CAN’T COMPLAIN, BUT I WILL ANYWAYS
It's a trader or investors nature to complain regardless of how good things are going. This is a game where you could always do better. It can become maddening at a certain point, if you get too critical regarding your every move. It's so important to keep your mental state stable whether you do this for a living or as a hobby. What is more important is discovering a strategy that allows your mental state to remain in optimum mode for the longest stretches of time. That is key. Most people take years upon years to realize this...and a majority give up without realizing it at all. It is impossible to remain in a "zen-like" state, without interruption. However, if you know yourself well enough, you can design a strategy that prolongs a positive mental state. I believe that this is one of the most important components of a trading strategy, as this game is 90% mental and 10% system. I could have done some things better this week. One thing I am happy about is that we bought more of our oil/gas spinoff and advised Zenpenny members to do the same last week when it was dipping. It was up 26% this week. Sellers are absent in the stock and it's a difficult one to buy size in when it's going up. Last week was one of the rare occasions when I bought stock as it was dropping for that exact reason. I'm a believer in buying into strength and not weakness, with last week being a rare exception. The rest of our names were more or less flat this week. Minimal volume, minimal participation. Just undiscovered really. It's not their fault. And I know that eventually they will all make similar moves to the upside. Not a matter of if, simply a matter of when. Technology permitting, I will be putting out a video this weekend going over some chart points. Also, our popular "10 charts" on Sunday. Hope everyone had a profitable and peaceful...
LASR (GSI GROUP) – ANALYSIS AND BREAKDOWN OF WHAT WENT INTO OUR DECISION TO BUY LASR
(Some of the prices that appear below are pre-reverse split prices) We initiated our position in LASR during the first quarter of 2010 at 2.55 per share. It is trading close to $12 as of 1-28-11. We have been scaling out of the position throughout January. The following is the research, reasons and facts that compelled us to make this our largest position: What appears below is from our current research report with respect to LASR. LASR was, at one point, our largest holding. We have been taking profits on the position since the beginning of this month. I am still very bullish on the stock and wouldn't hesitate for a second to recommend it for investment. I feel it will eventually be bought out by a larger company at a price that will, at a minimum, be double of where we are now. However, we are micro-cap investors, and this stock has gotten way out of my comfort zone. Add to this the fact that we are discovering new opportunities that we need to allocate capital into. What is missing from the research report below is the step by step process of what made us get into and continue scaling into LASRD. Although the company was in bankruptcy, at no time did we have any doubt that the company would come out of bankruptcy with shareholder value intact. Here is a summary of what took place from beginning to end: - In 2008, near the peak of the market GSI Group (LASR) acquired a company by the name of Excel Technology for $32 per share or $360 million. - The acquisition of Excel was partly paid for through the issuance of long-term debt securities, as well as cash. - In December of 2008, GSI Group announced that they had some errors in accounting. The prior financial statements they had issued could no longer be relied upon. This caused investors to jump ship and begin losing faith in the company. Shares plummeted as investors could not come up with a way to value the company given that their financial numbers were no longer reliable. - In late 2009 things began to unravel very quickly, as GSI Group was delisted for failing to provide the necessary filings to remain on the Nasdaq. - In late 2009 the company was forced to file for CH. 11 bankruptcy as a result of their continued delayed filings and the subsequent breach of agreement with Noteholders. - Stephen Bershad became involved with GSI Group in 2009. Stephen Bershad is an industry veteran and former CEO of Axsys Technologies. - Stephen Bershad began acquiring large...
OUR BANKRUPTCY REORG TECHNOLOGY PLAY WILL BE REVEALED AND DISCUSSED IN A BLOG POSTING TONIGHT
This is now considered a completed investment. We initiated the position almost exactly one year ago, when most thought the end result would be the shareholder equity in the company being dissolved in the bankruptcy. We have been in the process of liquidating for the past few weeks after a 400% gain in the stock since we initiated the position. Tonight I will be going over all the research that went into this stock, both as a demonstration of how we do things here at Zenpenny and so that you can educate yourself as to the benefits of investing in restructurings. A company that is undergoing restructuring scares away most investors, which is exactly why the gains can be absolutely monstrous if you catch the right one at the right time. Institutions and individuals, for the most part, just sell these names and forget about them. This lack of understanding and patience, makes it lucrative for those who do their homework. Make sure to visit later to get all the juicy details of the thought process behind this very successful, year long investment that is now nearing...
