Tuesday, January 30, 2007

Big Earnings Day and Hot Wings

Tomorrow is the last day of the month... and, it is also a big day for the Long-Term Portfolio. Earnings will be announced for three of the larger positions. #1 Altria Group (MO), #3 Form Factor (FORM), and #8 Eastman Kodak (EK). Looking forward to hearing about Altria's plans for breaking up and the Kraft spin-off.

Also, as much as it sucks to be down a quick 10% or so on SanDisk (SNDK), I think I'm pretty much stuck here. It's sort of like being pot-committed in poker... you know you're not likely to have the best hand, but the pot's giving decent enough odds for you to call with an inferior hand. Before the earnings, I was pretty confident that $40 would have been a reasonable post-earnings near-term floor if anything went wrong with the earnings release and subsequent conference call.

I looked at everything again and took in the news best as I could, and while I was obviously wrong, I am going to have to stick with my own analysis and say that at $38, the company starts looking quite inexpensive. Call me a sucker, a bagholder, or a clown. You're probably right, but I think I'm stuck here. I've got to hold on and see how this hand develops in the near-term. Fasten your seatbelts, this could get ugly.

On a completely different note, QB and I met up with some friends at Cluck University Chicken for some beers and SPICY buffalo wings. We got had mostly normal food, but we also got an order of the Global Thermal Nuclear chicken wings. They were pretty damn hot. Not anywhere near as hot as Dave's Insanity Sauce, but freakin' hot nonetheless. Pretty fun place. I'd definitely go back.

Earnings Roulette - Take Two

Gonna play earnings roulette again. The last one didn't work out too well, but it was a smallish position so I'll let the past stay in the past. If you want to make money, you probably want to fade my bet... ha ha.

In any case, trying once again on a flash memory company. Picked up SanDisk (SNDK) at 42.26. I've been following the company. It's traded down quite a bit mostly due to declining ASPs and general industry uncertainty. That said, I don't expect any huge downside potential even if what is reported later isn't so rosy. We'll see what happens. Depending on what we hear this afternoon, I might end up keeping part of the trading position and moving it into the long-term portfolio.

Also, the company's CEO, Eli Harari, will be appearing on CNBC after the market close.

*** Edit ***

Well, after the release the stock jumped up. Next, I went to a meeting, and I come back to see that it has now fallen 10%. Ugh. I lose... again. Bah. Not a happy camper at the moment.

Monday, January 29, 2007

The Weekend

This weekend, Crestfallen came over for the weekend. She's here for business, but flew in a couple of days early to kick it. Anyway, the weather was mostly bad while she was out here. It's been raining, and everything has been more or less glum. We did get to dine at a couple of restaurants that I had not yet had the chance to try.

The first was the Cajun Crab House in San Jose, which just opened up maybe a few months ago. The place was packed, and we were told that the wait would be about 45 minutes. Luckily, CF, QB, and I were being seated a short 15 minutes later. I ordered the seafood gumbo, CF had the Jambalaya, and QB had the cajun-spiced Dungeness crab. Let me say that the food can definitely be hot. The seafood gumbo packed some serious heat, and the crab was fiery (QB ordered the spicy version). It's a shame that we forgot to bring the camera, as they put one of those shellfish splatter bibs on QB, and it looked pretty funny.

The food was great, but I felt it was a bit pricey for what you got... gumbo and jambalaya were $18 and the crab was $22. I'd be much more excited about going there more often if the jambalaya or the gumbo were a few bucks cheaper. The service was generally pretty good, which was a nice surprise. Oh, and QB and I have never had beignets before, and we heard some pretty good things about them from CF, so we ordered a batch for dessert. I'd say that was the one item that was sub-par for the evening. I guess I'll have to give them a try if I ever make it out to New Orleans.

The other restaurant we checked out was Kubota in San Jose's Japantown. The restaurant is rather unassuming. From the outside, if it weren't for the electronically lit Open sign, you'd think it was someone's residence. Anyway, there's nothing too fancy about the place. It looks like a typical modern restaurant on the inside. It's all up from here.

