Session of 03/02/2007

[David Randolph]

David, I am interested in your take on Real Estate. Here on West Coast everyone says its a bubble and prices will come down. But then it reminds me when everyone is on one side, markets usually proves them wrong. Quite frustrating if you want to buy your first house

Hi stocky, nice to see you

You know I don't live in the US, so I have a limited knowledge of the real estate market in your country.

But from what I read and the experience here in Portugal, where there was also a real estate bubble that burst, as the economy entered a deep depression, house prices went down, but not by a lot, say 3% a year since 2004. What happened was that the market dried up, that is, the volume of transactions stalled.

The low quality houses went down the most. Some very high quality places like Cascais for example saw house prices continue to rise. I think the housing market analysis must be very local and case specific. If you buy quality for a reasonable price there will always be demand. You should buy something more unique, and not a "commodity", if you know what I mean.

I guess you should go ahead and buy the house, and not worry too much about macroeconomic developments. A house is not an investment, it is the place you live in, and you need one

[stocky]

Thanks David, it helped in giving me some direction.

[ScottishTrader]

Hi David,

I meant to ask you about your view on OMNI.  It broke above key 9.20 resistance at the beginning of this week, but obviously this week's actions have held it in check.  Still, it has been much more resilient than most stocks.  Valuation-wise, it appears attractive and is growning fast.

Cheers,

ST

[David Randolph]

Hi david, any thoughts about ANGN.

I think I should have held it longer when I bought it at $4 or so about a year and a half ago

Let's see what we have now ... the long term trend is obviously bullish and the 50 days simple moving average has been supporting the stock. The 200 days SMA is still coming up just at $9.24, so there's potential for a sharp correction, as multiples contract, as I believe it will happen over the general market.

- Market cap is $61 M. The Company, through its Medical Graphics Corporation subsidiary, designs non-invasive cardiorespiratory diagnostic systems. Also sells health and fitness products under the New Leaf brand to consumers through health & fitness clubs, weight loss centers.
- No dilution
- Balance sheet is strong
- Revenues are growing nicely and were $33.65 M in 2006
- 2006 was the first profitable year for the company, and diluted EPS was $0.34, so the trailing earnings multiple is 46.

My take is ANGN is a nice company, but the stock is overvalued. If the general market multiple contracts the stock could have a correction to the ascending 200 days SMA, at $9.24, where I would consider it a nice long term buy.

Good luck

[KCScott]

David,

Glad to see you've joined the Bear Camp - I went cash in Dec and missed the froth at the top, but the market is now at that level.

As for good Short candidates, you may want to look at is TWM which is an Inverse fund of the Russell 2000 and SDD which is an Inverse Fund of Small Cap 600 compaines. These are both similar products to QID ETF

As mentioned previously these ETFs don't require a margin account and with the coming market correction or crash I believe the small cap companies will be  the first ones to go in the selling furor.

Best Of Luck - Also Check your PMs - I am sending you links for some like minded boards you can take a look at when you have some spare time.

Best Regards,

KC Scott

[David Randolph]

Hi David,

I meant to ask you about your view on OMNI.  It broke above key 9.20 resistance at the beginning of this week, but obviously this week's actions have held it in check.  Still, it has been much more resilient than most stocks.  Valuation-wise, it appears attractive and is growning fast.

Cheers,

ST

Cool ScottishTrader, I'm curious about OMNI too.

Technically the stock is mixed, as the 50 days moving average just crossed below the 200 days, and OMNI is trading within what seems to be a symmetrical triangle.

Fundamentally:

- Market cap is $140 M. An integrated oilfield service company providing a range of onshore seismic drilling, operational support, permitting, and survey services, dock-side and offshore hazardous and non-hazardous oilfield waste management and environmental cleaning services.
- Hmmm, there's convertible stuff there, as the Diluted Weighted Average Shares has been rising.
- Balance sheet looks weak
- Nice revenue growth over the years, but declined sequentially in Q3 2006.
- EPS for the last reported 4 quarters was $0.64, so the trailing earnings multiple is just 14.3

Well, since I'm bearish on oil I couldn't be bullish on this company Scottish Trader. The company needs oil prices to stay high, or revenues will shrink.

