According to some news reports Tuesday, the U.S. Congress is gaining support for a Tax Loss Carryback proposal. We're not seeing a lot of news about this proposal but it seems to be something that would be very bullish for the worst off stocks in this economy. Any corporation that made a ton of money in 2004-2007 and is now losing truckloads of money would be able to reclaim some taxes paid in those previous years.

It could be a huge boon to financials struggling to raise capital or manufactures that saw boom years and now are struggling to make ends meet in these lean times. It seems odd that Congress would inact such a law to help the hated banks, but then again a lot of the smaller banks could use some help to stay afloat and continue lending. On the flip side, it would further help to support companies not allowing the best players to gain deserved market share. Some of the banks in strong capital shape might see less growth potential with such a bill.

Until this article at Realmoney.com, I'd never heard of KHD Humboldt Wedag (KHD). KHD owns companies that operate internationally in the industrial plant engineering and equipment supply industry, and specializes in the cement processing industries. They have a negative enterprise value meaning that cash in the bank outnumbers the market cap. This is a pretty rare situation especially considering they are basically a emerging markets play with 95% of their backlog in Russia, Eastern Europe, Asia (mainly India), and the Middle East.

Back to why this stock made my radar. They fall into the same sector as Liz Claiborne (LIZ), Terex (TEX), and Manitowoc (MTW) that we've owned this year and still own LIZ and TEX. What sector is that you ask? They are all still down roughly 80% from their recent highs and were 'blistered' alot more then deserved. The author suggests stocks deserving to be down 20%, but that dropped 80%. We're not so sure about just 20%, but even 50% would still provide for a huge gain from here. TEX for example would trade closer to $50 instead of the current $24.

Yum Brands (YUM) has been a desirable investment over the last few years because of its presence in China with KFC. As of September 30th, YUM caught our attention as a potential Net Payout Yield stock. On that day, YUM announced a 11% dividend increase and a $300M buyback. Anybody following our Net Payout Portfolio knows that we love stocks that generate plenty of cash to make dividends and buybacks.

With a market cap of over $16B, the buyback is only roughly 2% so not too impressive. Combined with the 2.4% dividend YUM is getting close to a 5% net payout. Somewhat below average but not too bad for a company forecasting 12% profit growth this year. Considering the buyback was higher in 2008, its also possible they'll up the buyback amount as the recovery takes hold.

Anybody just focusing on domestic US traffic would miss how the rest of the world is seeing explosive growth in airplane traffic. For airplane lessors it's mostly about international growth and with Boeing (BA) continuing to struggle to get its new plane out it just makes the planes owned by lessors like AerCap (AER) and Genesis Lease (GLS) more valuable. Below are a couple of examples of the explosive growth seen outside the US and in places other then China and India.

LAN Airlines is one of the leading airlines in Latin America with a dominant position in Chile and Peru plus operations in Argentina and Ecuador. It reported a huge 11.9% increase in system traffic for September.

After reporting Q2 numbers that we'll discuss in more detail later on, Local.com (LOCM) showed signs of actually starting to turn the corner from a serial disappointing money loser to a fast growing money maker. Then on Sept 14th, Nielsen reported that little $60M market cap Local.com made the Top 10 Search Providers for August.

It's hard to tell if this really adds up to much, considering they just grew with the market at 2.9% MOM, but the extra attention might just help. Local.com has always had an interesting concept of delivering great local internet searches at an easy to remember website. Unfortunately they've never caught the attention of the mass market and especially advertisers. Making these Top 10 lists might help spur on media attention, and with just 0.2% of the market share they've got plenty of room for gaining share, not to mention growing with the market.

In a rather unusual twist, Genesis Lease (GLS) confirms that they are actually in M&A discussions backing up an earlier story from Monday. No guarantee that it will work out, but it's surprising to see that the article was at least partially accurate. In the past it tends to work out that such articles are only half accurate. The article suggested that AerCap (AER) was in the process of buying GLS for a 40% premium or a price that would work out to $9.60. So don't be surprised if it's actually another acquirer or if the purchase price is materially different.

The deal would still be way below the $14 book value of GLS, but Stone Fox Capital has argued that since AER also trades at a similar BV discount it'd be advantageous for GLS shareholders to take the 40% bump and then participate in any AER rally. A rally likely to be quicker with the attention such a deal would bring. In addition, we suggested just less then a month ago that AER was the best investment in the airplane leasing sector: AirCap Leads the Airplane Leasing Sector.