The sushi was fresh and tasty. I ordered the deluxe Chirashi dish, and I was pleased all around. CF had a chirashi and udon combination, which provided her with a ton of food. And, QB went with a sushi combination plate. Again, I wish I had a camera, since the food looked really good. If you're ever in the area, and you're craving for sushi, you'll want to stop by for dinner.

While we all didn't do too much other than eating out, we did manage to get down to City Beach in Fremont and play some ping pong. I was the grand champion for the night with only a couple losses. But, don't get the wrong idea, I was horrible. It's just that there are varying degrees of horrible. And, we also spent a few hours playing poker for no real money at home while having a few beers and cocktails. Good thing Rowr was nowhere near, as I hear she's been on a poker roll.

Okay, I guess that about sums it up.

Friday, January 26, 2007

Quick Update

Sold 40% of the Micrus Endovascular (MEND) position at 23.20. I still like the company's prospects, and have no plans on selling the shares still in my possession any time soon. It's just that I wanted to free up some cash and the quick 10% jump in share price was a bit too tempting to simply pass on.

And, since I've got some time, here are a few quick blurbs about some portfolio holdings on the move today.

Amgen (AMGN) had disappointing clinical trials... they went 0 for 3 this time around. Shares fell a fair bit today as a result.

Fortune Brands (FO) is also under pressure today. While its Alcohol and Golf divisions did quite well, its Home and Hardware segment is really hurting due to the housing slowdown. So, they cut their earnings views for 2007.

International Game Technology (IGT) was started at an Underweight by Prudential Securities and given a $46 price target. Shares are on the retreat following that call.

First Marblehead (FMD) continued to outdo everyone's expectations, and so it moves higher.

Thursday, January 25, 2007

Quick Update

Took a 0.20 loss on the Silicon Storage (SSTI) earnings roulette gamble, dumping early on at 4.71. I have been trying to get me some Wet Seal (WTSLA) at $6 even, but the stock just doesn't get pushed down enough. I suppose that I'll just let the order sit.

Lifetime Brands (LCUT) is on the move today after affirming its '06 earnings guidance and also boosting its revenue forecast for '07. LCUT has more or less recovered from its recent big drop. Can't say that I expected such a quick rebound... if I was that confident, I surely would have bought more on that dip.

eBay (EBAY) is also on the move today following its strong quarterly numbers and aggressive stock buyback announced yesterday.

And, it looks like Lehman is talking up Eastman Kodak (EK). They see the upcoming Investor's meeting on February 8 to be a major catalyst for the stock. We shall see.

Wednesday, January 24, 2007

Can You Spare Some Change?

So, some time ago, I got myself an automatic coin sorter/roller from Dave and Buster's using my hard-earned prize tickets. It basically looks like this here. Anyway, it's been about two years since I've been rolling up my spare change. Here's what my change box looked like this morning.

Now, the change box is empty. I took it to the bank and made my deposit. I was surprised to learn that it was for a whopping $483.50. If there wasn't a bar across the street with a Ms. Pacman and the Addam's Family pinball machine, I would have easily surpassed the $500 mark. It feels like free money, but I know that's pure psychological nonsense. Anyway, I thought I'd share.

Earnings Call Roulette

It's that time again, where I throw caution to the wind and make a small earnings call gamble. I'll be betting on black... Silicon Storage (SSTI) at 4.91. This is a small flash memory company that I did very well with long, long ago during the great Nasdaq bubble. On a price to earnings basis, shares aren't all that expensive compared to peers. Then again, the stock has run up quite a ways, so I could end up with a black eye.

In any case, the croupier has spun the wheel, the bet has been placed, and the ball is going round and round. Where will it land?

Tuesday, January 23, 2007

Two Different Tales

Today, Yahoo! (YHOO) and Advanced Micro Devices (AMD) announced their quarterly and full-year earnings. To make a long story short, Yahoo! jumped in afterhours trading following its conference call. The company announced that their Panama advertising platform would be going live sooner than expected. And, AMD decided to spoil my party with a significant earnings miss and disappointing news all around.

Still getting ready for an initial bite of Wet Seal (WTSLA). The time is coming really, really soon.

