Stock Pursuit

Net-Net Stocks Update

2009-11-22T14:11:00.026-05:00

I was looking at Boss Holdings BSHI.ob a couple different times over the past year and a half or so. The stock continued to trade very thin and decline. I just found out that back in late August they announced they were going to go private and cash out holders of less than 100 shares at $7.65. I think this may already be finished. I don't know.

All my posts on BSHI

full disclosure:no position

Warren Buffett's Big Bet With Burlington Northern

2009-11-16T08:57:00.006-05:00

So, I imagine everyone knows Warren Buffett bought Burlington Northern recently and the media has spun it as wholly positive and a bullish bet on the economy of the United States. I'm going to look at this in a different angle and in a more skeptical and realistic fashion. Buffett says,"I basically believe this country will prosper and you’ll have more people moving more goods 10 and 20 and 30 years from now, and the rails should benefit. It’s a bet on the country, basically."

Let's start with the good things. I think it was definitely a good buy for the long-term. A classic Buffett moat company. A safe, smart move. But I think this could be a clue to the macro as well because Buffett is very keen on the macro economy. I'm not sure that I buy the argument that this is a big bet on the economy of the United States though. Right now the railroad gets only about 30% of its revenues from shipping consumer products. "Its next most important segment was coal, followed by industrial products like farm equipment, lumber and chemicals. It also hauls corn, wheat and soybeans, much of it exported to China."1

The media spin on it however is it's a bullish bet on the economy. I think it is a bet on future trends. None of them on a stronger United States economy. It just looks more like a bet on commodities, the fact that the dollar will be very weak, that people will be alive and eating in the future, the fact that oil prices will sky rocket over coming decades and that Canada will probably be stronger than the United States economically.

What is the way to ship if oil exceeds $140 a barrel? It sure isn't trucks or planes. The fact that rails take away from them doesn't seem particularly good, just that they will. This may be a bit of a stretch but buying a railroad seems more like a doomsday economic hedge than a hope that the economy will be strong. Shipping coal and necessities is pretty much a given. And you can't ignore a healthy demand from Canada next door.

Where's the leveraged bet on the consumer? Are you telling me from the extremely low valuations from the biggest stock market crash of his career and the worst economic crisis since the early 1900s that Buffett couldn't find a company any more correlated to the consumer? This is supposed to be an "all-in" bet right? Remember the consumer is the U.S. economy with consumer spending comprising over 70% of GDP. If the consumer does well so will the economy. And this railroad is the best deal he could find to "bet" on the economy? Give me a break media.

A bet on the economy is buying a company related to the housing industry or a service company.

I heard Buffett say he thinks this country will prosper in the future. Prosper isn't that strong a word though really. Buffett is an extremely candid guy to say the least. Why wouldn't he have said do extremely well or better than ever. He was saying this in the heart of the panic of 2008 and 2009 but I think one has to be skeptical of the context of those statements possibly because he is one of the most important statesman.

A low dollar and high fuel prices makes railroads an alternative for shipping to Canada and across the country. In that case it is a strong bet on Canada's economic future. I think that Canada will possibly be doing better than the US because they have the oil, healthier banks and financial institutions and more stable currency.

1. Yahoo! news

another source
http://www.usatoday.com/money/industries/2009-11-03-berkshire-bnsf-buffett_N.htm

full disclosure:no position in BRK-A,BRK-B,BNI thinking very seriously about an all in bet long on crude oil and coal long-term

Small-Cap Stock MSN

2009-11-12T02:41:00.007-05:00

Emerson Radio MSN is still doing very well and just reported second quarter results which were pretty good from looking over the press release. Quarterly revenue wasn't that great but overall on the year they are doing well. The stock only has a market cap of about $50 million and being a penny stock this size there probably isn't a line of institutions ready to pile on. I think it could continue to trade higher slowly though as it has all year.

