I looked through a lot of net-net's lately and didn't find all that much. On Zacks.com I screened for ones with zero long term debt. That diminished the universe of them along with ignoring all Chinese ADR's. So far this company called The LGL Group ticker LGL founded in the year 1917 seemed the most intriguing. Mostly because the company and stock price has not always struggled. The stock preformed very well in 2010.The company has $9.9 million in net current asset value and a market cap of just $8 mil. $5.4 mil of the net current asset value is cash. The company is not profitable. The last year of profitability was 2011. I put it sort of in the category of Emerson Radio MSN a perennial net because they are both electronics companies. MSN by the way is now selling for less than half of its net current asset value and is profitable.

I've been writing on Peerless PRLS here on the blog for years and in the last post on it I called it one of the most compelling net current asset stocks out there. They recently made an acquisition and now have a cash buyout offer for $7.00 a share. I talked on the phone with Peerless PRLS Chairman and CEO Timothy Brog five years ago. He's been very committed and patient in adding shareholder value with this company.

Metals are on trend support. I have a buy stop order in too long JNUG at 21.80.  Crude oil has a setup as well. There is a triangular consolidation on this flag/pennant over the last few days. If crude continues to crash I have a buy stop order at 74 in to short oil with the ultrashort ETF SCO.


I plan on going through some net current asset stocks over the next few days as I will have some time off. I plan on using the trusty Graham Investor Site and a basic site like either MSN or Yahoo and just screening for great balance sheet strength with light total liabilities to find some stocks net cash and net current assets. I'll post up any interesting finds later this week. Off of the top of my head I had expected Delia's DLIA to be a successful net-net because of the strong brand and potential they had for a turnaround. I mean they are practically in every mall in America. I see this stock is now a sub penny stock trading below $.01 a share. Luckily I had forgotten about it for some time and never took a position.

The net-net Delcath Systems DCTH I posted on recently where I said I wanted to see it even cheaper to its net cash did indeed fall. When I say net cash that is essentially selling for less than the cash on its balance sheet minus all debt. The stock fell as low as $1.09 and has gone as high as $1.50s. I may have missed it as I didn't pull the trigger but this looks like a flag and it could very well drop even lower. I prefer to scale into positions so if I pick up shares around $1 they might just be half of the position.

My long term portfolio is mixed lately.  The Fidelity Emerging Asia Mutual Fund is underperforming the US Markets, however my dollar long position via the ETF UUP which I posted my buy of dollar ETF UUP on Twitter is finally coming around and breaking out again. My Pimco bond fund is  basically flat.

The major US indices look very healthy here and it looks like we are heading for new highs any day here. Even the Russell 2000 looks like it will break out here very soon. The Russell has been the laggard. It's often seen as a key index to the overall market. I may do a post soon on it as it looks like there is a failed signal on the chart forming. Failed signals can often be extremely important. Jack Schwager wrote about them in his books.

There is some activity in deep value asset land worth talking about. Blonder Tongue Laboratories (BDR) has always been a cheap value stock. It has never really delivered and seen the stock price follow through. Could this time be different? They just recently reported a strong quarter with actual sales growth and net income!! This has happened before as we can see from some of my old posts on BDR over the years. In 2010 the stock actually ran to almost $3.00 share. On this last quarter the buying volume in the stock is the highest I could find on any chart going back at least 10 years. The companies sales were up 23% and net income was $.06 per share vs. a ($.11) loss last year.  Margins improved too. Management said they expect the rest of the year to be improved as well.

Right now the stock is 29% below net tangible asset value of $1.74 per share. 

Since 2006 the stock has always found a floor around $1.00 a share. So it's pretty safe to say $1.00 is the current low side and about $3.00 the upside.  I made an 8% gain on my DGAZ trade shorting natural gas. I posted the setup on the blog and my entries and exits on my Twitter page.

