Earnings season is always "exciting", but it seems much more so to me since I started using MFI. I think it is because before MFI I rarely bought a stock under $1b in market cap. And while those types of stocks have swings, the smaller MFI stocks that I buy are even wilder.
IVAC was bad news today. I suspected as much when I analyzed them on Sunday and it was confirmed when I read their release on Monday evening. Then it was triple confirmed when they dropped over 16% today. Not much to do but grin and bear it. We could easily take another hammering next quarter until their product cycle rolls over. In the meantime, they are financially strong and won't be fading away. I can wait.
HW actually had banner earnings this morning. Probably the first positive quarter they have had since I bought them 18 months ago (Headwaters 3Q Profit Jumps 68 Percent). I don't know whether it was the quarter being so good, or whether expectations were so low. They popped up almost 8%... they were up more like 15% early on, but I don't need to mention it was a tough day in the market.
Speaking of tough days, AHM, the stock I mentioned yesterday that I have been following since the spring when it was in the mid 20s... it opened today in the afternoon after taking a breather for the past day and a half. It opened up down 90%. Ouch. They are talking bankruptcy. I am sure glad I avoided that pothole. I did buy TMA, but it looks much better in the mortgage fiasco ( Is Thornburg Mortgage's (TMA - Cramer's Take - Stockpickr - Rating) 10% dividend too good to be true? I also noticed that this stock fared pretty well during the huge selloff.
Any opinions?). I actually have convinced myself that after all these weaker players are weeded out, that the remaining stronger players may have a chance to make a lot of moolah.
FDG reported earnings late last night. They seemed "okay" to me. The market did seem to like them. They were up about $1.50 earlier in the day, but got drug down with the market and ended up 15 cents.
VCI is one stock I am glad I didn't buy. I first thought about buying them between $13 and $14 in January when they made my blue light special list. Then they shot up to $18-$19 and I was kicking myself for not buying them Well, today they closed at $11.87. They bought a competitor (advco) this Spring and it looks to me like they're drowning in the debt. Perhaps they paid too much? It is hard to make these mergers work.
Tuesday, July 31, 2007
Monday, July 30, 2007
Bummer
Do I harp too much day-to-day? Perhaps I do. I think for a stretch, I'll comment on my portfolio moves only weekly. I understand that even one week moves are generally not meaningful (though there are traders that watch the tape in one minute moves). But I argue that I am thinking long term. I am hoping that my weekly graphs will be interesting to people 5 years from now.
I hope people understand that while I do let my mood swing with the market on the pages of this blog, I am not (as Jim Cramer puts it) "drinking scotch while laying on a linoleum floor". I understand that investing is a LT exercise and I'd be happy to compare my results (which I have tracked very closely) since the summer of 2002 with anyone. I have done well and intend to continue doing well.
WPCS announced earnings this evening. They were a little cryptic (which always worries me) as they didn't say how the quarter was, but instead said what the full year was. Doing a little subtraction, it looks like an ok quarter, making 18 cents. So they made 72 cents in total. Remember, they guided at 88 cents for FY 2008.
Bad News Stocks - Two MFI stocks had exceedingly bad news today.
MTEX - which had already taken a major haircut for a TX AG investigation was down another 10% as they pre-announced a miserable quarter (Mannatech, Inc. Pre-Announces Second Quarter, 2007 Results). Despite their problems, it seems they have boosted their incentive plans greatly. It isn't pretty.
IVAC - I commented yesterday that I was worried about the lack of a backlog for their upcoming call. I was right and the market has hammered them AH (Intevac Announces Results for the Second Quarter of 2007). I think they're between product cycles.
REIT Wrong
I haven't seen a word on CNBC, but AHM did the unthinkable on Friday (AHM Halted, No Word From Company). They reneged on an announced dividend. They were supposed to pay a 70 cent dividend on Friday and they didn't. How can that happen? What is interesting (in a way) is that I started following AHM in the Spring when James Stewart (who I think is an excellent investor) siad he had bought AHM because he thought they had been unfairly dinged from the sub-prime fiasco and that AHM had limited exposure to sub-prime. So what does this mean? Either Mr Stewart was wrong, and AHM had much more exposure to subprime OR subprime is a faulty label and this crisis is spreading into the levels above sub-prime.
I have to shake my head at Cerberus Capital. They bought 51% of GMAC just before all this started hitting. Now they're buying Chrysler. I hope they're making money somewhere.
I hope people understand that while I do let my mood swing with the market on the pages of this blog, I am not (as Jim Cramer puts it) "drinking scotch while laying on a linoleum floor". I understand that investing is a LT exercise and I'd be happy to compare my results (which I have tracked very closely) since the summer of 2002 with anyone. I have done well and intend to continue doing well.
WPCS announced earnings this evening. They were a little cryptic (which always worries me) as they didn't say how the quarter was, but instead said what the full year was. Doing a little subtraction, it looks like an ok quarter, making 18 cents. So they made 72 cents in total. Remember, they guided at 88 cents for FY 2008.
Bad News Stocks - Two MFI stocks had exceedingly bad news today.
MTEX - which had already taken a major haircut for a TX AG investigation was down another 10% as they pre-announced a miserable quarter (Mannatech, Inc. Pre-Announces Second Quarter, 2007 Results). Despite their problems, it seems they have boosted their incentive plans greatly. It isn't pretty.
IVAC - I commented yesterday that I was worried about the lack of a backlog for their upcoming call. I was right and the market has hammered them AH (Intevac Announces Results for the Second Quarter of 2007). I think they're between product cycles.
REIT Wrong
I haven't seen a word on CNBC, but AHM did the unthinkable on Friday (AHM Halted, No Word From Company). They reneged on an announced dividend. They were supposed to pay a 70 cent dividend on Friday and they didn't. How can that happen? What is interesting (in a way) is that I started following AHM in the Spring when James Stewart (who I think is an excellent investor) siad he had bought AHM because he thought they had been unfairly dinged from the sub-prime fiasco and that AHM had limited exposure to sub-prime. So what does this mean? Either Mr Stewart was wrong, and AHM had much more exposure to subprime OR subprime is a faulty label and this crisis is spreading into the levels above sub-prime.
I have to shake my head at Cerberus Capital. They bought 51% of GMAC just before all this started hitting. Now they're buying Chrysler. I hope they're making money somewhere.
