Tuesday, October 31, 2006
Deluxe Embarrassment - wow, DLX had their earnings last week and I didn't even notice. Sorry guys! Stock is pushing $23. You could've bought DLX for $13 in July. Proves that even boring old economy stocks can give good gains in MFI.
No Stock #30 - I decided against buying a 30th MFI stock. Instead I have plowed my proceeds from PTSC (sure glad I sold 'em) into more BLDR & BBSI. I am basically moving my most recent MFI purchases to my new tier of $ per stock as I try to pare down to 20-25 stocks over the next year.
ORCT - My lone Israeli stock made 6 cents today. They gave pretty lackluster guidance through April 2007. I don't know, if I have to sell a single MFI stock for tax purposes before December 31st, ORCT seems like a strong candidate. It has also entirely disappeared from any MFI lists.
IS Not Sweet - ISNS reported earnings in the middle of the day on Monday. That never works out well for me it seems. They were pretty bad. The company has now made less $ in 1st 9 months of 2006 vs 2005. Not a great sign. The problem is that these microcap companies are so lumpy in their earnings. The stock dropped about 12%. Funny though, some fool bought some shares at $14 about an hour after the news was released and the stock was trading at $13.
It has been an uneventful week so far. Made a little money Monday & Tuesday, but more or less treading water. Take care! Happy Halloween!
Sunday, October 29, 2006
BBSI - reported earnings on Wednesday (BBSI Announces Third Quarter 2006 Operating Results). They seemed good. Revenues were up 7% Y o Y. I suppose that was disappointing as 3 quarters over 3 quarters is +29%. Outlook for 4th quarter is +20% Y o Y. Stock got pounded (unfairly IMHO) dropping over $2.
BLDR - had poor earnings, with revenues down 11% Y o Y (Builders FirstSource Reports Third Quarter 2006 Results). They basically expect to struggle durning housing downturn. Dropped about 3% on the news. This stock will go up sharply next year if/when the Fed cuts rates.
ELX - reported earnings on Thursday (Emulex Reports First Quarter Fiscal 2007 Results). They got crushed, down 8%. Not sure why the big drop, perhaps people realized the cost of stock compensation, which drops eps 10 cents from 27 cents to 17 cents. Again, that is a huge hidden cost with change in GAAP.
FDG - Had earnings that didn't seem very good to me (Fording Canadian Coal Trust - 2006 third quarter earnings results). The stock didn't move much, so I guess people were expecting it.
MGLN - Had very good earnings (Magellan Health Services Reports Third Quarter 2006 Financial Results) and signed a new contract (Magellan Health Stock Climbs on Contract).
MSTR - had extremely good earnings (MicroStrategy Announces Third Quarter 2006 Financial Results). The stock was up over 10%.
MTEX - was mentioned in a Herb Greenberg article that Texas AG (Herb Greenberg: Texas Attorney General probing Mannatech) is considering a lawsuit about unfair trade practices. The stock dropped 16%.
PACR - had very good earnings (Pacer International Reports 3rd Quarter 2006 Diluted Earnings per Share Up Over 26 Percent). This is a quiet company that really gets at what MFI is all about.
RAIL - made $2.88 per share (FreightCar America, Inc. Reports Record Performance with Third Quarter Net Income Per Diluted Share of $2.88 on Sales of $395.8 Million). People sure don't believe in this stock at $54 price. The backlog of rail cars dropped from 16,846 to 12,176. But they announced a deal with TXU (that will be in 4th quarter) for a blistering 7,680 rail cars. I don't understand why this stock is below $60.
TBL - met expectations with their earnings. They commented that environment in 2007 will continue to be tough (Timberland quarterly profit falls; forecast weak).
UST - had what I felt were good earnings but dropped 5% (UST Inc.'s shares tumble despite earnings surprise). I guess they have gone up so much that earnings needed to be spectacular.
