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May 2008

Recs

11

Something to love about a company that top CAPS players HATE!

May 30, 2008 – Comments (2) | RELATED TICKERS: DRYS

After finishing a big project this morning, I decided to take a break and procrastinate by reading my weekly issue of RigZone.com's newsletter (I know, I'm lame).  In doing so, a headline leaped off of the page at me.  I thought to myself, wow what a cool blog post!  One that says something positive about one of the most hated, and painful for many, stocks in the CAPS universe, DryShips (DRYS) (see article: DryShips toTake Over Ocean Rig).  This company has been the bane of many Top Fools' existences, including awesome stock pickers like TMFEldrehad who has ridden it to a 911 point loss so far and TMFOtter who is down over a whopping 946 points on it.  [more]

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16

20% price increase in the cost of everything?!?!?

May 29, 2008 – Comments (5) | RELATED TICKERS: DOW , SEE , PPG

Dow Chemical (DOW), a company which I own, announced yesterday that effective June 1st it is raising prices on all of its products by as much as 20% across the board (see article: Dow Chemical hikes prices 20 pct).  Given the parabolic rise in the price of oil (other than the today's sharp pullback) this move is not all that surprising.  The company's cost of feedstocks and energy skyrocketed 42% in the first quarter.    [more]

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11

OMAB - Just when you thought it was safe to go back in the water

May 29, 2008 – Comments (4) | RELATED TICKERS: OMAB

Man when it rains on OMAB, it pours.  In addition to the headwinds of a slowdown in consumer spending and higher gas prices that I have mentioned previously, OMAB now has another problem...sharks.   [more]

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9

Only two airlines that serve Mexico are currently breaking even with $100 oil

May 28, 2008 – Comments (4) | RELATED TICKERS: OMAB , PAC , ASR

At the beginning of the month, I wrote about how I strongly believed that the stock prices of the public Mexican airports were going to drop significantly (see article: Say Adios to Mexican Airport Stocks).  I see that Goldman Sachs has hopped on board of my short Mexican airports trade.  Today in its morning comments, Goldman said:  [more]

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19

Ken Heebner, my new hero

May 28, 2008 – Comments (8)

As my investing style has evolved over the past few years, I have become more of a macro, big picture, top down sort of investor.  I have become fascinated with trying to pick up on major national and global trends and then look for solid companies that will benefit from them rather than just screening for cheap stocks like I used to in the past.    [more]

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18

I told you higher meat prices were coming / BUD will never, ever get bought out by inBev / Buy a car, get a gun

May 27, 2008 – Comments (5) | RELATED TICKERS: BUD

For over a month now, I have been writing about how inflation in meat prices traditionally lags inflation in grains and that we are going to see a tremendous spike in the prices of beef, chicken, etc... in the near future (see article: Sell Your Restaurant Stocks NOW!!!!).  Well, the mainstream media is finally starting to pick up on this.  Here's a great piece on it that Bloomberg just published: Corn Costs Signal Biggest Beef Surge Since 2003 as Herds Shrink.    [more]

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19

An update on my personal investment philosophy

May 25, 2008 – Comments (10)

Around six months ago I posted a message in my blog that outlined my personal investment philosophy.  Not only did I enjoy sharing my thoughts and ideas with everyone here in the great CAPS community, but it helped me as well.  I am now back with an update.  I am going to have to be fairly general in a lot of the things that I am bullish and bearish on because I want to remain nimble in the current market environment and TMF rules prevent me from trading specific stocks within ten days of mentioning them.  Everything that I am trading in real life I currently have in my CAPS portfolio.  [more]

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15

Helix: A cheap, under the radar deepwater play

May 22, 2008 – Comments (6) | RELATED TICKERS: HLX

It’s funny how one comes across investment ideas.  I’m convinced that the more stuff one exposes themselves to in terms of television shows and reading, the more good ideas they come across (too bad its so darn time consuming).  A couple of weeks ago I was watching Squawk Box on CNBC* and they had on David Einhorn to talk about his new book Fooling Some of the People All of the Time: A Long, Short Story (which looks very interesting btw).    [more]

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16

CAPS players told you so / Moody's is a joke / No job losses here / Man, it's going to be expensive to stock my bunker /

