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Stone Fox Capital Advisors is a registered investment advisor founded in 2010. The firm offers portfolio management with a focus on opportunistic stocks providing secular growth trends at an affordable value. An emphasis is placed on fundamental analysis though charts are used for timing entry... More
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  • Investment Report - March 2012: Opportunistic Levered

    This model gained a solid 21.4% in February versus 4.1% for the benchmark S&P 500. This model typical outpaces the major indices by a large margin in up periods and last month was no exception.

    Since the end of 2011, this model has been running on the theme that the majority of stocks would retrace the losses experienced since the July 2011 levels. In essence, our theory all along has been any losses since that time period were from irrational fear of a second financial collapse that the Europeans were unlikely to allow. Naturally this fluctuates on a case by case basis where any individual stock could move a lot higher or lower depending on circumstances since then.

    This conviction has allowed us to hold onto a highly leveraged portfolio and see significant gains this year as stocks like Apple (AAPL), Dicks Sporting Goods (DSK), Liz Claiborne (LIZ), and Radware (RDWR) all reached those July levels by February.

    Other stocks like Manitowoc (MTW), Sears Holdings (SHLD), and Terex (TEX) have made major runs by the end of February to reward investors for holding on during the rough summer months. Amazingly though neither of these stock had reached the July levels even after significant rebounds.

    What's even more amazing about the strong gains in the model is that several stocks have remained around 52 week lows including Alpha Natural Resources (ANR), NII Holdings (NIHD), and Savient Pharma (SVNT). Other stocks still remain far from last July levels leaving plenty of upside.

    Trades

    Trading for the month was limited especially as a percentage of assets. Small positions were initiated in Freeport McMoran (FCX) and NII Holdings (NIHD), while also adding to an existing position in OCZ Technology (OCZ) .

    ConclusionThe market in general remains in a uptrend that likely will lead to multi year highs and possibly eventually to all time highs in the S&P 500. This model while fully invested now will likely allow leverage to unwind with any more gains.

    While a few stocks are approaching valuations that might trigger closing positions, most of the stocks owned or followed trade at extremely low valuations. Investors need to understand that growth stocks have underperformed the market during this rally since last October in favor of dividend stocks. It would not surprise us to see a period over the next few months where growth stocks surged ahead even as the S&P 500 stalls.

    Disclosure: I am long FCX, TEX.

    Additional disclosure: Long all positions mentioned. Please consult your financial advisor before making any investment decisions.

    Tags: FCX, TEX, OCZ, SHLD, RDWR, KATE, AAPL, DKS, MTW, SVNTQ, ANR, NIHD
    Mar 12 2:11 PM | Link | Comment!
  • Impressive Numbers At FreightCar America
    FreightCar America (RAIL) had blowout earnings for Q4'11 reported this morning. Unfortunately this isn't a stock that I follow, but anybody watching the backlog numbers probably isn't that surprised. The stock has soared over 22% on the news.

    RAIL reported earnings of $.71 that easily smashed the $.13 estimate. Most astonishing were the rail car deliveries and backlog growth compared to last year and even last quarter.

    Deliveries

     

    • Q4'11 - 2,489 units
    • Q3'11 - 1,515 units
    • Q4'10 - 694 units

    Backlog
    • Q4'11 - 8,303 units
    • Q3'11 - 6,311 units
    • Q4'10 - 2,054 units

    It appears that most of the growth is related to a eastern coal car replacement cycle. Demand evidently jumped as more eastern coal is being shipped internationally. Getting that coal to ports evidently takes more railcars or just newer railcars. The big problem is that coal demand has slowed making the replacement cycle a big question especially to jump into a stock up 20%.

    Interesting information but investors need to beware.

    Disclosure: No positions mentioned. Please review the disclaimer page for more details.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Additional disclosure: Please consult your financial advisor before making any investment decisions.

    Feb 17 1:13 PM | Link | Comment!
  • Analysts Downgrading Every Day!
    While the market appears overbought and everybody claims to be bullish, several indicators of action show a different story. The sentiment versus action debate in investors is beginning to match that of the consumer confidence reports.

    Bespoke had an interesting graph yesterday showing that analysts have not had a single day of net upgrades this year. During the rally upwards in 2012, every day analysts come out downgrading stocks only to see them go higher.

    This action related number gives a completely different view than the investor sentiment polls. Considering analyst actions typically are great contrarian indicators does this mean the market goes higher? Considering the 8th appears to have been the most negative day of the year so far with 25 more downgrades. Wow!

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Feb 12 11:11 PM | Link | Comment!
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