HERE IS WHERE I STAND
At present I'm 75% invested in SYNC, AUTH, ATNY and GSIG. It is becoming increasingly apparent that my 25% cash position may remain intact for sometime to come. My short-term trend indicator is now firmly in the negative after flipping to the bearish side on May 10th. It would take a rally of some consequence to get it roll back over, allowing me to move back to a 100% invested position. Of some concern is the fact that my intermediate term trend indicator is 1-2 bad days away from switching to the bearish side as well. If this were to occur, I would have no choice but to allow this risk buffer to take the portfolio into a 50% cash position. My opinion of the market makes little difference when faced with my primary function, which is capital MANAGEMENT. Capital mismanagement means allocating down regardless of circumstances based on X, Y and Z. While this may work nine times in a row, it only takes that one time to blow you out of the water for good. I'll say it once again, you need a means of saving you from you. A risk management solution that makes sure you are around to fight another day. I went over this in detail some days ago. I am politely praying to the all-powerful market gods tonight that they allow me to remain 75% invested. Taking the portfolio down to a 50% invested position would require some very tough asset-allocation decisions as I strongly believe in the long-term viability of all my current holdings. I also have strong technical evidence that suggests a substantial bounce is imminent. I have made a promise to the market gods that if they allow the markets to bounce from here I will help a variety of hungry birds from all over California and perhaps stretching all the way into Nevada. I am of the opinion that they will take my offering seriously. I must say that despite the sell-off in the markets, the current portfolio has held up relatively well. This is mostly due to the staying power of SYNC, which released its 10-Q today. Worth reading if you haven't already done so. Their metrics are blazing a path towards some very real profit growth in the coming quarters based on the year over year numbers. Any further positive news out of the company over the coming weeks has the potential to take us on a parabolic journey as market participants have this company twisted. I spoke about it in detail over the weekend. That's all for tonight. Stay...
ADDITIONAL WEAPONRY TO CUT THROUGH AND CLARIFY THE CURRENT CONFUSION CONTAINED HEREIN
As all of my astute readers know, I have multiple reasons to believe we are coming up on what will be seen in hindsight as one of the better opportunities to allocate into stocks for 2012. Since we are nearing a point where smart play will rewarded through an abundance of profits, I am issuing this chart review as an addendum to the weekly review. Unfortunately for participants in the marketplace bottoms are typically violent and unpredictable affairs. They are by nature the point where the maximum number of participants begin an orgy of emotions that gathers steam until it converges into one single point of maximum anxiety where a reversal can take place. As you can imagine, given my description of such an affair, it is not something that is subject to simple interpretation. There is disinformation on both a fundamental and technical basis that is meant to throw your nose off the scent. Fortunately, during such times I become voluntarily illiterate, digesting as little information as possible so that it does not interfere with my tracking of the proper scents. Allow me to remind you of the fact that there has not been one important bottom in the history of mankind that occurred during a positive news cycle. They occur during periods of fear-based disinformation based on the assessments of those among us who are deemed experts. These are professors of disinformation who don't have a speculative bone in their body. There are no grey areas in their overly-contrived jargon. It is a black and white world that they thrive in rooted in data points that walk ass backwards sans pants. Not to be trusted, much less relied upon to enable you to thrive financially. Instead of feeding into the fear by attempting to translate information that is impossible to decipher accurately in order to generate profits, let us look at what prices and sentiment are telling us here and now: click chart to...
WHAT IN THE NAME OF TARTARUS HAPPENED TO SYNC?
A band of undesirables seems to have taken a hold of one of my positions and wreaked havoc on the share price. I speak of SYNC and the phenomenon of substantial volatility now becoming the norm for this stock. I spoke about this potential for a modified road map in attaining value last week. Despite the fact that I knew we would see volatility, when it actually takes hold and the reality of giving back substantial profits becomes, well.....a reality, I become unhinged and want to take heads. Before I get carried away with criticizing all the new patrons of the company I first discovered in late-March, let me put the past couple of weeks in perspective. SYNC was an undiscovered opportunity at the beginning of this month. Volume was no more than a couple hundred thousand shares per day. The message board was vacant, seeing no more than a couple posts per day and sometimes none at all. The Stocktwits stream was populated by myself and a few others who had discovered the name. Surprisingly enough, there seems to be individuals in the marketplace whose opinions are more valued than even mine. So much so that when they publish a research report on a company the dynamics of trading within that company are changed forever. At the same time, an entire group of anti-heroes becomes involved in the process, refuting the claims of the original publisher of the data, mostly based on concerns over the reputation of the one publishing the research. The classic war between short sellers and longs ensues. We are currently in the first inning of that war. It makes no difference who the antagonists and protagonists here are. It seems that instead of focusing on the company in question, the issue at hand has become who is driving the stock price? The only tangible difference, when looking back on SYNC a decade from now, the participants in the day to day movement will have is some extra zigs where there should have zags. And perhaps some extra zags where there should have been zigs. In other words, the path of getting to the pot of gold at the end of the chrome-plated rainbow has become much more nefarious in nature. It is not simply going to be straight line. There will volatility galore. As a result of the publicity that is aimed mostly at investor types who are far less sophisticated than any single person who frequents this forum for efficient exchange of information, SYNC has become filled with undesirables. Those undesirables, amateurs or perpetual loss magnets need to be dealt with before we can...
