The Pitbull Trader

Which Way are the Markets Headed Next?

2011-08-12T09:36:00.001-07:00

With the whipsaw action seen recently in ther international markets, many retail, professional and hedge fund investors are all thinking the same thing. Which way is the market headed next? Do we crash back down to Dow 1000? Or is it possible that the 'speculators' push the markets back up to challenge recent highs?

Thinking with the extremely greedy part of my brain I decided that the money would be much easier to make if the market was slowly marched upwards, rather than attempting to crash to further lows. Lets face it, fear and blood were in the streets. Pundits were panicking. Europe is eternally doomed. The USA is no longer considered AAA sovereign credit in a world of easily printed fiat currency.

Everyone knows that. The resolve the market has shown in the past few days to battle back from an overnight panic low will absolutely prove that the lows for 2011 are in. I may be a maniac or a pollyanna, but I truly think that now the game is different. Bernanke said safe investments are worthless until "mid-2013" at least. I can smell the greedy money on the sidelines waiting for a chance to put their riches to work. No one likes earning 0% on a CD or T-bill.

We will challenge our highs for the year in the upcoming 6 months. The fast money will pile right back in once the theoretical 'all clear' signal is given by Bernanke via QE3 or some positive economic numbers. In the long run, markets want to go up, and money needs to be made. There is always a bubble somewhere, and Bernanke is committed to making sure that our stocks are not going to be the first one to burst.

Long NCT, HGT, SJT, GAIN, MPB, VLCCF, FRO, JMF (all recent purchases)

Citron Research Going 'All In' on Short of Harbin Electric

2011-08-03T22:01:00.000-07:00

It is now apparent that Andrew Left and the short sellers at Citron Research have risked their well-known reputation on their continued attack on Harbin Electric. It has been made clear throughout SEC filings, the buyout financing by China Development Bank and other regulatory statutes have been (to date) satisfied. The only thing investors are waiting on is a definitive proxy statement and a date for the vote in favor of the management led buyout, including CEO Tianfu Yang and Abax Capital, as well as other insiders.

The past successes of Citron Research have possibly led to a high-level of hubris and shoddy detective work. Many of the accusations are supported by innuendo, guilt-by-association, and selective fact checking. The latest attempt at a 'hit job' came today and the stock was punished severely (being down 19% intraday). As the investors had time to read through Mr. Left's sloppy hit job, the stock ended up recovering and finished the day up nearly 5%.

It obviously helped that Harbins' CEO Yang came out and stated a very clear rebuttal of Citron's accusations, saying, "a patchwork of fabricated evidence, falsehoods, selective use of information, and clearly biased and dishonest reporting, showing that the authors' only intention is to drive our stock price down. We are aware that there are over 7 million shares of short interest outstanding as publicly reported. We condemn this attempt to further hurt our shareholders and want to reassure them, once again, that we stand by the accuracy of all our filings with the Securities and Exchange Commission ("SEC"),".

I understand not being able to change your opinions and 'sticking to your guns', but according to this Bloomberg article, the owner of Citron research (Andrew Left) was, "disciplined by the National Futures Association for accusations in 1995 that he “cheated, defrauded and deceived commodity futures customers,” according to the association’s website."

"Let he who has not sinned cast the first stones"

Mr. Left would do well to remember that sacred script. He is doing what most Americans would consider unethical and shady. Printing half-truths and poorly thought out 'gumshoe detective work' on his website without any clear evidence of any legal wrong doing. This is all while he has a devout horde of short-seller subscribers that are short Harbin Electric. (His firms' track record on Chinese stocks up to date is commendable).

This is another blatant case of using the idiocy of the crowd who copy trades without due diligence in any meaningful way. A poop-and-scoop, if you will, rather than a pump-and-dump. It appears to most who have watched this circus that Citron Research has decided to roll the dice of its long-term credibility on the outcome of this buyout. The reporting work and facts presented are all but concrete and clearly based on innuendo and misleading information. It is a shame that what started out as a seemingly helpful researcher to investors, now appears to be nothing more than another greedy short-selling outfit all about the cash, not the truth.

Top 5 Stocks to Buy on a Market Correction

2011-06-17T08:24:00.000-07:00

I am going to share with everyone stocks on my buylist for purchase during the ongoing correction, especially if we get a 5% selloff day with Greece/Euro panic or another flash crash type glitch.

1. CSR - China Security and Surveillance is in the midst of a management led buyout and there is significant premium on the table for those who are willing to wait the 4-6 months until it closes. 50%+ premium on the table for those who are not too chicken shit to invest in anything Chinese.

2. GST - Gastar is a small E&P that is highly levered to the marcellus shale play and has a very advantageous JV setup to lower their drilling cost for the next year. They have great opportunity to see prices above the $5.00 range once they start showing they own some great assets and reporting drilling statistics. They have a ton of wells coming online in Q3-Q4 in the 'wet' area of the marcellus. You want to get in this guy as close to $3.00 as possible for a trade to $5.00+.

3. ATPG - This is a highly levered oil play that is inolved in drilling offshore Gulf of Mexico and has some fantastic production capabilities. They have been hampered by the governments lack of business insight in delaying the responsible drillers ability to produce oil in the Gulf however, and have been punished accordingly. This will be a $25 stock within a years time. Buy close to $15.

4. Large Cap Technology companies with decent Growth possibilities as well as very strong balance sheets. I would include (DELL, MSFT, NOK, HPQ, GOOG, AAPL) on this list, and place your buy orders approximately 5% down from current prices. These offer good long-term value to prudent investors.

5. C - Citi Group. I know, the widely talked about bank also known as Shitty Group. Surprising pick for me as well, but out of all the domestic banks, they have the largest global footprint, and therefore probably the best growth capabilities going out 1-3 years. If the banking sector keeps getting slaughtered this is the pony to bet on. Buy this little slut around $37 if the market takes a dump.

6. Others to consider: EROC, NCT, MPB, AIG, KOG.

And remember, don't be a peasant, don't panic, and be a skeptic. The overlords of Wallstreet will not continue to manipulate and rob the average citizen of their assets if we wake up and quit acting like sheep. I am here to help guide individual investors and lead the revolution against the Wall Street manipulators/speculators who would sell their grandma up river for a gold coin.

Finding Value in Coffee Holding Co. (JVA)

2011-03-07T20:35:00.000-08:00

Coffee has two virtues: it’s wet and warm.

A cup of coffee shared with a friend is happiness tasted and time well spent.

No one can understand the truth until he drinks of coffee’s frothy goodness.

I don’t have a problem with caffeine. I have a problem without caffeine.

Chocolate, men, coffee – some things are better rich.

The morning cup of coffee has an exhilaration about it which the cheering influence of the afternoon or evening cup of tea cannot be expected to reproduce.

and my favorite

I believe humans get a lot done, not because we're smart, but because we have thumbs so we can make coffee.

Ok, now one to making money.

While Coffee Holding Company may not be a direct competitor to Starbucks (SBUX) any time soon, but they do offer a great value in the delightful coffee industry. We all know a great cup of coffee keeps the world spinning round, and it is also common knowledge that people will skimp on their breakfast before their coffee. To be able to invest in a $20MM market cap., family owned and operated business for a P/E ratio of 9 is a no-brainer.

From CoffeeHolding.com,

Coffee Holding Co., Inc. (CHC) is a family operated business for over 30 years. The management and operating team at CHC represents three generations of committed, knowledgeable professionals.

