I found a few interesting stocks below net current asset value the other day. A couple of these I know from the past as being volatile. In other words they just didn't trade super thin for months and years, rather, they have been scooped up by institutions before.
Qiao Xing Mobile Communication Co.(QXM) does handsets in China and is really beaten down here. I found it off a screen and when trying to double check to make sure it is sub NCAV if that's a major criteria for you. I didn't see a recent filing on the SEC website and don't want to put a whole lot of time into DD so do your own DD in this regard.
Infosonics Corp. is an old favorite because I made 20% on it last year over a few days and got out near the top. They distribute wireless handsets in Central and South America and distributes high-end products under the Verykool brand name. Off the balance sheet there is $25 mil in NCAV and a $16 mil market cap.
I just got filled finally today on this one at $1.13 and am long.
Seanergy Maritime Holdings SHIP
This is a dry bulk shipper and is beaten down but the technicals indicate it might be bottoming short term.
EF Johnson Technologies EFJI
I really nailed this one awhile back and called the top later on it too.
Unfortunately I don't think I bought it. But, anyway it is back below NCAV of $38 million. It might be bottoming out here. If I play it I might pick it up at mid $.90s so I have a clear stop loss on the breakdown signal.
clean technical bottom so far
full disclosure: long IFON for a trade
March 3, 2010
February 25, 2010
What Can't Be Hidden
A Seriously Struggling & Flawed U.S. Economic Model
There are a lot of negative things going on economically in the U.S. One of them being the fact that one in four homeowners are underwater and home values and retirement account values are two of the most important determining factors of consumers purchasing behavior. We are in an economy where over 70% of GDP is consumer spending. The retirement accounts are up for now but valuations are about fairly priced at best on US stocks because right now they are discounting an economic recover probably more along the lines of 2001 than 1931 after our Great Depression or 1990s Japan. These people think the 2000s weren't a continuation of the bubble!!? Hello! Greenspan and the housing bubble. The 1990s and 2000s can be corrected by a 2 year recession we have just had?!! I might even argue that the bubble actually started in the 1980s and even earlier with the consumer leveraging up on credit cards and a long standing government induced housing price bubble. The housing based economy is set up on a phony premise of everlasting cheap gasoline and fuel prices, endless supply of credit and perpetually rising home prices.
International Turmoil
There is a real threat of sovereign debt defaults like what we saw with Iceland just recently. Greece, Spain, Dubai and Japan are at risk of default and possibly eventually other major countries. The stock market hasn't realized or priced in additional defaults. That could start a domino effect. I was reading about the Asian currency crisis in the late 1990s. It all began in the small country of Thailand (then seemingly insignificant) and spread to South Korea, Japan, Brazil and Russia. Are Iceland and Dubai like a Thailand was then?
The strange thing so far I'm reading is there was lack of banking supervision prior because they were actually exploited by government giving public loans disguised as private and major asset bubbles were busting around this same time as well. A lot of these Asian countries had less than 30% of GDP comprised of exports which in my view gives some clout to the Austrian economists on what is possible in none Latin American economies and even ones as big as the U.S. There have been a lot of currency crisis in Latin America because of the cyclical nature of their economies among other reasons. In my view what happened in Asia in the 90s and in Iceland just recently shows that currency crisis are possible in a large country like the United States. It's hard to envision a scenario for the US for rates on our bonds not to go up and assuming the economy must continually be jump started and defense spending stays the same there could be serious trouble for the dollar and a following of the rest of the Western nations.
What good is deficit spending and artificial GDP growth like in China where there are empty cities if you still have to pay the piper for decades of juiced excess like here in the U.S.?
When it comes to the possibility of a continuing rise in stock valuations and a lasting improvement "absent stimulus" in the U.S. economy and even China's the burden of proof is on you bulls.
