A little Love for Barack Obama

What does Obama and Girls Gone Wild have in common.

Exactly nothing as far as I can see. But if you check out the video at barelypolitical.com, you may be thinking that the two go hand in hand. A 24 year old busty young lady has decided to declare her love for Obama, well more like his political campaign. It is pretty creative in my book and whatever it takes to give more press to Barack and his movement...I support it. In the video, the Obama-girl dances and shakes to a catchy song that professes her love. She professes her love in the office, on the train, in the park, and with random strangers all while the camera manages to focus on Obama's...sorry can't lie Obama-girl's assets.












Lastly I'm in the process of reading Barack's first book and so far its been hard to put down. Please pick up this book as read his interpretation on the impact race and inheritance plays in America. The book is "Dreams from My Father" by Barack Obama. More to come as I complete the book.

Back That Thang Up - Ballin' on Wall Street

Juvenile has penned hit songs like Ha, Slow Motion, Rodeo, and Bounce Back...so in honor of the former Hot Boy himself I have to recommend my "Back That Thang Up" pick and tell every to back the truck up and pick up shares of:
RadiSys (RSYS) Back the truck up on this one. The big time investor David Nierenberg
is talking, so holla at cha boy b/c I'm listening. The activist investor has a core set of rules that he follows when he makes an investment. Similar to my man Warren Buffett he looks for great valuation supported by a margin of safety, a good management team, trends, strong balance sheets, and improving sales. This has led me to RSYS a stock near its 52 weak low but poised to turnaround. The stock is covered by 5 analysts with price targets well above the 52 week low. Nierenberg has been an activist in this company and continues make this an attractive purchase as a 10% investor in RadiSys. Back the truck up and enjoy.

Buy Recommendation: $12.91
Note: I will be adding positions to this stock after my recommendation.

Another stock to watch: TD Ameritrade. There has been a lot of talk about TD Ameritrade and the phrase has been consolidation. There is talk of more consolidation going on in the brokerage sector, specifically online brokers. The potential buyer is supposed to be E-Trade. Shots out to my boy over in Cali working for E-Trade...you might be handling another conversion. Buy rec: $20

June week 1 - Stock and Lock Picks

ADPT – Adaptec; Look for private equity firm Steel Partners to continue to apply the vice grip here and try to take over this company and put new management in place. Good long term potential with Steel putting there money muscle behind them, but at $4 range…should see some quick upside. Already a nice move to the upside from the 3.50 range.
Buy In Target 4.05-4.07 and anything lower.

STXX.OB – South Texas Oil Company; Significant oil well find should lead to upside in earnings revisions and price appreciation. This well is the second recent find with the potential for more to be found.
Buy In Target – 9.14 and up

CNTF - China Techfaith; This mobile device company was a great tip from my boy who has been following this stock. It has recently hit a 52wk low and should be gain from recent job cuts and what is going to be a the largest mobile and broadband market in the world....China. Buy on any bounce off of the $6 dollar mark.
Buy In Target - I love the 52 wk low of $5.50 but a more reasonable price may be $5.75

MMS - Maximus; I apologize for not posting this one but we jumped on this one around $30 dollar range. Now up almost 40%, I have thought about pulling out. However, two new contracts (state of TX and Chicago school systems) have given MMS positive earning revisions for the next quarter and year...blowing the numbers out of the water. Look for this to continue to climb as it has received a recent upgrade and a strong buy from Zacks.com "Profit from the Pros" list of Momentum stocks. Hard to pick an entry point with this rising consistently. But any pullback into the $42 range may be a good entry point.

CLCT - Collectors Universe; I love the name and the industry. A strong dividend play here and a slightly slower mover compared to our other stocks (MMS & MOBE, SBH). However, CLCT is receiving consistent attention for private equity to turn ship around. We are up 5% from the intial $13.13 mark and I still think this has room to go. With recent activity it may be hard, but I would wait for a slight pullback and I like this stock at the $13.80 range.

