3rd & 4th Quarter Premium Alerts

Due to my recent travels I was very late in posting my 3rd quarter premium alerts.  So this post includes alerts for 7 new stocks.

The third and fourth quarter of 2011 produced seven stocks that Urbanomics paid subscribers will have access to review.  These stocks are consistent with sectors or value plays which I believe should outperform in the current economic environment.

3RD QUARTER STOCK ALERTS

1st Premium Pick
STOCK: ******
BASIC MATERIALS
OIL and NATURAL GAS
TIP: This stock pumps premier gas for profits.


2nd Premium Pick

STOCK: ******
TECHNOLOGY
APPLICATION SOFTWARE
TIP: This tech stock continues to innovate outside of the box.


3rd Premium Pick
STOCK: ******
FINANCIAL
REGIONAL BANKS
TIP: This stock's cash flows in waves.

4th Premium Pick
STOCK: ******
SERVICES
ENTERTAINMENT - DIVERSIFIED
TIP: This services stock may know more about you than you think.

4TH QUARTER STOCK ALERTS

1st Premium Pick

STOCK: ******
BASIC MATERIALS
GOLD
TIP: ??


2nd Premium Pick

STOCK: ******
TECHNOLOGY
TIP:  This technology stock is a Silicon Valley staple.


3rd Premium Pick
STOCK: ******
FINANCIAL
LIFE INSURANCE
TIP: ??

Note: This is an alert that this was triggered for URBANOMICS Alert Subscribers. Please email for access to subscription based contents.

Thanksgiving - Plenty to Be Thankful For

First, I would like to apologize for the pause in posting of my thoughts, articles, and trades. The last month has been very fast paced with lots going on. I was in Vegas for training and learned the latest developments in the banking industry. Then I was off to London to actually do some work.  I did get some time to enjoy the weekend in Vegas and celebrate my birthday...let's hope I'm getting wiser with age.  Here is a rundown of what's going on and specifically what to be thankful for:

Peeling Back the Details on Taxes in America...

Excerpt taken from the Wall Street Journal:

According to a letter Mr. Buffett sent to a Republican congressman on Tuesday, the Berkshire Hathaway Inc. chairman and chief executive disclosed that he made almost $63 million last year, yet paid less than $7 million in federal income tax.

Mr. Buffett long has urged lawmakers to raise income-tax rates on the wealthiest, arguing that his secretary paid a higher effective rate than he did last year.

Please head to the Wall Street Journal to read the rest of this article and the details about how different income levels are taxed. Click below:

Buffett Pays Less Taxes Than His Secretary!

I'm curious, on what people's thoughts are on his disclosure about the tax disparity.  It makes me want to think long and hard about becoming a full time investor as the benefits of deductions and less income being taxed could be pretty nice. Please post your thoughts.

1st Quarter Premium Stock Alert (Revealed)

If you recall in February of this year, I released my first premium subscription alert.  At the time, I  posted an update that gave you a hint into the industry, sector, and specifically the product that this company develops.  The update provided you with the following hints about the stock I was adding to my portfolio:

STOCK: ******
HEALTHCARE
BIOTECHNOLOGY & DRUGS
TIP: Ribbon
Link: http://urbanomics.blogspot.com/2011/02/february-2011-biotechnology-premium.html

If you'd like to find out which stock was picked up by subscribers to the premium service, please continue on and get a complete view of the stock and the performance since the alert went out.

Market Recession or Rally??

Rally or Recession...

Roughly about a week ago we all were a little queasy after viewing our portfolios and 401K accounts.  The economic picture in the US and in Europe made us all nervous and sent the markets in a spiral downward.  The levels we briefly hit were low, so low that it nearly reached a 20% drop from the peak of where the market were earlier this year.  This dubious drop is typically referred to as a 'Bear Market'.  Since April, the markets have dropped about 17% from its levels at that time and have been rocky since then.  Sooo are we back and is this RALLY for REAL???  Well you may not like what history says about 'Bear Markets'!  Bear Markets are often marked with quick bursts of large gains like we've started to see last week and into this week.  Why the roller coaster ride, maybe its because we (e.g. investors) have no clue each day which direction we think the markets are heading.  And if we are clueless, history has often indicated that reality will often set in and then begins to turn back down.

URB Brief Notes:

- Netflix fumbles and backtracks. They drop separate websites, keep the high pricing and continue to disappoint.

- Sprint tumbles on news that costs are rising. Not to mention they aren't selling the I Phone 4S, which was just released...just the I Phone 4.  I haven't seen David Einhorn bolt from his position so hold tight and double down off the 52 week low.

