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FoxForce5contest (46.66)

The FoxForceJournal

Recs

9

February 14, 2013 – Comments (27) | RELATED TICKERS: CWTRQ

Welcome to the second edition of The FoxForceJournal. Our goal is to examine all 41 picks in the FoxForce5contest while titilateing and expanding the inner workings of your subconcious.

Our featured stock is ColdwaterCreek, Inc. Picked by our most respected boardmember BravoBevo. (Some of you have wondered how Bravo finds these penny stocks that proceed to pull down massive gains?)

SIMPLE ANSWER- He's Bravo freakin' Bevo and your not.

Start price- $2.40 (actually .60 but there was a 1:4 reverse)

Todays price- $3.97

Stock gain +65.42%

From the Companys website-

"Today Coldwater Creek celebrates both the past and the future of the brand and our customer. Modern and relevant, we speak to a new generation of American women with a clear sense of purpose. We enhance and accent our customers' lives, providing vibrant fashions and gifts that fit her multi-faceted life. The essence of Coldwater Creek-timeless, relaxed, confident-remains unchanged.

As does our inspiration, drawn from the open American sketchbook. Whether we welcome customers into our stores or update our website, design artful patterns or buy inspired collections, keep the books or manage the distribution center, answer phones in the call center or answer to the CEO, our commitment is to add that extra moment of delight. It's part of our mission.

We will always strive to capture a spirit of freedom and independence, a love of nature and an artfulness that is unique to our brand. We've earned a special place in the hearts and homes of our customers and we promise to work to continue to earn that honor as we forge new relationships and bring new customers into the vibrant world of Coldwater Creek."

Recently Coldwater borrowed $65M to stave off bankruptcy, and so far the strategy is working, but one has to wonder if that will last till contest end.

$1,000 purchased @ $2.40=  416.7 shrs worth $1,654.20

Now Scruffys 40,000 shrs purchased for $96,000. Are worth $158,800.

Thanks for reading and keep an eye out for the next

FOXFORCEJOURNAL.

27 Comments – Post Your Own

#1) On February 14, 2013 at 10:16 PM, HarryCarysGhost (99.69) wrote:

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#2) On February 14, 2013 at 11:10 PM, HarryCarysGhost (99.69) wrote:

Make sure to check out blesto's top ten here-

http://boards.fool.com/foxforc5contest-journal-update-30528713.aspx

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#3) On February 14, 2013 at 11:50 PM, awallejr (85.54) wrote:

Bleh I still say DIVIDENDS rule.  I picked NCT in Chimp's contest.  At the time when it ended I was in the red.  Look at it now ;p http://caps.fool.com/player/chimpcontest.aspx?source=ipisitlnk0000001

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#4) On February 15, 2013 at 12:46 AM, HarryCarysGhost (99.69) wrote:

^ Andy, patience young Grasshopper.

Remember it's a loooong contest.

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#5) On February 15, 2013 at 11:39 PM, awallejr (85.54) wrote:

Unfortunately the contest is ending soon.  Now 5 years from now I bet my dividend pick will be a top play.

When I picked NCT in Chimp's contest he delayed entering it and eventually it started at around $8.  But as the years went by after they restarted their dividend (which was my thesis for the pick)  and now the pick is clearly in the green.  This is what I really want readers to see.  A dividend play is a patient play.  Don't worry about the daily noise.

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#6) On February 16, 2013 at 6:34 PM, HarryCarysGhost (99.69) wrote:

Andy, I hear ya.

I do plan on doing a blog asking shareholders(contestants) if they want to participate in the contest next year with some amended rules.

(That is assuming Caps and participants are still around at that time)

(1) All picks must pay a dividend, or distribution during the course of the contest (not quite sure how I would handle a situation where divs were no longer distributed)

Open to all suggestions on how to make the contest better so to everyone add em' if you gottem'

Cheers.

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#7) On February 17, 2013 at 10:36 AM, blesto (32.22) wrote:

<<"Open to all suggestions on how to make the contest better so to everyone add em' if you gottem' ">>

I think for the beginning you should announce an official start date of the contest and a deadline for submiting a pick. Then on your official start date you make all of the CAPS picks on the same day.

