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MPG: Is today the day to buy it or short it?

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August 09, 2010 – Comments (25) | RELATED TICKERS: MPG.DL2

Today, after the market close, MPG will be reporting its earnings.

Maguire Properties Inc. is one of the most hated stocks here on CAPS. I don't remember ever seeing its CAPS rating being anything other than 1 (FYI: there is no zero rating in CAPS).

I wonder why? What can be so wrong with a real estate company in California? Or a company that has a negative $12 EPS with 4.5 billion in debt? Beats me.  

I like MPG. But that's just me. I like highly speculative stocks. I also like being a little bit of a contrarian. It's fun. Sometimes.

Well, let's take a look at some PROS and CONS when it comes to making a correct call on MPG today:

PRO# 1: MPG was down on Friday and it's down again today (on an up day for the market), meaning expectations are low for today's earning announcement.

CON# 1: All big drops come in threes (third one being the mother of all drops).

PRO# 2: MPG is down 36% from its 52W high. It's time for some rebounding.

CON# 2: There is still 64% left for this stock to go down to zero (Is my math right...?)

PRO# 3: MPG's CAPS rating is 1.

CON# 3: MPG's CAPS rating is 1.

PRO# 4: Market is headed for a new high (say some people).

CON# 4: Market is headed for a double dip (say some people).

PRO# 5: MPG is still up more than 300% from its March 2009 low.

CON# 5: What goes up must come down (especially in California).

Well, there you have it. Decide for yourself.

There are only 2 things that can happen tomorrow morning when the market opens: MPG will either be up a lot or it will be down a lot (OK, there is more options, but these 2 are the most likely ones).

I hope it's the up scenario that plays out.

I like this chart a lot.

 

Good Luck MPG!

25 Comments – Post Your Own

#1) On August 09, 2010 at 1:43 PM, JaysRage (89.42) wrote:

If you think it has a great chance to move drastically one way or the other and you don't know which one, you could use options to bet on volatility.  

I'm not a fan of MPG as a company, but they aren't high enough for me to down-thumb and not even close to high enough for me to consider putting real money on a short.   

I'm not going to play this one at all....but I think the most logical play is volatility. 

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#2) On August 09, 2010 at 3:43 PM, bothisellhigher (29.02) wrote:

last friday it dumped over 6.5%...there  has not been any volume to speak of...(I do have interest in your "sudden and substantial high volume theories)...I don't see what you would like about in the chart above...this post is a puzzler!

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#3) On August 09, 2010 at 4:40 PM, dragonLZ (99.38) wrote:

JaysRage, thanks for the suggestion, but I'm not a big fan of volatility game (maybe just because I don't know how to play it).

bothisellhigher, How come you don't see it in the chart?

OK, I agree this is not the best looking chart around (presentation-wise), but this is the only one I'm "allowed" to use.

However, even in this not-so-perfect chart, one can easily see that MPG had huge volume jumps on its way up, while the volume dried up every time the stock was going down or moving sideways. I love that kind of volume pattern.

And the reason why I posted this is just to see if my volume theory is "stronger" than bad fundametals (and all the CAPS hate). I like to challange my theories all the time.

Posting something about a stock everybody thinks is a winner is just not my thing.

Good Luck!

p.s.

I'm glad you are showing interest in my volume theory. I'm convinced it works, and I will try to prove it.

Please keep in mind MPG is not one of my typical volume plays, but it's close. I agree with the rest of the world that MPG is a very speculative stock, but based on its volume pattern, I think it shows some nice potential. 

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#4) On August 09, 2010 at 8:27 PM, TSIF (99.96) wrote:

MPG remains a suckers bet. The 10% it will open down tomorrow doesn't come close to the negative value it deserves.  MPG remains an example of the speculative portion of Mr. Market who believes that PAST valuation have anything to do with current reality.  MPG will be used in textbooks in a few years as an example of volitility in an irrational market. 

