Tuesday, June 30, 2009
But the bottom line here is natural gas is a viable resource and gaining more traction with Washington all the time. It is going to play a major role in our energy plan moving forward, and I feel investors can make some money here.
Before today, I had no shares, so this is just a beginning purchase at 13.97. I feel anything under 14 is a good buy. If it falls further, I will pick up more shares. As I've said before, I'd like to hold a core position in this which I plan to hold for some time (until prices move substantially higher), but also some trading shares to buy and sell while it just bounces within its current range.
Monday, June 29, 2009
So while I do believe we could move a bit higher, I still expect some type of correction during the summer months. I've written at length about this, and still feel this is what is likely to happen...
As far as stocks, I'm not chasing anything, but I am actively looking to buy some stocks. Whether or not the economy strengthens, its probably going to be profitable to have exposure to equities. If we see a good amount of inflation, as many are predicting, stocks will probably follow, at least to some extent. There aren't a lot of great alternatives right now either. You can't get much of a return on cash, and investors will be getting antsy with their money. I expect money to gradually flow back into the market (I'll keep an eye on fund flows and report some results).
It will be a short, but interesting week.
Friday, June 26, 2009
I'm still hoping to buy at some better prices, and that will take a little more time. I'm fully expecting this quarter-end markup to take place as funds are trying desperately to attract that money that's currently sitting on the sidelines.
Have a great weekend!
Buy and hold dead? Not exactly, writes Todd Sullivan. Excellent piece by one of my favorite bloggers/market analysts.
First Solar trying to become viable independent of subsidies and tax credits. Good move.
Americans are finally waking up and beginning to live within their means.
Thursday, June 25, 2009
Days like this are very boring to me as I rarely buy anything when everything I'm looking at is moving higher.
A couple of updates:
-Looks like it may be a little while before I can add to my GGWPQ position as it jumped a quick 15% after I bought it. I will not trade out of this stock because the position I took is quite small.
-There has been plenty of strength in rails lately, and they just haven't sold off enough for me to buy yet. There seems to be plenty of people who see value in the rail industry like I do.
-Almost bought some UNG late yesterday, but my order wasn't filled. I'll look to pick up some shares if it gets back to around 14.00, and obviously add shares if it drops lower after that.
Unless we get a big reversal, I don't anticipate doing any trading today.
Looking forward to watching the NBA draft and trying to figure out what the T-Wolves (yes, they're my team) are going to do.
Disclosure: Long GGWPQ
Wednesday, June 24, 2009
Elsewhere, I'm just waiting and looking for stocks I like to fall to better prices. UNG is back near 14, and I'll likely pick up some shares soon.
I can't always do a blog post each time I purchase something, but I try to update it right away on Twitter, so if you're interested in what I trade pretty much real time, you may want to follow me on Twitter. Click here to do so.
Disclosure: Long GGWPQ
Tuesday, June 23, 2009
- Insiders of Standard & Poor’s 500 Index companies were net sellers for 14 straight weeks as the gauge rose 36 percent, data compiled by InsiderScore.com show.
- Sales by CEOs, directors and senior officers have accelerated to the highest level since June 2007, two months before credit markets froze, as the S&P 500 rebounded from its 12-year low in March. The increase is making investors more skittish because executives presumably have the best information about their companies’ prospects.
- “If insiders are selling into the rally, that shows they don’t expect their business to be able to support current stock- price levels,” said Joseph Keating, the chief investment officer of Raleigh, North Carolina-based RBC Bank, the unit of Royal Bank of Canada that oversees $33 billion in client assets. “They’re taking advantage of this bounce and selling into it.”
You can keep track of recent insider moves here.
I also keep an eye on money flow data. As of late, large amounts of money have been moving out of the big banks and large oil companies, and flowing into (you guessed it) more defensive names.
Monday, June 22, 2009
I don't have a lot of new info to add, but Todd Sullivan did a piece on this with a report on energy efficiency and rails.
I'm interested specifically in BNI, ARII, and maybe UNP.
Friday, June 19, 2009
While Natural Gas (and when I speak of natural gas, assume I'm talking about UNG the vehicle most use to trade gas) has been a popular trade and has seen massive volume, it hasn't really gone anywhere. The problem is supply.
The amount of natural gas available for production in the U.S. has soared 58% in the past four years, driven by a drilling boom and the discovery of huge new gas fields in Texas, Louisiana and Pennsylvania, a new study says.
The report, due to be released Thursday by the nonprofit Potential Gas Committee, concludes that the U.S. has 2,074 trillion cubic feet of natural gas still in the ground, or nearly a century's worth of production at current rates. That's a 35.4% jump over the committee's previous estimate, in 2007, of 1,532 trillion cubic feet, the biggest increase in the committee's 44-year history.
