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Where is the love for Ben Graham's Security Analysis? If a shouting chimpanzee like Cramer can get three of his books in the OP, what about the book that started it all? Edit: Also, http://www.sec.gov/edgar/searchedgar/webusers.htm lets you search SEC filings, including the all-important 10-K and 10-Q annual and quarterly reports. Without these you're just wandering in the dark in my opinion. Hobologist fucked around with this message at 07:35 on Jan 28, 2010 |
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Jan 28, 2010 07:27
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dv6speed posted:I'm in cash at the moment until poo poo settles down and am looking for short term trades... which I'm terrible at. Then don't do it. The markets will still be open tomorrow if you don't trade today. Of course, the last couple of weeks the market might have been better off staying closed.
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Jan 28, 2010 22:40
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destructo posted:Well, I got greedy on GNVC and I'm back to about $800 profit down from $5000. I learned my lesson on small-cap biotechs. Yes, who would have thought that a company that's never earned a profit would be risky...
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Jan 31, 2010 23:37
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lazybrain posted:Anybody interested in credit card stocks right now? It seems like the big guys are doing well, however bank-attached firms like AMEX and DFS are looking like solid short opportunities. I have always liked Capital One. (Well, actually that's not true; I didn't like them when they fell from 80 to 30 but I liked them fine when they went from 30 to 60 and I got out.) Their management team seems to show a suitable sort of opportunism; they have been buying banks to diversify their funding sources away from the securitization market, and the first bank they bought they threw away its subprime mortgage origination unit even back in 2007 before anyone knew what a subprime mortgage was. I can't say they're definitely underpriced right now, but my sense is they're on the low side of fairly priced.
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Feb 2, 2010 06:11
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Death to the chart people! Death! Well, maybe that's a little harsh, but I like being a fundamental guy.
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Feb 6, 2010 03:45
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dv6speed posted:I love this phrase. [fundamental arbitrage] Then surely you should love the concept of a stock selling for less than its net working capital. They do exist here and there.
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Feb 6, 2010 05:41
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dv6speed posted:Who doesn't love that? I don't care what kind of investor or trader you are... you will buy that one. Well, in the words of Jeremy Clarkson, I've been on the Internet, and I found this.
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Feb 6, 2010 07:31
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TheChimney posted:P/E is price over earnings per share. It can be shown as either trailing twelve months(ttm) or as a forward ratio. P/E ttm refers to price over EPS accumulated over the previous twelve months. Forward P/E refers to price over next year's anticipated earnings per share. I have to assume that Limit Up is talking about the avoidance of value traps. P/E is correctly defined, but in terms of usefulness in valuation the canonical view is that it cannot be considered separately from growth. Damodaran of Damodaran on Valuation, one of the more useful toolbooks on valuation in my opinion, teaches us that the correct earnings multiple is essentially 1/(the market's required return on equity - expected growth rate of the company), both expressed as a decimal. This equation is simply the convergence of an infinite series of payments being discounted to present value. Many market participants like the PEG, or properly speaking P/E/G, but the problem is, as Damodaran notes, value, P/E, and G are not in a linear relationship, although for the values of P/E and G that are likely to be encountered in the real world this doesn't typically become an issue, particularly since PEG is commonly used for relative valuation. It is, however, his contention that no company can have a permanent growth rate higher than the growth of the GDP of the places it does business, otherwise it would just be endlessly expanding its niche and taking over more and more of the entire economy (see also Goldman Sachs.) There are slightly more complicated pricing models in his book that take into account. It is also important to consider that the earnings component is highly idiosyncratic and for most firms varies from year to year, and negative earnings makes a lot of these equations fall apart. For this reason, most value investors estimate a firm's "earnings power," by looking at a firm's earnings history over the length of at least a business cycle and, of course, apply their own perceptions of the business's prospects (consciously or not). For example, it has always annoyed me that many financial companies were grouped in the value category in 2006-7 simply on the basis of their low P/E ratios, when in reality the risks inherent in their operations simply could not justify a higher one. This has perhaps caused an undeserved tarnishing of the reputation of value investing. Join us fundamental guys. Do not be afraid.
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Feb 9, 2010 08:42
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TheChimney posted:From what I understand, you shouldn't be to quick to dismiss relative valuation methods(comparing P/E, PEG, EV/EBITDA, and other ratios to competitors and industry averages to find relatively undervalued stocks) in favor of discounted cash flows. Tiny miscalculations in the discount rate or other inputs to a DCF model can have huge impacts on your valuation. Because of this, there are still quite a few managers and analysts who favor using multiples to value stocks. FCF, not DCF. FCF is said to be more useful than earnings; it is earnings plus depreciation and amortization minus capital expenditures, and relieves certain businesses of excessive depreciation charges. Qwest, for example, looks more attractive when you put back about $800 million in excessive depreciation every year. And I take the position that a multiple of earnings power is an absolute measure.