When you sell your best assets and the few that you have that are producing revenue are not coming close to making up for the losers you have a no-win situation.  The only thing that's saved MPG so far is that it used completely different creditors on most of it's assets and kept the mortgages defined and separate.  Any creditors who push on MPG's buttons just get ignored and MPG stops paying anything on that asset.  VERY smart business practice.  Built-in protection against failure.  IN the long run, however, no new creditors can be found and they will not be able to pay the mortgage on the better assets.

No combination of good luck or management can recover you to a level you use to be at if you don't have the assets you use to have.

 

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#5) On August 09, 2010 at 11:00 PM, Tastylunch (29.29) wrote:

This has to be the very worst stock you've ever talked bullishly about Dragon, the company itself is worth far less than nothing, which probably means it will triple and then promptly go to zero. :)

thanks for the reminder for me to stalk it short for the 8th (9th?) time. :)

Love the volatility on this name, it's great for trading.

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#6) On August 09, 2010 at 11:46 PM, dragonLZ (99.38) wrote:

You guys might be right. I said before there must be a reason why a stock like MPG is only at $3 this late into the rally (that started back in March of 2009).

However, I'd also like to remind you that WNC (1-star stock) at $3 was also considered a garbage just like MPG. It's now at $7.97. WNC's 1-yr return: 400%.

Or how about CVGI, another 1-star stock that was considered junk back at $3? 1-yr return: 200%.

What do these 2 stocks have in common (other than being suppliers to trucking industry)?

Huge increase in volume when they started going up.

 

 

 

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#7) On August 09, 2010 at 11:52 PM, dragonLZ (99.38) wrote:

Many people also ask themselves: How can LCC (US Airways), such a crapy 1-star stock be at $10 right now, and have a 200% 1-yr return?

I guess they would know how if they knew what happened to LCC when it was at $2.50.

You got it. A huge increase in volume.

 

 

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#8) On August 10, 2010 at 11:03 AM, TSIF (99.96) wrote:

LCC, CVGI, and WNC all have something in common that MPG does not have....they have managed to intermittantly have positive earnings and/or positive cash flows.  Part of this comes from their ability to CUT heavy and still maintain their assets.  All were also priced low due to heavy debt.

Debt was a key determination of investors valuations at the peak of the recession.  They over did it.  Most of us didn't realize that debt holders would rather let you not pay them than take you over and liquidate you.   Given a few good orders and the realization that they were not bankruptcy candidates they rebounded from what was a below reasonable value to above reasonable value. They will settle in.  In the long run, cutting your way to savings is a short term prospect. You have to keep the workforce to take advantage of orders and you have to keep your customer service, sales, quality up enough to get orders.

I fully agree that VOLUME is a good tool.  What it does is set a stronger resistance level as new shareholders enter in at the new price point.  What it does not do is guarantee that the company can maintain investor confidence to hold that level. While you site some good examples of companies that were perhaps undervalued at one point, responding to some economic stability, there are just as many that set new resistance points with high volume that continued to disappoint investors. I think you can find a few on your various "players" lists. 

As such, I like volume as it sets new resistance levels.  I don't believe it's as standalone of an indicator as you present it. MPG, BC, TLB, etc, may bounce, some may bloom, some may overshoot for short periods, but the fundamentals suggest that some will not "make it". Some will pull a YRCW, APP, AIB, BANR ....

TSIF 

 

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#9) On August 10, 2010 at 12:38 PM, dragonLZ (99.38) wrote:

TSIF, most likely, you are right. At this point, I really can't show anything that would prove you wrong. That's why we have to wait and see, I guess.

However, I want to remind you again that not all of my picks are based on the volume theory.

For example, I picked APP without looking at its chart. I just thought it had a good story (boy, was I wrong).

Look at its ugly chart. The volume actually started picking up when APP started going down.

 

 

YRCW was picked based on momentum, not based on volume. There was no volume increase for YRCW either (but its very high right now):

 

AIB and BANR were picked based on the volume spike, but unfortunately, their volume on the way down was much higher than on their way up.

