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.

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.

Santa Claus Rally...

This rally came too early to be called a Santa Claus rally this year!! To have a quick flashback you will recall that we recommended increasing our holdings of stocks to take advantage of certain actions earlier in the year like Quantitative Easing (QE). Looking back, I agreed with the thoughts of many other investors and economists that it was time to move up in the risk spectrum. At that time, I believe QE would negatively impact bonds and favorably impact stocks. Our picks ranged from: 1. Dividend Stocks 2. Commodities 3. Large Cap 4. Our Usual --Down and Out Stock w/ Great Upside Potential.

Urb Lessons Learned: Keep some skin in the game on speculative stories that perform well.

This year I learned to trust my instincts but I wasn't consistent with my usual strategy of keeping a little bit of a well performing stock. The following stocks fit our Down and Out Stocks w/ Solid Upside, however we sold early and didn't keep any to enjoy this even more of the upside:

~ Boston Scientific (BSX): Bought this down and out and eventually accumulated this stock at a dollar cost average of $6.20s. Looking back we sold this stock around $7 and now it boasts an asking price of $7.82. Things that make you go hmmm.

~ Audiovox (VOXX): This consumer technology play was a solid call after it clear our down and out strategy with great upside. Consumers are coming back and they make the great Xmas devices that are on people's wishlist. Bought around 6.40s, sold around $6.8os because I got jittery and this stock now trades around $8.45!!! Wow

This reinforces my lesson learned in 2010, keep some in the game, you'll regret it less later!

Here is a look at other nice calls since our shift away from bonds:

~ American International Group (AIG): Gone from $30s to $50s and it looks like the upside is just beginning. This was part of our down and out call, no dividend so the upside needs to be significant

~ Collectors Universe (CLCT): Maintained our position here from levels that range from $ 4 to 9 bucks. This stocks boasts a healthy dividend payout of 32.5 cents a share and keeps the income stream coming in. Management has cash so the dividend looks solid. And the ride up to the $14-15 dollar level has given us nice appreciation.

~ Iron Mountain (IRM): This stock is a quiet surprise because its seen good upside very quickly. Roughly a 20+% move, this was a down and out stock that boasted good dividends.

~ Republic Services (RSG): Waste management has never looked so sexy. I personally think this stock was battered for tough reasons, which gave us a great entry point and this stocks has a dividend.

~ Oracle (ORCL): I don't write often about this stock because I have never sold it since in 1999 or 2000. Yes, I have loyally owned it for 10 years. I never owned a lot and perplexed as to why I never bought more but its now gives out a small dividend which allows me to reinvent in ORCL.

UNDERPERFORMERS for 2010

~ Radisys (RSYS): The reason why this stock is listed in the underperform section because it hasn't gone down but its basically DONE NOTHING! If you don't believe me, check out my dog and largest shareholder David Nierenberg's letter to RSYS: Letter

Note: Please read this letter. Nierenberg has asked RSYS to take a number of steps to improve the stock price. It appears that RSYS just announced one of those actions, however it comes on the heels of RSYS trimming its 4th Quarter Outlook.

STAY TUNED FOR 2011

American International Group (AIG)

On a positive note today, we saw the shares of AIG rocket up 14%! As you have noted, we have recommended and are still bullish on AIG. The skinny:

~ AIG plans to repay the Federal Bank of New York

~ AIG is selling key assets, like their Asian life insurance, unit to drum up cash for repaying their loans

~ The market is reacting positively because it begins the process the US Treasury converting their shares to common stock

~ On the heels on GM, it LOOKS more feasible that the government may find receptive investors that want to snap up shares on a possible turnaround story

While there is still more room for this stock to run up, we have had a nice move here. I think with the developments highlighted above, this will DEFINITELY be a mainstay for my portfolio going forward with strategic buys going forward.

Like its Dynamite

If you haven't heard the song Dynamite by Taio Cruz you have got to check it out. Great song and it describes how our picks have been lately. My goal is to hopefully post more but write less. In this turbulent market, I think we have the right strategy for investors: wait for huge discounts in stocks and don't be foolish... take gains where they make sense. I try to frequently summarize recent picks and give status updates on older picks:

American International Group (NYSE:AIG) - I am trying to track down the most recent post of AIG. If my tracker is finally up and running I will look to see when I bought the shares. AIG was a pick that practically hit me in the head. I had a hard time recommending this stock but to be honest I listened to Bill Gross awhile back who said buy what the US Government is buying. I will write more later, as to my opinion on why this would be the case with stocks that are basically owned by Uncle Sam.
Disclosure: I own share of AIG

Boston Scientific (NYSE:BSX) - Not a stock for weak stomach. But this company has made an acquisition and bounced high recently on publication about their defibrilator devices. This is one where I would continue to buy on dips. Dollar cost average in and be patient and this company is in a restructuring mode.
Disclosure: I own shares of BSX

Exar Corp (NASDAQ:EXAR) - Appears to have found a nice floor around the 52 week low mark. This could have good upside from here. Moving nicely already.

Audiovox (NADSAQ:VOXX) - Moving above recommend price.

Theravance (NASDAQ:THRX) - This one was a really solid call. It ripped up from recommended level after positive news based on FDA comments.

I also written recently about these stocks and continue to see solid upside going forward:

Iron Mountain (NYSE:IRM) Up very nicely from recommended price. I watched this closely and there was a chance to buy this stock at an even further discount around the $20.80 and above. Doing well so far.

Comcast - Note there are two tickers for this company. Its up over the recommended price. I will write more about the difference in a new post.

Long-Term Stocks:
I love these names and they continue do very well:
Enterprise Partners (EPD)
Radisys (RSYS)
Disclosure: I own shares of RSYS
Collectors Universe (CLCT)
Disclosure: I own shares of CLCT
Visa (V)
Disclosure: I own share of V