black swans & white crows

OmniVision Notes

2012-02-28T03:53:00.003-08:00

Feb 28th, 2012 Notes

OmniVision products are used in HTC Corp's (2498.TW) EVO and Motorola Mobility Holdings Inc's (MMI.N) Droid X reported strong third-quarter sales.

At least two brokerages raised their price targets on OmniVision's stock, saying the company was on track to recapture lost market share in the smartphone segment.

OmniVision's 8-mega pixel camera sensors should be a major revenue and earnings drivers, said Canaccord Genuity, which rates the stock "buy."

NeedHam reports that OmniVision has lost the iPad 3 slot.

The following is an alphabetical listing of Apple suppliers in 2011. These suppliers represent 97 percent of Apple’s procurement expenditures for materials, manufacturing, and assembly of Apple’s products worldwide. OmniVision is not included as a supplier. This precludes their presents in the Apple products releasing this year. Maybe they will be in the 2012 list, just in time for the iPhone 5.

Why did OVTI emphasize the entertainment division?

2012-02-26T18:17:00.023-08:00

First, let me crunch the financial numbers.
OmniVision (Nasdaq:OVTI) is a good value right now. It has been on a 60+ day run. After the 3rd quarter earnings came out Friday, the stock price close for the day at 17.13 yielding the following highlights:

p/e ~ 10
book value ~ 14.31
p/b value ~ 1.20.
Z-score ~3.67
fair value price $39.04, a potential of 127% upwards swing [using 14.8 p/e and 1.5 bv]

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
In OmniVision's 2nd quarter 10Q filing it was mentioned that prior guidance was revised down when the company's key customers unexpectedly cutback their orders. This action reduced unit sales of the OmniBSI and OmniPixel3-HS based products and adversely affected their revenues for the 2nd quarter of fiscal 2012.

Apple (Nasdaq:AAPL) is suspected of being one of OmniVision's largest customers. They usually try to get two sources for their manufactured parts. For the iPhone-4/iPhone-4S CMOS image sensors they used Sony (NYSE:SNE) and Omnivision. The Apple iPhone-4/iPhone-4S uses the OmniVision's 8-megapixel image sensor based on the new OmniBSI™ technology. There is a rumor that OmniVision lost the deal with Apple on the iPhone-4S . The iPhone-5 is also rumored to be using Sony and Samsung as CMOS image sensors vendors, replacing OmniVision.

In OmniVision's 2nd quarter 10Q filing I found another sentence which stated the following:

"We also experienced a recent and unanticipated extension in the product development cycle of our OV8830 product. This delayed the production ramp up of this new sensor. Towards the end of our second quarter of fiscal 2012, we started to ship this product in very limited quantities."

The OmniVision OV8830 CMOS Image Sensor (CIS Technology) is based on their new stacked Back-sided Illumination OmniBSI-2 Technology.
Wait! Extension of product cycle? I'll explain in the Hard Facts section....

Rumors, rumors, rumors
There is a rumor that OmniVision lost the CIS technology deal with Apple on the iPhone-4S. The iPad-3 is coming out in March and there is no OmniVision production ramp-up for that.

[Edit: I could be wrong. - Robert W. Baird & Co, said Apple's iPad could boost OmniVision revenue by 30 percent over the revenue from iPhone last year. ]

The iTV successor may be release soon and could possibly use OmniVision; However, there seems to be no production ramp-up for that either. The iPhone-5, which is to be released later, is a possibility and the new OmniBSI-2 Technology 4mm width would fit into the new slimmer design. However, that is all speculation. But in the short run, where could the decreasing revenues be generated?

This quarter's earnings
Ok, back to last night's 3rd quarter earnings conference call from OmniVision. Everybody was asking or trying to confirm who the large customer that cancelled their orders was. Everybody was trying to confirm if the rumor about Apple was true. I don't think that is the take-away from the call. When asked what division will increase the most in the near future, the answer was the "entertainment business".

Ray Cisneros, VP of Worldwide Sales explained the product mix as follows:

"In terms of product markets, our mobile phone sales represented approximately 52% of our revenues in the third quarter as compared to 60% in our prior quarter. Our entertainment segment represented 28% of sales as compared to 20% in the prior quarter. Our sales of sensors into the notebook and webcam segment were approximately 8% of sales as compared to 9% in our prior quarter."

