Happy New Years

I wanted to wish everyone a HAPPY NEW YEARS!!! This has been a great year for me personally, professionally, and here at Urbanomics. I wanted to send a special shout out to ALL of the special people that are in my life. Whether we are travelling together, talking on the phone for hours, researching stocks by day, poppin' bottles by night, or just chillin' with family and friends these are all "Moments To Remember". Please remember that as we welcome in the New Year and tell all the special people in your life how much you appreciate them.

Peace!!!

Stay Tuned

I don't have a lot write about today. But one stock that I believe could continue to be a turnaround story is ADAPTEC (NASDAQ: ADPT). My screens have produced this stock again and I believe it should see gains from its current level. The stock was up tremendously today up .22 from it price of 3.22 and closed around 3.44. My price point is 3.38 which continues to be around that consistent mark where I have repeatedly written about acquiring this stock at these levels(adding the stock by Dollar Cost Averaging Down). I believe that Steel Partners, a private equity firm is (steely) locked into this company and finally directing the ship. By their proxy battle a few months ago I think it laid the groundwork and it was very visible by the 3 boards seats that were gained by the firm. With bullishness being seen in the stock going into the annual shareholder meeting, the perfect backdrop with be positive investor rhetoric from the CEO discussing:

1. continued improvements in its restructuring plan

2. new products are well received

3. company is exploring strategic alternatives

4. maybe even a change in management

One thing I have to go back to in to being patient with my investments...let, them play out because a number of these are turnaround stories that need time a positive catalysts to push them forward. If I continue being impatient I will miss out on the additional opportunities in stocks like RAD, EMKR, and others. EMKR was recommended at 10 and its superman price of 9.59...and today is sits at roughly 14...hmmm only if I were a little more patient.

The Proof is in the Pudding

Now if anything else was inside my pudding I would be afraid, very afraid. Its almost sounds like something Bill Cosby would have mentioned in one of his Jello Pudding Pops commercials. This annoying phrase was hammered into my head when I first started my career. And I think this catch phrase is used when people want to emphasize focusing on just the facts (i.e., you can’t confuse chocolate pudding with vanilla). So in the last three months the proof is in the our recent investment decisions.

Here is a summary of some of the decisions that we’ve made recently:

Positions with positive returns:

Best Buy (NYSE: BBY) – Up roughly 18% in 3 months
Burlington Northern Sante Fe (NYSE: BNI) Up roughly 12% in 3 months
Medcath (NYSE: MDTH) – Up roughly 7% in less than 1 month
Online Resources (Nasdaq: ORCC) Up roughly 13% about 1 month
Zhone Technologies (Nasdaq: ZHNE) Up roughly 11% in less than 1 month

Positions with a flatline or negative return:

Adaptec (Nasdaq: ADPT) – Down less than 1% in around 3 months; since early recommendations I am down 4% in more than 6 months

Rite Aid (NYSE: RAD) I will give a few scenarios for this stock b/c you would have likely experienced one of these situations (See my social picks tracker to the right to verify these percentages)
- If you’ve been along for the ride since the beginning of my RAD recommendations and sold your entire position based upon my November 21st posting (http://urbanomics.blogspot.com/2007/11/drink-and-my-2-step.html) you are down roughly 16%
- If you’ve been along for the ride since the beginning of my RAD recommendations and reduced your RAD position based upon my November 21st posting (http://urbanomics.blogspot.com/2007/11/drink-and-my-2-step.html), the portion you still own is down roughly 7%
- If you got lucky and only started following RAD since my October 26th posting (http://urbanomics.blogspot.com/2007/10/it-must-be-butter.html), you are actually up roughly 2%

Here is my note on RAD, so that I continue my ways of completely disclosing the truth. Some people may feel that it is unfair to list multiple outcomes of how things would have turned out if you actually owned RAD’s stock, but I have to do this because everyone’s decisions to BUY, SELL, or DOLLAR COST AVERAGE DOWN may not be consistent with when I post for my readers to take those actions. If you would consistently followed my postings you would have bought RAD at least twice:
- Initial BUY on October 6th and a Dollar Cost Average Down BUY on October 26th

To further complicate things I gave 2 recommendations on my November 21 to ‘Outright Sell” all your position or “Reduce Sell” some of your position in RAD. How you pay attention to my recommendations based upon your situation would have given you one of the three outcomes listed aboved.

My Actions: I chose to sell outright ALL my positions of RAD on November 21st for a 16% loss. This was because I had made the mistake of having to large of a position in the stock and it was negatively affecting my portfolio. I felt that I could better use that capital on my next 2 picks (MDTH & ZHNE) and I was right. If I didn’t have two new picks that I could have earned a better return on, I would have just reduced my position and I would experiencing the middle outcome of only a 7% decline so far. Notice that’s why I did not sell my RAD positions in my tracker portfolio (Socialpicks) located on the right side of my blog, because I still believe in the stock and its ability to still give readers a strong return.

Soon to come here @ URBANOMICS
I will outline how to trade based on my postings in case this has ever been a concern of yours. (This could be the case because Jim Cramer wrote a book for his viewers on how to trade based on his shows)
Finally I will highlight this year’s performance and the good, bad, and downright horrible decisions we made this year.