- I'll be releasing my latest quarterly alerts shortly, an interesting bunch. 

Are You Prepared For a Slowdown?

If you're like me, you've probably been keeping a close eye on the wallet nowadays.  I wanna believe that things are getting better but I need proof.  Unfortunately, part of my everyday routine is to search for clues to as to when the economy is going to get better and I didn't like what I heard.  I was listening to an economist named Lakshman Achutan and he had some interesting data to share last week.  He is predicting that America is heading into a recession after analyzing different indicators on the direction of our economy.  This is just one view of things, however; I would definitely take the time to be cautious until things get a little bit brighter.  Click the link to see the video:

RECESSION IS COMING

Economic Outlook, YAHOO, All Talk, & Netflix...

Urbanomics Outlook on the Economy
Here is my outlook on the economy. The economy is like a leaky faucet, slowly dripping. If you review the last few months, the data supporting jobs and economic growth have been bad kind of like when your faucet is clogged up. But every now and then you get a surprise and a few gushes come out and occasionally the economic numbers have had a few surprises. But if you put it all together the economy continues to be a very slow drip for a population of Americans that are thirsty for jobs and an economic rebound to our investments, 401K portfolios, real estate, and lifestyles.

Do You Yahoo?
I know I do. I use Yahoo all the time. Yahoo is my home page, my email service and also my source for fantasy football. But even with all these reasons they are having trouble keeping up with the big boys of technology (Google, Amazon, Ebay). They are even used as a verb, no one ever asks whether you ‘Yahooed’ something! Well it may be time to circle the wagon on this old reliable tech company. We have a little help in stirring the pot. Dan Loeb, founder of the hedge fund Third Point sent a scathing letter to Yahoo’s Board and then kindly reminded them that he now owns a roughly 5% stake in the company. Here at Urbanomics we are fans of investors that stir the pot and when it happens at unloved companies like Yahoo we get excited.

The Market's Continuous Drop...

I've been listening to some smart investors talk about how to invest in an environment like this.  These theories vary and this helps me shape my frame of reference.  It allows me to hear how bankers, investors, and politicians think and then I can ground some of that in reality because I can probably tell what's going on with the everyday person better than they might experience.

Right now we are in rapidly changing times in the US, some parts of the world and of course in the stock market.  The stock market has been violently gyrating and for the last few weeks it has been decidedly lower.  The smart money will tell you not to panic and while I subscribe to this theory it can be very difficult.  The economy is weak and some are reporting the increasing risk of a double dip recession.  For me, I go with my gut feeling and I have stayed consistent that too many Americans are hurting for anyone to be blindly buying stocks.  I agree that certain actions along the way have helped to stimulate the economy but not enough has been done to help alleviate the areas that the average citizen is being hampered by.  I believe the economy will continue to be fragile until: 1) Jobs return in a consistent fashion 2) Debt levels for the average American must get rightsized, and 3) Housing burdens for the average person become less of a constant drag on people and their local economies.  I'm not happy with the fact that are politicians can't stay focused on some of these core issues that are plaguing us today and make this their top priority.  So I will remind you to not get fooled by their gimmicks of last minute deal-making and understand that this slow painful decline will continue until they address the real problems at hand.

I do wish I had sounded a louder alarm because I've noticed that many big investors had recently been hedging their bets and protecting themselves if things got bad.  And as you can see they got bad in a hurry.  I think my approach will not change from the points I've been highlighting from the beginning of the year, and that is this is the YEAR OF DEFENSE. See the following articles to learn what we've been doing to stay defensive in these uncertain markets:

IPOs, A Little Defense, & China's All Star Team...

Initial Public Offerings (IPO)
Guess what's back in vogue, the wild rush of buying an IPO.  This is usually reserved to investors who are highly coveted, so usually not you and me.  However, a little unknown tip is that you can call your brokerage firm and ask if there is a process for you to sign-up or participate in IPOs.  You might be surprised that some of your favorite companies and their products have recently gone public. Check out these IPOs:

New Tech Titans, Double Dips, & Don't Label Me...

New Tech Titans

The technology field is definitely active as social networking, gaming, movies, and music continue to seamlessly weave themselves into our daily lives. It's time to refresh your memory on the new tech titans on the block.  First off, Facebook leads the charge with their recent announcement of new features: (1) group chat, (2) new designs, & (3) video chat. Many people can't wait for the day this stock IPO's or goes public.  Next is Google, who is offering Google+ a competing social network site and chomping at the bit for more targeted advertising.  And then there is the simplicity of Netflix.  Netflix is now streaming throughout many homes on a regular basis and they are betting that you will stick around even as they raise prices.  Sorry to break the news but Netflix prices are going up for everyone...will you pay up?

