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June 2007

Recs

2

Gulp.Two of my Picks, Moody's and Western Union dropped 4% and 5% respectively.

June 20, 2007 – Comments (2)

Moody's I have a 1/3 position in, so I am watching for further weakness so that I can add another position. Price isn't cheap without a reason, for Moody's the fear is that the sub-prime fallout will affect the debt rating business. Another fear is that the Govt is going to encourage competition in the rating business.    [more]

Recs

1

Reversion to the Mean & Berkshire Hathaway (BRK.A)

June 17, 2007 – Comments (0)

This is really interesting... I ran the updated Divebomber's BMW spreadsheet (found here: http://www.filespace.org/divebomber/ ) and I charted BRK.A as far back as the 16 years the spreadsheet would retrieve.

If you believe that over long period good companies will revert to the mean, then the good news is that BRK.A is near the bottom. And according to the BMW Method, it will bounce back from the lows again.

Of course, you do not really need to read the charts to know that, judging from the number of bears on the BRK board and in the media, I'd say that the bottom is near.   [more]

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My Three Investing Principles.

June 17, 2007 – Comments (0)

Investing Principles are important, they act as ballast during squalls that appear periodically on the investing horizon. While we hone in on our techniques, tools and methods, principles rarely change. What is interesting that Investing Principles are different from one investor to another. 
  [more]

Recs

3

Where to look for Investing Ideas: Hmm

June 13, 2007 – Comments (0)

Hi,

this is a suggestion on where to look for ideas, and this is especially good for beginner value investors like me.

Look at the Previous Day's largest Decliner.

Freerealtime.com's Decliners (free subscription required)
http://quotes.freerealtime.com/rt/frt/M?SA=Percent%20Losers&IM=stats&stat=4

If you have a WSJ subscription, you can also access it here:
http://online.wsj.com/mdc/public/page/2_3020-losenyse-loser.html?mod=djemBD&reflink=djemBD

Look at new 52-week Low's
http://moneycentral.msn.com/investor/finder/deluxestockscreen.aspx?query=New+52-Week+Lows

or the full list of 52-week low's
http://www2.barchart.com/low.asp?&what=all&force=low.asp

So, like the legendary investor John Neff once wrote: what we are looking for are companies on the new low list that makes you go "hmmmm", because they do not belong there. Perhaps this is a good quality company that has some short-term issues, that is why they are on the new low list. It may be worthwhile to figure out whether the problem is indeed short-term and whether the margin of safety is sufficient.

Well from previous day & new 52-week and full 52-week's new lows, these are the companies that make me go Hmmmm because either they are frequently mentioned bullishly in Fool.com or may have been mentioned as an investment candidate in one of the many Fool.com newsletter or maybe because it is a brand name company, of course, these are my opinions only:

AUY YAMANA GOLD
BBW BUILD-A-BEAR WORKSHOP
LZB LA Z BOY INC
NFLX NETFLIX
SBUX STARBUCKS CP
TACT TransAct Technologies Incorporated

So, which companies makes you go Hrmmm... ?

Disclosure: I do not own any of the above mentioned companies neither have I done any due diligence on the companies.   [more]

Recs

2

A couple of points gleaned from Francis Chou's Investing lecture 2005

June 13, 2007 – Comments (0)

I spent an hour or so listening/watching Francis Chou's 2005 lecture at The University of Western Ontario, ( you can watch it here:  http://www.bengrahaminvesting.ca/Resources/audio_video.htm ). A couple of point he raised that is worth mentioning:  [more]

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What is Coke ? What does Coke mean to the average customer ?

June 13, 2007 – Comments (0)

At the atomic level, Coke is just syrup and water.   [more]

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A response to a fellow poster

June 12, 2007 – Comments (0)

The following is my response to a BBS poster that SBUX was expensive and that Buffett wouldn't touch it with a ten-foot pole.    [more]

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I am never gonna use Limit Buys without AON any more

June 12, 2007 – Comments (0)

I put in an order to buy a thinly traded stock...hoping to scalp a 4 cents difference in a trade. Against my better judgement, I used a limit buy WITHOUT the default All-or-Nothing (AON). In the past, I have had 2 to 3 max transactions to fill an order.   [more]

Recs

2

Good Bye Apollo Group....

June 11, 2007 – Comments (1)

Good Bye Apollo Group (APOL),   [more]

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oh-oh...Whole Foods Merger with WIld Oats being challenged by the FTC

June 10, 2007 – Comments (0)

The FTC will sue Whole Foods to stop the merger from going through. The FTC claims that the new WFMI-OATS entity will be anti-competitive in the organic food market, even though kroger, safeway and walmart are now entering into the business. This is similar to a blotched deal between office depot and staples which the FTC sued successfully.   [more]

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Some thoughts on BWLD

June 09, 2007 – Comments (1)

Hi,  [more]

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2

Mechanical Investing Experiment YTD Results

June 02, 2007 – Comments (0)

Cornerstone Growth Screen: Vanilla Version 

Value: $1,058,912.19
Cash:
$595,555.91
Stock Value: $463,356.28
Total Shares: 100,000
NAV: $10.59
Returns: 5.95%   [more]

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1

Mechanical Investing Experiment: Picks for June 2007

June 02, 2007 – Comments (0)

June Edition
** Using Reuters Power Screener Lite

This is Mechanical Investing list for 2007 May
----------------------------------------------------------



CSG Vanilla: This is based on James O'Shaughnessy' Cornerstone Growth criteria. (See December Blog for exact criteria).