THIS DOW 12,000/S&P 1,300 THING
Never underestimate the power of round numbers on market averages and individual stocks. This is lesson I forgot coming into this week, as I wasn't expecting the type of upmove we have seen here recently. Round numbers act as a flashing billboard...it's the single best advertisement for the markets there is. It serves as means of getting sideline money to act. News reports that typically give 15 seconds to the market, devote a 3 minute segment to the markets and back it up with carefully selected fundamental facts that contradict what was said about the economy in an earlier segment. It's journalistic curve-fitting at its best. As all of you who have been reading the postings on this blog know, last year was magnificent on the upside with a greater than triple digit percentage gain for our accounts. This year, however, has started off with a thud, as our names have been slowly sliding back to Earth following the moon shot they had in the last six months of 2010. I added to our oil/gas spin-off play today at what I think will be seen as an absurdly attractive prices in 12 months. I am also looking at adding to our subprime/consumer credit restructuring play, as it has been very strong since we initiated the position in late December 2010. We have almost liquidated our technology bankruptcy reorg play completely after it has seen a gain of 400% since we first initiated the position almost exactly one year ago. Have a very small portion remaining. Once we fully liquidate the position, I will be describing the investment, thoughts behind it and analysis completely on this website. I feel it will be very educational for even the most experienced of investors. We are also getting set to release a new pick to all members in the coming days. I like to describe it as the safest 200% gain you can potentially have in a stock with a market cap under $50 million. It's heavily insider owned, has an activist angle at work and is tremendously undervalued. If you haven't tried our service and are looking for long-term investments that have tremendous upside, are well researched and have a very high success rate...give Zenpenny a shot. Click here to subscribe. That's all for now. Hope your day was a peaceful...
TAKING PROFITS HERE CAN’T HURT US. AND WHY BEING AN ALIEN IS PROFITABLE IN FINANCE.
So we're taking more of our technology bankruptcy (now well out of bankruptcy) play off the board here. It's moved down to a small - mid sized position. Not because I am bearish on the company at all...but rather it has become too large for us as our niche is companies trading under $50 million in market cap. This one is now nearing a $400 million market cap (was a $50 million company when we first took a position) and I believe it will be susceptible to market givebacks and instability going forward. We are also making room for additions to some current names and the purchase of a new name. Still working on the research...and it will be released to current members in the near future. Our portfolio, thus far in 2011, has been two stories: sideways or down. Not any violent downside in the least bit. Just some dull, mindless selling, as our holdings work themselves into sideways ranges, awaiting the next move forward. I can't say that this was unexpected, as the run of 6 straight up months that we had last year was due to hit some kind of resistance...namely in the form of profit taking in the new year, as taxes are always more fun when they are deferred for an extra 12 months. It surprises me the number of traders who are uncomfortable with simply sitting tight when the right opportunities do not present themselves. It's a function of inexperience more than anything else. Our nature as human beings is that if we're doing nothing we are lazy, worthless, wasting time etc. What people seem to forget is that the markets prey on human nature. What works as a human in everyday life and as you have been programmed to function in "normal" jobs doesn't work here. At times it pays to be lazy, it pays to do nothing, it pays to be fearful when everyone else is greedy and it pays to be greedy when everyone else is fearful. Be an alien...it's the only path to long-term success in the financial markets that I know...
THE THOUGHT PROCESS BEHIND A NEW STOCK WE’RE CONSIDERING
Given that we're in the midst of researching a potential new stock for investment, I thought now would be a good time to detail some of the thought process. As any of you who read this site in detail know, our stock investments come in the form of special situations. Special situations, for those of you who don't know, do not simply imply that we think our stocks are special because they sell a cool product or are going to go up 500%. Special situations is a term used to describe stocks that are undergoing a special or unique situation. This mostly comes in the form of some type of restructuring. These companies become special situations, a majority of the time, due to the fact that they are distressed. We have been researching a potential new stock for the past few days. The company, we believe, has potential upside of some 200% from its current price. Everything seems to be falling in line. It's undiscovered, undervalued, has been troubled in the past, has an activist investor stepping in, market cap is below $50 million, management is competent. Everything seems to be in order. However, there is one thing that I am slightly bothered with. While there is an activist investor stepping into the scene here, which provides somewhat of a catalyst going forward. There isn't the type of restructuring or sense of immediacy that comes with a fight. The beauty of restructurings - when a companies management and its primary activist investors are in court fighting it out, or restructuring debt in a number of creative ways, or considering different ways of bringing out the value of a company- is that it gives volatility and a sense of urgency to the stock price. It serves as a catalyst. That's so important. Within the micro-cap sector, there are tons of stocks that simply float sideways...some for years on end. They do absolutely nothing. They are undervalued, under-appreciated...but it doesn't add up to anything. These are classic value traps. The restructuring angle turns a sideways floating row boat into a yellow cigarette boat, with all 4 engines roaring. My primary concern with our newest possible candidate for investment is not whether it will eventually end up going up the 200% we expect...it will. It's not if we'll end up losing money in the stock over the long run...we won't. It's whether the stock will sit sideways for a year or longer, as the restructuring angle is not as defined as it should be. Either way, we will be looking into the stock further today and if we do decide to release...