In the next couple days though I think it could pull-back toward the upper bollinger band like it did after the last huge pop.

full disclosure:no position

The Market Looks Broken

2009-11-02T03:58:00.006-05:00

I've been telling some people close to me to go ahead and liquidate stock index and mutual fund positions they don't need for a super long time frame like 10 years plus. There's no reason I feel to hold gains that have been had since the March lows. The risk reward isn't there on many levels in my opinion. Valuations aren't priced for anything other than a quick recovery. We still don't know how sustainable this "shot" the government has given the economy will be. The operation may have been a success but the patient still could die.

I see all this and the negative price action in many indices and there isn't a good reason right now to sit on gains. I think any rally is a good selling opportunity. If it even comes...

New Blog

2009-10-29T20:32:00.012-04:00

Like I was saying earlier I'm going to put my technical stuff and technical trades on another blog now and keep this one mostly just fundamentals and net-nets. I'm actually going to do a new post on StockPursuit.com here soon on net-net's and one in particular that just surprised me.

DynamiteStocks.com is going to be the other blog.

Emerging Markets ETFs

2009-10-29T02:23:00.005-04:00

I was not 100% sure that the top was in in that last post a couple hours ago. I'm leaning much more toward the highs are over now and we've seen the top. I don't think we see new highs anytime this year probably going off what's happening now. I just have to be bearish now. The Russell 2000 small cap index has cracked support. The uptrend is over.

Remember we cracked in July on the major indices and I called it a bear trap which it was and got bullish on the indices. That was a powerful signal. Here are small-caps. For the countries sake I hope they can find some support soon and we trade sideways for some months but this just doesn't look good at all.

Another thing is Shanghai cooled off a long time ago. I guess they will lead us again. EEM is more broad but jeez this kind of sell-off on that kind of volume usually doesn't end well. This is very bad.

Emerging Market ETFs EEM EDZ EDC are at the top of my watchlist. These are some of the most volatile 3 X ETF's right now and I think this will continue for awhile. The bounces should be volatile too.

full disclosure:no positions at time of writing

U.S. Stock Market Analysis

2009-10-28T22:21:00.015-04:00

This runs uptrend is still intact but we are getting very close to possibly seeing some potentially dangerous conditions play out. The bull trap I pointed out on financials is not very reassuring when you take what could happen here in the next couple days.

I just noticed some hammers at the bottoms of the last pull-backs. Bulls will want to see some big hammers soon.

There should be a bounce or atleast an attempt to pick up some stocks at this level I circled on the Naz. If not look out! If the Nasdaq closes for a couple days below this support line the rally from the March lows is over. The momentum will be over. How much more downside could play out? I don't know. We could test the March lows or just go sideways. I'd be more inclined towards sideways or slightly down but all this is getting ahead of the next couple days. These next few days are very important. There could still be a new high soon if the support is broken but that doesn't seem very likely to me with the current economic and fundamental indicators today.

Uptrend still intact. Bigger selling pressure today. The bounce could be huge or the attempt could just get slaughtered. I expect some sort of bounce tomorrow.

full disclosure:no position in Nasdaq or S&P 500 ETF's or futures contracts or XLF

XLF Financials ETF

2009-10-27T06:01:00.011-04:00

I did some TA on the financials with XLF a few days ago. This turned out to be the right read as far as the further breakdown coming. My timing was a a couple days off because I was holding that trade as if the VIX was still over 50. I think this move will probably get a retest of some support if not turn into a short-term major top.

Worst Case For Bulls
That's a possible double top with a failed signal forming if this move prints 13.50. No reason to get ahead though but I am just keeping an eye on that if it happens. I think this down-slide the past couple days might have caught some people off guard after that rebound three days ago...or maybe they're just getting in the Nasdaq leaders.

full disclosure:no position

Nyer Liquidating

2009-10-27T00:05:00.010-04:00

Nyer Medical NYER is planning to liquidate after they sell their pharmacies for around $19 million. NYER was a chronic net-net for a long time I looked at a couple years ago. They've only got $5 million in cash on their last balance sheet. Let's say they get the full $19 million that's about $24 mil in cash less a whopping $10 million in total debt. This is assuming nothing changed from the filing date.