Hard Facts
OmniVision has signed a deal with Nintendo (NTDOY.PK) on their new Wii successor, Wii U. It is to be released after March 31, 2012.
OmniVision started mass production of the 0V10630/OV10635 based on OmniPixel3-HS technology for the auto industry.
OmniVision is in mass production of the best-in-class 720p HD video performance chip.
OmniVision is in a deal with ASUS Transformer Prime Tablet which uses the OV8830 OmniBSI-2 Technology and is considered the most advanced Tablet out in the market at this time.
OmniVision and Sony signed a deal for a Video Camera using the CameraCubeChip design.

Conclusion
OmniVision seems to have other deals which will lessen the risk of revenue declines if Apple changes its mind. It has a very broad range of products. I haven't even scratched the surface of all their competitive advantages.

I have no stake in OVTI.

OVTI is under appreciated

2012-02-23T05:48:00.000-08:00

Watch OVTI today, its earnings are released after the market closes today.

I'll give you the results & more on the next blogger post.
More to come...

What's Coming in LED Lighting?

2011-10-21T07:42:00.000-07:00

To see what's coming in LED lighting, check out the New Product pages for LightShow West 2011.

If you're looking for one-trick ponies, ready to ride up the recovery mountains, selling LED lightbulbs through DIY retailers, check out LSCG and NEXS.

..TS.

Interactive & SSD: Blasts from the Future

2011-09-07T07:50:00.000-07:00

Forrester Research recently released this "news" about the future of Interactive Marketing...big news (but expected). Why is this relevant to the investment world? Did Groupon read this? "We expect this [interactive] growth to help firms become adaptive, kill off daily deals..."

CTO of Panasas, Inc. Garth Gibson gives pause to the future of Seagate, Western Digital and other "hard drive" manufacturers. As if tens of millions of Flash-based iPods, iPads & iPhones weren't clue enough, Gibson defines reasons why High Performance Computing (HPC), which leads the way into the future for the computing industry, will need to consider further use of Solid State Disks (SSD's).

..TS.

Rebounding Gold?

2011-08-26T06:48:00.000-07:00

Totally inadvertently TrashStock called the timing for gold's correction. As of Wednesday night, though, Trashstock thought that the correction had been overdone, and sold his GLD Jan 12 130 & 140 puts Thursday morning, and traded them for a calendar spread consisting of GLD calls, Oct 11 170's and Jan 12 170's, in anticipation of something of a reactionary rally, coupled with hesitation about Bernanke's Jackson Hole, Wyoming talk. Who knew (TS didn't factor this tidbit in) that GDP would be reported down this morning, which has added a boost to yesterday's rebound.

Incidentally, TrashStock has been using Kitco.com's site for tracking the spot gold prices - very useful. Also, this recent foray into the commodity to outlast all commodities has taught TrashStock that in a game with heightened volatility, positions closer to the money are probably more likely to produce results than those further afield. The Jan 12 130's barely budged, though the 140's did return about 90%.

..TS.

Tolkien Gold

2011-08-22T06:46:00.000-07:00

"All that is gold does not glitter,
Not all those who wander are lost;"

In his classic tale of travel and travails, J.R.R Tolkien teaches the reader many things, not the least of which is how to seek value amongst a seeming cornucopia of treasures. While gold appears to be the safe haven in these hard times, perhaps it's not the treasure that will serve you best. Hardworking companies like AAPL and CROX are building both cash and global brands which, while they won't outlive gold, they will appreciate over the coming years much more readily. Are you ready to limit yourself with the yellow metal, or are you open to far better vehicles for the road?

Consider a contrarian investment such as out-of-the-money GLD Puts as the appreciation of gold accelerates.

[PUT (GLD) SPDR GOLD TR GOLD JAN 21 12 $140 (100 SHS)]

..TS.

Time for Experimenting

2011-08-17T04:45:00.000-07:00

When the market has been as volatile as it has lately, its time for experimenting.

On Stocktwits IWO to the close and Stocktwits Brunch, Steve Place has mentioned that if you trade as a hobby and don't have to be in this market, then don't be. It is really interesting to watch the video from the last 2 weeks, throughout this draw down. When I compare what I thought was happening to what actually happened, there was quite a divergence. Volatility can fool you into watching things at too narrow a time frame. Go back and switch all your charts into weekly time periods to see a different perspective.

So I have been playing with an option simulator to learn how to make money in a down market.

