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Garbage Stock Overload

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October 15, 2009 – Comments (56) | RELATED TICKERS: MNI , GTN , DTG.DL2

Well, it's official that the Dow Jones Industrial Average has crossed 10,000 yet again and the S&P 500 is closing in swiftly on that 1100 mark, but how far have we really come? If you look at expected earnings from all S&P 500 companies, the average earnings decrease expected in Q3 is 17% and yet we are just a hair above where we were last year on all three indexes. Understanding the criticism that the market doesn't exactly value things rationally in irrational times, I still have to be very skeptical of a move where we could lose nearly 1/5th of all profits and be HIGHER than where we were last year. This is definitely something that makes me support TMFMarathonMan's (I hope thats who posted the article) hypothesis that irrational exuberance may be making a comeback, or at least irrational expectations. Unemployment is leveling and yet still rising, junk bond rates are soaring, treasury yields are falling, but the truly horrifying fact is just how many of my so-called "garbage stocks" have taken off.

I think its best to define what I refer to as a garbage stock. A garbage stock in my opinion is a long-term money pit that is usually of junk credit status, highly indebted, and must cut staff and/or production just to control costs enough to meet their bills. They don't deserve huge rallies or your hard earned money and most are definite bankruptcy candidates. Yeah, I know that's not the best definition of what I'm trying to convey, but trust me they are garbage. I'm going to use this blog to highlight some of the most prevalent garbage companies out there, and no DragonLZ I'm not using this blog to pick on you in any way, you clearly have a good grasp of technical analysis, but the majority of your favorite picks are absolute "garbage" on a fundamental scale.

So let me begin a mighty long list of garbage companies...

McClatchy (NYSE: MNI)

Move since 03/09/09: ↑ 753.66%

McClatchy is a newspaper company that owns and operates 30 daily newspapers and roughly 50 non-local publications. It just so happens that they also reported their Q3 figures today which showed just how deep they must go into cost-cutting to meet their figures. Although they reported a 28 cent quarterly profit, they saw Q3 revenues dip 28% and this is a trend that should continue going forward. Really, how many more jobs need to be cut? Well, it doesn't matter if they can't get ad revenue up and with their online business being only 1/6th of the pie and only up 3% for that matter, I say they're screwed! Couple that with 1.97 billion dollars in both short and long-term debts and even with profitability they'll never climb out of this mess they're in.

Gray Television (NYSE: GTN)

Move since 03/09/09: ↑ 688.89%

Gray Television operates as a broadcast company with 36 owned stations. Gray has produced four consecutive quarterly losses which have far exceeded analysts expectations and we've rewarded this with a nearly 700% increase in stock price. With over 795 million dollars in debt and a minimal cash position with absolutely no profitability expected until 2011 I have zero clue as to why this is moving higher fundamentally. Today's story that revenue will be 1-2 million higher than previously forecast doesn't hardly dent the 20% drop in revenues they are witnessing this year. Gray is a garbage stock that is probably heading down the path of bankruptcy protection in the next 3 years.

Entercom Communications (NYSE: ETM)

Move since 03/09/09: ↑ 878.26%

Entercom Communications is a radio broadcasting company operating around 110 stations currently. My problem with Entercom is their non-existant revenue growth which shows a 14% drop in 2009 and a modest 5% growth in 2010, yet we've seen the stock take off almost 900%! Did I mention the company is sporting over 800 million dollars in debt with a leverage ratio of 5.6. Anything over 3 is considered dangerous territory, so take a wild guess where 5.6 fits into the equation! Earnings are due out any day now and I can almost guarantee a drop on the news. The long-term future here looks grim.

Sirius XM Satellite Radio (NASD: SIRI)

Move since 03/09/09: ↑ 286.67%

Sirius XM Satellite Radio provides satellite radio service in the US and Canada. I could literally write a manifesto on how much I despise Sirius XM but I will keep it short and sweet. This company has 3.3 billion dollars in debt, has and will never turn a profit, and is currently dealing with the biggest downturn the automobile industry has ever seen. Ad revenues are down on top of that and from a fundamental perspective outside of their continued losses, 15 times book at just 58 cents per share? Shouldn't this give you a clue that management's arrogance will be its downfall? I will personally throw a Sirius XM Chapter 11 party at my house the day they file!

Oncogenex Pharmaceuticals (NASD: OGXI)

Move since 03/09/09: ↑ 820.41%

Oncogenex Pharmaceuticals is a biopharmaceutical company engaging in the development and commercialization of therapies to treat cancer. Currently they are sporting a whopping ZERO approved drug candidates with only one even remotely late in clinical studies. Ongogenex has not produced a single cent in revenue to date and although I haven't looked up their defecit since inception, I'd have to assume its very large. How does 49.4 times book sound, or infinite times price to sales? Even IF their late clinical study OGX-011 gets approved, they are looking at only 4 million dollars in revenues in 2010 and a loss of at best $2 per share. This means their 5 million dollars in cash will last them only a few more months and they won't be trading below 50 times sales anytime in the next 18 months. That's what we call a one-and-done folks!

