svosavvy

Ark Restaurants Corp. - Finding Value in a Difficult Industry

Thanks for offering your perspective, I like finding hidden gems. I like companies with a strong cost controller (low debt ratio) mentality. Could you please expound on the dividend, I was looking at data provided by my broker and it looks like no dividends paid from nov 08-sep 09 and then the special one. You say they pay dividends when the "business operations" can support it. It appears you have not collected a 25 cent quarterly dividend, but, in fact have gotten a 1.00 special dividend. Possibly if there is a press release you could direct me to that declares a 25 cent quarterly dividend. I don't offer comments to be critical, it's just that you have piqued my interest and I am trying to get a feel for this one.

E*Trade Takeover Chatter: How Should an Investor Respond?

indirectly bullish this one, sold the 5 leap puts, premium collected paired into TIPS.

The Reluctant Bull: My Portfolio

Old Trader,

I agree with the tool box analogy, however, you and I both know the best investment is a good nights sleep, so, we only do things that are comfortable. That said, I really enjoy options as they let me "fly my freak flag", but, they are a form of leverage and thusly an implement of financial mass (self) destruction. I am a big prescriber in moderation in everything from single malt scotch to investments. I have to say I have a real bias toward selling leap (long dated) puts in companies that I love or at least have a lot of confidence in. I am not the only one, it appears Mr. Buffett is also a put seller here and there. Just watched his special with Bill gates on cnbc, I realize that it could be classified as cheerleader BS, but, there are few people that anything they say I soak up like a sponge, Warren Buffett is one of those people, that and seth klarman. Anyway leap put sales are from what I have found an excellent tool to distill cash from a bullish bias you might have. It has been my experience that this play really shines in an extremely negative environment. let me first accentuate the absolute downside, if you sell a leap put in a company you love, the real downside is that they lay an egg somewhere along the line of the life of that contract, the real downside is that the egg they lay actually makes you not believe in the company anymore. Then they lay the egg, and you cease to believe in them and then you get stuck with their shares on the downslide. However, if that egg does not occur and you continue to believe in the business this can pay handsomely. When I take a look at a company(stock) at the end I kind of think of an absolute bargain basement price my dream price per se, thsi price means a lot to a potential put sale. Anyway I may store that in my brain for a long time waiting because it appears every dog has its day. If it goes down down down I will usually buy the stock with what I feel a good margin of safety, anyway if it continues down, but, I feel that I would compromise myself by buying more as I need a fair cash position to sleep at night, I will sell a put generally in a negative environment and receive a nice premium for it. I will then take the cash to cover that put, be it the premium received plus the balnce in cash and take that number and invest it in whatever I consider to be the safest best yield of the time be it treasuries in a dollar strengthening bias, TIPS in a dollar weakening bias, or even as of a couple years ago when online savings accounts had an incredible yield matched with fdic guaranty. I then wait, if it is exercised I get my stock at a price I consider to be "dreamy"plus the premium received upfront is mine to keep. I did this as I mentioned before with AA. After the covering of those puts I have again sold the leap put at a 10 strike on AA which I wouldn't mind a few more shares of AA at 10 for this leap I recieved 2.10 on the hundred which nets me AA at 7.90 a share which rivals a march buy I made in this at 6.76. I have a bias that AA at or around 7.50 is a steal imho. I made the contract on a negative day in the end of october. I then take the $1000 per contract which is 2.10 premium plus 7.90 my cash and invest conservatively. If it hits I get my stock if it doesn't I get 2.10 on the hundred per contract. Similar I guess to an insurance float model. Anyway it is a style, and this makes up a very small amount of my portfolio most is more traditional. I would argue that that this kind of stuff is the reason I get out of bed in the morning to research. Cheers. Oh yeah, p.s. 99% of the time I buy cover if or when the trade swings my way in a significant fashion, that way I can reload it at a later date instead of waiting until the bitter end.

The Reluctant Bull: My Portfolio

oh yeah, I have this strategy going with etfc too. A while back i sold the $5 leap put for a premium of 3.90. So that means my defined downside is $110 on the hundred. Meanwhile someone gave me $390 on the hundred to invest as I please to cover a downside of $500. I am mildly bullish on etfc, this is why I picked it, I'm not insane over it, but, I think it is worth more than a 1.10 so I keep and invest in sure things the 3.90 I received. It will be called in some time, etfc at $5 in the next year is the same as me looking good in a speedo. This is a winner if it is called in above my initial 1.10 which I consider a freak out level. When it is called in I cash in my chips and pay up. My interest earned in the meantime is a (small) margin of safety. Yes yes I know this is an unholy spin on value investing, almost like watching Ben Graham go bungee jumping.