Are we done with this trend? Probably not. It takes a lot longer to get through these things than we think; However, I am taking advantage of the situation to watch/buy good cheap stocks and to learn how to trade in this down market.

But the market sometimes does things we don't expect.

Patents Trump Products

2011-08-15T07:08:00.000-07:00

Google's bid to purchase Motorola Mobility is a clear shot across Apple's bow. While on the face of it Google may be seeking to marshall forces in the Android smartphone device arena, "What Google likely wants from the acquisition is Motorola's trove of more than 17,000 patents on phone technology. Google recently lost out" in Apple's group buy of Nortel patents...that won't happen again.

IMHO, however, I think Google will only succeed beyond Apple if they take a page from Apple's book and innovate ahead of the market. Time will see if anybody can out-Apple Apple.

Unless they tell us otherwise, I think RIMM, NOK and Samsung's collective geese are cooked. Their patent portfolios (and Samsung's flash & screen production capabilities) are going forward more valuable than their products. They similarly need to out-Apple Apple... but don't bet on it.

..TS.

Don't Panic

2011-08-08T06:44:00.000-07:00

Don't panic, folks.

While today may not be the time to jump in on new lows, the next few weeks will be a learning experience for us all. Corporate earnings will still reign supreme, though we'll be distracted by political intrigue left and right. If cash is king, look to large ($AAPL) and small ($CROX) cash holders to comfortably lead the way forward, after initial panicky stumbles.

..TS.

A Pina Colada at Trader Vic's

2011-08-05T09:44:00.000-07:00

...just sayin'...

..TS.

$AAPL Spends Its Billions on Green

2011-08-03T06:47:00.000-07:00

Look no further for where Apple will be spending some of its greenbacks: on green-oriented PC recycling. Apple is emailing out RMA (return merchandise authorization) numbers so that customers can return either sellable products (read: recent macs) or non-sellable older machines:

Where does this spend money? Two places: (1) with FedEx, and (2) with a contracted or inhouse recycler. Actually, if you look at the environment page on Apple's website, they're putting a lot of thought into the whole carbon footprint equation, and how Apple as an industrial concern can offset their own impact. Recycling is one method, so you might say Apple is investing some of its billions right back into the environment.

..TS.

Taleb Avoids Randomness

2011-07-28T10:46:00.000-07:00

Several weeks ago I purchased Nicholas Taleb's "Fooled by Randomness" book as an iTunes audio book, and have listened to it several times through. My blog editor asked for a book review, and perhaps the conversational style is the most appropriate (from chat the other day):

MM: did you finish your book?
TS: yes, a couple of times. I guess I said I'd do a book report?? :-)
TS: I just downloaded audio version of Black Swan this morning...
MM: well, I was just wondering what were the main points....just for my experience
TS: hmmm main points. his primary point is its foolish to follow the day to day markets, that you're better off reading poetry and totally ignoring the day to day markets...
TS: (I'm totally serious - that's his main point). should I post that as a book-review-in-a-sentence? :-)
MM: I've actually thought about that, its just if you do that, you need a totally mechanical system that can tell you what is going on in the world
TS: when he goes to a trading room, he'd rather talk to the mathematicians and secretaries...
MM: the markets tell you what is going on in the world....but I think that's naive because you don't really know what is influencing you then... you need to know the news, but have a jaundice eye to filter it out correctly. IMHO
MM: you know, the music in the background in a grocery store is going to influence you, unless you know to combat it....
TS: he says to ignore the news. reading the news, quotes etc., leaves you susceptible to being fooled by randomness. Poetry is a type of randomness he can be fooled by without being otherwise harmed...
MM: being aware of the news, lets you combat it it must work for him, though
TS: he does not want to combat it. he wants to be totally cut off from it. combatting it assumes you know what is fooling you... (I disagree with him, I love exposing myself to the random flow, but he's made his millions, so who cares?)
MM: that's my point, if one's not aware of it, how do you know its not fooling you.
TS: if you're not exposed to it (like a jury) you can make decisions about life in general outside of the stream of news...

..TS.

[NB: after listening to the first sev chapters of Black Swan, I now understand Taleb's reticence to follow the news - he's seeking a philosophical angle, but is taking time to provide his views on history and markets, so the alienness of his outlook is actually refreshing, rather than disturbing. ..TS.]

$CROCS Has Bite

2011-07-27T13:57:00.000-07:00

You may hate the shoes, but you cannot possibly hate the news.

