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Random Musings - LIBOR Trouble & My Ever Growing Watch List

Recs

47

May 27, 2010 – Comments (15) | RELATED TICKERS: LIWA , CVVT , IDTI

Here's a short blog for you tonight folks because a lot of what I have to say here isn't anything new or exciting but simply a different spin on something I've already put out.

I've been keeping my eye on the London Interbank Offered Rate or LIBOR which is the lending rate banks charge each other to borrow money. I specifically prefer to follow the most popular measure which is the three month LIBOR rate. The three month LIBOR has more than doubled over the last two months as fears of the Euro have completely crushed trust in banks. Now I know the first thing you must be thinking is "Well gee, the LIBOR is only at 0.54% now and it was at over 4% when the financial crisis began in 2008 so who really cares!" If you're thinking this you are partly right...it's not as if we have a complete lack of liquidity in the system.

This move higher though is a direct reaction to investor sentiment declining and is a direct statement against confidence in European banks. There are countless banks out there which are teetering on insolvency but have been kept afloat by favorable governmental or EU actions. The problem here is this.... rising LIBOR rates screw even the good banks (which can be counted on my hand there are so few) which makes it considerably more expensive to borrow money. Just when you think the banks have a chance to rebound, we see the LIBOR rise just high enough to squash any profits they might be bringing in, and of course, lending rates are rising faster in Europe than they are in the US right now, but make no mistake, they are rapidly rising in both regions. I think we need to take a good look at this as it could be a signal of another period of major stagnation in the financial markets. I do feel there is liquidity in the system so we're not experiencing another financial collapse, but we are seeing a collapse of confidence as evidenced by the LIBOR. Smart money is going to avoid financials in the intermediate future and I would suggest doing the same. 

On the lighter side of things, I have been adding to a growing list of limit buy orders on CAPS and rather than get bombarded with questions as to what I might like and what price I might like it at (since I know CAPS alerts you to anytime I pick a company whether its a buy or a limit buy), I've decided to go "Portefeuille" on you all and simply post the 28 companies I currently have limit buy orders for. 

As the market heads lower I am positioning myself toward companies with greater growth prospects that are significantly off their highs and trading very near their cash value. Most of these companies have growing book values, long-term growth rates over 10%, strong net cash positions and have grotqsquely awful technical patterns. When the market is rising it's time to be adding to those short positions and when the market is falling, it's time to go hunting for buys and as you will see, China is a strong buy in my eyes. I've included today's closing price (05/26/10) as well as my limit buy price and included a copy and paste of my pitch for each security. All of these pitches have been entered at some point over the past six days so the fundamental information provided should be very close to being accurate. 

Currently on my CAPS limit buy list:

China Security & Surveillance Technology (CSR)
          • Closed at $4.35 / limit buy $3.18

Despite the fact that I feel the management of this company is completely hopeless, they do manage to churn profits and log product orders. What they have also done is dilute the living hell out of their shareholders over the past year. Have you noticed the extra 19 million shares currently at market compared to last year... that's horrendous. Long story short here, China Security & Surveillance is trading by my conservative estimates at about 5.2 times 2010's figures. They are priced at about 0.6 times book value and have solid revenue momentum behind them. I can see them consistently growing revenues at 16% per year but I'm concerned about their shrinking margins due to pricing pressure. With that, this is why we are using technicals in combination with limit orders to attempt to snipe CSR at a good risk/reward price. Currently I am entering an order to nab CSR at 3.18 or lower which would place this at a price to earnings of just under 4, less than half of their book value and I think this would be a value even the hapless executives can't screw up, but we can only hope... Chinese management never ceases to amaze me.