Monday, January 22, 2007

Turnaround Time - Wet Seal

I've mentioned in the past that I liked Wet Seal (WTSLA), which operates both Wet Seal and Arden B stores, as a turnaround play. At the time I was considering them seriously, their valuation implied that the market was not projecting so strong a recovery in their earnings. Not long after, the company's stock moved from the high $5's to the mid-$7 range. It was then that I felt that I might have missed the boat.

Fast forward about a month, and we see that the shares have retreated. WTSLA is trading at $6.17 at the close of today's market. It is once again entering into what I consider an attractive price range. So, I decided I'd take another good look at it. And, in my digging for more information, I came across a 40 page valuation report on the company issued by Credit Suisse just a couple of weeks ago.

They present a strong case as to why Wet Seal should be worth $9 a share. They break down their DCF-based analysis very carefully. While their valuation model is indeed quite complex, it is welcome, as it takes into account the already complex capital structure of the company.

There are a few key takeaways from the report that I will list here. CSFB believes that a 14% growth rate in square footage can be achieved (stores are far from saturation), which will drive the top line. Couple this top-line growth with operating margins that they believe can improve to roughly 8% by 2008, and you get much stronger earnings growth. They are forecasting a 3-5 year 20% operating income growth rate. Note that the 8% operating margin would put Wet Seal well below its average peer which is sporting a 12% margin.

Analysts at CSFB also mention that the management team is more or less complete at this point. Top positions have been filled with strong industry leaders, and many of them have received good guidance from a strong retail consultant that the company hired to aid in the turnaround. The key risk, as with any teen retailer, is the ability to keep up with fickle teen fashion trends. There's always near-term earnings risk with any turnaround play, as well.

In any case, I will be purchasing some shares of the company on any continued price weakness.

The Weekend

Well, Friday night was fun. Turned out to be a lot more party than dinner. I was misinformed that it was a Fondue and Martini dinner party... it was pretty much a crazy party kind of party. I had to drive, so I limited myself to a couple of martinis and a beer for the entire night.

Anyway, the host had a neat game room with a pool table, a Wii, a shuffleboard set-up, and also a stand-up arcade machine with a bunch of old games. One of the games on that machine is one I used to really enjoy, but had totally forgotten about... Klax. It sure brought back some old arcade gaming memories.

On Saturday, QB took me out on a surprise trip to Santa Cruz. We stayed over at the Casablanca Inn. The room was really nice, and we had a lovely ocean view to go with it. There was a nice private balcony, but we didn't really make much use of it unfortunately. Here are a couple of pictures I took. The first one was taken while we were on the pier, and I really liked the sky's colors. The second one is of the pier just before we headed out for breakfast today.

We dined at the Casablanca Restaurant, which is a part of the inn. The food was really good, and we certainly enjoyed it. The bread was really good to start us off. We then had oysters on the half-shell and some fried brie with jalapeno jelly for appetizers.

Fried Brie with Jalapeno Jelly

We both went with their daily specials for the main course. QB had lobster stuffed with crab, and I had seared ahi encrusted with a peppercorn melange. We were quite pleased with our dishes, which were both flavorful and presented nicely. I secretly wished that the the portions were just a tad larger, but really we were both satisfied afterwards. Heck, we skipped dessert.

Crab-stuffed Lobster

Seared Ahi Encrusted with a Peppercorn Melange

Before we headed out of Santa Cruz this morning, we had breakfast at Gilda's, a family restaurant on the pier. I didn't have anything special, just typical American breakfast fare. But, QB ordered a really really delicious crab omelette. I got to eat a third of it, and boy was it delicious. There was the occasional bit of shell, but the crab was fresh and the omelette was just great. It really was.

Okay, so once we got back home, we decided to check out Pan's Labyrinth. Everyone I had spoken with thought the movie was excellent. Rotton Tomatoes gave it a super fresh rating of 95%. That's a ridiculously solid score. Well, what did I think of it? I thought it was good, but I didn't find it to be amazing or anything. It was a neat story that weaved fantasy and cruel reality together. Maybe it was talked up just a bit too much, and I had pumped myself up for it being such a mind-blowing movie. In any case, it's definitely worth watching. But, don't go in thinking it's going to be your <insert your own top 5 movie here>.

I guess that's about it.

