Register
Hello, !
Edit Profile | Logout

Tuktoyaktuk or Bust -- A Trip Into the Canadian Economy

Rating: not yet rated    Vote: Terrible (-3)Worse (-2)Bad (-1)So-so (0)Good (+1)Better (+2)Best (+3)
User name*: '    Password*:
or register if you are a new user
User name*:
First name*:
Last name*:
Password*:
E-mail*:
Retype e-mail*:
Opt-In: Yes, send me email from InvestorPlace Blogs regarding blog post notifications and voting/commenting bulletins, along with The Investor Post weekly e-letter. Please un-check this box if you would prefer not to receive email from us.
Privacy Policy
InvestorPlace Blogs is powered by Marketocracy. Marketocracy has authorized Investor Place Blogs as an official registrar for voting through Marketocracy's Investment Research Rating service. Registered members of InvestorPlace Blogs are linked with a Marketocracy account to establish voting power based on their performance of trading and posting on stocks.

If all goes well, this summer I'll drive 19,000 miles and visit 22 national historic parks, 16 national parks, 6 states, 5 provinces, 2 territories and the Canadian Pingo Landmark in one month. I'll follow the path of the 'Ice Road Truckers' as I visit Yellowknife and Whitehorse, drive up the Dempster Highway to Inuvik and then fly to Tuktoyaktuk, NWT. Then, I'll follow the path of the gold rush as I hike 33 miles on the Chilkoot trail, battle hordes of mosquitoes, struggle with blown tires, and sleep in 24-hour sunlight. To some, I'm not going on a 'vacation' this is an all-out 'expedition'.

Too often we fly from one place to another without understanding how the economy, climate, geography, culture, transportation, and food changes along the way. Many of us might know the name of a 5 star restaurant in Toronto (Truffles), but few of us have watched icebergs in Newfoundland, encountered bears at Waterton Lakes, sought seclusion at Battle Harbor, climbed ice-waterfalls along the shores of Lake Superior, or experienced a true Finnish-140-degree-Celsius sauna. We fly long distances only to sit ourselves in a hotel pool and allow ourselves to be pampered. There is a place in life for all that stuff, but life has a lot more to offer, and part of the journey should include the stuff in between. To quote (dare I say) Leonardo DiCaprio from the movie, The Beach:

We all travel thousands of miles just to watch TV and check in to somewhere with all the comforts of home, and you gotta ask yourself, what is the point of that?

The Ross School of Business teaches 'action-based learning' to describe the education provided not only by 'thought', but by 'action' as well. It's a concept that not only listens to the theory, but applies it to practice. I've also the heard the term 'firsthand experience' from Ken Kam at Marketocracy, and it relates to the specialized firsthand knowledge/experience that great analysts and portfolio managers should have. I'm a quant, I've learned from the 'action based learning' and I believe I have some 'firsthand' experience in the quant world, but there are moments in time where I need to visit some of the sectors, industries and companies.

One day I had a student come up to me and tell me a story. He had spent the summer travelling for an investment bank and was required to visit companies that he thought were undervalued with potential growth. Upon visiting one of these companies, he found that their location had nothing on it. It was a vacant lot owned by the company. Smiling, I said to him, 'well, if it's vacant then there is plenty of growth available there'. In a very simple example, he had demonstrated qualitative research; 'action' orientated learning and 'firsthand' experience.

Life should be full of these experiences, but sometimes it isn't. Too often we are consumed by all sorts of things, and never make it past the confines of the town we live in. The cost of gas is certainly high this summer, and many won't travel further than the state they live in, but I'm going to take my stimulus check and drive - and I'll drive far. Why would I visit Canada? Well, the U.S. economy is becoming much more dependent on foreign oil, it has a deficit, a tremendous amount of money is spent on elections, some politicians want to revisit NAFTA, consumer confidence is much lower, the housing market is doing poorly, and it's had some bad luck with hurricanes, floods, tornadoes and fires. On the other hand, Canada has oil, tar sands, diamonds, gold, and potash; it has a surplus, less money is spent on elections, Canadian politics revolves around sexy dress scandals (Julie Couillard), the housing market is doing better, and the north will probably open up to more transportation and commerce. It's in my thought that Americans should pay closer attention to their friendly neighbors up north. Alberta may have lost Wayne Gretzky to the entertainment driven world of California, but as oil prices rise and Alberta prospers... perhaps Gretzky might want to think of moving back?

