FOSL

If insider actions are predictive then FOSL is the epitome of insiders who know what they are doing. They managed earnings into their Q1 earnings miss, while selling off like there was no tommorow. Now they are buying. The company sucks (don't argue with me here) but you know what: it is going higher! As much as I hate to say it, it is a BUY.

UARM

Now I find myself looking into the mirror thinking, WTF was I thinking buying puts on UARM? Talk about stepping in front of a train. Lets think about what I did to myself today. I thought to myself, too far too fast. Am I right yes! Will the stock co-operate? More than likely not. Why would I do it then? In short, impulse, a feeling, a hunch...Is that what you should base your investing on? Sometimes YES! I bought a small position 4% of my portfolio of UARM Jan 35 Puts. I am already down on this position, partially due to my own error (always remember when trading options LIMIT orders and ALL or NONE Qualifiers are exremely important!!!!) I forgot to check the AoN box, partially due to a lack of patience, and partially due to the stock being an f-ing rocket ship.

So now I have to take another look at this position, tommorow I actually do not want to turn on the flashing lights for fear I may trade out of my position, but ideally what I want to do is have the stock break down a nice 5% and make a small profit. I will be honest I am extremely inexperienced with options and how they trade. I can handle stocks, I understand them, but the options are uncharted teritory for me. Lets see how this plays out.

UARM

Jan 35 Uarm Puts.

Lookin at it, may have to strike.

Just a thought.

SFCC

This is a quote from a comment below:

"Your right the stock is worth alot more than the current price. But how about doing your homework, before making snap judgements that "This is a very shady organization". Go to the SFBC website and read the independent counsels response to the sensational "newsarticles" put out by Bloomberg. SFBC was the victim of some tabloid journalism and a third world hedgefund that timed options and shorting of the stock. The "shady" part of the story are the perpetrators of this hatchet job."


Granted what I said was maybe not the most P.C. thing in the world, and if I had more time to write maybe I should have explained the situation a little better. The company has problems. Now maybe not all of the hatchet jobs are true, but I would be willing to guess that some of them are. I don't know if any of you have listened to the conference call the company held a few weeks back but it is by far one of the most entertaining Q&A sessions imaginable. Daniel Loeb, completely trashes the company, and so do many others. That call drove the stock into the ground that day. It was a short term buying opportunity. That is now gone. There is no more edge to be played in the stock. From here on out you need to know that this company really didn't "threaten to deport imigrants for reporting side effects". I dont know that. I don't know about any of the other accusations. The easy money haas been made, or is almost completely made. From here on out there is an increased amount of risk. Although I do have to maintain the potential reward may slightly outweigh risk right here. Also one more thing of note, look at the insider buying there, may be a pretty good indication.

That One Thing

In my brief time writing this blog, I have attempted to offer quick thoughts on how I feel about the market or a specific stock at a given time. Its not much, but in a way it helps me keep things together and hopefully someone out there reads this and benefits in some way. So in the spirit of helping everyone around me become a better investor I am going to offer one rule which you should stick by.

Never listen to tips, advice, etc. on your investment ideas.

Now you may say hold on a second, this blog writes about stocks should I listen to it? No. There is nobody better than you, to invest your money. Provided you have the time to do the research (and by research I mean read the 10-k's, q's, press releases, conference calls, articles, and familiarize yourself with that company's competitors, at a minimum) nobody will do a better job with your money than you. In general people are filled with bad advice. Its not intentional, they simply just don't know what to do with the market. If you buy a stock on a tip, prepare yourself beforehand to lose your money. Nine times out of ten it will happen. This has been the most expensive lesson I have learned trading. I have told people about my positions and they have said to ride it out, or talked me out of them, only to find out that I was right and they were wrong. Worse yet often times I have abandoned my own thinking and adopted the advice as if it was "the truth". Now I am not saying that all advice is bad, its simply that you are better than anyone else at investing, know that, and profit from it.

One last thing

Email me with any recomendations on how I can improve my site, any ideas are more than welcome. I love feedback. randommarketthoughts@gmail.com Thanks.

Vacation

Hey all, I am going on vacation for the next week. I would venture to say that not a whole lot will go on in the market over the next few days and if it does, I won't be watching actively enough to do much about it. So lets see, I will come back with the lessons I learned investing this year. Along with my opinion on GYI...hopefully...I haven't spent much time on it to tell you the truth. One interesting speculative situation I might advise you all to look into is SFCC. This is a very shady organization, with lots of problems. Barring no other problems the stock is worth much more than it is now. However, no other problems for this company is far from a probable outcome.