Sunday, July 29, 2007
My Stocks
Thought I'd start writing some comments about my portfolio of MFI stocks. I'll start with my 13 stocks thta are in current Top 25 - BBSI, CHKE, FTO, IVAC, KSWS, NOOF, PACR, PNCL, USHS, EGY, VPHM, WNR and WSTG.
BBSI - In their recent earnings, their revenues were actually below a year ago. However, their operating income was about 16% higher. As expected from their name, they provide HR services to companies. They acquired a UT staffing company and it looks like an accretive acquisition. They expect revenues to be 9% higher and income 19% 3rdQ 07 over 3Q 06. The business services segment is still highly fragmented, so there always exist opportunities for acquisitions or to be acquired. They also pay a little dividend.
CHKE -A middleman company. They make money by licensing their brands to businesses such as Target. But they do not manufacture. So as you might expect, they have a high ROIC as the business takes very little capital. They pay a 75 cent dividend, which is over 8%. I don't know if they'll be able to maintain the dividend as they're only expected to make $2.03 per share. The dividend is part of a finder's fee from a year ago associated with MOSS. But they know what they're doing. They have had insider buying. This stock will not go up 40%, but it is a solid holding.
FTO - one of my two refining companies. I have written about the business in the past. I expect they will have a monster quarter, but I suppose the bigger quetsion is what will happen over next 12 months? They have $454m in cash and that will likely go over $500m after this quarter. Their refineries are in Denver, Cheyenne and Kansas. That is important should hurricanes hit other company's refineries on the Gulf Coast.
IVAC - They were over $30 earlier this year and have fallen to $19. Below I show their income for the past 5 quarters, it seems pretty clear what happened:
They blew the numbers away in 4q2006 and the stock spiked to $30. They have returned more to "normal" since then. The backlog at 12/31 was about $125m. It is now $93m (14 machines). It looks like they have only received orders for two since then. Things may be looking a bit bleak for the third quarter.
KSWS - We all know their shoes. Hopefully a few are still being bought, though Crocs and Heely's seem like the latest craze. The stock has tumbled from around $30 to under $24. They are certainly in turn-around mode. Sales were down 17% this quarter. They do have over $7 cash per share. Again, this isn't a high-flier, but I am hoping all the bad news is priced in,
More later
BBSI - In their recent earnings, their revenues were actually below a year ago. However, their operating income was about 16% higher. As expected from their name, they provide HR services to companies. They acquired a UT staffing company and it looks like an accretive acquisition. They expect revenues to be 9% higher and income 19% 3rdQ 07 over 3Q 06. The business services segment is still highly fragmented, so there always exist opportunities for acquisitions or to be acquired. They also pay a little dividend.
CHKE -A middleman company. They make money by licensing their brands to businesses such as Target. But they do not manufacture. So as you might expect, they have a high ROIC as the business takes very little capital. They pay a 75 cent dividend, which is over 8%. I don't know if they'll be able to maintain the dividend as they're only expected to make $2.03 per share. The dividend is part of a finder's fee from a year ago associated with MOSS. But they know what they're doing. They have had insider buying. This stock will not go up 40%, but it is a solid holding.
FTO - one of my two refining companies. I have written about the business in the past. I expect they will have a monster quarter, but I suppose the bigger quetsion is what will happen over next 12 months? They have $454m in cash and that will likely go over $500m after this quarter. Their refineries are in Denver, Cheyenne and Kansas. That is important should hurricanes hit other company's refineries on the Gulf Coast.
IVAC - They were over $30 earlier this year and have fallen to $19. Below I show their income for the past 5 quarters, it seems pretty clear what happened:
| Operating Income After Depreciation | 13.077 | 22.256 | 9.144 | 9.968 | 6.631 |
They blew the numbers away in 4q2006 and the stock spiked to $30. They have returned more to "normal" since then. The backlog at 12/31 was about $125m. It is now $93m (14 machines). It looks like they have only received orders for two since then. Things may be looking a bit bleak for the third quarter.
KSWS - We all know their shoes. Hopefully a few are still being bought, though Crocs and Heely's seem like the latest craze. The stock has tumbled from around $30 to under $24. They are certainly in turn-around mode. Sales were down 17% this quarter. They do have over $7 cash per share. Again, this isn't a high-flier, but I am hoping all the bad news is priced in,
More later
Saturday, July 28, 2007
Upcoming Week
What do people think? Another bloodbath coming up? I know I lost many thousands of paper gains. Funny, it didn't really bother me, I don't feel poorer. They have done studies and people view money differently depending our the source. Money from a paycheck is different than money from a casino which is different than money from a stock sale. People spend the money differently as well. And I suppose they grieve over the loss of the money from those sources differently.
Anyway, I am in a good mood. I just got Internet via cable and it seems better. It took me a solid week to get it working, the splitter was causing problems.
Ok, all that had nothing to do with MFI. Of course my trading is alledgedly finished until next summer, not sure what to chat about.
Interesting article from IBD (Refiners Running Out Of Gas?) about refiners (of which I now own 2). They suggest that margins have hit their peak (around $24) and may drop as low as $8. The same thing was said last Sept/Oct... the drops are seasonal in my opinion and they'll pop back up next Spring as they gear up for the Summer driving season. Until you see people driving less or new refining capacity built, the refiners have an oligopoly. That being said, IBD could very well be right that the stock prices may tumble some as the margins contract. Oh well.
Here is my stock market contest update from the groups board:
Anyway, I am in a good mood. I just got Internet via cable and it seems better. It took me a solid week to get it working, the splitter was causing problems.
- People are concerned about credit (or lack there of)
- The flop of BX has people worried that private equity deals will dry up
- But the market has been resilient to bad news.
- Earnings have been solid.
- Will the fed do anything?
Ok, all that had nothing to do with MFI. Of course my trading is alledgedly finished until next summer, not sure what to chat about.
Interesting article from IBD (Refiners Running Out Of Gas?) about refiners (of which I now own 2). They suggest that margins have hit their peak (around $24) and may drop as low as $8. The same thing was said last Sept/Oct... the drops are seasonal in my opinion and they'll pop back up next Spring as they gear up for the Summer driving season. Until you see people driving less or new refining capacity built, the refiners have an oligopoly. That being said, IBD could very well be right that the stock prices may tumble some as the margins contract. Oh well.