The $7.5 mil market cap doesn't seem like much of a spread. They do have $6 mil in receivables. I think a conservative crunch would put liquidation value around $10-12 million but this is just a really quick back of envelope. I don't think the stock even traded that high. It only got to 2.45 or about $9 mil. I don't think I'll be playing this right now but some of you all might want to do some more research and number crunching. It seems like there could be a 15% or so spread there.

The price action is sort of weird for a liquidation news. It opened up the day trading over $2 a share and hit a high of $2.40's per share then steadily sold off all day and closed at 1.86. I imagine the selling pressure was from bitter bag-holders who bought in over the past few years and were happy to dump their shares with the stock up over 100% on the day. That is just market forces based on past price action aka technical analysis.

full disclosure:no position

Stocks In Play

2009-10-25T20:27:00.031-04:00

I'm working on setting up another site for my more frequent trading watchlists. Stock Pursuit will continue to be my best net current asset stock(net-net) picks, my occasional value ideas and macro commentary. The new blog will strictly be trading with technical analysis. I'll keep using fundamentals and technicals with the net-nets because it is working very well. I'm going to probably use WallstreetJunky.com for the new domain name for now. It's one of about a couple dozen I have had for awhile and have just been squatting on.

This week I really think GBE is going to continue to breakout and the next stop is $2.80.

NXTH is going to have a one day high percentage drop very soon. I'm guessing atleast -20% or more like a death spiral.

Some others I have on watch are PWER ACPW with a long bias

full disclosure:no positions

Shorting Financials

2009-10-21T18:55:00.004-04:00

I'm shorting financials over night. I'm long FAZ at 19.85. I had thought about shorting as soon as they filled the gap about two days ago but it didn't seem safe enough then. Financial stocks look like toast here. We've got a bear trap. A really ugly bear trap. A break of support and a shooting star here as it looks like everybody hit the panic sell button or either program trades triggered. When it cracked that support around 15.00s there was a pretty big move and no flag. That's why I feel pretty good holding overnight. I'm not trying to get much more out of it. I should be selling tomorrow if there is anymore weakness. The maximum potential downside for XLF is 14ish though. I like this set-up.

full disclosure:long FAZ

Watch List Adds

2009-10-21T02:09:00.006-04:00

Just added these stocks to my watchlists

Long Bias
TLR PLUG RAME RDCM ZYTC HDVY ICOP ROIAK-still a top watch

Short Bias on breakdown
AWSL AUTC VRMLQ

AWSL is looking pretty supernova. Could be good long if continues too along with AUTC

full disclosure:no positions

Stock Pursuit Survery

2009-10-19T23:18:00.001-04:00

Please do me a favor if you don't mind and take this super quick survey if you read the blog regularly.

Gold Stock & A Survey

2009-10-19T22:27:00.006-04:00

Please do me a favor if you don't mind and take this super quick survey if you read the blog regularly.

I put this gold stock GRZ on my Twitter last night because of the volume at the end of the triangle. It popped up to 1.05 today and I think this could have some good upside if it holds $1.00 a share.

I hadn't traded an oil ETF in a long time and somebody left a comment that DXO has actually been closed. I might use the ProShares double long oil ETF UCO as a substitute vehicle if I play oil long. I'm going to take my loss in QDEL if it doesn't have a strong recovery tomorrow.

full disclosure:no positions

Time To Buy Crude Oil?

2009-10-18T21:22:00.011-04:00

I was watching crude oil over the last couple weeks but this last week I got distracted with some other stocks like my QDEL buy and I missed the easy oil trade. I wasn't watching for a breakout. Let's go back a second. Before gold broke out I knew this chart pattern below was the lense to look at it through. Well, a week or two ago I saw the same exact pattern forming in oil. And fundamentally oil and gold rise because of inflation.

On this chart below I was expecting heavy volume to come on the first move before a breakout. It wasn't there. Usually when a triangle pops it is on volume like gold was. There were two hammers back to back leading right up to the breakout though that I missed. There actually is a triangle that this move has come off of just not the long one I was expecting.