Before the report:
"Wall Street Analysts consensus calls for a profit of $0.43 a share on $281.64 million revenue."

After the report:
"Crocs Q2 beats estimates"
"Crocs Inc. posts 72% profit gain"
"Crocs (CROX) Flys Higher On 'Beat and Raise' Q2"

How should you take advantage of this news at 9:30 am tomorrow? Here're my suggestions, which comprise buying call options for maximum bang for the buck:

buy the Aug 2011 $32's,
buy the Sep 2011 $40's,
buy the Dec 2011 $40's, and
buy the Jan 2012 $40's.

..TS.

High-Frequency Trading manipulations and the SEC

2011-07-22T06:58:00.000-07:00

http://www.wealthdaily.com

Jim Cramer July 8th, 2011
"Until you get the SEC to start looking at the markets through the prism of your IRA or 401k or 529 plans instead of through a prism of market manipulators, don’t be surprised by any outrage or flash crash. It can happen again."

Michael Mauboussin video on Power of Counterintuition

2011-07-20T13:21:00.000-07:00

James Surowiecki speaks with Michael Mauboussin, the Chief Investment Strategist at Legg Mason Capital Management and the author of “Think Twice: Harnessing the Power of Counterintuition,” about common investment mistakes, how to improve decision-making, and what investors can learn from the recent stock-market woes. They met last week in New York City.

$CTRN's Perfectly Good Balance Sheet...

2011-07-20T08:00:00.000-07:00

...does not necessarily translate into a company with a happening Income Statement. Apple is the epitome of a company: reporting down and later blowing analysts out of the water, as in yesterday's quarterly report. Citi Trends, while well positioned in a niche industry segment and targeting growth with 50+ new stores, seems to be at the other end of the spectrum. I've run into this before: find a company with a fairly stellar balance sheet, and what seems to be a good business model, but then stumble into near term earnings misses. This occurred ten years ago with a company now called Woodstock Financial Group (originally Raike Financial Group). I still hold shares in the severely-underperforming member of the independent brokerage industry--perhaps they'll poke their head above water at some point this century.

Now it's happened again, but with a company that trades more than once a week, and in fact has decent daily volume: Citi Trends, an urban clothing store. A stellar balance sheet--cash which has grown to $80M over the past 8 quarters, no debt--and a YoY improving income statement...but near term misses and new forecasts that point even lower is deep-sixing any recent investments in the company. The following shows the dangers in buying calls in such a company... fortunately the calls have expiration dates far enough out that the value could come back (Nassim Taleb's warnings about such thought processes nag in my mind...).

-CTRN 111119 C17.5	CALL (CTRN) CITI TRENDS INC NOV 19 11 $17.5 (100 SHS)	30	$1.05	$0.05	$3,150.00	$150.00	-$3,000.00	-95.24%
-CTRN 111119 C20	CALL (CTRN) CITI TRENDS INC NOV 19 11 $20 (100 SHS)	90	$0.45	$0.45	$4,050.00	$4,050.00	$0.00	0.00%
-CTRN 120218 C17.5	CALL (CTRN) CITI TRENDS INC FEB 18 12 $17.5 (100 SHS)	25	$1.60	$0.35	$4,000.00	$875.00	-$3,125.00	-78.13%

The only reason to get out now is to retain some capital, and the only reason to stay in is to see how the August and November earnings reports for Citi Trends affects the pricing of the underlying and these calls. Will the underlying price come back up enough to make these phenomenal investments? Probably not (phenomenal in my mind is 300-500% return, which is attainable with call options), but probably will come back up to break even. While fundamentally sound, the performance of this company could be something of a clarion call for investors to be wary of lower-income-targeted clothing store industry... while the run-up from 2009 to 2011 may have helped, the recent languid performance of the US economy is reflected here.

A note about sell or trading rules: Taleb talks in "Fooled by Randomness" about the star traders who crash their accounts by hubristically shunning stop-losses and other sell rules, "knowing" that their chosen direction will win, and then it doesn't. I've developed just two loss-limiting rules: I sell only when I have another direction to go in which needs funding, and I only buy and sell with limits; too often a retail investor gets caught up in making "market" buys or sells...with the likes of AAPL or CITI it's a no-brainer, but then the investor accidentally does that on weak volume, and gets an atrocious price.

..TS.