Some Links to Think About
"While deficit hawks have long warned that policymakers need to curb deficits and debt, the new wrinkle is that the U.S. budget deficit picture has worsened so much largely because tax revenues have fallen off so sharply that the government is likely to reach a crisis point much sooner than under past forecasts."
http://finance.yahoo.com/news/Bipartisan-budget-group-says-apf-3303488614.html
"The 2009 Social Security and Medicare Trustees Reports show the combined unfunded liability of these two programs has reached nearly $107 trillion in today's dollars! That is about seven times the size of the U.S. economy and 10 times the size of the outstanding national debt."
http://www.ncpa.org/pub/ba662
There are a lot of negative things going on economically in the U.S. One of them being the fact that one in four homeowners are underwater and home values and retirement account values are two of the most important determining factors of consumers purchasing behavior. We are in an economy where over 70% of GDP is consumer spending. The retirement accounts are up for now but valuations are about fairly priced at best on US stocks because right now they are discounting an economic recover probably more along the lines of 2001 than 1931 after our Great Depression or 1990s Japan. These people think the 2000s weren't a continuation of the bubble!!? Hello! Greenspan and the housing bubble. The 1990s and 2000s can be corrected by a 2 year recession we have just had?!! I might even argue that the bubble actually started in the 1980s and even earlier with the consumer leveraging up on credit cards and a long standing government induced housing price bubble. The housing based economy is set up on a phony premise of everlasting cheap gasoline and fuel prices, endless supply of credit and perpetually rising home prices.
International Turmoil
There is a real threat of sovereign debt defaults like what we saw with Iceland just recently. Greece, Spain, Dubai and Japan are at risk of default and possibly eventually other major countries. The stock market hasn't realized or priced in additional defaults. That could start a domino effect. I was reading about the Asian currency crisis in the late 1990s. It all began in the small country of Thailand (then seemingly insignificant) and spread to South Korea, Japan, Brazil and Russia. Are Iceland and Dubai like a Thailand was then?
The strange thing so far I'm reading is there was lack of banking supervision prior because they were actually exploited by government giving public loans disguised as private and major asset bubbles were busting around this same time as well. A lot of these Asian countries had less than 30% of GDP comprised of exports which in my view gives some clout to the Austrian economists on what is possible in none Latin American economies and even ones as big as the U.S. There have been a lot of currency crisis in Latin America because of the cyclical nature of their economies among other reasons. In my view what happened in Asia in the 90s and in Iceland just recently shows that currency crisis are possible in a large country like the United States. It's hard to envision a scenario for the US for rates on our bonds not to go up and assuming the economy must continually be jump started and defense spending stays the same there could be serious trouble for the dollar and a following of the rest of the Western nations.
What good is deficit spending and artificial GDP growth like in China where there are empty cities if you still have to pay the piper for decades of juiced excess like here in the U.S.?
When it comes to the possibility of a continuing rise in stock valuations and a lasting improvement "absent stimulus" in the U.S. economy and even China's the burden of proof is on you bulls.
Some Links to Think About
"While deficit hawks have long warned that policymakers need to curb deficits and debt, the new wrinkle is that the U.S. budget deficit picture has worsened so much largely because tax revenues have fallen off so sharply that the government is likely to reach a crisis point much sooner than under past forecasts."
http://finance.yahoo.com/news/Bipartisan-budget-group-says-apf-3303488614.html
"The 2009 Social Security and Medicare Trustees Reports show the combined unfunded liability of these two programs has reached nearly $107 trillion in today's dollars! That is about seven times the size of the U.S. economy and 10 times the size of the outstanding national debt."
http://www.ncpa.org/pub/ba662
What Happened To The Green Shoots?
Delusions of Grandeur
Is it actually possible that the green shoots were merely the result of short-term stimulus and inventory shifts by companies? Is it possible that the trajectory of GDP could go sideways or fall for years or even a decade or two after a serious unprecedented structural shift in the economy?
Bernanke said today many times that the current budget deficit is unsustainable. He also said that deficits of over 3% of GDP are unsustainable over time. These two facts would be troubling but lawmakers and the FED believe they are temporary because solid economic growth will shortly return.
All scenarios revolve around the premise of a solid recovery returning. It has to because we are facing a falling tax base and baby boomers retiring. I'm afraid a stagnant economy like Japan in the 1990s will not even be considered by lawmakers when it comes to spending programs and balancing the budget. But I guess why would it? The U.S. has produced one of the greatest economic track records ever in history. Even more rare and impressive about it is the history of economics on the whole when it comes to other countries is often a very dismal one.
