What Is It Two U?

Well - I had been waiting for an opportunity to de-risk my portfolio. Today, TWOU was rated a buy by two analysts and the stock popped 7%. Perhaps I will be sad down the road, but the pop essentially allowed me to sell TWOU for my buy in price, so psychologically,  I was happy.  My only open position now in the higher risk post IPO plays is LMNS. And while it is up a snappy 4% today! it is still 20% below my average purchase price. For those of you who are math challenged, that means I need it to go up another 25%. I suppose I could double my bet and then just need 12.5%....

Actually, that comment makes me smile. I am back in New York and I was listening on the drive to a show on CNBC (CNBC bets on Las Vegas 'sports consulting agency') about a firm in Las Vegas that advises sports bettors. They called themselves "the bookies worst nightmare". Listening to this show would stop anyone from actually using them. Here is how it went down.

The owner had one of his big whales coming in to Vegas to bet on three or four games over the weekend. The big whale was prepared the wager $50,000. I think the adviser gets some sort of cut of the winnings.

I was expecting something super sophisticated in the gambling advice. I was very disappointed, I think the local barber could do as well. The first game was a baseball playoff game, dodgers and cardinals in St Louis.  The advice was to bet on the Dodgers as the Dodgers had the better pitcher going. I heard that and thought, "duh, but don't the odds already consider that easily known fact?"  Anyway, the bet was $10,000 and the Cardinals won in extra innings.

So now the advisor is nervous, if the client loses over the weekend - he may lose the whale. Game 2 is college football, North Carolina against the ranked Miami Hurricanes. Again the advisor tells us what I expect every person in the world already knew, "I expect Miami to win, NC has not beaten a ranked team in 10 years".  Duh.  But what about the 10 point spread? Has NC ever come within ten points of a ranked team? That seems the more pertinent question. Very disappointing. This time the whale bets 20,000 and while Miami wins, they do not cover the spread.  Now the whale is down by 30,000.

Obviously, if the man planned to only bet 50,000 on the weekend, he is going to walk away a loser as he only has 20,000 left to wager.  The adviser somehow convinces him that the Sunday bet is a "sure thing", even though he had said the same thing the prior two picks.  The whale digs deep and bets 60,000 on the Sunday game, Seahawks against Cardinals.  Then the adviser takes them out driving a fancy car instead of watching the game (probably could not bear to watch).  Thankfully, the story has a happy ending. The Seahawks win, cover the spread and the whale walks away net $30,000 richer (not counting what he had to pay the adviser, who was a dismal 1 for 3).  You know, I could do that job just as well. And every time I lost, just convince the whale to double his bet.  7 out of 8 times, I would be a "winner". Of course, the one time I lose, the guy is out 90,000 - but that is why it is called gambling.

Interesting Stock Action + Great Day

My portfolio was up almost exactly 2% today.  Pretty much everything I own that is larger in size was up nicely, GTAT, GNW, KLIC, RIOM, LMNS, RPXC and TWOU (though owned no longer).  A few of the stocks had some very interesting action.

• KLIC was up 6.6% on 3x normal volume, with almost all of movement in final 30 minutes.  I have always argued they have excess cash, and finally someone has come along to agree with me (Lemelson Capital Management announces stake in Kulicke and Soffa Industries, delivers letter to management and board members urging immediate share repurchase). While it isn't Greenlight Capital, this could be the catalyst I have waited (patiently) for, to start moving KLIC to a fairer value in the $16 to $18 range.
• RIOM also shot up over 6% (recall I increased my position 40% yesterday) in the final hour. The chart looks strange with absolutely no explanation for the pop that I can see.  Stay tuned is all I can suggest.
• GNW was up 4.7% as MTG (a competitor) beat expectations (MGIC Rallies After Posting Biggest Profit Since 2007).  I think GNW also has a chance to post some good numbers next week.

I did increase my FGL holdings by 25% today as it was under $22. This is a $25 to $27 stock in my opinion, unless I am missing something. Have a great evening everyone.