Great realmoney.com comment

From David Merkel @ realmoney.com:

So, as we watch GM fall, don't take comfort in the idea that because Mr. Kerkorian is invested in it, GM will somehow turn around. If anything, because of the size of his position, he is more trapped than other investors, because at his size, his selling would demolish the price that he would receive.

Good story on not always following big investors. Realmoney.com is a great site, I recomend that all of you subscribe to it.

GM + URBN

Continues its perpetual fall into the abyss. How does the CEO of GM still have a job? Honestly, someone needs to do some house cleaning and fire pretty much every single person in management. Not to be harsh, but if they don't we are all going to be driving Toyota's soon.


Other than that, I am looking to get back into a short on URBN if it can get a little higher. Right now I feel like it is poised to go higher, after a sharp sell off, but I hate the company and will recoup my losses soon enough.

GM

I am so happy I don't work for GM. Not only is it by far the worst run company in the DOW, but now they have come out with this:

http://biz.yahoo.com/rb/051215/autos_gm_salaried.html?.v=1

Yes, this is what you need to do to inspire moral. Not only can the company not make a car that people want to buy, run the company efficiently or control its own costs. But it pays a $2.00 per share dividend. By the way according to yahoo it loses $6.91. Granted I didn't major in math but to me that seems like a pretty shitty ratio to me.

To summarize, horrible management, worthless institutional holders, to tell you the truth before you buy this stock why don't you go outside and burn a stack of hundred dollar bills. This way you at least will get some sort of enjoyment from losing money.

Up Up and Away

This market is doing extremely well right now. I feel like everyone is going to be wrong about the Fed though and the market will be dead by March. In the meantime, I have a short term idea. Tomorrow at some point in time during the day I am going to short CAMD. When I wake up on Friday I am more than likely going to cover that stock assuming it acts accordingly. CAMD is not a good company. It has a mid quarter update in which I suspect it will say something to the effect of: "We are not a good company." Then the stock will go down. This is a trade. Keep it that way. Cover no matter what.

People evidently are very attached to CTT. Here are a few reasons why I would never own the stock looking purely at their press release.

Technologies, Inc. (AMEX: CTT - News) today announced a net loss of $0.3 million, or $0.04 per share, for the first fiscal quarter ended October 31, 2005, compared to net income of $1.0 million, or $0.14 per diluted share, for the quarter ended October 31, 2004.

The company doesn't make any money. Which always isn't a bad thing except they used to make money. Not a sign you want to see in any company you own. There are too many good companies out there to worry about crap like this one.

Total revenues for the quarter ended October 31, 2005, were $1.4 million, compared to $2.4 million in the same period of the prior year, a decrease of 1.0 million, or 44%.

Yes I love accelerating revenue growth. However, in this case its accelerating the wrong way.

Prior year results included $0.9 million for a legal award, including interest, and $0.7 million from a stock dividend received from one of CTT's investments.

OK OK maybe I was a bit too harsh on them with the revenue comment. Apparently none of last years revenue was legitimate.

The increase in expenses occurred principally as a result of $0.2 million of legal expenses incurred to defend the Company against two complaints filed against CTT by the Company's former President and Chief Executive Officer.

A history of shady executives is never a good sign. It is often too hard to change the culture of the company. Look at Nortel. Also look at the amount they spend, that's nearly 10% of revenue. Litigation of this sort is a clear signal to stay away.

The stock has a 30 mil market cap. Why touch something so illiquid? Wait for at least 100 mil market cap companies to hit your screens.

Look at this though: Cash & Equiv - 13,681,685 - Well at least you only have a 50% downside from here. Retained revenue growth is good though. SG&A skyrocketed. Poor cash flow this Q but normally strong, that's a good sign. The company can play with their earnings (if they had any) due to the structure of the business. To be honest I don't think they actually make any money. Its all settlements or "interest" from settlements. Good lawyers though. Look at the list of lawsuits this company is involved in. Do they even have a core business that they focus or is this a law firm?

Here is a lesson for you all:

We earn revenues primarily from licensing our clientsÂ’ and our own Technologies to our customers (licensees). Our customers pay us royalties based on their use of each Technology, and we share the fees with our clients. We determine the amount of royalty revenue to record when we can estimate the amount of royalties we have earned for a period, which usually occurs when we receive periodic royalty reports from our customers listing their sales of licensed products and the royalties we earned in the period. We receive these reports monthly, quarterly, or semi-annually. Since reports are not received on the same frequency, revenues will fluctuate from one quarter to another. In addition, revenues will fluctuate from quarter to quarter due to normal fluctuations in revenues of our customers, the granting of new licenses and the expiration of existing licenses, as in the normal course of our business, patents expire and revenues generated one year may not recur in the following year.