Other hot technology firms are Linked In, Pandora, Zynga, Square, and others which are changing the way we interact, watch movies, and listen to music. Then we have Groupon which could be potentially be valued ar roughly $20 Billion dollars when they IPO, or become a public company.  The question often asked is “Do You Remember The Technology Bubble?” and is it happening all over again. I do believe that some of these firms are legit, but I think a few won't be as popular as they are today. Stay tuned for further posts as I tackle which technology stocks will survive the digital renaissance.

Double Dip??

The economy may be suffering from a really bad hangover that was worse than we originally thought.  Financial stocks, housing stocks, and high levels of consumer debt make you wonder if we've learned anything at all from the 2008 crisis.  I just don't have the feeling that we are out of the woods yet and I've been cautious for quite awhile.  I don't think I am alone anymore as there have been rumbling about more stimulus...is there Quantitative Easing on the horizon, well the Fed might think so.  Can you say QE3

Meet Me @ The Gas Pump...It's Going Down

Literally, it may be time to meet at the gas station because the prices are finally going down.  When I thought about gas prices I obviously had the rap song "It's Going Down", by Yung Joc in my head.  It's been going down to the tune of 21 STRAIGHT DAYS with an average price around the country now at $3.60.  Yes I said to the tune...I can get that song outta my head.

Why is this happening??

Economy
 Well, start by taking a look at my last post written almost a month ago that outlined how high gas prices and not enough job creation hurts an economy.  If prices stay high for too long it begins to change the way people do things.  Remember Yung Joc said, "Meet me in the Mall, Meet me in the Club...it's going down"...well when gas prices stay high people start cutting back on buying gas and going to those spots.  As more and more people cut back, carpool, take public transportation or just travel less, the demand for gas will continue to fall and so will the prices. 

Over-Speculation
The other reason is there have been some high profile prosecutions recently of traders who were manipulating oil markets which has an impact on gas.  These traders can at times make the supply or demand greater or less than what the real market demand is for oil and when the fools are removed from the equation it helps to bring gas prices down.

Oil Reserves
Lastly, the US government just released barrels of oil from a strategic reserve that is maintained for emergency situations.  This was a coordinated effort of 28 countries around the world to release oil from emergency stashes in an effort to begin reducing the price and impact high gas is having on the global economy. The group of 28, also known as International Energy Agency (IEA), has taken these steps only three other times in history.

How to Invest - Stay defensive at this point - Dividends, Healthcare, and Energy

What's Up With The Economy, The Deficit...

That is a really good question, "What's Up With the Economy?"!  The best analogy is the economy is sorta like a really nice business train that is slowly chugging along and starting to lose passengers at each stop.  I think this is an accurate picture because the data is definitely mixed, showing corporate businesses are doing quite well and chugging along, like the train.  The passengers being lost at each stop are comparable to middle-class Americans that are being negatively impacted by: 1) high gas & food prices, 2) declining housing prices, 3) still high unemployment numbers.  And the biggest problem is JOBS, JOBS, JOBS, or the lack thereof.  Jobs are so critical because they give Americans confidence that the economy is getting better when they see their neighbors getting up and going to work, coming home with bags of groceries, and investing in their homes.  So who is focusing on getting more Americans jobs? That's the question that needs to be asked of everyone from the president and his administration, to your senators, then your local congressmen, and also of the companies that are doing well.  Every moment should be spent on turning the dismal job scenario around and we've seen our politicians come up with some solutions but not nearly enough.  The formula is not that difficult as it usually comes down to stimulating Americans and stimulating the companies who are tasked with hiring more Americans.  Its a shame the debate in Washington is whittled down to spending versus tax cuts, but that has been the case.  Last time I checked both scenarios cost taxpayers money but are needed to bring this economy back to life.

2nd Quarter 2011: 3 PREMIUM STOCK ALERTS

The second quarter of 2011 has produced three stocks that Urbanomics subcribers will have access to review.  These stocks are consistent with sectors that I believe should outperform in the current economic environment.

1st Premium Pick
STOCK: ******
BASIC MATERIALS
OIL & NATURAL GAS
TIP: This oil & gas play has planned big changes coming by the end of the year. Look for it to double, literally!

Click here for the other two premium alerts.

CLOSE POSITION - International Coal Group (ICO)

I have an announcement to make. My stock tracking portfolio will be closing its postion in International Coal Group, Inc. (NYSE: ICO).  This position netted roughly 258% over a one year period.

