don barrett

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

Mon, 13 Oct 2008 16:49:53 -0500

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.

Tue, 02 Sep 2008 17:51:04 -0500

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.

CNC-Healing the Sick

Sun, 24 Aug 2008 11:19:31 -0500

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!

Deere Slain by a Dollar

Mon, 18 Aug 2008 08:00:17 -0500

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.

Arts-Way or the Highway!

Thu, 14 Aug 2008 17:47:29 -0500

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.

Fannie-Where did We Go Wrong?

Tue, 12 Aug 2008 20:24:13 -0500

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!

MEI-LOOKIng for $15 a Share Soon!

Mon, 11 Aug 2008 13:48:42 -0500

I sold my MGM options and nearly doubled my money today. I bought back 5 MEI October $12.50 calls and I'll hold these till tomorrow at least,unless they double in the next couple of hours. MEI is a company I really like and my technical data says it should move up soon! Also,if you look at MEI you'll see I have the only 5 options on MEI for October $12.50 calls. Would you care to join me?

Wynn Resorts-The Best Game in Town!

Mon, 11 Aug 2008 11:58:29 -0500

I wanted to reiterate my earlier buy on Wynn Resorts. When I first recommended Wynn back in the middle of July Wynn was trading at about $90 and today is trading about $117. About a 30% gain in a month When I first recommended Wynn Mr. Ho I talked of had a monopoly for decadesinMacau,but Mr. Ho was having some family problems and then an IPO wasn't received as well as some thought it should have been. Since that time,last July, I think Mr. Ho has fallen out of favor in Macau and Wynn and now apparently MGM are moving to the front. I liked Wynn and now will recommend MGM too.
Any casino with exposure in Macau may very well be worth a look now. Vegas may have slowed but Macau is running wide open. Wynn lost a little ground last quarter in Vegas,but earnings doubled in Macau. MGM has a casino in Macau and I noticed this morning both Wynn and MGM stocks were moving up. I bought September $40 calls on MGM and they have almost doubled today.I would also look at IGT as they make most of the one-arm bandits and other hardware used in the gaming industry. Happy gaming!

The Election Year Recession

Sun, 10 Aug 2008 16:30:06 -0500

You may ask,what is an election year recession. An election year recession is when the media takes every bit of news and twists it to suit their own views. As an example take the recent positive growth of GDP by 1.9%. How could we possibly be in recession when GDP jumps from positive .9% to a positive GDP of 1.9%. If you want a recession go back and look at a true recession. The media had been looking for greater growth! (If we are in a recession i would think any growth would be welcome)
Let us look at the recession that started in the late 70s and ended sometime around the mid 80s. So lets start with inflation or stagflation as some called it back then and some are trying to tell you is happening now. Inflation in 1980 soared to 13.5%!!!! What is that about 3 times our current inflation. Read this little quote from 1982" Employment conditions deteriorated throughout the year. The unemployment rate in the U.S. reached 10.8% in December 1982-higher than at any time in the post-war era( That would be WWII).Job cutbacks were particularly high in housing,steel,and automobiles. By September 1982 ,the jobless rate reached 10.8%.Twelve million people were unemployed,a 4.2 million increase since July,1981(4.2 million added in about a year). Unemployment rates for every major group reached post-war highs with men over 20 hit particularly hard.Blacks and Hispanics were hit disportionately higher". So,how does that compare to today? !982-unemployment rate 10.8% Inflation-13.5%
2008-Unemployment-5.7% in July Inflation 5% in June Not too bad when compared to 1982!!!
So,the next time you hear Brian Williams or Katie Couric or some other graduate of the Rosie O'Donnell school of economics tell you how terrible things are today or for that matter anything they have to tell you,don't just take it as the gospel,it probably isn't true or accurate. These people have a liberal agenda and they are here to promote it.
So,the next time they tell you this is a recession,go back through history and you will see times are really pretty good since in the last 8 years we have had 9/11 and the market correction following,good or bad we have been at war since then at a tremendous cost of lives and money,and top it off with the oil and other commodities being pushed to new limits by speculators.
So that brings us to this last point-the commodities craze. The media keeps trying to tell you it was brought on by demand. And now the huge correction in oil and all the other commodities is due to the economic slow down around the world and in the U.S. Myself,I don't believe a word of it. The U.S. is the most economically challenged country that I know of and we just had a positive GDP growth of 1.9%. China and Australia have been growing so fast they have been raising interest rates to slow their economies down!!! Do some research and see where this big slowdown is coming from. The world economy hasn't slowed enough in the last couple of months for oil to drop 15 or 20%. The world economy hasn't slowed enough for copper to drop 20 or 30%. The major cause of oil prices dropping wasn't the economy was so slow. People got fed up with the B.S. and they cutback on usage. Toyota sold close to a quarter of a million hybrid cars last year in the U.S. and these people didn't buy these hybrids because the economy was bad,they bought them because they new they were tired of being bent over an oil barrel
So,the next time you hear someone on CNBC telling you how bad everything is go back and look at some prior times in our history and you will see things have been much worse than now and we will survive this slowdown!

