Just Sold my Cost Plus Nov Puts
Options will be the death of me. Sometimes I make killer money (TIE & JLP Calls) and sometimes I lose my shirt (TIE Calls again & CFFN Puts). In this case, I made 31% on my money, which works for me.
Cost Plus released quarterly earnings which were awful. They had to drop margins to grow their sales and that is a sign of struggling.
Hint: when you start receiving flyers in your mail box from retailers, notice the frequency. Bed Bath & Beyond went from monthly mailers to weekly, a sign of problems.
I have predicted havoc in the housing market to hit housewares and durables and I have been correct. Sadly, the market does not want to drop the stocks the way they should. And that's the general issue with investing: analysts tend to wait for the numbers to be released because they can release opinions based on facts and not judgement calls. This of course is less risky and more stupid, and this si where investing against the market makes sense.
I look at ILMN and UCCT and I see small cap companies with massive growth. I invest because I believe that the market will notice and reward.
I would rather put money down on companies to grow, but sometimes it is too tempting not to invest on the company going down. For example, JNPR & CSCO. This is a zero sum game: if JNPR is winning, CSCO is losing, and vice versa. CSCO's great release is not a sign that everyone is doing well - rather, it is a sign of JNPR doing badly. So when JNPR rose in sympathy, I considered buying puts. Same with RSH. If Best Buy and Circuit City are stealing the high end and Walmart is stealing the low end, RSH gets squeezed out.
Other times, it is not a case of one winner and one loser but all losers. There is no way on god's green earth that a housing slowdown is good for homebuilders and suppliers of things to a home. I searched for a long time for a door manufacturer and a window manufacturer to short. Think about it: there are dozens of doors in a house - cancel construction on a few thousand houses and a door maker loses hundreds of thousands of shipments. Cancel a few condo high rises in Florida, and window makers and glass makers are hurting. Compared to one refrigerator per home that gets unsold.
In the end, I found that these companies were privately held. So the best I could do is short BMHC, which has been incredibly resilient in the face of reports that they can expect 35% less business going forward. But we have to wait for the quarterly numbers to get released before we can do anything to th estock price......
That's why I shorted ETH and WHR - there are fewer places to install washing machines and a new couch. Growth will stall. It's a matter of time horizon - waiting for th emarket to accept and acknowledge.
Cost Plus released quarterly earnings which were awful. They had to drop margins to grow their sales and that is a sign of struggling.
Hint: when you start receiving flyers in your mail box from retailers, notice the frequency. Bed Bath & Beyond went from monthly mailers to weekly, a sign of problems.
I have predicted havoc in the housing market to hit housewares and durables and I have been correct. Sadly, the market does not want to drop the stocks the way they should. And that's the general issue with investing: analysts tend to wait for the numbers to be released because they can release opinions based on facts and not judgement calls. This of course is less risky and more stupid, and this si where investing against the market makes sense.
I look at ILMN and UCCT and I see small cap companies with massive growth. I invest because I believe that the market will notice and reward.
I would rather put money down on companies to grow, but sometimes it is too tempting not to invest on the company going down. For example, JNPR & CSCO. This is a zero sum game: if JNPR is winning, CSCO is losing, and vice versa. CSCO's great release is not a sign that everyone is doing well - rather, it is a sign of JNPR doing badly. So when JNPR rose in sympathy, I considered buying puts. Same with RSH. If Best Buy and Circuit City are stealing the high end and Walmart is stealing the low end, RSH gets squeezed out.
Other times, it is not a case of one winner and one loser but all losers. There is no way on god's green earth that a housing slowdown is good for homebuilders and suppliers of things to a home. I searched for a long time for a door manufacturer and a window manufacturer to short. Think about it: there are dozens of doors in a house - cancel construction on a few thousand houses and a door maker loses hundreds of thousands of shipments. Cancel a few condo high rises in Florida, and window makers and glass makers are hurting. Compared to one refrigerator per home that gets unsold.
In the end, I found that these companies were privately held. So the best I could do is short BMHC, which has been incredibly resilient in the face of reports that they can expect 35% less business going forward. But we have to wait for the quarterly numbers to get released before we can do anything to th estock price......
That's why I shorted ETH and WHR - there are fewer places to install washing machines and a new couch. Growth will stall. It's a matter of time horizon - waiting for th emarket to accept and acknowledge.
posted by Andrew at
9:08 AM
4 Comments:
Good call on CPWM. During my internship our PM wanted to cover and I convinced them to stay short - it's a broken company right now...although alot of people are actually thinking it's a turnaround stock. We squeezed more out of the short - from 15 to 11 when we finally covered.
Marketing their way out of this is the expensive way to go...they would be better served by a) figuring out what they actually sell (furniture or food?) and b) getting out of the markets where World Market means nothing, because those stores are the root of the problem.
This is a long-long way away from being where management thinks they can get to, IMO, and the stock isn't cheap with all those leases.
TRID is upgraded to strong buy by needham as ceo resigns.
UPDATE 1-Trident CEO resigns after panel finds option backdating
6:07p ET November 20, 2006 (Reuters)
Nov 20 (Reuters) - Trident Microsystems Inc. on Monday said its founder Frank Lin resigned as chief executive after an internal panel found that incorrect measurement dates were used while awarding stock options to employees.
The company appointed Glen Antle, a director, as acting CEO and chairman, the provider of digital TV technology said.
Trident said it expects to record a non-cash charge of about $40 million to $50 million for stock-based expense, which will be recognized between 1994 and 2006.
The determination of the actual charge is subject to the panel's completion of the investigation of the historical stock options, Trident added.
The Sunnyvale, California-based company said it will delay filing of its 2006 annual report and 2007 first-quarter results, pending the completion of the investigation.
The board has adopted some remedial measures following the panel's preliminary report, it added. (Reporting by Sweta Singh in Bangalore)
JNPR upgraded by JP Morgan, what the heck where these a-holes doing 2-3 weeks back when the stock was around 17? They upgrade the stock when it crosses 20 intead.
Anyways, I bought some JNPR stock yesterday and will ride the stock until the next earnings release. I plan to sell the stock prior to earnings and buy some puts then.
Your thoughts are appreciated.
thanks
MJ
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