Dollar Thrifty Automotive Group (NYSE: DTG)

Move since 03/09/09: ↑ 3652.11%

Dollar Thrifty Automotive Group is a car rental company under the names Dollar and Thrifty. No that is not a misprint, they really are up over 3600% in just a matter of seven months! What I find even more staggering is the fact that they have 1.84 billion dollars in debt and it's all due within the next 54 months! Ok, sure I'll give them the fact that they're turning a profit right now on stagnant revenues. Look at those 2009 revenues, down 6% and in 2010, up 5%, that's called stagnant folks! Explain to me how they are going to pay 1.84 billion dollars in revenue over the next 54 months and you deserve a cookie, in the meantime I have absolutely no love for the auto sector. Seriously, have you seen anyone going on vacation recently because I sure as hell have not!

Radio One (NASD: ROIAK)

Move since 03/09/09: ↑ 374.29%

Radio One is a radio broadcasting company that operates 53 stations nationwide. Things have been so bad here that they just decided to delay the annual shareholders meeting until the books have been fudged enough to explain how they are even surviving. Ok, so maybe I'm being a bit critical, but as ad revenues continue to collapse they've seen revenue down drop 15% in 2009 and are expecting another single digit drop in 2010. How does 673 million dollars in debt with your interest rate on 669M of that debt being 6% to as high as 9% sound? It doesn't matter how deep the cost cuts are here, this is bankruptcy fodder if you ask me.

Targacept (NASD: TRGT)

Move since 03/09/09: ↑ 758.55%

Targacept is a design, discovery and development company that focuses on the central nervous system. I know I'd certainly be nervous if I was sporting a price to book of 10 and a price to sales of nearly 24. Targacept has plenty of clinical studies going on but not much in that way of a guaranteed product. Too many times I've seen these companies lose 25 million dollars a year, just like Targacept and poach shareholders left and right with stock offerings. Oh yeah, did I mention that TRGT just offered another 2.2 million shares at $21. Losses are expected to be in the range of $1.00-1.10 for the next two years while revenues remain stagnant or even fall off completely. Another example of how to dupe investors.

I will pull a Portefeuille and continue to add to this list as I find more garbage stocks available. I'm going to cut it short here because its time to go throw around the pigskin.

UltraLong

56 Comments – Post Your Own

#1) On October 15, 2009 at 9:34 PM, ChrisGraley (29.86) wrote:

I am currently shorting every one of those stocks except GTN and MNI.

I closed my GTN short already, but I'm double dipping tomorrow. 

I'll have to check out MNI, but it won't take too much of an effort if a newspaper stock had that big of a run-up.

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#2) On October 15, 2009 at 9:52 PM, rexlove (99.54) wrote:

 "If you look at expected earnings from all S&P 500 companies, the average earnings decrease expected in Q3 is 17% and yet we are just a hair above where we were last year on all three indexes."

Ultralong - I'm surprised you would make a statement like this. You should know that the market is forward thinking. This time last year things were looking very bleak. Conditions have improved (although some would debate this) and there is a much more positive outlook on the future of the economy. Why wouldn't the market be higher?

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#3) On October 15, 2009 at 10:05 PM, TMFUltraLong (99.95) wrote:

Rexlove,

I'll just quote from my article above...

"Understanding the criticism that the market doesn't exactly value things rationally in irrational times"

It's the very next sentence after the statement you quoted. The market is an amalgamation of forward-looking, backward-thinking and present-hopping. Have conditions really improved? Is the market worth what it is currently knowing that the biggest companies out there will be earnings 83 cents for every dollar they were making last year? Personally I don't think so. Does this mean short the market? Well, although I strongly feel we head lower there is some major momentum in STRONG/large caps, I will instead be looking to snipe off the PLETHORA and I do mean overabundance of garbage stocks out there to the short side. It's been about 6 years since I've seen so many garbage companies...and that was the main tenet of this article was to point that out.

UltraLong

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#4) On October 15, 2009 at 10:09 PM, guiron (22.89) wrote:

Great list. I agree with SIRI but the company has a cult-like following who also trade the stock. I am very wary of getting squeezed on that one. Would like to short it but maybe puts are better.

Wouldn't you know ... Thomson Reuters rates DTG as outperform and Market Edge is long. Worthless.

I have been eyeing DTG for a long time looking for a top to get in to short it, but the damn thing keeps going up. The market's sideways movements are spooky right now, and it doesn't look like the bull is charging up past 10K on the DJIA, so maybe the insane momentum up is finding the air a bit thin up there. All it would take is just one real good correction in the market to pop this balloon, or maybe just bad news on the travel industry, and I think one or the other is due before too long.

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#5) On October 15, 2009 at 10:24 PM, hud500 (55.74) wrote:

Great post. Found a few great red thumbs there.

