Today marks the second anniversary of my mother’s passing. It’s true that time has brought some healing. Still, not a day has passed without me thinking of my parents.
Not too much commentary on the markets. $FEED and $ONP have been a disappointment. I’d say raise some cash where possible. Don’t buy short ETFs; instead buy gold via $GLD.
This post was done via WordPress for Android phones. =)
Orient Paper Inc. [ONP] has been in the mix of daytraders’ chatter the past few weeks. It all began with a report from Muddy Waters (a hedge fund, not the late musician) that claimed ONP was conducting fraudulent accounting practices. The stock nosedived a few weeks back to about $4. The same roller coaster ride occurred a few days ago and again today. Each time the stock seems to be making lower lows and lower highs. Today’s sell off is based on rumors that some analyst may suspend its rating for the company until an investigation is completed to either verify or disprove Muddy Waters’ claims. I read a good article on SeekingAlpha.com today that mentioned the fear of Chinese small cap stocks and also a hypothesis about how American based hedge funds are giving these companies the good ole’ wall street f*ck. I also read a recent 8-K form released by Orient Paper to counter Muddy Waters’ allegations. I watched this recent video from Doug over at Wall Street Media Company about his trip to Orient Paper’s headquarters and saw how large of an operation this company conducts as well as its expansion plans. Lastly, I did some browsing around and read other articles concerning the recent allegations. It all checks out for me and I think the fraud allegations are bogus. If you’re a speculative investor this one is for you. If Muddy Waters is found guilty instead ONP should go up to $7-8.
Disclosure: Long ONP at $4.42. Remember I have to hold for 30 days too. This is not an endorsement for you to purchase ONP. Please know that risks are inherent in investing in Chinese small cap stocks.
Image from www.simpsontrivia.com
Tonight I read that Matt Garza pitched the 5th no-hitter of the 2010 season. The way the 2010 season started it seemed as if we were on pace to see the total number of no-hitters games fall outside the three-sigma rule of statistics. My initial suspicion was that something had changed about the baseball that was giving pitchers an edge.
Image from bigsislilsis.com
Okay so by now you have probably already felt first hand this seemingly unrelenting hot weather. Studies indicate that last month was the hottest June recorded. So are there trades to take advantage of this hot weather?
Here’s a link to download the PDF file for AgFeed Inc’s presentation given this week in San Francisco. The main theme to note is that they are continuing to integrate the full hog production cycle (womb to tomb) to realize maximum profit margins. They are estimating full-year revenue for 2010 to come in at about $200-205M. This is roughly a 15% increase from last year’s $173M number. For full-year 2011 they are currently projecting $295M or so. So from 2009 you’re looking at a projected 30%+ CAGR. I doubled up on my FEED position earlier this week at $3.06 (average price of all positions is now $3.22/share).
“You don’t stop running because you get old. You get old because you stop running.”
- Jack Kirk (a.k.a. Dispea Demon)
I stumbled upon Christopher McDougall’s “Born To Run” by chance at the library last week. When I got around to reading it I found myself hooked and wound up finishing the book in three days. This is an excellent book that reads like a combination of an adventure, science, philosophy and biography on ultramarathon runners and the Tarahumara Indians. I became fascinated with some of the characters and events mentioned and wound up doing additional research as well as over the internet so as to put a picture to a name. The mention of the Divine Madness running cult was also very interesting and led me to Google around for articles related to that.
One of the themes in the book is this sort of Zen-like approach to life these ultramarathon runners have. The title of the book indicates that running allows us to realize how human beings (Homo sapiens) were engineered to be efficient runners. McDougall spends some time discussing the benefits of running without the fancy shoes and all their advanced microchips, springs and air pockets that companies like Nike promote. In fact, the case could be made that these very shoes are the cause for the injuries many runners are afflicted with. The reader also gets a sense of how these incredible athletes, despite having the chutzpah to run 100 miles in the desert, have a meditative outlook of life and are dedicated towards training their bodies solely for the pure bliss that may be captured when enjoying those special moments of simple joy when running. Some reject materialism and turn down commercial sponsorships. The Tarahumara Indians with their spartan lifestyle would be the epitome of the runners who grasp the birthright of running. If you’re considering training for a marathon or are already an avid runner, I would highly recommend this book.