RTI Biologics (RTIX)
          • Closed at $3.48 / limit buy $2.62

Just buying myself some falling knife protection again. I absolutely think RTI Biologics and the entire medical device sector is the way to play the 2010 decade and we should see a real ramp up in revenue and earnings in these companies within 2-3 years. RTIX is trading at just a fraction of its book value with 4M in net cash and trading still at roughly 16 times 2011's figures. It's not super cheap, but it's cheap enough to get me to buy-in. I'm attempting to catch another falling knife here with a limit order for $2.62. This would be roughly half of their book value and put them at about 13 times earnings with a 7% long-term growth rate.

Advanced Battery Technologies (ABAT)
          • Closed at $3.24 / limit buy $2.82

Advanced Battery Technologies is charged up with lithium ion goodness and the market simply refuses to give them their fair value. ABAT stated guidance roughly 10 days ago and used and abused by the market panic. In 2010 we're looking at aggressive growth with revenues in the 100-110M range and profits in the 32M-36M range. Assuming somewhere in the middle there you get about 65% year over year revenue growth, 50 cents in EPS, and roughly 75 cents in net cash. Let's just for fun back out the cash and we'd see a company trading around $2.53 over cash bringing in 50 cents in profits a year. Seriously, what the hell kind of crack are investors on that they'd pass up a bargain like this. I am going to buy myself some falling knife protection and look for this to possible nip the top of a gap 13 months ago around $2.82. That is where my limit buy order currently sits.

China Valves Technology (CVVT)
          • Closed at $9.10 / limit buy $6.68

I'm back to fight the good fight against stupidly valued securities, and today China Valves Technology is our winner. Unlike the norm, this isn't an overvalued company but a grossly undervalued one that technically can't catch a break. China Valves has been impressively growing their business for the latter half of a decade, meeting or beating their revenue and EPS estimates. They have no debt, 9.6M in cash, a solid product line that is largely recession resistant, a solid margin, and have reaffirmed guidance plenty of time. Once you back out their cash they are trading at just over 2 times book, about 6.5 times 2010's figures and roughly 5-5.5 times 2011's figures. CVVT is disgustingly cheap in my opinion and technically could get cheaper, thus the need for a limit buy order at $6.68. I easily feel it could double from that level.

China Finance Online (JRJC)
          • Closed at $6.58 / limit buy $5.24

China Finance Online almost gives you the opportunity to gamble your dollar for the promise of two dollars and if you're wrong, at worst you basically get your dollar back. China Finance has a whopping $5 in cash per share with no debt and is cranking out roughly 1-2M in positive cash flow per quarter so chances are they won't be burning that cash unless they go on an acquisition binge. JRJC has commented previously that they expect around 10-18c in 2010 EPS which isn't thoroughly exciting, nor is their 11-12% growth rate, but at $5 when you back that out I'm willing to take a shot at paying $1.28 for a cash flow and EPS positive company. Still, with Chinese stocks teetering on the technical brink, I'm placing a limit buy order median way between here and its 2009 low, so $5.24 seems like a good technical number. At this point I'd be paying 19 cents over cash for a profitable, growing company...totally insane!

Lihua International (LIWA)
          • Closed at $8.31 / limit buy $6.42

Lihua International astounds and amazes me like many Chinese small and mid-cap companies with its unbelievable cheapness. Sure their business is tied largely to the price of copper since they are in the business of recycling copper, but give me a break here, how cheap are we going to let this get before we give it a normal valuation. LIWA has $1.50 in net cash per share, so backing that out that leaves us roughly $6.50 based on its current price. They have already guided for 40%+ growth this year and raised their EPS estimates to roughly $1.22 for 2010. Doing the math that's basically just over 5 times after cash figures. They have expected their business to grow at roughly 20% over the next three years so pretty much we're under four times 2012's figures with bountiful cash and a relatively solid copper market. These figures are almost as retarded as the valuation LIWA receives. Given the pennant formation break I am going to place a limit buy order at $6.42 hoping to catch a downward spike on copper pricing pressure. Extremely cheap company is all I have to say.