Friday, January 19, 2007

From A Trade To An Investment

So, I had sold covered calls on two-thirds of the Yahoo! (YHOO) position. I guess it turned out to be a good thing, now that YHOO shares closed today at $27.64, just over the $27.50 strike price. The covered shares will be called away this weekend, and I'm going to be left with one-third of the YHOO trading position.

I've decided that I like Yahoo's prospects quite a bit, and I feel that it is worth quite a bit more. I'm transferring YHOO to the Long-Term Portfolio as of today.

Anyway, tonight I'm off to a Fondue and Martini dinner party. Should be fun. More on that at a later time. Gotta run!

Thursday, January 18, 2007

Quick Update

Today was a bit brutal with the Nasdaq selling off as it did.

Anyway, I did pick up some Micrus Endovascular (MEND) this morning at $21.10 for the long-term portfolio. Lucky me, it jumped up today. Hope it holds. The company makes micro-coils to treat aneurysms in the brain. I first heard about the company when it was trading in the $14-15 range. It has done quite well since then, and I'm kicking myself a bit for not getting some shares sooner. Definitely a riskier position, but it's worth a look.

Tuesday, January 16, 2007

Tagged (?)

So, it looks like I've been tagged by Crestfallen. Honestly, I'm not sure how this all started or what the point is, but I'll be a good sport about it. So, I guess I need to write about 5 things that people don't know about me.

1) When I was a high school kid, I hammered nickels into flatter, wider sized slugs. The vending machine in the locker room would accept them as quarters if you kept trying them. After perhaps a net profit of $4, I stopped this nearly daily activity when I accidentally hammered my thumb.

2) The first stock I ever bought on my own (non-custodial account) was 3dfx. I remember my hands were trembling as I clicked on the "Confirm Order" button. Amazing to think that the entire size of that position was a great deal smaller than a typical daily move the current Long-Term Portfolio sees. Anyway, I ultimately sold it for the same price I had paid for it many months later. Eventually, the company went bust, and its assets were bought on the cheap by nVidia.

3) As sad as it may be, I was thrown into the world of Texas Hold'em and the more serious side of poker after watching Rounders. It was not long after watching that movie that I thought it would be really cool to make some extra money playing poker on the side. After writing code to compute the likelihood of hands holding up against random hands and reading a few books on the subject, I felt I was ready to jump in a real game.

It took some convincing, but I was able to talk my roommate at the time (GZA of 12th Street) into going to the Commerce Casino with me. We played $1/2 (the lowest limit they spread), and I proceeded to lose $35. Not long after that, we figured out that it was probably close to impossible to beat the game due to the rake. We moved up to $3/6 upon realizing that. It would be a few more months before I was a consistent winner. And, looking back on how I used to play, I'm surrpised I was not a loser for longer.

4) In college, I took a Computer Architecture class. One of the assignments dealt with writing code to simulate 16-bit multiplication using some simple instruction set. Instead of thinking through the logic, I was lazy and tried to be a bit funny/stupid. So, I did a pretty ridiculous cut-and-pasting job that did the multiplication without any loops. It basically did things based on how a human would slowly hand compute numbers to sum leading to a product. The final printout of the code was some 30 pages long. It was not long before I got the nickname, Brute Force.

5) I've partied really hard in Los Algodones, Mexico, a border town near Yuma, Arizona. Along with a lot of others, I drank a bit too much and sang a lot of bad sounding karaoke. While I don't remember most of the night, I do remember singing Van Morrison's Brown Eyed Girl quite horribly.

I suppose it is now time to tag someone else. Eeny, meeny, miny, moe... catch a feline by the toe. If she purrs, let her go, eeny meeny miny moe. Rowr it is. She doesn't purr, she definitely revvs (in her Lotus!).

Quick Update

Doubled up on the TODCO (THE) position with a purchase at $31.21. Cost basis for the shares is now $32.74.

Also, looks like the market is expecting some bad earnings news coming from Linear Technology (LLTC) this afternoon. I guess we'll see what happens with that. I'm comfortable with the position at the moment.

Anyway, off to lunch I go.

Monday, January 15, 2007

Earnings Season: 2006 Q4

Here's a list of upcoming earnings dates for companies held in the portfolios, companies of wide or other personal interest. All estimates are those listed by Reuters. If you wish, bookmark the page, as I'll update it as new earnings dates come in for other companies of interest.

