Quick Update

Sold June $40 calls covering the entire FormFactor (FORM) position at 1.05. I'm growing more and more cautious right now. I am probably going to start selling more calls and possibly buy puts and/or begin shorting if the markets continue to tear it up. We've definitely been on a heater, that's for sure.

Just for record-keeping purposes, FORM basis is now effectively 35.72 once we include all covered call activity.

And, a quick note on International Game Technology (IGT)... so, they signed an agreement with Microsoft to help them distribute and develop the new surface computing product, Microsoft Surface. It's quite possible that some of those in the know about this deal were the sources of speculation about a potential buyout of IGT. We'll never know for certain, but I always find it fun to think about this sort of stuff.

Quick Update

Well, I made a couple of profitable daytrades on Network Appliance (NTAP) today. One was short from near the open, covering at $31. And, the other was long at 30.80 and covering at $31. Just a couple of trades in good fun.

Anyway, I rolled the profits into a bear put spread on NTAP. While I do think there might be a buying opportunity in NTAP if it were to continue its slide to say $28, I believe that in the very short-term it is likely to see $30. I could be totally wrong, but what else is new.

I picked up the spread for a debit of $1.25. Long the June 32.50 puts (NULRZ) at 1.55. Short the June 30 puts (NULRF) at 0.30.

Ignoring transaction costs, here's the gist of the trade.

Worst case scenario: NTAP at 32.50 or above on June 15 expiration. I lose $1.25 per contract.
Best case scenario: NTAP at 30 or below on expiration. I profit $1.25 per contract ($2.50 value less the $1.25 debit).
Break-even scenario: NTAP at 31.25 on expiration.
All other in-between price points: The profits and losses are progress linearly.

Memorial Day Weekend

Figured I'd write a little bit about the long weekend, since I've got nothing better to do right now as I eat a nice T-Bone steak that was left over from yesterday. Anyway, the weekend was relaxing and chill for the most part. Didn't do much on Friday or Saturday... watched a couple of movies: Blood Diamond and Black Dahlia. Don't bother with Black Dahlia, it was pretty stupid. The other flick was entertaining I thought.

Anyway, on Sunday, QB and I headed up to Bodega Bay. We really weren't sure what to expect, as neither of us had ever been there. But, we assumed we'd get some seafood and maybe go a bit further north to check out the beaches. Just a bit of trivia... Bodega Bay is where the infamous Hitchcock movie, The Birds was filmed. Once we got there, we were pretty hungry and it was just before noon, so we ate over at a place called Dee's Bayside Deli there. I'd have to give the place a thumbs down. It certainly wasn't anything special.

After our quick meal, we headed up further North and checked out the Sonoma Coast State Beach. We kicked it there a bit, and mostly just lay out in the sand. We didn't bring any towels, so we pretty much just got all sandy. Then, we decided to drive down towards Point Reyes area and get some live oysters. And, on our way down there, we drove past a trout farm. We thought it'd be fun, so we did some wanna-be fishing at the Hagemann Ranch Trout Farm. We had a lot of fun there, and caught 4 trout... two were decent sized and the other two were pretty crappy and small. Here's a pic of the largest one caught by QB.


After a bit of driving, we made it to the Hog Island Oyster Company in Tomales Bay. We bought like 50 oysters (25 sweetwater oysters and 25 Kumamoto oysters). The Kumamotos are really tasty and sweet. If you like to eat oysters on the half-shell, definitely get your hands on a few. They're delicious.

Here's a view from near the Oyster Farm.


We had considered dropping by Muir Woods, but we decided that the oysters might go bad even though they were packed in ice. Besides, we were pretty tired from driving around. So, we went home.

The next day, we grilled up some steaks, fish, oysters, and corn, and basically pigged out. Grilled up a some of the oysters and had a bunch of them raw. I'm pretty much going to finish off the rest tonight as a post-dinner snack.


