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July 07, 2007 – Comments (0)

Friday was an interesting day, made an underperform call on (LOCM). This is one of those stocks that's fun to play in CAPS, but has a risk/reward profile similar to playing blackjack or roulette, i.e. real money shouldn't be played unless you know what you're doing and can afford to lose. They recently won a patent for a system that allows context based advertising for 411 calls and the stock ran from something like 4 or 5 bucks to 13 in less than a week.  The bull case is the technology creates lots of new revenue from licensing and/or makes them interesting to Google, Microsoft, et. al.  The bear case is any buyout premium is already in the stock and the patent isn't that much different than stuff Google and others are nearly ready to put on the street.  More commentary here, here, and here.   The price action was pretty dramatic on Friday, to say the least - at various points during the day the stock was down 10% , up 10% and ended up 5 cents below the open. 

If you've been following subprime at all, you may get a chuckle out of the satire posted on fellow Fool camistocks' blog.  'Toxique Funding of Pasadena,' like all good satire, there's an element of truth there.

And, if you've got opinions on CAPS system of scoring points on underperforms, check out fellow Fool prose976's blog for a little discussion.

If you're looking for a call for the Summer Foolery contest, consider an underperform on LEND, basically a gamble that the Loan Star buyout won't go through (or call outperform if you think it will).  I figure the worst case is -10 or -12 pts and a losing score on accuracy if the buyout goes through, if the buyout falls apart, it could easily fall and be worth 50 pts to the good.  A stock trading in the high 13's when there's a tender for $15.10 seems to indicate there are some doubts out there.  Please see comments re. gambling in the first paragraph if you're tempted to put real money at risk here.

My gold basket started to turn up Friday and got my rating almost back to where it was before I made the mass gold bet. Newmont bought out of their hedged positions and is now entirely unhedged, which would indicate they think gold is going higher. I'll leave my avatar set to gold bars as a reminder not to pick six stocks in one sector at the same time again.

Not sure when, but I'm thinking of doing a blog on Social Security. I followed this a few years ago when the proposal for partial privatization was floated, but haven't kept current. Will need to do some research to refresh my memory and get updated facts.  Requests for any specific aspects you want covered cheerfully accepted.  No promises, but I'll try and please the audience. Best guess is 3 or 4 weeks down the road.

After reading several blogs, I've come to the conclusion that the blogger charm is awarded on an entirely random and unpredictable basis. 

Disclosure:  I own some shares of Yamana Gold (AUY), which is part of the 'gold basket' mentioned above. No position in any of the other companies mentioned in this blog.

Thanks for reading. 

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