Company Earnings Date Est.
Intel (INTC) 1/16/2007 0.25
*Linear Technology (LLTC) 1/16/2007 0.34
Apple (AAPL) 1/17/2007 0.78
JP Morgan Chase (JPM) 1/17/2007 0.94
*Capital One Financial (COF) 1/18/2007 1.25
International Bus. Machines (IBM) 1/18/2007 2.19
*International Game Tech. (IGT) 1/18/2007 0.35
UnitedHealth (UNH) 1/18/2007 0.85
Citigroup (C)
1/19/2007 1.03
*General Electric (GE) 1/19/2007 0.64
Motorola (MOT) 1/19/2007 0.24
Schlumberger (SLB) 1/19/2007 0.85
*Sun Bancorp (SNBC) 1/22/2007 0.24
*Advanced Micro Devices (AMD) 1/23/2007 0.23
*Yahoo! (YHOO) 1/23/2007 0.13
*eBay (EBAY) 1/24/2007 0.28
Wellpoint (WLP) 1/24/2007 1.27
*Amgen (AMGN) 1/25/2007 0.94
*First Marblehead (FMD) 1/25/2007 0.78
Microsoft (MSFT) 1/25/2007 0.24
Caterpillar (CAT)1/26/2007 1.34
*Fortune Brands (FO)1/26/2007 1.36
*Altria Group (MO) 1/31/2007 1.24
*Eastman Kodak (EK) 1/31/2007 0.56
*FormFactor (FORM) 1/31/2007 0.31
Starbucks 1/31/2007 0.26
Amazon.com (AMZN) 2/1/2007 0.21
*Chevron (CVX) 2/2/2007 1.80
RenaissanceRe (RNR) 2/5/2007 2.31
Walt Disney (DIS) 2/5/2007 0.38
Cisco Systems (CSCO) 2/7/2007 0.31
Kohl's (KSS) 2/8/2007 1.41
*Coventry Health Care (CVH) 2/9/2007 0.97
*MontpelierRe (MRH) 2/14/2007 0.76
*Home Depot (HD) 2/20/2007 0.52
*American Eagle Outfitters (AEOS) 3/7/2007 0.66
*DEB Shops (DEBS) 3/8/2007 0.68

* Companies held in the portfolios.

Friday, January 12, 2007

Multiplication Magic

Tonight, QB went out to her co-worker's going-away bash. I was just too tired to go out with her after a long, long day at work. So, here I am being bored and more or less unproductive.

To keep me busy, I have decided to share something I thought was pretty neat when I learned about it. I know that some of you out there have seen it before, but I still think it's pretty cool. Cool, until you see why it works, anyway.

So, start with any two whole numbers. Now, for the first number keep halving it until you end up with a value of 1. Note that you will always round down. For the second number, double it as often as the first number was halved.

As an example, say our numbers are 49 and 116.

49 116
24 232
12 464
6 928
3 1856
1 3712

The next step now is to cross out the values in the right column if the value in the left column is even. Continuing with our example, here's what we get.

49 116
24 232
12 464
6 928
3 1856
1 3712

Now, sum the values that remain in the right column. We have 116 + 1856 + 3712 = 5684, which is equivalent to the product of our two initial numbers (49 * 116 = 5684).

The reason the math works out this way is related to the binary number system (Decimal 49 = Binary 110001 = 2^5 + 2^4 + 2^0). Should be pretty obvious from here. Anyway, when I first saw this 'trick' I thought it was really neat. But, maybe it's because I'm easily amused. Ha ha.

Quick Update

Here's the Econ 101 Question of the Day: Who typically benefits from a price war?

Answer: The consumers.

Wrong Answer: A company (Hmmm... like Advanced Micro Devices) in the middle of one against a formidable competitor (Hmmm... like Intel).

Wrong Answer #2: A shareholder of a company in the middle of one.

AMD's warning is causing some pain in the Trading Port today, and well, I guess the signs were there, but I just didn't listen. Will think about what to do over the weekend. Blech.

In better news, I covered the Sapient (SAPE) short at $6.40, which was good for around 3.6%.