Andrew Gordon, President, CEO, and CFO
Andrew Gordon has served as Chief Executive Office, President, Treasurer and in the capacity of director since 1997 and as Chief Financial Officer since November 2004. He is responsible for managing our overall business and has worked for Coffee Holding for over 21 years, previously as a Vice President from 1993 to 1997. Mr. Gordon has worked in all capacities of our business and serves as the direct contact with our major private label accounts. In addition, Mr. Gordon publishes a weekly report that is distributed to our customers and is perceived by many of his peers and customers as a coffee market expert. Mr. Gordon received his Bachelor of Business Administration degree from Emory University. He is the brother of David Gordon.

David Gordon, Executive Vice President and COO
David Gordon has served as Executive Vice President—Operations, Secretary and one of our directors since 1995. He is responsible for managing all aspects of our roasting and blending operations, including quality control, and has worked for Coffee Holding for over 23 years, previously as an operating Manager from 1989 to 1995. He is a charter member of the Specialty Coffee Association of America. Mr. Gordon attended Baruch College in New York City. He is the brother of Andrew Gordon.

Sterling Gordon, Founder
Sterling Gordon founded Coffee Holding Co., Inc. in 1971. He possesses over 50 years of experience in the coffee business during which time he has developed a reputation in the industry as an expert in coffee blending and quality. He is the father of Andrew and David Gordon.

Also, insiders still own 53% plus of the float, I doubt they will be willing to sell at the $4.00 level. The float is currently listed as being only 1.42MM according to Yahoo!Finance. That means ANY positive news, and this stock is above $5.00 in the blink of an eye. A 25% gain in this market is nothing I am willing to pass up.

From their website regarding the newest coffee sensation to enthrall the elites, artists, and youths of America, Specialty Green Coffee.

"Coffee Holding Inc. purchases only the finest specialty green coffee from around the world. The coffees are cupped prior to shipping from origin and upon arrival in the United States must meet our demanding standards. Our cupping team includes Sterling, David, and Karen Gordon who collectively have over 75 years of experience. Everyday we cup new offerings from around the world striving to provide the best selection for our roasting clientele. We have grown our offerings to include Organic, Fair Trade, Rainforest Alliance, and Utz Kapeh certified coffees. Using our roasting experience and years of industry knowledge, our helpful staff is willing to aid all of our customers in selecting a single origin offering or the blend that works best for their business."

The bottom line is, you get an extemely under-valued coffee company including a family-based management team with over half a century experience in the coffee business. They also have their own incentives clearly aligned with shareholders with their sizeable insider stakes in the company. The fact that this equity's price remains so subdued is greatly influenced by the lack of public recognition of this security. I would put a true intrinsic value of this company based on buyout potential at this moment at approximately $7.50.

10 Chinese Value Stocks with < 10 P/E

2011-03-02T17:51:00.000-08:00

While I have been patiently waiting for the market to correct from irrational levels, I have been running methodical screens and diligently creating a 'buy list' in preparation for lower equity prices. Today I am going to share with everyone 10 Chinese companies that have shares listed here in the USA, and that I feel warrant further investigation upon continued equity weakness.

Chinese equity issues offer an attractive investment opportunity for American investors because the well known divergence of foreign equities compared to domestic markets. While these shares are traded on domestic exchanges, they are ownership stakes of companies whose primary business is in China. As most investors know, the US equity markets have greatly outperformed Chinese equities in the past year, mostly due to artificial stimulation and support of stock prices by our Federal Reserve. Now may be a great time to rotate out of high-flying US stocks and rotate into some unloved Chinese value companies with strong fundamentals before QE2 ends.

I have chosen these Chinese stocks for my buy list for multiple reasons:

They are currently out of favor with hedge funds, mutual funds, average investors, and the mainstream media outlets.

   2. They are being severly discounted over worry about accounting practices, and lack of expertise in shareholder relations that is common with American companies

   3. They trade at very reasonable P/E multiples, in this case < 10

   4. China will remain an important engine of growth in the global economy, and while it will be undoubtedly a bumpy ride, long-term the growth prospects are hard to beat.

In this screener I chose to include stocks whose P/E are less than 10, which have been trading on major exchanges for at least a year, and that have easily understandable business models.

Name Symbol

ZST Digital Networks... ZSTN

China Security & ... CSR

Changyou.com Limited CYOU

China Natural Gas, Inc. CHNG

Advanced Battery Tech.. ABAT

Concord Medical... CCM

Fushi Copperweld, Inc. FSIN

Yingli Green Energy... YGE

Huaneng Power Intl... HNP

ReneSola Ltd. (ADR) SOL

I would recommend either selecting your favorites out of this list, or diversifying by placing bids for initial positions in these securities 5-10% below current prices. Then when a moment of panic hits the markets, you will be granted an ownership stake in solid companies at a great entry point. While there are plenty of problems with investing in Chinese companies, the risk-reward ratio is beginning to look very appealing for grabbing a stake in Chinese companies that have the benefit of great future organic growth. I think allocating 10-25% of your assets in these Chinese companies provides great diversification and potentially very profitable trades in a well-balanced portfolio.

Wednesday Chat & 6 Stocks to Buy

2011-02-23T15:19:00.000-08:00

Below is an excerpt from my Premium Member Discussion Board:

"Idk about Nat gas. I'm tempted to avoid it. Chk and SD recently are switching from mostly natty to almost all oil. And they are well informed esp Chk CEO mecclendend sp? Who seems pretty sharp. I think thy realized the us through lobbyists and pre est infrastructure ain't switching to the t boone plan anytime soon even though its obv better imo I'm not super informed on natty + Idk what use buy anyway trusts seething net top of valuation and ung is a shitty product"

Pitbull Trading :

"Isnt Mclellan the same guy that levered up on CHK stock and got a margin call when the market crashed and was forced to bail on his position? I guess the contrarian in me would say that the facts you state make me tempted to like NG even more, with the focus on crude oil (chasing high prices) and therefore limiting the supply on the market of NG (low prices), longer term makes me feel like NG is a better prospect for investing right now. But I guess the question would be how long you are willing to wait. I think the guys you would want to look at buying would be some of the small-mid size companies with leases in great plays that are as of yet under-developed. There is a new shale in texas called the eagle ford that is suppose to be a game changer as well, Ive done some research but nothing jumped out at me as a screaming buy, the valuations are all kindve high because of the growth prospects. CHK and SD and things like that look stupid on a chart and I hate buying highs. Trusts dont look that great either. I really would be more tempted to get into something like oil sands in canada, SU, or a small E&P like GST, or even an off shore driller with an obvious catalyst that will bring it up 25-50% within the next year or so (lifting the moratorium on their platforms and bringing their massive amount of reserves to market at these huge prices) I know I am a bit too conspiracy theorist on the oil crap but in reality prices above 100 based on supply demand info Ive read are out of line and should come back down. Demand destruction will be real with the worlds middle-lower classes unable to afford basic foodstuffs and gasoline. And despite the stock markets nascent rise I dont believe that the middle-class americans who are depended upon to consume 70% of our GDP really are recovering all that nicely, look at recent housing data, true unemployment considering those who have already stopped looking, etc. Eventually corporations will have to either shift all their focus on exports and international business, or else start paying their workers legit wages here and hiring, which would crimp profits I think.

Some things I would consider buying on pullbacks are:

1. ZBB at 1.00-1.05.

2. NCT at $7.00 - $7.10

3. ATPG at $15.50 - $16.25

4. OPTR at $11.00 - $11.25

5. VGR at $15.00 - $15.50

6. AIG at $35.00 - $38.00

Also with AIG I was thinking that since the government owns 80% and we know they are not selling, it seems like that would buoy the share price and provide some strength until they start unloading their shares... That is unless the shorts attack the stock thinking there will be an imminent offering that would crash the sp.