The reason why I'm closing the position is Arch Coal, Inc. (NYSE: ACI) has decided to acquire International Coal Group, Inc. (NYSE: ICO) for $14.60 per share. I have to admit that this deal was first announced on May 2, 2011 and since then ICO has hovered at a 52 week high of $14.52. With nothing else to gain, I will close the position in the portfolio.  Note: Your portfolio would hold this stock until the deal is completed and there would not be a need to sell the stock like I am in my tracking tool.
 
For timely updates and alerts, please choose to follow these posts in your inbox.

Housing – When will the comeback story be written?

I look at the giant housing market here in the US like a prized fighter that has seen better days. The complacency is easy to see when you compare it to other fighters (like Canada) who’ve trained harder and set higher standards, such as requiring 20-30% down payments. However, all good prize fighters don’t stay down too long and eventually bounce back. I still think that the US housing market needs to see improvement in areas such as jobs and foreclosures but this fighter is getting its feet back underneath him. As usual, I’ll remind you to not listen to the Wall Street hype men out there who are always trumpeting that everything is great in housing, look where that would have put us 2-3 years ago. You have to always do our own research! I have not done a large amount of research but I think the housing market will make a comeback similar to LL Cool J’s return on ‘Mama Said Knock You Out’.

Notes from the Matix - April Download Pt II

Pharma
Pharma is short for pharmaceuticals and this has traditionally been an industry that I have shied away from as I’ve tried my best to incorporate a rule that I have learned from Warren Buffett and Peter Lynch awhile ago: Invest In Things That You Know

This is at odds at times with the strategy that I’ve been harnessing over time and that’s being a MACROVALUEQUANT. Often, my screens lead me select a stock that I believe has positive momentum (QUANT) and I further weed out these stocks if they are not trading at a low valuation (VALUE) and support my general view on what industries and sectors should do well in the current global economic environment (MACRO). My screens recently led me to 2 pharma stocks (See Pharma Premium Alerts Post) and I was very reluctant to nibble at the bait.

May Alert - NOBLE ENERGY

NOBLE ENERGY (NBL : NYSE) - An alert was triggered for NOBLE ENERGY. NBL has recently traded at $86.95, and this is an entry level that interests URBANOMICS


Note: This is an alert that this was triggered for URBANOMICS Alert Subscribers. This is a one-time free viewing of an alert that is viewable to subscribers.

Portfolio Update

Radisys (NASDAQ: RSYS)
As you all know I have owned this stock for a long long time. This is my second time around so search older posts for my writings. I am more positive about the direction its heading after yesterday's earnings call.

Notes from the Matrix - April Download Pt I

I know its a little late but it is about that time to download thoughts that have been swirling in my head (usually typed into my phone) for the month of APRIL. As I mentioned in the past, I've noticed a not so subtle shift in my investing habits and it has been a huge thirst for data! I think that in periods like this where the direction of the economy, country and the world are not so clear cut, everyone saturates the internet, tv, and newspapers with there different view points of how it will all play out. For me this amounts to a lot of noise. And noise for a MACROVALUEQUANT (not sure what this means, run a quick search for previous posts) can be good and bad, but mainly its time consuming. Its time consuming because I think investing and being wrong about these events may be worse than not investing at all. This gets us back to that VALUE concept and my need to want to have conviction that I am entering into an investment at a point where there is significant value to be gained.

But enough of my ramblings and onto the themes and concepts that I've dialed into the most this month, starting with the oldest dated notes:

Competing Interests...

The current economic environment and its effects over the last few years has made the competing interests of various groups more pronounced during these times. This is why I wanted to write a post about competing interests. Recently, I was reading about the self interests of people as it relates to the low interest rates, which have been rock bottom for a long time now. I was surprised when I learned that savers and risk adverse people (think older adults nearing retirement) are not too excited about the prolonged low interest rates which are not earning them much money on their safe assets in their savings and retirement accounts. Even though the general thought is low interest rates are helpful in stabilizing and spurring growth in the economy, some competing interests say enough is enough. They are saying this because they would prefer to go back to living off higher interest rates. As I begin my data dump of thoughts for the month of April, I find myself torn like many of the elderly who likely want the economy to do well but want their interest income to jump back to life.

Female Health Company (FHCO)

The Female Health Company (NASDAQ: FHCO) is a recent example of the alerts that are submitted to readers signing up. It is roughly up over 10% since it was identified. This was a free alert provided to anyone playing along at home in the last few weeks.