May 21, 2008 – Comments (11) | RELATED TICKERS: MCO

Anyone who has been reading the blogs of the top CAPS players will not be shocked by the following headline: Fed sees slower growth, higher unemployment in '08.  We've been telling you that the economy is not in as good a shape as the manipulated government statistics and annoying uberbulls like Larry Kudlow have been saying.  The markets got crushed today, even many of my beloved oil stocks (with oil sitting at a mind-blowing $133.50).  Mr. Market definitely did not like the Federal Reserve confirming what the smart CAPS players already knew...that the economy is slowing and that unemployment is going to rise.  For good measure, the Fed added that it is unlikely that they cut rates again.  We'll see about that, but at the very least the Federal Funds rate is going to sit here on the bottom at 2% for much longer than the Fed Fund Futures were guessing just last week, a 50% chance of a cut before the November election.  HAHAHAHA.  I wish I knew how to make that bet.  We all better hope that the Fed doesn't raise rates that soon, or the economy is really going to hit the fan.  [more]

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14

U.S. Postal Service Management = Morons

May 21, 2008 – Comments (3) | RELATED TICKERS: F

BREAKING NEWS FLASH!:  Ethanol and E85 fueled vehicles get worse gas mileage than those that use regular gas or diesel.  I thought that everyone on Earth knows this, but apparently the U.S. Postal Service didn't.  I literally laughed out loud when I heard this story on Bloomberg radio this morning.    [more]

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11

Mexico's Oiling Days Are Numbered

May 21, 2008 – Comments (2)

   [more]

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12

Blowin' in the Wind Part 2: Fluor Corp.

May 20, 2008 – Comments (3) | RELATED TICKERS: FLR

Yesterday I talked about how wind seems as though it is destined to be the next hot alternative energy sector and of the lack of pure wind plays on the U.S. exchanges (see post: the answer my friends is blowin in the wind).  I have found another "stealth" wind play, right in my own stock portfolio.  This stock isn't stealthy because it is a small, unknown company.  It is stealthy in that I, and I am sure many other people, was not aware that it was heavily involved in construction of wind farms.  The company is Fluor Corp. (FLR).    [more]

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23

Man that's weird, you're the fifth Todd Davis to buy a flat screen TV this week.

May 20, 2008 – Comments (4)

I came across this hilarious news item while listening to the increasingly annoying Fast Money simulcast on XM (I'm becoming more of a Bloomberg radio guy).  Anyone who listens to the radio a lot, especially satellite radio, is sure to have heard those annoying LifeLock advertisements over and over again where the company's CEO Richard "Todd" Davis talks about how his company's credit protection service and guarantee are so wonderful that he's willing to provide his real social security number over the air, blah, blah, blah...  Apparently, Mr. Davis has had his identity stolen a number of times as a result of this ad.  HA.  That's priceless.    [more]

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21

The answer my friends is blowin in the wind

May 19, 2008 – Comments (9) | RELATED TICKERS: GE , FPL.DL2 , WWD

What looks like it is the next trendy alternative energy play?  As Bob Dylan would say,   [more]

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18

A 92% Tax Rate?!?!

May 18, 2008 – Comments (8)

Over the past several months I have blogged about why I believe high oil prices are here to stay on a number of occasions.  While I believe that oil will eventually peak, I don't think that we are there yet.  The problem is not that we are running out of oil but that much of the low hanging fruit has already been picked.  The remaining oil is in difficult / expensive places to get at like deep under the ocean or in countries that have severely underinvested in their infrastructure, such as Nigeria, Mexico, Venezuela, and most of all Russia.  This week's Economist had an outstanding article on why Russian oil production has peaked and how it is unlikely to increase in the near future.  [more]

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12

Future corporate profit margins will be squeezed causing everything but ag and energy companies to suffer

May 16, 2008 – Comments (7)

Core inflation may remain tame in the near future as companies find it difficult to pass along price increases to consumers.  If this indeed happens, it is going to really hurt corporate profit margins, which as of the last quarter were sitting about 50% above their normal historical level.  Sure, increases in productivity account for some of this improvement but things like this usually eventually revert to the norm.  You know what corporations that are feeling pressure to improve their earnings are going to do?  At the very least they are not going to give their employees good raises that keep pace with the rate of inflation and in the worst case scenario they will lay people off, causing the unemployment rate to increase dramatically.  [more]

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12

CTRP Buying Opportunity? / A Mind-blowing Spin-off / Wasting energy to create energy