AIG-Time to Test the Water?

Sun, 10 Aug 2008 14:16:22 -0500

American International Group is a conglomerate operating as it says in 'international' markets or about 135 country's. AIG has some divisions that are still profitable,but they entered this mortgage market trying to wring out an extra percent or so return and it has bitten them in the buttocks as it has many others. The main hit came from "credit default swaps" and AIG seems to have gotten away from their core business-insurance.
If you look at AIGs quarterly report and all the others involved in this mortgage mess you will continue to see "unrealized losses" and I think this may be the basis for buying into AIG. All these companies are completely writing off these investments which will eventually prove to have some value. The Wall Street Journal had an article the other day which said that less than 1% of home loans are in serious trouble,so to write them all down to zero can't be realistic. These mortgage instruments are so complicated apparently the people who wrote them don't understand them fully. But,again remember these instruments aren't worthless and eventually they will be written back up to some degree.
As I stated earlier all of these companies got away from their core businesses as AIG has and now even their core businesses are suffering. AIGs life insurance and retirement income fell by 10% in their latest quarter. Meanwhile their aircraft leasing division had a 85% increase in revenue. AIGs premiums,deposits and other revenues were up over 16% to over $25 billion.
As AIG reduces their exposure to these mortgage related instruments and returns to their core business,insurance,the quicker they will turn the ship around. As it stands now,they have so much international exposure and some divisions that are still profitable that I think they will rebound soon. As I said earlier these mortgage instruments have been completely written off and somewhere down the road a true value will be established.

GM-Time to Put the Pedal to the Metal?

Sun, 03 Aug 2008 16:55:00 -0500

General Motors and rival Ford have been the leaders of the pack for many years,but is the glory run over? GM entered the 1970s as the leader in car sales and the 70s may have very well been the beginning of the demise of GM.
I was discharged from the US Army in 1971 and I can remember gasoline being .25 cents per gallon at that time. The average car could be filled up for a few bucks and as I was still holding on to the 60s,$10 bucks would fill your car up and you would still have a few bucks to party on. I was 20 years old and women were plentiful,booze was cheap and to top it all off,.25 cent a gallon gas. At the time I thought all this would never end and apparently the folks at GM must have been partying with me as they didnt read the writing on the wall either. But,guess who saw the future and began changing to more fuel efficient autos back then? Japan!
GM made some of the finest vehicles ever made in the 60s and as they moved into the 70s quality went the way of .25 cent gas. GMs entry into the compact and fuel efficient vehicle market left a little to be desired. The Vega with the aluminum block lasted a few thousand miles(I owned one) before they started blowing head gaskets due to over heating. Ford had the Pinto which I think was a little more dependable. Chrysler even entered the compact market with the Colt and Omni. The Colt was the best of the bunch,but they were only produced a few years. Later generations of compact cars from the Big Three never improved much and eventually the Japanese would capture most of the US compact car market. By the 90s GM had recaptured some of their lost market share and stock price was back up to $80. Then in 2004 GM made what may prove to be a fatal mistake by deciding to go almost exclusively with the pickup and SUVs and shortly thereafter oil started to skyrocket. As gas prices went up light trucks and SUV sales plummeted as did the value of these vehicles.
A couple more points on more current problems for GM and we'll try to decide if there may be hope for GM and it's stock. One reason US auto makers sales have been so bad is all the sedans with anything near decent fuel mileage have been sold and now all they have left are the gas guzzlers. Import auto makers sales haven't dropped near as much as US auto makers because they had a much better inventory of fuel efficient autos. Also,last week when Chrysler announced they would drop their leasing program which made up 21% of their annual sales. I then found out that when the SUVS and pickups came off lease they couldn't give them away. A three year lease and then they we're almost worthless. They are having a problem like back in the 80s when the public found out a US made vehicle would only last the first 2 or 3 years of a 5 or 6 year payment plan. Then the public started letting the vehicles be repossessed as they we're shot well before the payment plan was completed. One other bit of info. to let you see how much out of tune the US auto makers are. In the first quarter of 2008 GM sold 843 hybrid vehicles and for the same time period Ford sold 5225. For the 2007 model year Toyota sold 430,000 hybrid vehicles. Toyota has a slight edge as you can see.
Now let's look at GM as an investment and see if now is the time to make a move. As I have stated before GM and Ford are staying a float with international sales. Guess who is the top company for auto sales in China. GM. I saw a list of closed GM plants in the US and they have a shell compared to what they had previously. As foreigners become more affluent they cherish US made autos. GM has made a couple of changes that will help. One thing was they got the UAW to take over the insurance health plan for the auto workers. GM has closed or will close about 10 plants and are converting a couple of plants to make fuel efficient sedans again. GM also has the Volt which will be marketed in 2010.
So,GM has a few things going the right way and there may be hope. GM started a restructuring plan in 2005 and even showed a profit of $400 million for the first quarter 2006. If you discount the 50 or 60 billion in write downs for plant closings,etc. they could be profitable now. So,if you have any speculation cash available,it may just pan out in the future. But,please with foreign sales as this is their main catalyst right now. As they bring some new sedans on line and dispose of their SUV glut and in 2010 the Volt begins production,there may be light at the end of the tunnel!

