Friday, March 31, 2006

Portfolio Checkpoint - 2006 Q1

Here's what the long-term portfolio currently looks like at the close of the first quarter in 2006.

Notice how lackluster or stellar performance this quarter can cause a position to shrink or grow substantially relative to other positions in the portfolio. Over time, the poorest of performers can shrink to a point where they are no longer really meaningful. Similarly, the strongest performers can grow to dominate your portfolio.

This is why it is nice to monitor the sector allocations of your portfolio to ensure that the portfolio is fairly diversified. I may need to trim the Altria position, but I was really waiting for the eventual break-up to take place. However, my patience grows thin.

Long-term Portfolio (listed in order of position size)

Company Name - Ticker Symbol - % of Invested Portfolio / Change From Previous Checkpoint

1) Altria Group - MO - 18.4% / -1.9%
2) Harrah's Entertainment - HET - 11.1% / +0.4%
3) Student Loan Corp. - STU - 9.1% / +0.3%
4) General Electric - GE - 6.9% / +0.4%
5) Constellation Brands - STZ - 6.0% / -0.5%
6) American Eagle Outfitters - AEOS - 5.7% / +0.9%
7) Eastman Kodak - EK - 5.5% / +0.6%
8) International Gaming Technology - IGT - 5.1% / +0.5%
9) First Marblehead Corp. - FMD - 4.1% / +0.5%
10) *Fortune Brands - FO - 3.9% / +3.9%
11) Capital One Financial - COF - 3.6% / -0.4%
12) Amgen - AMGN - 3.5% / -0.4%
13) North Fork Bancorp - NFB - 3.4% / -0.1%
14) Linear Technology - LLTC - 3.4% / -0.4%
15) St. Jude Medical - STJ - 2.0% / -0.6%
16) Dow Chemical - DOW - 1.9% / -0.3%
17) Sun Bancorp - SNBC - 1.9% / +0.1%
18) Equity Office Properties - EOP - 1.8% / 0.0%
19) Finish Line - FINL - 1.6% / -0.1%
20) Khongzong Corp. - KONG - 1.3% / -0.2%
21) **Juniper Networks - JNPR - 0.0% / -2.2%

* New to Portfolio
** Juniper Networks (JNPR) was dropped from the portfolio on January 30, 2006.

Link to Previous Checkpoint (January 6, 2006)

Note: Percentages do not reflect any cash held in the Portfolio.

Quick Trades Today

It's been a while since I've played with a few stocks just for fun. I'm currently at the tail-end of a self-imposed poker break after a bad session a week ago.

So, here are three positions I picked up today. There's a good chance I'll exit them before the day's over.

** Edited -- Market 3, Brute Force 0 **

RF Micro Devices (RFMD) at 8.62 ** Sold 8.40
Portal Player (PLAY) at 22.33 ** Sold 22.22
Synaptics (SYNA) at 22.00 ** Sold 21.90

Stops have been set... this is very much just for fun.

On another note, American Eagle Outfitters (AEOS) is currently trading above $30 a share. This is the first time it has hit that value since the position was first established.

Finally, a Portfolio Checkpoint much like this one from January will be blogged this weekend. I think I'll do these checkpoint updates once a quarter.

Wednesday, March 29, 2006

My Girlfriend Is MacGyver

I've got this shower caddy that looks something like this...

Anyway, I've used it for some time at the old place and it works great. However, at the new apartment, the height between the ceiling and the floor is just off. The caddy won't fit. The caddy is adjustable with various parts, but no matter what combination you use, it simply does not work out.

The caddy has been leaning against the wall, cluttering up the bathroom area since my failed attempt to install it. After getting sick of the clutter, my girlfriend takes a look at it and tells me that she can fix it. I'm pretty much saying... ya, right. She says that all she needs are a couple of wine bottle corks. Luckily, we save most of ours (for the memories).

Fifteen minutes later, she's done and it's completely installed and it's snug. A real-life MacGyver effort. I still don't know exactly how she got it working and I have no idea where the corks went... probably inside the metal poles to force the spring into a different position.

So, this blog entry is a big thank you to my MacGyver of a girl.

Sunday, March 26, 2006

Apartment Pics

Finally got a chance to take a few pictures of the apartment. I'm not completely unpacked yet, but it's not too bad now.

Living Room 1

Living Room 2

A Tiger Protecting Some Wedding Giveaway Treasures

Saturday, March 25, 2006

How Fast Is Your Brain?