On an unrelated topic, take a moment to read about 'Ego-Death':

"...a sense of being controlled by frozen block-universe determinism with a single, pre-existing, ever-existing future. Experiencing this model of control and time initially destabilizes self-control power, and amounts to the death of the self that was conceived of as an autonomous control-agent. Self-control stability is restored upon transforming one's mental model to take into account the dependence of personal control on a hidden, separate thought-source, such as Necessity or a divine level that transcends Necessity."

As always, do your due diligence, and use stop losses where appropriate.

Turmoil in the Middle East, Pt. 2

2011-02-23T00:04:00.000-08:00

The events that unfolded in the Middle East and the stock market were predicted in my Post dated 02-11-2011:

"The way the human race is able to communicate is evolving at a clip faster than any moment in our history, we certainly live in unpredictable and exciting times. We will see many regime changes in the next decade due to the current state of affairs facing the global economy. Even a country like Saudi Arabia is not as untouchable as many may think."

and

"Markets are setting up like a crowded theater before someone yells 'fire'. When there is a sudden and surprising rush for the exits, things will get pretty ugly. This will offer up some intriguing long-term buys, but it is best to be defensive or bearish right now. It is better to sit out and wait for volatility to return than be the last one to the party. Breaking multi-year highs on pathetic volume does not show me anything. I think TZA, VXX, TVIX and short-medium expiration puts on select names such as NFLX, AMZN, and CMG look good here. I know fundamentals don't matter right now but the market can't stay irrationally exuberant forever."

Thats 17 points of profit in Chipotle, 15 in Netflix, 4.5 in VXX, 11 in TVIX, and 10 in Amazon! If you did the options recommendations, you would be looking at even better money. And it's not over yet...

Well if you had taken my advice, you would be looking quite nice on every single one of your trades. And while I may be tooting my own horn a bit, being a contrarian against an army of maniacal buyers is extremely mentally challenging, and I needed this small allowance of smug satisfaction.

The leading indicator for this correction can be seen by the VIX index's odd trading behavior over the last week, it rose continually with the markets, and this told me that something was afoot. Call it gumshoe detective work or common sense, but that was a sign I didn't believe I could ignore-the market telling me that even as equities rose, so did the 'perceived risk' associated with owning these stocks at higher prices.

Here is a sample of a response to a question posed by a premium member of my blog:

"so do u know whos leading in the new party formation in these turd
countries? also i saw that mubaurk's estimated wealth is b/n 1 and
70B upper end of that would be redic... some of those saudies must
be worth a $%#@ tonn"

The House of Saud are some rich people. "Over decades of oil revenue-generated expansion, estimates of royal receipts have varied, ranging as low as an unlikely $50 billion and as high as well over $1 trillion." If we see unrest in Saudi Arabia, then things will get very dangerous quickly, and the USA might even be forced to become involved based on our gluttonous oil habit. I haven't looked into the new parties too much. Seems though that in Libya they have tribes and many systems and cultures, so they could end up in civil war and one strong faction coming into power. Would need to research more... Really this thing starts to reek of the smell of manipulating crude prices now with Qaddafi threatening to explode and sabotage oil facilities in Libya to spike up prices. The real effect to crude supply may not be that enormous, but thats not what makes things move in the markets now days, the media's biased take on the events and coverage will really dictate price action. When our corporate overlords, and Bernanke's bankster puppeteers decide the investing environment is getting a little sketchy, watch out, because the pain train's comin to town. This rush to the exits could be spectacular, the market has made lots of gains on very poor volume, leading me to believe that serious selling pressure could bring the S&P 500 back to a more reasonable 1250-1275 level of support. That is only a 3-5% correction, but it could happen faster than you may believe. This is not taking into consideration the problems the USA is facing in the near term: Unsustainable Government debt levels, Unsustainable State debt levels, QE2 ending in June, European debt contagion (It is still out there in reality, if not in the headlines), as well as soaring commodity and food prices.

This is going to be an interesting couple of weeks. Buckle up.

How Inflation is Hurting Corporate America

2011-02-15T12:44:00.000-08:00

The nations that compose the global economy are intricately connected; economic imbalances currently spread faster through the system than history would predict.

Ben Bernanke recently stated that “There is not really an indication in our financial markets that, in the United States, there is an expectation of inflation.”

I believe that our well respected Chairman of the Federal Reserve is wrong about that. If the financial crisis showed us anything, it is that the global economy is so interrelated that economic imbalances spread faster than ever before. That means emerging markets and commodity inflation in developing nations can very well effect prices here in America. Proof of inflation is abundant-go fill up your gas tank or buy a cart full of groceries.

Here is a sample of what 'Blue-Chip' American companies are recently telling us about their experiences with commodity and food inflation.

Kraft (KFT):

Even as the food giant hikes prices, high commodity prices should continue eating away at margins.

Chipotle (CMG):

"In addition, while difficult to predict with certainty, we expect commodity inflation will steadily increase our food cost during each of the next two or three quarters. So rather than strike preemptively by raising prices now, we plan to hold tight on our menu pricing till the second half of the year both to allow our transaction to hold as strong as possible and to allow us to fully see the timing and magnitude of sustained inflation, even though this means our margins will be pressured over the next few quarters.

Pepsi (PEP):

"Soft drinks maker PepsiCo has cut its earnings forecast for 2011, warning that higher commodity prices will push its costs up and citing a weak economy."

HanesBrands (HBI):

Cotton prices have surged to a new record high amid global imbalances. The cost of the commodity has jumped 150% since 2010 began. "Hanesbrands' fourth-quarter results reflected strong top-line growth but weaker margins because of higher cotton prices.

Even America's favorite beverage, Beer is not saved from the pain.

(TAP):

"U.S. Brewers really have to be imaginative these days. They are facing the paradox that while sales are dropping, the costs to produce products is increasing in the form of commodity ingredients. Molson Coors Brewing Company reported yesterday its Q4 net income fell by more than half partially because of ingredient costs."

(KFT):

Many large consumer goods companies are reviewing their business models in the face of rising commodity costs to mitigate the effect on profits and their bottom line "Whether through raising prices, cutting costs, adjusting product size or altering ingredient mix, companies such as Unilever PLC, Reckitt Benckiser, and Kraft Foods Inc. are all having to take action as rising input costs show no sign of abating. As escalating costs have hit all categories of commodities, no single company is better placed than another, so their differing strategies will be under close scrutiny."

Inflation has many negative side-effects, the ones I believe we may be experiencing are:

1) Rising prices creates uncertainty. In a climate of uncertainty both domestic and foreign entrepreneurs will be reluctant to invest. This will slow down the potential for economic growth.

2) Low savings is a factor contributing to the cycle of poverty. During periods of inflation households that do have surplus funds are reluctant to save. Inflation erodes the real value of saving and hence there is less incentive to forego current consumption. Decreasing levels of savings and hence of investment will lead to a decline in economic growth and development.

3) Rising prices causes worsening poverty as the essentials for survival become more expensive and thus less attainable to those with low incomes. In an economy where unemployment and underemployment is increasing, family incomes are less able to purchase the basic requirements such as staple foodstuffs.

