Maybe a Pine Tree

Ahknaten -- Today Is...

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Today,
I fired the Fed, decimated the Sarbanes Oxley Act, annihilated the Up-Tick rule and voted on American Idol.

Today,
I believe the markets are efficient.

Today,
Wall Street adopted the Finnish market system and the overnight rate was dropped by 300 basis points.

Today,
I'm Warren Buffet, Gordon Gecko, Jim Cramer, Bud Fox, Kai Trump, Peter Lynch and Richard Sloan.

Today,
I published an academic paper called, "Give Up and Go Home". It spoke a lot about efficiency, synergies, exogenous and out of sample tests that I conducted while taking into account lagged periods, database errors, bid/ask spreads, transaction costs, taxes, inter-temporal shocks, solar winds, betas, tobin's q and other alphabet soup letters. Robustness checks were utilized with spearman, pearson and petainen windsorized coefficients, and correlations with Fama/French 2,3,5.5 and 100 factors over time, industry and cross-sectional variations while factoring in SOX and LTCM events, as well as disposition effect tests, accrual anomalies, and momentum/value/smart-money/quality controls. Also noted was that all the thoughts were my thoughts and did not reflect the thoughts of other seemingly smart people and if I made some errors then they were my dumb errors and I was certainly not as smart as I thought I was. It was published in a number of journals, but they incorrectly gave my name to someone else.

Today,
I'm going long on gold, GOOG, AAPL, and every momentum stock I have ever bashed, and short on managed health care and insurance.

Today,
Men are right. Women are wrong.

Today,
Someone will donate a lot of money in my name. I might get lucky and have a urinal named after me.

Today,
I love Photographic Products, Agricultural Products, Coal and Consumable Fuels, Thrifts and Mortgage Finance, Life Sciences Tools & Services, Airlines, Home Entertainment Software, Forest Products, Wireless American Telecommunication Services, and Gas Utility companies.

Today,
I bought a pair of CROX, made a call on my I-Phone and installed a solar panel on my pink cat.

Today,
Housing starts, consumer confidence, same store sales, and GDP rose to historical new highs. Oil dropped to $60, gold dropped to $600 and the deficit was given to "O-il Canada".

Today,
I created the next Bear Stearns, befriended Eliot Spitzer and fired Kwame Kilpatrick from Detroit.

Today,
Hotel saunas in America are hot instead of cold, and a spa near Mt. Tremblant knows the real meaning of the word, "loyly".

Today,
The honorable and glorious Stephen Colbert, of 'The Colbert Report' will mention my name, or my blog, or invite me on his show.

Today,
Jon Stewart will do the same. He too is honorable and glorious, but if Jon is reading this, then he is cooler than Stephen and if Stephen is reading this, then he cooler than Jon.

Today,
I love spelling Bloomberg in word puzzles.

Today,
I hate Tires and Rubber, Tobacco, Oil & Gas Drilling, Multi-Line Insurance, Managed Health Care, Office Services & Supplies, Electronic Manufacturing Services, Diversified Metals & Mining, Integrated Emerging Market Telecommunication Services, and Multi-utility companies.

Today,
I became a Sith Lord and was hired by Overstock. Light-sabers are on sale.

Today,
I conceived a child.

Today,
Is April Fools.

Comments: 4

Ahknaten -- POT might be legal in B.C. but...

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Although pot is legal in British Columbia, it's not legal in Saskatchewan - nor should it be.

Short POT.

Although I love Canada and I have a bias towards Canadians, I think POT is overvalued. Doing the usual procedure I follow in eVal (valuation software), I find a target price of $63, much lower than the current price of $176. POT has a high PE, a high price/book, a high F-score and high accruals - so I'm concerned, as it doesn't have the value/quality story that I would like to see. It has quite a lot of analyst coverage already, so I don't see many more analysts taking coverage of the stock. It's quite possible that more analysts might 'drop coverage' on the stock, and if that happens, that seems like a strong negative catalyst to me. After all, some analysts love to cover stocks that they like, but they seem to drop coverage on ones they hate. Weird, isn't it?

Would you like a few nice chemical companies to look at?
How about: DOW, FOE, LZ, MEOH, NCX, OMG, POL and SHI

I'm sorry; I'll pass on POT and get addicted to another stock.

Comments: 10

Ahknaten -- R.E.P. TSO

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Someone out there is bound to criticize how I value energy companies. They're going to talk to me about oil reserves and potential finds, and mention upstream and downstream, how oil should be at $150 or $70, biofuels that cause hunger, and how they like DIG DUG. Someone is going to point out that I'm going to talk about a company that is in my portfolio and someone is sure to notice that I have a large position in one of those companies. Some may even realize that I need to sell that particular position at some point to diversify a bit, as 24% in one position is way too large. Then, perhaps I'll complain about an energy company and it'll remind me of the time I complained of FXEN (down -150% with respect to the XLE) and how the Yahoo message boards lit up and attacked me personally. Oh, sometimes I'm wrong, sometimes I'm right, this is just an opinion folks.

So, I'm going to talk about two stocks - TSO and REP, and I'm going to do the usual arrangement on those stocks that I like to do.

REP - Long

Yesterday was a nice day for REP (up 17%) on news that the oil field they have interests in, has significantly more oil than previously expected, and that they might get acquired by China National Petroleum Corp. Cool. That sure helped out my portfolio. My initial position in REP was placed as it had the value story (low PE, price/book), the quality story (low accruals, F-score), few analysts, a growth story, and when I did a valuation of it in eVal I got a price of about $28 Euros ($44 USD). Oh wow, with the momentum today, perhaps some analysts will choose to cover it now and look super smart. Long on REP, but perhaps I'll start selling some soon.

TSO - Short

Today wasn't so bad for TSO, but it wasn't great. Not so cool. I have held TSO at some point, but not anymore. It has somewhat of a value story (low PE, price/book), and although I get a valuation of $42, the quality story isn't great (high f-score, high accruals), and after seeing the last quarter's EPS numbers the growth story isn't all that great either. The stock could be a 'value trap', and so I'll stay away for now. TSO makes me nervous - short.

Comments: 1

Ahknaten Oils up ADM and Lets it Slide By

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Today the earnings came out for ADM, and so I'll give you my opinion - short.

Following my traditional method of analysis, I look at these stories:

Value - Nice low PE and price/book, but poor price/cash flow. My conservative valuation gives me a price target of $33. Short.
Growth - Nice sales growth (not too low, not too high), and nice positive (increasing) earnings momentum. Long.
Smart money - Nice low short interest, but the insiders are selling, that's not good. Short.
Quality - High accruals. Short.

So, perhaps ADM would be fitting for a growth fund, but if I was pitching this for a value/blend/smart money/quality fund... I'm sorry, short ADM.

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