3SOF

Good morning

I have to meet Ramsburg in his office today so we can discuss strategic options of 3 Stocks, so I won't be here throughout the morning, but feel free to post about anything you want.

Yesterday there were many interesting posts that were left unanswered because it was the strongest day ever on this message board, with 134 messages. If you feel your post should get more attention, please just copy paste it until I get to comment it (I remember there were great posts about individual stocks that I don't want to lose sight).

As for the market, my bear case is getting weaker and weaker. Remember when I wrote here that when there's a move, in one individual stock or the general market for that matter, people start making calculus and evaluating the situation?

Ok, my two main concerns were unwarranted. It's like I bought a stock and after a more in depth study I found out preferred shares, the non recurrence of revenues, something hidden in its 10-Q ... I believe the same happened here.

China is growing so much for so long, that there should have been a lot of economic excesses. But no, the Chinese are still afraid of the future and save a lot, since private consumption still accounts for just 35% of China's GDP:

«Most believe the answer lies with the Chinese consumer.  The numbers are compelling: Private consumption in the world's most populous nation currently accounts for only about 35% of its GDP – half the elevated share in the US, well below portions elsewhere in the developing world, and quite possibly the lowest consumption share of any major economy in modern history.  There's obviously nothing but upside to the case for the Chinese consumer.  It is widely billed as one of the great hopes and opportunities of global rebalancing – capable of picking up the baton of support from China's overheated investment sector and from an equally over-extended export sector.»

As for the housing meltdown in the US, it is starting to be priced in, since housing sector stocks trade at very low multiples (of course, some companies will file for bankruptcy) and big banks are trading at 10 times earnings.

This doesn't mean the US consumer won't kneel down and there won't be a cyclical recession, I think there's a good chance of that happening. But businesses have the strongest balance sheets ever, and business spending and exports could pick up and rebalance the US economy.

It also doesn't mean the correction won't go on for some more time, and we won't make new lows in the market. But the bear case isn't as compelling as I initially thought, just that.

What does all this have to do with the 3 Stocks on Fire Portfolio? Very little to nothing.

I'll continue holding JADE and wishing those two stocks, GOOG and FMCN, pull back, so that those put warrants go up. The two stocks have medium term valid reasons to go down, because they're overvalued, but who knows about the next week? Anyway, at this point the reward/risk ratio makes me think I should maintain those positions a little longer (fortunately they're small size positions).

I wonder if I shouldn't just go back to the very first strategy of this portfolio. I've changed what was proving to be a winning strategy. Perhaps I'll correct course  and go back to the origins again in the near future.

I have to leave now, have a nice day and post as you please

Quote from: David Randolph on March 09, 2007, 09:34:22 AM

I wonder if I shouldn't just go back to the very first strategy of this portfolio. I've changed what was proving to be a winning strategy. Perhaps I'll correct course  and go back to the origins again in the near future.

I vote to do that .. and also watch for emerging market stocks, from countries like Brazil and others in South America, in addition to China.    When the market pulls back sharply, we should be looking for the stocks that did not pull back with it ... relative strength .. as these are the most likely to stay strong.  Regardless of what the market does overall, there will be new companies & technologies developing that will make 'some' people very rich.  Let's be among them

nullzero, I wonder if Cramer isn't lurking on this board .. after your last post yesterday, this morning he was touting the pawn shop stocks, mentioned the same one you mentioned & also CHE and AEA 

Or .. are YOU Cramer?? 

David,

Yesterday you mentioning researching SILC a little more (potentially viewing it as a 10-bagger) and maybe possibly adding it to the 3 stocks on fire portfolio and posting your findings (will that psoted later today?).  (If a stock has potential for a 10 bagger - I see it as no brainer to include in the prtfolio.). Please consider the use of options in  the future for the portfolio. The recent puts turned out to be a big mistake, but you shouldn't rule out the use of options, because of one mistake. As I mentioned in an earlier post, we just need to set up some option trading rules in advance.

Thanks

Quote from: David Randolph on March 09, 2007, 09:34:22 AM
Good morning

I have to meet Ramsburg in his office today so we can discuss strategic options of 3 Stocks, so I won't be here throughout the morning, but feel free to post about anything you want.

Yesterday there were many interesting posts that were left unanswered because it was the strongest day ever on this message board, with 134 messages. If you feel your post should get more attention, please just copy paste it until I get to comment it (I remember there were great posts about individual stocks that I don't want to lose sight).

As for the market, my bear case is getting weaker and weaker. Remember when I wrote here that when there's a move, in one individual stock or the general market for that matter, people start making calculus and evaluating the situation?