DO YOU HAVE A WAY OF SAVING YOU FROM YOU?
During the trading day today I tweeted the following: I'll explain this concept again because I think that it is the single most important component of investment success. You cannot simply depend on being a good stock picker to make it in this business. You must also have a means of controlling risk that is of your choosing and attuned to your tastes. It may be as simple as having a 5% stop below your entry point. It may be as complicated as a mechanical system with 18 separate parameters that take into account everything from price momentum to the current wind gusts in Santiago, Chile. Doesn't matter. There needs to be a system of controlling risk in place. My risk-management system triggered today. I absolutely hated the fact that it triggered and was praying that I would avoid it since the beginning of the week. It is no secret that I am bullish here. I think that we are about to see a bottom - perhaps by the middle of next week - that could drive this market substantially higher over the coming months. And that is exactly why I have this system in place: To save me from me. I'm not saying that my personal feelings about the market are incorrect or inaccurate. In fact, I am right more often than I am wrong. This site is a testament to the fact, as is my past history on Wall Street. When I am wrong, however, it always begins with the confidence I have right at this moment about the bullish outcome of the market from this point on. You don't fall into steep drawdowns by being indecisive about which way the market is going to go. You fall into a deep drawdown because of the fact that you unequivocally and without any doubts believe in your analysis. I am here to tell you that you need something to circumvent that belief. You need an interruption switch that gets you away from you at points where the danger is the greatest. This is coming from a guy who in his twenties blew up a hedge fund that had many millions of dollars under management and many more millions in capital commitments after finishing the prior 12 months ranked #1. I had a client base that other fund managers would kill for. I had the resources. I had the institutional support. I had the track record. I didn't have one thing: There was NO interruption switch. There was nothing in place to save me from me during times when danger was bubbling beneath the surface. So when I decided to...
PORTFOLIO UPDATE
During the trading day today I tweeted the following: The research is here http://www.zenpenny.com/?p=4042 As of the close today, I am 100% invested. In no particular order I am holding for accounts the following: - AUTH - See research report - GSIG - Remain bullish here. What has occurred recently looks like nothing more than a shakeout of those who were anticipating a breakout of the bullish pattern a couple weeks back. A bargain. No doubt. - SYNC - There seems to be confusion in the air regarding SYNC at present. Those who have become associated with the name have a past. That past does not necessarily disqualify the company as a result of the association. All that is happening is that what was going to take 6 months has been condensed into 6 days due to the attention. What was going to take 30 months may also be condensed into 30 days. The story here is far from over. We are now simply sitting in the range that company execs thought it should IPO at originally. A pump and dump? Really? Not even close. And those putting their money behind that thinking will be evaporated into small particles only leaving their reptilian tails behind as a sign they ever existed in the first place. This stock is under heavy accumulation. I have seen nothing to change my mind away from that fact. - CIS has been disappointing, thus far. It is trading close to net cash of roughly $2 per share now. Downside from here seems minimal. The only reason I am not considering adding and will likely keep the position relatively small is because it is a Chinese company. I cannot be sure what is on the other side of the coin here. I am not a robotic clown who believes that all Chinese companies are frauds. At the same time, if CIS was based in Cleveland, Ohio instead of Beijing, I would have a lot easier of a time buying into the story. It's a value and I plan on holding for the foreseeable future. - YELP - A brilliant future here. Misunderstood company. Reminds me of Yahoo when it came public in 1996 to a skeptic Wall Street audience that had no idea what the next few years had in store. I believe Wall Street, as a whole, has not learned much from that experience. Ignorance remains pervasive and widespread. - ATNY - Takeover play extraordinaire. Not a matter of if, but simply a matter of when. A wonderful team heading this company up. All of these companies have research available. You can access by clicking...