I will come up with some rating system but a good short term play is STXX.OB. With not as much volume as we would like a limit buy may be good here.



I am going away from the email format. This should give me a little more consistency to my post. Also here were the picks from the last quarter that netted us two big winners (This was a collection of emails forwarded, most with dates, and the earliest email listed at the bottom):

Comments for 12/1/06:

I apologize again, for the third update within a month
but we are getting some great action from the stocks
we've recommended so far. Both MOBE & SBH are up
roughly 10% today.

MOBE - Again a volatile stock and you saw people
taking profit, b/c notice for no apparent reason it
dipped yesterday sharply. It you were paying attention
their were additional buying opportunities presented
yesterday...the stock dipped below 3.30 and could have
been bought at a low of 3.21. The rise today can be
attributed to great news, we've got friends in high
places. Yesterday @ 3.21, a hedge fund bought another
round of shares which has pushed the prices up and
should create a nice floor for the stock price (They
have made 10 purchases in this stock within the last
month over 15 within the last two months{See Yahoo,
ticker: MOBE, insider transactions). And they have
cash to burn...remember the hedge fund article I sent
you. MOBE hit a high of 3.70 today which is a good
sign. I don't make predictions but I will recommend
taking profit at $4 a share and maybe leaving a few
shares to see what this stock does.
A few ppl let me know they bought the stock, I do not
recommend buying this stock at this point. I can't
guarantee you that 3.50 is a good entry point...but I
do personally think it will continue to rise.

SBH - Obviously the growth engine of former Alberto
Culver. Hence, the reason for a spinoff to fully
recognize the true value of a subsidiary. SBH is up
over 8% today. This stock could have been snapped up
by buying ACV before the spinoff (see the previous
emails) or by buying SBH the next day after the
spinoff for the opening value which was 7.30. If the
stock is up to $10, I'll let you calcuate the gains so
far. I contemplated buying mores shares this week but
was a little worried about the quick rise, when I
guess I was wrong, b/c the stock just got listed as an
"Outperform" by Bear Sterns and coverage was also
picked up by Oppenheimer, which could be considered
unusual for a small stock to track this early by to
large investment firms. I definitely don't recommend
buying more at this point because this is up almost
$50% in two weeks. I would think a better range is
back around $8 dollars.

Good luck and enjoy the weekend. If you have any
interesting stocks you've been following forward them
on.

---------------------------------------------


--- JG wrote:

> Date: Tue, 21 Nov 2006 09:19:40 -0800 (PST)
> From: JG
> Subject: Fwd: Portfolio Update
> To: xxxxxxxxxxxxxx
>
> Note: forwarded message attached.
>
> Well fellas, we got the momentum action
> that needed. Take a look at MOBE when you get
> a chance. The stock is definitely on the move
> again with strong momentum today. I usually
> don't like this many updates or even promote
> watching a stock this often,but with the
> volatility that you see here you may want to
> begin setting your price points for a quick
> exit if the volatility causes the stock
> down quickly.
>
> Take a quick walk with me and I mean quick,
> b/c if you remember my earlier email (NOV 14) to the
>
> group I recommended MOBE at roughly $3 a share
> as an entry point. I bought then and was able
> to buy more shares at $2.85. The transaction
> volume has been riding high since then and the price
> of the stock has increased to a high today of $3.60
> and is now settling in at about $3.38. If we
> see more action to the $3.60 range consinder
> taking profits and holding onto the rest for
> hopefully what Peter Lynch calls the ten baggers
> the beautiful 10 fold return. (We all can dream)
> ---------------------------------------------
> And ACV did exactly what we needed it to do. At
> remember at the price of $49 ACV decided to issue:
>
> - special cash dividend of $25
> - Give us new shares of ACV @ 17
> - Give us new shares of SBH @ 7
> add these up and you get = $49 dollars
> So basically they gave us free cash and our
> position never change. What is the current
> price of the stock
> ACV = 21.27
> SBH = 8.82
> Cash Dividend = 25
> Total = $55.09 - $49 we bought in at give us $6
> profit
> per dollar
> My math says your portfolio is already up roughly
> $6 dollars for every dollar you invested.
>
> Enjoy and I included the previous email I sent last
> week.
>
> jg
--------------------------------------------------
> From: JG
> Subject: Portfolio Update
> To: xxxxxxxxxxxx
>
> Keep your eyes peeled for the following stocks that
> I
> am digging.
>
> ACV - Alberto Culver, they are spinning off their
> Sally's Beauty division, issuing special $25
> dividend
> and shareholders get shares in both new companies.
> Historically both stocks rise after a spinoff.
> Current Ticker: ACV
> Future Tickers
> Alberto Culver (ACV)
> Sally Beauty Hldgs (SBH)
>
> This trade needs to be done b/f 11/16 which it
> appears
> will be the ex dividend date. If not you will have
> to
> buy share of the new company separately which isn't
> bad either.
>
> Also MOBE - Mobility Electronics. They make the I-Go
> adapter for all of your electronic gadgets that need
> to be charged.
>
> I like these and have added positions.