I hate it when companies with huge debt loads pay dividends way above earnings. Pay off the damn debt! Talk about mutton dressed as lamb.

 

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#6) On October 15, 2009 at 11:02 PM, PaxtorReborn (29.90) wrote:

You're being ridiculous.  The run up is due to inflation.  The cost to rent a car is up 3652%. And soon their debt will be worthless because they put all their cash in Japanese Yen and the US dollar will have only artistic value (drawings of dead presidents). 

Paper isn't money.  Car rental vouchers are money.  The DOW : car rental vouchers ratio needs to return to 1:1

 

 

 

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#7) On October 15, 2009 at 11:05 PM, ChrisGraley (29.86) wrote:

relove, this is just a matter of opinion, but I don't think conditions have improved and I specifically don't think they have improved for the above companies.

All the market growth I've seen seems to be an anticipation of inflation.

Most of the above companies are in dying sectors, with the exception of OGXI, and biopharms are a crap shoot.

Look at these companies that have improved 375% to 3652% and tell me which ones deserve such valuation?

 

 

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#8) On October 15, 2009 at 11:40 PM, dragonLZ (99.40) wrote:

Great post, UL. You are very wrong about my stocks, but great post...

p.s. I know you know, but just to make sure other folks know it too: From all the stocks mentioned in this post, only GTN and MNI are "my" stocks (notable RL holdings).

p.s. 2  See "GTN, you made me look bad" to understand why GTN and I have a very intimate relationship... :)

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#9) On October 15, 2009 at 11:43 PM, GenericInvestor (90.06) wrote:

Why would people use the Yen as a reserve currency? lol.

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#10) On October 16, 2009 at 12:01 AM, streetflame (30.52) wrote:

Good post ultralong.  I will definitely be stealing from your newest red thumb picks (to be fair I have been red thumbing some of these and others for several months, to the detriment of my score.)

Any thoughts on MPG?  It has gone up 25% or so over the last 2 days on news that a hedge fund picked up an 8% stake.

I just switched over to Interactive Brokers which is SO much better for shorting than Ameritrade or most other retail brokerages.  Trades as low as $1 so it is cost effective to have small positions.

Current shorts (all fairly recently opened):
MPG (They are still going bankrupt ... right?)
GBE
TLB
PALM
AXL
CAR
SCSS
MOT (Hate a lot of tech company valuations)

Also puts on PRGS, TFSL and ADVS.

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#11) On October 16, 2009 at 12:08 AM, dragonLZ (99.40) wrote:

Here are a few more stocks worth shorting...

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#12) On October 16, 2009 at 12:19 AM, ozzfan1317 (82.45) wrote:

Nice list still don't know why a company that is such a mess goes up that much could it be short covering who knows? I personally learned a real life lesson in sirius a couple years ago. Never invest soley on hype its very dangerous on the wallet..lol

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#13) On October 16, 2009 at 3:36 AM, TMFUltraLong (99.95) wrote:

Streetflame,

DragonLZ isn't the only one who can play the technical game. Mcguire Properties is a horrible company and it will definitely be added to the garbage stock list on the next round when I add a few more. I'm fundamentally red thumbing it for sure, but its not at a technical, we'll call it "something or other" level that I want to see that makes me say short away. If you did short here however I think you'd eventually make money as MPG is garbage. =)

UltraLong

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#14) On October 16, 2009 at 12:50 PM, miteycasey (30.71) wrote:

Nice list still don't know why a company that is such a mess goes up that much could it be short covering who knows?

1) Becuase the 'sector' is hot.

2) It's on a major exchange so all index funds must purchase the stock with a new influx of money.

3) The futrue is bright.

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#15) On October 16, 2009 at 3:08 PM, Bays (30.21) wrote:

UltraLong... 

as promised.... I wrote my blog for HE.TO....  It's up over 30% since i've posted it.

"Better Know a Stock" - Shout out to UltraLong

 

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#16) On October 16, 2009 at 7:37 PM, BravoBevo (99.97) wrote:

UL, nice post. I haven't paid sttention to all of the picks you've commented on, but I probably will do so a little bit more now. Keep up the good work.

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#17) On October 16, 2009 at 11:06 PM, d1david (29.29) wrote:

informative and i like your summaries.. nice job again

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#18) On October 16, 2009 at 11:37 PM, topsecret09 (37.86) wrote:

Oncogenex Pharmaceuticals (NASD: OGXI)

Move since 03/09/09: ↑ 820.41%     This HAS TO BE the best short on the planet !!!!!!    They have a total net worth of about 10 million dollars,and their market cap Is about 225 million.  No thanks,I can find better companies for quite a bit smaller share price...  How about this one ( I will just toss one out there that Is PROFITABLE and Is getting Into the INSURANCE INDUSTRY in China....   Ever heard of  China INSOline Corp?  Didn't think so...   http://www.china-insonline.com/    (OUTPERFORM,STRONG BUY)   @ $1.30  TS

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#19) On October 16, 2009 at 11:41 PM, topsecret09 (37.86) wrote:

   The only stock that you list that I WOULD NOT SHORT Is Grey Television. Insiders have been snapping up shares,may be something that we are not privy to....   TS

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#20) On October 17, 2009 at 12:10 AM, dragonLZ (99.40) wrote:

Did any of you "shorters" notice that TRGT was up 16% today?

