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!