Another Quick Update

You know what they say about weak hands... So, I sold off Apple (AAPL) yesterday partly fearing what else would come from the options backdating mess despite part of me saying it was unlikely to affect the company. My timing is impeccable, ugh. Today, the company cleared the executive team, including Jobs, and so the stock rebounded sharply.

But, let us not dwell on the past. Today, I continue my buying spree and add TODCO (THE) at 34.27. First mentioned a few weeks ago here, the share price has since come in about 10%. Anyway, it's only a starter position for now. I will likely grow this position in the next month or so, but we'll see how things develop before I do that.

Quick Update

Increased the Form Factor (FORM) position by one-third at $37.00. Excluding any proceeds from covered call sales, the cost basis for shares is now $37.27.

*** Edit #1 ***

Sold off the Apple (AAPL) position at $80.04. Looking to add to the Linear Technology (LLTC) position. Found some time last night to go over the current portfolio holdings, and although LLTC hasn't been a good performer since I first purchased it, I believe it is worth quite a bit more than current prices.

*** Edit #2 ***

The order to buy more LLTC was filled at $30.30. Increased the existing position by 75%. Cost basis for the shares is now roughly $33.90.

Back To Business

Vacation time is now over, and it's time to regain focus on the markets.

Yahoo (YHOO) is a losing trade for me at this point, off 6%. I will continue to hold this, and I do hope that some (or most, but really, who am I kidding) of this end-of-year languor is due to tax-loss selling.

Now that Harrah's (HET) has been sold, I've got cash to deploy. I'm still fairly bullish on the general market, but I do feel that the easier money has been made with the sharp run-up that started mid-year. Still keeping my eyes on a handful of companies, and I'm likely to bolster some existing positions in the weeks ahead. Most likely candidates are Coventry Health Care (CVH) and Form Factor (FORM).

Today has been strong with the Long-Term Portfolio moving up nicely. However, Apple (AAPL) is moving down today on reports of serious stock option impropriety. I'm not sure if the sell-off will be short-lived or not, but my general feeling about these sorts of things is whether or not they affect the underlying business, and in this case I don't really think so.

Speaking of stocks in the portfolio... Altria (MO) is poised to finish the year at all-time highs. It went ex-dividend just last week and continues to track upward. Fortune Brands (FO) is also doing well, looking to end the year on a 52-week high. And, finally General Electric (GE) is starting to move. It hasn't been the greatest stock for me, but it does add a lot of stability to the portfolio. I've held shares for many years now, and continue to re-invest its dividends. Maybe its time to shine is now.

Merry Christmas!

Well, I've been here in sunny Southern California for a few days now. All has been well, and it's been pretty busy doing the typical holiday things with friends and family. Anyway, hope everyone is enjoying the holidays.

Getting Cut

Long-Term Portfolio holding, Lifetime Brands (LCUT), sent out an earnings warning early this morning due to slower than expected sales. The company now anticipates that full year earnings for 2006 will fall in the 1.10 - 1.15 range as compared to their original forecast of 1.45 - 1.55.

This is a significant shortfall, and I will continue to monitor the stock. While I'm glad that I did not double up on the position a month or so ago when I had considered it (due in good part to gaamblor's take that trouble lay ahead), this is disappointing.

As one would expect, shares are trading sharply lower this morning. Most recent quote has it down almost 20%.

Gift Exchange Combinatorics

Well, I'm about to head to a holiday party. But, before I do that I just wanted to share a quick story with all of you.

So, our company promoted a holiday gift exchange recently, and a total of 19 people participated. Anyway, each person brought a gift and then each person was given one of the gifts randomly. There was nothing in place to ensure that people wouldn't be given their own gifts, and what happened was 4 of the 19 participants got their own gifts back. Pretty strange, and so I got a bit curious about the probability of such an occurrence.

I had to go back to some old math books that I haven't touched in a while and read up a bit on the inclusion-exclusion principle, but after some time, I was able to get the answer I sought. Just to double-check, I programmed up a quick Monte Carlo simulation, which pretty much corroborated the answer. After more digging, I learned that there's something interesting about this problem, which turns out to be a classic one. It seems that this problem is closely tied to the natural number, e, which I thought was really neat.

Anyway, the chance that exactly 4 of 19 people receive their own gifts is 1.53%. The chance that 4 or more people receive their own gifts is 1.90%.

Quick Update

Sold the Harrah's (HET) position this morning at $82.87. I guess I was slightly off as to how high shares would trade once the official announcement was made to accept a $90 per share bid. Time to move on, anyway. Along with their CEO, I also don't foresee any new bids in the next 25 days.

It's sort of sad to see the shares go. I bought into the company three times. The initial purchase was made in June of '03 at about $40. I added to the position about a year later in May of '04 just below $52. And, the final purchase was in October the following year near $59 after the hurricanes really took the shares lower. Thanks for the three and a half years. It's been fun.

Also, closed the Palm (PALM) trade at 13.73 earlier for a small gain of 0.13. Had I been blessed with the gift of clairvoyance, I would have dumped it near the open when it traded above $14.

Earnings Gamble

It's that time again... time to throw a small bet on the table. Picked up some shares of Palm (PALM) at 13.60. Sentiment has been remarkably negative, and it is trading at a 52-week low. Definitely catching a falling knife here. Some people like me will never learn.

And, thinking about what I said about Harrah's (HET) last night... I might be wrong in my estimate of where shares would trade should it officially announce the acceptance of a $90 offer. I failed to take into account the $1.60 in dividends that it would be paying out in the next year. Then again, it could choose not to pay it out, but I think that's unlikely.

More On Harrah's

So, we continue to get leaked information fed to us from the Wall Street Journal regarding the Harrah's (HET) buyout. The WSJ reports that the company's Board of Directors will be voting on the deal tomorrow, and a formal announcement should be expected as early as tomorrow. The paper is currently saying that the deal is for $90 a share. I guess I got a bit lucky when I picked out an acceptable-to-the-board buyout price in this post in November.

Anyway, what's the plan? Once the announcement is actually made by the company, I will be looking to exit. I'm not willing to wait for the deal to close for cash. Had the buyer been Penn National Gaming (PENN) and the deal was stock based, then I'd have to make a more difficult decision. As it stands, the answer is for me to exit. The question now becomes... at what price?

I'm going to make a list of some assumptions that I think are reasonable. Note that I am not sure how off I am to reality, so keep that in mind. Here we go.

1) It's a cash buyout at $90 a share.
2) Deal closes a year from now.
3) Deal carries a 2% risk premium.
4) There isn't any more investor hope for higher bids.

So, today's risk-free 1 year rate is 5%. Tack on a 2% risk premium, and we are looking at a total of 7% that should be made up in the next year. This translates to around $84 a share in today's terms. Maybe the deal risk is overstated by me. At 1% premium, we are closer to $85 a share. If my assumptions are anywhere near the actual values, then I guess I'm looking to exit right around $84-85. If I see any sort of significant pop past that, I'll call it a windfall and get out as soon as possible.

This might be an easy question compared to the follow-up... where should I deploy the funds from selling my shares. HET is one of the larger positions in the Long-Term Portfolio, and so it will provide me with the opportunity to fund a new position or two, as well as increase the size of existing ones. I'll keep you all posted.

Compounding Isn't Intuitive

Not long ago, a colleague of mine asked me a bit about some financial stuff. I'm not really qualified to give out any advice, but I could always tell him what I thought about saving and investing for the long-term and how one should probably go about it. Anyway, in our discussion, we hit upon the subject of compounding, and at one point it was clear that while he understood how powerful it was, he clearly didn't give it enough credit. So, I bring to your attention the non-intuitive nature of compounding, especially at high rates of return.

Let me describe 3 scenarios, and without too much dwelling on the matter, tell me which of them you think is best for you. To simplify things a bit for this exercise, assume that you will pay all of the debt at the very end of the 25-year period, and not periodically. Also, for simplicity's sake, assume no external factors like tax, fees, etc.

Scenario A: You are given $10,000 by an anonymous benefactor. You are allowed to put the money into a special risk-free investment that returns 6% a year for 25 years, compounded annually.

Scenario B: A rich guy lends you $10,000 at the rate of 7.5%, compounding annually. After 25 years, you will have to pay him back the entire amount you owe him ($10,000 + all the compounded interest at the 7.5% rate). With that borrowed money ($10,000), you can invest it in a risk-free vehicle that returns 10%, again compounded annually.

Scenario C: Same as Scenario B, except that instead of $10,000 at the rate of 7.5%, you get $5,000 at the usurious rate of 16%. But, in this situation, you are allowed to invest risk-free at 17.5%. You still pay your debt at the very end of the 25 year period, and everything compounds annually.

So, of these 3 scenarios, which one is the best? Which one of these will net you the most at the end? This means you pay off all the debt in Scenario B and C (you have no debt to repay in Scenario A).

My colleague is not unintelligent; he's a very solid engineer. But, when he was given these three choices he chose poorly. It wasn't so much that he didn't make the best choice, but that he was surprised by the result, which convinced me that the math of compounding is clearly not intuitive. I suspect that the vast majority of people will also choose poorly, and it says a lot about how underappreciated the power of compounding is, especially when you are talking about relatively high rates of return.