Orient Paper (ONP)
          • Closed at $8.77 / limit buy $7.24

China, China and more China is the theme here if you haven't noticed, but I'm definitely approaching this as a wading pool not a full-fledged ocean yet. I'm wading into Orient Paper with a limit to buy order at $7.24 which according to my voodoo magic makes a perfect entry point. Orient Paper is actually logged to increase growth dramatically in the latter half of 2010 and 2011 as new production lines come into operation. They have been more than conservative in their estimates this year of $1.01 in EPS and should easily trounce these figures. Long-term growth has been ridiculously strong and should remain so through all of 2012 before we see any major slowing. Cash is weak but who cares when you're trading at something like 5.5 times forward earnings. If I can get my strike I'd nab this at 4.5 times forward earnings. Come on plunge!

Atwood Oceanics (ATW)
          • Closed at $27.06 / limit buy $21.65

Oh my goodness, now we're beating down the good companies with the crappy ones. So Transocean made a whoopsie out in the Gulf of Mexico, it's not like this wasn't expected to happen at some point between now and let's say 2015. Accidents happen and they really shouldn't affect a company like Atwood Oceanics which is far and away the best company in the sector. A steady growth rate of 12%, trading at less than 6 times future earnings and generating over 300M dollars a year in cash flow. Their earnings momentum has then moving higher every quarter and the only thing working against them is pending litigation against other companies in their sector and a poor technical pattern. I'm going to bet that pattern could yield some panic selling in this sector and with that I'm putting in a limit order to buy for $21.65. If this level were to hit I'd nab Atwood Oceanics at less than 5 times forward earnings and hardly 1.1 times book with a PEG of something like 0.45....just sick!

Integrated Device Technologies (IDTI)
          • Closed at $5.60 / limit buy $4.70

I'm back trying to catch more falling knives. Again, another solid company that is being dragged down because there is an overwhelming pile of crap out there and not enough good company like Integrated Device Technology. IDTI has a really impressive cash pile with just over $2 and no debt to speak of. Backing that out at the moment you'd get a company trading at $3.50 a share that has beaten in four straight quarters. They have their restructuring charges behind them, they are profitable to the tune of nearly 50c in EPS in 2010 and probably over 65c in EPS in 2011. Using that cash estimate it's trading below 6 times earnings. I'm looking to catch it even further down the line and using a trend support at $4.70 as my basis of entry. Once again, if I get this, there is no sanity left.

Foster Wheeler (FWLT)
          • Closed at $23.33 / limit buy $19.82

It's so incredibly retarded how we bid the crappy companies up and let good companies fall in tandem with the crappy ones when they finally deflate and come back to earth. Foster Wheeler provides construction and engineering services to the oil industry and they are looking dirt cheap based on my estimates. They maintain just shy of $6 in cash per share and are currently trading at 9 times 2011's figures. If we back out their cash pile that figure drops to just over 6 times earnings. Cash flow is strong, business demand is good with a long-term growth of 9%-10%... I mean really, what more could you ask for? I'm taking a stab that traders will be dumb enough to fill that gap around $19.82 and I'd love an entry there. 

Rino International (RINO)
          • Closed at $12.38 / limit buy $8.69

Behold the great dome of dumb, at least that's what I would like to call this technical pattern currently exhibited by Rino International. This is a good company that may got monkey raped by analysts that have no clue how to place earnings estimates on a fast growing Chinese stock. RINO is showing us 30% yearly growth, has a disgustingly impressive $3.40 per share in cash with no debt and are trading at only 5.2 times 2011's figures without backing out the cash. Essentially, you get this company for about $8 over cash right now and they're bringing in almost $2 in EPS a year...yeah 4 times earnings with 30% growth...how about that PEG of 0.13? Despite this the market is giving them no respect and a dome formation is making it look likely that this will head to $8.69 which is where I'm placing my knife catching limit buy order. Keep in mind if this hits I will get a company making $2 a year in EPS for just $5 over its cash value..sick!