Then let's say if someone decided that their pick needed to be closed cuz maybe they think it won't go up anymore or the divies are stopped, (whatever reason they have) then you close it out and their score at that time is the score at the end of the contest. Just no more new picks.

JSS

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#8) On February 17, 2013 at 12:30 PM, Mary953 (77.81) wrote:

This is not a suggestion, more of a question to my most esteemed and highly respected friends in this contest.

My pick is RAX (Rackspace) which is a cloud computing company recommended by a couple of TMF newsletters.  I chose it because of the write-up in Rule Breakers and because, well, it is an area that I like and understand.  Yeah, I am a closet techie - so sue me.  ;)

RAX and I were happily humming along in the middle of the pack, making the kind of money that lines retirement plans but doesn't  make instant millions.  I can deal with that.  It's what I aim for.  Then on Wed, RAX fell off a cliff.  I missed it.  I was busy chasing a 3 year old (which is what happens when your daughter's ceiling falls in)  RAX dropped 20% in one day on a poor earnings report and went from middle of the pack to the bottom 5 in one day.  Even with that drop, I am still well ahead on profits from the stock if that tells you anything about the company.  So here is the question - and it is a real money question...

Sell or buy more?

TMF has a video up extolling the virtues of the stock.  Essentially, it sounds like 3+ minutes summed up as "It was and is a good company and nothing changed because they missed earnings by a penny"

My inclination is to buy more shares.  FWIW, a couple of rules apply here.  Rule number one - The stock market is a gamble, no matter how carefully you research.  Do not invest money you cannot lose.  Rule number two - Ask for advice from trusted friends as part of your research, but make up your own mind.  Never put your own decisions off on your friends.  Your money, your decisions.  (The reason I repeat that here is for those who might weigh in but won't if they think that I would just grab an answer, act on it, and then try to lay blame or responsibility on others.  I notice that only happens when a stock goes down.  When it goes up, the investor is the genius - hmmmmm)

So, thoughts? 

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#9) On February 17, 2013 at 4:13 PM, rd80 (98.26) wrote:

I don't follow RAX, so don't have any words of wisdom on the company.  But I can kibitz a bit on what you probably already know.

The key question you need to answer for yourself is whether or not the poor earnings is a short term glitch or something that's going to dog the company for a long time. 

If it's just a blip, a big selloff over a one penny miss could be a good opportunity to pick up shares on sale.

If it's more of a structural, long term issue it's more likely a sign to sell and look for greener pastures.

Read the earnings release, read the transcript or watch the video of the earnings call (if there was one), look for whatever analyst coverage you can find on the earnings.  Then make the best judgement you can on whether the miss was caused by a long-term problem or just some short-term issue.

And, you can always straddle the fence - sell some and hold some.  That way, no matter what happens, you only screwed up part-way.

 

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#10) On February 17, 2013 at 4:28 PM, awallejr (85.54) wrote:

Rackspace's fourth-quarter profit managed to meet estimates, but a small miss on the top line -- revenue of $353 million versus the consensus of $355.4 million -- reinforces serious concerns over slowing demand. Management blamed the slowdown on its transition to the next-generation cloud, but given that it is the fifth straight quarter in which growth has slowed, investors just aren't buying it. From http://www.fool.com/investing/general/2013/02/13/why-rackspace-shares-got-crushed.aspx?source=itxsitmot0000001&lidx=9

As Russ said it could be a great opportunity to buy more if you believe in management or it could signal a slowing of momentum. That is always a danger when owning high PE momentum stocks, once they start missing they get pummeled hard.

Since I don't really follow the company I am reluctant to give a buy or sell recommendation.

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#11) On February 17, 2013 at 6:07 PM, Mary953 (77.81) wrote:

One problem that I have, and this is a general problem rather than one specific to RAX, is the idea that a "small miss" can cause major problems in the short term.  I have never quite understood the reason that such small increments can cause such large responses.  

As to RAX, I suppose the question that I am wrestling with (and the deciding factor ultimately) is going to be this - Can RAX compete with Amazon in the cloud?  There was a point at which Garmin's GPS technology was in so many other venues (telephones, autos, etc) that there was a shrinking share for Garmin.  I sold the stock before it got to that point.  Is RAX there or do they have something extra?