The Reluctant Bull: My Portfolio

Old Trader:

The bulk of my options are of a leap variety. I mostly like selling leaps especially if I have a strong feeling about a position and am willing to back up my feeling with action. The reason I like the leaps is there is generally more leeway regarding time premium issues. In other words I think you can be less right and still make out, but, anyway you slice it if you make the move you gotta be willing to live with the consequences. I actually had a scary little adventure here a little while back and discovered something about myself. What I learned is that I am in love with my pvx position which is a scary proposition, attaching sentiment to a thing is setting yourself up to fail. Anyway, I sold 5 leap calls against 40% of my pvx for a dollar proceed, it promptly and abruptly flew up in price to the point where the contract was trading at 1.65 (not a big stop loss guy) I was beside myself that I let it go too easy. I spent a couple tense weeks a few weeks ago then it came back to me and I covered at 1.15. So only put buys for "my precious" now, something Buffett said in an address to a group of graduating mba's years ago that I saw on a youtube clip rang true for me. You absolutely cannot bet what you can't stand to lose, he made reference to a person getting millions of dollars to take a bet of playing russian roulette with a gun that had a thousand chambers and only one bullet. Yeah the odds are in your favor, but, you are betting what you can't lose and therefore it is reckless. It is wierd pvx is my first "lover" when it comes to stocks, man it is really wierd looking at that admission in type on the screen. I am generally more stoic than that, sorry. I actually remember back in march when they paraded out louise yamada on fast money and she called for some s&p level that was just absurd and I said to myself this is complete BS. The next day I went out and sold leap puts for I believe AA at 7.50 and ACI for 10.00 and I was real with myself, I had been a good boy and had a pile of cash, I said I would be thrilled to own at these levels. Anyway I think I got like 3.90 per for the aci one which is crazy that's like 39% of the risk in the first place. Covered both of these bets last month for monster gains. I find that if you can see an inflection point making the long bet against the grain can be huge. I am applying the same idea to my T tips, I bought them last spring. I opted for the 20 year the longest I could get, it is my belief that we will be screaming at the top of our lungs about inflation in 5years or so or longer. At the height of our screaming the prevailing bias will be that it will be like this forever, from what I have observed about human behavior (helps to have hands on psych experience) is that when a person is squarely in the center of some form of crisis or negative stimuli the prevailing "voice" (in your head or on tv) will continue to utter that it will be this way forever, however, if you subscribe like me to "the only constant is change" and "this too shall pass" you can overcome the idea that it will be like this forever. Kinda like if you ever want to see time stand still watch a person having a seizure. Anyway, while the crowd believes this rotten scenario will persist the crowd will seek comfort (pay up) in instruments that guarantee long term protection from a short term squeeze. So anyway I want TIPS that will have 10 years of comfort (premium) left on them because someone will pay up for that. That's my tested hypothesis anyway. Back to leaps, a nice conservativally aggressive play is to find a company you love that is in real distress and people are freaking out about it, calmly walk in and sell the longest put you can get (for the most premium) because unbeknownst to them your intention was to buy it all along and the premium collected can be your margin of safety. If the option isn't exercised you get an awesome payout and if it does you get the stock you wanted at a killer price. If the stock goes up you cover for pennies on the dollar you collected, if it stagnates time premium is your friend. It just came to me that if I remember right buffett had a truckload of bni puts sold that now will expire worthless with the buyout so yet another boon to buffett.

The Reluctant Bull: My Portfolio

Old Trader:

Yes indeed very valid reply, and options are generally not for the overly conservative. I become more conservative by the year, but, at 32 I fancy myself more of a cowboy. That or a mouse that thinks it can take on an elephant (an excerpt from a book my kiddies love). I hold pvx in my IRA as well so any shorting in there takes place as a put/buy. I do short in my brokerage acct. I have a healthy stack of 5 puts in my IRA, I bought when the stock broke 6. Some expire in dec some in mar, I am pretty much underwater on these nickels and dimes, however, what they represented for me was the option to continue being long the stock (and collecting the dist.). I was highly interested in selling at 6. I had carried a small position into the crash but I backed up the truck in march becoming titanically overweight, buying around the 2.50 mark and as a value investor not believing my eyes. Basically, I throw a little party every time my puts devalue because it means I get to keep the stock I think is irrationally high here and if it falls I would sell the purchased puts for proceed to cushion my oversized butt instead of exercising them. Anyway I think the theme here is a person who is balanced or hedged in approach generally tends to sleep better at night. Then there's ones in my brokerage acct like AA I've got 10 put/sales 17.50 call/sales and the proceeds go toward the underlying position which I have no love for. Hedged long pvx aa aci. naked long ed ge pwe silver and actual TIPS not the etf. Nakeds hedged with 25% cash.

