Friday, August 26, 2005


I'll be back in mid-September

My view that OVTI would surge today due to a short squeeze turned out to be spectacularly wrong. I'm now down about almost $700 on this position. Still, I think that I'll keep the stock for a while longer and see what transpires.

Despite OVTI's sour performance, I managed to stay in the black today and finished the week up $7,278 (1.4 percent), which compares favorably against the Nasdaq (down 0.7 percent), S&P 500 (down 1.2 percent), and the Russel 2000 (down 0.6 percent).

TAYD reported a very nice quarter this morning. I'm glad to see that the stock is moving up because of good earnings, and not because a bunch daytraders assumed that the company would be installing lots of vibration absorbers under grass huts in the outer reaches of the Indian Ocean.

And speaking of that particular part of the world, I will be traveling to South Asia next week on business. I will be gone for about 2 weeks. Although I may check to see how my portfolio is doing on the rare occasion, for the most part, I will keep things on autopilot. Frankly, that is okay with me. I find that when I am at home and at the office, I check on my portfolio way too often. It's distracting and honestly, I don't think my investment performance is any better because of it.

My best wishes and happy returns for everyone who reads this blog! See you in September!

Thursday, August 25, 2005


Short squeeze 'a brewing in Omnivision

Up $1,200 today. After I got home from work today, I noticed that Omnivision (OVTI) reported a solid quarter and that the stock had jumped 15 percent in very heavy afterhours trading. With nearly 17 million shares short, I think OVTI is poised for a major short squeeze tomorrow. I'm in for 700 shares at $15.53 (purchased at around 6:20 in the evening).

Wednesday, August 24, 2005


Google + Palmsource ?

Although KTCC couldn't hold last night's big gains, it still finished higher 20 percent for the day, which propelled my portfolio up by about $3,000. I also added to my position in FCPO and started a new position in Taylor Devices, a stock that has yielded big profits for me in the past.

Something is afoot with Palmsource. The company is under heavy institutional accumulation. Does somebody know something? I don't know, but I can offer a theory. There has been lots of buzz in the last few days about Google getting into the smartphone business. Today's announcement that Google will offer an instant messaging service only added fuel to the fire. If Google goes into the smartphone market, it is highly unlikely that they would want to use Microsoft's operating system. While Symbian would be a possibility, they wouldn't be able to own the operating system outright. That puts Palmsource in play as an acquisition candidate. Even if Google were to license Palmsource's OS, that could make PSRC a $25 stock virtually overnight.

Tuesday, August 23, 2005


Jim, tell them how to beat the street!

But it works best if they hear the show prior to when it airs.


Running out of ammo with SMTX

Up $60 for the day. I'm down to my last 1500 shares of SMTX. The thing just won't stay down. If it goes firmly above $3, I'll have to exit the position entirely. Perhaps the stock will then proceed to $5, I don't know. But at $3, SMTX already would have a market cap of about $50 million, which implies a price to sales ratio on par with bigger and healthier competitors in the EMS industry. I've achieved a modest level of success by buying low and selling high, not by buying high and hoping to sell higher. Experimental portfolios notwithstanding, that's not my game.

I picked up 3000 more shares of MACE. For several years now, MACE has been the laughing stock of the NASDAQ. However, lost in the sarcasm is the fact that the company's fundamentals are improving rapidly. I think eventually MACE will get the credit it deserves and go higher. In the meantime, I see little downside risk given that the stock is trading below tangible book value.

KTCC reported strong numbers after the close. Hopefully the gains the stock enjoyed in afterhours will continue tomorrow.

Monday, August 22, 2005


Once again, SMTX

Once again, SMTX bailed me out, allowing my portfolio to eke out a $1,500 gain for the day, no thanks to Bozo Electronics, which fell 10 percent after delivering a not so stellar earnings report (but one that did not, in my estimation, warrant a 10 percent decline).

I also sold all my shares of HAST for a small profit after the company guided down for the next quarter. While the stock did not decline on the news, I think the company's guidance will preclude a significant upside move in the coming months. In this case, I'd rather stay on the sidelines.

I used the proceeds to start a new position in Factory Card and Party Outlet (FCPO), a company I had owned and sold only a few months ago. Oddly enough, when I was taking the elevator up to my apartment today, there was a gal who was holding a Factory Card and Party Outlet bag. I didn't even know there was a store in my area. I asked her where the store was located. She probably thought I was hitting on her. Ahh, whatever.. go FCPO!