Wow, full week! More Zip, Zap Zoot next week. Overall I am up 3%, but trail benchmark by quite a bit still. I do have room for a 30th stock. Not sure what I'll do. Iam happy that I sold PTSC at 93 cents. It has since fallen to 73 cents. I didn't need that stress any longer.
|Current Gain/Loss ($)||$144|
|Current Gain/Loss (%)||0.0%|
|Sold Gain/Loss ($)||$10,050|
|Sold Gain/Loss (%)||25.0%|
|Total Gain/Loss ($)||$10,194|
|Benchmark Gain/Loss ($)||$21,350|
|Total Gain/Loss (%)||3.2%|
Thursday, October 26, 2006
|Current Gain/Loss ($)||$6,801|
|Current Gain/Loss (%)||2.1%|
|Sold Gain/Loss ($)||$10,050|
|Sold Gain/Loss (%)||25.0%|
|Total Gain/Loss ($)||$16,851|
|Benchmark Gain/Loss ($)||$23,825|
|Total Gain/Loss (%)||5.3%|
Thursday, October 19, 2006
I am having a little seller's regret in my sale of PCU. It has gone up about $3 since I said good-bye. Cramer even gave them his confidence the other day:
Peruvian PlaySouthern Copper (PCU - news - Cramer's Take - Rating) is "a great way to play one of the last capitalist countries [Peru] standing in Latin America," Cramer told his viewers.
One of the best reasons to buy this stock is the yield. In fact, if market players bought Southern Copper and it did nothing for a year, they would be up 8% because of its "glorious" dividend, he said.
"Even if copper is cheaper, it's in demand," said Cramer, who added that Southern Copper has a "monster upside surprise" coming.
The company just opened a big mine and settled a major labor dispute favorable to Southern Copper's management, he said. Plus, this year the company is not hedging.
Removing the cost of hedging should cause an "earnings explosion," Cramer said. He advised people to buy Southern Copper on a pullback.TGIS is having a monster week as the market embraced their earnings and 35% growth.They started the week at $11.82 and are now $13.52. I don't have a calculator at hand, but that has to be about 15%.
PGI announced their earnings this evening. I skimmed the release quickly and it didn't look inspiring. I expect they'll drop 3 to 5% tomorrow.
Overall my day was pretty good. I don't have my chart in front of me, but I think I am up about $11k or $12k now and trail the benchmark by about $7k.
Pretty funny. MTEX was downgraded today by some research analyst I have never heard of. What is funny though is the Yahoo list of upgrades/downgrades as they were downgraded to buy a while back and now downgraded to buy again. Didn't Matrix have to upgrade them at some point???
|UPGRADES & DOWNGRADES HISTORY|
|19-Oct-06||Matrix Research||Downgrade||Strong Buy||Buy|
|7-Jul-06||Avondale Partners||Initiated||Mkt Outperform|
|17-Apr-06||Matrix Research||Downgrade||Strong Buy||Buy|
Wednesday, October 18, 2006
- YoY Revenues + 35%
- 27 cents per share
- Positive outlook
Overall is was a lousy day for my portfolio, down about 0.5%. Hard to complain as things have been going so well of late.
Monday, October 16, 2006
I’ll tell you. My MFI portfolio actually ended up the day in the green, despite meltdowns by two stocks: MTEX (-12.8%) and PTSC (-18.2%).
The MTEX meltdown was a little bothersome. At about 2:15 it dove from $18.40 to below $17. I could find no reason for the drop. The volume was high at 1.2m shares vs normal 200k.
The PTSC drop wasn't unexpected after I read their long delayed quarterly income statement.
The fact that the portfolio increased does show the power of a thirty stock portfolio. BLDR has been going up like crazy, up 23% in the past week. Thanks Mr. Cramer for bullish posture on home-related stocks.
1st Major Deviation from Rules
I sold PTSCE today. 7 1/2 months before its time. It wasn’t really a MFI stock in my opinion. I could not stomach the volatility any longer. I am going to try not to look backwards and just consider it a lesson learned. Speaking of looking back, PCU shot up $1.42 today! Oh well, I did feel that was a legit sale as I had held for a year.
Breaking (up is hard to do) The Rules?
A recent comment was that my MFI approach was not following the rules specified in TLBTBTSM. That is correct as JG does lay out the steps to replicate his backtest study. In his steps, you are to buy 5-7 stocks at 4 points in the year and then hold for basically a year.
My buying has not been 5 to 7 stocks at a time.