Enjoy ~ Urbanomics

March Matrix Notes

I could do a follow up on why I'm a MACROVALUEQUANT, but who has time, its time to unload my thoughts and unplug from the matrix. I do a lot of reading on the train and listening to the radio and have started taking notes. In the past few weeks, I've tuned into the following discussions and readings:

Ray Dalio (find his discussion on CNBC)
Mr Dalio is the hedge fund titan who runs Bridgewater Associates and rarely makes tv appearances (I heard). After a few moments of defending his unusual methods running his firm, the man behind the world's largest hedge fund was very open about the cycle of leveraging and deleveraging and where the US is at in its cycle after the crisis. He talked about the following subjects:

He noted US Equities are cheap and will benefit from currency devaluations
The money flows will benefit equities
Portfolios are not properly weighted, too much in dollar denominated currencies
Gold is a currency that many are underweight
Stimulus will last through the 4th quarter, and private credit growth will be needed

Oil - The Game Changer

This phrase is often used in sports to describe one person that can change the outcome of a game. In many investor's opinion, Saudi Arabia is the country that is a game changer when it comes to oil. You are already aware of the unrest in Northern Africa and the Middle East and this has caused oil to spike (yes, also some speculation by greedy investors has also led to the spike). Many say that the spike would be even larger!!!...if Saudi Arabia was to see the same type of unrest. This piece of news was just broken:

MacroValueQuant

Why I am a MacroValueQuant
I can tell that I take trading too seriously because I have named my strategy. I couldn’t really describe it many years ago when I first started but I know that it has changed over time. The reason why I describe it as a MACROVALUEQUANT is because it represents a combination of what I slowly have morphed into. The first part of my anagram is MACRO, which describes my growing focus on truly understanding macroeconomics or the working of national economies. So I spend a large part of my reading and listening to stats about the US economy and even global economies. I truly believe that this is a strong approach when evaluating stocks because it gives you a lay of the land. So if you flashback over the past few years, I believe my investing alerts are more likely to be successful if I have better sense of the possible economic scenarios stocks face in the US. A few timely examples of MACRO events that were helpful to be aware of were the housing crisis and the financial crunch. The goal can be either to direct investments to areas that may benefit the most or to simply identify times where it is best to preserve capital.

QUANT represents my love affair with all things quantitative. Purdue University gets a little (okay a lot of) credit for the great mathematical emphasis on quant and statistical analysis. I’ve come to appreciate analytical models and scenarios that may produce highly probable events over time. I remember when I first learned about the January effect and the inefficiencies that exist at times in the efficient market theory. Some of these inefficiencies are due to human nature, things like fear and greed, and a quant approach can help alert when opportunities are available to benefit or stay away from.

VALUE helps to determine whether or not a stock is cheap. I truly have personally experienced not much good can come from buying something overvalued…stocks included. I don’t even really like buying many things at their normal value and prefer discounts and ‘margins of safety’.

So to summarize MACRO helps me find the most likely sectors and industries to benefit from. QUANT screens alert me of opportunities. And VALUE helps me verify that when I buy an alert, I am buying most of my stocks at a discount.

Going Mobile...

The goal of most companies is to go global. But this post is about the benefits of going MOBILE. MOBILE devices are rearranging the way we speak, think, and do business. I have much more to write on this topic but here is my starting team so far.

American Tower (AMT)
Verifone Systems (PAY)
NXP Semiconductors (NXPI)

Stay tuned for why mobile devices are sending the retail and banking industry into overdrive.

St. Joe's - Board Change Announced

St. Joe's Company has announced the CEO is stepping down, effective immediately. While having solid management in place is important, this could be the catalyst needed to reorganize this huge real estate company. If you look at a chart for St. Joe's you have seen this stock drop from highs in the $80s to definitely seeing the lows. I would have loved to muster up the courage and buy in the stock in the teens but I was a little nervous at that point. This cost me some percentage points but I'd like to think that at least we see pieces shifting that will cause this company to continue to move in the right direction with hopefully now a more limited downside. This is still a high risk high reward trade, as REAL ESTATE, FLORIDA, changing your Quarterly Reporting date, and big bettors are all going against the company. And my analogy for the day is, I hope the Florida (orange) squeeze is on, as that alone can move this stock in the right direction.

Training Day...Alerts

Come take a ride with me on your first day, just like rookie cop Ethan Hawke took a ride with Denzel...whips I mean Alonzo Harris. See in both of our worlds street justice reigns. In Training Day, Alonzo let his brand of street justice play out until he gets burned. In my world of investing, Wall Street enacts its own brand of street justice. You can get a cheap thrill by not doing your homework and buying the flavor of the month stock. Sometimes you'll win but you don't wanna lose...and get burned like Mr. Harris.