So I'll drive, and I'll learn more about the journey between 'point a' and 'point b'. Hopefully along the way, I'll learn more about the economy, climate, geography, culture, transportation, and food. I'll mix in with some locals and ask them, 'what do you think?' The quant in me vows not to turn towards the 'dark side' (qualitative research), but I will certainly keep an open mind on the economy, sectors, industries and stocks that I find. Gas prices will be high, at Eagle Plains on the Dempster highway, gas is over $6.25 a gallon; but, life is short and so I'll hike, drive, fly, and take a boat. I want some of that 'firsthand experience' and 'action-based' learning, so I'm going to take my quant view, mix it with some qualitative views, and drive through the Canadian wilderness to Alaska. Money is everything in business, but money shouldn't be everything in a personal life - if you gain a lot of money, but never see the world, "you gotta ask yourself, what is the point of that"?

AMR: American Airlines News

Rating: 3.00 (2 votes)    Vote: Terrible (-3)Worse (-2)Bad (-1)So-so (0)Good (+1)Better (+2)Best (+3)
User name*: '    Password*:
or register if you are a new user
User name*:
First name*:
Last name*:
Password*:
E-mail*:
Retype e-mail*:
Opt-In: Yes, send me email from InvestorPlace Blogs regarding blog post notifications and voting/commenting bulletins, along with The Investor Post weekly e-letter. Please un-check this box if you would prefer not to receive email from us.
Privacy Policy
InvestorPlace Blogs is powered by Marketocracy. Marketocracy has authorized Investor Place Blogs as an official registrar for voting through Marketocracy's Investment Research Rating service. Registered members of InvestorPlace Blogs are linked with a Marketocracy account to establish voting power based on their performance of trading and posting on stocks.

The bad news about American Airlines (AMR) puzzles me. The bad news about all the airlines puzzles me. The industry was once considered a luxury; now it's considered a necessity. The industry has a hard time improving margins, relying on high priced oil, while attempting to provide 'cheap' fares. It's an industry that charges money for your suitcase full of clothes, yet also makes news if you don't wear the right clothes (or lack thereof). It's an industry that is under constant scrutiny by passengers, security analysts, stockholders, transportation and shipping. It's a mess, and it's an industry that is probably overvalued, yet it also needs to exist.

So, how do you value something that is worth 'nothing'? When I perform a DCF valuation of AMR, I find a price worth less than $0. That sounds bad to me, yet AMR also has a low PE, price/book, and price/cash flow. In some part, the 'value story' is there. Despite the glimmer of hope, I have to pass.

Perhaps I can find some other redeeming qualities for AMR? Optimism won't come from the 'smart money' story where I see a high short interest and insider selling. It won't come from the 'quality' story where I see a high F-score but low accruals.

It won't come from the 'growth' story where I see some growth, but poor earnings growth. It won't come from the 'econ' story where I'm optimistic on 'industrials', but pessimistic on 'airlines'. So I really have a hard time justifying AMR. I know we need the airlines, but to me this is a gamble, some 'distressed' equity funds might like it, but instead of flying I'll pass on the stock and drive to the Northwest Territories this year.

FNM in a Quant's Eye

Rating: 3.00 (1 votes)    Vote: Terrible (-3)Worse (-2)Bad (-1)So-so (0)Good (+1)Better (+2)Best (+3)
User name*: '    Password*:
or register if you are a new user
User name*:
First name*:
Last name*:
Password*:
E-mail*:
Retype e-mail*:
Opt-In: Yes, send me email from InvestorPlace Blogs regarding blog post notifications and voting/commenting bulletins, along with The Investor Post weekly e-letter. Please un-check this box if you would prefer not to receive email from us.
Privacy Policy
InvestorPlace Blogs is powered by Marketocracy. Marketocracy has authorized Investor Place Blogs as an official registrar for voting through Marketocracy's Investment Research Rating service. Registered members of InvestorPlace Blogs are linked with a Marketocracy account to establish voting power based on their performance of trading and posting on stocks.

To some there is a major benefit to quant analysis, in that it avoids personal biases.
To others, a major complaint of quant analysis, is that it avoids qualitative analysis.

I'm a quant.
I love being a quant, and although I'll try to respect the ideas of non-quants, I'm still a quant.

So, I'll look at FNM as a quant.
I know there are qualitative stories that can be told about all sorts of mortgage backed securities.

But I'm a quant, and so I'll still give you a quant opinion.