Here is my stock market contest update from the groups board:
| Delete | ||||||
|---|---|---|---|---|---|---|
| 1 | $153,873.80 | +0.00% | +2.58% | 24 | ||
| 2 | $150,709.72 | +0.00% | +0.47% | 15 | ||
| 3 | $150,491.11 | +0.00% | +0.33% | 15 | ||
| 4 | $150,194.66 | +0.00% | +0.13% | 15 | ||
| 5 | $149,218.64 | +0.00% | -0.52% | 15 | ||
| 6 | $148,756.38 | +0.00% | -0.83% | 20 | ||
| 7 | $146,761.41 | +0.00% | -2.16% | 15 | ||
| 8 | $146,284.00 | +0.00% | -2.48% | 15 | ||
| 9 | $146,249.62 | +0.00% | -2.50% | 15 | ||
| 10 | $146,242.77 | +0.00% | -2.50% | 25 | ||
| 11 | $145,769.47 | +0.00% | -2.82% | 25 | ||
| 12 | $145,558.79 | +0.00% | -2.96% | 15 | ||
| 13 | $145,376.45 | +0.00% | -3.08% | 15 | ||
| 14 | $144,600.68 | +0.00% | -3.60% | 15 | ||
| 15 | $144,321.98 | +0.00% | -3.79% | 15 | ||
| 16 | $144,202.28 | +0.00% | -3.87% | 15 | ||
| 17 | $144,186.20 | +0.00% | -3.88% | 15 | ||
| 18 | $143,528.57 | +0.00% | -4.31% | 4 | ||
| 19 | $143,463.42 | +0.00% | -4.36% | 12 | ||
| 20 | $143,199.72 | +0.00% | -4.53% | 15 | ||
| 21 | $143,170.23 | +0.00% | -4.55% | 27 | ||
| 22 | $143,032.63 | +0.00% | -4.64% | 17 | ||
| 23 | $142,697.82 | +0.00% | -4.87% | 20 | ||
| 24 | $142,292.19 | +0.00% | -5.14% | 15 | ||
| 25 | $142,245.77 | +0.00% | -5.17% | 12 | ||
| 26 | $142,023.00 | +0.00% | -5.32% | 15 | ||
| 27 | $141,833.57 | +0.00% | -5.44% | 17 | ||
| 28 | $140,997.86 | +0.00% | -6.00% | 30 | ||
| 29 | $140,793.17 | +0.00% | -6.14% | 15 | ||
| 30 | $140,776.75 | +0.00% | -6.15% | 15 |
| Delete | ||||||
|---|---|---|---|---|---|---|
| 31 | $140,530.55 | +0.00% | -6.31% | 15 | ||
| 32 | $139,704.72 | +0.00% | -6.86% | 15 | ||
| 33 | $139,420.55 | +0.00% | -7.05% | 25 | ||
| 34 | $139,280.07 | +0.00% | -7.15% | 15 | ||
| 35 | $139,176.24 | +0.00% | -7.22% | 19 | ||
| 36 | $138,654.96 | +0.00% | -7.56% | 26 | ||
| 37 | $138,639.39 | +0.00% | -7.57% | 15 | ||
| 38 | $138,295.62 | +0.00% | -7.80% | 15 | ||
| 39 | $138,014.00 | +0.00% | -7.99% | 14 | ||
| 40 | $137,939.34 | +0.00% | -8.04% | 15 | ||
| 41 | $137,155.92 | +0.00% | -8.56% | 15 | ||
| 42 | $137,122.77 | +0.00% | -8.58% | 15 | ||
| 43 | $136,322.31 | +0.00% | -9.12% | 15 | ||
| 44 | $135,768.88 | +0.00% | -9.49% | 17 |
Friday, July 27, 2007
Out the Window - For Strong Stomachs Only
I could not take it any more. I sold 3 stocks today against the rules and bought 3 stocks that were on the top 25 list. No tax impact as all 3 stocks were essentially near my purchase price. There, I said it. Yes I was weak, but I feel better about my 3 new stocks.
Gone: CREL, PDS and MEOH (which hardly counts).
In: VSNT, KSWS and WNR.
This evening I read a MF article about PDS (Precise Pain at Precision Drilling). They agreed with me that it was an extremely bearish conference call. They think in the long run it'll help PDS as the weakness may bankrupt weaker competitors. Made me feel better about selling 1st thhing this morning.
I was certainly right that the WSTG quarter left something to be desired. Down 19%. Brutal. At least I'll get an extra penny dividend. I do hope that this downward move is temporary.
NXG reported their earnings this morning (Northgate reports strong quarterly cash flow of $43.7 million - A third large gold-copper porphyry system discovered at Kemess). I have to say that I thought the numbers were not very good. I came very very close to making them my 4th stock to sell early today and would have bought TCK (on the top 25). I did not, because of their comment about the discovery. I won't be surprised if they fall off the lists though, they really made a lot less $ than 4 quarters ago.
* Warning * Warning * Warning * Warning * Warning * Warning * Warning!
The graph below may cause physical distress. One should not be standing when viewing the graph. If You begin to feel like vomiting turn your computer screen upside down. If you have heart problems, it is advisable not to scroll down.
This is my weekly graph showing gains and losses vs the Russell 3000 benchmark. My MFI portfolio is the magenta line (you'll know it when you see it) and the R3000 is the Blue line.
Yes I "lost" a lot of money this week. But to keep things in perspective, I am still up YTD (7%) and I am beating the benchmark (barely).
Six stocks were up for me: HW, NXG, TGB, UG, VSNT and USHS. Even with the WSTG bloodletting, I was actually even with the market, which surprised me.
Some numbers:
My MFI portfolio dropped 8.3% during the week.
If you toss in last Friday, it is an even 9% drop.
My overall portfolio was down 7.5%, so not quite as bad on non MFI side.
My biggest purchase in the freefall was KF at about $41.50. I had been looking for an entry into Korea on the Intl side and the 6% drop was just want I wanted.
The whole drop is disturbing. I think one reason MFI stocks in general fared worse is because ironically many of them were considered takeover candidates because of their strong balance sheets. With more risk being priced in and banks less willing to issue debt, there will be less takeovers, which caused these "attractive" stocks to lose that takeover premium. Just my uneducated opinion.
Here ar the current standings in the stocks contest. Not much green, but note how well the top 25 portfolios are holding up. (trouble pulling this in)
Gone: CREL, PDS and MEOH (which hardly counts).
