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.

All I need is a little bit...

Yeah this line was coined by my boy 50 Cent for awhile. And word on da street...wall street that is...was that Fiddy was on Cavuto, a financial show probably showing off his investment muscle. Now I haven't seen the clip of his on the show but can he have time to be making the returns that we are over here at Urbanomics. Maybe after his stake in Vitamin Water got bought out, but we bring the platinum picks and he brings the platinum hits.

Today I wanted to write about Emcore (NASDAQ:EMKR), if you have been patient with us...and btw you haven't had to wait long, we hit our target already. Yes boys and girls, EMKR was up around 8% on no news that I am aware of. This volatile stock, was a short term pick of mine and for anyone following I am selling EMKR here. This is a quick 10% gain and I will look to revisit my friend EMKR when it declines back to a price around $10. I would Superman this stock back at the $9.15 level and be a strong accumulator around 9.79.

Lastly I spoke to soon on Adaptec (NASDAQ:ADPT) by about a day or two. I was getting some weird stock chart readings on ADPT and it didn't jump like I had expected. But here is the good news, ADPT reported earnings and beat estimates by .05c. That led the stock higher and if you read into the earning release by the CEO, you will also notice what I call is a subtle hint at good things to come for us. Attached is the comments, provided by Market Wire:

"While our top line results were above the company's expectations, we continue to face difficult market conditions," explained S. "Sundi" Sundaresh, president and CEO of Adaptec. "Despite these challenges, the company has made significant progress during the quarter in several key areas: our restructuring plan announced last quarter is on track to fully realize the expected savings by the end of the fiscal year; our Data Protection and Storage Solutions groups have each released new products and the early indicators of customer reaction are positive; and we reached an agreement with Steel Partners, and together, I expect, we will pursue a course designed to maximize value for all of our stockholders."

Urbanomic readers, I know one thing and when companies align with Private Equity firms to MAXIMIZE VALUE...that usually means great things for stockholders because they lead to buyouts, stock buyback programs, splitting up the company, or anything that makes them money. Hope you jumped all aboard ADPT, b/c again you could have had ADPT at 3.40 today which is the price that I have REPEATEDLY said is a great level to continue to add shares.

Enjoy the quick hit gain with EMKR and lets watch ADPT open higher tomorrow.

Disclosures: I sold EMKR today

Adaptec...Time to Sell?

Look people, I love the challenge that has been thrown in front on me. If I tell you I like something you are going to keep me to my word when its down and probably not remind me when its up (Not all of you...thx for the personal emails about BNI, BBY, ADVS). But I like a good challenge so that is why I have set up my stock tracking tool. Now this tool is not the greatest because I can't always get the optimal price points that I recommend on here or actually buy in my personal portfolio.

If I tell the tool to buy a stock, say ADPT tomorrow, it will wait until the open...then because most websites (Yahoo, CNNfn,etc) are on a 20 minute delay it won't buy ADPT until 20 minutes after the market is open. This works well only if the stock isn't moving to the upside, or else the tool is tracking my recommendation at a higher price. I will work on fixing this problem...but until then pay attention to the PRICE POINTS that I list here at URBANOMICS. A quick refresher...PRICE POINTS give you an idea of when I think the stock is buy. If you are aware of any other sites that give you this in bold print please let me know.

Adaptec is a great example of one of those stocks. I highlight this stock because there is some serious action going on AFTER-HOURS with this stock. It looks to be up over 11% and will likely open tomorrow up at least this amount. NOW LISTEN UP...this is the second time that ADPT will give you short term players an opportunity to SELL. Read my post from Friday...ADPT was highlighted as a stock that we could have sold for a gain (around 10%) but you may not have done so...when it hit levels of 3.92 less than a month ago. And I noted as Jim Cramer has told us don't get greedy because Bears and Bulls make money...PIGS get slaughtered.

PRICE POINTS are designed to dollar cost average solid investments. So like one clever person pointed out that I had recommended ADPT at 4.05 at one point. That is a true statement, and even though you will notice that I did not actually purchase until months later (Search for ADPT and read my posts until you notice my disclosure on when I purchased), I have to honor the fact that I did post that price on my site. Now even though, I am one of the VERY FEW SITES to POST PRICE POINTS, you must continue to follow the way we invest here are URBANOMICS religiously. Back in June, I noticed and recommended ADPT at 4.05, however remeber these rules you must follow:
1. Buid a margin of safety (a steadfast Warren Buffen rule) to the inital recommendation price

2. Use multiple PRICE POINTS to accumulate a position in the stock:
- There will be a regular PRICE POINT (with a margin of safety built in)
- There will be a SUPERMAN PRICE POINT (a load up the bus, truck, trailer price)

3. Follow this post for stocks that you own:
If you read my later posts that include ADPT, you will notice 3.40 as another price point and in fact this price made my SUPERMAN that stock PRICE POINT. So at 3.40 you would have accumulated more stock, which reduces your original buy price down (dollar cost averaging). Further because this stock was rated SUPERMAN you must CRANK IT UP, BACK THE BUS UP!!!! That means accumulate as much of the stock as possible, up to twice your normal purchase amount.