Real Estate, Housing, and Dynamite...

Now you are probably wondering what these three things have in common, so you can will the Prize on "The Million Dollar Pyramid" (if you don't remember this show, I am probably dating myself). To have won the top prize you better have answered: "Things capable of exploding". And of course, we here at Urbanomics hate to be ahead of the public on things but, damn we did it again. Check out an article from over a year ago, BEFORE...the Subprime (aka Interest Only Mortgage) meltdown began and tell me if the crystal ball was working that day: http://urbanomics.blogspot.com/2006/02/huff-puff-blow-houses-down.html

See in that article we were telling you ahead of time that the numbers just don't match. And I know we hate when someone wants to historically prove things with numbers but what's better than learning from the past. But putting that aside what about the common sense element of things. Over a year and a half ago I thought I was the only person left in America that didn't understand how everyone could afford a home except for me...and at that time I thought I had a good paying job. So for your Urbanomics Rule of the Day, please remember, "If It Sounds to Good to Be True, then Run the Other Way". So read on as I explain in an uncomplicated way why real estate isn't as fun as it used to be. First, the problem was the math wasn't working out correctly with a lot of these new loan gimmicks out there on the market. The last time I check paying only interest only works in the favor of one individual...and thats the owner of the loan. So let me get this straight, I continue to pay all my interest off and get no added value of my principal going down, yeah what a steal of a deal. The only time this great plan works is if you plan on selling your place in a few years and don't care about obtaining any income from your home except for the appreciation on what you sell it for. And that would be a great plan if everything in the world was perfect. But unfortunately for most of us the world isn't perfect and that strategy worked for only a few people. Also, even if this strategy does work, the great Warren Buffett teaches us to have a risk premium calculated in every investment we make. So in plain English here were peoples two problems:

1. People didn't treat buying a house like an investment and never factored in a risk premium (Even plainer: Too many damn things can go wrong with those loans for you to actually benefit from them).
2. Unless your an expert, houses should be treated as a long term investment.

Now I chose these two things because it points that most people didn't think about a house being an investment and truly weigh their options on if it was the best investment for them at the point in time. Basically, if interest only was your "only" option you should have been putting your money to better use. Secondly with the risk of interest rates rising (note at that time rates were at historic lows)you will get crushed if you can't sell your house timely.

Here is the ending result folks...the perfect storm happened. Rates being so low for so long began to rise, although they are still historically pretty low. Your interest only terms expired and peoples very low payments increased because they were now paying interest and principal (what they should have been paying in the first place). Secondly, people didn't treat their homes as an investment and realize that homes are not the most liquid investment. This means that you can't sell them very fast...like you can a stock in seconds. So the outcome: 1. people with bigger mortgage payments they can't afford, so they want to sell -> 2. Now we have too many houses on the market and not enough buyers -> 3. If you can't sell your house then the forclosure man comes a callin'.