Whether or not things get under control shorting treasury bonds and the dollar should be a good long-term macro play. Of course it is difficult here with the potential for at any time a panic rush to dollars but if there continues to be a flock that creates a mini bubble shorting the dollar seems like a no brainer because at the least it will fall from debasing.
Some articles and videos I have come across recently
Deathbed of Keynesian Economics Will Be in U.K.
Jim Rogers: The Dollar is Doomed
February 19, 2010
Net Tangible Asset Value Stock Plays,Oil & Retail
I crunched oil and natural gas stock Delta Petroleum's DPTR net tangible asset value to be around $515,000 vs a $368,000 market cap.
I'm pretty bullish on commodities and oil with Bernanke being re-confirmed. He's going to drop dollar bills from helicopters or even outer space if he has to to get the economy going(or just to hold its ground). Commodities have done very well the past 10 years because of inflation whether one wants to believe CPI or not. Gold has outperformed the major US indices since 2000.
Retail stock Borders BGP is just over net tangible asset value but has been beaten down a lot lately. I'd especially like to see some commitment by institutions with upgrades because it very well could continue to drop.
full disclosure: no position in BGP or DPTR at time of writing
I'm pretty bullish on commodities and oil with Bernanke being re-confirmed. He's going to drop dollar bills from helicopters or even outer space if he has to to get the economy going(or just to hold its ground). Commodities have done very well the past 10 years because of inflation whether one wants to believe CPI or not. Gold has outperformed the major US indices since 2000.
Retail stock Borders BGP is just over net tangible asset value but has been beaten down a lot lately. I'd especially like to see some commitment by institutions with upgrades because it very well could continue to drop.
full disclosure: no position in BGP or DPTR at time of writing
January 12, 2010
Former Net-Net Stock MSON Soaring
I just noticed former ncav MSON in a technical scan that I initially noticed at the beginning of 2009 is in play on new distribution news. Right now it is a little over net current asset value and I don't know their story here other than there was huge volume recently on this news. As the stock showed in April it can run straight up a ton fast.
I think it might consolidate right around $3.00 around this black resistance at 3.00. This news might give it the potential for a richer valuation of course and more follow through. It's pretty thin and usually doesn't trade that many shares a day.
click for larger image
full disclosure:no position
I think it might consolidate right around $3.00 around this black resistance at 3.00. This news might give it the potential for a richer valuation of course and more follow through. It's pretty thin and usually doesn't trade that many shares a day.
click for larger image
full disclosure:no position
January 11, 2010
Investimonials.com Financial Reviews
My site is up for review on Investimonials now. Investimonials is a new site for honest user reviews on anything financial from books, brokers to blogs. There's not a lot of transparency in the finance niche and I think this site might have some promise for providing it to newbies.
If you want to take a minute review my blog here
I haven't been posting in this blog as much lately because I am posting my trading stuff on DynamiteStocks.com now. I'm still going to blog about fundamentals and macro stuff on Stock Pursuit like I have been recently. It just won't be every week and that often but rather when I feel like blogging on something like I did on the Buffett Burlington purchase. Google webmaster was showing that post got linked to from the Huffington Post and a Buffett focused blog.
Also, if the market has a serious correction(probably won't happen to soon) I'll throw up some of my net-net ideas here.
Upcoming Post
I'm thinking about a macro play on commodities. More specifically, a play on exporting commodities from the United States. I'm going to do a blog post here on that shortly and will lay out my thesis and brainstorm some of the ways to play it.
If you want to take a minute review my blog here
I haven't been posting in this blog as much lately because I am posting my trading stuff on DynamiteStocks.com now. I'm still going to blog about fundamentals and macro stuff on Stock Pursuit like I have been recently. It just won't be every week and that often but rather when I feel like blogging on something like I did on the Buffett Burlington purchase. Google webmaster was showing that post got linked to from the Huffington Post and a Buffett focused blog.
