A look back in time...

I've been following the ups and downs of the markets the last few months and what's interesting about my analysis is I don't really feel like much has changed. It has to be the most perplexing thing in the world for me now in my over 10 years of personal investing. It's perplexing because things are changing (slightly) and for the market we've seen its slow ascent higher. But I still think the market sucks. There is a lot of downside risk and I STILL like Commodities, Technology, Wireless.


I am clearing through my papers and I was looking of the habits of investing for success. The purpose of this blog was to capture the main theme of that write up and that was to keep a diary, a virtual diary in my example. The things to try and remember to do are:

~ Review your holdings (probably not daily)
~ Remember you portfolio includes all your accounts: Stocks, 401K, and IRA accounts do matter and they make up your complete portfolio
~ Pick how you want to measure your success: Success can vary from investor to investor so what defines whether you're up...a percentage, a target goal, etc
~ Start keeping track

I hope these tools go a long way into to helping you build your own portfolio. For me I do these things and really don't review my portfolio very frequently. I care about how they are trading but I don't get to concerned on their moves up or down. A great example was when we bought Burlington Northern Santa Fe. If you go back to when this stock was first recommended you will see why I thought it was important and at what prices I thought it was attractive. By taking notes, I still remember I liked this stock in the mid 70s because I believed that one of the positive things to take away from where the economy was at the time was the importance in commodities and the shift in emerging markets needing those commodities. I kept up with things but often didn't watch its swings. Its hard to wait but the odd thing was when Burlington finally got bought out at over $100 a share it was my friend that called me and alerted me of what had happened...I didn't know right away.


Here are a few examples of stocks that we've recommended over time and waited and watched them pay off as the fundamentals developed:


Supertel (SPPR) - I originally bought this in 2005 when it was known at Humphrey Hospitality. In researching my blog this was sold roughly 3 years later for around a 60% increase.

Cytyc (CYTC)- One of my all time favorite stocks, they were one of the first stocks I recommended and one of the first that I owned to get bought out. Bought at $17 and held until they got bought out in the $40s I believe.

Ambassadors International (AMIE) - This one was a stock that didn't move much for a long time I bought in 2004 for $13. I wrote an article 3 years later finally selling after I recall it hitting a peak of $32 and coming back down and settling in the mid 20s.

OIL - My call to buy oil stocks back in 2005 in my inaugural post was fitting. Who would have known the ride this commodity was going to be on going forward. Oil Post

Clayton Williams (CWEI) - Based on my call in oil, this was the a stock bought at $42 and this went all the up into the $100s. This took years to develop but what a ride.

Collectors Universe (CLCT) - Here is the final and prime reason to not let go of a good thing. CLCT is not the best stock I've owned over time, but it was the most stressful one to own. I have owned this stock since 2007. CLCT POST The story behind this stock and why I still own is because of fundamentals. This stock was paying a healthy dividend $.20c a quarter back then and helped me build up my war chest. When the decline of 2008 hit this stock plummeted to $4 when management cut the dividend. The only thing that stopped me from taking a huge loss was reading the financial report that was put out by the company. The newly appointed CEO (because the company booted the last one) outlined that the company could afford to still issue a dividend however it is prudent to hold the cash during tough times. So I waited and waited through the darkest period in the market and true to his word they brought the dividend back when the stock was around $6 a share. So I was essentially buying the stock each quarter with the dividends and lowering the cost of what I had bought the stock in. So today even with the stock standing at mid $13s a share we are seeing a 25% increase.


This is why its important to take notes.



Now it is even more important to remember your blunders and boy have I had a few in my past. The easiest one I can remember is:

Zhone Technologies - I rode this stock from $1.10 to the $1.40s. Then the fundamentals fell and I waited to long. This cost me a bunch as I never sold until this stock hit .70c! Ouch, they didn't get approval to sell in a region in Europe which they thought they had locked down. So this taught me be careful with penny stocks and they are volatile and their business can swing based on contracts.


Not Shorting Housing - This would have made me a legend if I knew about shorting back in the day. This post proves why you should write down your thoughts...my first call on housing and I didn't nothing about it: Housing


Rite Aid (RAD): Just a horrible pick and I'm glad to notice that I wrote about getting out of this position and putting my capital to better use. Ha to bad that cash went to Zhone Tech. LOL


NOT Buying Apple (AAPL) - I wrote a piece on this based on a reader question, and never followed my own advice.

BUYING ETFs - I will write here. Do not buy ETFs as an investment. I would only use these purely as hedges in your portfolio. They are difficult securities to own due to their calculations and just because oil is going up doesn't mean the ETF is going to do up also. Also, anything super levered (Banks x3) is just not smart!!! Repeat do not buy unless you are hedging your portfolio!!!