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Feb 9, 2010 21:20
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You can't learn what you need to know about a company in 10 minutes. It takes at least half an hour. Allegiant doesn't engage in hedging of its jet fuel requirements, which is a bold move on their parts since it's a bit under 1/3 of their operating costs this year and about half of their costs last year. In fact, savings in fuel costs is essentially equal to their operating earnings growth versus last year, although that relationship does not hold true for earlier years. The leisure travel situation mentioned by the other poster does not give confidence, what with people not having a lot of money for leisure and with Las Vegas and Orlando representing more than half of their flights and both being big on economic troubles and foreclosures. I also note that over the last nine months the company purchased a good $106 million in short-term investments (financial instruments), and now holds $74 million of state and other municipal obligations, and the majority of their total investment holdings falls due between 2010 and 2013, a period future economists may be calling the Great Municipal Bankruptcy Wave. Although the company is authorized to engage in share buybacks, it is not using this money to declare a dividend and, let's face it, their shareholders know where municipal and Treasury bonds are sold, so why would they pay the management to buy them instead? Ironically, a big fat special dividend is what would probably shake some of the shorts off. I wouldn't short this company, but I'm not sure about buying it either. Fuel cost savings produce growth once but not on an ongoing basis, and I don't know what the price of oil will do or whether the price of jet fuel can be passed on to their customers (since some of their competitors do hedge (but they claim to have very little competition on their direct routes (but no doubt more competition on other routes to their destinations))).
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Feb 11, 2010 09:48
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POT has a P/E of 34. Go with Compass Minerals (CMP) instead. They make potash AND salt. Everyone likes salt, don't they?
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Feb 11, 2010 22:28
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LactoseO.D.'d posted:Guess I should spend more time in the 10Q and less going through old headlines. Thanks Hobo. ALGT isn't a doomed company; just an overpriced one. If you take 2008 as the "correct" level of jet fuel prices they have a P/E ratio of about 30. I think the shorts' main theme is a growth company that's hit the growth ceiling, and buying bonds instead of airplanes isn't really helping the company's case. I like shorts, but there are plenty of worse (better) candidates out there.
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Feb 11, 2010 22:30
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TheChimney posted:Do you have a source on this? I would be interested in reading more about it. Source? Lots of state governments are feeling the squeeze, particularly since many of them are required by the state Constitution to run a balanced budget every year. And since the public seems to have bailout fatigue, it is a big ask to get the federal government to step in and make good a significant portion of their deficits. As a result, the worst-case scenario is that states become much worse places to live, which further depresses their tax revenues, etc., touching off a vicious cycle.
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Feb 12, 2010 02:14
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Fuschia tude posted:Investing a big portion of your assets in any single stock is a really bad idea. Much of the movement of any stock is essentially random noise; you're getting a lot more volatility, but unlike the small-cap and value premium, it's uncompensated. In other words, you can expect significantly lower return in the long term compared to a similar index fund. This view is largely confined to academics, and among value investors and other people who know what they're doing, this is not necessarily the case. So what you are doing with Annaly? Annaly purchases mortgage-backed securities from Fannie, Freddie, Ginnie Mae, and the Federal Home Loan Banks. The first two have received a blank check from the US government to cover any losses, the third one was always guaranteed, and the last one would probably get bailed out if necessary too. So you're not really exposed to the real estate market because the government has already swooped in to protect you. Annaly, however, buys these securities on a great big fat margin. They own $70 billion of them, but only $9.3 billion represents equity. As a result, if the guarantees are withdrawn too early, the carnage could be epic, or then again it could not, but it's a risk. Your real exposure, though, is to interest rates. 3/4 of their holdings are fixed rate mortgages, which pay a rate that is much higher than Annaly's own interest cost. However, if interest rates go up, this large spread will shrink, causing that 17% yield to diminish rapidly and possibly even cause the firm to lose money. Rising rates also delay prepayments because refinancing becomes less attractive, and it also decreases the market value of the fixed-rate loans, which, in extreme cases, could result in Annaly getting a margin call. Annaly has $20 billion in interest rate swaps to protect themselves from this situation, and presumably the Federal Reserve will not be too precipitous about raising rates, but the fact remains that at some point rates will go up and the yield will drop. For adjustable rate mortgages, this isn't so much of an issue because the rate of the mortgage adjusts to rising interest rates after a lag of <1 year, subject to a limit of typically 1% a year and a ceiling on the rate itself which I don't think we're close to hitting in most cases. So, although the super-low cost of funds can go away, the holder of adjustable rate mortgages on margin is always, over the long term, entitled to the premium of the adjustable rate mortgage over the reference variable rate. For this reason, Capstead Mortgage (CMO), which invests only in adjustable rate mortgage securities, is probably better off if interest rates go up a lot, and curiously they also have a 17% yield. But for either company, those yields last only as long as interest rates are unrealistically low.