Gas drillers have been shutting off wells at a swift pace after a record amount in 2008, but it still hasn't done enough to slow supply enough.
Long term, this is good for our energy plan though. Natural gas can be used to generate electricity and power vehicles. Our current means of doing this are much dirtier and will likely come under scrutiny from Washington.
For investors, it means that demand is likely going to rise, but not until the economy is stronger. Other countries are relying on natural gas and learning how to find it as well, which has only added to the increased supply. I keep hearing how people want to be "loading up" on UNG because its going much higher soon. I don't disagree, but the timing is the key. It may take a couple of years before prices move much higher. Even though your investment will likely be in good shape, it could be "dead money" for awhile.
That's my take on this debate. I do want to own UNG as I believe in the whole thesis, but this is why I haven't been rushing into it. For now, I'm content to pick up shares when they trade on the low end of their current range, and sell when they appreciate a few percent.
Wednesday, June 17, 2009
What could be some causes? Well, for one the market isn't particularly oversold anymore. In some areas its actually overbought in my opinion. Speculative stocks (solar, commodity, global growth and/or China etc.) all have been bought up too far. I have spotted this and was going to go ahead and short Mosaic (MOS) yesterday, but hesitated (must be recency bias; everything goes up etc.). Anyway, missed about 3% yesterday, and its down 9% today. Not that important as there are a million of those types of trades.
Buying the 2x short S&P (SDS) has paid off so far, and I will probably move up my stops to protect some profits.
Keep in mind we could easily turn back into full bull mode as the funds could move in heavy to buy this dip. That's why I've been hesitant to go to heavy into shorting anything right now.
Disclosure: Long SDS
Tuesday, June 16, 2009
Monday, June 15, 2009
- Stockholders of American Railcar Industries Inc., a St. Charles, Mo.-based company, voted on Wednesday to change the company's incorporation from Delaware to North Dakota. It will be the first business to take advantage of a North Dakota law, approved by the state Legislature two years ago, that requires companies to make it easier for shareholders to challenge management.
- Icahn is a controlling shareholder in American Railcar, which manufactures and repairs railroad tanker and hopper cars. Aside from American Railcar, Icahn has unsuccessfully lobbied shareholders of two drug companies, Amylin Pharmaceuticals Inc. and Biogen Idec Inc., to endorse reincorporating in North Dakota.
- Icahn was among a group of activist investors who hired William H. Clark Jr., a Philadelphia attorney and specialist in corporate law, to write the original legislation. Icahn did not respond to requests for comment.
Crude oil is finally pulling back a little, while natural gas is climbing. Interesting shift. Will it continue? A lot of people have been saying it will, or at least for the spread between the two to close. I didn't get into UNG under 14 again like I'd hoped; I was probably a little picky. Ideally (and I've said this before), I'd like to establish a good sized position in UNG with two goals. 1) A core position that I will hold for a good length of time (ideally when gas prices move back to earlier highs), and 2) Trading shares. UNG has been fairly easy to trade between around 13.50 to 15.50 give or take a little. There is some risk in not being in UNG at this point, and that is that we're finally making a solid move higher, but I think that line of thinking is still premature. I'll continue to monitor that situation and report when I do make a move.
Pullbacks are always nice too in that its easier to buy. I hate chasing stocks. I've outlined the stocks in my radar, and will likely make a few purchases if we see even better prices.
I've been positoning for a pullback in stocks for a week or two now. I'm mostly in cash and pleased with that so far. I do feel we have to make some sort of test of those March lows, but it remains to be seen how close we'll actually get (or when that may even happen).
Saturday, June 13, 2009
This is a natural progression. The longer the rally in stocks progresses, the more sentiment improves. Not just with individual investors and fund managers, but corporate insiders. I would attribute the spike of selling in April to some pent up demand. Insiders needed to sell some stock but were waiting for better prices. We're now back to a more normal level, which now makes this indicator less useful. I view insider transactions as a useful indicator only when it spikes one way or the other.
Thursday, June 11, 2009
- Oil firmed to $72 a barrel on Thursday after the International Energy Agency raised its estimate for 2009 oil demand, adding to signs the fall in consumption may have bottomed out.
- World oil demand will contract by less than previously expected this year, the International Energy Agency (IEA) said as it raised its 2009 forecast for the first time since August 2008.
- Olivier Jakob, oil analyst at Petromatrix, said markets were now in a phase of identifying green shoots of economic recovery. The IEA report "will likely be taken as an additional green shoot," he said.
"Consumption may have bottomed." "World oil demand will contract by less than previously expected."