Thursday, January 11, 2007

Short Update

I went short a small amount of Sapient (SAPE) at 6.64 following their post-earnings jump. It's a dangerous short, so I'll be careful. And, it's a small position anyhow.

Here are some comments from some investment firms:

Thomas Weisel - Feel that the earnings results and the overall revenue trend and momentum were positive. There was some caution expressed regarding the company's higher expenses. They believe Europe will continue to improve and that SAPE should start seeing the ramping up of a major client. Sees economic cycle being a factor, which could really hurt them if there's a turn before SAPE fixes their operational issues.

Friedman Billings Ramsey - Reiterates Market Perform rating with $6 price target. They cite the ongoing stock option investigation as a weight on shares. They feel that European operations are stabilizing, but are still cautious.

RBC Capital - Firm remains cautious on shares of SAPE. They say that the program to improve margins is behind schedule, and they are unsure of the cash impact from the upcoming earnings restatements. They also cite high turnover rate as an area of concern.

Wednesday, January 10, 2007

FORM: Moving On Up

Shares of FormFactor (FORM) experienced a decent pop today as a result of analyst ratings and comments. As of today, FORM has taken over the #3 spot in the Long-Term Portfolio, behind #2 Student Loan (STU) and #1 Altria Group (MO).

Well, I might as well post the basic comments that led to the jump today. I know of three different investment firms that gave their views today on FormFactor. Two were clearly bullish, and the other was much more cautious.

AG Edwards - The firm initiates coverage on FORM with a Buy rating and $50 price target. They are believers that FormFactor's wafer probe cards will offer semiconductor manufacturers a cost effective and yield-enhancing solution for the testing process.

CIBC - Based on anecdotal data from Korea, increased wafer probe card demand should benefit FORM. They believe that the raw increase in DRAM bits coming out of Korea have eliminated any downside risk to first quarter estimates. And, a potential large positive catalyst would be the closing of a long-term supply contract for flash memory with Korean-based Hynix. CIBC called FormFactor their Top Idea for 2007.

Friedman Billings Ramsey - The firm cut their estimates on the latest quarter, and also reduced their price target on shares from $55 to $50. The firm cites high DDR II prices, an inventory correction in the high-end handsets market, and also lack of any major volume orders on flash. They believe that this could impact margins and potentially cause a Q/Q decline in bookings.

Quick Update

Sold covered calls (Jan 27.50's, YHQAY) on two-thirds of the Yahoo (YHOO) position at 0.95. This effectively brings down the overall cost basis of the position to 26.66. However, the shares covered by the calls have a maximum upside at 27.50; by selling the calls, I have effectively sold the shares at $28.45 barring a drop in price below 27.50.

I never intended to hold the entire position through their earnings call, which takes place on January 23. So, if the shares get called away, that's perfectly fine by me. If not, I will probably end up selling them anyway, and holding just one-third of the position.

Tuesday, January 09, 2007

Introduction to the iPhone

I'm sure most if not all of you heard about the big splash that Apple, Inc. (AAPL) made today regarding their new product, the iPhone. Well, I found some time tonight to watch the keynote address that Steve Jobs delivered today at the MacWorld Expo. And, I must say that I can see why everyone got so excited about this new mobile device offering.

Anyway, if you haven't watched the keynote address, you should. It is definitely worth watching. Find it here (if you want to save half an hour, you can just watch the iPhone Introduction, which runs about an hour and a half).

All I've got to say is that, that's one hell of a phone. If the real thing works as well as it did during his presentation, then it's really going to be hot, hot, hot. Just watch the keynote address. Really, just do it.

The company is targeting 1% market share by end of 2008, which translates to 10MM phones. The new phone works exclusively with Cingular Wireless. The reason for this has to do with the need for new network-level innovation... the first of these innovations is random-access voice mail. That's just super cool. Oh, and the phone also provides the user with Google-based search and Google Maps along with Yahoo-based searching, as well as Yahoo IMAP mail service.

So, just about right now I'm kicking myself for dumping my shares not long ago at just about the peak level of nervousness concerning the company's stock option irregularities. If there's any significant pullback in the company's stock, I will probably buy it back. Shares of the competition fell today with Research In Motion (RIMM) leading the way falling a whopping 8%.