The Price is Right

As always I am looking for information to identify when our investments have reached their true valuation. This is very key because too often as investors we struggle with selling a good stock too soon or holding on to a bad one too long. It reminds you of the contestants on The Price is Right because no one can seem to guess correctly. So you know I keep my ears to the streets and this is the information I found on Clayton Williams (CWEI) and Burlington Northern (BNI).

First up is an analysis of CWEI, courtesy of ZACKS INVESTMENT RESEARCH:
We are maintaining our Buy recommendation on small-cap company Clayton Williams Energy, Inc. ( CWEI ), but raising our estimates and price objective on account of an updated price deck. The stock's recent strength of the stock makes it evident that the market is taking another look at it after staying from the Clayton story given management's appetite for wildcat exploration with less than stellar results and a highly levered balance sheet. The current surge in oil prices no doubt serves as a very important backdrop.
We believe that Clayton's proved developed reserve base is not getting the value it deserves in the market. The company is devoting more resources to oil drilling in the Permian Basin and Austin Chalk, which is expected to bring a substantial amount of oil production online in 2008 and 2009. We are raising our earnings view to $7.48 from $5.90 per share for 2008 and to $9.46 from $6.38 per share for 2009.
With prices locked in place, Clayton's revenue streams and cash flows should be consistent and more attractive to investors. Energy markets are also likely to remain extremely volatile. The company has effectively mitigated its exposure to price swings. These factors should help Clayton's price appreciate in the near term. Our revised price target of $96 is the result of a multi-faceted valuation approach anchored by our after-tax NAV estimate.

Next is a report of BNI from the Associated Press:

NEW YORK (AP) -- The chairman, president and chief executive of railroad operator Burlington Northern Santa Fe Corp. sold 23,919 shares of common stock, according to a Securities and Exchange Commission filing Tuesday.
In a Form 4 filed with the SEC, Matthew K. Rose reported he sold the shares Thursday for $108 to $108.49 apiece.


My take on this information is that CWEI will continue to rise because of many of these things that Zacks identified in their analysis. Their report was written on Tuesday May 27 and look what the stock price did on Friday, an 11% spike to over $94. To see how far we've come on this stock read the most recent posts on CWEI. And my view of BNI is that I will closely monitor it because of the number of executives that are selling shares in the company. It concerns me but I will maintain my current position until who knows...when Buffet sells.

Urbanomics ~ A site where the average person can learn to invest, manage their finances, ask stock and retirement questions in a format that easy to understand.

The Hype

The hype comes in all shapes and forms. For most of us avid Wall Street fans we may read or hear about it through our favorite shows, blogs, or newspapers. And the hype reminds you of the teams like the New England Patriots. A great team that was poised to win it all. Many people overlook the fact that there were a number of games that New England could have and should have lost during the regular season and post season before the let down loss in the Superbowl. A number a games would have told you not to believe the hype like the Indianapolis Colts or New York Giants regular season games that exposed the Patriots. Now lets take a similar view to the market right now. Yes, people are excited because the markets are moving up and the Dow even touched 13,000 recently. But how quickly we forget what brought us to this point. The market is still suffering from the stuff that that gave it upset stomach in the first place. The hype is people like Henry Paulson coming out recently and saying that the market turmoil or upset stomach could soon be over. That's like saying that you can give the markets Pepto and this will all be over. Sorry folks, that is not the case and unemployment is now at levels that mirror the last recession in 2001 and many economists believe that it will continue to deteriorate. The financial markets are still a mess...don't believe me, as Citigroup who is throwing up and selling businesses left and right. And I am sorry for the analogies but I want this point to sink in, the markets are don't with us yet.

I won't change my stance at this point and like most of the stocks that are on our radar or that we have recommended here at Urbanomics. Take Ricks Cabaret (NASDAQ: RICK) which is up rough 13% today, H&R Block (NYSE: HRB) which took out new 52 week highs, and Coinstar (NASDAQ: CSTR) which exploded after their earnings announcement as proof that we are picking timely market plays. Ricks Cabaret is a great small cap stock that probably continues to do well even during a recession catering to big wigs who spend big bucks at their "higher-end" (no pun intended) establishments. And H&R Block should probably be coming of a strong tax season as people are eager to file and qualify for the great tax rebate check that our government came up with to stimulate the economy. It will do one thing and that's stimulate bill paying and retail business. Lastly, Coinstar is doing well after a great earnings season and they are benefitting from increased sales in their DVD kiosk business through a big contract with Walmart. I hope you also love the sector specific plays and REALIZE that high commodity prices are here to stay for awhile. Clayton Williams (NASDAQ: CWEI), AK Steel (NYSE: AKS), the exchange traded fund OIH (AMEX:OIH), and others are all great plays and make you feel a little bit better when you buy gas at the pump or buy something made from steel.

Enjoy the weekend and holla back!

