don barrett

W E D G I E Whats that spell? Wedgie!

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I've been away for a while but I just couldn't resist this one. All the bashing of Bush and Bernanke,but they still dealt the short boys a major wedgie! There is a place for shorting the market as it in effect hopefully shortens the life of a mismanaged companies or any company already doomed. When you start controlling the market your going to far. And Im not talking 10 or 20 shares. When you short or dump enough of a companys stock to rock the company it shouldnt be allowed. Remember manipulation!
Is this a bottom or just Bush and Bernanke shafting the shorts one more time for old times sake.Oil and all the commodities and last week the markets were down near 50%. In my opinion as I have said most of this year the commodities and the markets have been minipulated.in this election year. Oil as I said all year was being manipulated as there was never any shortage and oil consumption has dropped for most of the year. And all these oil traders and the media kept saying supply and demand. B.S. Now the market is flooded and gas is dropping as it should. Then all the grains started shooting up in price. Supply and demand. Then do you remember the rice shortage and the price of rice skyrocketing. But the media and the traders got caught in this lie. The next day Thailand and a couple of other Asian countries got pissed and told the press they had enough rice to feed the world a while. And what irked me on the rice was Sams and some of the other clubs started rationing rice. The first time the US has rationed anything since WWII.
The market has reacted much worse than it should have with the current market conditions. We still have a much better situation in our economy than we did in Carters recession. Go back and look at Carters recession and these conditions look like paradise. All of us have talked of the CFs and Pots. These companies have great earnings and people will always have to eat. But,these companies would get knocked down 15 or 20% in 2 or 3 days and then jump right back up 15 or 20%. I cant see any legitimate reason for these companies as stable as they are girating as they have in price.
So,I think with drop in oil and the other commodities will be a great help for the economy. The worldwide push to shore up the banks apparently was well received. I told everyone here a few weeks ago I bought calls on some tech. companies and they were up real nice. The best pick was Cisco,up over 2 points.today.

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Big Lots is a company that operates as a closeout retailer and BIG currently operates over 1300 stores. The image of BIG has changed over the last few years as they used to have boxes and pallets of merchandise scattered throughout the store. BIG looks more like any other retailer these days and I'm not sure what part of sales are actually closeout items from other stores. The last BIG I was in looked like any other retailer with a pretty wide range of inventory.
BIG reported 2nd quarter 2008 results last week and with the current economic outlook results we're impressive. Net sales for the quarter rose by 1.9% to $1.1 billion over same quarter 2007.Same store sales of stores open at least 2 years increased by 2.8% for 2nd quarter 2008 and this was after a same store sales increase of 5.2% for 2nd quarter 2007. Operating profit for 2nd quarter 2008 was $43.5 million or 3.9% of sales compared to $33.4 million or 3.1% of total sales.
BIG issued guidance for the third quarter 2008 with 1 to 2% increase in same store sales and 1 to 2% increase for the 4th quarter too. For 2008 Big Lots is looking for a net of $1.90 to $2.00 a share on a increased profit range of 5.5 to 5.7%. Based on the current quarter and guidance for the rest of 2008 I would rate Big Lots a strong buy. With the current growth BIG is showing and with the increase in sales as the economy strengthens,I think BIG is a clear value for your portfolio.

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CNC-Healing the Sick

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Centene operates as a multiline healthcare company operates through two segments,Medicaid Managed Care and Speciality Services. The MMC segment provides primary and speciality physician care for medicaid healthcare recipients,state health insurance program for children,and the supplemental security income program. The Speciality Services segment offers various programs to state programs,healthcare organizations,and employer groups.
CNC operates mainly through the Medicaid program for low income people and is thus recession proof. CNC does the work and sends the bill to the government.And CNC is profiting very nicely,thank you. Second quarter revenue jumped by 76.5% to $18 million or .41 cents per diluted share from $10.2 million or .23 cents a share second quarter 2007. CNC had $60 million dollar cash flow for second quarter 2008 and at the same time reduced G@A expenses from 14.4% to 13.5% of revenue. CNC also managed to buyback over 300,000 share during the quarter. The number of Medicaid recipients is growing and Cns growth should continue.
I have been buying options as they offer more bite for the dollar. I bought October 22.5 calls Friday and I think they will respond rather nicely!

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Deere Slain by a Dollar

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I watched as a weak dollar seemed to keep the U.S. afloat with a strong rise in exports. And now as the dollar strengthens the economy is rising and anything with a hint of being commodity related is getting slammed. I am happy to see corn,wheat,and other commodities drop in price,but I never expected to see farm implement manufacturers,coal,and some of the other backlash from the rising dollar. As I said last week,coal companies such as Arch have already inked contracts at set prices on out to 2010 and the prices Arch and the others are going to receive is already set and won't drop. The farm implement manufacturers such as Deere and ArtsWay are getting hammered. ArtsWay was up 30% last week and a day or two later dropped by 20%.
A lot of times I am guilty of looking at individual stocks and not looking at the big picture. I spent the weekend looking at some charts and I was shocked at some of the pullback some stocks have suffered. And the main damage seems to have been in the Ag industry. Most of the experts say that investors were locking into commodities which trade in dollars to try and beat the inflation we are facing. If you look at this angle and in oil especially you have speculators,which by definition are buying contracts but will never take possession of the commodity. I heard the other day that about 50% of all the contracts on oil were speculators. Again,by definition a speculator is someone who will never take delivery of the commodity. Southwest Airlines controls jet fuel prices by buying options and they were very successful at doing this. But,if I buy options on jet fuel,I'm a speculator as I don't have a plane and will never take delivery of the jet fuel. So,we had a huge bubble in commodities and it has imploded and this will ease the inflation problem worldwide soon.
At this time as i said i wouldn't buy anything ag related. Deere's last 2 quarters were great and although they met their projections,a couple of brokers sales earnings didn't meet their expectations and Deere has dropped by about 30%. If you are a long term investor and can wait this correction out,you should do real well. Companies like Deere are doing just fine,I just don't know when this phase will be over.