China Marine Food Group (CMFO)
          • Closed at $5.68 / limit buy $4.43

Continuing the game of catch the falling knives. China Marine Food Group has a very successful and quickly growing business. 35-40% yearly growth rates, $1.66 in cash per share with minimal debt, and trading around 5.5 times 2011's EPS projections, that should about sum it up. Margins are healthy, cash is moving higher and all aspects of their business are growing. Back out that cash and you're paying $4.18 for a company scheduled to make 75c in EPS this year and probably $1 in 2011, so just over 4 times forward EPS. I'm placing my knife-catching limit buy order at $4.43. If this level we're to hit I'm paying $2.67 roughly after cash for a company making 75c-$1 in EPS.

Telecommunication Systems (TSYS)
          • Closed at $4.35 / limit buy $3.87

Telecommunications Systems is suffering from an acute case of stupiditis. It's a problem where shareholders overlook a good value and dump shares as fast as they can. Telecommunications Systems reported what was a pretty solid quarter and has successfully been growing their business at 15% per year. They have seen a pretty much flawless integration of the four businesses they acquired in 2009 and aside from an unwelcome pile of debt, they have had growing cash flow and are trading at just 8.5 times future earnings. Their backlog is strong at 586M dollars and aside from a gap in their chart between $3.56-$3.84 there's a strong likelihood that they will move up over the next few months/years as they continue to gain wireless market share. I'm placing my limit buy order at $3.87.

KongZhong Inc. (KONG)
          • Closed at $5.98 / limit buy $4.71

Ok, the valuation on KongZhong is just re-goddamn-diculous and I'm going to take something like my 15th stab in the last 24 hours at a falling knife with a limit order. KONG is has amassed $3.80 in net cash once you take into account their recent 9.6M dollar purchase and their tiny 3M in short-term debt obligations. Think about this, that means 65% of the value of this company is tied up in cash. That wouldn't mean a whole hell of a lot if their revenues were falling or they were dancing around breakeven, but this company churns 37c-50c in profits for the year regularly now! Back out the cash and even right now you're paying only $2.18 for a company slated to earn 42 cents this year and 65 cents next year... thats a forward p/e of about 3.7.. that's insane! And it's not like their business isn't growing! Sure they are largely tied to one mobile application but they are trying to diversify and growing their business at 11% per year. Their current PEG is like 0.23 or so ( I don't feel like breaking out my calculator ). KONG is dirt cheap but I'm still going to try to nab it lower with a limit buy order at $4.71. If somehow my sadistic order hits, I will get KONG for less than $1 over cash. They will be cash flow positive and churning 7-11c profits per quarter...just sick!

China Nepstar Chain Drug (NPD)
          • Closed at $3.89 / limit buy $3.12

China Nepstar is like Rite Aid with actual growth. My biggest concern with China Nepstar is that it's growing beyond its own capacity to understand its cost structure. Effective tax rates and loose wallets are crippling its profit potential, luckily this makes cost cutting even easier and more effective. We have a nice dividend now, same store sales are up almost 7%, $1.60 in cash per share and trading at less than 2 times book with a forward price to earnings around 15 right now. What I'm trying to do is catch a falling knife here at a limit buy order of $3.12. At this point you'll get NPD for less than 1.5 times book, about 11-12 times sales and with a 12% long-term growth rate. At those levels I feel there is reasonable risk/reward with $1.60 in cash backing my $1.52 bet and knowing moderate cost cutting could bring them back to earning 55c a year easily.

ATP Oil & Gas Inc. (ATPG)
          • Closed at $12.54 / limit buy $7.86

ATP Oil & Gas is finally coming back down to a reasonable valuation and although it is nowhere near my favorite company in the sector I'm angling this as a limit order which might catch ATPG as a falling knife. ATP Oil & Gas has seen solid profits in the past but has been experiencing higher than normal disappointments in production and expensing. I think they could be trading at approximately 6-7 times 2011 figures at the moment which is just slightly undervalued. Revenues are scheduled to rise like a rocket again but I think it'll be a while before they re-visit those 2007-2008 figures. I'm not a huge fan of the 1.15B in net debt but on the all it makes for an intriguing play if it drops below book and can maintain a 25% growth rate. I'm placing my limit buy order at $7.86.