The banks and mortgage companies aren't in the business of owning homes. So they are attempting to sell these properties as quick as they can. But one last problem...builders such as Pulte, Toll Brothers, and Beazer are continuing to pump out new homes. So with all these people sell old homes, and builders putting new homes on the market, prices for houses can only go in one direction: DOWN. And the numbers don't lie:
1. Median Home Sales Declined drastically from last year to this year
2. New Home inventory levels are very high
3. Existing home inventory levels are also very high
4. Roughly 30 lenders have gone bankrupt

I'm out but if you or someone you know has experienced the headaches of the housing market...please share.

The Price is Wrong...At Least at the Pump

To blog with a purpose is not an easy thing to do. There are a number of things that are on my mind that will need to be discussed. For instance, there are subjects that I don’t into much and that would be politics. I was aware that a debate took place yesterday and the issues are all close to everyones hearts these days.
The others are how quietly the price at the pump continues to rise. As you will probably notice from my Ballin’ on Wall Street articles…I keep my ear to the streets. I have not been afraid to go on record in the past and I will continue to do so in the future. The dynamics of what we pay at the pump is center to what is happening in the world. Most people don’t realize or often try to forget. Often, someone may respond with who cares or its not going to impact ME…and that’s farthest from the truth.
Gas Ain't Cheap

Now with the price of gasoline at roughly around the $3.00 mark we are right back to where we were over a year ago when the entire country was in uproar. People cried this is price gouging and the oil companies can lower the prices if they want too. There may be some truth to this statement, but the overall “Urbanomics” of the situation reads like this:

Demand for oil with continue to be high – With the addition of China as a world power, oil consumption will continue to rise. And a thought others may not contemplate is demand will continue to come from developing nations that often use petrol or “oil” to power gas driven generators needed to provide power due to their country’s infrastructure that cannot provide reliable electricity.
Supply – The supply of oil has been debated but that not the importance. We do know that overall oil reserves will continue to deplete over time and that it takes a lot of resources to extract it. From companies in the Gulf region, to Canada and it’s oil sands, South America, Middle East and Africa. This allows those countries to charge a premium prices for their product. Through a cartel like OPEC the supply will continue to be controlled to effectively regulate price. The last the effects the prices of oil is the global affairs.
Global affairs help move the price of stock because in our highly modern world the investors must also factor in their two cents. With oil rich nations like Saudi Arabia, Iran, Iraq, Nigeria, and Venezuela constantly in the news, investors have helped to sustain the price of oil by factoring in their own risk premium. For instance, situations like the war in Iraq, or the nuclear capabilities of Iran, elections in Nigeria, and leadership in Venezuela can alter the price of a commodity. Oil fluctuates as these circumstances change. Our interpretation of these events helps to determine if oil in the future will be more expensive than it is today.
So I generally no longer say, I don’t care when it comes to global events because they do affect me. I drive a SUV and pumping gas into that thirsty vehicle ain’t easy. Just makes you wonder where our politicians were when alternatives to oil or infrastructure changes such as modernizing our country’s rail systems could have been evaluated. Until then I urge you to take action and not just to get slapped in the face by the oil tycoons. Arm yourself with some money and buy oil stocks. Now I have sold a number in my portfolio after impressive returns of over 100% but with the resurgence of oil take a solid look at buying on any dips that happen in the oil sector. I know, I know…the oil sector is very generic so I am leanin’ wit it, rockin’ wit it towards: Oil Services, Refineries, and International Oil & Gas Drillers. Let me guess, you want names…well guess what we all want names and picks. Here is my watch list including ownership disclosures:

Oil Services – Weatherford WFT (Currently Own)

Refineries – Valero VLO

International – PetroChina PTR, PetroCanada PCA, ChinaPetro&Chemical SNP

It's Been A Long Time...

