david

2 Comments

    • DryShips Inc.: A 400% Stock I Missed [view article]
      The reason why the BDI is tanking is because, like retail companies and the price of natural gas, the performance of the Baltic Dry Index is seasonal. Every year at the end of the year, the BDI goes down because of the initiation of contract negotiations regarding iron ore pricing with China, and then, right around Feb. the price starts to increase again. Because the interest in drybulk is relatively nascent, relatively uninformed investors are taking the drop in the BDI to be a secular as oppposed to seasonal phenomen, thus creating the buying opportunity. This happened with natural gas a couple of years ago when energy prices where increasing. the next year though, the market was much more savvy and did not sell after the winter months nor buy as heavily in the winter months. This is part of the problem that caused the downfall of that energy trading hedge fund. It only takes one year for a investors to get wise to new paradigms, as short or long lived as they may be. Jan 10 08:30 PM
    • Bidz.com: An Undiscovered Gem [view article]
      I don't seem to be able to get to the FY2007 earnings estimate of $0.33 per share. I think it does more like $0.60 per share, making it a very, very rapidly growing online retailer with a P/E of about 12 at $7.20 per share. Here are my arguments:

      1: Traffic trends from Ranking.com: Given that it did $0.15 per share in the first quarter and has been having MUCH higher traffic in April, May (and presumably June) than it did in Jan-March, as seen on Ranking.com, BIDZ.com seems to be bucking the trend of a slightly softer second quarter versus the first quarter, the effect of successful new marketing. This relationship between its ranking on Ranking.com was also noticed when traffic picked up from the fourth quarter of last year to the first quarter of FY2007 and sales went from $38MM to $44MM SEQUENTIALLY! when its ranking went from 751 to 515, since then it has gone to 391 in May, the same as Priceline.com.

      2. Their estimate for first quarter earnings was lower than for second quarter earnings: "The Company's net income for the first quarter of 2007 was $3.4 million, or $0.14 per fully-diluted share on 23.7 million weighted average shares above the Company's previously given guidance of $2.7-$3.0 million." - "The Company expects revenues for the second quarter of 2007 to be in the range of $38-$40 million, and anticipates income before income tax of $2.8-$3.3 million."

      3. CFO has been buying shares in the past month: At times at higher prices than where it trades currently! If anyone knows what they will do next quarter based on traffic trends, he does.

      4. The Company is smart, it is lowballing estimates so that they can price their recently awarded options cheaper (I actually don't care) as blowing away their numbers is good for me.       Jul 11 11:40 AM
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