So as an investor, how do we profit from the sinister rise of inflation? The basic answers most investors would say are Gold (GLD), Oil (USO), and Interest Rates (TBT). I think a better overall play would be something like RJA, the commodity basket created by expert investor Jim Rogers. According to one popular stock website "RJA is one-stop shopping for the indecisive investor. The ETN features weights of 13.6% to corn and wheat, respectively, and a 12% weight to cotton. Coffee, cattle, cocoa and sugar can also be found among the ETN's top-10 holdings."

I will close out with Congressman Ryan Paul's recent remarks to Ben Bernanke regarding the effects of the Quantitative Easing II program on the American people,

"There is nothing more insidious that a country can do to its citizens than debase its currency,"

Google, Facebook, and the Internet Riots

2011-02-09T08:13:00.000-08:00

With the riots exploding onto the world stage in Tunisia, Egypt, Lebanon, Yemen, Jordan, and Algeria, the world watches passively as the down-trodden attempt to overthrow their governments. This is a very interesting scenario that could result in unforeseen negative (and positive) events that shape the future of the Middle East's political balance. With increasing internet adoption rates throughout the developing world and social networking mediums providing a convenient way for the angry masses to gather en masse; riots of the many against the few are becoming surprisingly easier to organize. In the past, it was much harder to gather huge numbers of protesters together to demonstrate against a tyrannical regime. Now it is as simple as a tweet, forming a Facebook page, or posting it on your blog, and instantly thousands ,or millions, are updated with the latest information.

The reasons for the revolts are largely similar in nature, the elitist few in the government and corporate business are strangling the lower stratas of society in order to live opulent, extravagant and greedy lifestyles. With poor economic opportunities, a large unemployed youth base, blatant oppression of basic human rights, and the United States exporting inflation through the Federal Reserve's QE2 money printing, people are pissed! "According to the United Nations Food and Agricultural Organization, food prices in Algeria rose 32 percent between June and December 2010, and are expected to rise further." For a great summary of causes of the recent Middle East revolts, click here. This becomes a serious problem quickly for those countries like Egypt who have 20% of their population living on $2.00 a day or less.

Another interesting statistic is that Africa only has a 10.9% internet penetration rate, with Asia sporting 21.5%, and the Middle East a modest 29.8% according Internet World Stats. This shows that even with the exponential growth rates of internet adoption over the past decade, there is lots of room to the upside. I am convinced that we will continue to see unrest and riots as long as the disparity of wealth grows larger in these areas. Those who are similarly oppressed in a given area are increasingly able to communicate, empathize, and organize. They will seek to better their lot in this world by any means necessary, and we all know what humans are capable of when they have children they can't afford to feed.

This all happens to have an interesting parallel with the world's number one brand name: Google. Yes the company that's motto is "Do No Evil" and states,

"The need for information crosses all borders."

"Our company was founded in California, but our mission is to facilitate access to information for the entire world, and in every language. To that end, we have offices in dozens of countries, maintain more than 150 Internet domains, and serve more than half of our results to people living outside the United States. We offer Google‘s search interface in more than 110 languages, offer people the ability to restrict results to content written in their own language, and aim to provide the rest of our applications and products in as many languages and accessible formats as possible. Using our translation tools, people can discover content written on the other side of the world in languages they don‘t speak. With these tools and the help of volunteer translators, we have been able to greatly improve both the variety and quality of services we can offer in even the most far–flung corners of the globe. "

Could Google actually be a willing co-conspirator with the underprivileged masses who are attempting to overthrow corrupt, evil, and oppressive governments? Making all information readily available to all segments of a population is a cause for alarm in and of itself. Dictators have known for a long time that you have to keep the propaganda machine rolling along full steam and manipulate the people into submitting to your will. If the oppressed knew exactly how they were being manipulated, it would ruin the whole plan.

An obvious example of this would be the situation that evolved with Google in China. The Chinese know very well how real the threat of the peasants revolting over food prices and lack of employment is. When Google's rally cry for freedom of information and 'Do No Evil' was found to be at odds with the will of the Chinese Communist Party, they walked. Google is an obvious advocate for the open, unadulterated, and free flow of information on the internet. Knowing this is part of Google's core value system, do you find it that odd that one of their executives, Wael Ghonim, was behind a Facebook page that played a vital role in organizing the protests in Egypt?

Given Google's political clout, ubiquitous presence, creative talent, massive cash reserves, and golden image, they are quickly becoming a world force that may be unrivaled by anything the world has ever seen. The way the human race is able to communicate is evolving at a clip faster than any moment in our history, we certainly live in unpredictable and exciting times. We will see many regime changes in the next decade due to the current state of affairs facing the global economy. Even a country like Saudi Arabia is not as untouchable as many may think.

I would be willing to establish a position in Google starting at the $550 level. Markets are setting up like a crowded theater before someone yells 'fire'. When there is a sudden and surprising rush for the exits, things will get pretty ugly. This will offer up some intriguing long-term buys, but it is best to be defensive or bearish right now. It is better to sit out and wait for volatility to return than be the last one to the party. Breaking multi-year highs on pathetic volume does not show me anything. I think TZA, VXX, TVIX and short-medium expiration puts on select names such as NFLX, AMZN, and CMG look good here. I know fundamentals don't matter right now but the market can't stay irrationally exuberant forever.

The Ben Bernanke Time Bomb

2011-02-04T21:11:00.000-08:00

So, I may be crazy, but so is Ben S. Bernanke. Yes, him, the helicopter. And no, he can't do any cool basketball moves. He just runs the ponzi scheme so the peasants don't understand why that dollar they earned today cant buy 'em a dollar worth of gas tomorrow. Nevermind who profits off commodity prices increasing, that's irrelevant!

We are entering bizarro world in the stock markets. Egypt is dying, we go break new highs. We don't hire as many people, Dow goes up. We print money like it's going out of style and we are paying $100 dollars a barrel for oil, Fuck it. Let's party like its 1999 again, remember the markets then? They were awesome.

Do you remember P/E ratios of 74, 69 and 47? Yeah, well 2011 is sporting NFLX, AMZN and CMG. Netflix, Amazon, and Chipotle Mexican Grill. That's right, we extrapolatin' na' mah-fuckah. Stack dem billz up on the realz....$$

I digress... The market is discounting downside risks at this time and being artificially manipulated by the invisible hand of Ben Bernanke. That hand disappears in June at the latest. No more free money in June, and the market is forward looking right? Hmmmm. I think I will buy more TVIX and DCTH to hedge.

VXX: Prepare Your Portfolio for the Downside

2010-11-22T21:56:00.000-08:00

The market environment is such that at the current time it is very prudent to be either in a large percentage of cash or to hedge your porftolio against downside risk with VXX. VXX is a short term volatility tracking etf that can provide you with great benefits if used correctly.

VXX is not for all investors and should be traded very carefully, it is never to be considered a long-term holding, but a short term tool to protect yourself against market fluctuations and potentially violent movements. The market has had a great run of late and it is time for a natural pullback among equities and likely commodities as well. There are potential economic storms on the horizon that take many various forms, check out Phil Davis' writing here if you want more information about those topics.

The point of this article is to get individual investors to think about the downside risk that is more obvious to me at this moment in time than any artificial upside movements by the manipulated markets and Mr. Bernanke's magic wand. If you cannot be in a decent percentage of cash right now (25-50% IMHO), then consider buying VXX to capture some gains on the downside and provide you with extra funds when we start to bottom out and deals are abundant again.

I generally always recommend scaling into positions, especially into things as tricky as VXX, and try to buy in larger chunks on the way down. Then you have to play things by feel and dont be too panicky one way or the other. Take good profits when they present themselves and try to use your patience on entering positions. Oh, and be picky, only take entries you KNOW are good in the pit of your stomach. It pays to be a sniper in this market and to not use a spray shotgun style of investing.