I read on Slashdot that some company called Posit Science had developed a brain speed test based on auditory processing ability. The company posits that the ability to process auditory signals is positively correlated with the ability to process information in general. That is, the better you do on this test, the more likely you are able to process information at a faster rate.

Try the test here: Brain Speed Test. The tutorial is really simple, but when the test picks up, it gets really tough. I missed quite a few once they started getting ridiculously fast. The nice thing is reflex time is not a part of the test. The time it takes for you to produce an answer is not a factor in this test.

Just a quick edit here... the girlfriend blew my response time out of the water with a score of 26 milliseconds.

Click on the image below to zoom in.

Friday, March 24, 2006

Hop On The Seoul Train

Just wanted to throw a company at all of you to take a closer look at... Shinhan Financial Group (SHG).

SHG is a financial juggernaut in South Korea and one of the largest Korean companies based on market capitalization. They own a number of banks in Korea, including their flagship, Shinhan Bank, the oldest commercial bank of Korea, Chohung Bank, and Jeju Bank, a smaller regional bank on the island of Jeju. In addition, they also control subsidiaries that deal in credit cards all the way to the leasing of industrial equipment. The company makes a ton of cash, and they are growing rapidly.

The Korean market has been hot recently. It is up around 40% in the past 12 months. I believe Korea is getting stronger year by year, and I feel that there is money to be made hopping on the back of one of its strongest companies.

SHG trades as an ADR here, and there does not seem to be too much interest in it. Trading volume is fairly low on it, and there does not seem to be much analyst coverage. In researching Shinhan, I noticed that Cramer had actually recommended the stock on his Mad Money show some time in November in the $77-78 range. I missed that episode, and I never did follow up on his recommendation. I think he's right on this one in a big way.

I am going to be looking for an entry into SHG soon. I will probably be buying this in a few chunks. I do hope it pulls back some. Let's make some money.

Wednesday, March 22, 2006

Working Towards A Healthy Vocabulary

It's nice to have a strong vocabulary. I've been on a word binge ever since yesterday's discovery of perquisite.

Today, I was made aware of the distinction between healthy and healthful. The word healthy is used to describe something that possesses good health. The word healthful is used to describe something that is conducive to good health. Technically, it's a healthful environment that you seek, not a healthy one.

At the present, both can be used interchangeably, but this is only because people did not care enough to keep their meanings distinct. It's a real shame too. It's so unfair to lump similar entities; it is an attack on lexical individualism. Do you think the Sioux or Kickapoo would appreciate being called natives?

Tuesday, March 21, 2006

You Learn Something New Every Day

Some of you may already know this... especially those of you who love words and possess a strong vocabulary.

I have probably known what a job perk was since I was in elementary school. It's one of those extra benefits you get on top of your normal compensation. Today, I found out that perk was short for perquisite. I guess it's just one of those words that you never really had to look up and pretty much learned from context and others' usage.

Why it isn't spelled perq I don't know, but I suspect it is because perq just doesn't look like a proper English word. It's too bad too, Scrabble really could use another ends in a Q word. So, there you have it. I learned the word perquisite today. I wonder if most people out there are aware that perk comes from perquisite.

Monday, March 20, 2006

Weekend and a Quick Trade Update

So, the weekend was fairly uneventful for me. The weather was nice, but I didn't really take advantage of it, and now I'm regretting it, since the gloomy weather has returned.

Anyway, St. Patrick's Day night was spent drinking at home, mostly because of laziness.

On Saturday, we had a Moroccan feast over at Menara. This would be the second time I've been there. The first time was in 1999 when our clinic project team back in college visited the sponsoring company, which was located in the Bay Area. The food is quite good, and the atmosphere is different, but really nice and laid-back. I mean this literally, since you're eating your meal while on the ground lying against pillows and cushions.

I also ran lots of errands, and finally bought a television stand among other household necessities. And, last night I spent many hours doing taxes. I don't have as big of a tax bill as I had thought. Yay!

Today, my Allegheny Technologies (ATI) shares were called away for $55. I had sold the 55 calls for $1, so my exit is $56. About time I book a winner. My trading port suffers, as my Long-Term portfolio continues to perform well.

With some of the ATI proceeds, I picked up some Suntech Power Holdings (STP) at $33.05. We'll see how this goes... I've been following it for some time. Today's dropwas due in part to a fairly negative Barron's article about the cost of silicon affecting solar panel installation costs and also a downgrade of Evergreen Solar (ESLR) to Underperform by RBC Capital Markets. I don't think that the drop today is justified and was not based on any company-specific issue. The bottom line is that STP is profitable and ESLR is not. I will be watching this carefully.