One of the best patterns to trade is a breakout from a tight trading range. Such a fat pitch has been developing in natural gas lately. The channel lines are drawn out in these charts below. Whether it breaks out or breaks down there should be some significant follow through. Right now price is congesting at the bottom of the channel and looks poised to breakdown and plunge lower here. I have a buy stop set at 4.60 a share on DGAZ the 3X inverse natural gas ETF to short natural gas.  There may very well be whipsaw and this could be a fake out or failed signal but with energy getting hammered and a rush to liquidity in markets natural gas looks right to go much lower.

Lots of different things can become of net current asset value stocks. These are the truly deep value stocks that only a true value investor can love. Why? Because they aren't glamorous. They usually are not as sexy as say an Apple (AAPL) or GoPro (GPRO). Net Net's often don't even turn any profit. They are sometimes entering their journey into stock market obscurity.

However, sometimes they can be tremendous opportunities. Once in awhile a net net will be a former profitable growing company that just hit a rough patch. I find that many times these will have a "brand moat" like a major retailer. This can help the turnaround. Sometimes these good or great companies that turnaround and come out of net net territory can be big gainers and even multi-baggers. Yes, multi-baggers. Sometimes we value investors look for companies we that we know probably will never be good again. Companies that are just so cheap like trading below net cash that there might be a catalyst to bring out the value of the assets. Special situations and going private transactions can unlock that deep value. Or the company just recovers into profitability. One such company we will look at today that could possibly do so.

Delcath Systems (DCTH)
This troubled stock DCTH is seeing its stock price hammered lately. This is a struggling company. The reason I am interested in this one is the cash on the balance sheet. The cash has been stable. Let us crunch some numbers on this one. There is 25.1 million in net tangible assets or 2.64 per share, 22.7 million in net current asset value or 2.40 a share and 21 million in net cash which is 2.22 per share. The stock last traded at 1.77 a share. This is 20% below net cash. Technically this stock is taking out all kinds of support and I see it continuing to decline for awhile. Maybe we can see it around 40% below cash. That looks pretty good as cash stays stable.

SORL Auto Parts (SORL)
This is one of those that almost doesn't make any sense. This company has had sales and earnings growth and yet has been a net current asset stock. The last time I posted on SORL on the blog was last year. The stock ran up a lot and has started coming down again. Other than that not much has changed with this company. I can only guess the low price pegged on it is because it is a Chinese company. It's a small company too which is fine with me. The price to earnings growth rate (PEG) is nice here again at around 1.00. Last quarters earnings got shaved a little from forecasts. There is 129 million in net current asset value or 6.65 a share. The stock last traded at 3.48 per share or about half of its net current asset value. I think once SORL is below 3.00 a share it is in the buy zone. If you've read the blog over the past couple months or so you probably pinned me as just a technical analysis chart guy. Nope. I was a value investor before I learned how to read a chart. Why do I use both approaches? Simple. I like every edge I can get. I like to buy stocks that go up and short stocks that go down.

Incase you don't know famous bond guru Bill Gross quit his position at PIMCO a major investment firm. This is the news story on his move. He left for Janus. As this news story was being digested lots of PIMCO funds began crashing as people sold. This really hit the closed-end funds the hardest. I was looking through the daily largest percentage losers on the NYSE. I found atleast 3 down almost double digits. Out of the ones I researched a couple stood out.

The first one is the PIMCO Corporate Income and Opportunity (PTY).  It traded down 6% Friday to 17.18. It isn't below net asset value (NAV) yet but still has a 7% yield now.

The second one is the PIMCO Income Strategy Fund (PFN). It lost 4% and is now at 10.31 which is a 5% discount to its NAV. It's sporting an 8% yield.

The other funds I looked at were heavy into mortgage related securities so I took a pass on those. I read that a lot of the PIMCO funds have traded at steep premiums to net asset value over the years so seeing some of these fall below NAV is a good opportunity.