My blogs are short as my thoughts are quickly made, and you can certainly disagree with me.
But even in the world of quant analysis, FNM might be a tricky one to analyze.
Nevertheless, here is my quick quant opinion.

Smart money funds - FNM has a high short interest. SHORT.
Value funds - FNM has a nice low price/book and price/cash flow, but it also has a a poor PE. Mixed result = SHORT.
Growth funds - FNM has some positive growth, but poor earnings growth. Mixed result = SHORT.
Quality funds - FNM has low accruals and a low F-Score. LONG.
Econ thought - I'm long on Financials, but short on 'thrifts/mortgage finance'. Mixed result = SHORT.
My valuation - $41. LONG.

My Opinion = SHORT FNM, but some 'value' or 'quality' funds might want to buy FNM.

How to Pick Stocks -- Quick Thoughts on HOV, BGP and VLO

Rating: 3.00 (1 votes)    Vote: Terrible (-3)Worse (-2)Bad (-1)So-so (0)Good (+1)Better (+2)Best (+3)
User name*: '    Password*:
or register if you are a new user
User name*:
First name*:
Last name*:
Password*:
E-mail*:
Retype e-mail*:
Opt-In: Yes, send me email from InvestorPlace Blogs regarding blog post notifications and voting/commenting bulletins, along with The Investor Post weekly e-letter. Please un-check this box if you would prefer not to receive email from us.
Privacy Policy
InvestorPlace Blogs is powered by Marketocracy. Marketocracy has authorized Investor Place Blogs as an official registrar for voting through Marketocracy's Investment Research Rating service. Registered members of InvestorPlace Blogs are linked with a Marketocracy account to establish voting power based on their performance of trading and posting on stocks.

I'm not one to spin stories on stocks, as there are many blogs, newsletters, research reports and forums dedicated to doing just that. When deciding how to pick stocks, I like to ask myself this question:

What type of funds would I pitch this stock to?
Would it appeal to 'smart money', 'value', 'growth', or 'quality' funds?

If I think it would appeal to a variety of funds, then that gives me a 'long' opinion. If I think it wouldn't appeal to a variety of funds, then that gives a 'short' opinion. It's not terribly hard to create this opinion. If a stock would appeal to a variety of funds, then that creates a strong 'catalyst' for the stock, as many funds might be interested in increasing their exposure of that stock. It's a fairly simple story to understand.

So, here are three quick stock opinions.

HOV
Smart money funds - HOV has a high short interest. SHORT.
Value funds - HOV has a low price/book, poor PE, low price/cash flow. Mixed result = SHORT.
Growth funds - HOV has a low sales growth. SHORT.
Quality funds - HOV has a low F-Score and low accruals. LONG.
My valuation - $6. SHORT.
My Opinion = Short HOV, but it might appeal to 'quality' funds.

BGP

Smart money funds - BGP has a high short interest. SHORT.
Value funds - BGP has a low price/book, poor PE, low price/cash flow. Mixed result = SHORT.
Growth funds - BGP has a low sales growth. SHORT.
Quality funds - BGP has a low F-Score and low accruals. LONG.
My valuation - $6. SHORT.
My Opinion = Short BGP, but it might appeal to 'quality' funds.

VLO

Smart money funds - VLO has low short interest. LONG.
Value funds - VLO has a low price/book, low PE, low price/cash flow. LONG.
Growth funds - VLO has positive sales growth. LONG.
Quality funds - VLO has a high F-Score and low accruals. Mixed result = SHORT.
My valuation - $60. LONG.
My Opinion = Long VLO, but 'quality' funds may want to avoid it.

Short HOV and BGP. Buy VLO.

Captain Hook says avoid Crocs!

Rating: 2.00 (1 votes)    Vote: Terrible (-3)Worse (-2)Bad (-1)So-so (0)Good (+1)Better (+2)Best (+3)
User name*: '    Password*:
or register if you are a new user
User name*:
First name*:
Last name*:
Password*:
E-mail*:
Retype e-mail*:
Opt-In: Yes, send me email from InvestorPlace Blogs regarding blog post notifications and voting/commenting bulletins, along with The Investor Post weekly e-letter. Please un-check this box if you would prefer not to receive email from us.
Privacy Policy
InvestorPlace Blogs is powered by Marketocracy. Marketocracy has authorized Investor Place Blogs as an official registrar for voting through Marketocracy's Investment Research Rating service. Registered members of InvestorPlace Blogs are linked with a Marketocracy account to establish voting power based on their performance of trading and posting on stocks.