That is what a wise man once said…
Today I saw on CNBC that Perma Bull Jim Cramer did his Doug Kass impersonation and made his low of the year market call. I’ve seen some clips of the recent interviews on Bloomberg and CNBC featuring Meredith Whitney, Nouriel Roubini, Gene Munster, Dick Bove, etc. and if you’ve read my CNBC cheat sheet you too can be a psychic and guess what they had to say. These days I’m inclined to just put my TV on mute whenever someone from the CNBC cheat sheet appears because I can already tell what they will have to say.
The problem here is that we are all biased with an opinion. Just about every market prognosticator brought on air has some sort of position in the market. Whether it’s called “talking your book” or “reflexivity” or simply stating an opinion because it’s their job to, we can never truly be neutral making market predictions if we have a vested stake.
Remember Cramer also said to buy Bear Stearns and Kass also said to buy Lehman Brothers before both companies wound up in bankruptcy. It just goes to show you that you really have to do your homework and you can’t rely on the flip flop positions of the CNBC commentators.
As it turns out, you can speculate on LeBron James’ decision as to which basketball team he will join. Rumors are out today that LeBron is leaning towards signing with the Heat where he will join fellow NBA All Starts Dwayne Wade and Chris Bosh. I don’t see that happening. Sure such a lineup will likely equate to an NBA title next season, but playing alongside Wade and Bosh will diminish LeBron James’ brand. I think that LeBron either resigns a 2-3 year deal with the Cavaliers or signs a longer term contract with the Knicks. If you’re looking for a quick trade to bet on LeBron signing with the Knicks then Madison Square Garden [MSG] is a stock that will pop should he sign with the Knicks. The stock is down today because of the rumors that James is leaning towards inking a deal with the Heat.
Image from www.treehugger.com
Tesla [TSLA] is scheduled to go public this week and the current headlines are pointing to a $17/share IPO. Tesla is a high performance electric car manufacturer. It made headlines in 2008 with the introduction of the Tesla Roadster, a sleek 2-seater electric sport car. Reports indicate that approximately 1100 Roadsters have sold at an average price of $109,000 to date. In 2009, the Tesla Roadster Sports was introduced at $129,000. I could not find any figures about how many Roadster Sports units were sold.
Yesterday I read that the bid for the annual charity lunch with Warren Buffett drew a record price of $2.63M. What’s equally impressive is how much of a jump the winning bid amount of $2.63M is compared to the 2000 winning bid of $25,000 when the annual tradition first began. So far the winning bidder for 2010 has chosen to remain anonymous. A listing of winning bids and the winning bidder may be found here. The stratospheric rise of the bids may be seen from the chart below. At this rate maybe we’ll see $3M next year assuming Buffett is still around and willing to dine with people eager enough to shell out millions to have lunch with him.
Image from Google Docs
So is the price of the meal a good investment? It appears that a good number of the winning bidders from the previous years were came from people who ran hedge funds. The indulgence would appear to be a reflection of some spectacular performance in the fund as well as the PR that comes with being mentioned for being the winning bidder.
In 2008 it was Zhao Danyang from Pure Heart Capital who won with a $2.1M bid. The fund had an eye-popping 141.75% return in 2006 followed by a modest 10.7% return in 2007. The year after the Buffett lunch, the firm returned 74.10% in 2009. As of April 30th this year the fund was up 7.8%. I’m not sure how well they fared given the recent volatility that started in May though. Here’s a link to Pure Heart Capital’s numbers.
In 2009 it was a group from Salida Capital that won the right to dine with the Oracle of Omaha. Salida ran 2 funds in 2008 that lost 66.5% and 48.5% respectively. In 2009 they probably bet heavily on a market rebound and the same 2 funds posted spectacular gains of 181.55% and 226.33% respectively. This was probably the reason why they could afford to spend $1.63M to win the lunch bid. However, at the end of May 30th, 2010 the same two funds were down 9.85% and 9.81% respectively.
So while it’s difficult to tell for certain whether these funds were able to glean any information from Buffett, it’s clear that both funds got some sort of PR from all this that may have allowed them to attract more investors.