Nice timing, what else can I say...

It lloks like this one is shaping to be another DTG for UltraLong... :)

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#21) On October 17, 2009 at 12:11 AM, dragonLZ (99.40) wrote:

It looks...

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#22) On October 17, 2009 at 12:25 AM, dragonLZ (99.40) wrote:

Sorry, forgot to say one more thing.

After yesterdays 20% jump, GTN was down only 3% today (S&P was also down 0.8%).

If this stock is junk as UL says, why GTN wasn't down 15 or even 25% today? Why are people not selling this stock like crazy? Is there ever gonna be a better chance to get rid of this garbage?

I mean, this stock is up 630% just in the last 3 months... it jumps another 20% yesterday, then there are no sellers on day when the market loses almost 1%...

Come on, people. What's going on? How do we explain this?

p.s.

I hope you know the answer: This is another DTG in the works...

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#23) On October 17, 2009 at 12:26 AM, dragonLZ (99.40) wrote:

Sorry, forgot to say one more thing.

After yesterdays 20% jump, GTN was down only 3% today (S&P was also down 0.8%).

If this stock is junk as UL says, why GTN wasn't down 15 or even 25% today? Why are people not selling this stock like crazy? Is there ever gonna be a better chance to get rid of this garbage?

I mean, this stock is up 630% just in the last 3 months... it jumps another 20% yesterday, then there are no sellers on day when the market loses almost 1%...

Come on, people. What's going on? How do we explain this?

p.s.

I hope you know the answer: This is another DTG in the works...

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#24) On October 17, 2009 at 12:32 AM, TMFUltraLong (99.95) wrote:

Dollar General isn't a loss until its sold as a loss. Gray Television isn't a gain until you sell it as a gain, keep that in mind. Gray Television has momentum behind it and a hell of a lot of daytraders, that's really it. Whether you want to believe in EWT, or voodoo for all i care, daytraders are going to bore of GTN soon enough and within a few days, maybe a few weeks it will nose dive. Same with TRGT, as soon as more trials come out this will plummett back to earth like every biotech eventually does. You don't have time a biotech right, you just have to be holding it when it dives 72% in one day...just throw a dart, all these one hit wonders eventually do...

UltraLong

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#25) On October 17, 2009 at 12:53 AM, dragonLZ (99.40) wrote:

You 3M red-thumbed DTG: It has doubled since then.

You 3W red-thumbed TRGT: It has doubled since then.

Other than the Bear ETF's you shorted, you've been wrong on all (or almost all) of your shorts (I don't know if even this should count as your good call as you are saying for months now that the market will collapse. Did it happen...?)

At what point does one say "I was wrong about this one" or does one wait for the next bear market (when everything starts going down again) just so he can say "I told you it's gonna come back down"?

Seriously...

p.s. Believe me, it's nothing personal. I just want us all to be accountable for our calls...

In my opinion, 3 Months is 3 Months...

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#26) On October 17, 2009 at 1:08 AM, memoandstitch (< 20) wrote:

I think DTG is under a short squeeze.  Even at the current price, 24.25 % of shares are sold short.  There is a guaranteed demand for at least a quarter of its shares!

I would wait until the dust settles before I go in for the long squeeze.

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#27) On October 17, 2009 at 2:23 AM, TMFUltraLong (99.95) wrote:

Dragon,

Ya know, your "look at me, look at me" blogs sort of get old very very quick, so I forcibly did a little reading and here are a few of my favorite quotes from you....

Lets start this off with September 15th, 2009:

 “p.s. I know this sounds ridiculous as no serious investor can make a statement like this (disclaimer: I'm not a serious investor).” 

Sept 24th, 2009: “Eye, I have to warn you that I consider myself a novice investor too “ 

Also Sept 24th, 2009: “I also think that it would be stupid of me to give you any advice (or reveal my secret) at this point as I might be proven very wrong very soon” 

July 27th, 2009: “I don't rely on technicals” 

Sept 24th, 2009: “At this time, I can only tell you that 95% of my buys are based on charts”

↑↑↑↑↑ Uhhhhhhh....what? 

 Sept 26th, 2009:  “I consider myself a novice investor, and I don't know much about a lot of stuff when it comes to stock market, investing, etc” 

Sept 27th, 2009: “TSIF, I agree I'm more a gambler than an investor” 

Oct 14th, 2009: “everybody has noticed already that all of my RL holdings listed above are highly speculative stocks” 

July 27th, 2009: “I have no idea why S&P will soon hit 1100, I just know it will.” 