Invest in Silver Over Gold

All good and valid points. The credit I speak of is/was in the pockets of the 300,000,000 spenders of the US now gone by the wayside. I respect any intelligent conversation which is why I enjoy this, thank you. I maintain that nothing inflates without demand. I just don't see the track for big inflation continuing until we can outpace our rabid credit usage a la precredit crisis. I can believe in our "rebound" inflation which seems to have been taking place since march which appears to be a result of recovering from a "deflationary" shock. I would counter that I believe credit is inflationary and needs to be counted in the money supply, without credit you won't see demand, liquid growing inflating markets are built on demand. If the contraction of credit was added there would probably be a much different bottom line story. The inflationary leverage imho of a few years ago I think will be reeled in by the expected desire for regulation and oversight. I have no empirical evidence of my beliefs merely an anecdotal view from 30,000 feet. I would add that home prices as an example inflated on demand, credit was easy allowing a new pool of demanders to bid up prices on the greater fool theory to flip to the greater fool. Same idea on oil, and commodities I think it works great until the greater fool gets smart.

The Reluctant Bull: My Portfolio

Thank you for sharing your thoughts/positions. Fellow pvx'er, I also follow a weighting strategy through options call sales against a portion of my core holdings when I think they are overpriced and put sales when I think it is a yard sale out there. I think dividends are about the only way to fly right now as we may be in for an extended period of non growth despite the hoi polloi of the last few months. This "young" trader thinks you're alright. I also like ED (bit pricey right now) despite what the almighty goldman has to say. Betting my beer money on PRGN. I like your hedge with SDS you weight 5% and get 10% (daily rebalanced) hedge (in theory) with a defined ultimate downside as opposed to an outright short which could ruin someone who doesn't have their gameface on 24/7. Way to be a man for all seasons.

Option Trader Friday Outlook: Is the Dollar Going UUP?

nice article about dollar relationships. I also wonder what happens when treasury yields are actually bid up in now "competitive" auctions. Maybe fixed instrument yields as a whole increase and become competitve and people hungry for yield will rebalance out of stocks to an extent.

Invest in Silver Over Gold

I was driving at your silver/gold relationship. I am actually bullish on silver, and have had and continue a long term position in it. As far as inflation goes to merely talk about monetary expansion is like getting the sports report but only getting one teams score and not the others. Fractional reserve banking and the "hot" (external inflows) money issue I agree are of extreme importance imho when considering prospects for inflation, however, I find it highly disconcerting that credit contraction is hardly brought up. Seems we only talk supply and not demand. How can we inflate when the consumer who is supposedly 70% of gdp has had their credit dry up. Sure the banks have been liquified via the gov't but the spenders are broke. I am a big believer in needs based inflation in time (couple of years'ish imho), I see food and energy inflating on demand, and consumer crap hitting the skids.

Invest in Silver Over Gold

or is gold 30% overvalued

Portugal and Greece Downgrades Offer Silver Lining for Yield

good article and good points. Right now I can barely stand the idea of bonds, there is just no yield, so I stay horrifically out of balance. I am afraid to pull the trigger on these historically low yields as am afraid I will be stuck with them if the par sinks in a potentially high rate environment which may be on our horizon. I bought some TIPS in the spring, but, that is about it. Almost bought some 10yr GE program notes for 5.5 yield. So yeah I am artificially overweight stocks and cash because nothing I see from the fixed market piques my interest. I also feel that investment in junk debt while giving higher yield also would suffer from the sinking par blues if rates take off in a couple years. I think the fed walking away from the treasury markets will allow bidders to take up the yield in the future.

Michael Mauboussin's Think Twice: Harnessing the Power of Counterintuition Is Short but Sweet

We fight the battles of our childhood in adulthood.

Michael Mauboussin's Think Twice: Harnessing the Power of Counterintuition Is Short but Sweet

we always seek what we can't have

Nearly two-thirds of U.S. money managers are bullish on stocks through the middle of next year, Barron's fall survey finds. Money managers expect three sectors to outperform: tech energy and health care. They're bearish on financials and consumer cyclicals, and netural on oil. Top stock pick: Microsoft (MSFT).

So... does this mean the rally is 2/3 over? LOL