In: VSNT, KSWS and WNR.
This evening I read a MF article about PDS (Precise Pain at Precision Drilling). They agreed with me that it was an extremely bearish conference call. They think in the long run it'll help PDS as the weakness may bankrupt weaker competitors. Made me feel better about selling 1st thhing this morning.
I was certainly right that the WSTG quarter left something to be desired. Down 19%. Brutal. At least I'll get an extra penny dividend. I do hope that this downward move is temporary.
NXG reported their earnings this morning (Northgate reports strong quarterly cash flow of $43.7 million - A third large gold-copper porphyry system discovered at Kemess). I have to say that I thought the numbers were not very good. I came very very close to making them my 4th stock to sell early today and would have bought TCK (on the top 25). I did not, because of their comment about the discovery. I won't be surprised if they fall off the lists though, they really made a lot less $ than 4 quarters ago.
* Warning * Warning * Warning * Warning * Warning * Warning * Warning!
The graph below may cause physical distress. One should not be standing when viewing the graph. If You begin to feel like vomiting turn your computer screen upside down. If you have heart problems, it is advisable not to scroll down.
This is my weekly graph showing gains and losses vs the Russell 3000 benchmark. My MFI portfolio is the magenta line (you'll know it when you see it) and the R3000 is the Blue line.
Yes I "lost" a lot of money this week. But to keep things in perspective, I am still up YTD (7%) and I am beating the benchmark (barely).
Six stocks were up for me: HW, NXG, TGB, UG, VSNT and USHS. Even with the WSTG bloodletting, I was actually even with the market, which surprised me.
Some numbers:
My MFI portfolio dropped 8.3% during the week.
If you toss in last Friday, it is an even 9% drop.
My overall portfolio was down 7.5%, so not quite as bad on non MFI side.
My biggest purchase in the freefall was KF at about $41.50. I had been looking for an entry into Korea on the Intl side and the 6% drop was just want I wanted.
The whole drop is disturbing. I think one reason MFI stocks in general fared worse is because ironically many of them were considered takeover candidates because of their strong balance sheets. With more risk being priced in and banks less willing to issue debt, there will be less takeovers, which caused these "attractive" stocks to lose that takeover premium. Just my uneducated opinion.
Here ar the current standings in the stocks contest. Not much green, but note how well the top 25 portfolios are holding up. (trouble pulling this in)
Thursday, July 26, 2007
Earnings
A bunch of my stocks have announced earnings the past few days. I have been remiss in commenting.
- BBSI - had pretty good numbers (obviously) as they were up on this atrocious day. I thought they were positive. Basically up 15% across the board. Their CEO said "We are pleased with our record second quarter earnings and anticipate a stronger performance in the third quarter." This is a great small cap company.
- RAIL - I was really not thrilled with their earnings (FreightCar America 2Q Profit Plunges). Their EBITDA for the quarter dropped from 59m to 17m from last year. That will drop them quite a bit on the MFI lists. Here is what their CEO said (not exactly bullish):
"In light of the considerably softer North American market for most railcar types, our optimization of production at low cost facilities, in conjunction with stringent cost control, contributed substantially to our profitability this quarter. We plan to take full advantage of our low cost production facilities wherever possible, while continually reviewing ways to lower our manufacturing break-even point," said Chris Ragot, President and Chief Executive Officer.
"Orders for railcars totaled 2,262 units in the second quarter of 2007, up from 768 units ordered in the first quarter of 2007, compared with orders of 3,763 units for the same period in 2006. The backlog of unfilled orders was 5,589 units at June 30, 2007, compared with 6,006 units at March 31, 2007 and 16,846 units at June 30, 2006."
Mr. Ragot further stated, "In this challenging environment, we continue to maintain a strong balance sheet that allows us to proceed with our share repurchase program and explore strategic growth initiatives. Our product diversification program remains on schedule and we continue to examine growth opportunities."
- WSTG - announced their earnings tonight after the bell (Wayside Technology Group, Inc. Reports 2007 Second Quarter Results). Like RAIL, I was underwhelmed. Sales were up only 6% YoY, not exactly a high flier. Recall, this was the stock that bragged last quarter about 15 straight double digit growth quarters. They did increase their dividend a penny, so that is a sign of confidence in future cash flow.
- PDS - I saved the worst for last (Precision Drilling Trust Reports 2007 Second Quarter Earnings). Yes even worse than RAIL in my opinion. I felt like selling prematurely (though I didn't). Here are some of their downer comments:
- During the second quarter, Precision experienced some of its lowest activity and equipment utilization levels in a decade as poor weather and continued uncertainty over the economics of natural gas drilling in western Canada led customers to limit spending.
- Precision's customer pricing in Canada declined for drilling rig operations and held for service rigs during the quarter while overall equipment utilization declined significantly from the same period in the prior year. Precision realized an average day rate decline of 9% in the quarter for its drilling rigs compared to prior year levels. In general, spot pricing was considerably weaker in the second quarter of 2007 while average day rates were bolstered by long-term contract rates and market pricing for Precision's Super Single(TM) rigs.
- the outlook for Precision over the second half of fiscal 2007 will continue to be heavily dependant on its dominant market presence in the oilfield service sector in western Canada. The recent build of underground natural gas storage levels and record industry equipment capacity are expected to keep equipment utilization levels at seasonally adjusted low levels with continued price competition.
Ugly Day III
I have to admit it. I actually listed all my stocks in the red and considered selling them en masse and buying the 12 stocks in the top 25 over 50m that I don't own. But I did not push the button. It has been an exceedingly frustrating 5 days where I have gone from being about 6% ahead of the benchmark to 1.5% ahead AND I have lost actual $ as well. The chart tomorrow will show my ugliest week ever (easily) unless we get a bounce tomorrow.
But despite everything, the sun is still shining. While the market may have gotten a little ahead of itself, I don't think it is anything like 2001. I will hold my stocks through the despair, I have no reason to sell.
My question of changing to the approach of simply buying all 25 over 50m raised record commentary. Some people questioned whether it is putting everything on one date and that would I not be better the average in. I don't think that is valid, either way I am fully invested. The question is whether I should hold my current holdings until I have had them all at least a year and then on a common date sell them all and invest in top 25 equally.