Time To Buy Oil ETFs?
For the very long-term it's a good idea especially on major dips. But holding oil contracts outright vs ETFs is better. For holding for months at a time the etf USL should track oil better vs USO because of the contracts. USO has underperformed oil because it holds short-term contracts. USL holds 12 month futures contracts.

I doubt there is that much short-term upside left on this move but I wouldn't be surprised to see a couple more days before some consolidation. I'm not sure I will put a position on on another breakout because I play oil with ETFs like the double long DXO and I want to see a lot of clear upside that I can swing trade. Maybe I'll take a stab if bigger volume comes here this week.

full disclosure:no position in DXO or any oil

Peerless Systems PRLS

2009-10-17T00:05:00.037-04:00

I posted on Peerless Systems PRLS really quickly on Thursday after glancing over a couple things. I just wanted to get it out there quickly for whoever might have been interested. Looking more closely there are some more good things here along with the stability in cash. Activist investor Timothy Brog who I had the pleasure of speaking with briefly has gotten on the board of directors as chairman. No doubt, the company is now moving in a better direction. In 2008 they sold about all of their intellectual property to Kyocera-Mita Corporation for a pre-tax gain of $32.9 million along with 38 employees. They have a lot of cash to work with to get value out of the company be it an acquisition or some other means. There definitely looks like there is upside to the stock.

Background from 10Q
"The technology we license has addressed the worldwide market for printers (21-69 pages per minute) and multifunction printers (“MFP”) (21-110 pages per minute). This market has been consolidating, and the demand for the technology offered by us declined throughout fiscal years 2009 and 2008.

The document imaging industry has changed. Lower cost of development and production overseas increasing complexity of imaging requirements has resulted in us not being able to effectively compete in this environment. As a result, we sold our intellectual property and transferred 38 of our engineers and support personnel to KMC. Although as a part of the transaction we have retained the right, subject to certain restrictions, to continue licensing and supporting the imaging technology that we had previously developed and to continue to license third party imaging technologies. We are currently pursuing other potential investment opportunities. The strategy calls for aligning our cost structure with our current and projected revenue streams, maximizing the value of our licensed back technologies and expanding our business through investment opportunities.

Our contract with Adobe expires on March 31, 2010. We have had discussions with them to either extend the contract or enter into a different agreement with them. Our discussions have not resulted in an agreement. In order to maximize the value of our Intellectual Property and relationships with our clients, we are exploring how to transition our customer base that currently utilizes Adobe technology to another technology provider."

-source,http://yahoo.brand.edgar-online.com/displayfilinginfo.aspx?FilingID=6797058-787-90679&type=sect&dcn=0001144204-09-048137

full disclosure:no position

Small-Cap PRLS

2009-10-15T23:25:00.012-04:00

Net-Net Peerless Systems Corp. PRLS

Check out my updated more detailed look

Net Current Asset Value
$49.22 mil

Market Cap
$38.7 mil

PRLS's cash has been very stable the past couple years and even increasing. $47 million of that $49 million of NCAV is in cash and short-term investments. If I could get one guess about the direction management is going with this company it would be a liquidation because they've reduced liabilities consistently since 2008.

This company is simply just slowing down. Revenue is down from $30 million in 2007 to $10 million this last year. It doesn't seem like there is that great of a long-term trade. Sort of like a EFJI that I predicted had upside as far as $2.00. Following my post on the 27th of September it ran from 1.30s to 1.97. Just as my magic 8 ball predicted $2 was a ceiling. The next level of technical resistance on PRLS is 2.85 a share right now.

full disclosure:no position

Stock Watches For Earnings

2009-10-11T17:48:00.025-04:00

I guess everybody knows this week is a big earnings week. Just to keep the cycle going I'll say how well my last watchlist did like I have been doing and hopefully this amazing streak will continue another day. I mean the streak of me picking four or five stocks and one of them is a top percentage gainer on one of the major exchanges. This has happened atleast three times out of the last seven trading sessions or so. I think the streak is two days back to back even too. ROIAK ran 60% just a couple days after I posted it I think.