Wednesday, March 15, 2006

Obstacles Are For Suckers

So, a friend of mine sent me some pictures that were taken by one of his buddies who recently visited a country that will remain unnamed. Here's my favorite from the bunch.

Constructing a building and a street light is in the way? No problem.

They must have learned this from us software guys when we come up with a quick workaround for a problem instead of fixing it.

Tuesday, March 14, 2006

Quick Update

Sold March 55 calls on the Allegheny Technologies (ATI) position in the Trading Portfolio for $1.00 today. I figure if ATI can hold $55, this will provide me with an exit at $56 effectively.

Currently added to the watch list for consideration:

Movado (MOV)
Mercantile Bankshares (MRBK)
Proassurance (PRA)

Monday, March 13, 2006

The Past Few Days

So, over the weekend, I was still a bit sick. But, I managed to try out a new sushi place nearby called Michi Sushi. It simply wasn't that good, especially considering the prices there. I'll give it an A for presentation, but overall the meal rated about a C. The quality of the fish was not as good as it should have been, and the food service was slow on top of that. To their credit, they did provide extra snacks to compensate for the long food wait.

Being sick, I pretty much stayed home all weekend. I did read One Of A Kind: The Rise and Fall of Stuey "The Kid" Ungar, The World's Greatest Poker Player. I thoroughly enjoyed the book, and I felt that it did a good job keeping the story going. Even non-poker players might enjoy this tale of excess. Check it out if you want to see yet another story telling all of us why (hard) drugs are bad.

Finally, today Capital One Financial (COF) announced that it is acquiring North Fork Bank (NFB) in a cash plus stock deal. This is the first time I've ever owned stock in a company that was acquiring another company that I owned stock in. I'm pretty much going to let the acquisition take place, which will convert each share of NFB into 0.2216 shares of COF along with $11.25 in cash. I guess it's time to find another regional bank to invest in.

Wednesday, March 08, 2006

Quick Trade and Poker Update

Took the loss on the XM Satellite Radio (XMSR) call options. Dumped them in the morning at 0.95, a loss of 1.45 per contract. I guess I should have taken the profits while the profits were good. What a sucker I am. I'm still sick, so I haven't had much market enthusiasm lately. Hopefully, that'll change soon.

In poker news... I have set a new goal for myself. I'm going to earn enough Frequent Player Points to get me the Ipod Nano from PokerStars. I have 8000 FPPs right now. After I earn 700 more this month, I will be promoted to a SilverStar on that site. That allows me to earn FPPs at a 150% rate for all of April. And, if I'm able to get to 4000 FPPs by the month's end, I will be able to earn them at 200% rate as a GoldStar. I figure the Ipod will be mine some time in April or May. Wish me luck.

Tuesday, March 07, 2006

Nasdaq 2 Million

So, I recently read Warren Buffet's Annual Letter to Shareholders of Berkshire Hathaway. In it, he makes an observation about the compounding effect on the Dow Jones Industrial Average. I mean, the observation isn't anything earth-shattering, but I personally never really thought about it much, and I'd never had anyone ever point it out before.

This isn't what Buffet used as an example, but it's basically the same thing...

Today, the Nasdaq Composite Index sits at 2268.

If the Nasdaq can produce annualized gains of 7.5% up until the year 2100, then it will have compounded at that rate for approximately 94 years. And, if it is able to do so, we should see the Nasdaq Composite Index at 2,032,538 -- that's right, Nasdaq 2 Million. If the Dow was able to produce gains of that size over the same time frame, it would be sitting just shy of the 10,000,000 mark.

Mathematically obvious, but really gives you a different perspective. Anyway, thought I'd share.

Monday, March 06, 2006

Ill With A Fast Connection

Well, I've been sick. Sick all weekend, and today I went into work late. It sucks being sick. Especially when there's much left to take care of. I had planned on unpacking more stuff and cleaning up a bit, but I did not take care of even half of what I had intended to do.

The market did not help either, but I have been so out of it today I didn't even have time to check out what happened in the market today, except to see my portfolios drowned in a sea of red.

But, in better news, my internet connection is a lot faster here than at my old place. My connection measured a blazing 6Mbps downloading according to an online speed test I ran. The connection at my old place usually rated around 3.5-4Mbps. The upload speed here seems to be a bit slower, but I'm a lot less concerned with that direction of data transfer. How does your connection stack up? Find out here: DSL Reports Speed Test.