I also don't like the increase in the number of shares outstanding or the weak balance sheet. But probably I'm missing something, maybe some news or something, if you want please post more information, thanks

[David Randolph]

David,

Glad to see you've joined the Bear Camp - I went cash in Dec and missed the froth at the top, but the market is now at that level.

As for good Short candidates, you may want to look at is TWM which is an Inverse fund of the Russell 2000 and SDD which is an Inverse Fund of Small Cap 600 compaines. These are both similar products to QID ETF

As mentioned previously these ETFs don't require a margin account and with the coming market correction or crash I believe the small cap companies will be  the first ones to go in the selling furor.

Best Of Luck - Also Check your PMs - I am sending you links for some like minded boards you can take a look at when you have some spare time.

Best Regards,

KC Scott

Thanks KC Scott, nice to see you

You're providing very useful information, as I also think small caps in general will go down more than big caps. Small caps have been in a prolonged bull market of their own, and they're more expensive than large caps (although large caps are quite expensive too, if we take out the energy and the financial groups, which will suffer if there's an economic recession).

[dhiraj19]

Hi David,

As per yesterday's request:

Can you have a look at CGR and also NKTR?

Thanks,
Dhiraj

[David Randolph]

GOOG looks like a good short, check the double top breakdown on the chart. If it breaks that long term ascending support level as I think it will, watch for it going down $50 in a very brief period of time.

[tokyopua]

Damn, my friend from the semi industry suggested shorting CMOS a few weeks ago, and I lost track of it.  Down 23% today!

[basonista]

David, what do you think of ARM as a short here.  It is coming off recent highs and is part of the auto industry supplying parts worldwide.  I would think that the auto industry would get hit pretty hard in an economic downturn so ARM should follow suit.  Thanks!

[nica33]

Hi Dave!  Could you check EMKR please?  Thanks.

[David Randolph]

Damn, my friend from the semi industry suggested shorting CMOS a few weeks ago, and I lost track of it.  Down 23% today!

That's what I call a momentum short

There was this news out:

• Credence Issues 2Q Outlook Below Street
AP (Thu 5:58pm)

So you think your friend had inside information? Once a guy in Portugal, who has been an investor for over 30 years (he was a money manager in Australia for about 20 years), called me saying to short Altera. The stock went down more than 20% two days later due to some news out ... he knew, because a friend of a friend warned him.

[tokyopua]

Damn, my friend from the semi industry suggested shorting CMOS a few weeks ago, and I lost track of it.  Down 23% today!

That's what I call a momentum short

There was this news out:

• Credence Issues 2Q Outlook Below Street
AP (Thu 5:58pm)

So you think your friend had inside information? Once a guy in Portugal, who has been an investor for over 30 years (he was a money manager in Australia for about 20 years), called me saying to short Altera. The stock went down more than 20% two days later due to some news out ... he knew, because a friend of a friend warned him.

In this case I just think he knows the industry really really well!  He also had a short on AMD that he coved for a nice profit recently.  I used to work with him, we were at the same company but he has many more years than me in the semi industry.  He was short CMOS for about a month already, but was always nervous about it lol. 

I think his nervousness was part of why I didnt take it as seriously.  He didnt tell me "short CMOS" in any aggressive way, just told me that he was short himself.  Well, hindsight is 20/20, and I am happy for him cause of course he got clocked in many longs Tuesday and is staying long in those, so he needs this nice profit from CMOS...

[jorgegr]

DAVID:

I see Forestry Index   $DJUSFS  almost invulnerable these days and
two of the components like CSAR and WY showing no impact  on the
latest correction.  could you take a look at them please.
You are doing a fine job keep cool.

By the way applaud for Scott.