China Agritech Inc. (CAGC)
          • Closed at $12.27 / limit buy $6.85

China Agritech is quickly moving back into buyable territory and yes I realize I am making up words as I go along here. CAGC had been trading at something like 35+ times 2011's figures and was growing at roughly 30% over the next two years. They are still slated to grow at 30% but are now staring down a forward price to earnings of just 12 which is still more than i would pay for CAGC at the moment. They have a solid balance sheet with $1.16 in cash per share and currently they're sitting at just under 3 times book. What I'm looking to do is enter a limit buy to pick up CAGC at $6.85 which places this at roughly 7 times 2011's figures with a 30% growth rate and about 1.5 times book value still with $1 in cash on hand. I'm not sure if I'll get this entry point but I can hope right?

China North East Petroleum (NEP)
          • Closed at $5.50 / limit buy $3.74

I'm setting up more falling knife targets and China North East Petroleum is next up on my list. NEP is actually a solid little money maker, they unfortunately don't yet understand the concept of reporting earnings in a timely manner. In fact, one of the main reasons NEP is down so much lately is because they face delisting from still not having filed their December quarterly report and annual report. What I suspect NEP is capable of is something like 49-55M in revenues with profits in the range of 66c-73c for the full-year. They maintain 80 cents in net cash per share and trade around 1.9 times book value. My target limit buy is $3.74. At this level NEP would be trading at roughly 5-6 times earnings, just over 1.2 times book, and it would make a perfect technical bounce point as the divergence from bottom to top of their recent pennant formation was about $4 and old school technicians will tell you that this pattern likes to mirror itself to the downside.

Transocean Inc. (RIG)
          • Closed at $58.58 / limit buy $48.55

You know that game you used to play as a kid with a knife in one hand and your hand on the table as you try to stab the table in between your fingers without stabbing your fingers, well that pretty much sums up this limit order. I'm attempting to do more knife catching here with Transocean and am putting in a limit buy at $48.55. RIG is already trading below book value and with reason at the moment. They are facing considerable litigation and revenues have been dropping for three consecutive years. Despite this cash flow remains incredibly strong and their oil rig presence is basically unsurpassed. If I can get my limit order hit they will be trading at roughly 6 times 2010 figures and perhaps less than 5 times 2011 and they should see a return to revenue growth in 2011 as well. Although largely indebted, cash flow remains very strong regardless of the price of oil. It remains one of my favorite long-term holds and I'm eager to see if it will trade as low as $48.55!

Arcelor Mittal (MT)
          • Closed at $29.07 / limit buy $24.08

Poor Arcelor Mittal is taking it on the chin again just because a few people got their knickers in a twist over this rampant downward action. Arcelor is one of the very few larger companies that should be relatively immune to this sort of overreaction but as we've seen it's not. They are already trading at 0.8 times book and just under 7 times future earnings. I am trying to catch a falling knife here and entering my buy limit order at $24.08. At this level we'll get a company well below 0.7 times book and under 6 times forward earnings with solid cash flow and a good history of beating analysts' estimates. I'm looking for solid growth in the energy and industrial sectors so don't worry about any expected slowdown in housing...for now...

Force Protection (FRPT)
          • Closed at $4.24 / limit buy $3.10

No one wanted to give DynCorp any respect in the defense solutions sector and look what happened - they got purchased for a 40% premium. Now we have Force Protection which has $1.91 in cash per share with no debt and is trading at just $4.23 while fully profitable. The beef with Force Protection has always been that their revenue stream is highly inconsistent, luckily they are consistently profitable and financially sound. What I am attempting to do here and with many other companies is catch a falling knife, so I am placing a limit order buy at $3.10. At this point FRPT will be trading at only 0.7 times book and roughly 8 times 2010's figures. This is a relatively inexpensive armored solutions provider and I don't think it can stay this cheap for long.