Happy Holidays, and remember, were all in this to make money, don't let the bankers fool you.

GOOG is Becoming a Value Play

2010-08-11T20:13:00.000-07:00

It is time to consider buying a blue chip company that is becoming a value play in this current market. I am talking about Google, a strong business that is poised for solid future growth is being currently discounted by Mr. Market. There is no reason for GOOG to have a forward P/E of 15. This represents a very attractive level for Google, whose android platform and the exponential increase in smart phone usage for everyday life will drive earnings higher in the future. Not to mention the domination of search and online advertising that only a fool would think they stand to lose market share in.

People who are infatuated with Apple or RIMM are not seeing the future clearly, these 'closed' platforms are too limited and their individual companies pride will not allow them to turn things around in time to stem the android tsunami. Take a look at the disaster that RIMM has become for an example, I personally do not think Apple can keep their brain-washed, money-wasting followers happy with continued mediocrity such as the Iphone 4 either. The competition is catching up and hardware is not the place you want to be when that happens (think Dell 10 years ago). The long-term gold to be had in this whole smart phone revolution lies in the software, and that is where Google has decided to lay it's chips. Android will no doubt power a similar percentage of smartphone devices as their search engine currently dominates it's market. Google will cleverly figure out ways to profit from ads and mobile search ability (think walking down a local street and searching 'pizza' on google maps). They have the best talent, minds, and creativity in the world, as well as the strongest brand name that ever existed. That my friend is what Warren Buffet would call a 'sustainable competitive advantage'. Not to mention Google has 30 billion in cash and no debt on the balance sheet, and the fact that they were hiring last quarter shows me the makings of a company that is not afraid to invest in growth. I disagree with the analysts who derided their decision to not be misers with their cash, after all I invest in Google because it is a growth stock, not some waste of time like Microsoft.

In essence, At below $500, Google represents a very fairly valued company with plenty of upside in a high growth potential sector: Technology. They are the best of the best and have proven since their IPO that they know how to manage a business for the long-term, and not quarter to quarter with tricks to appease the analysts. I would put my trust in management to reward shareholders who are willing to stick it out and let their creative intelligence bring in the cash flow. I personally recommend buying 33-50% of your position here and be willing to buy the rest if Google for any blessed reason spikes down closer to the $450 area anytime in the near future.

06/11/2010: Market Analysis and Global Macro Trade

2010-06-11T13:25:00.000-07:00

The level of pessimism in the market regarding the ongoing European Union drama, the Euro currency, China slow-down, BP oil spill, etc. etc. has reached a point where all the sheeple who are easily frightened (aka the weak hands) have already folded in despair. The MSM pundits attempting to drum up stories and fear by constantly bombarding the common investor with negativity have done their job, and the market is was down ~14% from it's highs recently. I now forsee a current period of consolidation which will be followed by a push upwards to new highs on positive macro/global/economic news. Especially a perceived 'solution' to the European crisis and positive economic data here in America will provide legs to a new market rally.

As astute investors have seen throughout history, being a contrarian is the surefire way to outperform the averages. When the market kept breaking new highs on flimsy premises I kept buying more VIX at multi-year lows. When the market rolled over and the commoners panicked I sold my VIX (VXX) for a nice profit and floated bids out on companies I wanted to own long-term at prices I was happy with. I have since been filled on many of my positions and am currently profitable in the majority of them.

For the medium term, I see catalysts that will provide the stock market legs will be:

1. The devaluation of the US Dollar, coinciding with a possible rally of the EURO and the eventual appreciation of the Yuan (Reminibi). The amount of US Debt is staggering and eventually we have to inflate our way out of it, and/or yields must go higher to reward the fools who would even consider buying US Debt.

2. The coming rotation out of bonds and into stocks, commodities, and other asset classes. It is widely known that bonds were one of the few asset classes to have record inflows in the face of the rally off of the March 2008 lows. Stock cash inflows have been tepid and the common investor still does not trust the market. Many postulate that bonds are the biggest bubble in the current environment, and common sense tells us that rates here in the US have no where to go but up. The question now is "when"; In a rising interest rate environment the last place you want to be parking your cash is in bonds. I expect a broad transfer of wealth out of bonds into either high-yielding, energy-related, defensive, or other equities that have pricing power over their products/services.

3. The pundits and headlines dominating the news sources constantly spout negativity, fear and doom. I have learned that when everyone else is bearish and negative on the markets in general, then you usually want to start your buying spree. There is a reason the average investor sells the bottoms and buys the tops. It is much easier for the human psyche to follow the pack decision, and possibly lose money, than it is to take the opposite side and fear being left out. This is a genetic trait that will not likely change soon. One must check their emotion at the door and use the analytical side of our brains. In essence, be a computer- base your decisions on logic, using all past, present, and perceived future stimuli, and then mix in a dash of your own 'gut' intuition to make the 'correct' trade. In addition, no one can time the market perfectly, but you don't have to, just be better than the other 90% out there.

And for a global/macro pairs trade that I am currently recommending for wealthy clients:

Long Chinese Equities (FXI, HAO, CSR, CHNG, CCM, ABAT, ZSTN)

VS.

Short US Government Debt (TBT, Short TLT, Short TLH, Short IEF)

I will go into further explanation, but that requires an entire article of it's own, check back soon........

Buy this Chinese Small-Cap

2010-05-25T11:06:00.000-07:00

The amount of panic and fear in the market currently has punished asset classes across all sectors and countries. Some of the losses may be justified; especially in banks and other high-risk, opaque, and complicated financial companies. However, many stocks may be getting punished unjustifiably, and right now the main stocks on my radar are chinese and energy companies. My focus today however will be on a small capitilization Chinese company that trades with a very low multiple yet still has great growth prospects. It also exists in a country not debt-ridden up to their eyeballs and with positive trade surpluses, as well as a population that are net savers. These positive economic factors for China are mostly forgotten in favor of 'bubble' speeches and inflation worries by MSM pundits and average advisors. And while I agree that their real estate market in particular is prone to overheating, I believe that their governments' ability to ignore populist/political cycles and focus on long-term economic strength will give China a unique advantage.

The ability of the government to ignore the mercurial wishes of the ignorant, "short-term solutions" commoners in favor of a sound long-term economic plan can be a powerful advantage. China also sports a burgeoning middle class and has the fundamentals to eventually overtake USA and Japan as the largest economy in the world. Once they start strengthening the Yuan they will allow their middle class to explode and to begin buying their own products. This will be the beginning of the shift that will usher in the new era of China as the new global growth engine, and the replacement of the mature, debt-burdened countries of the West.

The company that I have selected to write about today represents a significantly under-valued equity that offers value as well as great growth potential.

CSR - China Security & Surveillance Tech. Inc.

About: China Security & Surveillance Technology, Inc. (CSR) is engaged through its indirect Chinese subsidiaries, in the manufacturing, distributing, installing, and servicing of surveillance and safety products and systems and developing surveillance and safety related software in China. The Company’s customers include governmental entities, such as customs agencies, courts, public security bureaus, and prisons; non-profit organizations, including schools, museums, sports arenas, and libraries and commercial entities, such as airports, hotels, real estate, banks, mines, railways, supermarkets and entertainment venues. CSR operates in five segments: Installation Segment, Manufacturing Segment, Distribution Segment, software segment and service segment. Both the Software Segment and the Service Segment are in the development stage.