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Arts-Way or the Highway!

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Arts-Way manufacturing is a company that manufacturers equipment for the farmer to process his own feed,stalk shredders,and even potato harvesting machines. I have recommended CF,a fertilizer company since it was $80 last fall. I have recommended the trains that are used to haul a lot of the grain from the farm to the processor. I recommended ADM which is heavily involved in the ethanol production where a lot of the grain was going. And now to ARTW which I'm recommending now,because farmers have had a real nice run for a couple of years.
I have watched ARTW for a while and Monday I bought into the company myself and in my Marketocracy Monday also. and I'm happy to say it's up over 30% since Monday. ARTW last quarterly report back on July 9 reported sales up 35% and net income was up over 59% but nothing new reported since then. ARTW is in the AG sector which has been booming for quite a while,but the only time farmers were mentioned was when the media was bashing President Bush for the ethanol program. When the growing season is good,farmers will usually celebrate by buying a new piece of machinery or cattle or something to increase earnings for the next growing season.
As I said i don't really know what caused the recent run-up,I bought it mainly on a technical basis and the last quarterly statement I which I mentioned earlier. I have 8 or 10 stocks in my marketocracy portfolio and I feel safe in recommending all of them as they fit my criteria and all have moved up since Monday,except a railroad I like KSU. And someone came out with a railroad recommendation today,so it should have some upside soon too.

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Fannie-Where did We Go Wrong?

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I read Mr. Fleckensteins article on the meltdown of Fannie and while I agree with most of what he said,I would like to add a few remarks. I knew this Raines and Howard were behind a lot of Fannies problems and that their juggling of the books to get themselves and their cronies bonuses. I read a few minutes ago that their juggling the books cost Fannie around $50 billion
to correct what these clowns have done.
I went back and did some research and Fannie was a very profitable entity at least until 1996,as Fannie had 10 consecutive years of record profits up to 1996.So,what happened between 1996 and now that brought Fannie to her knees?
Let me first plot a timeline of events and we'll see if we can spot where the Fannie hit the fan.
Fannie was created in 1938 and operated for close to 50 years within the guidelines as mandated by Congress. In 1983 Fannie was pushed by HUD to enter the multi-family market and Fannie became a landlord. I remember hearing through the years about apartments that the rent was based on your earnings and this must have been Fannie in action. I had one rental property and I swore I would never rent anything else. I doubt Fannie fared much better.
In 1991 a program called"Opening the Doors to Affordable Housing" was started and by 1993 more than $10 billion in mortgages had been originated in this program. In 1994 a new program started and it was called "The Trillion Dollar Commitment" for affordable housing. By 1998 this program had originated half a trillion dollars in low income mortgages. Mr. Fleckenstein stated that Greenspan didn't have anything or didn't want anything to do with Fannie. Greenspan made at least one decision on Fannie and that was to loosen lending regulations and this led to one of the main reasons we got to this point. He let the banks get by with fewer appraisals. I think this is as dangerous as not verifying employment or income. How can you make a loan on some property when you have no clue what it's worth. So,later we went from no appraisal to not verifying employment to not verifying income and I read tonight not to discriminate against people that already owed to much money. So,from March 1994 Fannie has gone from making qualified loans based on sane lending to no appraisal,no income or employment verification and don't worry if you already owe more than you could ever hope to repay,your just the type of person were looking for.
A couple of more interesting points., In 1994 Fannie bought back $634 million "risky securities" which I assume was Fannie paper from Orange County,Ca for $577 million and I bet Fannie lost on this transaction. March,10,1994 Clinton visits Fannie as he has called for Fannie to relax their lending policy so more poor and lower-middle class can qualify for loans. In 2001 HUD pushed Fannie for more multi-family and subprime loans to be approved.
This Raines worked at Fannie once before he returned in 1998. Raines worked in the Clinton cabinet and was appointed by Clinton in 1998 to the Fannie board. The President can appoint 5 people to the board so we have Raines and 4 more appointed by Clinton and this was the beginning of the end. Raines ran amuck from 1998 to 2003 and he was succeeded by Mudd that was already at Fannie. Raines decided his 5 years were worth some $90 million of which an estimated $52 million was gotten frauduantly. Raines,Gorelick and Jim Johnson all played a part in this fraud and Johnson was eying the VP slot with O'Bama until the Fannie hit the Fan!
To me it is apparent that Fannie was a very important part of the American dream,home ownership,until the rats got in the woodpile. So this problem started several years ago and the only people I can see at fault are the crooks and the people behind the bad policy changes. Mr.Fleckenstein mentioned one that played a big part in this mess-Barney,Don't call me Fife,Frank. another that has played a big part is Chris,Don't ask me my mortgage rate" Dodd. All the clowns that have sat on the hill for the last 20 years or so are part of the blame.
Also,to put any kind of blame on Mr. Paulson I don't think is fair as this started many years ago. Mr. Bernanke has put in a new team and they have to be better than what was there the last 20 years. Let Fannie be operated in a proper manner and keep Congress out of the way and this can be turned around. You can't let 50 or 60% of all the home loans in this country go under or Fannie that manages the loans.. Also,Paulson has already said he is finished in January so he has nothing to gain. With proper management I don't think the taxpayer will be hit near as hard as some of the estimates I've read. Fannie has already raised some fees for the loans and there is a nice spread Fannie is collecting. It will take less time to turn it around than it did to get to the edge of the cliff!

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