Shouldn't have left you without a dope beat to step to. Whats up everybody its your favorite man signing in. I know its been quite awhile since I drop my thoughts on you...so you wondering whats on my mind: Barack Obama, Jennifer Hudson, Heroes, Las Vegas, China, Amircan Idol, and whatever the heck else is on my mind.

I was going to start with Barack but I have to skip to American Idol. Now I will admit that I watched the first week and laughed at everyone that couldn't sing a lick. And then I had thoughts about myself standing in front of that panel and I actually like my chances. All I know is you let me sing Shai, "If I Ever Fall In Love" and I might be headed straight to Hollywood. But for the first time in over a month I am catching Idol and I think they are down to almost 20 people. And I am thinking about how much of a factory this show is.
Read Right Here

I guess the reason why I called it a factory was because I don't have to watch it and I can guess the type of people that will make it to the final round. You have your "I don't look like a singer", "Beauty but singing is suspect", "Shy, not sure if I can sing on the big stage", "Hey I'm a rebel...but I'll sing while I'm here", and "Ohhh by the way we can drag this contest on but the world knows I am the best singer" personalities. There is always a little bit of scandal, stars that got booted that go on to stardom, and don't forget the ability to text message your life away so that Fox collects all the way to the bank.

This leads to the next thing that was on my mind...former Idol Jennifer Hudson. This girl has been living it up with a hit role in a big move, which I want to see, I wonder which personality she played while on the show. Save the drama, vote Obama that will be my motto all the way to the elections. I really like Obama and all that he stands for and I know many people would like to protect him and fear for his life, but Barack has the ability to do more than make history. He can run a country in a clean, fair, and possibly bipartisan fashion. Heroes is a show that I have started to watch and I like the plot. Its almost like an X-Men type of feel but like the cartoon lacks in the reality department. The show I most recently watch talked of a plant where they experimented with humans and then created people with crazy abilities to read minds, create fire, move through walls...and that good stuff. Good ole china has created a buying opportunity for my stock portfolio. In case you didn't notice China who has single handily propped up the worlds economy for the last few years had a slight stock market plunge. It dropped 9% the other day which lead the Dow Jones to fall roughly 500 points. Tread cautiously in this market but look for great buying opportunities. And finally, my thoughts on Las Vegas and All-Star weekend. There was a lot of noise and negativity around the All Star break but being there on ground zero I have to say it was one of the best vacations that I have had. Unfortunately I have to send a reminder to America that whenever a group of people of a similar culture get together it doesn't always have to be looked at negatively. Vegas was a melting pot of colors and that should be appreciated, not depreciated.

Holla

HIP HOP IS DEAD!

Is it true, the latest report is that HIP HOP has been murdered, yep ya heard me murder in the first degree. Why all the bulletins on this latest death, my theory is because everyone wants to be the first one to say they called it right. I mean you have economists (Sorry had to go deep, look at the name of my blog!) every year that guess the rise and fall of the stock market and each year its guaranteed one side will be wrong. But whoa if you're on the right side, you will be published in newsletters, show up on CNBC, and probably even get a book deal if it happens to be one of the largest rises or falls ever known to the market. I will get off this analogy but think of it this way, image if you were the analysts that on tv or on print predicted the fall of the tech boom in the 90's or the market slump after 9/11. These guys were heralded as outright geniuses...but how many of those genius analysts predicted that the market would come roaring back like it has. Haven't checked, well the Dow has recently set its ALL TIME HIGH.

