Vad's Best Ideas

My worries about going fully invested last Monday had some merit. As the first week shows worries about credit crunch are spreading further and further. Fear is slowly overcoming greed to become the main market driver. Bear Sterns made a move that might have been questionable - late on Friday they held a call with Investors explaining that BSC has sufficient capital to survive- the question some people might hav here is why would they do that?

As we all know without access to capital and prsitine reputation Wall Street is nothing more than a group of overcompensated MBA grads. The problem of Bear is that they are on the verge of losing both- possible debt dowgrades could explain why BSC is trading at a very low (by WS standard) 1.2 times book -investors are expecting that BV is going to decline significantly in the immediate future. Reputation damage is even more troubling at this point- the next logical steps would be employee layoffs, increased attrition and finally takeover by one of the big banks like BofA, Wachovia or Citi...

Anyway as far as my portfolio goes- I had a roough couple of days- my bigges losers so far are NOV (Varco) and NVLS (Novellus). Similar stock symbols but very different stories- Varco is one of the best O&G servicing companies that I think is just taking a short breazer from a phenomenal rise of the last few years. I feel comfortable holding on to my short term losses here- 6 months target-$150 or roughly 45% return.

NVLS however a whole different story- its a semiconductor company that went through quite a turbulent 52 weeks and right now is in a falling knife pattern. Trying to catch it might be painfull but given how attractive the fundamentals look at this time, I am willing to weather he turbulence and have a target 6 months return of roughly 40% from here.

Comments: View Comments |  Sunday August 5, 2007