SEPTEMBER MONTH END SUMMARY AND LOOKING AHEAD TO OCTOBER
September Performance: +2.96% ------------ S&P 500 September Performance: +2.42% YTD Performance: +46.60% ------------------ S&P 500 YTD Performance: +14.55% Portfolio Highlights For September: - SPRT, a position that was originally re-initiated in August, with an addition to the position taking place on September 6th, saw its share price increase 37% during the month. This is turning out to be the third, round-turn, double digit percentage profit in SPRT for 2012. It has, needless to say, been a kind stock for the entirety of the year. The bulk of the gains for the month of September came as a result of the move in SPRT, which was the largest position in the portfolio for a majority of the month. - WMIH saw its share price rise 6% during the month. This is essentially the spread between the bid and ask. I won't be putting too much faith, therefore, in the viability of the increase. I have a very long-term objective in mind for WMIH. This isn't a company that is going to suddenly blossom into a pretty flower due to a magical sprinkle of stock market good fortune. The opportunity equation here is very simple to understand. WMIH is a company with very defined risk as a result of their .38 cents per share in cash, no debt and very little cash burn. At its current price of .50 cents, I am essentially risking .12 cents to participate in an investment that has potential to yield 300%, 500% or upward of 1000% depending on the outcome. Whenever I am allowed to participate in an opportunity that defines my risk clearly while offering as much reward as WMIH, I will grab the bull by the horns, so to speak, prepared for a tussle. - BWC was exited for a tiny profit since the investment was initiated in August. The reason for the exit was purely to make room for a new small-cap play that took priority over BWC, which is a mid-cap company. The portfolios seek out small-cap opportunities first. Every other class of security comes second in terms of priority. I continue to believe that BWC will move into the 30 range over the intermediate term and much higher over the long-term. The company remains undervalued inside of a niche that has a barrier to entry 5 miles high and 100 miles long. - UPIP is the newest portfolio investment. I issued a research report for the company on September 24th. It is a very simple formula that I use to choose my investments. UPIP embodies that formula extraordinarily well. It comes down to three things: (1) A company that is experiencing accumulation and stability/predictability...
SOMETHING STINKS IN SUBURBIA
I don't like it. The entire universe seems to be conspiring against me to create an uneasy feeling about the market that I can't exactly pinpoint. I just know that my spidey senses are beginning to tingle a bit more than they have at any point over the past several months. Maybe it is because we need THRUST here and it is nonexistent? Perhaps it is because we revisited trajectory points in both the Dow and Nasdaq that should have been blasted through? Or is it due to the fact that we have seen this trajectory point on the Dow act as a rally killer so many times in the past? Today should have ended up 140 points on the Dow. Instead we got half that, with the market acting like Pookie from New Jack City going into the close. You know what else is of concern? The company. There is so much of it. I suddenly have an army of bulls behind surrounding me, looking to march into territory that was unspoiled and well-preserved. Now being a bull is like attending Burning Man. The popularity is spoiling the experience. Icing on the cake time: My short-term trend indicator is, once again, on the verge of flipping. When I say on the verge that means a few more good down days and I will be 75% invested from the current 100% and fully hedged via TZA. Luckily for me I have a this handy mechanical system that takes over the controls when I begin experiencing vertigo as I am now. I won't do anything rash or hasty due to these concerns I have. My job is to wait until the my indicators flip. Once that occurs, my exposure begins to be reduced in a very systematic manner. Losers exit first and all others follow close behind, if need be. I've voiced my concerns for today. Hopefully tonight's sleep will allow my sudden onset of paranoia to float...
THE SOX GIVES BULLS EXACTLY WHAT THEY NEED
Definition. A sense of perspective. A platform from which to rise. It was all granted today in the most subtle of ways. The SOX reversed, starting around mid-day, closing near its highs, while the rest of the market got pummeled into the close. That's bullish. In last night's broadcast, I posted the SOX chart, mentioning that a reversal needed to happen around mid-day today in order to keep from becoming a weight on the market. It just so happens that the market continues its obedient, on the edge type behavior, as it has for all of 2012. Allow me to amplify why the reversal today was as important as it was by commenting on the price action in the chart below: click chart to...
THE MARKET FALLS PREY TO THE BEAR’S GRAVITY BEAM. NOW WHAT?