Also, if the market has a serious correction(probably won't happen to soon) I'll throw up some of my net-net ideas here.
Upcoming Post
I'm thinking about a macro play on commodities. More specifically, a play on exporting commodities from the United States. I'm going to do a blog post here on that shortly and will lay out my thesis and brainstorm some of the ways to play it.
November 27, 2009
Stock Market Crash Round Two?
At the bottom of this post I compare the chart of the 1929 crash and rebound to the 2008 crash and this rebound.
So, the US equities markets have rallied tremendously off the March lows as fear quickly turned to greed. I mean what else really justifies such an optimistic view of US economic and corporate performance going forward. Housing has been in a recession? depression since 2005. What has enabled the consumer to spend for the last 20 odd years? That's right rising home prices. But hey government is committed to softening the fallout. So we get flat growth probably instead of total chaos in housing and the economy.
For atleast 2 years people have been calling for a bottom in housing and real estate in the US. It hasn't come. Is it really any surprise when even today big banks are still dumping residential for fractions on the dollar? Acres of land in Charlotte that once sold for over $2 million dumped for $300,000? This bubble hasn't fully popped I don't think.
I live in Charlotte North Carolina and housing is as bad as ever if not even worse I think. This state like many other states are in bad financial condition. North Carolina is desperate for tax revenues. So desperate not that many months ago they were going to pass a bill to tax online transactions. The kind of affiliate revenue Amazon offers to webmasters who use Amazon links on their sites. I used to use Amazon affiliate links. Not anymore because Amazon ceased doing business in all of North Carolina even before they could get the tax in place.
I made a brief thesis that the market seemed out of whack with even best case recovery over the future.
This is not just another little recession. The economy is not going to blast to new heights any time soon. Forward valuations look more like a regular old recession is about to end I feel. The consumer is different now. The consumer is saving more now and deleveraging the last 15-20 years of insanity. This could take some time I believe.
The question I have been asking myself is just how long can the government spending and low rates continue to have a positive effect on the economy without bankrupting us in the long-term if it is not to late already. Could the FED and government stimulus actually work? They certainly had an effect in the past. But just how bad is the recession/depression? It's not easily overcome right?
Could I be wrong? Yeah. Is this a hard view to still hang on to after the market run? Yes and no. No, because I'm usually a skeptic and pretty cynical even for my age. These viewpoints be it fortunate or unfortunate turn out to be right a lot especially in the world of investments and economics.
On the other token questioning the soundness of this recovery? and historical stock market recovery has definitely made me hesitant to make some trades even though I had to dismiss the fundamentals to be long biased since around April or May. The technical picture was pretty sound especially after the attempts to correct failed and the market kept breaking to new highs. I'll be a perma-bull as soon as housing shows a clear bottom.
The question I have here now that the Dubai bubble is fully bursting is how safe is China and Asia's real estate sector? On valuation alone Chinese equities don't seem like a bubble to me atleast comparable to 2007. However, banks are a big, big part of the Shanghai Composite. This could be devastating if their banks are leveraged. Of course real-estate in China would have to collapse. I don't follow China that closely to know if there are bubble conditions in real-estate there. Maybe someone reading this could point me to a fairly reputable source if they know more on this. I think it would be hard, for me atleast to make a call on housing or real estate in China because it's harder for me to gauge a bubble vs equities and considering they actually do have a seemingly healthy economy and rapid population growth.
Indices are encountering some trend line resistance. If the next wave or healthy consolidation is to come it will possibly be very soon.
These might be two of the scariest charts right now. There is a very similar spike/pipe bottom that happened in the 1929 bottom and uncanny resemblance in the bounces. Even on the rebound percentages from bottom. That's 1929 on top and 2008-09 on bottom.
And notice the failed signal we had in June and July were the market rally looked like it was going to end but just continued upward.
Whether or not such a rapid decline will come so fast I think at the very least a short pull-back is in the works. This support trend line will have to be tested again. I wouldn't be surprised to see some window dressing by institutions as they try and lock in these yearly gains.