I have to say I am STRONGLY leaning towards this approach. It is what JG really did in his book, is it not? I'd probably do it next June. So I would essentially put my MFI transactions on ice from now until then. I know it will take some "fun" out of stock picking etc, but the tracking portfolios have been kicking my butt. In my MFI stock contest, that portfolio is currently 6th out of 44. We're talking real money, it is not like I have $1000 invested, so I need to go with what gets me the best return, not what strokes my stock-picking ego. I go have "fun" with some of the gains at the casino. Anyway, I am on hold for trades until September when ASEI, BBSI and VPHM come up. Then I'll decide whether to continue the freeze and implement new approach or not. There are other variation, say 14 in January and 14 in July but I want to remove my bias entirely.
I apologize if people bought TGIS because of my bullishness. I am just an investor like people reading this blog and I strongly encourage people to do their own research. I know people know I am not pumping and dumping or anything like that, I certainly had my share of that recent 26% drop.
But despite everything, the sun is still shining. While the market may have gotten a little ahead of itself, I don't think it is anything like 2001. I will hold my stocks through the despair, I have no reason to sell.
My question of changing to the approach of simply buying all 25 over 50m raised record commentary. Some people questioned whether it is putting everything on one date and that would I not be better the average in. I don't think that is valid, either way I am fully invested. The question is whether I should hold my current holdings until I have had them all at least a year and then on a common date sell them all and invest in top 25 equally.
I have to say I am STRONGLY leaning towards this approach. It is what JG really did in his book, is it not? I'd probably do it next June. So I would essentially put my MFI transactions on ice from now until then. I know it will take some "fun" out of stock picking etc, but the tracking portfolios have been kicking my butt. In my MFI stock contest, that portfolio is currently 6th out of 44. We're talking real money, it is not like I have $1000 invested, so I need to go with what gets me the best return, not what strokes my stock-picking ego. I go have "fun" with some of the gains at the casino. Anyway, I am on hold for trades until September when ASEI, BBSI and VPHM come up. Then I'll decide whether to continue the freeze and implement new approach or not. There are other variation, say 14 in January and 14 in July but I want to remove my bias entirely.
I apologize if people bought TGIS because of my bullishness. I am just an investor like people reading this blog and I strongly encourage people to do their own research. I know people know I am not pumping and dumping or anything like that, I certainly had my share of that recent 26% drop.
Wednesday, July 25, 2007
Starting Over
I posted a note on the Yahoo Groups Board showing the standings of my MFI stock contest. So far, just the top 25 over $50 M has been a strong performer. Toss on top of that the fact that my actual portfolio is only about 3% above the benchmark, while my tracking portfolios are probably more like 6-8% higher.
It makes one think. Have I been unlucky or do I bring a bias to stock picking? Do we all bring a bias?
I am going to think about this question. I have to say if I were starting over, I'd be strongly tempted to just buy the top 25 on a single day and then make no changes for a year. It'd be duller, but for an extra 5% I could live with dull.
I took a look at my portfolio to see if I could transition over the next year to that approach. It would not be easy unless I wanted to take a substantial tax hit (and I don't). The best approach would be for me to simply hold my current portfolio for a year (meaning some stocks would be more than a year) and then sell everything and "start over" by picking the top 25 over 50m.
I will think about this shift over the next couple of months as my next batch of sales will be in September. Then I wonder if there is a best time of the year to do this? There is always "noise" on the list as stocks fall off when earnings are updated, it seems you want a point in time when noise is minimal. But again, I am probably over-thinking.
What do you think? Post a comment!
MEOH did announce their earnings late last night (Methanex quarterly earnings fall). They didn't seem very good to me. But they did say a lot of positive things about the state of the industry.
It makes one think. Have I been unlucky or do I bring a bias to stock picking? Do we all bring a bias?
I am going to think about this question. I have to say if I were starting over, I'd be strongly tempted to just buy the top 25 on a single day and then make no changes for a year. It'd be duller, but for an extra 5% I could live with dull.
I took a look at my portfolio to see if I could transition over the next year to that approach. It would not be easy unless I wanted to take a substantial tax hit (and I don't). The best approach would be for me to simply hold my current portfolio for a year (meaning some stocks would be more than a year) and then sell everything and "start over" by picking the top 25 over 50m.
I will think about this shift over the next couple of months as my next batch of sales will be in September. Then I wonder if there is a best time of the year to do this? There is always "noise" on the list as stocks fall off when earnings are updated, it seems you want a point in time when noise is minimal. But again, I am probably over-thinking.
What do you think? Post a comment!
MEOH did announce their earnings late last night (Methanex quarterly earnings fall). They didn't seem very good to me. But they did say a lot of positive things about the state of the industry.
Tuesday, July 24, 2007
Ugly Day II
Someone on the Yahoo Groups board mentioned that the contrarian indicator from the board itself was flashing a sell signal yesterday (This indicator is thoroughly untested, but suggests that the more posts on the Yahoo board, the more over bought the stock market. It seems kind of logical as people would rather post when they're happy.My portfolio was down an ugly 2.7%. That made today the second straight day I lost 1% more than the Russell 3000. I am still ahead of the index by over 3%, but the gap is narrowing. This drop happened despite my having the 6th best stock on the NYSE, DGX. They reported a solid quarter and gave good outlook for the remainder of 2007. This caused them to jump almost 7% (ironically, another MFI stock, DPZ was up 16%!).
It was such a crummy day, I have set up a new Blue Light Special Portfolio. The BLS has some names that are not exactly on fire:
| Symbol | Shrs | Price Paid | Trade | Gain | |
|---|---|---|---|---|---|
| ALOY | 1,011 | 9.89 | 9.82 |  $70.77 | 0.71% |
| AVR | 633 | 15.81 | 15.52 | $183.57 | 1.83% |
| HW | 639 | 15.64 | 15.52 | $76.68 | 0.77% |
| IWV | 1 | 88.37 | 87.57 | $0.80 | 0.91% |
| KG | 561 | 17.83 | 17.61 | $123.42 | 1.23% |
| MTEX | 930 | 10.75 | 10.77 |  $18.60 | 0.19% |
| OPMR | 1,307 | 7.65 | 7.59 | $78.42 | 0.78% |
| PACR | 450 | 22.21 | 22.05 | $72.00 | 0.72% |
| TGIS | 966 | 10.35 | 10.41 | $57.96 | 0.58% |
| TZOO | 435 | 22.99 | 22.41 | $252.30 | 2.52% |
| USHS | 1,117 | 8.95 | 8.85 | $111.70 | 1.12% |
| Total (USD): | - | - | - | $893.10 | 0.89% |
LRCX reported their earnings (kind of) after the bell (Lam Research Corporation Announces Selected Financial Results for the Quarter Ended June 24, 2007). Their sales were up a whopping 29%. But not a whole lot of color in their press release, so I suppose I'll have to wait.