RESEARCH REPORT: AUTH REPRESENTS A SUBSTANTIAL OPPORTUNITY IN THE WIRELESS SECTOR
7-27-12 - Sold 100% of AUTH on 7-27-12 at 8.16-8.17 for a 73% profit since 7-15. 7-15-12 - AUTH reentered on 7-15-12 & 7-16-12 at average price of 4.70 6-5-12 - Note: Took profits on AUTH on at 4.95 - 5 for a 37% gain since publishing this report. 5-8-12 - AUTH is a current long position in accounts at an average price of roughly 3.65. This is a mid-sized position to start. I will make it a large position if the performance warrants. AUTH represents my favorite type of opportunity in that there are a combination of factors at work that have led to the company being overlooked since it went public in 2007. That is a proper segue to the first reason the company has been greatly ignored: Timing of the IPO. AUTH underwriters and management certainly are not market timers, as they started trading publicly in July 0f 2007 almost precisely at a multi-year top on the S&P 500 that has not been surpassed to this day. IPOs that enjoy the misfortune of going public at multi-year tops are not only ignored but essentially buried at the very bottom of the rotting pile of companies that are victimized by the fear and panic driven selling that is the hallmark of a bear market. AUTH represents a "bottom of the pile" opportunity. The second factor leading to the company remaining undiscovered for a number of years is the fact that the company is a spin-off. It was a privately held spin-off from Harris Corp taking place during the late 90's. Development of the company did not necessarily shift into overdrive until they went public at what was arguably the worst possible time of the past 10 years. This basically put them back at square one in terms of gaining the recognition the company deserves. What does AUTH do exactly? This from the company website: AuthenTec is a leading provider of mobile and network security. Our diverse product and technology offering helps protect individuals and organizations through secure networking, content and data protection, access control and strong fingerprint security on PCs and mobile devices. The company has been aggressively expanding through acquisition: - In February 2010, AUTH acquired SafeNet’s Embedded Security Solutions division, further enhancing our offering of mobile and network security solutions. - In September 2010, AUTH acquired privately-held UPEK Inc., a supplier of fingerprint solutions for consumer, business and government applications. - In November 2011, AUTH acquired PeerSec Networks, an innovative provider of networking security solutions. - In December 2011, AUTH acquired the assets of Proxure, Inc., a provider of syncing and cloud-based storage services for PCs and...
4 CHARTS THAT ARE A REMINDER OF HOW CLASSLESS THE MARKET CAN BE AT TIMES
click chart to enlarge
THE CURRENT STATE OF AFFAIRS
I find it odd that the news flow has turned into a fountain of bear semen slowly impregnating the minds of all those who are unfortunate enough to listen, while the market is sitting close to 4 year highs. Why is this odd? Let's look at the market from the standpoint of the average mind. What I classify as the average mind are not seemingly naive retail investors who are easily fooled into either the latest greed driven fad or fear driven panic. The average mind also encompasses the institutional investor on Wall Street; be it a hedge fund manager, mutual fund manager, analyst or any of the other titles that are chosen. I have personally consulted with numerous hedge fund managers and analysts over the years. There are very few who are qualified to go beyond the menial duty of creating a spreadsheet or PowerPoint presentation in order to create the image of brilliance that is - in all reality - completely hollow and vacant in nature. If you were to have the ability to peer into the mind of those that populate the Wall Street analyst and hedge fund community you would come to the swift conclusion that the only thing of substance is the hollow nature of the methods used to create an image in order to sustain the fleecing. Back to the average mind. There are few investors who haven't been caught in the negative-euphoria of the current news flow. Whether it is the fear of a retrenchment in earnings. A slowdown in the general economy leading to increasing joblessness. The continued deterioration in Europe. Fear of an economic catastrophe in China. The flow of information at present does not allow one to rationalize a four year high in the Dow. This comparison chart certainly doesn't seem to confirm the news. If anything, in the case of the Dow, it completely refutes the current news flow. It also is a clear indication that global capital now sees leading developed markets as the sole refuge. It is no coincidence, therefore, that the Dow and the Dax are top performers this year: click chart to enlarge Forgotten in the flood of information that is absorbed on a daily basis is one very simply truth: Bull markets do not end in the midst of news cycles that emanate a foul odor, allowing all those who are walking by to avoid soiling their shoes. Bull markets invariably come to an end during positive news cycles that create the necessary set of circumstances to allow the market to decline in as lubricated a means as possible. The average mind be it retail or institutional...
A NEW SMALL-CAP INVESTMENT OPPORTUNITY UNDER REVIEW
This website is a tool for you and an outlet for me. It allows you to acquire knowledge that can prove profitable, obtain a different perspective on the financial markets and hopefully learn a lesson or two along the way. What is does for me is allowing the opportunity to take erratic thoughts that have no particular dwelling and solidify them within a confined space that is always accessible if I should need to reference the how, what and why of a particular situation. We are, therefore, achieving a mutually beneficial path towards fulfilling each other's goals, the foundation of which lies in becoming better and more profitable investors. In performing the research that has been a part of my daily routine for the better part of 17 years, I came across a new potential candidate for investment recently. The very first thing I do when my filter spits out a new potential candidate is to look at the price action. From there, I look into the fundamentals of the company, reviewing everything from the 10-K, to the insiders/executives and the history of the company. Midway through the process I will realize that I have a viable candidate when I begin to sense a certain excitement. At that point, I cannot wait for the market to open in order to begin bidding for stock. I experienced this exact feeling earlier today. Barring the discovery of information that completely decimates the thesis behind this opportunity, another small-cap name will be added to the portfolio in the coming weeks. I am 100% invested, which presents a certain quandary. I refuse to utilize leverage the same way I cannot bring myself to walk past an inferno after taking a bubble bath in super unleaded gasoline. The proper course of action here is obvious. I will simply trim from the weakest names in the portfolio in order to have enough of an allocation for a starter position in this company. There is not an activist angle at work here. It is more a conceptual play, similar to the potential I saw in SYNC on both a product and fundamental basis some 60% ago before traders realized that SYNC wasn't Justin Timberlake and his friends taking their former boy band public. With the previous six paragraphs being said, I will formally be presenting the investment before the end of this coming...