Before I end this, note that I didn't say Apple Computer, Inc. The company changed its name to simply Apple, Inc. to better reflect their more diverse product line.

Word Growth Puzzle

Our friend, Mr. PetDander, gave me a word puzzle yesterday that you all might enjoy. Here it is...

What is the longest word in the English language which you can form starting with a base single-letter word (e.g. A, I, or O) and adding one letter at a time without rearrangement, where each additional letter creates a new legal word? Internal additions are allowed.

Here is an example of a valid 7 letter solution:

A --> AN --> ANT --> PANT --> PLANT --> PLANTS --> PLANETS

So, what is the longest valid solution?

I'll post the answer later on if no one gets it. I was unable to find any really long answers, so I cheated and ended up writing a program that grew words from A, I, O seeds. Turns out that there is a single word that bests all others. Interesting.

Sunday, January 07, 2007

Supreme Beings of Leisure

If you like chill and somewhat lounging music, then you should definitely check out Supreme Beings of Leisure if you haven't before. They're not new or anything, but both their albums are really good.

Anyway, today QB and I went to the Outlet Stores in Gilroy. It was there that I happened upon a steal. I picked up Divine Operating System (their second album from 2002) for $2.99 at Music For A Song. It was probably a mislabeling, but who knows. All I know is that you can't beat the price, unless you're a pirate, aaarrrgh.

Friday, January 05, 2007

Blast From The Past

Now, here's a blast from the past... video found on YouTube showing some 'stupid' college kids playing with alcohol and fire in my old dorm back in college. Based on the people I recognize in the video, I am guessing that this video was shot right around 1999-2000.

Footnote: I hear that Drobb no longer finds his old nickname appropriate, and does not appreciate anyone referring to him by it any longer.

Thursday, January 04, 2007

Portfolio Meteor Shower

Today, we get to see some falling stars. The portfolio's #5 holding is taking a beating. Constellation Brands (STZ) announced its earnings this morning, and they came in a couple pennies shy of analysts' estimates. It appears that their UK sales were really hurt by an unexpected increase in the supply of cheap Austrailian wine making that market that much more difficult to compete in.

They now see that this isn't going to be a one-time miss, and the company lowered its earnings outlook accordingly. STZ now expects this year's earnings to lie in the $1.65 - $1.70 as compared to their previous forecast of $1.72 to $1.76.

In light of today's news, Deutsche Bank downgraded the stock to a Hold from Buy with a price target of $28. They did mention that the stock might be attractive in the mid-$20's. Well, that's pretty much where they are now. At the moment, shares are trading around $25.50, down roughly 10%. Not much else to say, really... enjoy the meteor shower.

Tuesday, January 02, 2007

Holiday Break

The markets were closed today, since today was declared a National Day of Mourning for the late former president, Gerald Ford. So, I figure I'd give a quick update about my extended holiday break; today was my first day back in the office.

Anyway, I headed down to SoCal with QB to hang out with friends and family. While there, QB took me out on a dinner cruise with Hornblower in Marina Del Rey. The food wasn't amazing or anything, but it was decent enough. The weather was nice, and so following our meal, we got to spend a good amount of time outside just enjoying the view and fresh air.

On a different day, my sister and Spud joined us for a BBQ at my buddy, Jorge's place. We also enjoyed playing the Lightning Reaction game (that game is so friggin' awesome). Food was good, and all in all, it was a fun-filled afternoon.

Eventually, we made it to see the parents, and we played a lot of family type games like Taboo, Pictionary, and Scattergories. The Omaha Steaks I bought my dad for Christmas came in handy... as luck would have it, my parents' only 4-year old refrigerator broke just days before we went there. Normally, a broken fridge wouldn't be that big a deal. But, the company said that no repairmen would be available until after the holiday.

Speaking of gifts, I got my mom a Roomba from iRobot, which was actually pretty cool. I should totally get one for my place. My other sister and her husband got as a joint gift from me, an alarm clock that has an iPod hook-up. And, my other sister still hasn't received her gift yet. Here it is, and it's currently shipping. I wasn't able to play my hands quickly enough on PokerStars to get the gift shipped early enough for arrival before Christmas. Anyway, I expect to get it in the next week or so.