July 27th, 2009: “I don't care why fundamentals didn't improve, or why revenues and earnings are down, or why... All I care is the facts” 

Sept 24th, 2009:

Disclaimer: I'm no expert by any means. I'm just guessing...”

So pretty much let me get this straight. You come onto my blog constantly to point out the few calls i get wrong (notice you dont see me touting all the calls I've made that are right). My accuracy is at the worst its ever been right now and its still a clear 10%+ higher than yours. We had a MODEST down day today where my point total saw a 0.3% drop...how did the Dragon portfolio of garbage stocks do? The point total was down nearly 10%! You have no rationale to describe what you like or why you like it, you completely ignore the hypothesis of fundamental analysis, and you feel the need to offer your email and advice to people despite your "novice" status. You incessantly post about how hot a sector is and how your call is correct yet you have zero idea as to why its correct. Either own up to using a service or admit that you are getting luckier than hell at the moment.

This thread is based on garbage fundamental companies and since you have no idea what fundamental analysis is, this thread has little bearing to you. I would bet very strongly you'll find many more of your CAPS holdings on this list eventually.

Over and out,

UltraLong

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#28) On October 17, 2009 at 10:10 AM, dragonLZ (99.40) wrote:

UL,

YES on all:

- Yes, I do consider myself a novice investor

- Yes, I am more of a gambler than an investor (as all of my holdings are highly speculative)

- Yes, 95% of my buys are based on charts, but I don't rely on traditional "technicals" - I "invented" something much better :)

- Yes, I do think I might be proven very wrong very soon (but so far I haven't been)

- Yes, I said less than 3 months ago S&P will hit 1100 soon (and I hope we can agree I was right).

- Yes, I do only care about the facts. For example, I do not care that some bloggers or "analysts" think DTG is a $1 stock - I care about the fact that DTG is a $26 stock right now. I do not care that someone thinks market will collapse - all I care about is the fact market has been going up on a volume higher than ever.

And one more thing: The stuff you guys call "fundamentals" (looking up a stock on yahoo.com or msn.com and then copying and pasting that company's earnings and balance sheet) is something I also don't care about. I do not want to pretend I'm some kind of an expert just because I found on yahoo.com such and such company has no earnings and has a high debt...

- And yes, I'm not a serious investor, I'm just having fun...

And yes, I'm also very honest about myself and my investment skills... No pretending here... (but I agree I do like to brag and I do know that's not a very popular thing. In the future, I'll try to avoid doing that).

p.s.

I don't know why do you get mad so fast. I just said you made some wrong calls.

And nowhere did I say "I'm better than you", so you didn't really have to start comparing our two portfolios and points lost on a down day for the market. I know (and everybody else) your rating is much, much better than mine. I know you did well in this CAPS game. Congratulations! 

p.s.2  Alexpaz was the first one who introduced the idea that I subscribe to some kind of investment service... If that makes you feel better, then feel free to believe that...

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#29) On October 17, 2009 at 10:36 AM, dragonLZ (99.40) wrote:

As you guys mentioned MPG quite a few times already, I thought maybe I should post this here (as a part of my disclaimer or something like that):

#18) On September 21, 2009 at 12:21 AM, dragonLZ (98.87) wrote:

Last Friday, 9/18/09, I made the following buys:

MPG  400 shares at $1.67

CPE 400 shares at $2.15

FTWR 280 shares at $1.02 (after buying 500 shares at $1.19 four days earlier).

 

p.s.

Since then (that was a month ago), MPG is up 59% (this includes yesterday's 11% pullback) CPE is down 7.5%, and FTWR is up 39%... 

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#30) On October 17, 2009 at 11:04 AM, Bays (30.21) wrote:

Dragon, you are going to have a very hard time having tong term success investing if you are buying purely based on charts and ignoring fundamental analysis.

No offense, but a 6 year old could have picked a portfolio of 20 stocks back in March and still be up a healthy percentage.

Some of Ultras pick may be in the red right now, but the fundamentals of t hese companies will most likely catch up sooner or later and the market will price them accordingly.  

The market is "manic depressive" in the short term and youre investing thesis will most likely crumble sooner or later.

Good luck.

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#31) On October 17, 2009 at 2:10 PM, TMFUltraLong (99.95) wrote:

I have no problem with the fact that you buy on charts Dragon, but the problem is you attest to knowing nothing about charting or technicals... you say DTG isn't a $1 stock....WHY???? You have avoided answering WHY something isnt garbage on every single thread you have written on TMF where someone has bashed one of your holdings. Rather than stating, I just know its not...tell us WHY its not, that's what's bothering me. Just saying because I said so isn't enough....

UltraLong

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#32) On October 18, 2009 at 1:21 AM, dragonLZ (99.40) wrote:

As I hate I ruined this post by talking about me (and not the garbage stocks), I'll come back to comment on this post only if...:

- GTN closes at $4.36 (which will be a 100% gain since I issued my "Strong Buy" rating on GTN)

- MNI closes at $5 (54% gain from here) 

I think this is fair as if I'm wrong and UL is right, as you guys say, you'll never hear from me again. 