May 15, 2008 – Comments (4) | RELATED TICKERS: CTRP , IACI

Chinese travel agency Ctrip (CTRP) reported its quarterly results after the bell yesterday.  The company beat analysts' estimates on earnings and revenue.  Its earnings rose 52% versus the same period a year ago!  Despite these strong results, it is trading down more than 10% afterhours (see article: China's Ctrip Q1 soars, but quake fears weigh).  What?!?!  Apparently analysts are concerned that China's recent earthquake will hurt its future results.  CTRP did not change its yearly earnings guidance, but said that it is too early what impact the earthquake damage will have.  The company's CFO was quoted as saying "The impact can be significant" in the company's conference call.  I have a feeling that the market may be overreacting to that statement.  Sichuan travel accounts for less than 10% of CTRP's business.  Analysts are afraid that potential Chinese travelers will be unnerved by the quake and decide to cancel or shorten vacation plans.  This might happen in the short run, but if U.S. citizens can shake off September 11th and begin traveling again, I suspect that the Chinese will easily be able to set aside their earthquake fears and continue to travel.  I am a former CTRP shareholder myself, riding it to over a double before selling at some point last year.  The more investment experience I get, the more leery I am about companies with P/E ratios of 75 :).  The stock is still way to rich for my blood, but if you don't mind the lofty price any drop today might make a nice entry point, especially with the Olympics catalyst in the near future.  [more]

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12

Yesterday's retail sales numbers were great...if you ignore the government's understated inflation stats

May 14, 2008 – Comments (6)

I've bashed the government on a number of occasions for publishing misleading statistics on the economy, such as understating the inflation that people in the real world experience in the CPI.  Even if you take the government's understated CPI numbers at face value, inflation is outpacing the retail sales figures that the media celebrated yesterday (see article: Retail sales strength rebuts recession talk).  The government's published retail sales number for April came in inline with analysts' estimates at -0.2%.  Furthermore, the media pumped up the number even further by looking at it ex autos, which came in at +0.5%.  [more]

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14

Consumers are cutting back on discretionary purchases and HELOCs are a mess, according to the company formerly known as “Bank of Italy”

May 13, 2008 – Comments (7) | RELATED TICKERS: BAC , COF , DFS

You might be asking yourself what the heck is that “Bank of Italy” stuff about.  Well, I’ll get to that in a second.  First, it appears as though Bank of America (BAC) is finally starting to figure out that consumers are feeling “significant economic pressure.”  This is the phrase that the company’s president of global consumer and small business banking used while speaking at an investor conference in New York today.  Credit and debit-card purchases for “necessary” items aka food, gas, electricity rose by 13% during the first quarter of 2008 while spending on consumer discretionary items such as entertainment, travel, and retail rose by only 0.5%.  While they may receive a temporary reprieve if consumers waste their government stimulus checks like they probably will instead of saving them for a rainy day like they should, I am remain extremely bearish on specialty retailers, restaurants, airlines, airports...basically any consumer discretionary play that I can think of.  [more]

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13

I guarantee that the price of oil will drop today, but... (The Oil Nonbubble)

May 13, 2008 – Comments (8)

I can virtually guarantee that the price of oil is going to drop today.  How can I be so sure you ask?  Because I am going to talk about how I believe that high oil prices are here to stay and that they will eventually head higher from here :).  According to Murphy's law, whenever I make a bullish statement like that the price of whatever I was talking about will temporarily drop.  For a number of months, I was one of the lone voices who disputed the fact that we are in a commodities bubble.  Some people are still staing that, but the media has backed off of that prediction and is instead hyping the current astronomical rise in the price of oil.  Here are a few of the pieces that I have written on the subject:  [more]

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12

I hate Cablevision / a few great quotes on pensions & Social Security

May 12, 2008 – Comments (1) | RELATED TICKERS: CVC

I was looking around this morning for something that I felt passionate enough about to write on.  After looking around for a while and not seeing anything that really caught my eye.  Wham there is was.  Cablevision (CVC).  Man I hate Cablevision.  Perhaps it stems from them charging me an arm and a leg for television for all of these years.  Or perhaps it harkens back to when they deprived me and millions of other subscribers from our beloved New York Yankees for the bulk of a season years ago.  I think that it mainly has to do with the fact that nepotism has turned what should be a cash cow into a laughingstock of a company.  [more]

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20

Say Adios to Mexican Airport Stocks

May 09, 2008 – Comments (9) | RELATED TICKERS: PAC , OMAB , ASR

As a former shareholder of both Grupo Aeroportuario del Centro Nort (OMAB) and Grupo Aeroportuario Del Paci (PAC), I got to know both companies fairly well.  I love the concept of investing in a company that has a toll bridge-like model, essentially being granted a monopoly by the Mexican government to charge every single passenger that flies into and out of the country money.  However, I finally decided to part ways with both of them in late February because I noticed a disturbing pattern in their passenger traffic (a key metric when determining how profitable airports will be).    [more]