Jan Picks:
SNKI     Swank, Inc.            Jewelry & Silverware
APN    Applica Incorporated          Appliance & Tool
CHDX   Chindex International, Inc.     Medical Equipment & Supplies

Feb Picks:
SYX:  Systemax Inc
CPY: CPI Corp

March:
SLP   Simulations Plus, Inc.  
ANGN   Angeion Corporation 

April
SPAR Spartan Motors Inc
GRIL Grill Concepts

May (new) Using Reuters Screener Lite

Select Company List    US Companies
{Pr2SalesTTM} < 1.5
{MktCap} > 50
{EPS%ChgTTM} > 1 .AND.{EPS%ChgA} > 1
{Pr13W%Chg} > 1.AND.{Pr26W%Chg} > 1.AND.{Pr52W%Chg} > 1

CNRD: Discarded because it is in Pink Sheets
DELI: DIscard because it is in Pink Sheets
MWP: MarkWest Hydrocarbon Inc.
SYNL: Synalloy Corp. 

June:
CPNLQ: Calpine Rejected because of Pink Sheets
NWRG: Rejected because of Pink Sheets
CNRD: Rejected because of Pink Sheets

SIF: SIFCO Industries, Inc.
PRGX:  PRG-Schultz International, Inc.



CSG Insider: Also based on the Cornerstone Growth formula, with an added component of Net Positive Insider purchase. My 2006 experiment showed better performance when CxOs & directors of a company are buying stock.

Jan Picks:
APN    Applica Incorporated       Appliance & Tool
CHDX   Chindex International, Inc.   Medical Equipment & Supplies
CNST   Constar International, Inc.   Containers & Packaging

Feb:
XIDE: Exide Technology
CHMP: Champion Industries, Inc.

March :
Tex: Terex Corp
Vir Virco Mfg Corp
 
April:
IOSP: Innospec Inc
FRN: Friendly's Ice Cream

May New ** (Using Reuters Screener Lite):

Select Company List    US Companies
{Pr2SalesTTM} < 1.5
{MktCap} > 50
{EPS%ChgTTM} > 1 .AND.{EPS%ChgA} > 1
{Pr13W%Chg} > 1.AND.{Pr26W%Chg} > 1.AND.{Pr52W%Chg} > 1
{InsNetTrans}>0

NWRG.PK.: Discarded because it is Pink Sheets
PTSX: Point.360 (PTSX)
NXST: Nexstar Broadcasting Group Inc

June:
PTSX: rejected, already selected
HAYZ:  Hayes Lemmerz International, Inc.
GMTN:  Gander Mountain Company



MFI Vanilla: This is my interpretation of  Joel Greenblatt's Magic Formula investing.

Jan Picks:
PWEI   PW Eagle, Inc.         Fabricated Plastic & Rubber
RAIL   FreightCar America, Inc.   Railroads
NVR   NVR, Inc.         Construction Services

Feb Picks:
FCX: Freeport-McMoRan Copper & Gold Inc.
EGY: VAALCO Energy, Inc

March
PXP: Plains Exploration & Production Company
PTEN:Patterson-UTI Energy, Inc.

April
HF: HFF, Inc -- Delisted !!!
PNCL: Pinnacle Airlines
BMI: Badger Meter Inc

May (New) Using Reuters Screener Lite
Select Company List    US Companies
{MktCap} > 40
Is NOT In Set({IndDescr},[ELECTU,INSLIF,
{ADR} = F
{ROI%TTM} > 4 .AND. {ROI%TTM} < 99
{PEExclXorTTM} > 2 .AND. {PEExclXorTTM} < 99
{InsNetTrans} > 0

PETD: Petroleum Development Corp.
DFZ: RG Barry Corp.

June:
 
SNKI : Rejected coz pink sheets
ROCM: Rochester Medical Corporation
DFZ: R.G. Barry Corp.


ROCM


SNKI

MFI Insider: This is similar to "MFI-Vanilla" with an added component of Net Positive Insider transaction.

Jan Picks:
PWEI   PW Eagle, Inc Fabricate d Plastic & Rubber
FCX    Freeport-McMoRan Copper & Gold Inc.      Metal Mining
ARLP   Alliance Resource Partners, L.P.      Coal

Feb
UNT: Unit Corporation
IXYS: IXYS Corporation
 
March
CXTI : OTC : Discarded because OTC stock
EVEP: EV Energy Partners LP: Discarded because Marketocracy.com does not recognise EVEP 
THE: TODCO
USG: USG Corp.

April
PONR: Pioneer Companies
CNW: Con-way Inc.

May (New) **Using Reuters Screener LITE

Select Company List    US Companies
{MktCap} > 40
Is NOT In Set({IndDescr},[ELECTU,INSLIF,
{ADR} = F
{ROI%TTM} > 4 .AND. {ROI%TTM} < 99
{PEExclXorTTM} > 2 .AND. {PEExclXorTTM} < 99
{InsNetTrans} > 0

AVCA - Rejected because ROE is 1400%
ECMV: eCom Ventures, Inc.
ABXA:ABX Air Inc.

June Selection
AVCA: Advocat Inc,
CLMT:Calumet Specialty

  [more]

Recs

1

Kelly Criterion and Arbitrage

June 01, 2007 – Comments (0)

The following is an email response from mike klein to my query on using risk arbitrage and the kelly criterion.    [more]

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