Ok, my two main concerns were unwarranted. It's like I bought a stock and after a more in depth study I found out preferred shares, the non recurrence of revenues, something hidden in its 10-Q ... I believe the same happened here.

China is growing so much for so long, that there should have been a lot of economic excesses. But no, the Chinese are still afraid of the future and save a lot, since private consumption still accounts for just 35% of China's GDP:

«Most believe the answer lies with the Chinese consumer.  The numbers are compelling: Private consumption in the world's most populous nation currently accounts for only about 35% of its GDP – half the elevated share in the US, well below portions elsewhere in the developing world, and quite possibly the lowest consumption share of any major economy in modern history.  There's obviously nothing but upside to the case for the Chinese consumer.  It is widely billed as one of the great hopes and opportunities of global rebalancing – capable of picking up the baton of support from China's overheated investment sector and from an equally over-extended export sector.»

As for the housing meltdown in the US, it is starting to be priced in, since housing sector stocks trade at very low multiples (of course, some companies will file for bankruptcy) and big banks are trading at 10 times earnings.

This doesn't mean the US consumer won't kneel down and there won't be a cyclical recession, I think there's a good chance of that happening. But businesses have the strongest balance sheets ever, and business spending and exports could pick up and rebalance the US economy.

It also doesn't mean the correction won't go on for some more time, and we won't make new lows in the market. But the bear case isn't as compelling as I initially thought, just that.

What does all this have to do with the 3 Stocks on Fire Portfolio? Very little to nothing.

I'll continue holding JADE and wishing those two stocks, GOOG and FMCN, pull back, so that those put warrants go up. The two stocks have medium term valid reasons to go down, because they're overvalued, but who knows about the next week? Anyway, at this point the reward/risk ratio makes me think I should maintain those positions a little longer (fortunately they're small size positions).

I wonder if I shouldn't just go back to the very first strategy of this portfolio. I've changed what was proving to be a winning strategy. Perhaps I'll correct course  and go back to the origins again in the near future.

I have to leave now, have a nice day and post as you please

Uh, I think you are still right on being bearish.  Though maybe it will only be a correction instead of a full blown bear market. 

But today isnt as strong as it needed to be to fix the damage.  I am all short and my portfolio is marginally green now .  This open is being faded, could even end red today.  Could be sell the news in reverse.

The technicals tell us there was a problem.  Maybe none of us know for sure what that problem was, but its there, somewhere.  Maybe it wasnt US jobs. 

David, in the past you didnt trust your instincts to hold stocks long for long enough and you learned from that, it would appear to me that recent events can be similar for you, but in reverse. 

We stilll have a ways to go before we are out of the woods on this one...

David, a suggestion for the portfoliio: MAMA   It's the Canadian Google ( fun to be around, diffident and all the queries have to end in eh?)  I bought in at around 5.40 this a.m.

David, I think you should take a look at SIGA.  I know it's a biotech stock, but I think if you are really interested in a 10-bagger, you need to consider some biotech stocks.  (After all, look where you'd be today if you bought Celgene 4 years ago.)  SIGA is a small company which I think will go much higher this year, probably starting this month.  They have developed a cure to smallpox that has proven itself effective and safe - and they have a pipeline of half a dozen other promising drugs.  The company is in a transition now as they just brought a new CEO on board (though no stranger to the company - and a man of much prestige) to bring this product to commercialization.  It was announced in January and he started March 1.  News is expected any day now on a lawsuit to dismiss claims to the drug by a company they almost merged with last year.  The company plans a conference call to discuss where things are at in 2 weeks or so.  (That piece of information comes from a posting on yahoo from someone who called the company yesterday to find out what's happening.)  I think other news is also imminent.  As far as I can tell, there has been no dilution for at least a year.  They seem to derive their funding from the government.

Yesterday, the stock rose suddenly 14% on large volume near the end of the day.  This is not the first time such a thing has happened in the past couple of months.  Last week during the market downturn, this stock did not go down much, unlike many other small biotechs.  It stayed in a narrow channel between the 20 and 50 day ma.  Monday it did breakdown, but yesterday returned it to levels higher even then before the latest market breakdown.