First Quarter Highlights:

First-quarter revenues increased 24.7% to $120.19 million versus the first quarter of 2009, driven by the rapid growth of demand for CSST's products and services in China -- First-quarter net income increased 64.0% to $3.28 million and diluted EPS increased 25.0% to $0.05 versus the first quarter of 2009
We delivered a strong first quarter. Momentum in the installation business continues, and execution across the Company is solid," said Mr. Guoshen Tu, Chairman and Chief Executive Officer of CSST. "I am particularly pleased with our robust growth in the government sector, driven by the safe city and e-city projects.Government expectations for security and surveillance products are on the rise. The opportunity for growth is substantial. CSST is well positioned to benefit from the growth of security and surveillance industry in China."
As of March 31, 2010, CSST's accounts receivable was $300.25 million, up from $251.60 million at December 31, 2009. The increase in accounts receivable was due to the fact that a majority of the first quarter projects were completed and respective revenues were recognized towards the end of the quarter, as a result of late Chinese New Year holiday. Customer payments were delayed into the second quarter of 2010, which has caused the increase of accounts receivable.
CSST's first-quarter growth was driven by the robust growth in the installation segment. Such momentum continued in the first quarter of 2010 and CSST secured several significant government agreements, notably in e-city projects. These agreements were key to propel the future growth of the Company. Highlights of key government agreements in the first quarter of 2010 included:
Phase one framework agreement for the Tongling City E-city development, with a project valued at approximately RMB 77 million (approximately US$ 11.3 million).
Phase one framework agreement for a major digitization project for the Dantu area of Zhenjiang City. As part of the Zhenjiang E-city development, the phase one project is valued at approximately RMB 250 million (approximately US$ 36.6 million).
Framework agreement for the Changchun City E-city development, with the total project valued at approximately RMB 1.5 billion (US$ 219.4 million).
E-city contract with Baotou City for RMB560 million (approximately US$ 82.0 million): The E-city solution will cover a number of areas, including city safety network, traffic management, public information
management, emergency response and energy saving and emission reduction.
Revenues from the above projects are expected to be recognized within the next two years. Additionally, CSST continues to maintain working relationships with local banks to provide us with revolving financing facilities in order to handle working capital needs.
"Mainland's demand for security and surveillance products and services continues to be strong, we are keenly focused on cost improvement as well as ongoing leadership and expansion in key areas expected to drive future growth. We will move forward in enhancing our capabilities in the security service business and continue to look at sizable government contracts," said Mr. Tu.

In Addition, CSR trades at 0.57 book value and has a trailing P/E of 4.46, as well as a forward P/E of 3.25. Shares have been under pressure partly because of a public offering overhanging the company; which will dilute shareholders to the tune of 15 millions shares. Most likely the company arranging the offering is shorting the stock in the open market and will effectively cover their position when the placement is finalized. A clever, but manipulative and unethical way for the slimeball hedge funds to make a quick dollar at long-term shareholders' expense.

However, the investors who have the nerve and patience to see through this tom-foolery will be rewarded when the offering is placed and the shorts are forced to cover. This company should at least trade at book value ($7.67), where it was just a month ago, representing a huge premium to the current price of $4.20. If you believe that this is a real company with competent management and is not a ponzi scheme or a company who is committing fraud, you should buy shares hand over fist. Either it is worth zero or it is worth it's book value (at least). I do not believe that this company is fraudulent, but the recent market negativity, the "dump everything China", and risk-aversion movements in the broader market offer prudent investors a chance to buy CSR at firesale prices.

Remember, you want to buy companies that have short-term setbacks at times when no one else does. Buying a company at the pinnacle of negativity is how you make uncommon profits above and beyond the average investor. Do not listen to the MSM pundits who tell you to 'buy high and sell low'. They work hand in hand with the sharks who feed off of the retail investors' ignorance and lack of conviction in their own due diligence. Buy half your position in CSR here and hope that you can buy your other half in the 3's.

Koss Corp is a small cap turnaround story

2010-04-16T17:45:00.000-07:00

Koss Corp. is a company that has been scarred by a recent imbezzlement scandal involving their former vice president of finance for a reported sum of $31 million dollars. This was done using various fraudulent transactions and involving elaborate accounting wizardry and the help of subordinates in the accounting department. At first glance, this seems to point out an ineffectual management that is lazzes-faire in their running of the company. However, when you take a further look into this scandal, you can see that this was a somewhat elaborate scheme pulled off by a high ranking executive and other accomplices. Sure the Koss family could've been more stringent on pouring over the financials themselves, but I think this very well could fall into the category of "fool me once, shame on you, fool me twice, shame on me." The alleged criminal, Sujata “Sue” Sachdeva, had worked for the company since 1992, and the family viewed her as a trusted partner in the business. Additionally, the amount of embarassment and financial losses that have struck the Koss family personally should ensure that precautions are now in place to prevent such a reoccurence in the future.

The Koss Corp. is a profitable company that has been a steady earner throughout the years, staying focused on their core business and their channels of revenue. In addition, my back of the napkin homework suggests that normalized EPS for KOSS should be in the range of $0.60-$0.80, giving KOSS a very attractive Price-to-Earnings ratio once this scandal's full impact is accounted for. Revenues have been relatively stable in the past and the company has been ran prudently for the most part by the management. You can feel confident that management is going to do their best to maximize shareholder value, as insiders (the Koss family) owns 69.81% of the company stock. Koss offers a tiny float of 1.2 million shares, so there is not a huge supply of shares to meet potential demand if the company succeeds in rebounding from this freak occurence.

CEO Michael Koss: “Our business and cash flow have remained on a solid footing since the discovery of a number of unauthorized transactions in December,” Koss said. “We are working diligently to restate our financial statements for the reporting periods affected by the unauthorized transactions as required in order to satisfy the company’s NASDAQ listing obligations, and its SEC reporting requirements.”

Also, with an effective current yield of 4%, KOSS offers a significant dividend to reward the patience of investors willing to wait for management to get the house in order.

"Koss Corp. said it will pay a regular quarterly dividend of 6 cents per share on April 15 to shareholders of record as of March 31. The Milwaukee-based stereo headphone designer and marketer (NASDAQ: KOSS) said it has made regularly scheduled quarterly dividend payments to its shareholders since Oct. 15, 2001. The recent financial issues related to a former executive’s alleged embezzlement of millions from the company won’t change that policy, said president and CEO Michael Koss.'

http://milwaukee.bizjournals.com/milwaukee/stories/2010/02/22/daily70.html?ana=yfcpc

About Koss:

Koss Corporation designs, manufactures, and sells stereo headphones and related accessory products. The company offers speaker-phones, computer headsets, telecommunications headsets, active noise canceling stereophones, wireless stereophones, and compact disc recordings of American Symphony Orchestras on the Koss Classics label. It markets its products under the Koss brand name through audio specialty stores, the Internet, direct mail catalogs, regional department store chains, discount department stores, military exchanges, prisons, and national retailers. The company also sells its products to distributors for resale to school systems, and directly to other manufactures. Koss Corporation distributes its products internationally through sales representatives and independent distributors. The company was founded in 1953 and is based in Milwaukee,

There are a couple of Lawsuits involving Koss Corp. summarized below:

Class Action vs Koss

Bronstein, Gewirtz & Grossman, LLC announces that a class action has been filed in the United States District Court for the Eastern District of Wisconsin on behalf of those who purchased or otherwise acquired stock of Koss Corporation ("Koss" or the "Company") (Nasdaq:KOSS - News) during the period between July 12, 2005 through and including December 21, 2009 (the "Class Period").