Oh, and on a totally different subject... QB and I caught the Miss Universe Pageant last night. It was pretty lame, but what I thought was really sad was that Miss USA made it to the final 5. I mean, she fell on her ass. Like, you could argue that she kept her poise and all that. But, the bottom line is she fell and still managed to make it to the final cut. That's ridiculous.

And, to continue on with the contestant ragging... Miss Korea's answer to the final question was ridiculous. When asked what superpower she'd want to have, she basically starts off by not answering the question at all and describes her love of missionary work. Then, she throws in that a wallet that never dries would be a great superpower. Seriously ridiculous.

Stuttering Succotash

Here's a general tip for any of you who run a business that requires a telephone-based customer support line. Do not hire someone with a severe stuttering problem. I just wasted a good amount of time on the phone with a customer service agent when I called in about a problem with my cable box.

It started out normally. But, within a few sentences, there was a stutter or two. No big deal, I could understand what he was saying. Unfortunately, his stuttering problem got progressively worse quickly. At one point, it took him almost 30 seconds to give me the address of a local office. And, yes, I really did stay calm and not once did I bring up the stuttering, though I did ask him to repeat a few things, because I couldn't understand him. As expected, that made things worse. Anyway, by the end of the call, he resorted to spelling out his words, because he could no longer say them any more.

That's really ridiculous. Why not have him work on their 'live online chat' support line and not on the phones. I'm not really here to bash those who stutter, but it would make a lot more sense to find a job where the stuttering would not come into play. I can't blame him as much as I can blame the person who hired him. That's just a bad management decision.

Suh-, Suh-, So, Coh-, Coh-, Com, Comcassss, Comcast. Li-, Li-sten up. Muh-, Muh-, Moooove thhh thhh this guy tuh tuh tuh to a muh- muh- more appropriate place within your company.

IGT Options Activity

There might be some inkling of truth to the recent International Game Technology (IGT) buyout rumors. It has been about a week since they surfaced publicly, and options activity is still a bit unusual.

IGT is at 41.50 as I type. Open Interest in the June 45's is 11,049 contracts, and today's volume sits at 3,836. These contracts are going for roughly 0.60, so these options break-even if IGT moves 10% in the next 3 1/2 weeks.

Contrast this to First Marblehead (FMD) options activity. There was recent M&A talk regarding FMD also. Today's volume in the June 40's is 60 contracts with Open Interest of 4,019 contracts.

Just an observation. I don't claim to know anything more, but it's interesting to see if a deal happens, because the options activity is definitely not normal.

lolcats

Okay, so I'm not really that in-the-know about random web stuff. I don't know what's fresh, trendy, whatever. But, I recently was made aware of this lolcats phenomenon. Anyway, if you don't know what lolcats are, here is a link to a bunch of lolcats images.

So, I am putting myself at risk of being sent to lolcats hell by giving you my own submission. Here you go, enjoy.

Dumped the Donkey of the Day

The portfolio Donkey has been Kongzhong (KONG) for quite some time. Luckily, it was never a large position, and for the most part has been the smallest position, and not just because of the continual share price drop.

Well, it is no more. I dumped KONG today at 5.70. It's basically time to throw in the towel on that one. Percentage-wise it was a horrendous loss. In absolute terms, the loss was not too big a deal. Anyway, that's all I wanted to say.

Edit #1

Sold off American Eagle Outfitters (AEO) at 28.21, which I puchased back in December of 2005.

Quick Update

Sold the SanDisk (SNDK) at 44.69 from the Trading Portfolio.

First Marblehead (FMD) is ticking higher today on buyout rumors. From what I saw, there's talk that Wells Fargo (WFC) is in advanced buyout talks with the company. No Limp is reporting a mid-$50 price tag.

Anti-social Drinker Puzzler

A friend of mine recently had an interview for a software position, and was given the following problem...

There is a bar with 25 equally spaced stools. The patrons are anti-social and will always choose the stool that maximizes the minimum distance to other patrons. And, no patron will choose to sit next to another. If there isn't any spot that is insulated from others, then no more patrons can be seated. As the owner, you get to seat the first patron, but after that initial placement, the new patrons will seat themselves according to the aforementioned rules. Where do you seat the first person to maximize the number of customers?