Definition of Risk

2011-07-19T08:52:00.000-07:00

Investopedia defines risk as "The chance that an investment's actual return will be different than expected. Risk includes the possibility of losing some or all of the original investment. Different versions of risk are usually measured by calculating the standard deviation of the historical returns or average returns of a specific investment. A high standard deviations indicates a high degree of risk."

It explains Volatility as "the amount of uncertainty or risk about the size of changes in a security's value."

I want to express risk and volatility as the collection of all the investors' foibles and ambitions into one price at one instance in time. Its the fear of not paying your bills on time this month. Its the dream of buying your girlfriend an engagement ring or planning your wedding day. Its the hope of sending your children to college, or retiring and being independently wealthy. Its where supply meets demand on our hopes and dreams, fears and greed. Its the accumulation of all emotions we hide from the world and ourselves. Its a point in time plotting sentiment on how the economy is expanding or contracting. Its a list of long-term & short-Term goals; Fear, greed and all other human emotions combined into one.

Even if we remove and detach our emotional states or biases from the equation it will be a focal point of society's aggregate value of the security.

Couple of Biz Stone, Co-Founder of Twitter Interviews

2011-07-18T03:29:00.000-07:00

Biz Stone is co-founder and Creative Director of Twitter.

Mr. STONE: It turns out it has a lot of different facets, because while there's many people doing stupid narcissistic things, that gets you to use it on a regular basis and it gets you familiar with it. But then when you see an accident, you're trained to tweet that you've just seen an accident, and suddenly that's a useful piece of information. Whereas, if we told you that this was a program only for reporting accidents, you'd never think of it.

Dustin Diaz/Twitter

On how Biz Stone uses Twitter

"I definitely spend way more time reading tweets than writing tweets. The first thing I do in the morning when I'm waking up is, I reach over and grab my iPhone and I just start scanning through tweets. What it does for me — I know right away that if something big is going on, in the world or in my area, someone will have tweeted about it. If nothing big is going on, at the very least I'm being reminded that people are up and doing things. For me, looking at tweets first thing in the morning is kind of like caffeine. It sort of makes me realize other co-workers are up, getting coffee, driving to work, etc. I better get out of bed. All through the day, I'm checking Twitter and seeing what people are saying about certain things. I'm clicking on the trends and the sidebar to figure out why this particular celebrity or phrase is in the trends right now. And then I'm tweeting maybe once a day, maybe every couple of days. I'm an infrequent tweeter. I'm more of a consumer of the information that's coursing through the system."

Dissemination of News from Lake Wobegon

2011-07-15T07:56:00.000-07:00

I started out writing this post about how to do extensive research into an equity. It occurred to me that it would be disrespectful or rude to think that I knew the best way to research stocks. Did you know there was a "Due Diligence Framework"? How can you top that....

So I want to switch gears and let you imagine a cross-section of a tree. I do my research working from the bottom up when I am looking for a company. Imagine that your focusing at the center of such a cross-section, each ring with its meandering path representing news and information about a company. Each news article you read or nugget of information you gather adds another ring around the core. A younger company, just like a tree, will have less rings, less information available. An older company has more rings, more information and popularity. Now take a cross-section across a truncating branch. Seeing the knot and its rings symbolize news generated from outside the company, or how you react to the company. News comes from the company itself. News comes from outside the company and information comes from our personal impact and reaction to the company.

Game theory
Know Your Opponent. In the first three chapters of Seth Klarman in Margin of Safety he writes about the constraints the institutional investor is under. Adding into this mixed market are the latest social media sites that allow the amateurs, professionals, and ex-prop traders to share their resources.

What are the known facts? At what level is the information really understood. What does the average person think your going to do with that information? Not all participants are thinking at the same level.

Game theory teaches us that in any encounter most people only think about 2 steps into this process of what will the other contestant do. The game of gaming information.....

Disseminating the news for an equity
"In finance, the efficient-market hypothesis asserts that financial markets are "informationally efficient". That is, one cannot consistently achieve returns in excess of average market returns on a risk-adjusted basis, given the information publicly available at the time the investment is made."

level 0 - Efficient-Market Hypothesis (EMH) theory
no research is done because market is efficient
level 1 - reaching this stock through any investing style, screening or event source
biases,ambiguity and controversy
level 2 - gathering data from company, from second sources or personal impact
...
...
...
level X - lateral thinking, Second Level thinking, Creative Flow

Level X thinking
I have borrowed excessively from Michael Bigger, Howard Marks & other authors, but my interpretation of X level thinking boils down to the ability to identify probable outcomes from connections and correlations that can occur between companies. How does information gathered from bottom up investigation fit into top down information? How can one company affect others? What actions by one source affect others?