2/24 - 5 stocks
2/27 - 1 stock
3/2 - 1 stock
3/9 - 1 stock
3/15 and 3/17 - 1 stock
4/3 - 3 stocks
4/7, 5/1, 5/4, 5/9, 5/12, 5/15. 5/16. 5/22, 5/26 - 1 stock
5/31 - 3 stocks
6/2, 6/5, 6/13, 6/19, 7/7, 9/6, 9/11, 9/18 & 10/5 - 1 stock
And now I am trying to watch stocks and buy them on dips. Am I following the rules? While I am not following his procedure exactly, mathematically I do not see how it matters whether the portfolio is 4 equal buys, 12 equal buys or whatever. Over a 3 to 5 year period the difference should move towards 0. The equal buys and then selling around the same date do make it easier to rebalance your portfolio so you have equal $ in all stocks. But as I intend to be supplementing $ invested in MFI contnuously, I don't know that this is a big deal.
How about "timing" a purchase? Watching the stock prices and picking a stock on "sale". JG certainly doesn't infer that this approach should be used. It is something I have begun to do because the MFI stocks seem pretty volatile to me. Perhaps I am biasing my purchases by doing this. I have really only done this 3 times (ASEI, BBSI & VPHM). I will likely continue the approach as it appeals to the way I like to invest.
I checked on how my monthly benchmark portfolios have been faring. The answer is "quite nicely thank you".
Saturday, October 14, 2006
For those of you new to reading my blog, I have begun trying to identify potential stocks to buy from the MFI lists. Then I watch them for a buying opportunity. A couple of recent good examples have been BBSI & PRLS.
I began watching BBSI at around $21. I t dropped to $19.18 for no apparant reason and I pulled the trigger. So far that has been a great move as it is up 25% since then. PRLS had a so-so quarter. Their stock was punished, knocked down from $4 to $3 (it had been as high as $6 earlier in 2006). It then proceded to fall further (about $2.70). I did not pull the trigger in real life. Since then, it has shot to $3.90 in the past 3 weeks.
I am now watching ASPV. It went down 11% on Friday (to $22.05) as they announced a 3q shortfall. But (and this is the important part to me) they re-affirmed 2006 guidance (Aspreva Announces Preliminary Revenues for Third Quarter 2006 and Reaffirms Guidance for the Year).
Aspreva believes continued strong underlying annual growth of CellCept prescriptions in the range of 20%-25% will be realized in 2006. Aspreva is therefore reaffirming its previously disclosed guidance for revenue in excess of $200 million for 2006.
The stock is now dirt cheap. They are trading at 8x ttm earnings. If they drop at all next week, I may have to jump in. Not sure if they will be an "MFI" stock for me or just part of my non MFI holdings. I do want to keep # of stocks in that portfolio to 30. Now if I sell PTSC (a real possibility) then that would open a slot for ASPV.
Friday, October 13, 2006
- It was a great week. My portfolio is now up about 4%. I closed the day at my all-time high.
- I sold PCU. That drops me back to 30 MFI stocks.
- PTSC released their earnings after the market closed. I was unimpressed.
Copper has been shooting up, and the companies are in a "miraculously good situation," Cramer told another caller inquiring about Southern Copper (PCU - news - Cramer's Take). "I like copper because it's in short supply," he said.
I was surprised when PTSC waited until after market to release their long delayed earnings. I read the release (Patriot Scientific Files Form 10-KSB for Fiscal Year 2006) and frankly it made my head hurt a bit as they seemed to intentionally not state things clearly. Here are my key takeaways:
- They said their annual income for year ending May 31st was $28.7m. Nowhere did I see their quarterly income. The prior 3 quarters had income of 24.886, (1.275) and 4.442m. Using basic subtraction, they made about 700K in the quarter.
- They said from June 1st through Oct 3rd they had joint revenue of $32.7m. I think PTSC only gets 50% of that. So that is about $16.3m in revenues in past 4 months. If you figure they bring 40% to the bottom line, that is about $4m or $1m a month.
The sale of PCU takes me back to 30 MFI stocks. I was uneasy being over 30. Of course, had I known PTSC was going to be so lukewarm, I might have held PCU and sold the PTSC.
Enough rambling! Here is my list of stocks:
|Current Gain/Loss ($)||$64|
|Current Gain/Loss (%)||0.0%|
|Sold Gain/Loss ($)||$12,865|
|Sold Gain/Loss (%)||32.0%|
|Total Gain/Loss ($)||$12,929|
|Benchmark Gain/Loss ($)||$18,704|
|Total Gain/Loss (%)||4.1%|
Then finally, here is my graph. The IWV is starting to get nervous. Have a great weekend everyone!