Quote from: Jim897 on March 09, 2007, 10:11:55 AM
David, I think you should take a look at SIGA.  I know it's a biotech stock, but I think if you are really interested in a 10-bagger, you need to consider some biotech stocks.  (After all, look where you'd be today if you bought Celgene 4 years ago.)  SIGA is a small company which I think will go much higher this year, probably starting this month.  They have developed a cure to smallpox that has proven itself effective and safe - and they have a pipeline of half a dozen other promising drugs.  The company is in a transition now as they just brought a new CEO on board (though no stranger to the company - and a man of much prestige) to bring this product to commercialization.  It was announced in January and he started March 1.  News is expected any day now on a lawsuit to dismiss claims to the drug by a company they almost merged with last year.  The company plans a conference call to discuss where things are at in 2 weeks or so.  (That piece of information comes from a posting on yahoo from someone who called the company yesterday to find out what's happening.)  I think other news is also imminent.  As far as I can tell, there has been no dilution for at least a year.  They seem to derive their funding from the government.

Yesterday, the stock rose suddenly 14% on large volume near the end of the day.  This is not the first time such a thing has happened in the past couple of months.  Last week during the market downturn, this stock did not go down much, unlike many other small biotechs.  It stayed in a narrow channel between the 20 and 50 day ma.  Monday it did breakdown, but yesterday returned it to levels higher even then before the latest market breakdown.

hi jim, have you tried the search functionality from 3SoF?
there is a SIGA analysis posted already 
cheers
O.

Hi Tokyopua,

I think it's just too early too decide the bullish vs bearish case. I still think it's wise to take a "market neutral" approach for now, and continue looking for both good long and short prospects, and be ready for a more decisive move.
Like you, I think we are still in a corrective mode for now until proven otherwise and I don't think the big guys are buying.

I am really hoping that there is much more correction in store, it would be much more healthy  than the measly 4% to 5% we've had thus far.

Quote from: TraderStar on March 09, 2007, 09:46:15 AM
nullzero, I wonder if Cramer isn't lurking on this board .. after your last post yesterday, this morning he was touting the pawn shop stocks, mentioned the same one you mentioned & also CHE and AEA 

Or .. are YOU Cramer?? 

I guess I kind of think a little like cramer... I go with trends I see around me and have a good sense of how things will play out by looking at the real world.

Quote from: BigSully1 on March 09, 2007, 10:29:26 AM
Hi Tokyopua,

I think it's just too early too decide the bullish vs bearish case. I still think it's wise to take a "market neutral" approach for now, and continue looking for both good long and short prospects, and be ready for a more decisive move.
Like you, I think we are still in a corrective mode for now until proven otherwise and I don't think the big guys are buying.

I am really hoping that there is much more correction in store, it would be much more healthy  than the measly 4% to 5% we've had thus far.

I am not hardcore bearish to the extent that I think the longer term bull market is necessarily done, but while we are in a confirmed correction, I am a bear for that time period.  Per Investors Business Daily correction theory, we are in a confirmed correction with a rally attempt.  Today is the 4th day of the rally attempt, and as such is the first day that the correction can be turned into a confirmed rally.  IMO today was the big hope for that, but you need to see the indices up about 1.5% on higher volume than yesterday and that seems unlikely from where I am sitting.

However, going forward all we need is the major indices to show .2% or greater loss in stronger volume than the day before and the rally count goes back to zero.

As for getting long picks, I dont doubt there might be some out there, and I will buy those if they seem really compelling!  But I have stopped scanning for those personally till we are out of the correction officially.

Quote from: David Randolph on March 09, 2007, 09:34:22 AM
Good morning

Yesterday there were many interesting posts that were left unanswered because it was the strongest day ever on this message board, with 134 messages. If you feel your post should get more attention, please just copy paste it until I get to comment it (I remember there were great posts about individual stocks that I don't want to lose sight).

David, I know you are very busy, but since you you asked, I will repost my request to you from yesterday. Thanks again.

David, I've been meaning to ask you about a microcap co. I am very much interested in and have been watching for some time. I know the chart looks bad now (I am more of a fundamental value hunter anyway) but I would REALLY appreciate and value your fundamental analysis and opinion on it.  THNX in advance.

AMK

American Technical Ceramics Corp. engages in the design, development, manufacture, and sale of radio frequency/microwave/millimeter-wave ceramic capacitors, thin film products, and other passive components worldwide. It offers multilayer capacitors, single layer ceramic capacitors, and passive resistive products, as well as provides resistors, terminations, attenuators, and other customized products. The company?s products are primarily used in ultra-high frequency and microwave applications, including wireless electronics, medical electronics, semiconductor equipment, satellite equipment, and fiber optics. It sells its products primarily to the manufacturers of microwave, high frequency, and fiber optic systems, including original equipment manufacturers, and electronics manufacturing services companies and suppliers. American Technical Ceramics was founded in 1966. It was formerly known as Phase Industries, Inc. and changed its name to American Technical Ceramics Corp. in 1984. The company is headquartered in Huntington Station, New York.

