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Stocks on my radar and other random thoughts

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July 07, 2010 – Comments (11) | RELATED TICKERS: JNJ , WAG , STR

I've been swamped with work lately, but I found a dew minutes to post a few quick thoughts here on CAPS.

-  I told you that Tesla was a slam dunk short.  timing is everything though.  After the stock didn't pop right out the gate like I thought it would I figured it was safe to short here in CAPS...boy was that wrong.  What a roller-coaster.  My score on TSLA went from negative 50 to positive 11 in the span of a couple trading days.  I expect TSLA's share price to continue to fall until it either comes out with a technology that's so revolutionary and disruptive before everyone else that it gets bought out by a major automaker at a decent price (unlikely) or it comes out with similar technology to what other manufacturers are bound to introduce and it just fades away / gets bought out at a price well below its IPO (more likely).

-  Questar's (STR) spin-off of its E&P operations is complete.  I find both of the companies intriguing.   I went long STR prior to the event.  I'm not sure because the spin is not yet being accounted for accurately in CAPS (my score shows -60 something) but I believe that it has resulted in positive CAPS points already.  When work calms down in a week or two I plan to take a very close look at STR and its newly spun-off company QEP.  I will probably end up adding at least the latter to CAPS.

-  While my score is currently negative 11.5, I still think that Walgreens (WAG) is a solid CAPS bet and that it will outperform the S&P 500 over the next several years.  Its exposure to the consumer does scare me a little, but many of the things that it sells are non-discretionary.  Pharmacies have two huge tailwinds coming down the pipe, 1) an increase in the number of people who have healthcare coverage and in turn will go to their stores to buy stuff and 2) the introduction of a huge number of generic drugs over the next several years...which are significantly more profitable for pharmacies than brand name drugs.  I personally chose to play these trends using CVS, which was cheaper than WAG at the time I bought it and has the added kicker of its Caremark benefits manager division.  Here's a couple of good articles on the company:

Walgreen Set for Turnaround

http://online.barrons.com/article/SB50001424052970203296004575351011164297550.html

Walgreen -- A Rare Opportunity With Little Downside And Huge Upside 

http://www.gurufocus.com/news.php?id=99094 

-   Speaking of pharmacies, my personal boycott of all Johnson and Johnson (NJN) products continues.  What the heck is up with an iconic American company running its factories where it produces medicine for CHILDREN like they're located in some third world country.  Heck, I bet that Chinese factories have better quality control than the recently shut down JNJ plant had.  I've been forking over extra hard-earned money for "premium" medication for my kids all these years only to find out that the quality of the generic stuff is actually better?  From now on I plan to buy only store-brand generic medicines.  I'm sure that my boycott will really hurt this zillion dollar behemoth :).  I could never short a cheap stock like JNJ in real life.  In fact, it's probably a buy at this point.  Most people will probably forget all about this incident...but I won't.  My protest play was to go long Perrigo (PRGO) the generic competitor to many of JNJ's products.

-   Since everybody else is talking about it, why not.  There's absolutely no way that LeBron James is going to the Knicks.  The Dolans, who retain control of the recently spun-off MSG, are theeeeeeeee worst owners in sports.  It's one thing to have an owner who is just plain cheap and won't spend money to improve your team.  That would be annoying, but the Dolans have thrown away hundreds of millions of dollars on terrible contracts over the past decade.  Amare Stoudemire is a good player, but he's not worth even close to $100 million.  The Knicks weren't even bidding against anybody else for his services.  He wasn't going to go back to Phoenix.  I suppose that they felt as though they had to pay as much as they could to get some big name in ASAP, getting shut out in free agency after tanking two years on purpose to get to this point would have been a disaster, but the Knicks overpaid for a non-max player who is an injury risk.  Who knows if this makes MSG a short in CAPS, but I definitely would not be long it.

-  Other special situation news:

Frontier Communications, FTR, Down On Huge Volume

http://stockspinoffblog.com/2010/07/06/frontier-communications-ftr-down-on-huge-volume/

I hate land lines, but if everyone else does too this stock might just get interesting

McDermott spinning off Babcock & Wilcox

http://finance.yahoo.com/news/McDermott-spinning-off-apf-1164562431.html?x=0&.v=1

Motorola to Split in Two, Hopes to Regain Overseas Strength

http://www.minyanville.com/businessmarkets/articles/motorola-mobile-phones-smartphone-wireless-subscribers/7/6/2010/id/29047?camp=syndication&medium=portals&from=yahoo 

Motorola sucks, but this is interesting.

Gotta Go.

Deej 

11 Comments – Post Your Own

#1) On July 07, 2010 at 9:21 AM, Dobbes (< 20) wrote:

Wait, the generics are better?  I have also splurged for name brand stuff in the past :-( .  Do you have a link?

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#2) On July 07, 2010 at 9:32 AM, TMFDeej (99.27) wrote:

I may end up having to eat my words on MSG :).  Breaking news this morning has Chris Bosh signing in Miami with Dwyane Wade.