Obviously I had some stocks (actually many stocks) taken to the woodshed in my 2nd worst day of the year (Feb 27th was the worst). Here are a few of the downers:
UG down 10.4% (mostly late in the day as they were up early).
FTO down 7.6% (HOC, WNR and TSO were all torched as well... I assume profit taking).
TRLG down 5.1%
PNCL down 4.9%
PACR down 4,7% as they were downgraded.
EGY down 4.6%
GVHR down 4.4%
VALU down 4.4% (I felt that gain yesterday was over done)
DGX, KSW and NOOF can all take bows as only stocks in the green.
My newest stock, MEOH, is supposed to release earnings this evening. Maybe they're arguing over a preposition.
I saw Cramer is doing a thing on tech stocks, saying they're "immune" to downturn. Somehow the Naz dropped 50 points despite JC's assurances.
I do apologize that I have not made headway on my backtesting study. My friend who was going to get the data for me via Perl has gotten side-tracked.
Monday, July 23, 2007
Ugly Day
Pretty humbling day. I have stated several times here that I was bullish on TGIS. Well, it was shot down today (Thomas Group Announces Second Quarter 2007 Results). Down a brutal 18.3%. I tried to listen to the cc this evening, but have had technical problems. The bad news is that my MFI portfolio, even excluding the TGIS meltdown, was in the red on a green day.
So all-in-all I was down about 0.8%, losing over 1% to the Russell 3000. Blech.
I did add MEOH to my portfolio today. Not an exciting stock, but their revenues have really been increasing pretty strongly. They make manufacture chemicals, maybe a little like PONR for me last year.
The other humbling stock today (in a good way) was VALU. I stated I thought their earnings on Friday were ho-hum. Up about 5% Y o Y. Yet the stock shot up almost 6% today. There are no analyst estimates, but I am guessing that expectations were pretty low.
I am watching the O'Reilly Factor. He is one slanted journalist, if we can use that term. He was bashing NBC news pretty hard. He made the comment that CNBC will go down the toilet as soon as Fox launches their business channel this October. I assume that means he thinks Murdoch has the WSJ sewn up. I do think there is great untapped value there, the WSJ could have been the pre-eminent financial website had they had an ounce of innovation. Maybe Murdoch and his team will take them there. But I keep thinking that VALU would be a nice addition for CNBC, YHOO, GOOG or FOX in this war on financial information that is starting.
Well, no sense crying over spilled beer. Later.
So all-in-all I was down about 0.8%, losing over 1% to the Russell 3000. Blech.
I did add MEOH to my portfolio today. Not an exciting stock, but their revenues have really been increasing pretty strongly. They make manufacture chemicals, maybe a little like PONR for me last year.
| | Q1 2007 03/31/07 | Q4 2006 12/31/06 | Q3 2006 09/30/06 | Q2 2006 06/30/06 | Q1 2006 03/31/06 |
|---|---|---|---|---|---|
| Total Revenue | 673.932 | 668.159 | 519.586 | 460.915 | 459.590 |
The other humbling stock today (in a good way) was VALU. I stated I thought their earnings on Friday were ho-hum. Up about 5% Y o Y. Yet the stock shot up almost 6% today. There are no analyst estimates, but I am guessing that expectations were pretty low.
I am watching the O'Reilly Factor. He is one slanted journalist, if we can use that term. He was bashing NBC news pretty hard. He made the comment that CNBC will go down the toilet as soon as Fox launches their business channel this October. I assume that means he thinks Murdoch has the WSJ sewn up. I do think there is great untapped value there, the WSJ could have been the pre-eminent financial website had they had an ounce of innovation. Maybe Murdoch and his team will take them there. But I keep thinking that VALU would be a nice addition for CNBC, YHOO, GOOG or FOX in this war on financial information that is starting.
Well, no sense crying over spilled beer. Later.
Sunday, July 22, 2007
Stock Rank
I had a little spare time today and decided to rank my 36 MFI stocks. I calculated their ROIC & EY per my worksheet. Then I ranked them scoring each one 1 to 36 for each statistic.
While my scores are generally in line with the MFI website, I did find it curious that I rated JTX so high and they were not on their list. KSW still looks super cheap, despite being up 29% for me. VPHM also looks great, I think they are a super buy... though pharmas do have the issue of their drugs coming off patent. I don't remember this being a huge item for VPHM, but it should be checked. And then RAIL is head and shoulders above everyone. That is why I renewed them. I sure it is also why Pabrai owns them.
Conversely, TGB did not score that well - I suppose that is due to 85% run up. I am tempted to sell ANF from time to time. They were "renewed" so I have actually held more than a year. But I am trying to stick to the plan.
Note these scores do not necessarily reflect the rankings of the stocks in a 2000 stock universe. For instance, TGB outranks ANF in the website. It doesn't mean my calcs are wrong. It could be that the outranking of TGB in ROIC is a bigger difference than ANFs outranking in ROIC across 2000 stocks as opposed to 36.