Greetings from Bull Market USA. The bull market capital of the world. Where low interest rates reign forever! Wheeee! In all seriousness however, I don't think Japan's lost decade has much on our QE. We've done better in my opinion. A few years ago everyone was predicting something along the lines of a Japan post asset bubble collapse stagnation. That is what they had in the 90s. Our true collapse was really in the wake of the tech bubble bursting in the year 2000. Atleast when it comes to the economy and equites. Yes, that was the secular stock market bubble that had been going since the early 80s. So I don't think comparing Japan and the USA was really apples to apples anyway. The other expectation Austrian economists had was serious inflation following QE. There was definitely some inflation as evident commodity prices but the dollar inflation seems gone now. Just look at the gold price. Gold and the dollar are always completely inverse. Gold is still crashing. I'm not sure what is going to happen from here.

History would say that if rates stay low for a long period of time there will be significant inflation ala the 70s inflation. Only Paul Volcker could stop it when he effectively let the market set rates at 20%. Could you imagine that today? So far things are going pretty well with the macro here. Doesn't hurt to be hedged though.

To me a good hedge on low rates is to be long precious metals.  I actually bought some more silver bullion recently around $21 an ounce. I got some Engelhard Silver Rounds on Apmex.com. I've always been pleased with my orders with them and I recommend them. They are one of the top 2 respected online metals dealers. So far I have Silver Eagles and the Engelhards. I'd like to get some gold Krugerrands soon and some Palladium.

I longed some emerging Asian stocks via the Fidelity Emerging Asia (FSEAX) mutual fund in my Roth IRA. I like the Goldman Sachs Emerging Debt Fund (GSDAX) also and have it on my watchlist along with the I-Shares International Real Estate Fund (IFGL). All of these funds have low expense ratios and similar or better performance vs their benchmark index.

High Yield Stocks
I also have some high yield equites on my watchlist. Whether stuff keeps falling or not these look good to me too. The first is my favorite REIT. It's not one of those sketchy adjustable rate mortgage REIT's or anything like that. Those mortgage REITs are going to blow up when rates go up. There's probably a reason they are all yielding 9 to 11%. I like these simple ones.

One like Sun Communities (SUI) which is just mobile homes and RV's that have great cash flow. Sun has increased the dividend consistently and currently is yielding around 5%. Shareholder equity has been growing the past couple years along with revenue and earnings. The chart is a breakout too.

UMH Properties (UMH) is the second REIT. UMH is yielding 7% and has a consistently rising dividend history along with revenue and earnings. This one has a smaller market cap at just $215 million.

Another high yield stock I like is Energy Transfer Partners (ETP). This is a diversified natural gas pipeline company that also sells gasoline and runs retail convenience stores. ETP's current dividend yield is 6%. The PEG ratio (price to earnings growth) is a very nice .69.

With ebola in the news there has been considerable buzz about what is going on with the drug that the two Americans were given. Apparently there is more than one company that is working on a vaccine. The company that has gotten the most publicity the past couple days is Tekmira Pharmaceuticals (TKMR). TMKR's stock was up 45% today. Another company I found that is working on a vaccine is Newlink Genetics (NLNK) . The news headline is the company "secures a Letter Contract From the Defense Threat Reduction Agency for Testing and Evaluation of Ebola Virus Vaccine". Its stock was up 6% today. I found an interesting link in the comments on ZeroHedge.com from 2013. The military was supporting working on a vaccine back then. It proved effective on primates. Here is a summary from the military.

I noticed The 9 Limited (NCTY) had a parabolic move from 2.4 to about 4.00 a share. On the run there were not any red (negative) days. This is a very good short setup here as today it finally closed red. NCTY is a Chinese company that hasn't had a profit since atleast 2011. For a target, I see this testing the $3.00 a share area soon. 

disclosure: no position

Even as IPOs are soaring and low interest rates are pledged to infinity the major indices are at a major test here. These highs are following the trend breakdown we had back in the spring. That pull-back was pretty significant. Before that the market was in a tight uptrend. Whether the correction in the spring was just a pull-back or the start of a major top will be decided over the next couple weeks. If there's going to be a double top it is going to start very soon. The Nasdaq has printed two days back to back above the upper bollinger band. This is bearish. A shooting star candle above the upper bollie is very often the "kiss of death" in technical analysis with stocks. A crashing stock price often follows.