Last Sunday I posted up CMLS and it was a top percentage gainer on Monday. I Forgot the run? I think it was 30%. YONG was nice to. On Wednesday I posted on MMG and it ran 60% Thursday. On Thursday night I posted the set-up on Sunrise Senior Living SRZ and it ran 44% on Friday. The combined gain of Fridays watches was 69%. I don't think I mentioned it in a post but RAME a stock I put on my Twitter popped big double digits a day or two after I posted it a week back or so. I think there are others but anyway here are my top watches for Monday.

EDIT: LEE 18% on day. CMTP 18% on day

GRAN WNC OCLR BLC

lower priority but still high watches
MTSN LEE BEE MNI CMTP

full disclosure:no positions at time of writing

Swing Trade Set-Ups

2009-10-08T23:31:00.017-04:00

My gold stock watch MMG from yesterday popped 60% today. I don't expect most of these to pop over 20% in one day soon but who knows. Net-Net FSII just broke out again and has some good technicals going for it. Most of these watches below are suited for a swing trade with the stop loss right below the trend lines or fairly loose. Ideally these might be good entries on slight pull-backs if they happen to come quick or on the next push up depending on the next move.

This is a flu play. They sell point of care flu tests. I think EPS guidance maybe isn't taking fully into account the swine flu panic by offices ordering more product.

The ticker is CEMJQ formerly CEM I believe

I've talked about this baby boomer retirement play a lot in the past year. Very bullish chart.

Trades in a clear trading range. 16.90s is sell target

Same stock longer-term

A watch for breakout from this trading range.

You know the bulls are in control when consumer fashion apparel stocks like American Eagle AEO are breaking out on gaps on huge volume. No doubt retail sales results had a hand in this. It's the direction the market goes on the news that is important. Hey, so what if it is from 0% rates and trillions in stimulus. I'd be happy to long AEO on retest of gap about 17.40ish if it holds. It might just take off though tomorrow but I doubt it. It still would be a spec swing trade though.

full disclosure:no positions

Gold Stocks List

2009-10-07T00:03:00.056-04:00

Gold has just reached new highs of $1,043. I predicted the breakout on gold in early September and presented my thesis for anyone who reads the blog. Like I was looking for and said,"Any congestion would be bullish." Gold did congest around the former highs and that was the signal along with the triangle that telegraphed the move.

Gold Stocks List
Some gold stocks to buy possibly I am looking at for potential quick trades soon are as follows. The following list is stocks I have picked out solely because of their technical price action.

GRS had a breakout gap on volume.

Steady riser

New Gold also had a gap on volume but it needs to hold $4.30 to look like a buy.

Metalline Mining looks like it might be late to the party. Looks good on a technical breakout.

Why buy gold stocks? Gold is a commodity that usually has an inverse correlation with the United States dollar. If the dollar falls because of inflation or hyperinflation its purchasing power thus falls and any safe haven for capital is attractive to invest in. This is why you would want to buy gold stocks. The last time the United States experienced hyperinflation was during the 1970s. Gold went on a tear and was a great investment vehicle during those times.

More gold penny stocks for trades possibly.

full disclosure: no positions in any stocks mentioned at time of writing

Follow Up On Stock List

2009-10-05T18:46:00.006-04:00

That was some list from yesterday. Chinese agriculture stocks like YONG must have all had a good day. YONG had the gap up and run I was looking for. CMLS was a top gainer today etc. Other watches were amazing like ROIAK I've had on watch ran 46%. This shorter trading list for the week wasn't quite as impressive as my hand picked watches. I'm not sure which scans to give my priority now. I'll probably continue to have a lot on my watchlists. I think using call options on some of my top set-ups might do really well.

I think maybe there is a couple people interested in these watches, I don't know. I might put up new lists this week if I make any.

full disclosure:no positions

Chinese Agriculture Stocks & More

2009-10-04T19:32:00.017-04:00

I used a new scan and found some pretty good stocks in play. Check out the volume spikes on these. TTNP from an earlier post is still one of my top watches.