Finally, I was curious to see where MEOH would rank. Randy H on the Yahoo board was pretty bullish on them. They seem interesting with a 2.5% dividend and growing sales. Hmm they'd be middle of the pack. 18th overall. 2nd in EY at 29%, but near the bottom (36th) in ROIC.
| Rank | Stock | EY | ROIC | EY Rank | ROIC Rank | Score |
| 1 | RAIL | 42% | 661% | 1 | 4 | 5 |
| 2 | KSW | 14% | 725% | 9 | 3 | 12 |
| 3 | VPHM | 16% | 411% | 6 | 6 | 12 |
| 4 | IVAC | 16% | 181% | 5 | 14 | 19 |
| 5 | JTX | 12% | 336% | 15 | 7 | 22 |
| 6 | TGIS | 12% | 263% | 13 | 9 | 22 |
| 7 | EGY | 25% | 87% | 2 | 26 | 28 |
| 8 | LRCX | 10% | 315% | 21 | 8 | 29 |
| 9 | VALU | 9% | 741% | 30 | 2 | 32 |
| 10 | USHS | 14% | 108% | 10 | 22 | 32 |
| 11 | PNCL | 16% | 81% | 4 | 28 | 32 |
| 12 | WSTG | 8% | 866% | 32 | 1 | 33 |
| 13 | UNTD | 10% | 253% | 23 | 10 | 33 |
| 14 | NXG | 20% | 70% | 3 | 31 | 34 |
| 15 | PACR | 11% | 170% | 17 | 18 | 35 |
| 16 | SHOO | 13% | 104% | 12 | 23 | 35 |
| 17 | NOOF | 11% | 171% | 19 | 17 | 36 |
| 18 | BBSI | 10% | 172% | 22 | 15 | 37 |
| 19 | AEO | 11% | 109% | 16 | 21 | 37 |
| 20 | CHKE | 9% | 212% | 28 | 11 | 39 |
| 21 | GVHR | 10% | 172% | 24 | 16 | 40 |
| 22 | CREL | 7% | 484% | 36 | 5 | 41 |
| 23 | FTO | 12% | 85% | 14 | 27 | 41 |
| 24 | BLDR | 15% | 43% | 7 | 35 | 42 |
| 25 | TRLG | 8% | 209% | 31 | 12 | 43 |
| 26 | HW | 14% | 57% | 11 | 33 | 44 |
| 27 | PDS | 15% | 38% | 8 | 36 | 44 |
| 28 | DGX | 9% | 126% | 27 | 20 | 47 |
| 29 | CHCG.OB | 7% | 193% | 35 | 13 | 48 |
| 30 | THO | 11% | 76% | 20 | 30 | 50 |
| 31 | FDG | 10% | 93% | 26 | 25 | 51 |
| 32 | ANF | 11% | 52% | 18 | 34 | 52 |
| 33 | UG | 8% | 136% | 34 | 19 | 53 |
| 34 | ASEI | 8% | 94% | 33 | 24 | 57 |
| 35 | TGB | 10% | 65% | 25 | 32 | 57 |
| 36 | WPCS | 9% | 79% | 29 | 29 | 58 |
While my scores are generally in line with the MFI website, I did find it curious that I rated JTX so high and they were not on their list. KSW still looks super cheap, despite being up 29% for me. VPHM also looks great, I think they are a super buy... though pharmas do have the issue of their drugs coming off patent. I don't remember this being a huge item for VPHM, but it should be checked. And then RAIL is head and shoulders above everyone. That is why I renewed them. I sure it is also why Pabrai owns them.
Conversely, TGB did not score that well - I suppose that is due to 85% run up. I am tempted to sell ANF from time to time. They were "renewed" so I have actually held more than a year. But I am trying to stick to the plan.
Note these scores do not necessarily reflect the rankings of the stocks in a 2000 stock universe. For instance, TGB outranks ANF in the website. It doesn't mean my calcs are wrong. It could be that the outranking of TGB in ROIC is a bigger difference than ANFs outranking in ROIC across 2000 stocks as opposed to 36.
Finally, I was curious to see where MEOH would rank. Randy H on the Yahoo board was pretty bullish on them. They seem interesting with a 2.5% dividend and growing sales. Hmm they'd be middle of the pack. 18th overall. 2nd in EY at 29%, but near the bottom (36th) in ROIC.
Saturday, July 21, 2007
VALU Earnings
VALU announced their earnings on Friday evening (Value Line, Inc. Announces Earnings). A little bizarre as few companies report on a Friday evening. While the press release was succinct, the earnings were very blase. I guess that is the point, VALU is about as dull a company as exists. I gotta believe the stock will take a hit on Monday. Oh well.
PDS has been doing a bit of a swan dive for me of late. It is odd. Back in June they were over $26 and now PDS trades at $23.56. I say it is odd because many drilling companies have done very well in the past 6 weeks. They do pay about a 12 cent per month dividend, so I can't see them going much lower.
HW is another troubled stock. It is down 31% since I renewed them in February. And in February it was down about 30% from 2006. It is definitely a "blue light" stock, though it seems stuck in reverse. Maybe $16.43 will be a low, though even Jubak has tossed in the towel. They are tied somewhat to construction, and that is not exactly a bull market.
Have a good one everyone!
PDS has been doing a bit of a swan dive for me of late. It is odd. Back in June they were over $26 and now PDS trades at $23.56. I say it is odd because many drilling companies have done very well in the past 6 weeks. They do pay about a 12 cent per month dividend, so I can't see them going much lower.
HW is another troubled stock. It is down 31% since I renewed them in February. And in February it was down about 30% from 2006. It is definitely a "blue light" stock, though it seems stuck in reverse. Maybe $16.43 will be a low, though even Jubak has tossed in the towel. They are tied somewhat to construction, and that is not exactly a bull market.
Have a good one everyone!
Friday, July 20, 2007
Potter Mania Friday
Well, at 12:01 am tomorrow, we can all run to our local B&N and buy Harry Potter (assuming you haven't already lifted it off the web). I may have to stay up and go get my copy and see the hoopla. I was watching CNBC this afternoon and it dawned on me why MFI has been stomping the broader indices lately. Can you guess?
The S&P is up about 8.6% YTD. What is the one sector that is actually down YTD? Financial Stocks due to subprime fears (they make up about 20% of the market)! Since MFI doesn't have Financials, just by excluding them this year we'd expect to outperform. At some point, the Financials drop will shift, then we'll have a head wind instead of a tail wind.
Today's market was kind of deflating. We stuck our nose above 14,000 and the #whack#! down 150 points, though still up 11% YTD. My day was "okay", I certainly out-performed the broader market. My big gainer?
VALU - I can't explain it, but they were up a snappy 8.8% on 6x normal volume (though still a lowly 46,000 shares). So I am up 16% on Value line since buying them at the end of May.
UG was my only other stock on the move, up 3.5%. They are now up 17%.
Overall, I am now up 20.3% (portfolio value/invested) and on an annualized IRR I am at 25.3%. Not too shabby. The benchmark is up 14.6%, so I have about a 5.8 point lead. Very nice.
Enough small talk! Here are my weekly chart and weekly graph. Remember on the graph, the chart shows my cumulative gains week-by-week since I started in Feb 2006. I said it way way in the beginning, but the values on the graph (and charts) are my actual values multiplied by a factor.