You can't watch a clip on CNBC or Bloomberg or read an article on numerous websites without somebody talking about a correction in September. Even SeekingAlpha has a focus on buying gold to protect from the 'inevitable' downside. Guess the market got that start it wanted on the 1st day with the SP500 down over 2% and then over 0.5% soon after the bell on the 2nd day. Every poll I see the pollsters expect a much larger chance of a large drop rather then a large gain in September. The action on the first just seems overly convenient to suck in the shorts that have been expecting a huge sell off and Monday there was confirmation to dive in headfirst. But is that what will actually play out?

Watching Fast Money Tuesday night I was appalled and then delighted to see that they featured the PermaBear trio of David Rosenberg, Peter Schiff, and Roubini. One decent down day and they pull all the stops on the negative side. Though I do agree with Schiff in that investing outside the US will see better returns, he doesn't come off as a bullish investor since he spends so much time hating on the US. Wish he would spend more TV time focusing on the investments he likes outside the US. It almost seems as if everybody on the show has dismissed the possibility of a positive market. That seems almost absurd considering that the average loss of 0.9% in September is much better then the 2.2% loss on the first day. The average September would suggest investing now gives you an 1.3% gain the rest of the month.

With the crazy market of the last year, it's been difficult to focus on the Net Payout Yield stocks in our portfolios. The Net Payout Yield is the combination of the payout from a dividend and any stock buyback divided by the market cap of a stock. A lot of mutual funds, ETFs, and advisors focus on the values of investing in dividends, but not many focus on companies that buyback stock. Stock buybacks are more efficient ways for increasing the value of your portfolio, but more people seem to like getting the cash directly even if its less tax efficient.

While getting cash can be important to clients, the total return usually rules investment decisions and the Net Payout Yield has proven to be a much better investing philosophy.

One way to play the ever growing government reach under the Obama administration is to invest in internet companies that are helping the governments promise under Obama to be more transparent and internet centric. Terremark (TMRK) fulfills that role as the Data Center operator that now runs some of the biggest government sites such as data.gov.

The stock is also on sale after being hit 15% after reporting a strong Q2 with revenue and EBITDA a the high end of estimates. Its the second time the stock appeared ready for a major breakout only to be hit by major selling.

The airplane leasing sector has been promising for a while now as emerging markets expand air traffic and airlines with weak balance sheets look to cut cash outlays for new planes. It's also a much better way to play this trend then to own a airline as they typically struggle to make profits with the fierce competition in the sector yet every time we turn around another company wants to open an airline. Owning one seems like a status symbol similar to a sports franchise, except airlines almost always lose value.

Airplane lessors on the other hand are typically very profitable. The airplanes typically hold their values and during a period where both Boeing (BA) and Airbus struggle to get new versions out, the planes on hand remain in high demand. It's also an attractive investment because the leases are typically for 5-7 years providing for a consistent return.

Last week,CF Industries (CF) upped its bid for Terra Industries (TRA) from its prior bid of 0.4129 to 0.4539 shares to 0.465 CF shares. The deal currently values TRA at nearly $39 share (.465 x $83 CF share) or 30% above its Friday closing price of $29.91. How could the Terra Board of Directors turn down such a sweet offer?

Many reasons exist for turning down a premium offer. For example, shareholder growth would be higher as an independent compared to being part of a conglomerate, shareholders want cash for various reasons including the premium can be wiped out if the acquiring company's price drops after announcing the deal, or the premium just isn't large enough to cash out.

After closing up 8% today following a nearly 10% gain Thursday, FCStone (FCSX) is trading at $5.59 which is above the $5.25 price of the takover offer from International Assets (IAAC) (.295 shares at $17.8). Somebody clearly thinks another bidder is lurking. While this could be good short term for the FCSX stock, I'm not sure it would be all that great long term. Any new bidder is likely much larger and would dilute the shareholder much more in the new structure. The current offer, while not that exciting to existing shareholders from a premium, at least offered continued participation in a dynamic, growing company. One with better capitilzation to help grow the FCSX client base.

Monday could be interesting. My best hope is that IAAC has to up its offer.

Disclosure: Long FCSX

Last Thursday night, Rigel Pharma (RIGL) released disappointing results on its TASKi3 Phase 2b study on Rheumatoid Arthritis (RA). The results showed that the placebo worked basically as well as the R788 pill. Now here is where you need to understand the stock and what was being tested or otherwise you'll be forced into a trading decision by the market and not knowledge.