Now, let's get back to garbage stocks...

p.s.

I hope you (UL and Bays) won't mind if I briefly remind you of my existence if:

- My accuracy gets within 5 points from UL's accuracy

- My ranking gets better than Bays ranking

Once again, I think chances are you'll never hear from me again... 

:) 

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#33) On October 18, 2009 at 11:22 AM, TMFUltraLong (99.95) wrote:

And still no reason why GTN or MNI are buys....

UltraLong

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#34) On October 18, 2009 at 7:31 PM, Tastylunch (29.37) wrote:

UltraLong

thanks for the great blog. Your points are well thought out and I think your picks are on target.

CAR is another one that blows my mind that it's up so much. Not quite DTG but geez what's with the car rental segment lately?

I'm also amazed by how many lives Pier One has had as well.

nice smackdown as well btw.

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#35) On October 19, 2009 at 3:00 AM, APJ4RealHoldings (33.24) wrote:

I think its important to note that of the stocks mentioned in UltraLong's blog, only TRGT, DTG, and OGXI have had 5 year returns better than (40%) loss. 

All the rest of the names have dropped (75%) or much more (MNI, GTN, ETM, SIRI, ROIAK). 

Why would I bother mentioning?

Well for any would-be shorters, it's good to ask, how much more juice can be sucked out of a stock that's already been deflated?  Sure, it can still get pretty close to zero in valuation...but the risks involved for a stock that has dropped by so much are way too high in my opinion.  I mean many of these stocks have gone up well over 5 times, (500%+) and STILL be down over 70-90% over 5yr period!  The risk is too high in relative terms in my opinion. 

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#36) On October 19, 2009 at 6:46 AM, dragonLZ (99.40) wrote:

Chart

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#37) On October 19, 2009 at 11:44 AM, Bays (30.21) wrote:

Dragon,

You put too much weight on ranking.  Ranking does not always effectively reflect investing knowledge. 

If you would have had started your profile last September, instead of in the middle of huge rally, your score would not look the same. 

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#38) On October 19, 2009 at 12:34 PM, dragonLZ (99.40) wrote:

Bays, I agree.

p.s. Here is the update on Media stocks. Just trying to make sure you guys don't miss out on this HUGE rally...

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#39) On October 19, 2009 at 12:53 PM, cecamadocv2 (99.96) wrote:

Dragon your not even in the same stratosphere as Ultralong.

 

I used to think Ultra was just lucky, but hte more and more i look at his picks, the more respect i have for him.

He was a little wrong with the W shaped recovery (looks like its going to be a V with a few hiccups along the way).

But 3-4 months from now, we might see the S and P lose 10-15 pct... 

Best on this site, from my perspective

1.  Bravo

2. Portfueille

3 Ultra

All three are right up there, and have different styles... that all work

 

 

 

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#40) On October 19, 2009 at 2:22 PM, dragonLZ (99.40) wrote:

Theonecy, the topic is Garbage Stocks...

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#41) On October 19, 2009 at 9:36 PM, Tastylunch (29.37) wrote:

dragonLZ

how about you tell us why you make the picks you make

Ultralong did so, I'm sure you have it in your ability to do so in your next blog.

otherwise none of us have any reason to respect your opinion, as you clearly like companies that are in financial trouble

 

 

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#42) On October 20, 2009 at 12:47 AM, dragonLZ (99.40) wrote:

Tastylunch, I'll try to keep it as short as possible (and I don't think I'm going to say anything new):

95% of my picks are based on charts. I hate to call it TA as I have no (or very little) knowledge of traditional TA.  I never pay any attention to 50 MA, 200 MA, resistance points, chart shapes, etc., and I see that other people who call themselves TA experts do. Just to give you an example, I never was able to follow binve's charts and explanations of P1, P2 points, etc. I never draw any lines, never look at any points...I mean, I just don't know how to explain it...

Volume, however, is a big part of my analysis (combined with a few other things/rules I "learned" or came up along the way). Here you can see my volume story, and as you will see, 5 stocks I identified as possible winners based on my theory are yielding the following returns so far:

BPOP, price on 9/27/09 (when my Volume Story was posted) $2.75, today $2.71, return -1.5%

GTN, then $2.38, now $2.65, return +11.3%

CNO, then $5.04, now $6.54, return +29.8%

HWD, then $8.09, now $10.50, return +29.8% (not a typo, really same as for CNO above)

GCI, then $9.38, now 14.06, return +49.9%

Not too bad, I'd say (even though Bays will now say: "Any 6 year old could've done the same). Btw. September 27, the day I posted my Volume Story, was only 16 trading days ago, and S&P's return since then is 5.1%.

 

Why did I mention all of this so far: I don't think my picks are as bad as UL thinks they are, and I'm convinced there is a method to my madness.

Here is another example: My 50% portfolio.