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7

Say Adios to Mexican Airports Stocks

May 09, 2008 – Comments (0) | RELATED TICKERS: PAC , OMAB , ASR

As a former shareholder of both Grupo Aeroportuario del Centro Nort (OMAB) and Grupo Aeroportuario Del Paci (PAC), I got to know both companies fairly well.  I love the concept of investing in a company that has a toll bridge-like model, essentially being granted a monopoly by the Mexican government to charge every single passenger that flies into and out of the country money.  However, I finally decided to part ways with both of them in late February because I noticed a disturbing pattern in their passenger traffic (a key metric when determining how profitable airports will be).    [more]

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15

Swish, Swish, Swish, Swish...What's that sound?

May 08, 2008 – Comments (14) | RELATED TICKERS: COF , TM , ENERQ.DL

Swish, Swish, Swish, Swish...What's that sound?  [more]

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11

The US Dollar: A Marathon, Not A Sprint

May 08, 2008 – Comments (4)

I have been saying for a while now that we are probably due for a short term bear market rally in the U.S. dollar, but that I personally have little doubt that in the long term it will continue to drop.  The always insightful Bespoke Investment Group posted a chart on its site the other day that illustrates exactly what I have been saying (see article: The US Dollar: A Marathon, Not A Sprint)  [more]

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15

Bees! They're ripping my flesh off! Run away, your firearms are useless against them!

May 07, 2008 – Comments (4) | RELATED TICKERS: FDP , CQB , CLX

"Bees! Bees! Bees in the car! Bees everywhere! God, they're huge! They're ripping my flesh off! Run away, your firearms are useless against them!"  [more]

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14

One of my favorite plays for $200 oil

May 07, 2008 – Comments (3) | RELATED TICKERS: PWE

Goldman Sachs came out with a report yesterday stating that it believes we may see a Super Spike in the price of oil that could bring it as high as $200 per barrel in the next two years as the growth in supply lags growth in demand (see article: Goldman's Murti Says Oil `Likely' to Reach $150-$200).  I am one of the most bullish people that I know when it comes to oil and natural gas, but the meteoric rise that we have seen in the prices of both lately have even shocked me.  Fortunately, my personal portfolio is aligned to take advantaqge of this trend.  I bought all sorts of E&P companies, drillers, oil services, CANROYs, energy infrastructure plays, etc... in part because I strongly believe that the price of oil will steadily rise over the next several years, but also as a hedge to protect my family in case it does.  Rather than cringing every time I drop a C Note to fill up my family's SUV, I now smile (though I am definitely replacing it with something smaller when its lease is up in February).  [more]

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21

A funny take on the stimulus checks / “Big Apple” / searching for alternative energy

May 06, 2008 – Comments (13) | RELATED TICKERS: GE , ENERQ.DL , FPL.DL2

While doing research on the government stimulus checks and the potential impact that they will have upon the economy, I stumbled across this hilarious take on them from comedic author Dave Barry:  [more]

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20

The miracle of Birth / Death, how to magically turn -287,000 into -20,000

May 04, 2008 – Comments (6)

The government published several better than expected pieces of economic data last week that were celebrated by the media, the last of which was the April employment report.  It’s funny how we call a loss of 20,000 jobs in a single month good news, but given economists’ expectations for a loss of 75,000 to 80,000 I guess that it was.  Unfortunately, things aren’t quite as rosy as the government would like us to believe.  Once again the BS…er uh the BLS (Bureau of Labor Statistics) used the magical “birth / death” adjustment to make the jobs report look much better than it really was.  This month, the magical birth / death adjustment created 267,000 imaginary new jobs out of thin air.  If this “adjustment” had not been made to the official employment number the economy would have actually lost 287,000 jobs in April!!!    [more]

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7

The solution to wasting money, spend more / Bernanke the Sphinx + a fun party game / a CAPS short

May 02, 2008 – Comments (4) | RELATED TICKERS: BWLD

Good morning CAPS friends.  Here are this mornings random musings.    [more]

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18

A tale of two automakers, one mighty one weak…both headed in the same direction

May 01, 2008 – Comments (6) | RELATED TICKERS: TM , GM , F

Gather round children.  I have a fantastic tale to tell of two automakers, one a mighty titan who has dominated the industry for the past decade and another that is more like the local court jester, both who are headed in the same direction…down.   [more]

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