PORTFOLIO UPDATE
Had a nice push on our oil/gas spinoff play, with it ending the day up 5%. Volume was light, however. Our technology restructuring play, biotech restructuring play and subprime restructuring play were more or less unchanged. Yawn. Sideways was only fun when it was made into a film. Glad its the weekend. Tennis, gym, friends, family and sunshine...that's my recipe for contentment. I hope you find yours, as...
OPTION EXPIRATION USED TO BE FUN
Option expiration Friday's used to be fun. Actually, they still are fun once in a great while. However, the fever with which it used to whip traders into a frenzy is for the most part gone. A function I think of institutions having a better handle on it than individual investors, who have become a smaller population of the current financial market demographics. It seems that the powers that be are perfectly content keeping prices around the unchanged level for today. Short of a panicked institution being on the wrong side an option max pain point, I wouldn't count on much out of this market for the rest of today. I think next week, however, will be a different story as the volatility will pick up and the market will demonstrate that it is not yet done with its reckless, rebellion against all the bulls who seem to hardened believers. Again, the long-term is very bullish, but we are in need of a recalibration of the bids and offers in order to see this market have fuel for another leg up. It could take some months. In that time, it will play with your head...make you think you are seeing things that don't exist and cause you to question what you believe in...be forewarned! Our portfolio remains a demonstration of how micro-cap names can indeed function as a market neutral strategy...as we are more or less flat once again. We had about 6 up months in a row coming into 2011...and were due for a break. I am not at all disappointed with this behavior and think it serves to preserve the uptrends in our major holdings. Sitting tight on this option expiration...
I’M NOT GOING TO BE ABLE TO SLEEP TONIGHT
I just sent our members some new research on our oil/gas spinoff. It was a comparison of the market caps of companies that are drilling in the same region relative to the market cap of our oil/gas holding. It made my head spin with excitement. I admit, I drank some coffee tonight before I started doing the research. But once I started digging even deeper into this name, I realized exactly why it is our largest holding...and I really would like to find a way to buy more. It's rare that you come across such a gem. Why a gem? Mainly because it's so undiscovered...so underrepresented...so undercover. Nobody talks about it, nobody cares about it. The message board is empty...I google it and very little comes up. It's the picture perfect stock, with the picture perfect management, at a picture perfect time. I'm telling you, I am tempted to just shout it out. I want to share all the research we have on this..so everyone can see what we see, but I can't. Again, it wouldn't be fair to my current members, it wouldn't be fair to my investors, and it wouldn't be fair to my analyst who helps me uncover opportunities such as these. There is a very clear reason we offer the guarantee that we do. We find names like this once in a great while that have embarrassing upside. The others we find, while not having the upside potential of this one, still have a good amount of upside and have a great margin of safety. We research them constantly and thoroughly. All misunderstood, under-recognized and under-appreciated companies that are high percentage bets. Join...
OUR LARGEST POSITION – OIL/GAS SPINOFF GETS MORE EXCITING
It just gets brighter and brighter for our oil/gas spinoff, which is already up 350% since we initiated the position in October of 2010. I love talking stocks...and I love sharing picks. I've been doing it since the late-90's after I left my job as an institutional trader for Bank of America Investments. I am to the point with this one where I just want to tell everyone that reads this blog what it is so they can see for themselves the potential it has, due to the right management team, the right financing and the right experience. But I can't do that to my members and I can't do that to my investors. So I have to zip it. What I can say is that the parent company is leading this spin-off forward. I can say that the parent company is up about 1000% or 10 times over the past two years...and it looks like by the time all is said and done it could be one of those gems that ends up gaining an obscene amount. The beautiful part is that our spinoff is the parent companies baby...and they are treating it as such. They are grooming this thing to possibly make the parent companies gains look tame. With everything we are seeing in the inflationary supercycle that will take commodities higher, oil higher, stock prices higher. This one will keep rising and I think by the time all is said and done Zenpenny members will be a happy bunch. And that's guaranteed, of...