Thompson Creek Metals (TC)
          • Closed at $9.40 / limit buy $7.12

Absolutely scary that I can find myself on the same side of a trade with DragonLz but here we are. Actually I'm taking this as a falling knife and attempting to catch it with a limit buy order for $7.12! Thompson Creek Metals is just dirt cheap with $3.75 in cash and trading currently at under 5 times forward earnings. Everyone is predicting a commodity collapse but TC is trading like they're all going to zero! TC is a fast growing company that would be just under book value if my strike price is hit.

Integrated Silicon Solutions Inc. (ISSI)
          • Closed at $8.87 / limit buy $6.65

There isn't anything new that can't be said about Integrated Silicon Solutions that hasn't already been said in my Better Know a Stock blog. ISSI is without a doubt one of the strongest semiconductor peripheral players right now. A sadistic $3 in cash per share and trading at only 6.6 times 2011 figures with guidance shooting out their noses it's so good. How many more times do they need to guide higher this year before traders finally get it? Placing a limit order to buy at $6.65 if it makes it there.
 

Arch Coal Inc. (ACI)
          • Closed at $20.44 / limit buy $15.84

You'd think I was going to enter the circus with all this random knife catching! I've made it no secret that I think coal is a valuable energy source going forward and Arch Coal looks like, dare I say it, a value play here. Revenue growth rates should be in the 11%-12% range and they're trading at roughly 8 times 2011's figures. I am going to attempt to snipe this falling knife with a limit buy order at $15.84 which would be only 1.2 times book value and a mere 6.8 times forward earnings. I think I may just get this one....

Nvidia Inc. (NVDA)
          • Closed at $12.75 / limit buy $10.60

Yes indeed, time for some more of those amazing knife catching tricks. Nvidia has more cash than they know what to do with, currently $3 per share. If you look at their earnings from a conservative perspective you'll get a company growing at about 11% per year and trading at roughly 9 times 2011 figures if you back out cash, that's relatively undervalued. I dare you to find a better graphics chip producer out there. Don't worry about any slowing down in their business or any insider dumping, NVDA always bounces back. Looking to get this as a limit buy at $10.60, essentially filling a small gap at that level.

Duoyuan Printing Inc. (DYP)
          • Closed at $8.23 / limit buy $6.78

Catch the falling the knife, that's the name of the game! Duoyuan Printing just about can't do any more for their shareholders than they're already doing. They maintain a ridiculously healthy $2.80 per share in net cash which if you back it out translates into paying for a $4.55 company. Checking out their remaining quarterly forecast and 2011 projections, they will earn somewhere in the ballpark of $1.25 this year and next year with a growth rate tapering off to 15%. That's a forward price to earnings of about 3.6. Yes, I know.. that is absolutely retardedly (making up words again) cheap! Margins came down a bit in the recent quarter and I really don't care given how much cash they generate. Their color sector is strong and that's good with me. Looking for a limit order buy at $6.78.

Cumberland Pharmaceuticals (CPIX)
          • Closed at $6.49 / limit buy $5.12

Cumberland Pharmaceuticals presents to us a quarter of moderate growth and the market absolutely crucifies the company. Sure they did the rookie mistake and brought 5M more shares to market than this time last year so it really messed with their earnings estimates, but their pipeline of drugs is strong enough to sustain them and drive profits higher. First off they have a very impressive pile of net cash, about $2.92 per share which is almost half of their current value. They have a new drug coming to market which should fully be realized this quarter called Caldolor as well as their other two fail-safes Kristalose and Acetadote. Revenues should be growing north of 16% per year and they could be staring down a forward price to earnings of roughly 9. Back that cash out and this company is trading at just $3.57 per share and is very capable of producing 50-60c in EPS in a short amount of time. Very reasonable growth here but I have to tread lightly with such little technical information. I'm going to go with a limit buy order at $5.12 which is just $2.20 over cash value. With their strong cash flow I think this makes a logical point of entry.

