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- FedEx Fails to Deliver - Fast Money (5/9/08)
- Furniture Brands International Gets Off The Couch
- Strongest Upward Revisions Heading Into Earnings
- Three Smallcap Stock Picks
- Smallcaps With Attractive Price-to-Book Ratios
- Furniture Brands Surges Following Samson Holding's Proposal
- Five Sectors To Consider Shorting
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Smallcaps With Attractive Price-to-Book Ratios [view article]
Hi Jakester. Here are two brief ideas…1) This is a long term strategy, so the results after 9 months have little relevance (feel free to read some of the research reports linked above if you want more information).
2) The overall stock market is down significantly since the list was posted in October 2007. However, the majority of the stocks on the list have actually outperformed the S&P500 and the Russell 2000 Value, so by those benchmarks performance has been good.
Thank for your comments. Reply
Smallcaps With Attractive Price-to-Book Ratios [view article]
Performance has been horrendous as of 7/10/08. Your thoughts on why?? ReplyEditors
General Discussion on FBN
Is this a buy or a sell? ReplyThree Smallcap Stock Picks [view article]
No offense, and no disrespect to Mr. Byrne, but why would anybody pay any attention to a guy whose investment philosophy is to invest in stocks that pay high dividends in order to avoid picking losers?Buying a stock because the dividend yield happens to be high is fine, but yield is function of price, so assuming the dividend amount stays the same, the yield will go up or down depending on the price.
Let's look at the first pick, Traffix, Inc. (Nasdaq: TRFX). The company lists itself as an internet media and marketing company that provides end-to-end marketing solutions for its clients. I have to tell you, when I visited the company's website that I came away with the impression that if this company went out of business, at least half of the spam I get would stop.
At any rate, I did look at the company's latest annual financials which were for the period ending 11/06 and I have to say I personally wasn't very impressed.
The company's direct costs are 63% of sales, and their selling and administrative expenses are 30% of sales. Taxes eat up another 2% of sales, and dividends consume another 6% of sales, leaving absolutely nothing for a rainy day.
NOTE: Please do not freak out, the reason it doesn't total 100% is because of rounding.
On a value investing basis, I estimate that a reasonable value for the stock is $7, with a buy target of $3.50, a first sell target of $6.75, and a close target of $7.50.
On a fundamental investing basis based on the latest 10-K filing of 11/06, the stock has a PE of 35, a Return on Invested Capital of 10%, Free Cash Flow of $0.23, a Tangible Book of $2.36, and pays a cash dividend of $0.01 per share.
On a short term investing basis, based on a recent close of $6.11, the stock has overhead resistance at $7.39, a 28% increase from current levels, first support at $6.05, a 1% decline from current levels, and second support at $5.71, a 7% decline from current levels.
So all of this brings me back to the company's investment philosophy, investing in stocks that pay high dividends to avoid investing in losers.
Now admittedly I'm not the sharpest pencil in the box, but it just seems to me that if the one penny per share dividend that Traffix, Inc. pays is considered a high paying dividend by Mr. Byrne, it might just be that his client base dies off before they are able to determine how well his investing philosophy actually works.
Wax Reply
Five Sectors To Consider Shorting [view article]
If you did not research by past trades, take a look at my current model portfolio or even the portfolio from November 2006 when I initiated four naked put options to hedge the long portion (not specific long stocks) of the portfolio. Two of those four puts (a trucking company YRC Worldwide and a homebuilder St Joe) are still in the portfolio wth gains of 111.43% and 161.54%.www.sinletter.com/port...
www.sinletter.com/arch...
As for the "tech-stock" portfolio, I would hardly call a portfolio that contains an Israeli generic drug manufacturer (TEVA), a travel company (EPAX), an oil drilling company (DO), an entertainment company (BBI), an Indian auto company (TTM) and consumer non-discrenary companies (PG and UL) a "tech-stock" portfolio.