To help you transition into this tough game of investing I'll take you on a Walk down Walk Street. We are gonna ride because its not a race, its actually hours and hours of research to find deeply valued plays that have explosive potential. I believe in my process and hope to share some of these deep values with you. Email me to begin receiving alerts so that you can follow along while being your own boss by picking your own selections.

Here is a quick summary of my most recent Alerts:

Trade Deadline...

If you follow sports there is always a part of the season where the right to trade a player from one team to another comes to a close, this is the 'trade deadline'. And in the NBA this year its come with some big names on the trading block. Carmelo Anthony to the New York Knicks and Deron Williams to the New Jersey Nets sounds like these franchises are solidifying their rosters with serious talent.

Its time to solidify our roster of stocks with as many 'Melo's and Deron's as possible because turbulence is starting to set in on the markets. Many people forget when investing that you must really consider the entire global landscape these days. Listening to the news for a few seconds leads to a crash course in countries like Tunisia, Egypt, Bahrain, Libya...and then flickers of concern with names like Saudi Arabia, Israel, Iran. The unrest in these countries is the main reason why you must solidify your roster with serious talent.

I have been expecting a pullback for sometime but its always difficult to tell when it may occur. The economy is chugging along but there are still mixed data signals telling us the coast is not close to being clear. Unemployment, housing prices dropping back to historic lows, gas prices, and quantitative easing all make me uneasy. The catalyst of the pullback may oddly enough be Tunisia!! So its time to evaluate the roster and TRADE:

~ Trade your stud who's maximized their talent.
~ Trade your players who are not panning out.
~ Accumulate money to acquire the biggest stud out there (i.e., Lebron James)

I took the following actions:
~ Sold (or traded) Iron Mountain (IRM) shares for the roughly 30% gain accumulated in the last few months. This is a stud I wanted to take profits of before they reported earnings & before this pull back eats my profits.

~ Sold (or traded) Republic Services(RSG) shares for the roughly 5% gain accumulated in the last few months. This is a stud I wanted to take profits of before this pull back eats my profits. I hope to reacquire this prospect later.

~ I will buy a few Lebron James...starting with my 2 premium screen alert stocks. And keep the extra cash (or dry powder) for a rainy day

FEBRUARY 2011: BIOTECHNOLOGY PREMIUM SCREEN

STOCK: ******
HEALTHCARE
BIOTECHNOLOGY & DRUGS
TIP: Ribbon

Please email for access to subscription based contents.

Risk On: Orexigen, St. Joe Company

I will start off by saying that my view of the economy is very MIXED. I will get into the reasons the next time around. Here are a few more free picks because these are very risky plays and I want to document my theory here. I have one premium pick posted a few weeks ago that is doing quite well. Please contact me for gaining access to my premium picks.

OREXIGEN (OREX): I hope you like this call! After this stock got hammered, I called for a 'NIBBLE' in my last post. I parsed through a ton of data on both sides of how the FDA approval would play out and I ended up with the right conclusion. The proof was in the pudding of the FDA panel advisers meeting at the end of last year. This panel advises the FDA and while they approved Orexigen, it was a narrow approval vote and the theme was that there were concerns with elevated heart readings of patients. As I mentioned before, the FDA had to pull a previous diet drug from shelves due to cardiac concerns and I have a strong feeling that they didn't want to make the same mistake again (duh). Hence, the FDA voted to not APPROVE the drug, but called for more studies.

HOWEVER, the reason I call for a nibble of this stock at the 52 week low of $2.47 is because of the probability. The probability is likely that this drug won't die. Its comprised of two drugs that have already received FDA approvals separately. That means there is a chance for a few different outcomes:
~ More testing until even FDA approval
~ Sale of existing drug to another company that can use the technology

These outcomes led me to recommend a gamble on OREX. Since then I believe its been up 44% in a few days.

St. Joe Company (JOE): JOE continues my love of all stocks controversial. I am not sure why the 'Risk On' trades are of interest to me at this point but I want to make sure that I capture it here in my posts and some of the reasons why. JOE is a tough stock to recommend because it has a LOVE/HATE story line going on. Real estate companies and prime Florida locations makes its a darling, but the downfall of all real estate across the country has many thinking its on its last leg. The story drags on amongst investment titans. This stock is loved by famed mutual fund manager, Bruck Berkowitz, and hated by hedge fund genius David Einhorn. So the reason why I picked up a few shares the other day is because of a few reasons simple to probably only me.