Friday, August 19, 2005


Weekly Summary

A strong end to a good week, as my portfolio gained about $4,000 today to finish the week up $6,595 (1.3 percent), which compares nicely to the S&P 500 (down 0.9 percent), the NASDAQ (down 1 percent), and the Russell 2000 (down 1.1 percent). I picked up a new stock today: VTEK. The company is profitable, has a healthy balance sheet, an active buyback program, and is in a sector that I think could get "hot" this year: VOIP. VTEK's last earnings report left some investors disappointed. But a careful reading of the press release clearly indicates that there was shift of revenues from the prior quarter to this quarter. That bodes well for when they report this quarter's numbers in a couple months time.

Thursday, August 18, 2005


Keep an eye on airlines

None of my stocks were able to make any strong moves upwards today. That combined with SMTX giving up some of the gains from earlier this week led to a decline in my portfolio of $2,100. It's clear that market players are getting into a more defensive mode. I am keeping a close eye on crude oil prices, not least of which because I have two energy stocks in my portfolio (NGAS and AE). If oil prices keep falling, I think I may do some bottom fishing in the airline sector.

Wednesday, August 17, 2005


Lightening up on SMTX; loading up on CALL

SMTX kept me out of the red again today. The stock soared another 50 percent, boosting my portfolio by nearly $5,000 to a new all time high. As I usually do in such circumstances, I took some money off the table and sold 40 percent of my shares. I used the proceeds to double down on my position in CALL. I now have 4,000 shares of CALL, and will gladly buy more if the price falls further. As far as I am concerned, CALL is a no-brainer. The company is profitable and has $56 million in cash and no debt. It's true that their core business is under pressure and that management is projecting a decline in operating earnings next year. However, they are developing new technology in the wireless area, which should help propel earnings in subsequent quarters. Plus, with such a healthy cash position, I regard CALL as a nice hedge against higher interest rates. If short-term rates keep rising, as Fed watchers expect they will, that will generate more interest earnings, which will help boost CALL's bottom line.

Tuesday, August 16, 2005


SMTX saves the day

What a horrendous tape! Luckily, SMTX went up nicely today, which helped to limit my losses for the day to $500 (yesterday my portfolio gained $400). Now that the market is showing weakness, some of the stocks on my watch list are starting to come in, so I hope to be able to start some new positions soon, and possibly add to some existing positions that have not held up well.

I find it amusing to read the message boards after a stock has gone down. Case in point: Dicks Sporting Group(DKS). Cramer recommended it yesterday just hours before the company reported not so great numbers. The stock sold off 15 percent. It never ceases to amaze me that those people who bought yesterday in afterhours when Cramer was recommending the stock now blame Cramer for their losses. Had the stock gone up, they would have praised themselves for having the insight to buy. Anyway, on today's show, Cramer reiterated that he still likes Dicks. Personally, I prefer the products in Victoria's Secret.

Saturday, August 13, 2005


Weekly summary

Although my portfolio succumbed to market weakness on Friday, I finished up $5,614 (1.1 percent) for the week, which compares favorably to the S&P 500 (up 0.3 percent), the NASDAQ (down 1.0 percent), and the Russell 2000 (down 0.4 percent). Like many other value investors, I am concerned that there is a dearth of undervalued companies out there. Although I believe that my core holdings (such as COBR, KTCC, OCCF) will continue to do well, the truth is that the market environment is considerably less favorable than in early 2003, when you couldn't sneeze without bumping into some stock that was trading below net asset value, had a great business model, and a share price stuck at a 52 week low.

There has been much discussion about the yield curve lately. Despite a steady stream of rate hikes, long term rates are lower than they were two years ago, and consequently, the yield curve has become increasingly flat, which historically has been a harbinger of recessions. I don't belong to the camp that puts too much weight on what the yield curve portends for the future. In the past, inverted yield curves have arisen when the Fed was aggressively raising rates to bring down inflation (the early 1980's is an obvious example). At that time, an inverted yield curve signaled that investors thought Fed policy was credible and would lead to lower inflation in the future (and hence, lower bond yields). A recession was the price we had to pay to bring down inflation.