RD - Thanks for the 'play-by-play' of places to look.  I did not know to check all those places but will certainly do so.  I will end up being more informed.  

Awallejr - I had not yet seen that article and definitely needed to.  There is a very good reason that I ask you for ideas.  I always learn things that I need.

Thanks to you both! 

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#12) On February 17, 2013 at 7:06 PM, HarryCarysGhost (99.69) wrote:

Looks like they are still making money-

http://finance.yahoo.com/q/is?s=RAX+Income+Statement&annual

I can tell you what I would do, but this is not advice. Pretty sure everyone here knows me well enough to realize that I'm a complete knucklehead.

I would hold the shares and see how it goes.

If they plummmeted further closer to start price I would dump.

I don't think that will happen,and maybe that gives you an even better point to add. (buck or two cheaper)

Cheers.

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#13) On February 17, 2013 at 7:42 PM, Mary953 (77.81) wrote:

Harry, I have a problem.  I really, really want to buy more shares.  Call it a gut instinct, but the 'Pro' arguements are weighin in heavier than the 'Con' arguements.  Trouble is, I think I am lookin for some good reasons to back up my instincts.  My instincts on certain things seem to be pretty good, but all this due diligence makes me nervous.  (It's a good thing I didn't know about dd when they started IRA's.  I went with one of those instincts and picked a total unknown with a brand new fund - Peter somebody and his Magellan Fund....what was his name?)

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#14) On February 17, 2013 at 7:57 PM, HarryCarysGhost (99.69) wrote:

Heh,Heh-

Peter-

http://www.investopedia.com/articles/stocks/06/peterlynch.asp#axzz2LCvqbYXs

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#15) On February 17, 2013 at 10:43 PM, awallejr (85.54) wrote:

One problem that I have, and this is a general problem rather than one specific to RAX, is the idea that a "small miss" can cause major problems in the short term.  I have never quite understood the reason that such small increments can cause such large responses.

It depends on the type of company.  A small miss on a solid low PE play won't make much difference in the long run.  It is more important to watch when concerning high PE strong growth momentum plays.  Once the traders/institutions start to get a wiff of a miss there they dump hard.

Mary if your gut says the stock fell more than it should but you are still concerned about pulling the trigger I can give you an alternative play.  Sell a far out put. January 2015 $60 one looks interesting. Offer is around $11.40 at the moment. 

Worse case come January 2015 you have to buy the stock for $60 (but you received $11.40 making your real cost $49.60).  If you like it here at $59 I have to believe you would love it at $49.  On the other hand if the stock does keep going up at least you made $11.40.  If the stock is selling under $49 and you still have faith you can roll out the put by selling an eventual 2016 and use the proceeds to close out the 2015 one.You do need as margin account to do this.

Main danger is if the company goes BK since then there are no option chains to keep stretching out.  A lesson I learned with ATPG ;/  So make sure the balance sheet is solid and no serious debt.

- Andy

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#16) On February 17, 2013 at 10:44 PM, CROIC (81.92) wrote:

As to RAX, I suppose the question that I am wrestling with (and the deciding factor ultimately) is going to be this - Can RAX compete with Amazon in the cloud?

I think the answer to that question is yes. But that's not the main question I'd be concerned with.

I'd ask, "Am I comfortable paying 80x earnings? Does that price assume their growth plan goes perfectly, with no margin for error?"

Some cloudy stocks look cheaper, EMC for instance.

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#17) On February 17, 2013 at 11:01 PM, awallejr (85.54) wrote:

Pretty sure everyone here knows me well enough to realize that I'm a complete knucklehead.

Oh and I can confirm this heheh.

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#18) On February 17, 2013 at 11:03 PM, awallejr (85.54) wrote:

Some cloudy stocks look cheaper, EMC for instance.

Yeah I have been eyeing this stock for a rl purchase.

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#19) On February 18, 2013 at 8:28 AM, 4melody (24.03) wrote:

IMHO investing is tricky in and of itself. The best part of getting older is the ability to not react to every hint of disaster that is available to read on the web or view on cable about any and every investment possible. As a long term investor, I look for companies or products that have sustained profitability and a history of stable and/or increasing dividends. Missing a projected earnings estimate by one or two cents should not cause such an irrational reaction. All things being equal, it seems to be reactive and not based on actual performance. ~ mkp

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#20) On February 18, 2013 at 8:17 PM, HarryCarysGhost (99.69) wrote:

Hi again Mary, I had the chance to think about your dilema a bit more today.