4. Finally, review your stock periodically to ensure that the fundamentals have not changed with the stock. If they have soured, reduced your position. If the fundamentals are the same or improving, create new PRICE POINTS and continue to accumulate more stock, which reduces the average price at which you own the stock. Notice: In my post, on Friday October 26, I mentioned that ADPT's fundamentals are still on track and said to buy the stock again if it reaches under 3.40 and I gave a new SUPERMAN PRICE at 3.23 (the 52wk low). Well the stock was below 3.40 today.

So what does this mean in English...you would have probably done something like this is you followed ADPT on this site (using 1 shares as the standard buy):

Dollar Cost Average Example:
Buy 1 @ 4.05 (June) + Buy 2 @3.40 (Superman Price identified in Aug) + Buy 1 @ 3.40 (Oct 29 post price) = Dollar Cost Average Price of 3.56

I am telling you this because I believe that ADPT will be up big tomorrow which will give us the opportunity to SELL...for the short term traders. And some people may say how did you sell ADPT for a profit and this is how it happens. Need proof follow the stock Radisys (RSYS) and the posts that recommend multiple price points. That is why with Radisys we are up almost 30% in that stock.

BTW - Check out the recent news, was I right about my analysis back in June of this year about the Private Equity Firm, Steel Partners tightening the belt around ADPT, see the Article here: Adaptec in a War

It Must Be Butter...

It must be butter, cause we’re on roll! Now I have to give credit to my boy, Stuart Scott from ESPN who popularized this phrase. Another pioneer who is doing big things, appreciates hip hop, and changed the way we view our television hosts. Now hopefully I can do that for you through this site and on the subject matter of financials (mainly stocks).


~Urbanomics Update ~

Yes sir how did you like the last post where we analyzed Advent Software (ADVS). Just two months ago I told you that this stock, which was already moving in a positive direction, had more room to go. And you know through my investment style all we needed was what I have called a catalyst (Use the search tool to see how many times I talked about catalysts) Now in my short time of watching the market, I’ve noticed that a number of stocks move quickly up or down after a catalyst has been communicated to the masses. That catalyst for ADVS was apparent to a few of us in a number of different ways. Once we found our entry point into this stock, we paid attention to the information that ADVS was giving us through its press releases. I know your thinking, now how hard was that!!! Sorry no magical equation, we just simply paid attention to the fact that ADVS was disclosing through press releases that business was cranking through the roof. In one of their releases ADVS told us that they have developed or enhanced a new product and tons of their clients were signing up to use. Now again, I’m not a genius but this sounds like a solid indicator that their earnings are going to move higher over time, which means the stock price should follow...this was confirmed early through our daily ritual of looking for information on our stocks (See Zacks Newsletter disclosure). So the stock didn’t just take off over night…it was creeping here and there giving us a number of times to buy in at great prices. Remember, ADVS was recommended by URBANOMICS @ 39.25 (click here for: ADVS Recommendation ) and has been up between 15-25% since that recommendation.

But a well known secret that I believe savvy investors take advantage of it was I call the Water Cooler Investor effect. This happens when everybody and their mother get the inside tip from a website, the news, or a friend that a stock is going to do well. When this happens, a catalyst has triggered your Water Cooler Investors to jump on board and we will see huge trading volumes in those stocks. This is what happened to ADVS...it reported earnings (catalyst) confirming exactly what they had told us in press releases for the past few months and when this was discussed in their Earnings Release Conference Call, major news outlets spread the news to our Water Cooler Investors. What was the result, hordes of investors flocked to ADVS and raised the stock up roughly 19% in one day. This was the Leading Percentage Gainer of the Day yesterday and made us all very happy. I will now recommend that you sell ADVS at these levels because while they will continue to grow, the effect of our catalyst will die down in the weeks and months to come.

The perfect scenario is that you own alot of the stock, sell enough to gain your original investment back and some profits, and they play with the house's money. ADVS will be a great stock for years to come but unless you own a substantial amount we can put these gains to better use. I often get the call you show you more proof that our strategy works here at Urbanomics, well do a quick review of some of our recommendations:

ADVS - a return of over 30% in the last three months
MSFT - up 9% today as a result of a catalyst; up 30 since first recommended
RSYS - up 9% today b/c of catalyst; up roughly 5 - 30% depending on when you bought it
BBY - a large value stock that is up 10%
BNI - a large value play that is up almost 10% since first recommended

We also highlight the stock that could do better:
Rite Aid (RAD) - recommended @ 4.45, I still believe in Rite Aid and believe this should be bought at 3.95 or lower to build up our shares in this stock.
Avid Technology (AVID) - This stock was up and could have been sold for a profit; recommended @ 32 and now at 28; I believe that AVID has a longer road to recovery but this stock should be repurchased at levels that approach its 52wk low of 25.55
Adaptec (ADPT) - This one could have been sold for a profit; check the press releases b/c private equity is tightening the reigns around this company in trying to win a board seat. Superman price is 3.23, but nibble at building positions whenever the stock drops below 3.40

Why fly to tech...

