Vad's Best Ideas

I am making another change switching IBN for NFI... Will look for a quick 20% rebound but will sell if it dips under $5... First trade today 8% position at $5.60...

After the release of the Fed's statement I tried to play a reversal that usually follow a large down move after the release- sold half position of ATI and bought more NFI. ( now up to a 15% position)

Gambling with a company that could easily end bankrupt is not something I do every day but given the overall market mood, I think shorts are overreacting a bit. Book value of NFI before the fall out was very respectable $50 a share. Undoubtedly it's going to decline signigficantly but I am betting my Strategy Lab success on the chance of them surviving...

This opportunity with sub prime lenders/homebuilders today reminds me the sell off of anything related to natural gas/utilites/power generating companies following Enron's collapse. Anyone who was smart and brave enough to pick players like AES, EP made a killing. The main point though was diversification- because we know that a number of companies like Mirant and Calpine did not survive. However if were holding a diversified portfolio of power producers you made a killing because positions in bankrupt companies can't go down more than 100% while real winners like AES produced returns that exceeded 1000%...

I am going to spread my bets a little. Reducing all of my initial positions to 5% and buying some Impac Holdings (IMH), Countrywide (CFC) and IndyMac (IMB)

Comments: View Comments |  Tuesday August 7, 2007