Session of 03/06/2007

[David Randolph]

Good morning

Some guys that talk at CNBC are certainly funny. I don't know why they put three different people talking when they all think alike.

The market is opening sharply higher, let's see how the rest of the day unfolds.

I'm interested in studying some more stocks today, that Stocks Covered List must continue to grow, in bull or bear markets.

Have a nice day!

[rudynostalgia]

David, could you take a look at SVNT. It's moving up today. I've been in and out of it several times and made a bit of $ each trip.

[eggman11]

David,

Do you still think GOPOL is a good buy at this time? There is not a lot of time left, but I don't see this gap up lasting long.

Thanks

[David Randolph]

David, could you take a look at SVNT. It's moving up today. I've been in and out of it several times and made a bit of $ each trip.

Yes, in a minute Rudy. First I'll just go for a quick walk, I don't like pain, and I'm sure feeling it now as there's a lot of short covering action at the open.

Well, not me, it would take a lot more than one higher open on a short term oversold market to make me change my views.

Good luck on your trades

[nicknite20]

David,
I dont think this rally will last either..

Still looking to buy puts / short:

1. GS (Reduced risk appetites & lower revenue as result)
2. MA (strong run, potential lower consumer spending)

Thoughts?
Nick

[kpunarc]

"DRL"
"EPEX"
"GSX"
"BEXP"

GMET (314M)
EGY (333M)
TMY (379M - good short point?)

[rudynostalgia]

David: I guess that's a universal reaction. In the States, when a ball player suffers a minor injury, he's told to "Walk it off."  Of course, as a youth in Catholic school, I was told, when I scrapped a knee, to "offer it up," thus seeking remission from temporary agony in Purgatory.

[anvilring]

Just a thought really. I know sub-prime lenders are coming under fire for real these days... here's a site devoted to the problem:

http://www.americansforfairnessinlending.org/

And... an early casualty:   NEW  

rebounding today but where there's smoke there's fire.

[2bun]

GM David,could you look at edac.ob for me? At 52 week high,earnings soon and same sector as KRSL.

[ScottishTrader]

Hi David,

Have a look at IVAN pleasse - is on fire today!!!

[David Randolph]

David, could you take a look at SVNT. It's moving up today. I've been in and out of it several times and made a bit of $ each trip.

Technically the trend has turned bearish now, at least over the short term. The stock could correct to the 200 days moving average, coming up at $8.76. Over the very long term, I mean, watching a chart since 1980, the stock didn't go anywhere over these 27 years, just up and down a lot but staying basically the same.

Fundamentally:

- Market cap is $655 M. The Company was incorporated in Delaware in 1980, a pharmaceutical company engaged in developing, manufacturing and marketing pharmaceutical products that address unmet medical needs in both niche and broader markets.
- The share count has been increasing by about 1 million each year for the past six years or so, that's not much
- The balance sheet looks strong, with $199 M cash and a current ratio of 5.6.
- Revenues declined in 2004 and 2005. And declined again in Q3 2006, to $15 M from $24 M in Q2 2006. I see they probably sold a division or something in Q3 2006, didn't they?
- Diluted normalized EPS for the past 4 quarters was $0.31, so the trailing earnings multiple is about 41, which seems high. Analysts are expecting a ($0.72) per share loss in 2007, on a decline in revenues (probably because they sold a revenue stream).

I guess probably you have your motives to enjoy this stock Rudy, but I couldn't find them on this quick analysis.

Thanks

[David Randolph]

David,

Do you still think GOPOL is a good buy at this time? There is not a lot of time left, but I don't see this gap up lasting long.

Thanks

Hi eggman11, you know I never get more confident when losing, and I'm losing big on those puts at this moment (not so much when considering the Fire's comparatively small exposure).

I wouldn't throw more money at them, maybe buy a longer maturity derivative product, but always with a small percentage of your equity, because risk is very, very high.

Good luck

[Quasi]

GM David,

Nice to be able to go for a walk, not an option for me as its -22 C where I am this morning.

I don't see much strength in todays little gap rally (yet).  On the major index's the 30 min high has not been taken out, 1 + hr in still below the high and below the 30 min level.  Also still below the highs of yesterday and volume on the index's is moderate.

I do expect to see some rallies and sideways action and then more down over the next several weeks.

Of course this is JMHO and subject to change without notice.

Still holding QID's and some other puts and will reduce any longs left into these rallies.  Mostly in cash and looking for opportunities, although still have some O&G and metals (feeling some pain there).

Quasi

[David Randolph]

David,
I dont think this rally will last either..

Still looking to buy puts / short:

1. GS (Reduced risk appetites & lower revenue as result)
2. MA (strong run, potential lower consumer spending)

Thoughts?
Nick

Hi Nick, let's check out GS first. Technically the stock is bearish now, as it broke down below an ascending trendline with a runaway gap. It should at least touch the 200 days SMA on this down move, currently standing at $177. It may also go down to close a gap opened between $151.23 and $154.71.

Fundamentally:

- Market cap is $80 B. Global investment bank, securities and investment management firm that provides a wide range of services worldwide to a substantial and diversified client base that includes corporations, financial institutions, governments and high-net-worth individuals.
- The company bought back shares in 2005 and 2006.
- Balance sheet is weird, because they account for clients money as an asset and a liability. I see long term debt growing. The book value is $35.8 B.
- Revenues had a big jump in 2006 to an all time record level of $69.35 B. Analysts are expecting a more "normal" revenue number in fiscal 2007, in fact they expect a decline of 44% from 2006 levels.
- Normalized EPS was $19.69 in 2006, and analysts expect $19.25 for fiscal 07. The earnings multiple is about 10.1, which seems attractive, perhaps too attractive.

The more I study stocks the more I get suspicious when they trade at way below average multiples. It tells me the current earnings numbers are not sustainable, and not that they are cheap, plain and simple.

For example, Goldman gets a lot of money from M&A activity, IPO's, loans and managing clients money. I see all these businesses drying if indeed the market turns bearish for more than a couple of months as I foresee.

I guess there are better short plays outthere, but I wouldn't be surprised to see Goldman go down an additional 20% - 30% as the current bear market unfolds.

Good luck

[eggman11]

I think GOOG hit it's high already today. GOOG had a big gap up today with no news and the volume is slowing. As the day goes longer more people will get nervous and sell I believe it fill in the gap over the next 2 days. We will test the recent low of 437. If we break that we will test the 200 day at 432. If GOOG fall below 432, we will drop sharply quickly another 20 points to about 410-415. If this was all to happen within the next 8 trading days when the March options expire, that would be ideal, but I believe we will at least retest the 440 area within the next couple days. Any thoughts?