First, this test was only to determine whether the R788 drug worked on RA patients that failed to respond to at least one biologic treatment. Therefore, this result was much less material to the company then the TASKi2 results on July 9th that showed the drug was as effective or more so then existing medicines that typically require shots.

While the rest of the airline leasing business has been busy buying either new planes from Airbus or Boeing (BA) or working out sale/leaseback arrangements with cash strapped carriers, Genesis Lease (GLS) has stayed on the sidelines unwilling to tap its large credit line.

At least, until today.

Netflix (NFLX) has been a favorite short target of Stone Fox for a while. Luckily we've never engaged in more than short term short positions on this stock as it's been one of the bright performers during this recession. The recession and high gas prices have in fact likely helped business as consumers have migrated to the cheapest forms of entertainment - DVD rentals via mail. It saves gas and eliminates late fees, all for a low monthly subscription fee.

Getting DVDs via the mail is clearly a doomed business as even highlighted by the CEO in this Wall Street Journal interview. It's actually pretty incredible that the business model as done so well considering the huge competition in the DVD rental space and the fact that renting by mail was actually seen as a step back for that market. After all, why wait days for a item via the mail when you could just stop at the local store and pick up whatever you wanted and the price of $2-4 per rental didn't seem overly costly? That's where the catch for the current and future business models comes in.

Back in early May we reported on how Brian Westbury was calling an end to the recession. At that time we thought the recession was more likely to end around July. On Monday, Brian wrote a market update that confirms his view that in spite of the weak June jobs report that the recovery was still on track.

Several metrics reported below in fact typically only take place when the economy is recovering while the jobs report can continue to sputter. And when jobs do sputter it's likely because corporations are reaping huge profits from less employee expenses and higher productivity.

For transporters, the cost of gas will be a 'driving' force in future profits and the ability to transport more commodities and less retail products will be beneficial. For that fact, we have decided to swap shares in UPS for a bigger focus on CSX. Both were favorites of the NetPayout Yield Portfolio for decent dividends and a history of buybacks.

Unfortunately for UPS whether public perception or reality, the cost of fuel will likely continue to hinder the amount of products shipped going forward. Even if it doesn't, its likely to hold the price of the stock down and competition with FedEx (FDX) and USPS is likely to hold down profit growth regardless. Not to mention that legal documents that used to be delivered via Express services will likely move to a sort of digital format reducing the need for UPS services because it can be done cheaper and is more economical and even greener.

Tween Brands is up 30% today on news of the all stock deal with Dress Barn (DBRN). It's interesting that DBRN is up 10%+ on the news. It's very uncommon for an acquirer to increase on news of a purchase. Our take is that the market sees this as a steal by DBRN considering they were able to buy a premium brand for about 85% lower then its peak valuation.

My only concern is that TWB has some stuff hiding in the closet for their BOD to agree to such a minimal price of $137M when they still have sales in the $1B range. Being that its an all stock deal they do still get the opportunity to participate in any further market rallies and to any rebound in the Justice line, though on a very diluted basis. In general your getting mostly an investment in DBRN going forward.

As hinted Tuesday, including on my instablog, Alvarion (ALVR) officially announced a deal that will exceed $100M over 5 years. Now the deal is with Open Range instead of Clearwire (CLWR). Open Range is a company I've never heard of so I was skeptical at first.

After reading up on them and understanding that a large part of the funds is coming from the Rural Broadband portion of the stimulus plan, I'm a lot more comfortable like the market that this is a solid deal. Not to mention that ALVR has a history of being conservative.

While Stone Fox Capital has never been that big about investing in a stock based on individual customer deals, this win by Riverbed (RVBD) made us take notice. Petrobras (PBR) has become the global leader in oil exploration and one of the most respected companies in the world. The deepwater oil that they've found recently has set off a huge capital expansion program into Deepwater drilling. For them to use RVBD Steelhead appliances on 40 offshore oil platforms is worth noting.

The data collected from these platforms is mission critical and they'd likely spare all costs to find the best equipment around. They chose RVBD over likely competition from Cisco (CSCO) and all others in the industry and alternative sources of just hooking up more bandwidth. Best of Breed companies typically used Best of Breed vendors. RVBD has clearly set themselves apart from the competition.