This is a text book loop hole for a company to manage earnings. Its called aggressive revenue recognition. Tough to prove but this company seems like it would have no problems using tactics like that.

Directors fees and expenses increased $78,000 due to an increase in the annual premium for our director and officers liability insurance, an increase in directors fees due to an increase in the number of meetings held, and an increase in the annual stipend paid to the Chairman of our Board of Directors to recognize the additional responsibilities and time demands of the position.

Do they really deserve that for driving the stock price into the ground?

Related Party Transactions
#1
Our board of directors has determined that when a director's services are outside the normal duties of a director, we should compensate the director at the rate of $1,000 per day, plus expenses (which is the same amount that we pay a director for attending a one-day board meeting).
#2
During the three months ended October 31, 2005, we incurred $1,147 of costs, including expenses, (principally travel, reported in personnel and other direct expenses relating to revenues) related to consulting services provided by one of our directors.


#1 = Bad
#2 = Not so Bad

OK I am stopping there because I am tired. Sorry about not proofreading this. I couldn't stand to go back over it. But in conclusion: I just tried to outline my takeaways from the press release and the Q. I could do much more. This is not a good company although I am convinced thatthis isntt more than 30% risk to the downside. Although I fail to see positive catalysts. Would I own it here: NO, at $3.00 its worth a look. At $2.00 its a screaming BUY (it wont get there though...damn).

Quick Glance at CTT

I initially looked at this stock as a potential investment. A reader asked me to take a look at it. The problem I had with the stock is that it struck out on nearly every one of the criteria I look at. EPS down. Litigation up. More problems than I care to list. I really kind of threw in the towel looking at it. I may pick it back up this weekend and do a more in depth review, but I cant see how anyone would want to own the stock or really even hold it. I hope this helps, but I would look elsewhere for ideas. In general I would look at financial stocks and cyclicals right here given the Fed's actions. The reader did suggest CTT as a long term good prospect. I just must say that there is no hurry here. Not a good company. Not a good stock. Why not just buy GOOGLE? Or even MO...

The Fed

The Fed will be raising interest rates again this week. Just another step toward killing the stock market. They will go to far. They always do. Do you think they will hit 6.0% on the funds rate? I wouldn't doubt it. Be ready to short the market if they don't change the language. Panic = Profits. How about LCAV and CAB, you heard it here first, some nice moves in those stocks.

New Stocks I am looking at.

I am looking at 2 stocks right now. The first is GYI. It has amazing growth; however, recently it lowered guidance. I am not sure if I am looking to go long or short it depends on what I find. The other stock is at the request of a reader. CTT. It reports tomorrow so I am not going to look at it until then. That is all for now.

Word of Caution

There could be short term moves in the following stocks as they redo the QQQQ index. I borrowed this list from realmoney.com, specifically James De Porre's, trading diary. It is an excellent source of insight. He said that the following stocks could be poised to be shuffled in and out of the index.

The most likely additions are: GOOG, URBN, NIHD, CDNS, PTEN, ATVI, EXPE, RHAT, NVDA and MNST. CKFR is also a possible addition. The likely deletions are: ISIL, QLGC, MLNM, IVGN, SSCC, SANM, SNPS, DLTR, MOLX and LVLT. MERQE is also a possible deletion.

Its tough to game this sort of a thing so I don't recommend anything, just use this information how you see fit.

Clarification

Now some further clarification on SHLD. 1.) When I said the ratio of up 80 down 10, that was a best case scenario over a period of longer than one day. 2.) I did recommend buying the stock, then when the stock was up $6 I recommended a sale. Granted I was wrong about the result of the report, but money was still made. Not bad for being wrong. In essence the company sucks and it will continue to suck. I won't mention SHLD again until next earnings release. I do caution that I wouldn't be short heading into the release though.

Next, lets talk about stock ideas. I am going to devote this next weekend to fresh ideas, next week I will bring them to you. I will probably target small caps. If anyone has a stock they want me to look at let me know. Email me at randommarketthoughts@gmail.com.

SHLD

Scratch that post below this one. I would sell SHLD right now. Not nearly the improvement I had imagined.

Back in the Saddle Again

Ok so now I am back in the saddle again. Finished with the CFA test on Saturday. What a joy that was. Anyway, I am going to be hitting it hard in December, more so with trading tips that stock recomendations, but either way I am sure I will do both. This upcoming week I am feeling a little SHLD action. For as horrible a company it is and given all the shady things that go on at that company I think the stock is pegged for a rally. I would buy it ahead of earnings and keep a tight stop on it. I see it as 10 down 80 up. Not a bad ratio. I will be in touch.