The Complaint charges Koss and certain of the Company's current and former executive officers with violations of federal securities laws. Â The complaint alleges that throughout the Class Period defendants knew or disregarded that their public statements concerning Koss' financial performance were false and misleading. Â Specifically, defendants made false and/or misleading statements and/or failed to disclose: (1) that certain Company employees had devised and carried out a scheme to defraud investors and divert Company funds potentially exceeding $31 million; (2) that the Company's financial statements and corporate bank account balances had been manipulated to conceal the diversion of corporate funds; (3) that, as a result, the Company's financial results were overstated during the Class Period; (4) that the Company's financial results were not prepared in accordance with Generally Accepted Accounting Principles ("GAAP"); (5) that the Company lacked adequate internal and financial controls; and (6), as a result of the above, that the Company's financial statements were materially false and misleading at all relevant times.

Koss Vs. American Express

Koss filed the suit Thursday in Phoenix, where American Express has business operations for its credit card unit. Milwaukee-based Koss (NADAQ: KOSS) is seeking compensatory damages of up to $20 million and unspecified punitive damages.Koss alleges in the complaint that former Koss vice president of finance Sujata “Sue” Sachdeva paid bills on her personal American Express card with $16 million in wire transfers from Koss bank accounts and $4 million in cashiers checks drawn on a Koss account at Park Bank in Milwaukee.American Express failed to detect and report the suspicious activity by Sachdeva, the suit alleges.The suit alleges that American Express officials had determined by August 2009 that Sachdeva, who was paying bills at a rate of $1 million per month, was embezzling the money from Koss Corp. However, American Express didn’t inform Koss Corp. executives until December of Sachdeva’s activities.

In summary, despite the negative clouds that currently surround the Koss Corp., I feel that there is value to be found by investing in the company at this point in time. The future ability to return to normalized earnings and continue their successful business model of creating positive cashflow will cancel out all short-term problems hindering the share price. The sustained dividend policy as well as the family committment to the success of the company are strong reasons for a higher future share price. This may very well represent a broken stock, but not a broken company, and with some patience, and faith in management, this investment could reward you handsomely.

Exxon Mobil: The Berkshire Hathaway of the Oil Patch?

2010-04-11T19:22:00.000-07:00

I believe that ExxonMobil Corp. shares currently trade at a fair value, and going forward they are well positioned to maintain positive growth and steady profits. Exxon is not an exciting stock, nor is it really a growth stock, or a high-dividend paying stock; essentially nothing about Exxon makes investors get excited and want to pile money into the company. But Exxon does have redeeming features: the management have been a good steward of capital throughout the years, they return value to their investors with dividends and share buybacks consistently, they have raised their dividend steadily over the years, they are committed to maintaining a conservative attitude on strategic acquisitions and capital expenditures, and they are not a volatile stock. I would almost go so far as to say that Exxon is the Berkshire Hathaway of the oil patch. They are not flashy, and don't chase the quick buck; rather they stay committed to a time-proven strategy that focuses on a good return on investment and creating highly predictable cashflows for a long period of time.

This is not to say that Exxon is perfect for everyone. I think young investors with a long investment horizon could probably do better off with something besides an integrated major, and even look into some of the E&P guys or some strictly non-conventional resource plays. For many of the older folks out there, I think XOM is a great value at it's current price. It offers a safe yield that will steadily increase over time, and a price that really does not fluctuate significantly with the broader market's gyrations. This is perfect for an investor looking for a stock with low volatility, but that has the ability to match inflation and still kick back cash to the shareholders. Exxon is not completely dull however, they have many smaller side-businesses that are focusing on developing technologies and future possibilities. Chemicals, bio-fuels, and new techniques for extracting non-conventional oil and gas assets, etc. Below are some notes I found interesting from their most recent conference call:

"As you are aware, on December 14, 2009, ExxonMobil and XTO Energy announced an agreement bringing together two organizations with highly complementary skills and capabilities. XTO has assembled a substantial high quality, unconventional natural gas and oil resource base in the U.S. They also have extensive technical capabilities and operating experience in unconventional resources.

These qualities, combined with ExxonMobil''s global unconventional gas portfolio, world class research and technology capabilities, industry-leading project management and operational skills and financial capacity will create a premier global unconventional resource organization. "

"Turning to our unconventional gas opportunities, during 2009, ExxonMobil increased its position in the Marcellus shale gas play through the formation of a 50/50 joint venture with Pennsylvania General Energy. The joint venture holds approximately 290,000 gross acres in the play and we are encouraged by the drilling results and production rates achieved so far. Including this capture, our total global unconventional gas acreage now stands at over 5.5 million net acres."

"During the quarter, the second phase of the Al Khaleej Gas projects started up in Qatar. AKG Phase II has the capacity to supply 1.25 billion cubic feet of natural gas per day to meet Qatar''s growing domestic demand. Combined with Phase I, which has been operating since 2005, AKG Phase II has increased the project''s total gas supply capacity to 2 billion cubic feet of natural gas per day.

Including AKG Phase II, Qatargas 2, Trains 4 and 5 and RasGas Train 6 in Qatar, the South Hook LNG receiving terminal in the U.K., the Adriatic LNG terminal in Italy, Piceance Phase I in the U.S. and Tyrihans in Norway, ExxonMobil completed eight major product start-ups in 2009. These projects are forecast to provide a combined net production of nearly 400,000 oil equivalent barrels per day in 2010.

The final Qatar LNG train, RasGas Train 7, is completing commissioning. Gas is now flowing into the facility and we anticipate first LNG in the coming weeks. This will be the fourth 7.8 million tons per year train brought online by our joint ventures with Qatar Petroleum. Including this train, we will participate in approximately 62 million tons per year of LNG capacity in Qatar."

"In December, ExxonMobil and our co-venture partners agreed to proceed with the Papua New Guinea LNG project. The project is an integrated development that includes gas production and processing facilities, onshore and offshore pipelines and liquefaction facilities with the capacity to produce 6.6 million tons of LNG per year."

Another feature that is attractive about Exxon is their commitment to not overpaying for assets. When do they go out and make huge natural gas purchases? When natural gas is at multi-year lows of course! Prudent management of company assets and capital is key to long-term value creation, something Warren Buffet knows quite well. Take a look at his comments on the Kraft and Cadbury tie up as an example. I for one do not accuse Exxon of overpaying for XTO. On the contrary, it is a calculated move to snatch up huge long-lived assets in an energy hungry world at very fair prices. I have no doubt that Exxon will leverage the synergies of both companies technological expertise and resources to pay back their purchase with interest.

Overall, Exxon represents a good value for investors looking for a safe place to park their money. Exxon has proven throughout the years that they are very conservative with the allocation of shareholder money, and will err on the side of caution when it comes to deploying that capital. This may prevent them from being first to the newest and greatest thing, but with their size and cash position (10+ bln), they can afford to wait and act when necessary. In addition, a consistently increasing dividend along with vast underlying oil and natural gas assets offer a nice hedge against possible future inflation.

EV Energy Partners (EVEP): A Long-Term Buy Candidate

2010-04-07T13:27:00.000-07:00

EV Energy Partners is a company that is situated for growth and increasing shareholder value in the future. EVEP is a relatively small company with a market cap of only $890 million, and has been actively acquiring natural gas and oil assets during the economic downturn of the recent past. Since going publc in the fall of 2006, EVEP has returned 65% to shareholders not including their distributions. The company has steadily increased it's distribution from $0.40 to $0.75 per quarter, and the CEO has stated previously that he is committed to maintaining the current distribution. At $0.75 per quarter, this issue currently yields north of 9% and offers a fantastic opportunity for growth in both share price and distribution as a long-term holding.