Well, I guess this is where I give you the end results for each of the three scenarios presented above.

Scenario A: You were given $10,000 and owe nothing. Free money, yay! So, right from the get-go, you're better off than the other two, since you've got $10,000 net, and the others have $0. After 25 years, your money grew to $42,918 at the 6% rate. Not bad considering it was free money.

Scenario B: You borrowed $10,000 at 7.5%. After 25 years, you owe the lender $60,983. This is due to the 7.5% interest rate he was charging you. But, you were able to grow the $10,000 you had borrowed at 10%. So, at the time you paid your debt, you had grown the initial money to a nice $108,347. After paying off the debt, you are left with $47,364.

Scenario C: You borrowed $5,000 at a ridiculous 16% rate. After the 25 years is up, you owe a whopping $204,371. But, you were blessed with a beautiful return rate of 17.5%. You grew the $5,000 to a staggering $281,784 after 25 years of annual compounding. After your debt repayment, you're much better off than the other two people with a tidy sum of $77,413.

To be fair, I should note that after 10 years, the person in Scenario A is doing the best, followed by the one in Scenario B. The one in Scenario C is probably kicking himself at this point having only a net just over $3,000 vs. the one in Scenario A with nearly $18,000. It is in year 21 that the person from Scenario C overtakes them both and never looks back. Also, I should note that it is not until after the 24th year that Scenario B outpaces Scenario A.

So, the above scenarios are far from reality, because debt repayment doesn't work as above and also there's no risk-free investments yielding such high returns. But, the math is what it is. And, the fact that most people would not have chosen the best option says a lot about how little the public truly understands the powers of compounding.

Also, the above implies that if companies are able to achieve consistent high rates of return on investment, then it's not necessarily bad that they are taking on debt at fairly high rates. In fact, if they are able to keep their ROI at a high level over long periods of time, then taking on debt even at rates that aren't great would be hugely profitable.

Triple Pay

So, I log in to my bank account online to make sure that the paycheck direct deposit took place as it should. I'm a bit confused as my account balance is much larger than where it should be. Upon further investigation, there are three identically sized deposits instead of one. Somehow there was a glitch, and I got paid three times.

I'm thinking to myself... well that's funny, but I guess I had better talk to our payroll person when I get in today. But, I log back in about 15 minutes later, I see that there have been two reversals. I didn't realize they'd be so quick to catch errors like this.

In stock market news... the CPI number came out not long ago, and it was very good. The markets should move on this number. Maybe we'll get that year-end Santa Claus rally after all.

Also, the Wall Street Journal is reporting that Harrah's (HET) continues to evaluate its bids and is also contemplating a possible recapitalization of the company which would involve the payout of a special dividend to shareholders. And, I guess there's a joint-effort bid of $88.50 by Penn National Gaming (PENN) and a few financial partners.

And, Amgen (AMGN) is on the move this morning after Roche announced there would be a delay in the approval of Mircera, which is a direct challenger to Amgen's blockbuster drug, Epogen.

A Few More To Watch

Don't have much too much to say, but, I wanted to throw a few companies your way to keep an eye on. I have no current plan on owning any of them, but one each is interesting to me as a potential future investment. I haven't done much in researching yet, but at the moment, they are all on my radar.

P.H. Glatfelter (GLT) - This is an old company. When I say old, I mean it. It was founded during the Civil War. The company manufactures specialty papers and also high-tech paper. Their products range from the simple, like tea bags and coffee filters, to the sophisticated, like pressure-sensitive paper and metallized holographic paper.

Cutter & Buck (CBUK) - This is a small cap that sells golf sportswear as well as business and casual clothing for those in the mid-thirties or older. Not surprisingly, they cater mostly to the yuppie crowd. In addition to standard clothing, they also sell sportswear with college and professional team logos. In the last year or so, the company was highlighted in the Motley Fool's Hidden Gems newsletters.

TODCO (THE) - The company's name stands for "The Offshore Drilling Company." The company does contract drilling for oil and gas, mostly concentrating on shallow-water drilling in the Gulf of Mexico. They own a variety of drilling rigs, and customers rent them along with a qualified crew on a day rate basis. Additionally, they also operate their own fleet of ships and boats, which complements operations.

Four Square Interpolation

This post is for those who like to think about math or enjoy puzzles. It's not meant to be overly tough, and who knows there might be several ways that it could be done. Anyway, this problem came up during work this week, and I thought it was somewhat interesting. Maybe some of you will find it interesting.


Note that the y-axis might look flipped to you. This is because we are dealing with image coordinates, which are of the form (column, row).

Okay, so we've got 4 squares. Each square has a value associated with it: A, B, C, and D. The center intersection point is the origin (0, 0). Now, you see the orange point at some (x, y)? We want to know the interpolated value of (x, y) given the values A, B, C, and D for the squares. The range of (x, y) is bounded by the dotted square whose vertices are the center points of the 4 squares above. This is because if we were to get a point (x, y) that was outside of this bounds of the dotted square, then we would be dealing with a different set of four base squares.

So, let's take a few simple examples. Say we care about the yellow point at the origin. Then the proper interpolated value should be 0.25 * A + 0.25 * B + 0.25 * C + 0.25 * D. Say we are looking at the green dot at (0, 0.5). The proper interpolated value of that green dot should be 0.5 * C + 0.5 * D. Similarly, the proper interpolated value of the purple point should be 0.5 * B + 0.5 * D.

What we're really after is an interpolated value of the form: a * A + b * B + c * C + d * D. Simply put, how do you come up with the coefficients: a, b, c, and d.

So, give it some thought if you have the time and the interest. I'd like to hear what you come up with that works.

Let's Do Some Gambling

Okay, every now and then I gamble. Usually, it's on some trade. Once in a blue moon though, I'll throw some uninformed money on a sports game or two. Looks like we have a blue moon right about now.

I made two NBA wagers today:

LA Lakers at Houston. Houston Rockets -2.5 at +100
Denver at Atlanta. Atlanta Hawks +5.5 at +104.1

It's good to have some gamble in you.

*** Edit #1 ***

We're getting closer to game time, and a quick look at the current odds show that the wagers have moved against me. The bet on Houston can now be had at +104, and the bet on Atlanta is now listed at +135 with the confirmation that Joe Johnson will not play this game. This is what I get for being a sports betting sucker. But, it ain't over till the morbidly obese lady sings.

*** Edit #2 ***

O-fer. That's my name, don't wear it out. So, both bets went down in flames. Lucky for me, the bets were tiny. Still sucks though. Things were looking good for Atlanta in the first half, but they fell apart later on. And, the other game was pretty much meh.

A Quick Update and a Sick Verge

Well, I worked late tonight, and then I tried to go to bed. After only a short nap, I woke up. I'm on the verge of sickness. My body gives me an early warning when it comes to getting sick. I got that warning late Saturday, and I am not all that sure I'm going to be able to escape the grasp of the Cold. It is really going to suck if I get sick for real.

Anyway onto the important stuff... health is so overrated. Haha.

So, on Monday, Kongzhong (KONG) kept on trucking higher. On Friday, when it made the initial jump, I did notice a lot of largish blocks trading on the ask. Still no news, so maybe this is just an extension of a technical move. I continue to have no clue, but the move sure is welcome.

Today, the Wall Street Journal is reporting that Harrah's (HET) is going to be getting a sweetened bid of $87. Harrah's announced that they would be looking at all offers tomorrow, and today would be the last day for the submission of new bids to be considered.

And, we also get a new Buy rating today for a Long-Term Port holding. So, Sun Bancorp (SNBC) was started as a Buy at Sterne Agee. They put out a $23 price target, and cited double digit earnings growth, and they also mentioned that the increased M&A activity in the New Jersey region was not accounted for in the current share price.

Just over a year ago, I opened a position in SNBC mostly as a turnaround play. It was actively reducing its costs, and assuming their management would be able to pull it off, the shares looked undervalued. They also pay a 5% dividend via a 21:20 stock split annually. What initially turned my attention to the company was the strong insider buying. After seeing this, and doing some number crunching, I felt it was a good buy.

So, for just over a year the shares have given the LT Port a total return of 8.3%. This makes SNBC an underachiever compared to the 15% total return of the S&P. It's not a total dog, but it certainly isn't on Santa's Nice list this year. Maybe things will pick up in '07.

I'm still holding onto Yahoo! (YHOO) in the Trading Port. Thus far, it has dealt me a 3% blow. Hopefully, nothing but a mere flesh wound, but you never know. I still think there's good upside in the shares at this prices, but there is definitely the possibility that it continues to fall. This is not a stock for the conservative types.

Okay, I better give sleep another try.

Unit Conversion and a Party

QB and I went to her company's holiday party on Friday. It was held in the main banquet room at the Historic Del Monte Building in Sunnyvale. The place was nice, and the staff there was very good overall.

The company also hired a professional photographer (who I wasn't all that impressed with) and also a close-up magician that would go from table to table doing some pretty cool tricks. For the most part, you would be able to make an educated guess at how each trick was done, but they were pretty neat for what they were.

The food was buffet style, but was of very high quality. They had a little bit of everything from salmon to vegetarian eggplant pasta to very fine tasting tri-tip steak. And, there was a very wide assortment of desserts to choose from at the end. I ate too much, and could barely finish a couple of drinks throughout the evening.