The Russell 2000 index is at resistance and could be topping out. I remember the 2007 Chinese stock market crash began with a double top. I don't think anything here is starting to "crash" as I'm pretty bullish long-term on equites but some major consolidation could be in store. As much as I'd love to see us finally clearly break out of the trading range we have been stuck in since the 2000 Tech bubble crash and 2008 banking panic a runaway market has to consolidate. If this raging bull market is going to stop it is going to begin here. However, if we keep heading higher there is no resistance in sight. So, maybe it's prudent to get some protection on the short-side for a bit. Buy some puts, sell some futures or something and get a little short.

Just two days after the last post I put up on LOJack the stock has run 18% on the day today and was a top percentage gainer on the Nasdaq. That trend support held well. Since I had a buy stop order at 4.60 set I didn't get filled until after the gap up. I got filled at 5.07 which I'm still happy with as I plan to keep the position on for some time. It should be volatile for awhile here anyway. I might get to add some at a lower price.

I wrote a quick post on a small-cap stock I thought was undervalued a month ago. LoJack Corp. LOJN I believe is a good value here now at $4.50 a share. It looked cheap then at almost $6.00 a share when I wrote that. With $.23 a share in earnings for the year the current PE multiple is just 19 here at $4.50 a share. This is a small company with only about an 80 million market cap and revenue growth is apparent along with earnings growth. Next years earnings are forecast at $.43 a share. If they hit the $.43, that times a PE multiple of just 20 values the stock at $8 share. I think that PE is pretty conservative given how fast their revenue and earnings can grow. I see this stock as an economic recovery play at a fair price.
I am going to nibble on some shares and put a buy limit order in to buy at $4.57ish a share. I want to see it hold the $4.50s first. Sell volume looks currently exhausted as it is resting on trend support.

Back in January Shanda Games GAME announced a proposal of a going private transaction valued at $6.90 a share. The stock is currently at only $6.50 a share based off of Fridays close. This is about a 6% spread. I did some quick reading on this as I was unable to actually pull up the filing outlining it. The most official info I could pull up was that old press release. As far as I know this is still likely to get approved and become a done deal. I don't see how it wouldn't when "As of January 27, 2014, the Consortium members beneficially owned, in the aggregate, approximately 76.2% of the Company's outstanding shares" according to their press release. The only key thing I'm missing here is the limit on the number of shares one can hold.

As far as macro trades go there doesn't seem to be anything more certain than the fact that interest rates will eventually rise. The FED has said they will raise rates when they like the employment figures. Unemployment rates have been falling across the country and to my knowledge the most recent rate was between 6-7% nationwide. My state of North Carolina is now down to about 6.5%.
A few years back I was almost certain that the FED's unprecedented low interest rate environment was going to spawn serious dollar inflation. Something along the lines of the late 1970s through early 1980s inflation that only Paul Volker saved us from in the early 80s. One of the reasons I feel less concerned about massive inflation is the falling price of gold. To see the true value of the dollar you only have to look at gold. Rapidly rising gold means the dollar is falling and vice versa.
Now to the play. The only place rates can go from here are up. The timeframe is less certain but the fact they will go up is clear. When rates go up bonds go down. The simple trade is to short long-term Treasury Bonds. The Proshares Ultra short US Tresury bonds ticker TBT is a vehicle. I'm not going into this trade tomorrow or the next day or even next month. But some day this will be a good trade.
LoJack Corporation (LOJN)
As I am typing this we are in the middle of the tech bubble it seems. I probably wouldn't touch Facebook with a ten foot pole. I noticed this stock LoJack LOJN awhile back when they reported their 4th quarter. 4th quarter revenue had risen 20%. The thing I like more is that they gave guidance of next full years revenue growth to be 8% to 10% year over year. The business is simple. They help people recover stolen cars and do car security. It's a small company too with just under a $100 million market cap which is good. The market still isn't fully valuing this companies revenue and earnings growth. The stock is currently at 5.60. They should grow earnings atleast 25% a year but the current PE is just 16. Foward PE multiple is just 13!! This is if they just do $.43 EPS for the year.