Not a good technical picture on the Russell 2000 small-cap index. This gap down from the Dubai news spooked the market or atleast gave good enough reason to sell. Such a gap at these levels does not look good for the time being.
I've been watching this bull-trap play out in financials since it happened. The possibility of it playing out fully and the financials breaking down is looking very high here now with this gap down and shooting star day.
full disclosure: no positions
So, the US equities markets have rallied tremendously off the March lows as fear quickly turned to greed. I mean what else really justifies such an optimistic view of US economic and corporate performance going forward. Housing has been in a recession? depression since 2005. What has enabled the consumer to spend for the last 20 odd years? That's right rising home prices. But hey government is committed to softening the fallout. So we get flat growth probably instead of total chaos in housing and the economy.
For atleast 2 years people have been calling for a bottom in housing and real estate in the US. It hasn't come. Is it really any surprise when even today big banks are still dumping residential for fractions on the dollar? Acres of land in Charlotte that once sold for over $2 million dumped for $300,000? This bubble hasn't fully popped I don't think.
I live in Charlotte North Carolina and housing is as bad as ever if not even worse I think. This state like many other states are in bad financial condition. North Carolina is desperate for tax revenues. So desperate not that many months ago they were going to pass a bill to tax online transactions. The kind of affiliate revenue Amazon offers to webmasters who use Amazon links on their sites. I used to use Amazon affiliate links. Not anymore because Amazon ceased doing business in all of North Carolina even before they could get the tax in place.
I made a brief thesis that the market seemed out of whack with even best case recovery over the future.
This is not just another little recession. The economy is not going to blast to new heights any time soon. Forward valuations look more like a regular old recession is about to end I feel. The consumer is different now. The consumer is saving more now and deleveraging the last 15-20 years of insanity. This could take some time I believe.
The question I have been asking myself is just how long can the government spending and low rates continue to have a positive effect on the economy without bankrupting us in the long-term if it is not to late already. Could the FED and government stimulus actually work? They certainly had an effect in the past. But just how bad is the recession/depression? It's not easily overcome right?
Could I be wrong? Yeah. Is this a hard view to still hang on to after the market run? Yes and no. No, because I'm usually a skeptic and pretty cynical even for my age. These viewpoints be it fortunate or unfortunate turn out to be right a lot especially in the world of investments and economics.
On the other token questioning the soundness of this recovery? and historical stock market recovery has definitely made me hesitant to make some trades even though I had to dismiss the fundamentals to be long biased since around April or May. The technical picture was pretty sound especially after the attempts to correct failed and the market kept breaking to new highs. I'll be a perma-bull as soon as housing shows a clear bottom.
The question I have here now that the Dubai bubble is fully bursting is how safe is China and Asia's real estate sector? On valuation alone Chinese equities don't seem like a bubble to me atleast comparable to 2007. However, banks are a big, big part of the Shanghai Composite. This could be devastating if their banks are leveraged. Of course real-estate in China would have to collapse. I don't follow China that closely to know if there are bubble conditions in real-estate there. Maybe someone reading this could point me to a fairly reputable source if they know more on this. I think it would be hard, for me atleast to make a call on housing or real estate in China because it's harder for me to gauge a bubble vs equities and considering they actually do have a seemingly healthy economy and rapid population growth.
Indices are encountering some trend line resistance. If the next wave or healthy consolidation is to come it will possibly be very soon.
These might be two of the scariest charts right now. There is a very similar spike/pipe bottom that happened in the 1929 bottom and uncanny resemblance in the bounces. Even on the rebound percentages from bottom. That's 1929 on top and 2008-09 on bottom.
And notice the failed signal we had in June and July were the market rally looked like it was going to end but just continued upward.
Whether or not such a rapid decline will come so fast I think at the very least a short pull-back is in the works. This support trend line will have to be tested again. I wouldn't be surprised to see some window dressing by institutions as they try and lock in these yearly gains.
Not a good technical picture on the Russell 2000 small-cap index. This gap down from the Dubai news spooked the market or atleast gave good enough reason to sell. Such a gap at these levels does not look good for the time being.