On 9/14/09, I listed 13 stocks (many of them "fundamentally" not very good picks), and I said each one of them will have at least a 50% gain in 3 months or less.

So far, MNI has already hit my 50% target, OMN is at +46%, FTWR at +43%, BLC at +36%, CNO at +30%, NNBR at +24%, and so on (3 out of the 13 stocks are still in red).

The total portfolio's return since 9/14/09 is +20.2%, S&P's return during the same time frame is +4.7% (and there are almost 2 full months left to go...)

I hope you agree it takes at least a 7 year old to get returns like these... 

 

To be continued...

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#43) On October 20, 2009 at 1:45 AM, dragonLZ (99.40) wrote:

Tastylunch, I probably again gave no good explanation as to why I make the picks I make.

So let me try again:

1. I study charts

2. I think charts tell us a lot

3. I do very little fundamental analysis (or none at all)

4. By buying (and selling) based on charts, I think I follow people who know something I don't (and people who did the fundamental analysis for me)

5. Based on a few chart patterns I identified, I think I can say which companies will survive and are not as risky as other people think (sounds ridiculous, I know)

6. Buying stocks that majority of other people consider high risk, one can get the highest returns (both short and long term)

7. I don't have to be right on all of my picks. Exceptionally high returns on the companies that will survive will offset the loss on the companies that won't (I also set reasonable stop-loss orders so I never lost all my money invested in a single stock...)

That would basically be it.

Here are a few more points I'd like to make:

1. I don't like explaining my investment strategy as I know it sounds primitive and stupid (but all great minds were misunderstood by their peers... :)

2. I also don't want to reveal all of my "secrets" when it comes to calls I make

3. In spite of what the haters say (some people just don't like people who are different than they are), I'm very good at this chart reading thing. You will see, I promise... :)

p.s. Btw. Did you notice MNI was up 11% today?

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#44) On October 20, 2009 at 6:51 AM, dragonLZ (99.40) wrote:

Update on some of my recs is here (quite a few CAPS players are shorting TEN, ARM, SAH,...)

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#45) On October 20, 2009 at 10:04 AM, Bays (30.21) wrote:

 (even though Bays will now say: "Any 6 year old could've done the same).

Haha,

What I mean is that fundamental analysis, to some extent, has not been needed whatsoever since March. Everything is rallying, even garbage stocks. 

What you dont understand is that this will not last.  Now for someone who hasnt been through a bear market in CAPS, I wouldnt expect you to understand that.

Your method only works until it doesnt.  Last summer/fall stocks were hitting fresh 52 week lows everyday, your investment thesis would have lost you a lot of money.

Although I disagree with your method of analysis, I do wish you the best of luck. 

Cheers,

Bays

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#46) On October 20, 2009 at 12:40 PM, dragonLZ (99.40) wrote:

Bays, last summer/fall I lost no money in RL. Why? My method told me to stay away from stock market (I didn't know one can invest in reverse ETFs, otherwise I think I would've made a lot of money).

However, I do understand what you and UL are trying to say. Most likely, both of you are correct, but I'll try to prove you wrong. I know my CAPS portfolio (but not RL one) is gonna get killed during any correction, but in the long run...

I also think that my method will tell me when it's the time to start reversing my positions from green thumbs into the red ones. I know I'll lose a lot before I realize it's time to start reversing, but eventually, I'll come out on the top again. We'll see... 

Good Luck to you too, unless you are shorting in RL my RL holdings :) 

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#47) On October 20, 2009 at 1:35 PM, dragonLZ (99.40) wrote:

Inverse ETFs

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#48) On October 21, 2009 at 9:02 AM, Tastylunch (29.37) wrote:

dragonLZ

3. I do very little fundamental analysis (or none at all)

well that much is obvious. Many of the companies you propose have a very high risk of bankruptcy.

6. Buying stocks that majority of other people consider high risk, one can get the highest returns (both short and long term)

I'd be careful with that belief, risk isn't necessarily 100% correlated with reward. A lot of Wall Street firms got burned using this very same assumption. The Math nerds can tell you why if you are interested. Lots of papers have been written about it.

 1. I don't like explaining my investment strategy as I know it sounds primitive and stupid (but all great minds were misunderstood by their peers... :)

2. I also don't want to reveal all of my "secrets" when it comes to calls I make

3. In spite of what the haters say (some people just don't like people who are different than they are), I'm very good at this chart reading thing. You will see, I promise... :)

Well I guess we'll never cross the why bridge then for most of your calls.

You have every right to not want to tell people what you are doing. If it were me I wouldn't even mention to it anyone if I found some sort of trading holy grail.

But if you want to brag/show off what you are doing,don't expect a coronation if you aren't willing to share.

Not  a whole lot of people get real excited about someone yelling repeatedly they have a secret way to make money and then refusing to share it. More than a few people have made claims like you do on the internet and just disappeared.

It doesn't help your street cred either that you seem to like to bait/attack people, many of whom actually share what they are doing.