Because, I'm like a bird I wanna fly away. That was my best version of Nelly Furtado and it was darn good. I can't go pop so time to get back to the basics. You wonder why previously I said their has been flight. You usually here the statement: "There has been a flight to quality". And all of a sudden the industry that we all have been running away from since 2001 is now the one that we are flying back too now that the financial bubble begins to rear its ugly head.

As usual I try to do the one thing most stock pickers don't do. All the websites and TV shows recommend picks but they don't do one thing that would have been helpful for me when I first got started and that was to recommend great entry prices. There have been a few simple concepts that have made a huge difference in how my returns affect my portfolio. Over the years, I have come to realize that entry price, transaction fees, dollar cost averaging, dividends, and earnings releases/market news have been important in understanding the stocks I pick and how much I buy and how long I hold. I would like to say that I am on the cutting edge by actually recommending an entry price but there is probably someone else out there making a bold leap and doing the same. But even some of my favorites, Jim Cramer, Fast Money crew, and Jim Jubak recommend picks but not exactly the entry price. Jubak probably comes the closest by disclosing he will purchase the stock three days (I think its still three) after he has noted that he will be buying the stock. So here goes my take on good ole' technology:

Adaptec (ADPT) $3.40 – Every portfolio needs a little risk and here is mine. This beaten down warrior blasted through its 52wk low. I see momentum action here that will create a floor and push this stock higher. If this stock every dips back to my recommendation price Superman that stock. I got in at $3.54 and since then this stock has gone up $3.82. It has come back a little and due to the markets negative outlook. I would accumulate at $3.50s if it dips and ride the short term wave to a nice quick gain. Save a little in the tank as this will be a great long term play.
Risk – Medium - High
Time Horizon – Short Term

Advent Software (ADVS) $39.25 – Another area not hit by the credit woes is technology. This company reported earnings in August and sales of their software geared towards investment companies and non-profit organizations grew at a decent clip. With the adding of new customers and management’s willingness repurchase the firms shares when they are trading at a discount, this company will continue to be rewarded for growth and look for an exit point of $45 to $47. My quick update is this stock is volatile and a little patience will be rewarded if this stock gets down back to my recommendation price.
Risk – Moderate
Time Horizon – Moderate Term


Zhone Technologies (ZHNE) $1.10 – Many well known investors note they would probably be small cap traders if they could start all over again in today’s world. And I don’t disagree with them. Small cap gives you the opportunity to accumulate a large number of shares just as a private equity firm would accumulate a large number shares for their investment portfolio of today’s medium and large cap stocks. The practice is to load up on a good thing (most funds hold a majority shares in the top 10 companies) and ride the great returns. But the problem with small cap stocks is risk… or should I say the perceived risk that in one quick swoop your $1 stock can become worthless. The way I recommend playing small cap stocks is find your entry point and give yourself some margin of safety to buy the stock. For example, I have indicated a target price for ZHNE of $1.10, but this is the margin of safety price after I noticed momentum at the $1.15-1.17 range over a month ago. On Aug 16, the death day of the market I got my margin of safety price of $1.10 and rode ZHNE for a few days and sold at $1.20. Well more momentum action is occurring at $1.20. I would say this consistent action should reduce our margin of safety and I would re-recommend ZHNE here at a range of around $1.15 to 1.17.
Risk – High
Time Horizon – Short Term

Ohh and I almost forgot my favorite tech stock of the moment, Radisys.
RSYS - This stock has tested the limits of the faint of heart. Many people watched this stock dip below the 52 wk low and thats when a technique that we discussed above came in handy. Dollar cost averaging allowed us to continue to buy this stock as it fell. The price here would be around the mid 10.80s. The "Superman that stock" price would be where I got lucky and repurchased the stock at 10.50s. If this stock drops to 10.50 I repeat...bring out the 18 Wheeler and jump all aboard. Notice the recent news of RSYS acquiring technology platforms from Intel has fueled a nice rally today. It could have been picked up today at around $11 but the nice upside move is just what the doctor ordered. It was reported the new acquisition will be completed in a little over a month and add around $50 million to the bottom line. Music to the ears of us buyers here at this point in the stock. Look for the completion of the acquisition and if as earnings begin to be revised upwards by analysts covering the stock...get ready for takeoff.

I'm Out....PEACE

Flight To Technology

As I commented before, with the turbulent markets reeling from the financial industries woes there has been a flight to technology. This is understandable as many investors still search for growth and safety. I will apologize ahead of time because I have bought a few names but here are the stocks I will bring to your attention. Some are technology plays while others show positive momentum action in this crazy market.

Adaptec (ADPT)
Zhone Technologies (ZHNE)
Advent Software (ADVS)
Lamar Advertising (LAMR)
Gatehouse Media (GHS)
Wachovia Corp (WB)

I should have more on these companies later.

Disclosure: I recently purchased Adaptec, and Advent Software. I recently bought and sold Zhone Tech for a profit.