Archive for March 2011

Ed’s Daily Summary for March 31st   16 comments

GCC: 0.52 to $35.23 (1.50%, 0.51% overall)–bought at $35.05
PFF: 0.04 to $39.65 (0.10%, 1.15% overall)–bought at $39.20
SLW: -0.65 to $43.36 (-1.48%, 20.44% overall)–bought at $36.00

OVERALL: -0.03%

March definitely went out like a lamb…a fleeced lamb, that is…

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Posted March 31, 2011 by edmcgon in Portfolio

More comments!   5 comments

I added more “recent comments” to the sidebar on the blog, so you folks can see any comments you may have missed if we all add more than 5 comments. Hopefully this helps.

Next week, I add more cowbell…

Posted March 31, 2011 by edmcgon in Blog stuff

Options/technicals thread   9 comments

I didn’t realize I had been so wordy over the past 2 days until I noticed the last Options/technicals thread had dropped to the end of the front page. I guess I’m talking and I can’t shut up?

Regardless, Michele added a question to the last thread, so I thought I would post it here for you options traders out there:

Technical question for any of you that might me able to help me with this. Lets say a stock has a large short interest. If I read that it”would take nearly eight sessions to unwind, at xyz’s average pace of trading”, does this mean that if there is a short squeeze I could expect the stock to trade higher for eight days? Or is this too simple an assumption. (yes, I know what happens when we assume) Thanks.

Have at it folks. As usual, this is your thread for all things options or technical analysis. Feel free to post any questions or suggestions.

Posted March 31, 2011 by edmcgon in Options/technicals Thread

Beware of Irish haircuts   17 comments

Apparently, I spoke to soon about Greek investments yesterday. Today, it is looking like Ireland might force a few bondholders to accept haircuts (in bond-speak, that means accepting less than you paid for the bond). This could shut down Europe’s senior unsecured debt market, with banks in countries like Spain and Italy basically getting shut off from selling any debt.

Mind you, this is speculative at this point. My guess is that Ireland is threatening this in order to get the EU to give more money to Irish banks. Based on the fact the euro is up against the dollar today, I suspect the currency markets are thinking the same thing.

Posted March 31, 2011 by edmcgon in Economy, Market Analysis

Insider trading: Ed’s Daily Notes for March 31st   31 comments

1. The big news today is David Sokol. If you didn’t know who he was, you will certainly become aware of him today. Sokol, supposedly the hand-picked successor to Warren Buffett, suddenly resigned from Berkshire Hathaway yesterday. To make a long story short, Sokol was the one who recommended the Lubrizol purchase to Buffett. Sokol also made about $3 million from that deal, because he was sitting on 96,060 shares of Lubrizol BEFORE he made the recommendation to Buffett.

This is the very definition of “insider trading”. The fact that Buffett KNEW that Sokol owned shares of Lubrizol makes Buffett complicit in the insider trading, at the least from an ethical standpoint. I don’t know if Buffett will face any legal action for this, but Sokol is toast.

Frankly, the fact that Buffett knew about this and did nothing makes him look bad. This really comes down to the Wall Street culture, where insider trading is done so often, that nobody bats an eyelash at it. What we see in this is the curtain drawn back from Buffett’s folksy charm, revealing the Gordon Gekko behind his personna. Buffett is nothing more than a Wall Street shark, whose moral compass doesn’t recognize insider trading as wrong. His folksy charm may yet get him out of this, but I personally wouldn’t trust Buffett as far as I can throw him. 

As for Sokol, he was already quite wealthy, so that extra $3 million didn’t make or break him. He did NOT have to do it. But because he didn’t have to “rob the bank” doesn’t absolve him of guilt.

2. Inflation in the Euro-zone is up to 2.6%, from 2.4% in February. Who says the U.S. doesn’t export much?

3. Speaking of Europe, Microsoft has made a filing with the European Commission. The filing accuses Google of engaging “in a broadening pattern of walling off access to content and data that competitors need to provide search results to consumers and to attract advertisers.” Maybe it’s just me, but this looks awfully desperate on Microsoft’s part…

4. From USAToday: Wal-mart’s CEO thinks inflation is “going to be serious”, and “We’re seeing cost increases starting to come through at a pretty rapid rate.” In addition, “John Long, a retail strategist at Kurt Salmon, says labor costs in China and fuel costs for transportation are weighing heavily on retailers. He predicts prices will start increasing at all retailers in June.”

Posted March 31, 2011 by edmcgon in Economy, Market Analysis

Ed’s Daily Summary for March 30th   4 comments

GCC: -0.02 to $34.71 (-0.06%, -0.97% overall)–bought at $35.05
PFF: 0.08 to $39.61 (0.20%, 1.05% overall)–bought at $39.20
SLW: 1.11 to $44.01 (2.59%, 22.25% overall)–bought at $36.00

OVERALL: +0.58%

Posted March 30, 2011 by edmcgon in Portfolio

Stockwatch: National Bank of Greece Preferred A (NBG_pa)   11 comments

As I was looking into preferred stocks, I came across the National Bank of Greece’s preferred shares.

I know what you’re thinking: “Are you friggin nuts Ed?! GREECE?!”

Hear me out on this one. NBG actually has profitable operations in Turkey, and they have been cutting their costs in Greece. One of the problems they had in Greece was the need to increase their reserves against losses. Overall, they were profitable last year, even with their Greek losses.

But here is the great thing about NBG’s preferred shares: Their call price is $25/share, and the next call date is 6/6/2013. The shares are trading at $19.74. Unless this profitable Greek bank goes out of business in the next 2 years, shareholders can make a tidy 25+% return, in addition to the dividend (paid quarterly), which is currently at 11.2% annual.

Granted, this is a gamble, but I honestly don’t see Greece, or the EU, allowing this bank to go out of business. But I won’t call it an impossibility, as European politics can end up going anywhere. However, the risk here is Euro-centric risk, not U.S. market risk. Overall, this is a gamble on the level of buying a junk bond. But it could pay off, especially if the preferred shares make it back to $25 before 2013.

Posted March 30, 2011 by edmcgon in Stocks