Sure this is a positive, but it shouldn't be misinterpreted as some kind of strong resurgence of demand. Last year, when prices ran up to around $150/barrel, there was much more demand, and the economy was much stronger. Even then there was a ton of speculation, as well as the weak dollar contributing. Right now we have speculation, the weak dollar, and maybe a bottom in demand.
Yesterday, I was reading Todd Sullivan's blog, and he had a link to a video about this same discussion. The analyst pointed out there is an "endless bid" for oil which started last year. Everyone wants oil to be a part of their portfolio, and this contributes to prices rising. If you look at the oil etfs (USO, DXO etc.) they have seen major inflows of funds. Strong economy or not, most people believe that oil prices are going higher, and want to be a part of that. Anyway, its worth a look.
Tuesday, June 9, 2009
US Natural Gas (UNG). Anyone who has been reading the blog knows I've been in this before and watch it closely. In the short term, this is being driven by speculators and hasn't moved due to still weak fundamentals. In the coming 6 months to couple of years, I think this has major upside potential. You can trade it short term, or just buy it and hold it. I'd like to get it back near 13.50, and the chart is still pointing that way.
News Corp. (NWSA). Followed Todd Sullivan into this trade. I like the thesis on this stock has they are doing well in the face of tough times for most media. I sold it due to the 20% gain it took, but I'd love to buy at back if it falls back to around 9.00. Seth Klarman's largest holding too, I believe.
Teradata Corp. (TDC). A stock I picked up on about a month ago. Interesting data storage company that has traded at a lower multiple than many quality tech companies. Is a spin-off from a couple of years ago (click here to read my piece on why spin-offs often out-perform). It jumped following a postive earnings report, and has since had a lot of strength. I'd like to buy it near the 20 day ema of just under 22 if I can. Large holding of David Einhorn's Greenlight Capital.
Silver (SLV). I still like the case for silver. I held this fund breifly and sold for a small profit. I'd buy it back at a lower price if I can. It did recently bounce off its 20 day ema around 14.60. Click here to read my piece on silver.
RHI Entertainment (RHIE). Deep value play. Another Todd Sullivan/Seth Klarman stock. Trading for less than half of book value. This company has wide moats in the made for tv movie and miniseries industry. I'd look to buy it under 3.00.
Burlington Northern (BNI). In my opinon, the best of the rails. I like the thesis for rails in the medium to long term. Click here to read my post on rails. Warren Buffett owns 22% of the stock, and its always nice to have him behind you. Rails have jumped recently due to Washington backing of some anti-trust regulation on rails, and the prospect of "green shoots." I'd like to get BNI back around 60.
General Growth Properties (GGWPQ). Bankruptcy stock. I've been following Todd Sullivan's excellent analysis of this. I almost bought it twice around 1.00 and then William Ackman made his speech saying it is likely worth $20-30/share. Major volume poured into the stock and it jumped to around $3.00. It is slowing now at around $2.70, but I'm still conflicted here. I may buy in, and will update if I do. Keep in mind, there is the potential of total loss of the value of common shares as this stock is in chapter 11.
There are always a few others, but these are the main few I'm watching right now. Questions and/or feedback always welcome.
No current positions in names mentioned.
Monday, June 8, 2009
- This year’s 31 percent decline in natural gas made it the worst performing commodity and the cheapest next to oil since the fall of the Soviet Union. That’s about to change, if history is any guide.
- Natural gas lost 72 percent in 11 months as the U.S. fell into the deepest recession in 50 years and drillers failed to idle rigs fast enough to control inventories. Stockpiles are 22 percent larger than the five-year average, the Energy Department said. Oil costs 18 times more than gas, the biggest gap since 1992, when the collapse of communism cut supplies from Russia, according to data compiled by Bloomberg.
- Now, gas drillers are tightening their grip on production just as the economy shows signs of improving. The number of U.S. rigs plunged 56 percent in nine months, the steepest drop in two decades, Baker Hughes Inc. said. Gas may rise 38 percent in the second half, while oil will gain 22 percent, according to Bloomberg analyst surveys.
On the technical side, UNG continues to make lower highs which still represents a bearish trend. Volume has exploded and I'd attribute that more to the popularity of the commodity trade than a confirmed move. If you're a trader, you can move in and out of this for quick profits. If you're a value guy, you have to figure that anywhere in here is a good buying point as natural gas won't stay at these levels forever.
Another look at the chart.
No Positions, but that could change soon.
1) Increased Medicaid Funding
2) Highway Infrastructure Investment
3) State Fiscal Stabilization Fund
Today we got a little more commentary by the President on the employment situation:
- President Barack Obama said on Monday he expected to create or save 600,000 jobs over the next 100 days by expediting 10 major projects funded by a huge stimulus package that Congress passed in February.