Chinese Agriculture Stock YONG
YONG hit the trend line 3 times and this last time somebody really showed their hand. Looks like a long on breakout. Might not retest that trend line anytime soon. There's no resistance on this chart to.

I checked out some of this companies fundamentals. They are...

into the research and development, manufacturing, and distribution of fulvic acid based liquid and powder nutrient compounds for plant and animal feed used in the agriculture industry in the People's Republic of China.

Gangbuster's!!!

You would imagine Chinese agriculture stocks doing pretty well in the future. They grew earnings per share 18% this year and are looking for 46% next year. EPS for next year is 1.00 per share and has just been boosted which is good. So we've only got a PE of 8 and very strong growth coming likely in the years ahead. The longer term PEG ratio is something like .30. Very attractive. The balance sheet is healthy with a current ratio of 3 and total debt to equity is just .47.

The only thing I don't like about this stock is it is already up a ton this year. On the other hand the valuation should still look cheap to a lot of people.

If you look closely at this chart and the next one you can see how usually every time it gaps up it runs. Let's keep an eye out for another gap breakout.

Media company CMLS. Probably a set-up for a buy on breakout. I missed the two hammers back to back off trend line on flag. This volume spike looks pretty telling somebody will take it over resistance I think.

Mining stock LVCA. Big volume on breakout. I think the spread will be decent and the chance of follow through on this move looks very good.

full disclosure:no positions

Watch List

2009-10-02T04:26:00.009-04:00

I added a couple of stocks to my watchlist. I added ROIAK DANR TTNP. I put a conditional buy order in for DANR. If it hits $.19 I hope to get filled.

TTNP looks like it might have a pop over $1.75 coming. TTNP couldn't go over $1.75 three times. Any pure funnymentals guys/gals. count it. Random chance or an emotional, important price level? Once it breaks over this resistance level I am betting it will be in play. I probably will put a conditional buy market order for $1.80 in here sometime before the market opens. The ascending triangle helps to. Almost always volatility after a triangle.

full disclosure:no positions at time of writing

Short Stock Market With An ETF

2009-10-01T18:47:00.012-04:00

I chickened out on my idea to short real-estate with SRS. I was spot on though on the further downside that seemed to be coming after the flag I was looking for to get short. I feel like going here with an ETF to short an index again. I like the volatility in SRS. It's prudent to wait though for more fundamental signals and technical breakdown though. So, I think I will. I think my valuation thesis makes sense and that as economic numbers will probably continue to show that this housing depression and economic recession are different than any in recent history. In other words it's hard to just get back to normal after a credit and housing bubble that lasted for many years. The only problem with a short trade for a couple days or so though I think is it could be possible that when the S&P and other indices finally correct a little the downside might be limited and they just trade sideways for weeks and months.

I was surprised and glad to see that Ben Bernanke said that businesses must be allowed to fail. I don't think he has the right framework for stopping them from becoming systemic though. I haven't read or seen his whole presentation today but it seems like he just thinks if you raise capital requirements and regulate to big to fail can be avoided? He needs to study some history if he thinks investment banks and commercial banks can exist together without major consequences to the system. Long Term Capital Management should have failed in 1998. Breaking up these ridiculous giants like Wells Fargo and Bank of America is the kind of reform that can allow firms that leverage up to fail. There's a reason my 1907 crash paper is second in a Google search for '1907 crash' only to Wikipedia.

I think our system is set up to fail now probably unfortunately though. I might post more on this as time goes by. Not sure if I should buy gold and silver bags or prepare for bartering when we can't afford these interest payments and/or they get raised.

full disclosure:no positions

Swine Flu Stock Alpha Pro Tech APT

2009-09-30T20:51:00.005-04:00

CNBC did atleast one long segment on APT this morning as part of a swine flu segment. Here is the CNBC article on them to. This $130 million market cap company had heavy volume today on a gap up. I'm going to watch for a possible double top. It looks like the chart sets up for a short if it fills this gap. The chart is unclear to me until it retests that high. It very well could continue breaking out though because of this gap and volume. Though the past two times is has a gaped up it has pulled back immediately this year.

full disclosure:no position