I don't think the same dynamic applies today. Today's lower bond rates do not signal that investors expect economic activity to dampen, but rather reflect the steady stream of capital flowing into the country (much of it into the treasury market, and much of it from Asia). These capital inflows are the flipside of America's mammoth trade deficit, which is unlikely to decline dramatically any time soon. In short, while interest rates are low in America, they could get lower, and indeed are already much lower in countries like Germany and especially, Japan.

How is an investor to react to all this? My view is to sit back and keep doing what has worked in the past. For me, this means putting my money in small caps (which tend to prosper in an environment of easy credit). However, the economic environment may deteriorate more quickly than the pundits expect, especially if the housing market begins to crumble. In that case, I think most of the big profits will be made on the short side.

Thursday, August 11, 2005


I don't rely on GTSI (anymore)

Up $4,500 today thanks largely to a good move by COBR. I sold my remaining few shares of GTSI today. What a disappoint this stock has been! At one point last year, GTSI was my largest holding. Yet, the past few months have brought nothing but bad news for this company. Their slogan "I rely on GTSI" has become a bitter joke for shareholders and judging from the last earnings release, for a good number of their customers. I think GTSI is dead money for the next quarter at least.

Wednesday, August 10, 2005


Market weakness

My portfolio started out strong today. When I checked it around noon, I was up $3,000. However, by the end of the day, I was down $2,800, a net change of close to $6,000 in only four hours. Oh well. The market is showing signs of weakness. What's to blame? Some will say Fed tightening, others will say high energy prices. Personally, I think it's because Cramer is off this week and so isn't around to hype the market. Okay, perhaps I jest.

Actually, he did a pre-recorded show tonight (a very good one, I might add) about speculation in which he counseled people to speculate on stocks that are trading in the "sweet spot" of between $2 and $10 per share and to buy stocks that no one has heard of. Can't disagree with that.

As far as my MNTA trade went, I got stopped out at $24.11 for a whopping 10 cent gain per share. Actually, my stop loss order was set at $24.41. This is the last time that I use a market stop loss order. In the future, to the extent that I will use stop loss orders (which I tend to eschew), I will use stop limit orders rather than stop market orders. I would rather run the risk of not having my order filled than getting such lousy execution.

Monday, August 08, 2005


Momenta's Momentum

A decent day today, as my portfolio posted a $1,900 gain thanks to good moves in my energy stocks (especially DWSN, which I sold today after the stock hit my price target). I jettisoned AE from my experimental "Momentum Moose" portfolio. AE has been welded to the $22 range for the past month, and hardly qualifies as a momentum stock (if it ever was one). Still, I like the company's fundamental's well enough that I will keep it in my regular portfolio. For the sake of scorekeeping, I'll record the sale price at $21.95, which is the average of today's closing price and the price at which I sold some shares 6 weeks ago. In place of AE, I bought some shares of MNTA (what better for a momentum portfolio than a company called Momenta?). Apparently Deutsche Bank has been pounding the table recently on this stock and telling clients to load up the truck prior to tomorrow's earnings release. I figure I'll jump on board for the ride.

Sunday, August 07, 2005


Year of the pig:

St. Augustine reportedly said. "Oh Lord, give me chastity and virtue... but not yet". By the same token, I say "let me short BIDU, but not yet". The stock got priced at $27 and finished the day at $120. The Google of China they say. Yeah, whatever. More like of China. Anyway, BIDU is definitely a candidate for my "Short the Pig" experimental trading portfolio. But I don't want to touch it until the stock begins to crater. Of course, even then, it will be probably be next to impossible to get any shares to short.

Saturday, August 06, 2005


Books that I recommend

Every once in a while, I can an email from someone who wants to learn more about finance and economics. Here is a list of books that I myself have read, and would recommend to others. I hope you enjoy them as much as I have:

Friday, August 05, 2005


My first week as a dad

Well, my first week as a new father is now almost over, and it's been exhilarating to say the least. It's absolutely impossible to describe the sense of magic and wonder that one feels when they look into a newborn's eyes... their whole life is in front of them, and you're there to guide them in the right direction. What a challenge, what a responsibility, and what an honor.

As far as my portfolio is concerned, it wasn't a very memorable week. My portfolio declined in value by $1,831, falling to $505,201. As you can imagine, I didn't do much trading, though I did pick up some shares in CALL and sold my shares in ZEUS and TWX. Have a great weekend everyone!

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