Can you equate levels of research to levels of game theory?
I have a bad habit of finding information and assuming that I am the only one who has this data. The SEC goes to extreme lengths to assure that all investors have the same public information. Howard Marks states that data should be "something that should be assumed to be true until proven otherwise" and describes EMH as a sense of "speedy, quick to incorporate information" not "right".

Lake Wobegon is characterized as the town where "all the women are strong, all the men are good looking, and all the children are above average." The Lake Wobegon effect, a natural human tendency to overestimate one's capabilities, is named after the town. When gathering data one should ask who else knows the information or reasoning? If your data or idea is truly actionable, other people will find it too.

Omega is another fair value play

2011-07-13T12:07:00.000-07:00

Omega Protein Corp fair value target is $15.50, using Benjamin Graham's magic formula.

In the news last month, OME was selected to join the Russell 3000 Index on June 24th.

According to 10K

Omega Protein’s principal raw material is menhaden, a species of fish that inhabits coastal and inland tidal waters in the United States. Menhaden usually school in large, tight clusters and are commonly found in warm, shallow waters.

Omega Protein is the only fully-integrated fish oil processing operation in the United States that both directly conducts fishing operations and also manufactures highly refined EPA and DHA from these marine resources. Omega Protein can control the purity and quality of its product from harvesting all the way through manufacturing and shipment.

Menhaden oil currently is the only marine source of long-chain Omega-3’s directly affirmed by the FDA as a Generally Recognized As Safe (or “GRAS”) food ingredient for direct human consumption. The FDA has approved menhaden oil use in 29 different food categories such as margarine, salad dressings, condiments, yogurt, ice cream, cheese, prepared meats, sauces, soups, crackers, cookies, cereals and bakery products.

According to 10Q

A finding by the ASMFC that overfishing occurred in the Atlantic menhaden fishery in 2008 may result in additional restrictions on Omega Protein’s menhaden harvest, which could have a material adverse effect on the Company’s business, financial condition or results of operations.
The Atlantic State Marine Fisheries Commission ("ASMFC") manages the menhaden fishery throughout the stock’s Atlantic coast-wide range....

In March 2011, the ASMFC initiated a review regulatory process which if enacted would: (1) require annual updates on menhaden recruits, or the numbers of fish in their first year of life, currently reviewed only every three years; (2) begin a process of developing management reference points for identifying the relative status of the stock using broad ecosystem indicators; and (3) establish interim management targets and consider regulatory tools to assist managers in achieving these targets. The interim management reference point target will be based on achieving 15% of the spawning potential the Atlantic menhaden stock would have if such stock were unfished. By comparison, in 2008, the estimate of this so-called “spawning potential ratio” was estimated to be 9%; however, those numbers have not been estimated for 2009 and 2010. The Company expects that such reassessment will not occur until the next stock assessment in 2012.

Conclusion
Adding this equity to the index gave it a pop of 5%-10%. I am going to put this on a watchlist to see if there are any minor unanticipated setbacks. Historically, the 2nd and 3rd quarters are seasonally the best for them.

This document supports the recommendation of the Assessment Team that the stock status

determination is “not overfished” and there is “no overfishing”. But if there are any adverse judgement from ASMFC this equity could incur they will not be assessed until 2012.

$LSCG and $VUOC Will Save the Planet

2011-07-13T10:50:00.000-07:00

As can be seen from headlines decrying government legislation and from discussions with your peers, technologies which purport to "save the planet" or "reduce reliance on foreign oil" are using push-button issues which are sensitive to both sides of the aisle to generate buzz and funding. The hullabaloo surrounding incandescent light bulbs has been swirling since the 2007, when the Energy Independence and Security Act of 2007 put into law bulb efficiency improvement requirements of 25% by 2014 and equivalency of 200% improvement by 2020. Note, this law, signed by George W. Bush, also requires tighter automobile CAFE standards, raising fleetwide economy to 35 mpg, but of course the issue couldn't possibly be about this multi-billion-dollar industry, could it?