Also, there were some decent raffle prizes. They did three rounds of raffle drawings. Each round consisted of 5 prizes. The worst prize was a $100 gift card to Amazon. The best prizes were pairs of unrestricted airline tickets to anywhere in the continental U.S. Too bad we didn't win anything. All in all, her company did a fine job with the party.

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Now, many of you have probably seen this already. But, I thought this was really painful and funny at the same time. I'm amazed at how this guy is able to remain calm as he explains that 0.02 dollars is very different than 0.02 cents. Even though he misspeaks a few times while arguing his point, it doesn't take much away from the ridiculousness of the situation. I would hope that I would be able to explain unit conversion better than he did, but it is quite possible that the customer service reps he speaks with haven't the ability to grasp such a concept.

Here's a taste of the conversation:

Guy: You agree that 1 dollar is different than 1 cent?
VZ Rep: Yes, definitely.
Guy: And, you agree that half a dollar is different than half a cent?
VZ Rep: Yes.
Guy: Therefore, you agree that 0.02 dollars is different than 0.02 cents?
VZ Rep: No.

Okay, here's a link to the audio: Verizon Customer Service Unit Conversion

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Also, a buddy of mine started updating his blog with interesting, almost-daily facts that he is calling the Programmer's Almanac. Check it out, even if you're not a programmer.

King Kong

Today, the star performer of the LT Port is Kongzhong (KONG), which is currently trading up over 10%. I don't see any news, and it doesn't look like China stocks are moving, really. I have no idea why it's moving... maybe a technical move. I don't know. The only sad part is that it is my smallest position, and so this move doesn't really affect the port all that much. But, if it can keep on moving like it has been doing recently, maybe one day it will grow large enough to make an impact.

Taking A Shot

Well, I'm taking a shot with Yahoo! (YHOO). Picked up shares at an average price of 27.29 in the pre-market (bought shares as low as 27.10 and as high as 27.38). I would have thought that the shake-up announced last night would have been viewed positively. Basically, I'm betting that it my initial reaction is the right one and the minor sell-off this morning will be short-lived. The position isn't all that small, but I'm going to be watching it like a hawk and prepared to exit as early as today.

Stock Fusion and Fission

Today, First Marblehead (FMD) began trading at prices reflecting its 3 for 2 split. Just for the record, cost basis in this LT Portfolio position has been adjusted to 18.67. And, as an added bonus FMD is trading at a new high following the release of their expected revenue numbers from the securitization deal with the National Collegiate Student Loan Trust.

Yesterday, it was confirmed that all of the North Fork Bancorp shares were converted to Capital One (COF) as per my 100% stock election. The COF position roughly doubled in size as a result of this conversion, and effective cost basis for the position now sits at 38.61.

After some thought and digging, I think I'm going to be adding to my Amgen (AMGN) position. Their drug pipeline is pretty strong, and I want more exposure to biotech. I guess this means that I will probably be taking a pass on Genentech (DNA) after getting close to buying shares recently on a number of occasions. I might add shares as early as today, seeing as how it is currently under pressure.

*** Edit #1 ***

Order was filled to buy Amgen (AMGN) at 68.89. The LT Portfolio position has been increased by 50%, and the average cost basis for the shares is now 62.57.

*** End Edit #1 ***

As for Pfizer (PFE)... I'd stay away. That drug halt effectively killed off their pipeline. So what's more interesting is to try and figure out what companies it will buy. Its hand is now forced, and the company has no choice but to sustain its growth through key acquisitions.

Quick Update

Okay, I got a few minutes here before I head to lunch, so I figure I'll write this quick.

Earlier today, I entered into a buy-write trade with Broadcom (BRCM). Bought shares of BRCM at 33.47 and simultaneously sold BRCM Dec 32.50 call options (RCQLZ) for 1.55.

What's this mean? Well, it means that I effectively paid $31.92 for shares of BRCM that have a maximum profit potential when called away for 32.50. Basically, the options expire next Friday. If BRCM closes at 32.50 or higher, then I've realized the maximum gain of 0.58 (or 1.82%). If it closes from 31.92 to 32.50, then I gain from 0 to 0.58. Anything below 31.92 and I lose penny for penny.

So, I figured I'd take my chances here to capture 1.8% for less than two weeks time. This works out to more than 60% annualized.

Poker Art

I'm not really in the mood to write a thousand words describing the last 8,000 hands of online poker that I've played. So, instead I made a collage for all of you. Enjoy!

Two Become One

Cue the Spice Girls...

Well, it's a done deal. North Fork Bancorp (NFB) is no more. Capital One Financial's (COF) aquisition of NFB has been completed. I elected my shares for conversion into COF stock, but I won't know if I actually get a 100% conversion or not until next week. Any shares of NFB that do not get converted will be converted to cash as per the merger agreement.

It was back in October of 2001, a couple of weeks before the 9/11 attacks that I bought shares in Greenpoint Financial. I held onto the shares as they appreciated. At some point they split 3 for 2, and then eventually, they were acquired by North Fork Bancorp in October 2004. And, now that initial investment finds itself in the same pool of COF shares as did the investment in Hibernia Corp.

Still waiting for a few stocks to come in a bit before I do some more buying. Have a good weekend.


*** Edit #1 ***

Just added to the Montpelier Re (MRH) position at 18.85 increasing share count by two-thirds. Average cost basis now sits at 18.66.

Another Quick Update

Abercrombie & Fitch (ANF) came out with disappointing SSS numbers, and the stock dipped as a result. I went ahead and relieved myself of the position, dumping shares at 67.30 for a modest gain of 4.7%. Turns out that I would have been better off just holding onto American Eagle Outfitters (AEOS) instead of partially swapping. I think it is pretty clear that AEOS is still growing strongly, despite missing the consensus estimates on its own November SSS numbers. So, I will continue to hold that position.

I think it's about time for me to reshape the portfolio a bit. I have been looking to consolidate the portfolio for some time now. Basically, trim the number of different positions and increase the average position size. It's just very time consuming keeping up to speed with everything. I think tomorrow, North Fork Bancorp (NFB) will be no more, as the Capital One Financial (COF) merger completes then. At least, that's what I read.

That said, I really want to buy more Coventry Health Care (CVH), but it jumped a bit today. I might add to Montpelier Re (MRH)... I think any price under $19 is a good one. I still like Lifetime Brands (LCUT), but would much prefer a price near $19. I think Constellation Brands (STZ) is underappreciated by the market, but it's already a #5 holding, so I'll probably hold off on adding there.

Well, when I figure out what I'm going to do, I'll post it up. Today's been a good day... go market, go!

Quick Update

Got nervous on the Amazon (AMZN) short, and covered at 41.05. Good for a $1.05 gain, but not quite what I had initially thought would be my exit point. I will definitely re-short this if it moves to the upside. The GDP data today really pushed the markets higher, and sentiment has swung back to being quite positive.

*** Edit #1 ***

First, let me kick myself a little bit for covering the AMZN at an intraday top. Doh!

Second, I went ahead and initiated a position in Coventry Health Care (CVH) at 46.68. This is just a start, as I intend to add to this position.

Don't Sit Up -- Relax Your Back

Some researchers have given strong evidence that sitting up straight is not only unnatural, but could cause you back problems down the line. They presented their findings at the RSNA Conference yesterday in a talk titled The Way You Sit Will Never Be the Same! Alterations of Lumbosacral Curvature and Intervertebral Disc Morphology in Normal Subjects in Variable Sitting Positions Using Whole-body Positional MRI.

A quick summary can be found here. Or, if you prefer a news article... try this link instead.

Anyway, kick back and live better.

Another Bidder for HET

So, I'm on my way back to work from KFC (gotta love that Corn + Mashed Potatoes + Chicken + Cheese Famous bowl)... anyway, on CNBC (yay, for satellite radio), they talked about Harrah's (HET) getting a new bidder.

We know that the special committee formed by Harrah's and its advisers have already turned down the $83.50 offer. So, I'm definitely curious to see how much higher we can get. Hopefully, it's around $90. I think at that price management might cave and take it, which I wouldn't be all that opposed to, really.

In other news... I didn't get any Coventry Health Care (CVH) despite having a couple of orders in. Will wait for it to come in for me, but it's close to my buy price so there's a good chance for the order to fill soon. FormFactor (FORM) got taken off of Goldman's Conviction Buy list, which was probably part of the reason for the sell-off today. And, Eastman Kodak (EK) tanked today. I really hope it's not some bad juju coming out of the RSNA conference being held in Chicago right now.

Contrarian Stock Pick

So, I've been looking at a few companies recently. I still think that it's worthwhile to take a look at Texas Roadhouse (TXRH), and McCormick and Schmick's Seafood Restaurants (MSSR) maybe worth a look also. Wet Seal (WTSLA) kind of ran up a bit, and I do hope it pulls back some time, because I think the turnaround play still exists.

But, none of those companies I really want to talk about. Instead, I want to talk about Coventry Health Care (CVH). Unless you're on the East coast or in the Midwest, you probably haven't heard of them. Anyway, they are a national managed healthcare company based out in Maryland. They compete with big firms like Wellpoint (WLP), Aetna (AET), and United Health (UNH).