So, I thought about this a little bit, and decided that the more general related problem was maybe a bit more interesting. Here's a slightly different question that is a bit more general. Given a bar with N stools, is it possible to seat (N + 1)/2 patrons? I came up with a solution, but it's not really all that elegant, but I do believe it works.

I'm going to skip a ton of the details, but what I came up with is the following. Let's start with what I am going to call a safe interior median partition (SIMP). These are interior stool groupings where splitting down the middle creates two SIMPs. Safe, meaning odd numbered. This is because as soon as we see even numbers, we know we can't fill it up to full capacity.

Not all interior median partitions are safe. Say we had the following: O O O O O O O. We care about the interior, so let's put patrons on the edges. Now, we have: X O O O O O X. Now, we have an IMP of size 5 (there are 5 stools on the interior). This is not safe since it leads to even-numbered IMPs. If we put a patron in the center, we'd have X O O X O O X, and that's clearly not what we want. We can't achieve full capacity using a 'sit in the middle' strategy. So, we know that IMP-5 is not a SIMP.

Now, if we had O O O O O O O O O. We block the edges, giving us: X O O O O O O O X, and we see that this gives us an IMP of size 7. But, look at what happens when we put a person in the middle. We then have X O O O X O O O X. And, we now have two new IMPs, each of size 3. Notice that the IMP of size 3 allows us futher partitioning with a central-seating. Giving us X O X O X O X O X. So, we know that IMP-3 is a SIMP, and IMP-7 is a SIMP, as it produces two IMP-3's.

We have a SIMP, if we have an IMP-X where X is of the form (2^N - 1). So, we can generate our list of SIMPs: 1, 3, 7, 15, 31, 63, etc.

Now, how does this help us? Basically, here's the deal. If we have N barstools, then I contend that we can fill it to capacity, which means (N + 1)/2 patrons seated according to the rules, if and only if we are able to find two SIMPs that sum to (N-3). Once we find our two SIMPs, then simply take one of them and add 2 to find the initial seating. Since we are choosing a first seat to give us two SIMPs, we are guaranteed to fill to capacity, because each median seating produces new SIMPs.

Here are a few examples with illustrative seatings:

N = 25. (N-3) = 22. Our two SIMPs are 7 and 15, which sum to 22. So, we choose initial seat 9.

N = 19. (N-3) = 16. Our two SIMPs are 1 and 15. We choose initial seat 3.

N = 13. (N-3) = 10. Our two SIMPs are 3 and 7. We choose initial seat 5.

N = 15. (N-3) = 12. There aren't two SIMPs that sum to 12. So, there does not exist an initial seating that gives us full capacity. You can see this is the case below, as I've exhausted the possibilities (ignoring symmetric cases).

Click Image to Enlarge

And, that's really all there is to it. If you can find two SIMPs that sum to N-3, then you can certainly fill to capacity. Otherwise, you are bound to have some two-seat gaps in the final seating configuration.

Yet Another Quick Update

Sold Amgen (AMGN) at 54.36, and bought Amgen Jan '08 $40 LEAPS (AMQAH) at $16.20 while increasing exposure by 50%. In other words, I bought 50% more contracts than would have been required to match my original position.

Anyway, I paid roughly $1.85 in premium. The option delta was roughly 0.9, which means that for the time being, I should be expecting a move of 90 cents for every dollar that AMGN moves. This delta will fluctuate, but if AMGN goes significantly higher, the delta should approach 1.0.

Amgen has really been hit hard recently by a string of setbacks. I do like the company long-term, but I didn't want to pump more money into the issue. So, after some thought I figured to pull money out and increase exposure. Of course, if Amgen were to fall hard from this point on, I lose at a much faster rate. But, that's a chance I was willing to take.