What did I get? Clothes, clothes, a slew of XBox 360 games, and more clothes. I guess no one got the memo that I actually dress alright these days.

New Year's Eve was uneventful. Mostly spent time with the family who came up here to visit me and others in the Bay Area. Probably the first New Year's Eve in quite some time where I didn't do much of anything. All for the better anyway, I guess. I feel totally energized and ready to tackle the new year. Heck, I even had fun at work today.

And, here's a quote for all you old-school gamers: It's time to kick ass and chew bubble gum... and, I'm all out of gum.

Monday, January 01, 2007

Portfolio Checkpoint - 2006 Q4

This was not a good year for me. My much smaller trading portfolio was more or less destroyed by a couple bad trades (specifically, AAPL and PLAY). On the bright side, the long-term portfolio delivered S&P 500 beating returns. However, the net result is a year of underperformance.

Long-term Portfolio: +17.1%
Trading Portfolio: -67.2%

S&P 500 Total Return: +16.3%
Dow Jones Wilshire 5000 Total Return: +16.5%
Dow Jones Industrial Average Total Return: +19.0%
Nasdaq Total Return: +10.4%

Average Diversified Domestic Equity Fund: +12.9% (source: Lipper)

If you're curious, here is last year's much better report card: 2005 Results

It is definitely disappointing to see net underperformance, but live and learn. Oversized positions in the trading account that turned out to be large losers really hurt. Going forward, I plan to be more cautious with the trading portfolio, and reduce the portfolio's concentration on a few large positions.

I don't currently plan on making any major deposits into the Trading Portfolio, as it is pretty obvious to me that I am not a good trader. I think the evidence points strongly to me being a much better investor, but who knows. I don't claim to have enough of a track record to be that sure of anything. I still have a lot to learn.

Company Ticker Q4 Q3 Change
Altria Group MO 18.6% 17.0% 1.6%
Student Loan Corp. STU 8.1% 7.7% 0.4%
General Electric GE 6.1% 6.0% 0.1%
Form Factor FORM 5.7% 3.4% 2.3%
Constellation Brands STZ 5.6% 5.7% -0.1%
Capital One Financial COF 5.5% 2.9% 2.6%
International Gaming Technology IGT 5.5% 5.1% 0.4%
Eastman Kodak EK 5.3% 4.8% 0.5%
Fortune Brands FO 5.0% 4.5% 0.5%
American Eagle Outfitters AEOS 4.5% 4.4% 0.1%
Linear Technology LLTC 4.1% 2.5% 1.6%
Amgen AMGN 3.9% 2.8% 1.1%
Montpelier Re MRH 3.6% * * * * * *
First Marblehead Corp. FMD 3.2% 5.5% -1.7%
Home Depot HD 3.1% 2.9% 0.2%
Chevron CVX 2.9% 2.6% 0.3%
Coventry Health Care CVH 1.9% * * * * * *
Sun Bancorp. SNBC 1.7% 1.6% 0.1%
Deb Shops DEBS 1.5% 1.7% 0.0%
Kongzhong KONG 1.5% 0.6% 0.9%
TODCO THE 1.3% * * * * * *
Lifetime Brands LCUT 1.3% * * * * * *
Equity Office Properties EOP 0.0% 1.8% -1.8%
Abercrombie and Fitch ANF 0.0% 2.8% -2.8%
Apple Computer AAPL 0.0% 3.1% -3.1%
North Fork Bancorp. NFB 0.0% 2.9% -2.9%
Harrah's Entertainment HET 0.0% 7.9% -7.9%


Percentages do not account for any cash held in the portfolio.

During this quarter, additional shares of the following existing positions were purchased: AMGN, FORM, LLTC, KONG.

NFB shares were converted to cash and COF shares as a result of the buy-out.

EOP and HET were sold after being purchased for cash by LBO firms.

FMD position was reduced in October.


Current Trading Portfolio Positions: Advanced Micro Devices (AMD), Yahoo (YHOO), eBay (EBAY) and some EBAY Jan 32.50 Calls.

Happy New Year, everyone! May everyone's portfolio get bloated during a prosperous 2007.