Compared to those three, Coventry is pretty small. At current prices, the company is trading at a 7.5B market cap. For comparison, Aetna has a 21.5B market capitalization, Wellpoint is worth 44B, and United Health is a behemoth with a 62B market cap. Despite being smaller than these bigger peers, it is run well. The company has been able to produce a strong return on its equity, and its operating margins are pretty good for the sector.

These are good things for a company, but there's something else going for CVH. As the industry consolidates, it will surely be considered as a takeover target. Now, I don't mean to say it's going to get bought out any time soon. But, in the next couple of years, it certainly wouldn't be out of the question. This story isn't all that different than the Oxford Health Plans story from a few years back. It was an unloved industry back then, and OHP was working on making a comeback. Then, United Health bought them out. Will history repeat itself? I really don't know, but I wouldn't bet heavily against it.

While most everything else is near a high, CVH is near its 52-week low right now. Currently, the S&P has it rated 5 stars, but Goldman Sachs and most other brokerages have a Neutral rating on the shares. I'd categorize this as a contrarian pick.

After running a few DCF scenarios ranging from bearish to bullish on CVH, I am getting a downside risk of roughly $5 and an upside potential of about $15 based on its current price of $46.79. Sounds good to me. Who wants to take a bite of this? I assure you it's not poisoned... it might be spoiled, but at least it won't kill you.

Market Dump and Black Friday

Here's today's pop quiz.

Q: When can I be pleased watching the Long-Term Portfolio lose nearly 1%?

A: When the major averages are down quite a bit more.

So, we took a beating today... a continuation of last week's sell-off. We see the Nasdaq fall 2.2%, and both the S&P and Dow down about 1.3%. The dollar is weakening, oil prices are being pushed higher after an attack of an oil facility, and Black Friday sales didn't bring all that much cheer.

What saved the port somewhat today is the Amazon.com (AMZN) short position and also the favorable Supreme Court ruling in the Price case (better known as the 'lights' case) for Altria (MO). While the ruling didn't push MO up today, it definitely played a role in keeping it at an even keel on a strong down day.

Enough of the market talk... so, I went to Circuit City at 5am on Black Friday. I wasn't there for any of the big ticket items, so there wasn't any need for me to stand out in the cold. I picked up a few XBox360 games for $18, some DVDs for $3-4, and also a couple of DVD Box Sets for $13.

I got Season One sets for House and Monk. Both are great shows that I only get to catch once in a while. Anyway, QB and I spent a ton of hours this weekend watching House. I think we have another 8 episodes to finish off the season. If you've never seen it, check it out.

Quick Update

Initiated a position in Montpelier Re (MRH) at 18.54 for the Long-Term Portfolio. It looks cheap, and it also has the support of Tom Brown, who I feel is a bad ass when it comes to this stuff.

Hope everyone has a good Thanksgiving.

Another Quick Update

Shorted Amazon (AMZN) for the third and final time at 43.23, increasing the short position by 25%. Current cost basis of the short now sits at 42.10. This means the position is currently underwater 2.8%. I'm willing to take an 8% loss or so on this trade, so, if shares manage to rally strongly to the 45.50 range, I'll go ahead and cry a bit, and take my loss.

Quick Update

Well, I just got home, and I'm really tired. It's been a long day.

Anyway, before I went to the airport this morning, I put in an order to sell my Equity Office Properties (EOP) shares at $48. I just checked, and shares closed slightly above that, and my sell order was filled. Time to figure out what is next... but, that is a task for another day.

Another One Bites The Dust

Equity Office Properties (EOP), a REIT in the Long-Term Portfolio, has agreed to a cash buyout by Blackstone Real Estate Partners at $48.50 per share. I will be selling my shares as soon as I am able to do so. I'm going to be totally offline tomorrow due to some offsite meetings, so I figure it won't be until Tuesday when I dump my shares.

I bought EOP on August 16, 2002 at $26.80... mostly, because I had read so much about Sam Zell and how much of a bad ass he was in real estate. Anyway, from that day up until today, a total of $8 per share has been paid out in the form of dividends, most of which were re-invested. Assuming no re-investment, you can view this as if we are finally selling out at $56.50, which would represent over 110% return over just over 4 years... this is roughly an annualized rate of 20%. Even better given that most of the dividends were re-invested. Of course, I won't actually be able to get the full $48.50 selling out early. Nonetheless... a winning investment, indeed!

I will take a close look at some other REITS, as I do want some exposure to the commercial real estate market. In my retirement accounts, I currently hold HRPT Properties (HRP). Perhaps, that might be a worthwhile candidate.

Poker and Stocks

Been incredibly busy all day... no time to post anything.

Anyway, the quick news on the Long-Term Portfolio today is that Altria Group (MO) benefitted from the issuance of a formal stay on the Schwab (Light Cigarettes) class-action suit. Also, Form Factor (FORM) will not be called away as it fell enough today to close below the $40 strike price. I will probably sell another round of the $40 calls for December, but I'm not 100% on that yet. In the Trading Portfolio, Broadcom (BRCM) will get called away, and so I should have a large infusion of cash that will need a home come Monday.

Well, last night I gave the $5-200 spread-limit game another try. It was a bit of a roller coaster, but it worked out well. I'll talk about a few of the bigger hands that took place.

Early on I lost my initial $200 buy-in with 99 vs TT. By the turn, the board was Q high with 3 undercards to my pair. I read him correctly as not having the queen and made a largish all-in bet on the turn. This was probably a real amateur mistake... I'm really still learning this game, and I am definitely feeling my way around right now. He thinks for a bit, and he really looks ready to muck. But, at the last minute, he says, "OK, let's just do it." He makes the call, and I'm drawing to two outs, which I miss. I rebuy and tell myself that I will try not to do stupid things like that going forward.

Then, after a few hours of what I felt was pretty solid play on my part, I slowly worked up to a profit of a few hundred dollars. Things were looking good, and I was feeling quite a bit better about my play. Anyway, after stagnating for a couple more hours, I get totally outplayed on a hand.

So, I've got AK on the button, and I smooth-call a $25 raise pre-flop. Anyway a few of us see the flop come Ad Kd X. The raiser bets out $50, I make it $150 and after he makes the call, it is heads-up. The turn brings another diamond, and he checks. I go ahead and bet another $100, and again he calls. The river brings a low diamond, and I'm defintely not liking it. He bets $200 straight, and I think about it a bit, and I can't justify a call. Anyway, after I muck, he shows his AK for the same hand. Played like a fiddle.

So, that knocked me back down into slightly negative territory. I get KdQx in late position, and we see a flop 6-handed for $15 apiece. The flop comes J T 9, all diamonds. Some kid bets out $50, another guy calls the $50. I go ahead and raise it enough to get both of them all in (each of them had roughly the inital max buy-in of $200). They both call, and I'm up against JTo and 8d9x. I'm in pretty good shape, and the turn and river were bricks, and I scoop up the pot.

After building up a bit more with routine play, I hit a biggie with QQ. I flop QJT and get two others to go all-in with me after a series of raises. The turn is an Ace, and my heart sinks. I'm pretty sure I'm dead. Anyway, the river doesn't pair the board, and to my amazement, I'm up against JTs and some other hand I never got to see (but, a hand that I beat). That was a big pot and from there after a little more build-up, I leave a solid winner. Yay, for being a luckbox.

Quick Update

Altria (MO) increased its earnings forecast by roughly 2.7% due to a reorganization of its business in the Dominican Republic. Shares are up nearly 2% on this news. They also reaffirmed their committment to give details of their Kraft spin-off plans at the end of January. Go MO!

Home Depot (HD) boosted its dividend by 50%. Shares are now yielding 2.4%. This is the second time this year that it has done so. As I've said in the past, I strongly believe that a firm's ability to continually increase its dividends over long periods of time is indicative of its earnings strength and quality. I know many of you hate HD, but I believe this stock is worth a fair amount more than its current market price.

I might end up picking up that last position in HD after all. Recall that I had originally wanted to buy in 3 chunks. I was able to get a good price on the first two purchases, but then the stock ran up outside my buying price range, so I passed on the last batch.

Another Quick Update

Increased the Amazon.com (AMZN) short position by a third at 42.88. Average cost basis on the short is now 41.82. I might have it in me to short a third round, but if it moves another 3-4% against me I'll take my lumps and cover.

Altria Group (MO) made a nice move today after Goldman upgraded it. Here's a short blip coming from Goldman:

We are adding Altria to Americas Buy/ Conviction Buy List from Neutral as we expect the potential Kraft spin-off and an improvement in international tobacco trends to drive the stock towards our new 12-month target price of $96 (representing 19% upside from current levels). While management indicated that it intends to announce on 1/31/07 the details of the Kraft spin-off, the stock continues to trade at a significant discount to its sum-of-the-parts value. We see several catalysts in the near term that could alleviate investors lingering skepticism about the timing of the Kraft spin-off and concern over weak international tobacco trends.

Abercrombie & Fitch (ANF) selling off today after yesterday's earnings release. The numbers themselves were quite good actually, but guidance was neutral to slightly negative and analysts fear tough comps going forward.