If using multiple naked put options, using selective short positions and diversifying long positions across asset classes and countries is not called hedging your risks, I have no idea what is. Reply
Five Sectors To Consider Shorting [view article]
One more comment. You are not hedging your $180,000 long-stock portfolio, which is heavily tech-laden, when you buy a few thousand dollars worth of puts on the home-mortgage sector. To mask the relative ineffectiveness of the "hedge," you focus on the percentage gain in the option. People should always be wary when profit/loss on options is listed in terms of the option price rather than the stock price. ReplyFive Sectors To Consider Shorting [view article]
I didn't research your past trades, I just looked at your posts.Here's what you said on Dec. 11: "A little over two weeks ago I placed an order to buy May 2007 puts on another mortgage lender New Century Financial (NEW) but unfortunately my order was not fulfilled. New Century Financial was mentioned in my November article, "Hedging The Economy", and is already up 44% since we added it to the model portfolio. As an alternative to New Century, I picked up the July 2007 $42.5 puts for Countrywide Financial last week and after the analyst downgrade on Friday, these puts are already up 27%." I thought you meant you missed out on New Century puts to cover the New Century stock that was up 44% in your portfolio, so you went to Countrywide puts instead. I guess you're saying you sold New Century and went short the industry by buying Countrywide puts. OK.
So you used puts on Countrywide to hedge a tech-stock portfolio, made $1.64 on each put and tell us that "we protected our model portfolio by hedging our long positions with put options."
My point is that your hedges had expired by the time the underlyig moved down. Your portfolio was exposed at exactly the time the mortgage sector was experiecing its worst moments.That's why I say your hedging claims are misleading. You're lucky the tech market hasn't gone down yet. Reply
Five Sectors To Consider Shorting [view article]
Since you seem to have done the research on my past trades, I would love for you to show me when and where I was "naked long the stock again in my model portfolio". As most of my subscribers know I have been nothing but bearish on Countrywide since 2006. When those options expired I suggested that my timing was a little unfortunate ( I *only* made a 66.67% gain in 6 months as a "couple of points" on a $2.46 put option works out to a tidy gain) and it may be a good idea to roll them into new put options. While all my current positions are listed in the model portfolio, every single trade done in the past is listed in the Historical Trades section of SINLetter.comwww.sinletter.com/hist... Reply
Five Sectors To Consider Shorting [view article]
"We protected our model portfolio by hedging our long positions with put options" is a misleading statement. While your fundamental analysis is solid as can be, your timing and application of options leaves something to be desired.I looked back, and your post on Dec. 11 last year said you were buying the July 42 1/2 puts on Countrywide (CFC). That day, the stock closed at 40.48. The day you posted and said your July puts expired, the stock closed at 36.17. So your puts were worth 6.33 at expiry (42.5 - 36.17). But the options were nearly 2 points in the money when purchased, poiints you had to pay when you bought. That leaves 4.33 points, minus the premuim -- a couple points? -- you paid to hold those for six months. So you made maybe 3 points on the trade in six months. Then you were naked long the stock again in your model portfolio. Right before it tanked.
You also said you missed out on buying protective puts in New Century (no symbol). If you made a fundamental decision to hedge, why didn't you buy those on the offer?
It's important because of your final statement: "A half-point Fed cut may make the markets go up in response." When dealing with options, timing and application is more important than fundamentals.
impliedrisk.blogspot.c... Reply
Five Sectors To Consider Shorting [view article]
Often ETFConnect will pub, the top holdings by volume. ReplyFive Sectors To Consider Shorting [view article]
It looks like QID achieves its leveraged shorting of the Qs through swaps and options as you can see from its daily holdings herewww.proshares.com/fund...
You can find additional information from their prospectus here
media.proshares.biz/do...
The inverse correlation between QID and QQQQ is quite apparent when you look at the following one year chart comparing the two
finance.yahoo.com/char...;range=1y;compare=qqqq...
Similarly the inverse correlation between TWM and the Russell 2000 is quite apparent when you look at the following 6 month chart comparing the two
finance.yahoo.com/char...=^rut;range=6m;compare... Reply
Five Sectors To Consider Shorting [view article]
It looks like QID achieves its leveraged shorting of the Qs through swaps and options as you can see from its daily holdings herewww.proshares.com/fund...
You can find additional information from their prospectus here
media.proshares.biz/do...
The inverse correlation between QID and QQQQ is quite apparent when you look at the following one year chart comparing the two
finance.yahoo.com/char...;range=1y;compare=qqqq...
Similarly the inverse correlation between TWM and the Russell 2000 is quite apparent when you look at the following 6 month chart comparing the two
finance.yahoo.com/char...=^rut;range=6m;compare... Reply
Robertson
Five Sectors To Consider Shorting [view article]
Also XLB XLI XLY and XLK.... ReplyFive Sectors To Consider Shorting [view article]
I had held positions in QID, but had a hard time finding out the companies represented in that ETF. I also had difficulty in finding a correlation between moves in NASDAQ and in QID. How can one read into TWM holdings and correlations? omooc Reply