Why I Won't Sell(out)

I won't sell out because I keep it real, you know what I'm saying. I mean that's my job here at Urbanomics, to keep it real and uncut. And the problem is this tag gets thrown on a lot of people all the time. Take your favorite hip hop artist and you get a real quick example of what I mean. Let's look at 50 Cent, the hardest rapper, forget rapper...man alive. He took nine bullets and lived to rap about it through his music. Who can forget the debut album, "Get Rich or Die Tryin'", which exploded on the scene in 2003 laced with gangsta rhymes, tight beats and catchy hooks. I won't test his gangsta, with tracks titled:

~Many Men (the hook goes "wish death upon me")
~ What Up Gangsta
~ Don't Push Me


And everyone will remember "In Da Club" and "Wanksta" as memorable hits that put 50 on the radar. My how quickly times have changed. Now I won't call my man 50 Cent a sellout but many have questioned the general since the release of that first album. Maybe it was the tracks that he later dropped such as "Candy Shop" or "Amusement Park" or is it just human nature to take shots at the guy on top by calling them a sellout and wishing for his demise from the thrown.


So what does all this have to do with stocks? Well many people sell or sell(out) on stocks because their stocks made it big...kinda like 50 Cent did. As documented in my last post, I highlighted Clayton Williams Energy Inc. It is one of the high flyers of the year but it wasn't always that way. This company first came up on my radar way back in 2006. Yep, it was January 2006 when I made my second wave of investments in the oil industry. A year two before that you may remember major purchases like PetroChina that we made before the great Warren Buffet
revealed his acquisition of a large number of their shares also. A small oil and gas exploration company called Clayton Williams made a splash on my stock screener. With small victories in my portfolio, I was looking for more small and mid cap stocks to purchase with the opportunity for huge upside. Run a chart of this stock since the beginning of 2006 and you will quickly learn that this stock was trading down since the beginning of 2008. But as Warren Buffet has always mentioned if you believe that you have obtained a stock at a discounted price then hold onto that investment until its true intrinsic value has been reached. Well it caused me great pains to watch my investment drop to levels of roughly 30% declines at some points, but you have to think long term! The economics behind oil and gas were pointing in the right direction and all it took was good management to pull this company up off the ground. Today CWEI has taken out new 52 week highs once again and this wouldn't have been hard to see. Going into its earning CWEI sold some of its oil fields which is guaranteed to present a nice upside to short term earnings going into its quarterly earnings meeting. After this meeting the market loved what it heard and pushed CWEI up 7% more on the day. On the year CWEI has run up over 100% and I am still not looking to sell anytime soon. I ain't no sell(out) just because CWEI is hot. If the fundamentals look good I am sticking with my stock and keeping it real. Take 50 Cent for example even though people have taken shots at him, his second album sold over 1Million copies in JUST 4 days.

Knowing when to sell is a tough thing so we will look at some times when we have gotten it right and also some thoughts from the big dogs that do this for a living.

Holla

Best Performing Stocks

Patience is something that cannot be taught. And as I have evaluated some of the best performing stocks of this year so far, I am pleased to note that one of our recommendations comes in on all the lists with big returns this year. It is Clayton Williams Energy Inc (CWEI). This stock has been with us so long that if patience is your weakness it would have been exposed. If you gave up on this stock that was in a sector we have constantly talked about week after week you would have taken part in these great gains. Need more proof check out these:

Urbanomics post on Clayton Williams, and other energy plays...notice the date of the article and the message from 2 years ago to stick with Energy stocks, Clayton Williams and Weatherford, and Chesapeake Energy.

http://urbanomics.blogspot.com/2006/04/portfolio-alert-ballin-of-wall-street.html
http://urbanomics.blogspot.com/2006/01/stock-update.html

Motley Fool's take on this year's top stocks:
http://www.fool.com/investing/small-cap/2008/04/17/the-years-top-stock.aspx

Seeking Alpha's write-up on top stocks:
http://seekingalpha.com/article/75107-another-month-of-08-in-the-books

I like to note that a few of my friends are making great recommendations at this point and one of their stocks is actually topping the list. This stock is Finish Line (FINL) and what I love about this stock is that we were 100% on the money with our analysis. Now I did not buy into this stock but my recommendation was to wait for the legal proceedings from the Genesco trail to end and look to accumulate this stock in the event that the judge allows Finish Line to walk away from its original deal to acquire Genesco. I didn't like the potential acquisition and it looks like the street agreed with me. Also I would like to point out that another one of my friends has been enjoying an incredicble ride with the credit card network processors Mastercard (MA) and Visa (V). Again, I do not own shares here but I think these are great plays due to the fact that the networks don't have exposure to customers with deteriorating credit concerns like the big credit card issuers do (Bank of America, Capital One, Citigroup)...they just run the transactions back and forth.