Despite the ANF drop and the AMZN move against me, things are looking damn good for the portfolios. I might begin to trim a few positions, and I've also thought a bit about consolidating the portfolio so that I don't have as many holdings.

Also, come Friday, the Broadcom (BRCM) position will be called away at $30 for a decent profit. Could have made a lot more had I not sold the calls, but I'm not complaining. And, the Form Factor (FORM) position could get called away at $40 if it does not trade lower in the next couple of days. If these positions get called, I'll have a lot more ammo to make a few moves.

Out of Africa

Okay, this is pretty f'ing cool. Check this link out: Link to Live Webcam of a Watering Hole in Africa.

*** Edit #1 ***

So after watching some stupid bird do nothing for a while... a warthog makes his way to the watering hole.



Okay, the lazy warthog got up...



*** Edit #2 ***

I'm still hooked on this thing... it's night time now in Africa, and look what shows up at the watering hole. A RHINO! This cam is way too cool.

Quick Update

Just about to head to lunch, but wanted to toss out this quick update.

Shorted a small Amazon.com (AMZN) position at 41.47. I don't believe it can be worth this much. But, if it moves strongly against me, I'll take a loss. No reason to fight the strong market uptrend, even if I feel valuation is currently lofty.

American Eagle Outfitters (AEOS) kicked some butt and announced solid numbers. The company beat both top and bottom line estimates. Also, they announced a 3 for 2 stock split.

Home Depot (HD) announced numbers that came in a bit lighter than expected. They also their lowered earnings forecasts. I wasn't too impressed with their quarter, but the stock is trading up now after starting off the day on a dour note.

Abercrombie & Fitch (ANF) announce their numbers today after the market closes. Hopefully, the AEOS numbers are a good indicator of what to expect here.

2-7 Triple Draw

Okay, after a decent online session I decided to give 2-7 Triple Draw a try on PokerStars. And, I must say that the game's a lot of fun. It's really subtle, and it's plenty different than any poker game, even Razz. Anyway, I donked it up playing the $0.50/$1 limit. And, I lost a few bets (meaning $5). Give it a try if you get bored of the other games.

*** Edit ***

Okay, I'm kind of hooked on this new game. So, I went back to play some more at the same tiny limits. I can now say that I am officially ahead in 2-7 Triple Draw for my lifetime (a whopping $4). I guess I am officially ahead lifetime in Let It Ride also. However, unlike Let It Ride, I suspect I will play more Triple Draw in the near future.

A Night Out in the City

Yesterday afternoon, QB and I headed out to the new Westfield shopping centre in San Francisco. I mostly wanted to check out the Martin and Osa store, because of my position in American Eagle Outfitters (AEOS). The store was decorated nicely and it looked great. It was sort of a cross between Banana Republic and Abercrombie and Fitch. Unfortunately, there wasn't much of a line at the register. There were definitely people inside shopping, but I didn't see much buying. I asked the saleslady about it, and she said things were actually okay, and that its always tough for new brands as they first start out.



At least American Eagle was bustling and full of happy shoppers. Also, I did check out Wet Seal (WTSLA), and the place had a constant line going at the register counter. I think that Wet Seal might be a good turnaround play in retail, but I'm not yet ready to commit any funds to buying any yet.

Later on, QB and I headed out for a night out with some of her friends and ex-coworkers. The night started out at Citizen Thai and the Monkey on Grant Ave. It was a really good Thai restaurant. We really liked the food. I had their special of the night... Scallops and Prawns in Green Coconut Curry. Delicious! We had been to another similar-tasting Thai restaurant before called Koh Samui and the Monkey, and after speaking with the hostess there, I learned that the restaurants had the same owner.



After the meal, we took a couple of limos over to the Grandviews Restaurant atop the Hyatt. Luckily, the night was clear. What a view from up there!

Anyway, after our desserts. We went to watch the Beach Blanket Babylon show over at the Fugazi Theatre. It's really a fun show, and its content is updated constantly. I had seen the show once before maybe four years ago. The show is full of political and pop cultural humor. They really had a lot of fun with the recent election results and even Kevin Federline wasn't able to escape.

When the show was over we went to Harry's Bar on Fillmore to get a quick round of drinks, and then it was time to head home. It was a fun night to be sure.

Quick Trade Update

Just for fun, I'm in on a piece of NVDIA (NVDA) at 34.75. Their earnings were good and they are trading lower today after spiking up in the afterhours yesterday. Part of this might have to do with some cautious comments and a downgrade by a smaller firm (Stifel). ThinkEquity also had negative things to say about NVDA. This is balanced out by positive comments coming from CIBC and Thomas Weisel. Maybe part of this sell-off could be due to profit-taking after a heated run-up. And, then again, there's always the chance that I don't know what I've gotten myself into. Hah.

Anyway, this is mostly a fun trade following a decent night of poker. So, I will probably go ahead and close this trade out before the day is over. Also, wanted to note that some analysts believe NVDA is eating AMD's lunch (recall that AMD bought ATI Technologies), which isn't too good for my current AMD trading position.

*** Edit #1 ***

Well, since I decided not to go back to bed right away I might as well give some quick updates on the Long-Term Portfolio holdings.

First Marblehead (FMD) declared a 3 for 2 stock split. Doesn't really mean too much to me other than a potential blip (stock split effect). For companies with small floats, stock splits do matter in the sense that it improves trading liquidity. Sometimes that's an issue for larger firms to get into a stock. For companies like FMD, stock split really doesn't mean much. Along with the stock-split announcement, they also announced a 20% increase in the dividend. Previous quarterly dividend was 0.15, and the new dividend on a post-split share basis is 0.12. Good stuff.

Kongzhong (KONG) was downgraded by Susquehanna from Positive to Neutral. They believe that the recent better than expected earnings was due to overly conservative guidance, and not any true improvement in the fundamentals of the company.

*** Edit #2 ***

Took the loss on the NVDA daytrade at 34.20. Smallish position so the 1.6% loss isn't horrible. But, it probably means I won't eat anything too nice for lunch today... did somebody say McDonald's?

Vegas and Lots of Food Pictures

Okay, here's my Vegas post. I'll break it up into sections so you can skip around if it gets a bit long and boring.


Introduction / Lodging

So, six of us met up in Vegas... Rowr, PetDander, Barber, E-Lankan, QB, and me. Since hotel rates were simply outrageous last weekend, we all stayed in different places. Not really much of an issue, but it is what it is. All of us stayed off the strip. Rowr and PetDander end up at the La Quinta, just down the street from where QB and I stayed at the Tuscany Suites. Barber and the E-Lankan stayed over at the newly renovated Hilton.


Lance Burton: Master Magician

QB and I were a bit rushed upon arrival, since we had to tickets to the Lance Burton magic show over at the Monte Carlo. We made it to the show without any problems despite the ridiculously bad traffic. This particular weekend was horrible. Apparently, it was sandwiched by two major conventions, and there was a major boxing match scheduled, along with a professional bull riding rodeo in town. Okay, so we get to the show.

Lance Burton is amazing. He's quite the showman, and he's simply amazing. Like, when you see a magic trick, you usually can take a guess as to how it's done. Whether you're right or not, or even close isn't all that important. The point is that you usually can come up with some crazy scheme as to how a trick was done. Well, I'd say that there were quite a few tricks that he pulled off that I can't even try to make a guess about. It was really an awesome show. If you're ever in Vegas, and you are sick of the Cirque du Soleil shows and don't feel like watching topless showgirls dance, then go and check out Lance. It's a very kid-friendly show also, so it's a great choice for a family.


Pokering at the Monte Carlo

After the show, QB and I met up with PetDander and Rowr over at the Monte Carlo. We were immediately seated in a new low-limit $4/8 game, and we were on our way to do some heavy drinking and late-night pokering. Since QB doesn't really like poker, she sat behind me for a little while, then got bored and took off to play other games and check out the gift shops.

So, it was Rowr on my left and PetDander on my right. I think that was the best seat order for all of us. Rowr is fairly new, and so she gets a nice early warning to get the hell out of the pot if either PD or I raise it up (unless of course she has a big hand). You can read more about the early warning system by following this link. PD probably likes me on his left because he's so much more aggressive and can usually fold me out more easily if he acts before me. And, I much prefer to get out of his way than to get trapped in a hand due to a raise coming in from behind.

I got pretty unlucky in a couple of hands where my opponents caught their two-outers to spike their sets on the turn. But, in a rare act of equalization, I caught a one-outer to win a large pot. I had Q7s in the big blind. There was a limper and PD (in the small blind) raised. We see the flop 3-handed for two bets apiece. The flop comes T 7 7. PD bets out, I raise, and a weak-tight guy 3-bets. I honestly think I'm outkicked here, and I put him on A9s. PD folds, and I call with the intention of just check-calling the guy... maybe I'm the weak-tighty. The turn is a 7, and I go ahead bet out. The bet - raise - 3-bet line seems so much better than the check-raise line. So, things go as planned, I bet, he raises, and I 3-bet. He calls me down and flips over pocket Tens. Whew!

Oh ya, I should mention that Rowr is up against me lifetime at a live poker table. There was a hand where I betting with middle pair, but she had top pair (and rivered a two pair for the overkill). We're all pretty drunk by the time we get the call from Barber that says he and E-Lankan are on the way over to meet us. We had been ordering drinks non-stop, since it's just a lot more fun to get free drinks than having to pay for them. Ha ha.