Thursday, October 12, 2006
My MFI portfolio shot up over 2% today. Since September 10th, it is up 8.3%. That is a ton in a single month. I am now up 3% overall and trail the IWV by 3.2%. Watching Cramer the other day made me think (Reposition for a Soft Landing). He was commenting about "The Winds of Change" and that he said that people need to get out of defensive stocks (like Pepsi & Kellogg) and into tech, airlines etc. I suspect that is why MFI has been lagging to some extent, is that for the first 5 to 6 months... it was the defensive stocks that were outperforming of which my MFI portfolio had extremely little exposure.
DLX did a real about face. When I looked at lunch time, it was the best stock (on a very good day) on the NYSE. They increased guidance (Deluxe Soars on Higher Forecast) and went up about 17%! If you had bought DLX back when everyone was so negative on them (July), you'd be up 50%!
That illustrates a theme that in my mind there is no rush to buy MFI stocks. Many of them have warts. Watch them for a bit and be ready when a buying opportunity comes along. You'll know it when you see it.
It also illustrates the importance of not panicking and selling your MFI stock when it tanks. By forcing myself to hold for a year, I have had some losers bounce backa great deal. DLX is now down about 17% for me. PTSC is down about 14%. These were both close to 50% losers at one time.
Speaking of PTSC, tomorrow (per my calendar) is October (Friday) the 13th. We shall see what they have to say for the first time in about 6 months. Pardon me while I nervously chew on my fingernails.
Cramer today said to sell ANF.
It is time to sell Abercrombie & Fitch (ANF - news - Cramer's Take) now that it has a high valuation as the stock has hit $76 a share, Cramer said. "You are now being a hog. I think you should sell and swap into Lowe's (LOW - news - Cramer's Take) or Sears Holdings (SHLD - news - Cramer's Take)."
He has called the stock pretty well, saying to buy at $55 (now over $76). I can't say I disagree, if it was not an MFI stock for me, I'd probably happily take my profits. But I am in until March 2nd, 2007. We'll see how it works out. ANF will not crash (unless sales crater), but further upside may be limited. I am not sure that I agree that ANF is at a "high" valuation, as its forward P/E ratio is slightly higher than LOW and more than 10% below SHLD. That being said, Jubak just said he is buying AEOS (5 buys for a fourth-quarter rally)... not that different from ANF.
I am reading an interesting book right now called "Bull". It analyzes the bull market from 1982 - 1999. While the book twists numbers to make its point, basically that there are extended stretches that you are better off to be out of the market; it makes for fascinating reading as the book interviews people like Blodget, Grubman and Ancampora. Important to learn from history.
Finally, here is an update of my holdings and their performance.
|Current Gain/Loss ($)||$48|
|Current Gain/Loss (%)||0.0%|
|Sold Gain/Loss ($)||$9,495|
|Sold Gain/Loss (%)||31.5%|
|Total Gain/Loss ($)||$9,543|
|Benchmark Gain/Loss ($)||$17,339|
|Total Gain/Loss (%)||3.0%|
Tuesday, October 10, 2006
We are quickly approaching earnings season. I am starting to put together an earnings calendar. I remember they came fast and furious in July.
My sell date on PCU is October 17th. I already know that I'll have an emotional time selling it. It has doubled for me since I bought it last year. It is still "on the list". If I keep it, I'll be holding 31 MFI stocks. I suppose that is "ok". If it makes a real spurt in the next 2 weeks though, I may have to take the money & run. It has done well as an MFI stock for me, +28% including the dividends. I do have one stock that has been a four-bagger since I bought it last November. OMG has gone from $12.95 to $53.16.
Finally, my side car stocks continue to do well in my IRA. Right now I have PTEN, EZEN, PONR & PLAY. PLAY is new to me. It is a calculated gamble. They have a ton of cash, but no real customers right now. I figure if they get any customer at all, the stock will shoot up.
Here's my current scorecard. I'm up about 2%. Note that MTEX is my best performer. I am sure glad I picked them over PLAY back in May in "My Tale of Two Stocks".
|Current Gain/Loss ($)||-$3,338|
|Current Gain/Loss (%)||-1.0%|
|Sold Gain/Loss ($)||$9,495|
|Sold Gain/Loss (%)||31.5%|
|Total Gain/Loss ($)||$6,157|
|Benchmark Gain/Loss ($)||$14,906|
|Total Gain/Loss (%)||1.9%|