If your gut is telling you to buy more it's probably a good idea to listen. That's how I invest and am generally successful at it. Now on the times I happen'd to be wrong at least my concience was clear that I had a strong conviction in my actions, and I can take all the credit or blame.

Not sure how much weight you put on charting (I don't put alot, but it still interests me)

I ran Rax though this website and the signals put it as a buy-

http://www.freestockcharts.com/

Also I do like awallejr 's idea about the puts (I'm going to have to get around to trying options one of these days)

All the best to you and your decision (and please let us know the outcome)

Cheers.

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#21) On February 18, 2013 at 9:30 PM, awallejr (85.54) wrote:

I have had great success over the years selling puts.  ATPG was my only loser and that was because it went BK and I couldn't string out the puts.

It really is one way to make money off a stock that you want but don't want to chase.

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#22) On February 18, 2013 at 9:37 PM, awallejr (85.54) wrote:

Oh and one thing I do need to forewarn you about, it does mess-up your portfolio value.  For me with Fidelity during the week they use the "ask" price as the valuation point, but on weekends they use the "last" price.  So on Monday your portfolio always drops in value because of the accounting change but corrects itself on the weekends.  Takes awhile to get used to that.

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#23) On February 18, 2013 at 9:39 PM, awallejr (85.54) wrote:

And ALWAYS use limit orders.  Sheesh I am getting like Porte with all these multiple posts heheh.

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#24) On February 19, 2013 at 1:08 PM, Mary953 (77.81) wrote:

Andy, I like the multiple posts.  It just means your mind keeps going to solve a problem.  That's a good thing (did I just channel a bit of Martha Stewart??  Ugh!)

Harry, you are not a knucklehead.  More a loveable, fun person...and anyone who runs the numbers for a mathphobe like me gets high praise indeed (as well as many thanks.)

I fail Cramer's diversification test.  I have a bit of EMC (mainly because I like VMW and owning the parent company is better than just the VMW part - also because Porte fussed at me for doing it backwards)  I figure that there are enough companies using EMC that they cannot all handle the retraining, modification, etc to change over to another company.  It's the tech equivalent of addiction!

I am comfortable with 80x earnings - or at least Netflix cured me of going solely on that indicator.  They were at 95x the entire time that they were rocketing up.  Eventually, you take out your original investment and coast.  At least, that is the theory.

As to what I would like to do, it is to let the stock drop a bit more and then buy into more shares.  As to what I did, I bought 200 more shares today.  Yeah, I know it dropped a bit more, but this is long term.  I have read all about how to do puts and it just doesn't gel for me.  Music, writing, genealogy, history all make sense.  Math doesn't.  I would have waited, but I have a 3 year old to take shopping for toys.  Her Christmas toys were under the ceiling that fell in...along with all her shoes, her coat, etc.  Easier to buy now and wait through the drop.

Thank you, dear friends! 

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#25) On February 19, 2013 at 1:13 PM, Mary953 (77.81) wrote:

There is also the fact that I planned to buy into Tesla in early Dec.  Forgot to do so and missed a nice big jump.  I am never better off waiting.  (The mind is the first to go and mine left some time ago.)

And on a totally unrelated topic, do you ever see the Ancestry.com commercials?  Those are the "I looked and found this "fill in the blank" wonderful thing" spots.  Do those really seem all that impressive to you?  I am trying to figure out if they only seem silly to me because that is an area I understand - the way you guys seem to understand so much about math.  I cannot ask my family.  They are biased. 

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#26) On February 20, 2013 at 7:02 PM, blesto (32.22) wrote:

Mary, I liked this one...

" target="_self">...

And the midweekly FF5c update;

http://boards.fool.com/cupid-let-down-ff5c-midweek-update-30553224.aspx

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#27) On February 21, 2013 at 10:53 AM, Mary953 (77.81) wrote:

Santa is the first Ancestry commercial spot to have something in his tree that is fun, fascinating, and impressive - but I question the supporting documents. Thanks for the day brightener.

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