Drinking and Gambling at the Monte Carlo

So, Barber and E-Lankan get there, and we all do some gambling on our own. I can't even remember exactly who did what. I think PetDander and Barber went to play some poker at some point and I think E-Lankan played some blackjack. QB and Rowr drank some for free at the Video Poker machine also, I believe.

Well, at some point we all end up at the Houdini Lounge in the middle of the hotel and continue to get the drink on. I think we started out with a round of shots followed up with more drinks and more beer. There's a lot of random conversation, and I'm my usual loud and obnoxious self. Eventually, it's time to crash, and we all head back to our respective hotels.

Pokering at the Wynn

The next day, PetDander, Rowr, QB, and I make it over to the Wynn to do some pokering again. We played a pretty short session. Rowr and I sat in the lowly 4/8 game, and PetDander played a little higher at the 8/16. Not sure if he played any 15/30 or not, but anyway, the table Rowr and I were at was not so good. Players were mostly tight and aggressive... definitely not the type of table you want to be at for the purpose of money-making.

PetDander decided his game was a bit too good to leave, so he decided to skip out on dinner and continue to rake in the bucks. So, QB, and I headed out to meet up with Barber and E-Lankan at the Mandalay Bay. Our dinner reservations at Aureole were for 7:45pm, so we had to hurry, especially with the horrendous traffic crippling the city.

Aureole

QB and I met up with Barber and E-L at the Island Lounge at the Mandalay Bay. After a quick drink, we made our way to the restaurant. We hung out at the restaurant lounge area for a bit as Rowr was having major problems finding a parking spot... after all, it was fight night. She gave us a call and told us to go ahead and get seated. So, we did just that. Not long after, she made it. Yay!

Well, this post is already pretty long, so let me just throw out a few highlights and then put up pictures of the food. Four of us decided to go with the Chef's Tasting Menu. Rowr isn't a big seafood fan, so she went with the foie gras and the roasted pork loin.

The food was absolutely fabulous. Words, especially those coming from me, cannot do it justice. The meal was very well balanced overall, and portions were generous considering we had so many dishes to try.

On top of the great food, the service was really awesome. As each dish came out, there was usually two servers standing by to give us a description of what we were about to eat and also to answer any questions we had. Drinks were always re-filled before glasses were empty, and they even had this metal cover that they put on QB's food to keep it warm when she went to the bathroom. I've never experienced that before... pretty funny.

Oh ya... I should mention that I was completely fooled by a rasberry sauce stained plate. So, we're on our first dish which was served on this fancy glass plate. QB then says to me, "Make sure to try the raspberry sauce, it's incredibly tasty." So, I start jabbing my ahi tuna into the 'sauce' on the plate, only to see that I wasn't getting any sauce. I press the fish harder and harder onto the plate before I realize I've been fooled. Doh!

The meal lasted over three-and-a-half hours. And, there was a ton of food. We were all pretty stuffed afterwards. Okay, no more wasting your time. Here are some pics of the food that was served to each of us during the tasting. Enjoy.


Duo of Ahi Tuna: Tartare and Tataki

Three Cheese Ravioli topped with Dungeness Crab

Grilled Escolar

Sonoma Squab with Foie Gras

Beef Duo: Filet Mignon and Shepard's Pie

Three American Cheeses (Blue, Bucheret, and Cheddar) and Cinnamon Brioche

Pear Tart with Chocolate Fondue and Gelato

Petit Fours and Chocolates

Variety of Fruit Sorbet

Rowr has a lot of pictures of her food too. I'm sure you will be able to see them on her blog at some point.

And, that's all, folks!

One, Two, Buckle My Shoe

Three, Four... Knock On The Door
Five, Six... Pick Up Sticks
. . .
Propositions 86, 87... Go To Heaven

Since neither proposition passed no harm was done, and so I gave them the benefit of the doubt and sent them up and not down.

Anyway, I'm glad to hear that both of these were shot down. Californians get it right once in a while. Who would have guessed that given the piss poor state of our public education system.

Missouri also had a tobacco tax hike proposition that got shot down. However, a few other states passed similar hikes, but luckily those states represent much smaller volumes.

Go Altria (MO)! Go Chevron (CVX)!

Kong Add-On

I've had a small (and, losing) position in Kongzhong (KONG) in the Long-Term Portfolio. Today, I doubled up on the position at 8.70. Gaamblor has been pretty big on it, and I've felt for a while that KONG has a real chance of making it big one day, otherwise I would have already sold it off.

Even after doubling up on it, it's a small position. That's the way I like it when it comes to speculative positions.

Original cost basis: $12.90
New cost basis: $10.80

In the previous day's comments section, I wrote briefly about this move. So, anyway here we are.

Back From Vegas... and Market Talk

Well, I'm back. Had a blast. Will give details (and pictures) from the trip in a future post.

For now, let's talk briefly about the explosive day in the market. Market breadth was excellent. It's so nice to see such a strong broad-based rally. It's not often that ONE HUNDRED PERCENT of the holdings in both the long-term and trading portfolios closed up on the day.

The M&A activity really spurred some strong buying interest. Gotta love it all.

Caterpillar (CAT) fell today and is slowly approaching my buying range.

International Game Technology (IGT) got a nice boost today and closed at a 52-week high. Next week is the Global Gaming Expo. Hopefully, we'll hear about some good things coming out of the trade show.

Chevron (CVX) also closed at its 52-week high.

All in all, it was a monster day today. I'm so very tired today having flown back in from Vegas this morning and going straight to work... but, nothing perks me up better than a sick move in the markets.

Don't forget that elections are tomorrow. Hopefully, we'll get into some sort of gridlock situation. I think there's little chance that the Republicans remain in control of the Congress.

Vegas, Baby!

Well, not much to really report... yesterday was a brutal day for the portfolios and markets in general, and today the portfolios recovered about 25% of yesterday's losses in the face of a flat market. So, that was good.

Been reading up a bit about and researching Montpelier Re Holdings (MRH). After a quick first pass through the numbers, it looks cheap. Planning on digging into it a bit more and taking a closer look at its peers as well. No plans on buying any yet, but that might change soon. They say never to take insurance in Blackjack (if you're not counting), but maybe re-insurance is a good bet.

By tomorrow afternoon, I'll be in Vegas! So, no stock research for a few days at least. I'll definitely be checking quotes when I'm out there, but outside of that, stocks will probably not be on my mind. I plan on donking it up at some drunken low-limit poker table with PetDander, Barber, and Rowr. Should be a fun time.

Anyway, go have a good weekend, everyone.

Halloween and Tires

Well, last night was pretty awesome up until I hit some metal crap on the freeway on the drive home. QB and I basically partied with a few friends over in Moutain View. Everything was great and everyone had a good time. The Holy Shit costume was a hit. While last year's tree costume got a good reception, this year's costume drew quite a few women that wanted to have their pictures taken, etc. I'll probably share a few pictures later on... maybe even the one with the lady wearing nothing but fishnet for a top... well, I take that back I suppose there was some dark tape covering her nipples. Ha ha.

Anyway, tires are expensive. The metal stuff I hit did a good amount of tire damage, wiping out both tires on the driver's side. I had to wait for quite a while in the middle of the night to get towed. At least the tow was covered by insurance. So that's pretty much how my Halloween night went from great to ugh.

Say Cheese!

I was pretty anxious this morning waiting for the Eastman Kodak (EK) earnings release. Now, I can let out a sigh of relief. Kodak managed to post a profit of 0.44 a share excluding one-time items. This was 25 cents ahead of the consensus estimates. We're not out of the woods yet, but it looks like the ship is now heading in the right direction. I've bet a lot on this turnaround, and maybe, just maybe this is the start of something big. I was fully ready to dump the entire position today had the numbers been disappointing. Just glad that I don't have to make that decision... it would have been a sad day.

In other parts of the long-term portfolio, Equity Office Properties (EOP) also posted earnings today. Excluding non-recurring items, they came in 2 cents ahead of estimates at 0.53. They did lower this year's earnings numbers, but guided their numbers in-line for FY2007.

That's it for now... too bad I never did move on Nuance (NUAN). I see they're ticking higher today after increasing their outlook for the 4th quarter. Still on the watch, but I'm not going to be chasing this issue.

*** Edit ***

I managed to flip some shares on a day trade of Akamai (AKAM) for over $1 this morning.

Added Advanced Micro Devices (AMD) to the Trading Portfolio at $21.20 today as well.

Labyrinthine Maize

Last night, QB and I hit up the MAiZE over at the Ardenwood Historic Farm. Neither of us had ever been there before, and we figured that we might as well check it out since we were planning on grabbing some burgers at Fuddruckers in Union City. The burgers were great. I've always loved Fuddruckers, even back when I lived in Laguna Beach. The only thing that was disappointing was that they no longer served ostrich burgers. But, the cashier lady told us that the Emeryville location still did... but, that's just too far away. After finishing up our food, we went off to the cornfield.