Latin American 3X Bear Fund (LHB) - short
          • Closed at $52.97 / limit short $67.55

It's an unbelievably sad day when the Latin American economies look far and away better than the United States and Europe. Latin America is largely export driven and somewhat commodity based. I like many others here am not looking for a commodity implosion and think most of the downside in that area of the market has been largely priced in. I'm placing a limit order here to bet against the Latin American Bear 3X Index at $67.55 and the way things have been going this may hit in a day or two.

And the scary thing is this watch list is only growing..... Til next time, same bat time, same bat channel!

UltraLong

 

15 Comments – Post Your Own

#1) On May 27, 2010 at 3:38 AM, ATH001 (< 20) wrote:

Hello Ultra Long,

 Since my finances are parked in Europe, would you mind giving me one or two names of banks in Europe that you consider safe? Thank you in advance,

Luis

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#2) On May 27, 2010 at 9:19 AM, Option1307 (29.70) wrote:

You could have just said you like all of Chine, that might have sved you some time! ;)

Some good thoughts as usual, thanks for sharing!

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#3) On May 27, 2010 at 9:20 AM, Option1307 (29.70) wrote:

wow, my bad...

*China

*saved

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#4) On May 27, 2010 at 10:36 AM, portefeuille (99.59) wrote:

Just when you think the banks have a chance to rebound, we see the LIBOR rise just high enough to squash any profits they might be bringing in

Are you not exaggerating a little here? Have a look at the latest earnings reports of all those "poor European banks". The earnings have very little to do with the "squiggles" of the Libor rate ...

It would be very surprising (to me at least) to not see most of those banks to have decent earnings this quarter as well ...

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#5) On May 27, 2010 at 10:39 AM, portefeuille (99.59) wrote:

There are quite a few European bank stocks among my favourite stocks. Deutsche Bank, Commerzbank, Banco Santander, UniCredit, Barclays, Sociéte Générale, ...

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#6) On May 27, 2010 at 10:41 AM, portefeuille (99.59) wrote:

not to forget UBS, Credit Suisse, BNP Paribas, ...

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#7) On May 27, 2010 at 11:01 AM, TMFDeej (99.40) wrote:

What a fantastic post, Ultra.  Thanks for taking the time to put together your thoughts on the companies that you're interested in.  I wish there was more posts on CAPS that talk about specific companies rather than just whining about this or that.

Have a good one.

Deej 

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#8) On May 27, 2010 at 11:20 AM, portefeuille (99.59) wrote:

Sociéte Générale

Société Générale

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#9) On May 27, 2010 at 12:52 PM, Bays (30.21) wrote:

Always enjoy reading your blogs. 

Cheers,

Bays

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#10) On May 27, 2010 at 2:37 PM, EnigmaDude (94.22) wrote:

TSYS jumped 15% today.  Perhaps a bit of short covering?  I picked up a few shares at $5. I'm pretty confident that it will not drop below $4.50 again any time soon.  And if it does I will add to my position.

Still think you are early on the China call though...

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#11) On May 27, 2010 at 7:30 PM, JaysRage (88.77) wrote:

Great post.   There is a lot of value here.   I don't necessarily like all the stocks that you've picked, but the price points that you have provide a lot of protection from the risk that you'd take in taking positions in them.

ABAT, CSR, NEP, CAGC, CVVT, LIWA, ONP are on my watch list.     I won't do Chinese finance, construction or biotech, so that leaves a bunch of your picks off my possibilities list.  

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#12) On May 27, 2010 at 11:45 PM, Momentum22 (29.62) wrote:

...the write-ups are fantastic but if CSR loses another 25%+ we are talking March 2009 lows. So you must be reading the EWP charts and expecting a huge leg down from here...or else why would you want a piece at $3.18?