In any event, Republicans tried yesterday to deep-six the law proposed four years ago by the Democrats, and failed. Rising from the ashes of this failure, Lighting Sciences Group (LSCG), an LED-bulb-only company pushing several families of consumer and commercial LED lighting solutions, and Vu1 Corporation (VUOC) with a new non-LED, non-CFL bulb in development and nearing UL-approval and distribution, both have a chance to surge into the marketplace with their alternatives to CFL. Whether they can compete is a long-shot, but LSCG's LED and VUOC's Electron Stimulated Luminescence (ESL) are viable alternatives, and the companies could also be buy-out opportunities for someone looking to get into an industry with a truly global market.

Do these companies have a snow-balls chance? I believe that they do.

..TS.

$GOOG at $250?

2011-07-12T07:22:00.000-07:00

[guest post by TS]

Will Google+ drive Google's price higher, as it's still 30% shy of it's 2007 high, or will surface virtues of a whole new social paradigm turn out to be hidden tragedies when people realize that Google is enticing people into categorizing their email contacts more precisely so that Google's ad engines can target them more effectively? I'd been adding people fluidly to circles within in my Google+ account, when the thought struck me: what if this is just the way that Google has determined that for free they can improve the quality of their data mines, with well-categorized email addresses/contacts?

I know this is crazy talk, a la Mel Gibson's Conspiracy Theory (a great movie--but is it just that??), but how would one target this kind of event-arbitrage idea with a long-term trade (assuming Google+'s true identity isn't immediately revealed)? I suggest something like the GOOG 2013 $260 Puts, which are roughly 1/2 the current price, at this moment selling at an Ask of about $2.90/contract. If you've more cash in your account that I do (and I don't do margin), you may consider something closer to in-the-money like the GOOG 2013 $460 Puts, currently asking $42.10 per contract.

I personally think this is a crazy idea... but given the trend of Google slightly stepping away from it's original "do no evil" mantra, it's certainly not out of the realm of possibilities.

..TS.

Rimm is fair value play

2011-07-12T06:30:00.000-07:00

I am very intrigued by the assumptions in the current market that Google's android and Apple's Iphone are going to monopolize the smart phone sector.

Research in Motion (RIMM) has fallen quit a bit lately. Their fair value target is $50.92, using Benjamin Graham's magic formula.

In the news today, RIMM is having their annual meeting to determine whether to replace the current chairmen & co-CEO's, Jim Balsillie and Mike Lazaridis.

Bought the $FARM

2011-07-11T12:20:00.000-07:00

[guest post by TS]

Last Friday afternoon and over the weekend I was thinking about penning a somewhat derisive article about the coffee patch, about how JVA, CBOU, GMCR, SBUX, and PEET can fly so high, while the ho-hum performance of FARM just peters along a low level at about 0.25 sales. While Farmer Brother Company's sales have been rising steadily YoY, they have yet to have a profitable quarter in at least the past four--clearly the fact that investors were ignoring them was quite warranted.

Then, this afternoon I was tracking the anti-negative-market antics of JVA and CBOU, when I saw this article NASDAQ stock posting largest percentage increases, I was floored by the first company listed:

"A look at the 10 biggest percentage gainers on Nasdaq at 1 p.m.:
Farmer Brothers Co. rose 21.0 percent to $11.68.
Vitacost.com Inc. rose 13.1 percent to $5.97.
Donegal Group B rose 12.2 percent to $19.53.
Quantum Fuel Systems Technologies Worldwide Inc. rose 10.4 percent to $5.26.
GSV Capital Corp. rose 9.0 percent to $17.65.
PDL BioPharma Inc. rose 8.1 percent to $6.22.
Coffee Holding Co. rose 8.0 percent to $28.90.
Caribou Coffee Company Inc. rose 7.6 percent to $14.63.
Vasco Data Security International Inc. rose 6.4 percent to $13.70.
Fst Savings Fncl rose 6.0 percent to $16.48."

I got in, then, at just over $12. I could kick myself for not doing anything about FARM on Friday. Of course investors would see JVA jump, see the apparently under-value of FARM (despite lack of earnings), and similarly pounce. FARM was deservedly priced around $9 on Friday, and it serves me right that it should be at $12 this afternoon, and will probably close at $11.50 after I bought in (somebody must be selling if I'm buying, right?). Alan Elliott posted for Investors.com last Thursday that "...dealing in coffee is no pledge of success. Coffee distributor Farmer Brothers (FARM) has only logged one profitable quarter since 2007. The stock is down 45% so far this year."

Have I just bought the FARM, or will this misbegotten company follow the other coffee companies to more than just a caffeine high?

..TS.