So, we get there around 7:15, and finally entered the maze around 7:30. You really do get lost in there as the cornstalks are 8 to 10 feet tall. And, to make things even more difficult, we didn't think to bring flashlights. There were a lot of people there, lots of younger kids, but quite a few adults as well. From time to time you run into some signposts with hints, but I personally didn't find them too helpful. Anyway, we finally made it out of there about 45 minutes later. Not sure I'll do it again, but if I do, I'll be sure to wear warmer clothes and bring a flashlight.

Holy Shit! It's a Viking!

Last night, we had planned on going out to a costume party in Palo Alto. Then, we got invited to a house party that was a bit closer, so it just made more sense to go to that one. We figured if the house party was no good, we always had our original plan to fall back on.

I was going as Holy Shit. I am basically wrapped up in brown fabric without any armholes with angel wings made of toilet paper and a halo. Also, there were random strands of toilet paper attached to give the poopy effect. QB went as a sexy Viking. My costume actually held up okay, but I'll have to do some rework on it before the next party and before our office costume party. I'm going to add some corn kernels to the fabric, and possibly buy a cheap made-for-Halloween cross to wear. I've decided to stop being so damn paranoid and just post up pics without my usual blurring out of faces.






Anyway, we get there around 9, and the party is already in full swing. Everyone's drinking, dancing, and having a ball. You could see lots of extra provocative costumes everywhere, since they had a contest just for that. The winner was a lady with a super skimpy Strawberry Shortcake outfit. The second place winner was a voluptuous lady with everything hanging out. And, third place winner wore a sexy flight attendent that I'm sure would outdo any of the attendents on a flight on the now defunct HootersAir line.

But, the craziest thing happened that night, and it really goes to show how small a world we live in. So, I ran into a high school buddy that I haven't seen since we graduated... over ten years ago. It was really random. I was chatting with a few people while hidden inside my costume, and this guy in a Tyvek costume came by to chat, and I totally recognized him. And, I asked what his name was... he replied Edward. Back in school, we called him Eddie. I then gave him his last name and asked if he ever lived in Riverside. He confirms, and I poke my head out of my costume, and the dude tripped out.

There was a lot of catching up, and man that was nuts. So, anyway, the party was still going on strong when we left. I'm getting too old to party hard on Fridays after a long day at work.

Have a Happy Halloween party-filled weekend!

Halloween and Earnings

Well, I spent a fair amount of time last night making my Halloween costume. It's about 90% done... I'll put up pictures later. Man, I really hope it doesn't fall apart either, it's kind of fragile. I now have proof that I possess zero sewing skills, and I really suck at crafts.

Anyway, I just have to get it in wearable condition before the parties this weekend. Tonight, QB and I are heading out with some friends to what I believe is a private party over at the Blue Chalk Cafe in Palo Alto. I've never been there, so I have no idea what to expect.

Okay, onto the good stuff... all of you non-stock peeps can tune out now.

So, today the GDP number came in pretty low at 1.6%. Economists had forcasted a more robust 2.1%. Not good, but we'll see how the talking heads spin it.

Two holdings in the long-term portfolio released earnings this morning... Fortune Brands (FO) and Chevron (CVX). I wasn't too worried about Chevron's earnings after the strong showing by Exxon (XOM) yesterday. However, I was a bit worried about Fortune, especially since Constellation didn't have a strong showing in the alcohol department, and potential problems in their home and hardware brands due to housing slowdown related issues.

Anyway, let's get to the results... Chevron came in stronger than expected. Fortune missed their estimates by 3 cents, but they did manage to come in ahead of expectations on revenues. Their wine and spirits business did very well, which offset some of the weakness in the home brands department. I don't expect the miss to hurt them too much, and I still see a lot of potential in the company. If it does dip on this report, and it continues lower I will consider adding to the position.

Akamai (AKAM) got a few target price increases today... Piper boosted its target from $45 to $48. Merriman gave a $56-62 target price range. Deutsche Bank raised their target from $55 to $58. But, the stock is trading lower today, so I should be able to exit this short-side gamble profitably. Hopefully soon, maybe even in the pre-market. Market opens in about 20 minutes, and I think the sentiment is negative today due to the GDP figure. So, I'll probably just dump it during the normal trading session.

*** Edit ***

Covered AKAM short at 48.53. Small profit, but enough to pay for dinner for a week or so.

Quick Portfolio Update

I said I would be adding to the Form Factor (FORM) position at $37.50 yesterday evening. I lied. I increased my existing position by 50% with a purchase just minutes ago at $38.48. This is actually averaging up, and not down. The cost basis of the position now sits at $37.36. I'm going to try and sell some calls on the entire position as a way to trade potential upside past $40 for a reduction in effective cost basis.

** Edit #1 **

Just noticed that FORM has bounced a bit, and my order to sell the calls was filled... sold the FORM $40 Nov Calls (AFUKH) at $1.40. This brings down the cost basis to 35.96 with a cap on the upside at 40.

** Edit #2 **

Sold calls on the Broadcom (BRCM) position in the trading portfolio. Just got filled on an order to sell the Nov $30 calls at $0.95. Effective cost basis is now $27.25 on this position... Shares put to me at $30 less put premium collected $1.80 less covered call premium collected $0.95. Upside capped at $30.

** Edit #3 **

GAMBLING... sold a small position of Akamai (AKAM) short at $49.46. Following in the footsteps of Gaamblor. Even if it moves big either way, won't really amount to too much, but gambling is fun.

Poor Form and Breaking Up

Well, I'm sitting here waiting for an installation of Windows CE 5.0 SDK to complete. But, it sure is taking forever. So, I guess now is as good time a time as any other to talk a bit about some recent happenings related to the long-term portfolio.

Today, Altria (MO) announced its earnings. It was a mixed bag really... they missed analsyts' earnings estimates, but they came in well above the concensus in the revenue department. They also guided their next quarter's numbers higher, which is always nice to hear. But, I think the biggest announcement today was that the company has set a date for finalizing breaking-up with Kraft. Everyone's been waiting a long time for this, and now it's finally going to happen. So save the date... January 31, 2007.

Form Factor (FORM) announced its earnings today, and it wasn't so hot. The earnings were in-line with expectations, and their revenues topped estimates. Unfortunately, they guided lower on next quarter's revenues, while guiding higher on earnings. The stock got clobbered as a result.

I am not sure exactly what to make of it, but it might be a buying opportunity. In fact, I put in an order to do some afterhours purchasing at 37.50, but my order hasn't filled with 25 minutes left in the extended session. If it moves to 37.50 or lower this week, I will be adding to my existing position.

All things considered, today was a great day for the portfolio. The long-term portfolio managed to advance well ahead of the market averages in spite of the FORM sell-off. Hoping to see some more good things... until next time, take it easy.

Long-Term Portfolio Update

Just a minute ago, I sold half of the First Marblehead (FMD) shares at $69.57. Currently, I do not intend to part with the rest of the shares. It's tough not to take a profit of this size. And, I did want to start freeing up some cash for other stocks. FMD has been very good to me... we picked it up at $28 a little over a year ago, and it's time to book some of the 148.5% gain. Tom Brown, hedge fund manager and regular contributor at bankstocks.com, was dead-on with his recommendation of this company.

Still interested in:

CAT, DNA, UVV, SHG, AMD, WWE

Quick Thought

I think that after getting slammed, Caterpillar (CAT) is looking quite attractive. I think if somehow the market trades it down to the $50-55, then it'd be a steal, and you should really load up.

Anyway, the company missed its earnings for a number of reasons, including production issues and legal issues. And, the company reduced its profit forecasts for 2006 from a range of $5.25 - 5.50 down to $5.05 - 5.30 a share. The company also hinted that double digit growth would be unlikely, and that investors should expect mid to low single digit growth.

Let's assume that earnings come in at the low-end of their range for '06 at $5.05. That would mean that at $60 a share, CAT would be trading below a 12x multiple. I think that's a very pessimistic outlook. Say it came at $5.05, but instead of no earnings growth, they see a modest 4% increase. That would put next year's earnings at $5.25, and once again, using a price of $60 per share, CAT would be trading at under 11.5x forward earnings. I think Wall Street has overreacted, and I think it's time to take a good look at the company.

CAT's a strong company, and there is serious upside potential if they do better than their low-end estimates. Also consider that, historically, their management tends to be conservative with estimates. In any case, I'll be waiting for it to come down a bit more. I will probably sell part of the First Marblehead (FMD) shares to fund this purchase, if an opportunity to purchase shares materializes. I'm going to start nibbling at $58 or better, and I'm prepared to add heavily to the position if it ever does see $55 or less.

Oktoberfest!

Yesterday, we checked out the Oktoberfest festival in historic downtown Campbell. It was fun, and there was a good turn out. We had plenty of beer and food. They served three types of Spaten beer at the festival... lager, wheat, and of course, the dark Oktoberfest variety. We ate these ginormous sausages from the Lockeford Meat and Sausage company, and we were totally suffed. When we got home after spending several hours at the festival, we pretty much went into a coma resulting from overeating and all the beer-drinking in the hot sun.

Lots of different vendors were there at the festival, too. Many you would expect at a festival like this one, like those selling foods and clothes. But, others you wouldn't quite expect, like one booth that was selling insects encasedin clear plastic molds. While pretty freaky, it was one of the more popular booths. We almost bought a few of them, but decided it'd be a waste of money. An insect keychain cost just as much as beer... insect or beer? Hmmm... Insect... beer. Insect... beer. BEER!