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Feb 17, 2010 20:39
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Limit Up posted:Horrible news A/H. Things are going to hit the fan tomorrow. Discount window raised and Fed Funds rate is next. Right at resistance too. They're hoping the news gets digested over the weekend to prevent further collapse. Whether it works we'll see Monday. Monday will be huge and if they want this rally going strong, they better have the printing presses going Monday. Did things hit the fan today? I can't tell.
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Feb 20, 2010 02:23
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Limit Up posted:No they didn't. So what's your next move? I've been giving some thought to Chiquita Brands, but I have to satisfy myself that they can handle a future increase in the cost of shipping first. Edit: I think they can. Hobologist fucked around with this message at 03:13 on Feb 22, 2010 |
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Feb 22, 2010 01:15
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Rentech (RTK) has a market cap of 220 million and has an average volume of 2.6 million shares a day. But it's still a penny stock by price and by the nature of the company itself.
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Mar 1, 2010 21:02
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f2a posted:This thread: This isn't even fooled by randomness. It's fooled by small sample sizes and a big fat rally. Fooled by randomness would be more like Victor Niederhoffer's claim that "I have traded about 2 million contracts in my life thus far, with an average profit of $70 per contract....This average profit is approximately 700 standard deviations from randomness, a departure that would occur by chance alone about as frequently as the spare parts in an automotive salvage lot might spontaneously assemble themselves into a McDOnald's restaurant." Didn't stop him from blowing up two hedge funds, though.
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Mar 1, 2010 22:18
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ElehemEare posted:This, so much this. My coworkers thought I was crazy for buying into Chariot Resources at 31c/share, even though they had a solid copper project and were dirt poor from getting it to that point. The OP posted:May I also suggest that any gloating must include a link to the post saying when you bought or sold the stock? Also, if they were dirt poor from getting the copper project going, what if the copper project were unexpectedly delayed a few more months? Did you do any sort of stress testing or anything like that?
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Mar 2, 2010 22:52
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ElehemEare posted:The project was delayed indefinitely until a buyer could be found. There was no way Chariot was going to be able to raise the capital, or had the expertise, to build and commission it themselves. As such, they stopped spending any significant capital and sat on their reserves until a buyer came along (they developed the project to shovel-ready status; permitted with positive feasibility studies, just awaiting funding). They may/may not have severely cut their executive compensation in early '08 as well. So they couldn't get the funding to operate at a profit, but they could convince a buyer that the mine could be bought and operated at a profit. Something doesn't compute.
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Mar 3, 2010 04:42
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Droo posted:I am curious what the investor types think about a couple specific stocks. I wouldn't be trying to trade these, but start accumulating shares to hold for as long as the company doesn't do anything majorly stupid/highly unusual. Well, Annally's P/E ratio is less important that most stocks, since Annaly is basically a portfolio rather than an ongoing business, so its results from one year are not really tied to the results from next year. I wouldn't worry about the federal government withdrawing its guarantee of Fannie and Freddie, at least not any time soon. The company makes its colossal spreads and dividends because interest rates right now are unrealistically low and are destined to go up. When that happens, the dividends will evaporate and the company's earnings might even go negative. For this reason, I would prefer a company like CMO, which has the same strategy as NLY but invests solely in adjustable rate mortgages. As a result, they are less exposed to interest rate movements, and their dividend is more sustainable, although it will also probably drop when interest rates return to normal.
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Mar 5, 2010 00:01
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ElehemEare posted:They couldn't get the financing to build the mine because they're a bunch of exploration geologists who developed a resource to the point that you needed to spend half a billion dollars to see profit. They also completed their studies in April '09: not exactly the best time to go to a bank and ask for US$650 million in debt financing. Mind you, the studies were pretty solid; producing at the (independently) projected costs of US$0.88/lb Cu would turn a profit even when prices bottomed out last year. I admit I'm not an expert in mining (or economics), but it seems kind of wasteful that you have to identify a mining property, go into the equity markets, buy it outright, and then do the analysis. If the business is so dependent on talented geologists, would it really be impossible to get the geologists in there before the IPO?
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Mar 5, 2010 05:35
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You all remember how happy I was about CONN's performance? Well, it's all the way back up to where it was when I bought it. 
Hobologist fucked around with this message at 21:38 on Mar 8, 2010 |
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Mar 8, 2010 20:59
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Does anyone know a site that includes free cash flow (earnings plus depreciation minus capital expenditure) in its statistical data about stocks? It's such a useful tool and no one seems to have heard of it.
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Mar 12, 2010 20:38
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LactoseO.D.'d posted:Morningstar.com has that. Sweet, thanks.