Subzero - Mortgage Rate Freeze

My thoughts on the mortgage crisis have been chronicled, like Narnia...get it. All jokes aside, because this is a real serious situation that I sighted her on Urbanomics almost a year ago. I plead that people really think situations through and hold people accountable for the deals, offers, and negotiations that they make with you. And I understand the average person doesn't have time to pay attention to the economic indicators out there in the economy. So my compromise to you is that you tune in here and I will give you the real deal in average people words.
A recent example that I can cite is my dealings with my insurance company. When I got into an unfortunate car accident which wasn't my fault, I really thought the situation through. My insurance company, BELIEVE IT OR NOT, works for me. Let me remind you, I send them monthly payments and because of my good driving record they don't have to use the money on me...rather they reinvest the money so that it can make them more. So, when it comes time and I actually get into an accident...they have the responsibility of making it a smooth transition so that I can get my life back to normal. I will speed up my example by saying there were difference in what my SUV was valued once it was totaled. Here is the ACCOUNTABILITY part! I did not trust their methods for determining the value of my car even though they used a reliable industry expert. I asked many questions and made them explain in plain english how they value my truck. It was my job to be skeptical and guess what!!! We negotiated a higher settlement because I challenged the status quo.

In this article here (http://urbanomics.blogspot.com/2006/02/huff-puff-blow-houses-down.html), we were asking a few questions and challenging the status quo about the housing market. And I wish many more home buyers would have done the same. But whats done is done and now the government is being forced to step in and take unprecendented moves to try quiet the uneasy storm that is developing. I was glad that I did not bite my tongue then and I will continue to write what I believe. I have mentioned before that the data leads me to believe that the economy is grinding into a period that feels like a Recession. I think the markets will rebound slightly but the economy is still feeling like its taking a beating. So to ease the pain good ole Bush and his buddies have decided to get involved and set requirements that will offer struggling homeowners a five-year freeze on their mortgage rates... if they qualify. I agree with others that are protesting that this is a late move on behalf of Bush because the number of foreclosures have risen to the all - time highs.

Again this mainly effects the people who own subprime mortgages, or loans that are offered to people with not so great credit. Subprime loans often get you excited by their low rates for the first few years but then they jump very high making it difficult for your homeowner to keep up with payments. I don't think that this latest effort will change the economy that much in the short term. The plan helps a small group of people whose rates will adjust from 2008 through 2010. So where is the relief for the folks already impacted or that will be impacted before 2008?

This will not help the economy immediately. Again this move helps the investors of the world sleep easier at night. There is now some stability in sight for the markets and Wall Street got what it wanted to hear. Notice the last two days of the market have increased sharply. Because this means that homeowners payments won't rise which helps the retailers (whose customers have $$$ to shop), banks (don't have to take ownership of as many foreclosed homes), and other industries such as credit card companies who were worried their customers would't pay their bills.

Mixed Emotions

Hello all out there. If you have followed our ride this year, you will quickly note that Maximus (NYSE: MMS) has been a crowd pleaser and a favorite of mine. I have written about MMS a number of times and since the beginning we've enjoyed great returns. But now I am at a point where I am struggling with Maximus and I would like a little bit of help. Here's the problem there is currently good and bad news out there about this stock and I will start with...

The Good:

I was alerted to additional comments today on Maximus, which were GOOD. Zacks.com, an investment website has listed MMS on its Zacks Buy list again. The first time it was listed as an Agressive Growth Play at the end of May this year. Now MMS is listed again on their buy list as a Value Play and still considered a buy. Here is an excerpt from Zacks.com's most recent write up:

MAXIMUS, Inc. is doing all the right things. Business is doing well, the company is buying back its own stock and staying friendly to shareholders. Valuations are attractive for the stock. MMS is trading at less than 12x next year's estimates of $3.27 per share. Over the past month, this year's numbers have risen 21 cents to $2.68 per share (Zacks.com)

The Bad:

I also can't believe that I missed something so obvious about 15 days ago by not analyzing volume and chart patterns. Run a one month chart for Maximus and you will see some disturbing trends. The volume on MMS is alarming but I missed the fact that indicators where sounding off all around us. Case in point: On 11.14, you will notice very unusually high volume which is an indicator...and the volume was unusually high selling volume. Ding, Ding, this creates pressure on the stock which caused it to drop from its high of 47 on that day and reached a low of 40. Now this date coincides with Maximus's earnings release so this can be brushed off as understandable volatility on a meaningful day. But even on days of good news, 11.19, when MMS disclosed new contracts they had won for their business and when "TheStreet.com" upgraded the stock, it continued its downward pressure due to high volumes of investors selling the stock. This piece of information is not good b/c when good info comes out you want to see the stock rise. Further, today when the market is up over 1% you want to see you stock rise...MMS was down again today. This tells me that the stock cannot hold up from the current selling pressure and will trend downward for a period of time...which could be short. Finally, I dug even deeper and found the culprit of the large selling volumes was none other than PRIVATE EQUITY...this final indicator tells me what all true 'Contrarians' believe. Its time to sell when the rest of the world is upgrading the stock but Private Equity is bailing.

Urbanomics Easy Read: Its time to sell MMS because some smart money is exiting. I believe the this stock would be a good long term hold if you were in it for a large position. Remember earnings are increasing and in a matter of months this has gone from an aggressive growth play to a value play which means it could be held for a long time but it may not provide the aggressive returns like it once was. For us here at Urbanomics we will get off the ride, but if this stock drops a lot (which I don't believe it will) then get back on.

I am officially telling you to sell Maximus even though there is positive news and recent upgrades on this stock. Get out with the smart money, lock in our over 25% points of gains and wait for another rainy day to build your portfolio with this stock if it drops.