On paper CSR is already uncomfortably cheap...at that point it would be broken...or more broken...

Are you being sarcastic?

I say ring the bell and buy, buy, buy all of them with market orders in the AM! NVDA and ATW are gone man...not looking back....choo, choo...all aboard. : )

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#13) On May 27, 2010 at 11:52 PM, portefeuille (99.59) wrote:

to not see most of those banks to have

to not see most of those banks have

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#14) On May 30, 2010 at 4:28 PM, TigerPack1 (97.65) wrote:

Regrading a blog or two back, I have some evidence locally that the mortgage reset situation on large value non-conforming loans is going to be a real problem by late-summer.

A few blocks from my house is a very affluent neighborhood with houses priced well above $500,000 on average.  During the last 8 years since I moved to the area, there have never been more than a small handful of houses for sale at a time... likely under 1 in 10, or 10%, even during the spring/summer selling season.  I have noticed a very large jump in homes for sale in this area the last 6 weeks, from almost none to nearly 20%... many with signs showing up this past week alone!!!  The city I live in, has a diverse economy, and has done relatively better than the rest of the country. 

It would appear that the 5-year teaser rate and easy term resets to reality on these non-conforming loans (that are seeing a jump in mortgage rates in 2010-2011 and may not be able to be refinanced to lower rates with the tightening of credit conditions versus many years ago) could pose another huge weight (headwind) on real estate pricing in the second half of the year as the economy slows down again.

If the rich see their stock portfolios plummet in value again (like we experienced in May) and the high-end real estate market takes another large hit in pricing, this important consumer spending group (that also makes most of the business decisions) could see confidence hit hard...

No doubt a double-dip recession looks quite possible by yearend 2010 if real estate and stock prices fall concurrently like 2007-2009... Given my projections were already predicting corporate profits to peak in the June Quarter about to end, with a contraction/recession in GDP output by the 1st Quarter of 2011, an oversupply of stocks and real estate when measured against lower than average demand for these assets currently, should translate into a big price decline soon.

With an insanely overextended government deficit spending backdrop and ZERO for interest rates on the short-end already, the Federal Reserve and Treasury and Congress will find themselves in an even bigger pickle than after the Lehman debacle in 3-6 months I fear, if not sooner, if consumers decide to halt spending again from any of a number potential catalysts in the summer.

The 15% stock market price drop from the April peak is "THE" largest slide in 5 weeks from a major stock market top I HAVE EVER SEEN in my 25 years of trading and investing... As the market is discounting what the economy will be doing in 6-9 months, real caution about the economy and the stock market are warranted now.  I see the honest potential for free-fall in stocks over the summer if European problems multiply (let's pray they do not) and/or if China's economy slides or they decide to throw around their newfound economic power by making U.S. plans for Iran and N.Korea impossible to implement.

Further political friction may cause China to actually dump U.S. Treasuries and send long-term interest rates skyward, before any downgrade of Treasuries takes place later in the fall as the credit rating agencies factor in the double-dip recession that will make it impossible to cut deficit spending or EVER pay back the $15+ trillion in debt we owe existing Treasury investors.

This may be a "worst of all worlds" economic and financial markets setup developing:  higher interest rates, sovereign debt downgrades, lost business and consumer confidence, falling economic output and business profitability, political turmoil and friction between nations, and more... look like a nearly certain future for U.S.  I hope smart investors are paying attention and getting ready for a rocky ride in the markets the next year or two.

-TigerPack

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#15) On May 30, 2010 at 10:21 PM, simplemts (< 20) wrote:

Excellent commentary TigerPack.  If you thought Lehman (Late2008/Early2009) was an interesting time, I think the next two years will be even more interesting.  That is not saying anything specifically about the S&P or stocks, but simply a lot of potential for the entire world economy to go into disarray is present.  Be careful out there.

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