It has been apparent during the entire free agency period that Bosh wants to play with LeBron.  Does this mean that LeBron is going to go to Miami and form a Dream Team?  I don't see how LeBron could leave that much money on the table, salary-wise, on the table but who knows.

What this does appear to mean is that the Bulls are screwed. Bosh and LeBron could have gone to Chicago together if they had wanted to. 

The folks on ESPN radio are saying that today's news means the Knicks are still in this.  I guess that makes sense, but they have been so poorly run for so long I'll believe it when I see it.  

Oh the drama.  

I've always been intrigued by the building of professional sports teams, perhaps even more so than by the games themselves, which is saying something.  There's just something about following the building of a franchise that I find completely fascinating.  I never miss a draft, NFL, NBA, or MLB.  I guess that this ties in with my fascination in building an outstanding stock portfolio and finding undervalued stocks.

The signing of LeBron would definitely make MSG pop, no doubt about it.  One has to weigh the potential instant increase that the stock would get if they signed King James versus the potential drop if they don't and take into account the odds of each one happening.  

I can see a case being made for taking either side of this bet.  As much I love sports and would like to play this trade, I'm personally staying away from it.

Deej 

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#3) On July 07, 2010 at 9:37 AM, TMFDeej (99.27) wrote:

Hi Dobbes.  The generics are essentially the same thing, but I had always assumed that a big-name company like Johnson and Johnson would have better plants and better quality control than the generic manufacturers.  Unfortunately, that is not the case.

Johnson & Johnson is a Disgrace

Deej 

 

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#4) On July 07, 2010 at 9:47 AM, Dobbes (< 20) wrote:

Thanks for the link Deej.  I never knew.

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#5) On July 07, 2010 at 9:50 AM, TMFDeej (99.27) wrote:

You're welcome, Dobbes.  

Have a good one.

Deej 

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#6) On July 07, 2010 at 2:12 PM, Cavalier0812 (65.79) wrote:

LeBron can earn himself more than a max-contract by signing with the Knicks. If he buys MSG stock now knowing he will sign with the Knicks, he will be rewarded not only with a huge contract and endorsement deals, but through the increase in MSG stock prices. His signing will bring in millions of additional revenue for MSG. 

 http://blogs.forbes.com/sportsmoney/2010/07/the-new-york-knicks-will-get-lebron-james/

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#7) On July 07, 2010 at 3:25 PM, TMFDeej (99.27) wrote:

Good point Wahoo.  The NBA figured out that loophole as well and created a rule forbidding NBA players from owning public stock in teams.

There's no doubt that MSG is a screaming buy at this point if LeBron comes aboard.  It's amazing how much of an impact one player can have upon a franchise. The more I think about it, the more I might be willing to take a flier on MSG stock in CAPS on the outside chance that LeBron does sign here.  The upside is enormous, but him not coming to NY is probably already priced in.

Deej 

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#8) On July 08, 2010 at 12:44 AM, awallejr (81.20) wrote:

I agree on Tesla.  I view that more as a "gimmick" stock than a worthwhile long term investment.

As for FTR, I would stay away.  Just not worth the risk.  I can see what happened to FRP after it bought Verizon's New England landlines, happening to FTR, namely bankruptcy.  Biting off more than they can chew in a declining market.

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#9) On July 08, 2010 at 5:40 AM, TMFDeej (99.27) wrote:

Good point about FTR, awallerjr.  I agree that land line businesses suck.  I suppose the theory behind FTR would be if everyone hates it enough and there is enough post-spin-off selling pressure that it could eventually become attractive.  Having said that if the company's eventual destiny is bankruptcy then it certainly is not attractive at this level or anywhere near it.

Deej 

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#10) On July 08, 2010 at 7:21 AM, ragedmaximus (< 20) wrote:

I know it's early thursday the morning after the big pop yesterday of 274 and something and I have some foolish questions.I was surprised that the president was on and actually talking about the issues at hand,unemployment,exports job sectors etc.I wonder would the usa govt buy stocks in all sectors to prop up these failing markeys? It worked with Citibank as they will make a profit at investors expense.Where did all the volume come from yesterday and other than a large insider orchestration.If the market continues to go down then (where it should)then I'll be wrong.    BUT........IF the market keeps going up ORCHESTRATED by USA GOVT(conspiracy theory) then it's time to go back into the market and everyone will be saying oh great we have hit the bottom and naturally were headed up.I for one don't feel were at a bottom because it feels like deja vu from the 2008 market decline.Even jim cramer sounds the same like he did when I rode my CHK from 67 bucks to 12.deja vu and a continued spiral down which is fine for me then it will be a great investing oppoprtunity if you are in cash now.If the market goes up from today 7-8-2010 I will then know it was Orchestrated.  

 

 

 

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#11) On July 10, 2010 at 7:09 PM, eqsecrets2010 wrote:

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