- "We have a long way to go on our road to recovery, but we are going the right way," Obama said. His statement came three days after a Labor Department report showed the U.S. unemployment rate rose to 9.4 percent in May, even though the pace of monthly job losses slowed to 345,000.
Don't get me wrong, many states are in serious trouble. The lack of fiscal discipline has been a problem on the national, state, and individual level. I'm just skeptical in sweeping, federal government programs and their potential to address the problem. There are states that have avoided crisis by being more conservative. Fund My Mutual Fund picked up this story today.
In my opinion, the only way to fix these fiscal problems is to face some tough realities. We need to take our medicine and cut expenditures so we can be functional again in the future. If we don't do this, we will have a society completely at the mercy of a ever-increasing federal government which is only printing money for a short-term fix. This trend will only escalate without an shift in policy.
Bloomberg (The best there is, in my opinion)
Reuters (Wide variety; good international news)
Wall Street Journal (Specifically blogs, which are free to read)
Barrons (Subscription required, but some blogs free)
Mish's Global Economic Trend Analysis
Zero Hedge (Tons of info; updated very frequently)
Mises.Org (Economic theory, Austrian Economics, etc)
Naked Capitalism (Good Stuff)
Fund My Mutual Fund (Good combo economic/market news/occasional humor)
Value Plays (Great place to find investing ideas)
There are others I follow, but this is my everyday reading, and these sites put out consistent, solid stuff.
Friday, June 5, 2009
1) The dollar has weakened, and this has helped as it typically has a negative correlation to oil prices. Not a huge factor yet.
2) There have been signs the economy is stabilizing, but to me, you cannot say we've seen a return to growth. We have massive efforts by the Fed, Treasury, and Washington (stimulus) to make this economy turn. Job numbers have improved, but we're still looking at 9.4% unemployment. This economy will not strengthen without the consumer.
3) Speculation is rampant. Traders love commodities and particularly oil. Zero Hedge had a post about this yesterday. If you look at natural gas (UNG) which everyone is trading, we're seeing massive volume. Yesterday reached 70+ million shares on fund with an average of 15 million shares traded daily. UNG is a separate story as supply numbers continue to outpace demand, but the long term outlook remains good. So although natural gas hasn't rallied that much, UNG has been profitable to trade.
Bottom line here is that the rug could be pulled out from this, and rather quickly. But in order for that to happen, you need the same three factors to reverse. Most likely scenario is oil prices don't see their previous lows, but establish a new trading range between $50 to $75 barrel. I believe this mostly because the economy is stabilized and the major fear is gone. This will bring more confidence to buyers of oil and related stocks.
Missed my opportunity to buy UNG yesterday when it dipped in the morning. I'll get in eventually, and will post when I do.
Disclosure: No Positions.
Wednesday, June 3, 2009
Disclosure: No Position
Bloomberg had some info on this today that I wanted to pass on:
- “It seems like the federal stimulus is trickling down very slowly,” says Beaumont, chief assistant director of public works for Marin County, north of San Francisco. “My feeling is it’s not finding its way into the economy as quickly as it should.”
- The $787 billion package Congress passed in February is having less impact than economists expected in pulling the U.S. out of the worst recession in at least 50 years. About $111 billion in planned infrastructure spending is arriving so slowly that recovery in the final six months of 2009 may be weak.
- “Most of the stimulus still hasn’t yet reached the real economy,” says Robert Solow, professor emeritus at the Massachusetts Institute of Technology in Cambridge, who won the 1987 Nobel Prize for economics. “It will help us a lot in the second half of the year. But given the collapse in consumer spending, business investment and state and local government spending, I think it’s premature to be getting optimistic.”
- Jim Owens, chief executive officer of Peoria, Illinois- based Caterpillar Inc., said his dealers are seeing some benefit.
- “People are starting to bid work again,” Owens, whose company is the world’s largest maker of bulldozers and earth- moving equipment, said on NBC’s “Meet the Press” program May 31. “It’ll have a positive impact and I think we’ll start to see that kick in through the summer and into the fall.”
Tuesday, June 2, 2009
I continue to be more bullish, but again feel we have to make some sort of test of the March lows. Right now that 666 level on the S&P seems worlds away, but I think we're going to have to see a test that gets lower than about 880 which is really all we've seen so far. We have pushed through the 200 day ma, which could be a sign this rally has more to go. One thing is for sure, I am not short anything and don't plan to be until something major changes in this trend.
Disclosure: No current positions in stocks mentioned.