I'll be leaving AMGN in the Long-Term Portfolio list on the right, since I am fairly certain that come January, I will end up exercising the LEAPS and get back into an equity position.

Quick Update

Just sold all of the Capital One Financial (COF) from the Long-Term Portfolio at 77.38. I have never bought any shares of COF. I ended up with the COF position as a result of two other purchases.

Long ago, I bought New York based Greenpoint Financial, which was acquired by North Fork Bancorp. Around the same time, I also bought Hibernia, based out of Lousiana. In 2005 and in 2006, Capital One bought out Hibernia and North Fork, respectively. And, so I ended up with the shares. So, there you have it.

Quick Update

I should have sold calls on Yahoo (YHOO) following the published acquisition rumors. Anyway, I'm late to the party. I sold the Yahoo June $30 calls (YHQFF) at $1.25. They expire in about 5 weeks. If I get called away, I will be looking to re-enter at sub-$30 prices. Otherwise, my position remains intact. Effective cost basis on the shares is now $28.25.

Sudoku

So, the other day Rowr was talking to me about writing a sudoku solver. Just in case you've been living in a cave for the last 2 years, here's a sudoku webpage. Since I suck at figuring out sudokus, I figured I might as well write a solver, and it might be fun to do so. Anyway, I'm done with a working version. There are a few things about it that I figure I'd mention now.

Download the SudokuSolver here.

1) The program attempts to use built-in logic first, but if it gets stuck then it attempts a trial-and-error method (Nishio method). If this happens, then either the puzzle is complex or is deficient (see #2 below). The program will warn you if this method is invoked. There are likely other logic rules that I didn't put in, so my program might have to invoke the Nishio method when a good puzzle solver would not require it.

2) If it is given a deficient puzzle, meaning there is more than one solution, then the program should find a solution. So, even if you were to give it a blank board, some valid solution should appear.

3) You can set up the board using either the Quick Entry (81 edit boxes) or simply clicking on the graphical board. Clicking is much slower, but if you are making small tweaks, it might be simpler.

Oh, and look at the readme file for other info. This thing isn't perfect, and is provided as-is.

And, for those who don't trust random programs, here's a screenshot so you can see what you're missing out on.

Swamped

I have been absolutely swamped at work lately. Hopefully, the load lets up soon.

Speaking of swamps, the trading portfolio sinks a bit today due to CompuCredit (CCRT), which shed over 9% today following a large miss in their managed earnings. Reuters confirmed that their -0.19 EPS is comparable to the consensus estimates of +0.21 EPS. Management over at CCRT claims to be comfortable with their previous full year guidance of $4.00 in EPS.

Wachovia downgraded the stock to an underperform citing uncertainty in the company's growth plan. Rochdale Securities, on the other hand, reiterated their Buy rating. Personally, I'm in a holding pattern. I'm not comfortable adding to this one, but I'm willing to ride this out. If they do achieve their full-year earnings targets, then this stock really should be trading higher.

For those that want to do some research and are interested in the global mobile handset space... check out Qiao Xing Mobile (QXM). It IPO'ed very recently at $12, and now trades below that. They have sizeable revenues and what looks to be decent earnings. Anyone want to take a look? They are focused primarily on the mobile handset market in China.

Another Buyout?

The New York Post is reporting that Microsoft is upping the ante a bit by asking Yahoo! (YHOO) to enter formal talks to be acquired. I think the acquisition makes a lot of sense. I can't say for sure what price would be fair, but according to the paper, Wall Street sources are estimating a $50B price tag. This would translate to roughly $37 a share.

Quick Update

I'm finally doing some portfolio consolidation. I sold Coventry Health Care (CVH) today at 57.65. It more or less hit my estimated price target and so, I'm out. Will be doing more selling soon, and probably add to some existing positions.

In other news, Glatfelter (GLT) had a rather disappointing quarter, and the company said that things weren't going quite as smoothly as planned. I've still got faith that their acquisitions will eventually lead to more efficient operations and higher profitability.