I bought the oil ETF UCO awhile back. This position trade is working out well. It's up 11% now as oil has climbed. I also bought some Silver American Eagle coins as a long-term investment from Apmex.com recently. Gold and silver have both fallen a lot from the highs. It wouldn't even surprise me if they fell more. But, I don't really care as I'm just looking to build a long-term position. Both charts of course went parabolic and are selling off. Silver looked like it came down a lot more than gold has so far. That's one of the reasons I started in the silver.

I wrote about this company You On Demand Holdings YOD last year. The stock is up 69% today and closed at $5.62. I wrote about it when it was in the $1.50's a share. It looks like the big run today is from some pump from a Seeking Alpha article. This company C Media just upped their investment a little in the company which seems pretty arbitrary. The stock also has a low float which is some of the reason for the run.

I posted IFON on the blog not that long ago when it traded at 1.54. It is now at 2.92 incredibly. I have another short sell watch. The same kind of setup as CDTI that I posted on awhile back. The ticker is GFOX and the company is Grey Fox Petroleum. It trades on the OTC and I'm not sure there are currently any shares available anywhere to short. This is a good short setup forming though. It is up this month from $.80 a share to $2.24 currently. It barely even traded any shares before November. It also has zero revenue. Buy volume is getting exhausted.

ZLCS ran all the way to 2.25 intraday, however, I wasn't watching it during the day and missed any opportunity to lock in a profit. It subsequently reversed and closed lower. This is very bad price action for a breakout and I will be selling ZLCS tomorrow on any weakness. It will be about a 7% loss. UCO alternatively is acting very nicely and I plan on staying long this for some time.

I'm long a couple position trades. After stalking oil for awhile I put a buy stop for UCO the oil ETF in at 29.75 a share a couple days ago. I got filled on UCO and am now long. I'd like to keep this on for weeks. I also bought ZLCS a pharma company. I got filled in the 1.90s a share. Couldn't have asked for a better print on the day. A nice hammer. I expect this to run a lot after it hits over 2.00.

One predictable chart pattern to short sell is an over-extended run followed by a red (loosing day) that prints a shooting star candlestick. I circled the shooting star in the chart. By an over-extended run I mean a stock that gains over 50% or more over about 5 days. The classic setup is when it moves that much and also finishes above the upper bollinger band. A breakdown from the previous days low is a great short sell entry. CDTI was an almost textbook example of such a setup.

Crude Oil

I have a buy stop set for Powershares Ultra crude Oil UCO at 29.75.

disclosure: no position in CDTI

To start I will do a recap on some of the stocks I've posted on lately. One that continues to surprise is Plug Power PLUG. I posted it when it was around $1.75 a share. It printed $4.90 today! ETRM followed through too. Interestingly enough Delcath Systems DCTH bottomed out around net current asset value.

Now on to crude oil. There is a long setup now as it is back on trend support. When it comes to crude we have to be bullish right? For starters there is the inflation piece. Over decades the majority of oil's gains are attributed to inflation. Will there be inflation short-term? I definitely believe so. With more dollar debasement on the horizon I think inflation is more likely here than deflation. Let's even say one drinks the FED's Koolaid and would rather go on CPI, M1 or M2. Still looks like inflation to me. Unemployment is down and the economy is a little better. So I think the fundamental bullish case is sound and the long setup is here again in the charts.

We are back on trend support folks. It will be interesting to see how the price acts around trend support here but this is still a long setup whether the signal fails or not.

Now a slightly longer-term chart. You can see the rock solid support. Vehicles to trade oil include the futures outright CL, ETF's USO and USL. USL has longer contracts so there is less decay than USO.

disclosure: no positions in any stocks mentioned