Politically Incorrect Joke of the Day

Anyway, I'm waiting on a few tests to run to completion here at work, so I'm going to share a joke that a buddy told me today.

So, a black baby is given a pair of wings from God. The baby then asks, "God, does this make me an angel now?" God laughs, "Naw, nigga, you a bat!"

Quick Update

Closed out the Intel (INTC) call options at $1.25. Tiny profit of 10 cents per contract... it was a small position, so not much to write home about. But, a gain's a gain, and that certainly beats a loss.

Still not sure if I want to let the Broadcom (BRCM) shares get put to me... I'm just a tiny bit underwater on the contracts right now with shares trading at $28.05. If I allow the shares to get put to me, then my cost basis will be $28.20. I'm leaning towards buying the shares at the moment.

Also, Advanced Micro Devices (AMD) is starting to look worthwhile to pick up after its recent decline due to the poor gross margins for the most recent quarter. And, I have my eyes on Genentech (DNA) at current levels. Would be nice to see it dip below $80. Not sure if that'll happen, but if it does, I might pick some up.

Trading and Poker Update

Well, unfortunately I got a bit greedy when I set my order to dump the Oct 20 Intel calls (NQJD) this morning. My price missed by a touch, and well, the market pulled back and now I'm more or less even on that trade... plus or minus a little. Will definitely dump the calls before the week is over, as this was a pure gamble, and I don't intend to buy shares.

Additionally, I dumped the Multi-Fineline Electronix (MFLX) shares today for a 12% overall loss at 22.65. It's a shame I didn't dump it earlier when I first saw the not-so-positive motives of the Roth & Stark buying spree. Bah.

In better news, I did chalk up another nice win last night at the lowly $6/12... I'm no baller.

Quick Trade Update

Once in a while, I like to gamble. So, here's my latest bet. I picked up Intel (INTC) Oct 20 call contracts (NQJD) at $1.15 today. Intel reports earnings after the bell. I guess we'll see if I make my point or if the stickman clears the table with my hard-earned money. It's a small position, so it's really nothing more than a fun gamble. Then again, maybe it's not so smart to bet against Goldman... they downgraded Intel today ahead of earnings.

What's a Gymnopedist?

Recently, I've been kind of hooked on some music by this eccentric composer named Erik Satie, who once introduced himself as a gymnopedist. I have no idea what a gymnopedist is... according to Wiki, it is related to some ancient Greek dance called the gymnopaedia.

I encourage all of you to give his music a try. It's some really good stuff. I know a few of you play the piano, so maybe you've played some of his music. Others may have heard a few of his pieces in movies or perhaps on television.

As far as his music goes, it seems that I like his popular stuff the most, Gymnopédies, in particular. But, some other pieces that I enjoy very much include the first Nocturne, all five Gnossiennes, and also Sonatine Bureaucratique. I don't know much about classical music, but man, seriously he's got some good stuff.

A Post of Poker Beats

If you don't like to hear about losing poker hands (both bad and legitimate beats), then I strongly advise you to skip this post.

So, as I mentioned in my previous post, I played some cards from late Saturday night until Sunday morning. And, while I can't say that I played all that well, I certainly didn't play horribly. If I were to rate my game that session, I'd give myself a solid B.

Here are three notable beats...

86c in the BB. We see the flop 7 handed for 2 bets apiece. The pre-flop raiser was this lady who doesn't play all that badly. She's not a strong player, but she was really hot that night and hit pretty much everything. So, the flop comes 5c 7x 9c (oh, flopping the nuts is so pretty), and we get 4 bets in on the flop 3-ways. The turn is a Qc, and the three of us put in a total of 2 bets each. The river is a blank, and my flush loses to the bigger one. Final hands: raiser had 99 for flopped top set, and the winning hand was KTc. Why the poker gods didn't give me a 7c on the river, I don't know. Ouch.

About 20 minutes later... I limp in MP with KsTx after a couple of EP limpers, and we see a 6-way flop for two bets apiece. The dealer deals me a beautiful flop of Qs Js 9x. Again, flopping the nuts is so nice... definitely a nice way to lose a lot of money. Anyway, we go two bets on the flop and the turn brings out a Ts. Ok, so I might be losing to a flush here, but at least I have outs with an open-ended straight flush draw with my beautiful King. Anyway, we go two bets 3 ways on that street, and we're off to see the River, the wonderful River of Oz. It's some low spade, and I lose to As4x. Double Ouch.

Later on, I've got KQh in the blinds and I call a raise. Four of us see the flop of Ks Qs 5x. I check-raise the flop, and 3 of us including the pre-flop raiser get to the see the turn. It was some blank, I bet and only the PFR calls. River comes some baby spade... I don't figure him for a flush draw, and go ahead and bet out. I get popped (ugh), and I call. Total put into the pot when I was ahead? Zero Dollars. Total I shoved into the pot when I was behind? Sixty Dollars. The look on my face when he turned over pocket Kings? Priceless. For everything else, there's the chip runner who can give you another rack of chips.

I was stuck a lot more at one point, but eventually clawed my way back to being stuck 260. Not really a big deal at just over 20 bets lost, but it does get to you when you get absolutely clobbered on a few hands that could have been so very nice. For me, losing when you're card dead just happens and I don't think that much of it. But, losing big pots in the manner described above just hurts. Okay, no more bad beat stories until after I go and play some tonight.

Saturday Eats

Lunch on Saturday was actually more like a celebratory feast. Had we known this, we would not have made dinner plans at a local Cuban restaurant. So, anyway QB and I were invited to a lunch to celebrate the birth of her aunt's now one-month old newborn. So, we show up to China Stix in Santa Clara, and to our surprise, we learn that a total of 5 tables were reserved for this occasion. The tables were decorated with streams of gold ribbon, and every seat had its own cover. Even the chopsticks were fancy with gold-colored metallic ends.

We had a total of 11 courses in the 3 hours that followed our arrival... I'll just list them out with a dash of detail.

1) Cold Appetizer Plate - Typical dish to start off any Chinese banquet. Various cold cuts of meat, jellyfish, and some vegetables.

2) Shark Fin Soup - Imitation, of course. It was quite good. In fact, I really liked all the food that was served.

3) Peking Duck - I usually don't like duck, as it's often greasy. But, Peking Duck I don't mind because the bread that goes with the duck does a good job soaking up the grease.

4) Lobster With Ginger And Onions - I'm not that huge a lobster fan, but the couple chunks I had were tasty.

5) Wealth & Happiness Double Cake - This, I'd never had before. It was slices of honey glazed ham and a crunchy somewhat sweet cracker that went into some bread.

6) Minced Lobster With Lettuce Cup - This was new to me also. Again, I'm not a lobster fan, but I had two of these. Basically, lobster meat in a cup of lettuce. Really a nice and refreshing course.

7) Braised Sea Cucumber With Bok Choy, Chicken, and Mushrooms - Yummy. As gross as it may sound to eat a sea slug, sea cucumbers when prepared correctly remains one of my favorites. And, this place really did get it right.

8) Steamed Trout - Each table had two fish. I was pretty full at this point, so I only had a tiny bit knowing that there was more to come.

9) Napa with Scallops - This was a simple dish... Chinese Napa vegetables with scallop shreds in a seafood sauce.

10) Seafood Yee-Mein - This was the closer... a soft seafood noodle dish. Traditionally, noodles are mandatory fare at any birthday-related feast. It has something to do with their symbolism of longevity.

11) Sweet Rice In Pineapple Bowl - I liked this dessert quite a bit. It was an empty half-pineapple shell filled with rice and sweet red bean, and some pineapple chunks.

Okay, I lied. There was a 12th course... a second dessert. The new parents of Jaeden (the baby's name) brought over some cake also. So, everyone had some of it despite being way overstuffed already.

I went into a food coma shortly after this 3-hour meal. QB and I even had to move our dinner reservations by an hour, since there's no way we'd be able to eat much without more of a break.

So, this brings us to our Cuban dinner at Habana Cuba in downtown San Jose. Neither of us have ever had Cuban food, so we really didn't know what to expect. Also, there's no way for us to tell if the restaurant's food is really authentic. But, if the crowd was any indication, the place must be good. It was completely packed, and without reservations, there'd be quite a wait.

We didn't really know what to order, so we just winged it. We were still a bit too full to order any appetizers, so we just had the salad and chicken-corn soup that came with our meals. We decided to share dishes to get more exposure to Cuban cuisine. We ordered the Rabo Encendido, which was slow-braised oxtail in a red wine sauce. And, we also ordered the Lechón a la Cubana, which was a traditional Cuban pork dish.

I really like oxtail, and this dish met my expectations. It was delicious and full of spices and had lots of taste. The lechon had a light taste, and so QB wasn't thrilled. I, on the other hand, thought it tasted pretty good. Along with the meal, QB had a mojito, and I gave Hatuey, their Cuban beer offering, a try. The beer was okay, nothing remarkable. The mojito was also far from the best that I've tried.

I also played a lengthy poker session, but unfortunately I was stuck over a rack after about eight hours. I'll probably write something up later that will read more like a sad tale than anything else. Okay, this post is long enough as it is. Enjoy your weekend.