So I'm guessing from what you linked that you buy stocks hitting new lows with a flattening out chart that are experiencing above normal volume in out of favor sectors.

keep in mind that year had the greatest uncertianty over bankruptcy prospects of any market in recent memory. While the market is  never perfectly  efficiently priced it's usually not this off.

But if it's working for you, you might as well ride that horse until it dies.

p.s. Btw. Did you notice MNI was up 11% today?

nope don't care. Didn't pop up on the trading scans and the fundamentals aren't appealing to me. GCI was/is the only media play I've made for a while now. Sold that one too early.Eh it happens.

In any event good fortune to you.

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#49) On October 21, 2009 at 1:36 PM, dragonLZ (99.40) wrote:

TL, I can't argue with anything you said...

Good Luck to you too!

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#50) On October 28, 2009 at 1:59 AM, TMFUltraLong (99.95) wrote:

Cant help but pull a Dragon here and point out how poorly these garbage stocks have been performing with the market moving down only 3% in the past week and change. Notice how we also haven't heard from Dragon either. His accuracy has fallen 17% and his point total is down nearly 1400....

UltraLong

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#51) On October 28, 2009 at 12:41 PM, dragonLZ (99.40) wrote:

UL, what can I say? You were absolutely right. My portfolio is getting killed lately. In just a little over a week, my rating went from 99 down to 73, and my accuracy went from 70 to below 50.

Even the stock from my portfolio I didn't consider speculative are down 50% or so.

Even though I expected my portfolio to get killed during any (severe) market corrections, I didn't really expect anything like this.

So once again, what can I say? You were right and I was wrong. I apologize for my stupidity...honestly...

p.s. I'm not closing any positions in my portfolio as my portfolio is designed with "long term returns" in mind.  I'll be back...I think...  

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#52) On October 28, 2009 at 4:55 PM, Bays (30.21) wrote:

Lesson Learned:

Always stay humble or the market will put you in your place.

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#53) On October 29, 2009 at 2:21 PM, dragonLZ (99.40) wrote:

UL, I have a question for you (sorry, not related to garbage stocks):

As you know, a couple of months ago, I "came up" (or at least I thought so) with the MarketWhisperer thing...

Last night, I'm watching Cramer and he said something like: "Just like there is a horse whisperer or a dog whisperer, I'm a stock whisperer..."

I couldn't believe my ears. I think that's exactly what I posted somewhere a couple of months ago (and have it in my profile for the MarketWhisperer's portfolio). 

Now, my question is: Am I a copycat (unknowingly, I swear) or is Cramer (or somebody from his team) reading my blogs?

I'm asking this as you have been around longer than I am, so I'm thinking you might now if this whisperer notion (be it a stock or market whisperer) was used by other people before.

If anyone else has any knowledge about this, please help.

I was really thinking I was the one who came up with it... (but being new to this investing game, I might be wrong)...  

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#54) On January 13, 2010 at 8:56 PM, dragonLZ (99.40) wrote:

#32) On October 18, 2009 at 1:21 AM, dragonLZ (98.90) wrote:

As I hate I ruined this post by talking about me (and not the garbage stocks), I'll come back to comment on this post only if...:

- GTN closes at $4.36 (which will be a 100% gain since I issued my "Strong Buy" rating on GTN)

- MNI closes at $5 (54% gain from here) 

I think this is fair as if I'm wrong and UL is right, as you guys say, you'll never hear from me again. 

 

1/13/10:   MNI closed above $5 for the second time in last 3 days...

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#55) On April 09, 2010 at 9:45 AM, dragonLZ (99.40) wrote:

#32) On October 18, 2009 at 1:21 AM, dragonLZ (98.90) wrote:

As I hate I ruined this post by talking about me (and not the garbage stocks), I'll come back to comment on this post only if...:

- GTN closes at $4.36 (which will be a 100% gain since I issued my "Strong Buy" rating on GTN)

- MNI closes at $5 (54% gain from here) 

I think this is fair as if I'm wrong and UL is right, as you guys say, you'll never hear from me again. 

Now, let's get back to garbage stocks...

p.s.

I hope you (UL and Bays) won't mind if I briefly remind you of my existence if:

- My accuracy gets within 5 points from UL's accuracy

- My ranking gets better than Bays ranking

Once again, I think chances are you'll never hear from me again... 

 

Today is April 9, 2010, and:

- UL's accuracy is 78.6%, mine 74.1% (that's within 5%)

- Bays' rank is 294 (his rating 99.58), mine 262 (my rating 99.63)

Also, MNI is still above $5. GTN is still underperforming, but it's back to $2.70, and when UL called it Garbage, it was at $2.85.

Now guys, please don't misinterpret my comment again. I'm not trying to say your performance is bad (because it's not, it's great).

I'm just tryinng to say my grabage stocks have been kicking some serious butt as of late...

Good Luck!

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#56) On April 22, 2010 at 3:25 PM, dragonLZ (99.40) wrote:

Is anyone still following this?

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