Friday, March 03, 2006

First Marblehead Update

First Marblehead (FMD) has been really surging lately. The company is showing the world that its profitability is not being affected in the way that many bears were predicting. As a result, the stock continues on a strong upward path. The great thing is that there are still a ton of shares shorted.

Here are the latest numbers as of Feb 28, 2006 from the NYSE:

Shares Short - Jan 31, 2006 - 12,999,664
Shares Short - Feb 28, 2006 - 14,597,891
Avg Daily Volume - 659,564

The bears have continued to short the stock, increasing their short positions by about 12% in the last month. This brings the short ratio to 21.2. Over 21 days of average volume trade just to cover the short shares! Very dangerous to short a stock with such a high ratio. If you ever decide to short such a stock, you better be damn sure you're right. If the company continues to move higher and show good news, the shorts will be squeezed hard. This squeezing effect is probably happening now.

Tom Brown, an amazing financial services analyst, has been very bullish on FMD in the last year.

Links to Tom Brown's FMD articles can be found here:

Oct 12, 2005: The Farther It Falls, the More Attractive It Becomes - FMD at $23.25
Nov 3, 2005: A Huge Overreaction - FMD at $25
Dec 8, 2005: Bears On The Run - FMD at $32.75
Dec 15, 2005: A Positive Not A Negative - FMD at $28.75
Dec 19, 2005: The Mystery Of Biv930 - FMD at $29.50
Dec 21, 2005: Listening To the Education Lenders - FMD at $31
Jan 6, 2006: Just Askin' - FMD at $32
Feb 9, 2006: Looking Ahead With First Marblehead - FMD at $36.50
Feb 23, 2006: More Partners, More Services, More Deals - FMD at $36.75

Today... FMD sits at $41.75. I fully expect the short squeeze to continue. Gotta love this great move to the upside.

Thursday, March 02, 2006

Deb Shops: A Small Cap Teen Retailer

I regularly run a few stock screens, and Deb Shops (DEBS) has found its way through the screen on more than one occasion. I figured it was time I started taking a much deeper look at the company. After a quick glance, it looks like a reasonable company for investment.

The company was first founded in 1932 under the name Joy Hosiery by the Weiner and Rounick families. The families currently hold two key spots on the executive management team, and still own over two-thirds of the company. As of their most recent 10-Q filing, the company operates 319 DEB stores, 19 Tops n' Bottoms stores, and 3 outlet stores for clearance and slow moving inventory.

My main concerns at this point is that their sales per square foot number is not so strong and they don't look like they are expanding rapidly. Quick back of the envelope calculations reveal that they generate approximately $160 in sales per square foot annually. Compare this with American Eagle Outfitters (AEOS) and Abercrombie & Fitch (ANF) that produce roughly $400 in sales per square foot. DEBS has not had any significant increase in number of stores in the last couple of years.

Their balance sheet looks fine, but as the GZA of 12th Street pointed out, they paid out a special dividend of $6/share last year. This suggests that they don't have a better use for their cash, which is a slight negative in my book. They do continue to pay out a quarterly dividend that works out to a yield of over 1.6%.

All this said, the company does look like it should be worth more despite its somewhat high Price/Sales ratio of 1.4. Its margins are quite a bit stronger than its closest competitor, Charlotte Russe (CHIC). Also, the company flies under the investment radar with roughly 20,000 shares exchanging hands each day. If the company continues to operate as it has recently and continues to grow its EPS, potentially strong share price appreciation could follow.

More research to be done... they have an earnings conference call on the morning of March 9. Not sure if I will take a bite before the earnings call or not. Maybe no position will be established at all, but I just wanted to throw my thoughts out there about DEBS.

Wednesday, March 01, 2006

Today's Market Movers

Yesterday, the market handed me a sizeable loss. Today, it was completely different.

Today's big mover was American Eagle Outfitters (AEOS). It was added to the Long-Term Portfolio on December 30, and reported here. Their earnings were released this morning, and they were solid. In addition, the company provided stronger than expected guidance in the next quarter.

Another major mover today was Form Factor (FORM), a position I picked up about a month ago, and reported here. No major headline news of any sort I am aware of that moved the stock today, but it's a company that is still not completely on the investor radar. The company has a lot of promise and has shown to have efficient operations. If it continues to move strongly, I may trim my position, and take some profits.

And, finally... where is Womper? He has been a long-time reader of the blog, and he is primarily interested in the stock stuff. He told me that he took on a good sized position in AEOS, so he is probably smiling right now.