The company appears to be nicely diversified within their industry. I'm going to take the lazy way out and copy a synopsis of the situation from a recent yahoo poster;

>>Something I posted on MFCaps  (Not rated)       7-Mar-07 03:32 pm     American Technical Ceramics Corp is a thinly traded (57000 average volume for 3 months) small cap (currently 113M) company. The CEO holds over 50% of the company and insider ownership is around 55%. Though there have been a few insider transactions they have been minimal even during a 50% stock price increase (.4%). The company has established sales channels in the US, Europe and Asia, with wholly owned subsidiaries in Sweden and China, and offices in Germany and Russia. They consider their products "The Engineer's Choice", I have not read any reviews on their product to back this claim however.

It looks to me like the price of the stock had a quick run up that was much to large for the news (in December they announced that they would be moving a portion of their operations offshore to Costa Rica to reduce production costs.) On that news the stock had a 50% which was defiantly too high.

At the beginning of February the company released their 2nd quarter results, operations ended December 31st 2006. In this report they announced a slowdown in revenue growth, and a decrease in second quarter earnings compared to quarter 2, 2005. As far as I could tell this slow down was explained by 3 things.

1. Cost of severance packages (remember the news of moving operations to Costa Rica that caused the stock to shoot up in price)
2. There is a seasonality slowdown that extended further than expected, however the company saw an end to this in January and notes that they have had increased sales for that month. Forward looking statements include "The company expects that sales for the remainder of the fiscal year will be strong."
3. Lower gross margin realized due to a "less favorable product sales mix."

The result of this bad quarter resulted in a 1 day 28% loss in the stock price. The stock continued to loose an additional 15% over the next few weeks. After going up a bit, the stock lost 10% on march 5th. In all the stock is down close to 60% from the high seen when the company announced the move to off shore.

I feel the severance packages are a one time expense that should be overlooked as a whole. As the company saw an extended slowdown this year, I think this is something that may need to be factored in as an expectation for future years. However as the company has seen a strong demand and increase in sales for January to make up for the seasonality issue I consider it a minor factor. I am concerned with the lower gross margins, and hope that the move of some operations to offshore will help to overcome this.




When I saw the last price drop of 10% I felt that I needed to do more digging on the company, and I have decided to increase my position in AMK next week if the price holds below 13.00 (initial position was @13.93). Though I do not believe that another good earnings report would warrant putting the stock back into the $20.00 as some have stated, I do believe that this stock should be around the $16.00 level. However on a thinly traded stock like this you can get big spikes on news. In addition, the stock is currently trading at a 12.5 price to earnings verses an industry 19.4, if they can prove with a few good quarters that they warrant a P/E to match the industry by increasing earnings at the industry 20% growth, that would put the stock around $23 at the end of 2007. However I think that $23 is more than we will actually see.

Cheers,
stevie<<

Thanks la-onda.  I had no idea there was so much information about the stock here.  I guess I should do a search before I recommend anything.  I feel a bit foolish now.  I still think David should consider it for the 3stocksonfire portfolio.

The market turned around real quick this morning. I think we will see it the market lower towards the end of the day, with a lot of traders locking in their profits this week before the close and not wanting to hold their positions over the long weekend, (especially in GOOG, which had a nice run up this week)

The market is reacting poorly to good news. I think we headed for one more down day of +100 points within the next couple of days. If we finish today really weak. Down 50+. Monday could be the big drop day. 100+ IMHO

Quote from: BigSully1 on March 09, 2007, 10:29:26 AM
Hi Tokyopua,

I think it's just too early too decide the bullish vs bearish case. I still think it's wise to take a "market neutral" approach for now, and continue looking for both good long and short prospects, and be ready for a more decisive move.
Like you, I think we are still in a corrective mode for now until proven otherwise and I don't think the big guys are buying.

I am really hoping that there is much more correction in store, it would be much more healthy  than the measly 4% to 5% we've had thus far.

I may be to early on my call on a bear market who knows this may just be just a short correction and we may run into early summer making new highs. Just like my orignal guess of the implosion of subprimes I shorted some NEW back in late summer of last year was early with my call but didnt hold through. I would say by holiday season of this year we should be seeing the effects greatly. Consumers are definately tapped out I know so by all the people I know in debt upto their ears. Its a matter of when its going to play out. Im all in for playing short term long plays but I dont want to be holding the bag when its appearant that the U.S. economy is in total slow down mode and the global economy will get hit just as hard.