Watch what they do, not what they say
Almost every day another tough talking FedHead is paraded in front of us. They try to impress as vigilant folk and hardly seem like the type we would chat up at a punchbowl in the basement of a college frat house. Although they talk a good game, they don’t always back up their trash talking. Talking hawkish and acting dovish that is.
The following news did not seem inspire much debate when it was released:
The staff of the Securities and Exchange Commission has approved the New York Stock Exchange’s application for a new type of trading account that would set requirements for using borrowed funds, called margin, based on the types and weightings of securities in the account - stocks, options and futures.
“It’s a very significant change,” said Robert Colby, deputy director of the SEC division that oversees U.S. stock markets.
True, it appears that this appears to apply mostly to hedge funds and other sophisticated institutional investors. The prime brokers that cater to the big money crowd can seemingly create money and credit out of thin air. Which effectively circumvents the regulators anyhow.
Perhaps we need to do this in order to stay competitive with our european and asian rivals.
But will it have the effect of throwing fuel on an already smoldering tape?
Stay tuned.
Moe Mentum Investing with ThinkEquity Partners
I have long enjoyed a zero-sum relationship with ThinkEquity Partners. I lose money in their favorite names, and they garner commissions as I puke em down 40% from my basis. Shame on me. Well at least one of us is making a little scratch. I recently stumbled on their ThinkBlog which left me ashen-faced. More on that in a minute…
Michael Moe has a high profile in the emerging growth camp on Wall Street, and has surrounded himself with like-minded partners and clients who embrace the higher risks that are inherent in the flakiest style boxes extant.
Growth stock investing. Imagine the smell of napalm in the morning. The stomping ground of sadomasochist money managers. The kind of people who actually get a rush when a position at the top of their sheets (ie. a big position) declines a couple of hundred million dollars in market cap in the blink of an eye and their quarter turns to shit against their peers. The thing is...I think these adrenaline junkies actually get off on it.
Prison Stocks Break Out
Fashionistas have always maintained that stripes are slimming, yet investors have been fattening up on the publicly traded prison operators over the past few weeks. Corrections Corporation of America (CXW) and The Geo Group (GEO) have been absolutely en fuego as privatization efforts gain traction and new contract awards are handed down. Indeed, the Terminator himself, Governor Arnold of California is behind much of the recent excitement in the sector as he ships off prisoners to far away states with really shitty weather. California awards 2 out-of-state prison contracts (Yahoo Finance)
The financial model of prisons is similar to the hotel industry, with earnings estimates driven by a RevPar model or revenue per available room, a relatively straightforward calculation that in theory lends some earnings predictability to these companies. After all, many of the customers check in for 10- to life...and with short interest on these names ticking up slightly over the past few months, no doubt some folks on Wall Street are walking a little funny as the stocks catch a bid.
That’s gotta hurt
Lenny Dykstra….Stockpicking Savant?
This is the first in our new series: Talking Heads
Lenny Dykstra was a one-man wrecking crew when he played for the Mets and Phillies back in the day. Brash and outspoken, he was the Charlie Hustle of his generation. He has parlayed his baseball earnings into a http://www.nj.com/mets/ledger/index.ssf?/base/sports-1/1160455584216100.xml&coll=1">mini empire that includes car washes, quick lube outlets and other related business ventures. All in all, we would have to say that he has done well for himself despite some missteps along the way and lingering suspicions that he still parties too much.
Indeed, we think some of his television appearances have been quite bizarre as he adjusts to a different type of media glare. Of late, Lenny has frequently been quoted in the media advocating a deep-in the-money call strategy and has also been quoted on the record boasting of a near-perfect run of stock picks…
Dykstra says more than 90 percent of his stock picks are money-makers. And if you don’t believe it, he says with that familiar edge, ”go ahead, dude, look it up.”
Still, he can’t be any worse than some of those so called professionals CNBC trots out day after day, and we are willing to give him a shot at attaining guru status here at UTC. A reasonably lucid Dykstra was on Fox News Channel’s “Bulls and Bears” this past weekend (10/21/06) sharing his investment prowess with, well, anyone who will listen. His picks included:
Archer Daniels Midland (ADM)
Yahoo (YHOO)
Anadarko Petroleum (APC)
Unit Corp (UNT)
Diageo PLC (DEO)
Despite our skepticism regarding ex-baseball players and ex-wrestlers who dispense financial advice to the unwashed masses, we are trying to have an open mind. And we have to be honest. We love Lenny Dykstra. We admired his grit during his playing days and now his attempts to create jobs and wealth since he retired from the game. We are just not convinced he is a stock savant with a 90% success rate, although he is probably better than Joe Battapaglia.
We also love a good scrap, and have an ego every bit as bloated as Lenny’s face and waistline. Thus we think a little wager is in order. We will submit five picks, including the high flying recent IPO Acme Packet (APKT)
and the following:
Express Scripts Inc.(ESRX)
Global Payments(GPN)
DeVry Inc. (DV)
Exlservice Holdings (EXLS)
The two portfolios will be tracked and we will update you periodically on the progress, or lack thereof. The circus will end on December 31st, 2006 and a winner declared.
Too, in honor of Lenny’s five flea ridden dog picks, we will make a modest donation to the North Shore Animal League at the contests end....and if we beat Lenny we will ask him to match our donation.
Game On, Nails
Buried with the Mets
Savvy readers of UTC are always quick to spot promising investment opportunities. We think we may have found a live one for you.
Funeral home operators such as Service Corp International (SCI) and Carriage Services (CSV) have been struggling to grow earnings over the past few years. And the stocks have been....well, dead money.
Although they say you cant take it with you, Major League Baseball is hoping that doesn’t hold true for diehard fans. Fans can now choose between stylish urns and caskets decked out with the colors and logo’s of their favorite teams...providing everlasting support into the afterlife.This infinite time horizon should ensure that even Cubs fans get the championship they so desperately crave. Fans can still be part of game after final out (MSNBC)
And with New York Mets fans downright suicidal these days we would expect the growth rates of the funeral homes to re-accelerate. We are going to do some digging here...but these products might breathe some life into the deathcare industry.
Crackerjack not included.
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