But back to the topic at hand:
Read the HIP HOP autopsy


We are all in the prediction game, but what ammunition do the naysayers have. Well try this on for size. This years 2006 Billboards did not record 1 hiphop artist in the top 10, except for Eminem's Curtain Call...but this was a greatest hits album. I know, your next question is what the heck made up the top 10, check this out and don't rub your eyes...I already tried:

1 SOME HEARTS CARRIE UNDERWOOD 3,721,7622
2 HIGH SCHOOL MUSICAL SOUNDTRACK 3,252,743
3 ALL THE RIGHT REASONS NICKELBACK 3,043,246
4 ME & MY GANG RASCAL FLATTS 2,761,915
5 THE BREAKTHROUGH MARY J BLIGE 2,636,062
6 CURTAIN CALL: THE HITS EMINEM 2,576,365
7 BACK TO BEDLAM JAMES BLUNT 2,231,085
8 THE ROAD AND THE RADIO KENNY CHESNEY 2,100,744
9 THE LEGEND OF JOHNNY CASH JOHNNY CASH 2,004,003
10 BREAKAWAY KELLY CLARKSON 1,980,966

As you can see country dominated the theme. Overall these numbers look low but I guess we have been spoiled by the numbers Ludacris, Eminem, 50 Cent, Jay Z and other popular hiphop artists have registered recently. So where is hip hop closest representor that would be TI's King @ roughly 1.5M records sold. As you can see R&B was well represented with Mary J at #5, Mariah Carey #11, pop/hiphop group Black Eyed Peas #14, Jamie Foxx #15, Chris Brown #17, Justin Timberlake #18, Ne-Yo #28, and the next true hiphop artist Chamillionaire at #35 with 1.2 M. Get Rich or Dye Tryin Soundtrack, Notorious BIG, Gnarls Barkley and Lil Wayneare other notables just above 1M.

So what does this all mean, two things in my theory. I think that this was just the year of the singles for hiphop. You have a number of big singles from smaller artists and these artist will need time to crossover. Think of the huge singles of 2006:
Walk it - DJ Unk
Soul Survivor Young Jeezy ft Akon
Lean Wit it Rock Wit it - Dem Franchise Boyz
Chicken Noodle Soup
We Fly High - Jim Jones
What You Know About That - TI
Golddigger - Kanye West
Grillz - Nelly
Ridin - Chamillionaire
Hustlin - Rick Ross

Look at this list closely and realize that most of these artists are on their first or second album. My second theory is the lines of R&B, pop, and hiphop are blurring and definitely more because of hiphop. Again the top albums and in R&B and pop have a heavy dose of hiphop influence. Check this list out:
Chris Brown - newcomer with hiphop influence. Example had a song featuring Little Wayne
Ne Yo - first single was a hiphop track with Peedi
Mary J - long ties to hiphop with classics of her and Method Man, Game, and P Diddy
Mariah Carey - same can be said of her hiphop collabo's
Jamie Foxx - his hit single featured Ludacris
Pussycat Dolls - hits singles featured Busta Rhymes and Snoop Dogg
Fergie - part of Black Eye Peas
Justin Timberlake - productions ooze of Timbaland, a well know hiphop producer and artist (courtesy of Timbaland you can now throw Nelly Furtado and Omarion)
Ciara - featured Bow Wow and Chamillionaire on songs

Do you get my point!!! And to finish things off, we had none of our heavyweights drop albums this year. My prediction, this will be a huge year for hiphop and other artists with huge hiphop influences. These albums and more will make sure of that:
The Game - Doctor's Advocate, not a classic...but creeps close
Jay Z - Kingdom Come, this album has brought even me back to Jay Z's side, check out my write up on his tight track "Lost Ones"
Nas - Hip Hop is dead is the name of the new album and he's teamed up with Jay
Ludacris - great album, and he's evolving...kinda like Nelly has
Young Jeezy - note he was a newcomer less than two years ago
Akon - already blazing the charts
Eminem - he's put together a compilation album "Eminem presents the Re UP"
50 Cent - album coming soon
Snoop Dogg - The Blue Carpet Treatment

My prediction HIP HOP takes its throne back and we shake our way back into 2007!

Nuff said