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Mar 13, 2010 01:05
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Well, if it makes you feel better, I'm down today.
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Mar 16, 2010 21:38
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Ah, Qwest. I suppose a price/free cash flow ratio of 5 has to get noticed eventually.
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Mar 17, 2010 19:13
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Do my eyes deceive me, or is Endwave (ENWV) selling for less than its net cash? Am I missing anything?
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Mar 18, 2010 18:23
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LactoseO.D.'d posted:Consistent operating losses? That's all I saw in my 5 minute check anyways. Well, obviously, but a lot of that is R & D. I'm just wondering if they can start operating at not a loss what else could be lurking in the wings. Edit: Aha, I have missed something. They repurchased $36 million in preferred stock since their last balance sheet, so instead of buying $66 million for $26, you'd only get to buy $30 for $26. Still, management resolving a $45 million liquidation preference for $36 million suggests that they're up to something. Hobologist fucked around with this message at 08:42 on Mar 19, 2010 |
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Mar 18, 2010 20:14
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You're all very quiet today. You must all own the same miserable crap I do. Ugh, what a day.
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Mar 19, 2010 19:54
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Ah, CONN. Perhaps now I can break out the  and keep it broken out.Edit: I bought CONN because it was a net-net; it no longer is, so I'm out. Now I'm thinking about Mirant. Hobologist fucked around with this message at 20:05 on Mar 25, 2010 |
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Mar 25, 2010 17:33
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Poor ALN. So close...
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Mar 30, 2010 22:01
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Well, the trouble with ALN, apart from the fact that it seems to be still in the capacity-building phase, is that most of its revenues are in yuan, but it reports its results in dollars, which I'm using anyway (US dollars, not that Canadian monopoly money either). If the world manages to convince China to float the yuan, then it will take more yuan to produce the same amount of dollars, and that makes a P/E ratio of 6 not look so crazy. That is how it works, right? Edit: No, it's the other way round. Now I'm confused. Hobologist fucked around with this message at 16:06 on Mar 31, 2010 |
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Mar 31, 2010 05:47
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Consider also that KV Pharmaceuticals had to delay its SEC filings by almost a full year in response to FDA investigations (something you always want to see with a pharmaceutical retailer), which included a recall of essentially every product they manufacture. I find it unlikely that anything short of a Chapter 11 would repair the company.
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Apr 9, 2010 19:08
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Favorabilis Solitud posted:There is a lot of information for me to read still but I am trying to absorb as much as I can. I am looking for solid growth stocks. I would prefer small cap companies that are sturdy (as possible). However I am not sure where to begin. Plenty. Qwest, American Lorain, Air T, Breitburn Energy Partners, Chiquita Brands, are all some of my favorites. But I suggest you find out why before you buy them. Favorabilis Solitud posted:
Much as I distrust mainstream financial economics, I take their side in this issue. Where is a company's growth going to come from if it pays out dividends? A company is a growth company because at least for now it has a high return on its assets. Such a company needs as many assets as possible, and it makes no sense to pay dividends instead of acquiring more assets. When the growth terminates and the company is earning the same return on its assets as anyone else, then is the time for dividends.
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Apr 13, 2010 06:20
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Favorabilis Solitud posted:BBEP has fairly large negative profit margin. However I assume you are basing this one on the recent news of changing policies. When I see a negative profit margin like that should I go to EDGAR and see how it compares with the year before or the reasoning behind it? If it seems a fluke then it could be a positive otherwise because they will return or surpass past profit margins or they invested in expansion? No, I'm actually basing it on the effect of their future oil hedges being included in their income statement, but not the future income that's being protected by those hedges. Put back $219 million in unrealized losses and you'll find they did pretty well last year.
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Apr 13, 2010 18:42
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ChubbyEmoBabe posted:I wish this was my real portfolio. Well, CONN was part of my portfolio until recently, but I wouldn't buy Fannie Mae with stolen money. Go with CMO and some other mortgage securities companies that hold Fannie Mae's debts. Those are guaranteed, you know.
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Apr 14, 2010 22:30
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Indeed. When I buy a stock, it's because I anticipate it will go up in the next few months or years. My counterparty might be a day trader who thinks it will go down in the next few seconds. We can both be right and we can both be better off after the trade than before.
Hobologist fucked around with this message at 07:11 on Apr 15, 2010 |
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Apr 15, 2010 06:51
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There is a hypothesis that options writers, generally deep-pocketed financial institutions, have the clout to push prices closest to the point where the options holders will collectively make the smallest possible amount of money. I don't know that I subscribe to it, but some people like conspiracy theories.
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Apr 16, 2010 01:03
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SEC accuses Goldman Sachs of fraud So there is a crack in Goldman's armor, but I don't see why that should take the entire market with it.
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Apr 16, 2010 17:44
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