REASONS I LIKE JOE:
~ Valuation: Many (wink:Einhorn) have hinted at valuation troubles lurking. I used to subscribe to this school of thought until the financial crisis taught me, there is a valuation crisis only if you can't get access to capital. Once banks got infused, they didn't have to write down every asset, they could afford to wait.

My opinion is JOE will not have to value its property at these historic lows...they can wait it out

~ Catalyst: Institutional love. This stock is attracting some big players, Bruce and I believe BlackRock on one side and of course Einhorn on the Other.

My opinion is JOE will benefit from its largest shareholders actively attempting to make this company more efficient and profitable. The don't have time to play and Bruce owns 29% of the damn stock...can you say his voice will be heard. And it has been, he's been out pumping up the stock recently, check CNBC.

~ Short Squeeze: This last one may be dumb, but everyone and their mom jumped on the Einhorn bandwagon and started SHORTING the stock. If either of my first two points prove to be correct the shares should jump as short sellers get squeezed out of betting this stock will go down. They will have to buy their shares back and...TA DA the stock rises.

Now the stock on Monday was up between 8-10% but I still bought because I think this is just the beginning of a beaten down stock with a serious plot...think Young & the Restless.
Pick up shares around $29 and anywhere below. I had to settle for $29.30 right before the close of Monday after I learned that morning listening to CNBC that Bruce it trying to get himself the Chairman spot and his business partner Mr. Fernandez the Vice Chairman spot. Can you say catalyst for change! Say goodbye to the scrubs on the board, there is a new sheriff in town. Any news like this and you will have buyers jumping on a beat down stock and short selling feeling the squeeze.

Disclosure: I own shares of St. Joes Company

Positive Earning and all to important Approvals...

I will first start off with Orexigen (OREX). The did not get the coveted FDA Board approval for Contrave, their weight loss drug. I was watching closely as many people made calculated bets on which way this all too important approval would go. I think the best write up was from an article on Seeking Alpha which outlines the cases for this drug to not get approved right away. It outlined points from the 2010 panel, not board, meeting which outlined that many doctors on the panel and board are concerned about the elevated readings blood pressure in people that were part of the phase III testing. Glad I read that article because I almost pulled the trigger. Oddly enough I think their may be an opportunity now that the stock was slammed by over 72% to the downside after the closing bell. It was from roughly $9 to a 52 week low of $2.47. If you've got ice in your veins because of the blizzard. Nibble here on Orexigen because again there is an all to important thesis out there about this stock. It was known in the FDA panel review that they already thought more monitoring of patients would need to be done based on patient data. This along with the comments from panel members should have been taken into consideration as the FDA was not looked in a favorable light due to the last approved diet drug that had to be pulled from the market. There is clearly a high hurdle rate that must be met for diet drugs. But at these levels for a drug that made it through Phase III with fairly good efficacy tests should be looked at closely.

Baidu (BIDU) - I've been watching this stock and the earnings were better than expected. Now is way above where I want to acquire but remember this is the Google of China, and there is serious value to be had.

Radisys (RSYS) - Finally, they reported better than expected earnings. We will need more quarters of this for the stock to keep rising.

Its A Blizzard In Chicago...

It is literally white out conditions here in Chicago and I now know what a true blizzard looks and feels like. And like the snow, I'll tell you that its tough to see through the market right now. I am impressed with the run the market has been on and it has broken through the all too important psychological barrier of 12,000 on the Dow Jones Industrial Average. I am cautious as most of the stocks that I am analyzing appear priced for perfection. And the hardest thing to do sometimes is to be idle and have a little dry powder.

Here are a few stocks I am keeping an eye on but even they are pushing higher very quickly. Here are a few selections for free, but remember I usually like a little safety before I enter the position:

EXAR Corp (EXAR)
American Superconductor (AMSC)

Close Position: CIT, AIG

Now that my tracking tool is working again I can update when I anticipate closing certain recommendations from the past.

American International Group (AIG) - As you recall, I already recommended closing this position and I blame AIG on the confusing warrant situation. You remember we exited at roughly $55 a share. Due to the lack of availability in my tracking tool, it will unfortunately show that the position was closed much lower.

CIT Group (CIT) - This pick was from the middle of last year. You'll notice the trend with these trades is we believe in the policies of the Federal Government and many of the early investments they made we built positions in these companies. It is tough but you try to anticipate the turning point where the downside risk is no longer falling dramatically. Time to ring the register on CIT.

Also take a look at last roughly 20 picks that were closed, only 4 closed negatively. Not a bad trend.

Track Please...

Check Please is a popular show here in Chicago that finds local restaurants that most people aren't too familiar and tells you all the reasons why you should stop by.