So far, that's not the case with MPG...

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#10) On August 10, 2010 at 12:51 PM, EnigmaDude (89.37) wrote:

Hey dragon, not everyone thinks MPG is a short candidate.  Here is what Zacks has to say:

MPG Office Trust has assets in some of the best long-term, supply-constrained office markets in the country. Rents continue to increase as leases roll, which is a positive sign. In addition, new construction in the company’s core markets has virtually come to a halt, which is encouraging for long-term prospects. We maintain our Neutral rating on MPG Office Trust with a Zacks #1 Rank, which translates into a short-term ‘Strong Buy’ recommendation.

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#11) On August 10, 2010 at 1:37 PM, TSIF (99.96) wrote:

I know not all your picks are based on volume, but as you indicate, with any pick, time will tell.....

 "So far, that's not the case with MPG..."

Again, I like volume as a resistance builder, but if you dump a few hundred ton of rock into a levi and a hurricane hits, the levi may not hold.  In some cases, it's a slow erosion.  Maybe some fresh rock will help, if someone has some to dump in.  More likely the parties at play are just going to argue over whose responsible and who will fund it while they  let the levi erode. 

 

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#12) On August 10, 2010 at 4:04 PM, dragonLZ (99.38) wrote:

EnigmaDude, thanks for trying to make me feel good about my call... :)

TSIF, all I can say about that: Time will tell... :)

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#13) On August 10, 2010 at 4:23 PM, dragonLZ (99.38) wrote:

MPG misses the earnings estimate and ends the day (only) 5% down (on a down day for the market!!!).

Today's volume: 1,239,586

Average volume: 1,221,100

Wasn't today a perfect day for MPG investors to dump shares of MPG? Did it happen?

It looks to me that for some reason people are not too anxious to sell MPG shares.

Is $5 the next stop?  :) 

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#14) On August 10, 2010 at 4:38 PM, dragonLZ (99.38) wrote:

Reding my comment #13 reminded me of something. 

Last time I said "people don't seem to be too anxious to dump this stock" was back in October of 2009. I said it about WNC.

WNC was at $2.65 back then, and it's at $7.55 today. 185% return in 10 months...

p.s.

I'm not suggesting the same thing will happen to MPG...but it would be nice...  

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#15) On August 10, 2010 at 4:49 PM, dragonLZ (99.38) wrote:

An here is TSIF's opinion on WNC from Sept. of 2009:

#40) On September 28, 2009 at 11:10 PM, TSIF (99.79) wrote:

 WNC, IMnsHO is a DOG!  Thanks for the pointer, if it pops above $100 Million market cap then I'll have a new CAPs short!!! :)  Beer on that one??

You still owe me that beer...

p.s. Just teasing you. Sometimes is volume that doesn't work, and sometimes is fundamentals... :) 

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#16) On August 11, 2010 at 10:10 AM, TSIF (99.96) wrote:

Yep, happy to pay up a few.  Swing on out my way and we'll drink our losses, celebrate our wins, (if we have any), and empty the beer in VOLUME!!!   :)

I'm much more particular than I was a year ago about what I count out.  With a little luck, good management, and a little recovery, companies such as WNC, CVGI, etc. have a chance. You'll finad many instances in the last year of my Lenders are Lenient because they are smarter than I thought theory that I developed since then.

TLB's will stay solvent but stagnant.  Those companies booking losses and selling assets in this minor recovery are still in my doghouse. 

Down down 200....off to buy some TNA and get ready for the real investors to take the hobby investors/rabbits money....

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#17) On August 11, 2010 at 10:33 AM, TSIF (99.96) wrote:

Hey Dragon, what's your current theory on SEED, I see it's down 20% since:

"Next time SEED jumps, it's going to jump at least 20%. It might take 1-2-3 months for that to happen, but it's coming. $15 stock soon after that...   It might sound complicated, but it's really simple..."