This week CROX announced earnings, and folks got excited and the stock went up 10%, well guess what? I still dislike it and I'll still short this footwear company that seems to act like a volatile biotech stock.

Now, not to toot my own prediction, but back in this article,

I had complained about CROX and made this statement:

"Avoid this one, pick up a copy of Backpacker magazine, read the reviews on hiking shoes and buy something else instead"

And so I got a subscription to Backpacker magazine, I'm reading their Gear Guide and I'm going to buy something other than CROX for my hikes this year. By doing so, I have avoided the -55% drop that the stock has experienced since that time. I don't always get these stock predictions right, but when it happens to go in my favor - it sure feels good.

Now, once again I'll look at the value, quality, smart money and growth stories for CROX.

Value
CROX has a low (nice?) PE and price/book, but it also has high (poor?) price/cash flows. With updated earnings into my model, I get a price target of $13. With the poor price/cash flow, it's a 'short', but the other variables tell me that it's a 'Long'.

Quality
CROX has high (poor?) accruals and a high F-score. Short.

Smart Money
Poor high short interest, but the insiders haven't sold recently. Now, for those who don't think that insider selling counts, what do you think of the insider selling that happened last year when the stock was at $40, $50, $60? Does it make you pause and wonder: Did the insiders know something? Did they think it was overpriced? Should you have thought the same? Short, but if the insiders buy more and the short interest declines, then it's a 'Long'.

Growth
They have very high sales growth, and in my opinion that can't continue. Short.

My Opinion

I think CROX could appeal to some value investors hoping for a turn-around story, it could also appeal to those growth investors that love fluctuating high growth rates. But, with high price/cash flows, high accruals, a high F-score, high short interest, and "abnormal" growth rates, I'm going to pass on CROX and stay 'Short'.

Balmer falls short, You should too!

Rating: not yet rated    Vote: Terrible (-3)Worse (-2)Bad (-1)So-so (0)Good (+1)Better (+2)Best (+3)
User name*: '    Password*:
or register if you are a new user
User name*:
First name*:
Last name*:
Password*:
E-mail*:
Retype e-mail*:
Opt-In: Yes, send me email from InvestorPlace Blogs regarding blog post notifications and voting/commenting bulletins, along with The Investor Post weekly e-letter. Please un-check this box if you would prefer not to receive email from us.
Privacy Policy
InvestorPlace Blogs is powered by Marketocracy. Marketocracy has authorized Investor Place Blogs as an official registrar for voting through Marketocracy's Investment Research Rating service. Registered members of InvestorPlace Blogs are linked with a Marketocracy account to establish voting power based on their performance of trading and posting on stocks.

I heard Yahoo rejected the Microsoft offer, the stock dropped, and I found myself strangely smiling.

Back in Feb. '08, I mentioned in this blog:

"Yahoo is overpriced. Sell. Microsoft is paying too much."

And then in this blog , I gave a small prediction.

"Here's my weird prediction: I think YHOO stock will fall in the next year. I think it's overvalued. Sell. Now, once YHOO falls, then I think there is a high probability that MSFT might make another offer on the company, but this time the stock will be trading at a price lower than $19, and the offer will be at least $5 billion less than the other offer they made."

So far so good, but do I feel bad for the shareholders? Sure.

Is Yahoo trying to do what is in the best interest of the shareholders? Just for fun, go to Yahoo Finance, and look at the Yahoo insider transactions on Yahoo from the past two years. It feels rather odd using Yahoo to look at itself, but let's do it for some fun. Do you see the selling? It sure looks like a director, another director, a former COO, the EVP, a President, and even a 'Chief Yahoo' has sold some shares. I'm afraid to count how much a Chief Yahoo sold. Yet, although they are exercising options and selling some stuff, the Microsoft deal wasn't good for the shareholders? Wow. Shareholders do pay attention - here's a fun exercise, in the next couple months watch to see if there is any insider selling and by whom, and ask yourself, if they're selling, shouldn't you be too?

Why do some analysts make downgrades AFTER the announcement? Do they lack the guts to go out on a limb and make a prediction, or are they just trying to 'play it safe' and keep their jobs? After all, it seems a bit easier to go along with the flow and issue predictions AFTER the event. Perhaps in 6-12 months Yahoo will get another offer from MSFT at a lower price and I'll love to see how many analysts upgrade the stock on that news, AFTER the announcement. At least I had the guts to downgrade it BEFORE the announcement.

YHOO, I think you should have taken the offer - sorry, short YHOO.