This post is called Track Please, because I am alerting you that it appears that my tracking tool located on the side of the page is finally back up and running. This is important because it allows me to visualize my performance over time after I have written and recommended various stocks.

Take the opportunity to review the performance of the last 10 or so picks. Here is a short snapshot of a few picks:

CSE: 42%
ICO: 112%
WFC: 18%

Update: No AIG Warrants

Here is a quick update, AIG warrants are confusing. If you used the strategy that I posted you will not receive AIG warrants. Although most of the investing community believed that you needed to be a shareholder on record as of Jan 13, 2011, this was not the case. It turns out there was more hidden language than was originally believed on the warrants. I've learned that there was additional language located in the "tax" section of an SEC filing that indicated that you would have needed to have held your shares until Jan 19th.

So I feel stronger about our exit of AIG even though we didn't receive any warrants. We sold at the top of the range and that was well worth it when comparing the other alternative which is:

~ Still holding shares which dropped to $43 and the rights to a small amount of warrants in the future.

My feeling is when we hit our rock bottom price on AIG again, we can rebuy at a later point. I will repost where I think that is but for now let's use our last buying point as our benchmark for reentry.

Peace

I Got a Warrant...for AIG

Just a quick post for folks playing along at home. I won’t give you my thesis but my take is its time to take our huge profits in AIG. We recommended it here when it was unpopular in the $30s and I’ve taken my position off the table. My simple reasoning is that you should have stayed in the stock until Jan 13, 2011 when they issued warrants to shareholders on record. These warrants will allow shareholders to buy the stock at $45, whenever we want for UP TO 10 YEARS!!!

After that Jan 13th, sell the stock because they are beginning a recapitalization program. To me this is just a fancy term meaning they have to pay the US Government (technically Treasury) back. To do this AIG will take the US Treasury’s preferred shares and convert that into 1.7 billion shares of common stock. This will dilute OUR shares and likely drive the stock DOWN into the low $40 range. More new shares means my shares are now a smaller amount of the whole pie...people don't like that. That's why AIG is giving you warrants to stick around or comeback.

This is why I sold on Jan 14 and locked in those juicy profits. I hope to receive warrants because I was a shareholder as of Jan 13. I anticipate the stock price dropping and I will have to mark a new entry point on when I want to buy back into AIG which will eventually be a company free of government money in the near future. In the meantime I will still have warrants for the next 10 years that allow me to buy this story back in the event it takes off. (Kinda like a break in case of emergency that the stock took off w/o you)

Wish me luck and let’s hope this works. I will keep you posted on the warrants. And now I am wondering if this stock is available to be shorted on the ride down.

Questions on Technology Stocks

I wanted to post my high level thoughts on three technology stocks that I was asked to consider.

Applied Micro Devices (NYSE: AMD) - I am nervous about this stock because they’ve never been able to get over the hump. I tempted to call them a dog with fleas. There is reason to be concerned as the Board of Directors (BOD) canned the CEO because they thought he wasn't built for the next wave in the PC industry… tablets. It is mind boggling that the CEO may not steer the company in the right direction. How hard is the chip sector to understand, smaller devices (phones, tablets, netbooks) is the direction to go.

URB Recommendation – Pass on this pup



Coinstar (NASDAQ: CSTR) - I have really liked this stock for quite a few years now. This one qualifies as one that got away because I liked it back when it was in the $20 range. I won’t take any credit because a friend who is very loyal to Motley Fool uncovered this gem awhile back and has held ever since. Not many realize they are the brains behind Redbox, which everyone seems to be familiar with. There stock recently fell (roughly 25%), I believe out of concern that the company was being squeezed on their margins.

URB Recommendation – Need more research to identify buying opportunity


Netflix (NASDAQ: NFLX) – I learned from my Napster days if it’s so simple and convenient for people to adopt, then it will be a hit. And Netflix definitely qualifies for this category. I have not used the service but they took off and never looked back. This story definitely qualifies as one that I left get away and I’ve been watching closely. I don’t necessarily like what I see at this point: Plump valuation, hedge funds taking the opposite position, and new competitors popping up everyday. I see this now as a crowded space. They are facing new competition from Hulu, Apple TV, Google TV, DVR's, Redbox, etc.

URB Warning – The Chief Financial Officer (CFO) recently quit, which is strange?!?! Also, when the hedge funds came out shorting and talking bad about the company…the CEO responded….ODD, as CEO don’t you have anything better to do?!?!?

URB Recommendation – More tempted to short this stock, but don’t feel bad about doing nuthin!