Elan-Hype or Hope?

Thu, 31 Jul 2008 19:11:33 -0500

I used the same title as I did last time and since then it looks more like hype. If you go back to my article you'll see I advised investing in Elan as it was just too early in the process. I think Elan will get this right it is too risky to buy into Elan now. Elan was just entering Phase II with b-Mab and as I said then it was met with mixed reviews at best. EZArnie or someone even told me I was using outdated data. EZ said b-mabs efficacy was already established and proven. A drug just entering Phase II always has a lot of unanswered questions and that's why they go to all the trouble of PhaseII,III,and IV. When I wrote the article I stated Elan may be a buy later but not at this time and price.
B-Mab and Elan were on the ropes yesterday and today Tysabri and Elan were in the news again. Patients using Tysarbi for MS were having some serious side effects and brain disease. Tysarbi was pulled off the market in 2005 and was returned to the market in 2006 with the understanding to the MS patients they would be using Tysarbi at their own risk. That decision will be decided by the FDA as Tysarbi will be pulled from the market again.
I would like to close with a little advice and a company's stock with more potential and less risk than Elan will will ever be. Buying a pharmaceutical always has some risks and a company such as Elan with one drug already pulled off the market and then to buy into the company due to a drug in Phase II is very risky.
My advice is to you is stick with company marketing something with proven results. I have recommended the fertilizer companies since last year and I'm still buying them myself. I bought some $50 calls on Monday for $6 and sold them for $9 today. A 50% profit in 4 days is pretty good in my book. Terra Resources just reported some fabulous results this week and gave similar guidance for the rest of 2008(The calls were onTRA).

The Three Musketeers

Wed, 16 Jul 2008 08:31:17 -0500

Turning the reigns over to Mr. Bernanke on Freddie and Fannie will go a long way toward correcting this mess if the Senate will stay out of his way. The first thing I heard Mr. Bernanke say last week after he took over was we have to make better loan decisions.
I think now is the time to be buying Freddie and Freddie and some of the banks. As Mr.Bernake corrects this problem confidence in our banking system will return shortly.
Coal was drug down with oil yesterday and as I've said before they are mostly independent of each other as they have almost totally different uses.
Oil is down again and Im hoping this is the start of the major correction of oil prices. As Ive said for months its being caused by speculators. Michell Caruso-Cabrera( check my spelling) on CNBC was the only person that noticed or said anything about it,but as soon as Mr. Bernanke mentioned speculators yesterday oil started dropping. And that's not the first time Ive noticed that same reaction.
Potash and my favorite ag play CF dropped yesterday and the fertilizer companies seem to drop with oil and I dont see the connection. People have to eat and these companies will prosper.
Trains,planes and trucking companies should surge as oil drops.
The tech companies should be ready to surge. The last few tech companies have decent earnings and good projections looking forward so I would give them a look.

Sprint is Takeover Candidate

Tue, 15 Jul 2008 14:49:14 -0500

It was reported on CNBC that S may be a takeover target by a south Korea telephone company. I like this because the board at S thinks they are already turning the company around and I dont think they will lay down at a takeover attempt.

Calls On Tso and Vlo

Tue, 15 Jul 2008 10:59:24 -0500

As most of you know i have thought all year that oil prices are being manipulated by speculators. Various reasons have led me to this view the main one being if the U. S. is using less oil,the other countries with much less disposable income have to be using less. Most of the Asian countries with their gas subsidies cut have to be using less oil.
These 2 oil refiners should increase profits as oil prices drop. Oil and oil companies haven't risen as aggressively lately and for the oil companies some have been declining. So,I bought some October calls at as close to the stock price today as I could and some are in the money already. That would be a $30 call on VLO and $15 call on TSO for Oct. and if you want to go out to Nov. or Dec calls.