On my long list of scenarios for this week, the least favorable scenario was an expansion in downside volatility as we experienced today. I realize that we are in a time and place where volume is sparse, meaning that follow through on technically favorable, bullish patterns is hard to come by. Nevertheless, we are at THE point for the market that matters. I'll remind you of that fact by directing you to the chart below so that you can see for yourself the type of gravity the bulls are attempting to break away from. click chart to enlarge That treacherous pink trajectory line, born during the Great Depression, continues to grab the market by its throat, slowly digging its fingernails in until the market is forced to pop off its bull costume . It has happened six times in the past couple of years. I am hoping this doesn't turn into a seventh. Bear in mind that an acceleration away from the aforementioned trajectory is a strong indication of a new secular bull market. Let's look at the recent price action in the Dow and the...
PORTFOLIO UPDATE
During the trading day I tweeted the following: The research report for UPIP is available by clicking here. The current portfolio now consists of UPIP, SPNS, SPRT, PXLW, WMIH, ATNY. 100% invested and 100%...
RESEARCH REPORT – UPIP: A PATENT PORTFOLIO PROVIDING TREMENDOUS RISK/REWARD TO INVESTORS
Position taken on September 21st & 24th, 2012 at 1.91 - 1.98 UPIP (Unwired Planet) represents my favorite type of investment opportunity. That opportunity comes in the form of assets that are difficult, if not impossible, for the market to value correctly. In the case of UPIP, those assets are in the form of 200 patents and 75 pending patent applications. UPIP was formerly known as OpenWave, trading under the symbol OPWV. Most technology investors who have been around for sometime should be familiar with OPWV. OpenWave was a highly liquid, "story" stock during the early part of 2000 due to their innovative wireless technology. They were, in fact, THE preeminent force in wireless back in the days when Apple was coming up with the concept of the IPod and Google was solely a search engine. OPWV is an almost 20 year old company. In those 20 years, they pioneered many of the technologies that are instrumental to what has become our daily routine of text messaging, accessing unlimited information from our phones, while remaining connected 24/7. They were, in fact, the first company to deliver mobile internet browsing through a partnership with AT&T in 1996. Needless to say, being a pioneer in an industry that was to become the platform for future connectivity made OPWV into a technology behemoth. At the Nasdaq bubble peak, in March of 2000, OPWV sported a split adjusted stock price of over $600, with a market cap in the many billions of dollars. By mid-2001 97% of internet ready phones in the US and approximately 75% of internet ready phones overseas used OPWV technology for accessing the mobile internet. The company got caught in the typical early 2000 cycle of acquisition, leverage and the fantasy of infinite prosperity. We all know how that fantasy ended now. OPWV got decimated over a period of years. Their businesses were devoured whole by a wireless industry that was experiencing such rapid expansion and innovation that it left any company that couldn't keep pace in permanent purgatory. The company has recently taken steps to restructure, in what I see as a brilliant move to capitalize on the newest technology industry: The enforcement, protection and licensing of valuable patents that have been ignored by what has become a monopolized industry dominated by Apple and Google. Earlier this year, UPIP shed its business units through a sale to a private equity firm, leaving the company with 20 employees, 200 patents, 75 pending patents and a team of lawyers. UPIP has become a patent troll. The company has zero debt, $80 million in cash with a market cap of $180...
PORTFOLIO UPDATE
During the trading day Friday, I tweeted the following: I initiated BWC on August 22nd. I would have liked to hold onto the stock, however, I am making room for a new portfolio holding that I am currently in the process of accumulating. I will be releasing the research report on the position tomorrow...
4 CHARTS THAT WILL KEEP YOU FROM GETTING BAMBOOZLED DURING THE WEEK AHEAD
click chart to enlarge
A FOLLOW-UP ON CRUDE OIL FOLLOWING A CRAZY WEEK OF TRADING
Last weekend I posted an article titled "The Price Pattern In Crude Oil Makes A Prius The Best Investment Of All." In the article I discussed the long-term possibility that crude has much higher prices in its future. I also discussed the short-term possibility that it was ready for a period of consolidation after reaction to its upside trajectory point. The reaction we saw this week was NOT within my normal range of expectations. Whenever a financial instrument, be it a stock, bond or commodity begins exhibiting behavior that is outside my normal range of expectations, I reexamine that asset to learn what could be influencing it to behave in an erratic fashion. Here is an updated analysis of crude...