Then here are my current holdings (these do include dividends) and their performance:
Wow, I just watched Cramer. He made my head spin. Just two days ago he was saying that we (the little people) should view a down day as a "sale"sign, a chance to buy a good company cheaper. Today he is saying that we should not be buying anything. Wait a minute, aren't things "more on sale"? He says that he thinks the Dow still goes to 14,500 by year end. How can he change his mind in two days? He must've driven the people at his hedge fund nuts. Luckily, we who are using MFI don't have to try and time the market. I love his saying, "Bulls make money, Bears make money and Pigs get slaughtered". Sounds good, but I can name off the top of my head 20 stocks I sold early (even after making money) that I wish I had held. JC acts like every increase is short term, so the gains have to be locked in. Maybe in his momentum world that is true.
Oh well.
The S&P is up about 8.6% YTD. What is the one sector that is actually down YTD? Financial Stocks due to subprime fears (they make up about 20% of the market)! Since MFI doesn't have Financials, just by excluding them this year we'd expect to outperform. At some point, the Financials drop will shift, then we'll have a head wind instead of a tail wind.
Today's market was kind of deflating. We stuck our nose above 14,000 and the #whack#! down 150 points, though still up 11% YTD. My day was "okay", I certainly out-performed the broader market. My big gainer?
VALU - I can't explain it, but they were up a snappy 8.8% on 6x normal volume (though still a lowly 46,000 shares). So I am up 16% on Value line since buying them at the end of May.
UG was my only other stock on the move, up 3.5%. They are now up 17%.
Overall, I am now up 20.3% (portfolio value/invested) and on an annualized IRR I am at 25.3%. Not too shabby. The benchmark is up 14.6%, so I have about a 5.8 point lead. Very nice.
Enough small talk! Here are my weekly chart and weekly graph. Remember on the graph, the chart shows my cumulative gains week-by-week since I started in Feb 2006. I said it way way in the beginning, but the values on the graph (and charts) are my actual values multiplied by a factor.
Then here are my current holdings (these do include dividends) and their performance:
| Current Portfolio | ||||
| Stock | Purchase Date | Cost | Current | Gain |
| TGB | 04/16/07 | $2.64 | $4.80 | 81.8% |
| TGIS | 11/30/06 | $9.18 | $12.89 | 41.5% |
| TRLG | 05/22/07 | $15.54 | $21.85 | 40.6% |
| BBSI | 09/06/06 | $19.56 | $26.42 | 36.1% |
| FDG | 03/08/07 | $25.45 | $33.91 | 35.6% |
| FTO | 01/10/07 | $35.16 | $46.24 | 31.7% |
| KSW | 05/10/07 | $6.48 | $8.34 | 28.8% |
| ASEI | 10/05/06 | $45.85 | $58.06 | 26.6% |
| LRCX | 07/03/07 | $47.51 | $59.16 | 24.5% |
| WSTG | 05/15/07 | $14.98 | $18.34 | 23.1% |
| VPHM | 09/11/06 | $11.79 | $14.21 | 20.5% |
| RAIL | 02/16/07 | $45.54 | $53.80 | 18.3% |
| UG | 06/13/07 | $12.07 | $14.19 | 17.6% |
| CHCG.OB | 06/05/07 | $6.10 | $7.10 | 16.4% |
| VALU | 05/29/07 | $44.01 | $51.17 | 16.3% |
| UNTD | 05/01/07 | $14.46 | $16.11 | 12.8% |
| WPCS | 06/18/07 | $11.89 | $13.39 | 12.6% |
| PNCL | 02/09/07 | $17.07 | $19.00 | 11.3% |
| NXG | 12/20/06 | $3.04 | $3.38 | 11.2% |
| THO | 03/26/07 | $40.30 | $44.20 | 9.9% |
| CREL | 02/26/07 | $12.50 | $13.62 | 9.0% |
| PDS | 03/01/07 | $22.58 | $23.56 | 6.9% |
| JTX | 04/09/07 | $28.70 | $29.91 | 4.6% |
| DGX | 03/17/07 | $52.11 | $54.02 | 4.0% |
| NOOF | 04/27/07 | $8.59 | $8.60 | 1.6% |
| CHKE | 07/17/07 | $36.70 | $37.08 | 1.0% |
| BLDR | 09/18/06 | $15.91 | $15.78 | -0.8% |
| SHOO | 01/17/07 | $32.36 | $32.09 | -0.8% |
| AEO | 07/10/07 | $28.42 | $27.33 | -3.5% |
| ANF | 02/02/07 | $74.81 | $71.65 | -4.0% |
| GVHR | 04/03/07 | $19.17 | $18.22 | -4.0% |
| IVAC | 11/23/06 | $23.52 | $21.06 | -10.5% |
| PACR | 01/03/07 | $28.26 | $23.81 | -14.7% |
| USHS | 06/25/07 | $11.22 | $9.28 | -17.3% |
| EGY | 12/13/06 | $6.42 | $5.23 | -18.5% |
| HW | 12/27/06 | $24.00 | $16.43 | -31.5% |
| Gain/Loss Open Positions ($): | $72,370 | |||
| Gain/Loss Open Positions (%): | 12.2% | |||
| Gain/Loss Closed Positions ($): | $38,755 | |||
| Gain/Loss Closed Positions (%): | 11.4% | |||
| Total Gain/Loss ($): | $111,125 | |||
| Benchmark Gain/Loss ($): | $79,571 | |||
| Annual IRR: | 25.3% | |||
| Total Gain/Loss (%): | 20.3% | |||
Wow, I just watched Cramer. He made my head spin. Just two days ago he was saying that we (the little people) should view a down day as a "sale"sign, a chance to buy a good company cheaper. Today he is saying that we should not be buying anything. Wait a minute, aren't things "more on sale"? He says that he thinks the Dow still goes to 14,500 by year end. How can he change his mind in two days? He must've driven the people at his hedge fund nuts. Luckily, we who are using MFI don't have to try and time the market. I love his saying, "Bulls make money, Bears make money and Pigs get slaughtered". Sounds good, but I can name off the top of my head 20 stocks I sold early (even after making money) that I wish I had held. JC acts like every increase is short term, so the gains have to be locked in. Maybe in his momentum world that is true.
Oh well.
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