It's been 5 months now, is it a good time to buy.... $15 would be a double.  Sounds like a good buy? :)

Sorry....was just looking at some leaders and laggers for today and I couldn't resist!!!!  If we voice our opinions, there's lots of ammo for fodder!!!!  :)

I'll toss in a beer for being a pain!  :)

Time and Volume..... 

High volumes of beer over a long period of time!!!  :)

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#18) On August 11, 2010 at 12:17 PM, dragonLZ (99.38) wrote:

Hey Dragon, what's your current theory on SEED, I see it's down 20% since:

"Next time SEED jumps, it's going to jump at least 20%. It might take 1-2-3 months for that to happen, but it's coming. $15 stock soon after that...   It might sound complicated, but it's really simple..."

I'm taking the Fifth (don't want to incriminate myself)... 

 

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#19) On August 11, 2010 at 12:49 PM, dragonLZ (99.38) wrote:

Sorry....was just looking at some leaders and laggers for today and I couldn't resist!!!!  If we voice our opinions, there's lots of ammo for fodder!!!!  :)

TSIF, when I'm proven right, I like to brag about it (and tease others). When I'm proven wrong, I expect to be teased about it.

That's the way I (and my friends) go about any kind of competition.

My friends and I still tease each other about stuff that happened 10 or even 20 years ago. 

That's why I don't understand why some people here on CAPS are so sensitive when it comes to their bad calls. (I, for example, have no bad calls, just the calls that haven't materialized yet...).

Btw., Volume and Time sounds good to me when it comes to beer. I live in GR, MI. Are you close? (I think you told me once, but I forgot? 

Next time I have a successful trade, I might have enough money for a ticket and a six pack... (The way the market's behaving, it might take a year or two...)   :)

Good Luck!

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#20) On August 11, 2010 at 1:10 PM, TSIF (99.96) wrote:

I'm learning that blogs are a little difficult to communicate with, especially with someone you don't know well.  We are all generally sensitive by nature, (especially about being wrong), our calls have an infinite time to mature, (so "most "of mine are still right, but I won't claim all of them), but a finite time to be noticed.  :)  So I'll pay up on WNC even if my call hasn't matured yet!  :)

Competition works better in person!  Facial expressions, tone, body language all help interpret.  The payouts for the bets are more immediate!!!

I hear houses are cheap were you are, but MI is not on my list anytime soon to travel to, but we have been doing a lot of travelling lately.  I'm Northeast, a few hours from anything interesting on any travel brochures, but keep me in mind when that SEED, TLB or BONT come through for you. Wear the BONT Shoes and TLB dress so I can recognize you when I pick you up at the airport!!! :

 

 

 

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#21) On August 11, 2010 at 4:42 PM, dragonLZ (99.38) wrote:

Wear the BONT Shoes and TLB dress so I can recognize you when I pick you up at the airport!!! :

I think you misunderstood what I once said about BONT shoes and TLB dresses.

I wear those only at home (when my wife is out). Would never wear them in public. My legs are O-shaped, and I've gained a lot of weight lately...

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#22) On August 11, 2010 at 5:18 PM, TSIF (99.96) wrote:

Thought you might be ready to come out of the closet.....I'm not sure what O-shaped legs look like, but that will make it easier to recognize you as well......

Come on, MAN UP!

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#23) On January 26, 2011 at 8:16 PM, ContraryDude (32.26) wrote:

dragon,

Zacks just upgraded MPG to outperform and it got a mention on PBS from an analyst who said she is building a "large position" in this stock. I am thinking of initiating a position in my IRA.  People don't want to believe that the commercial real estate market in LA is turning around, but it is.  And MPG stands to benefit hugely from the turnaround.

Good luck,

EnigmaDude (aka ContraryDude)

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#24) On January 27, 2011 at 5:58 AM, dragonLZ (99.38) wrote:

I guess they don't call you contrary dude for no reason... :)

Thanks for the info.

God Luck.

 

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