I've been watching this bull-trap play out in financials since it happened. The possibility of it playing out fully and the financials breaking down is looking very high here now with this gap down and shooting star day.
full disclosure: no positions
November 22, 2009
Net-Net Update
I was looking at Boss Holdings BSHI.ob a couple different times over the past year and a half or so. The stock continued to trade very thin and decline. I just found out that back in late August they announced they were going to go private and cash out holders of less than 100 shares at $7.65. I think this may already be finished. I don't know.
All my posts on BSHI
full disclosure:no position
All my posts on BSHI
full disclosure:no position
November 16, 2009
Warren Buffett's Big Bet With Burlington Northern
So, I imagine everyone knows Warren Buffett bought Burlington Northern recently and the media has spun it as wholly positive and a bullish bet on the economy of the United States. I'm going to look at this in a different angle and in a more skeptical and realistic fashion. Buffett says,"I basically believe this country will prosper and you’ll have more people moving more goods 10 and 20 and 30 years from now, and the rails should benefit. It’s a bet on the country, basically."
Let's start with the good things. I think it was definitely a good buy for the long-term. A classic Buffett moat company. A safe, smart move. But I think this could be a clue to the macro as well because Buffett is very keen on the macro economy. I'm not sure that I buy the argument that this is a big bet on the economy of the United States though. Right now the railroad gets only about 30% of its revenues from shipping consumer products. "Its next most important segment was coal, followed by industrial products like farm equipment, lumber and chemicals. It also hauls corn, wheat and soybeans, much of it exported to China."1
The media spin on it however is it's a bullish bet on the economy. I think it is a bet on future trends. None of them on a stronger United States economy. It just looks more like a bet on commodities, the fact that the dollar will be very weak, that people will be alive and eating in the future, the fact that oil prices will sky rocket over coming decades and that Canada will probably be stronger than the United States economically.
What is the way to ship if oil exceeds $140 a barrel? It sure isn't trucks or planes. The fact that rails take away from them doesn't seem particularly good, just that they will. This may be a bit of a stretch but buying a railroad seems more like a doomsday economic hedge than a hope that the economy will be strong. Shipping coal and necessities is pretty much a given. And you can't ignore a healthy demand from Canada next door.
Where's the leveraged bet on the consumer? Are you telling me from the extremely low valuations from the biggest stock market crash of his career and the worst economic crisis since the early 1900s that Buffett couldn't find a company any more correlated to the consumer? This is supposed to be an "all-in" bet right? Remember the consumer is the U.S. economy with consumer spending comprising over 70% of GDP. If the consumer does well so will the economy. And this railroad is the best deal he could find to "bet" on the economy? Give me a break media.
A bet on the economy is buying a company related to the housing industry or a service company.
I heard Buffett say he thinks this country will prosper in the future. Prosper isn't that strong a word though really. Buffett is an extremely candid guy to say the least. Why wouldn't he have said do extremely well or better than ever. He was saying this in the heart of the panic of 2008 and 2009 but I think one has to be skeptical of the context of those statements possibly because he is one of the most important statesman.
A low dollar and high fuel prices makes railroads an alternative for shipping to Canada and across the country. In that case it is a strong bet on Canada's economic future. I think that Canada will possibly be doing better than the US because they have the oil, healthier banks and financial institutions and more stable currency.
1. Yahoo! news
another source
http://www.usatoday.com/money/industries/2009-11-03-berkshire-bnsf-buffett_N.htm
full disclosure:no position in BRK-A,BRK-B,BNI
November 12, 2009
Small-Cap Stock MSN
Emerson Radio MSN is still doing very well and just reported second quarter results which were pretty good from looking over the press release. Quarterly revenue wasn't that great but overall on the year they are doing well. The stock only has a market cap of about $50 million and being a small-cap this size there probably isn't a line of institutions ready to pile on. I think it could continue to trade higher slowly though as it has all year.
In the next couple days though I think it could pull-back toward the upper bollinger band like it did after the last huge pop.
full disclosure:no position
In the next couple days though I think it could pull-back toward the upper bollinger band like it did after the last huge pop.
full disclosure:no position
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