About EVEP according to Google Finance: EV Energy Partners, L.P. is engaged in the exploration, development and production of oil and natural gas properties. During the year ended December 31, 2008, the Company’s properties were located in the Appalachian Basin (in Ohio and West Virginia), Michigan, the Monroe Field in Northern Louisiana, Central and East Texas (which includes the Austin Chalk area), the Permian Basin, the San Juan Basin and the Mid-Continent areas in Oklahoma, Texas, Kansas and Louisiana. In 2008, the Company had estimated net proved reserves of 5.9 million barrels (MMBbls) of oil, 266 billion cubic feet (Bcf) of natural gas and 9.6 MMBbls of natural gas liquids, or 359.2 billion cubic feet equivalent (Bcfe). In May 2008, the Company acquired oil properties in South Central Texas. In August 2008, the Company acquired oil and natural gas properties in Michigan, Central and East Texas, the Mid-Continent area (Oklahoma, Texas Panhandle and Kansas) and Eastland County, Texas.

John Walker, Chairman and CEO said, "We are very pleased with our results for 2009. We completed one Appalachian Basin and two Austin Chalk add-on acquisitions, as well as two successful equity offerings to finance the acquisitions and increase liquidity. During the year, we reduced our debt by $165 million. To date in 2010 we have announced a sizeable Appalachian Basin acquisition, which we expect to close by the end of March, and completed a 3.45 million common unit offering to finance the acquisition and provide capacity for additional acquisitions."

Jon Walker has been a prudent and efficient CEO in his time with EVEP. He is a significant individual shareholder in the company and has taken many actions to increase shareholder value over the years. Among these are strategic acquisitions of valuable assets at good prices and conducting timely equity offerings to satisfy liquidity, growth and cash needs. Mr. Walker still appears to be confident in the future prospects for EVEP, as he just recently bought 10,000 shares to bring his total up to 113,000.

"CEO of EV Energy Partners L.P. (EVEP) John B Walker bought 10,000 shares on 02/09/2010 at an average price of $29.51. EV Energy Partners is an upstream Master Limited Partnership focused on acquiring and operating oil and gas properties within the continental United States." (http://www.gurufocus.com/news.php?id=84572)

Some excerpts of the most recent financial statement:
Full Year 2009 Results

Adjusted EBITDA and distributable cash flow for 2009 were $132.2 million and $75.5 million, increases of 11% and 20%, respectively, over 2008 primarily due to acquisitions made during the second half of 2008 and in 2009, partially offset by lower realized natural gas prices. Adjusted EBITDA and distributable cash flow are described in the attached table under "Non-GAAP Measures."

Production for 2009 was 16.5 Bcf of natural gas, 514 MBbls of crude oil and 768 MBbls of natural gas liquids, or 24.2 Bcfe. This was an 18% increase over 2008 production of 20.5 Bcfe, primarily due to acquisitions made during the second half of 2008 and in 2009.

Year-End 2009 Estimated Net Proved Reserves

EVEP's year-end 2009 estimated net proved reserves were 365.6 billion cubic feet equivalents (Bcfe), a 2% increase over year-end 2008 estimated net proved reserves. Approximately 70% were natural gas, 18% were natural gas liquids and 12% were crude oil. In addition, 93% were categorized as proved developed. At December 31, 2009 the present value of future net pre-tax cash flows discounted at 10% was $352.8 million and the standardized measure of our estimated net proved reserves was $351.5 million.

In summary, EV Energy Partners is a company that is heavily weighted in one of the asset classes I think is undervalued right now (Nat.Gas), as well as having exposure to oil which is valued with a higher premium. This should allow the company to maintain their currently solid earnings and distributions as well as increase revenues when natural gas prices rise. Being a smaller company, there is plenty of room for future acquisitions to increase production, assets, and proven reserves in the future. The CEO John Walker has proven to be a very capable manager of the company who has shown he is dedicated to increasing shareholder value ever since the shares first traded publicly. Mr. Walker puts his money where his mouth is and shows the utmost confidence in the future of EVEP by placing a significant portion of his personal wealth into company stock. EVEP clearly stands to benefit from the increased needs of the world's populations' increasingly insatiable appetite for energy. With the prudent management in place, strong fundamentals and proven reserves, and a very solid distribution yield, EVEP is a stock you can buy and hold for many, many years to come.

Nobody ever went broke taking profits

2010-04-02T11:07:00.000-07:00

I think the old market adage, "Nobody ever went broke taking profits" is a market truism that helps remind investors of the number one reason for being in the market: to MAKE MONEY. It is impossible to truly make any profit in the market unless you pull the trigger and sell some of your gains at some point. This of course leads to the problem of trying to 'time' or 'predict' the market, or making up an arbitrary profit target such as 25%. This is one of the first things my mentor told me when I 'chumped'(sold too early) a trade and took my gains way too soon. It has taken me years of trading to understand the importance of locking in gains on your profitable trades and on the flip side, cutting your losers short when they turn sour.

My personal style of trading involves targeting undervalued companies at a price target and I scale into my position when the stock reaches that price target. I typically buy in 3-4 separate purchases, ensuring a good overall price. I typically sell in at least 2 different orders as well, to try and get a good average price exit. The counter argument to my style is that you should just buy once and sell once at the best prices, but in my experience this is much easier said than done and I have had better results with using my scaling technique. I think it is too hard to time the market anywhere near perfectly, and using my technique will allow you more leeway to maximize your profits and limit your losses.

Another tactic I have been using more recently is to leave my profits in a winning trade in that stock. For example, If I decided to trade Google, and I was up 25% in three months time, I would sell my original investment and leave my 25% profits as Google stock. This does a few things for my porftolio and overall strategic allocation. Now I have shares of a company that I never plan on selling to add diversification and potential growth to my portfolio. For every successful trade I complete using this strategy I add more diversification and another potential long-term winner to my portfolio of stocks. One of my favorite types of investments to employ this strategy on are dividend payers that have a strong business model, which then provides you with a lifetime income stream to invest as you see fit. If you have a long investment horizon, then I believe this strategy would help you become very diversified across many sectors, industries, countries, etc as you reach closer to your retirement age. This would help you weather severe downturns and abrupt changes in any individual markets.

In addition, there is nothing saying you can't revisit a trade you have already successfully made, and currently hold "profit shares" of. If the price reaches an undervalued level again, you can re-enter that trade and attempt to 'capture' more shares. One of the side-benefits of this strategy is that you keep your eye on many different equities and investments that you at one time thought were a good buy, prompting you to at least do some homework on them if you see a future opportunity in that issue. An obvious side-effect of this strategy is that you are going to cash out your gains(hopefully) when the underlying stock/sector are hot, and leave your "profit shares" to potentially languish or even lose value as you look towards the next opportunity. This helps to act as a hedge over time and help discourage you from "putting all your eggs into one basket" and risk too much of your net worth in a single hot investment.

As a disclaimer, this is a strategy that I have found to be worth employing in certain instances and may not be right for everyone. Individuals have their own risk tolerances and trading styles that they need to find in order to be a consistently successful trader. I wish only to offer strategies and ideas to stimulate investors thought process and point them in directions that may be beneficial to them.

One last quick note on something I have found to be a solid market wisdom. When in doubt of whether or not to take profits, sell half of your position, and be patient. You can always put on the trade again if the market tells you to or if something fundamentally changes in the stock.

Kona Grill: A Sake Bomb and Sushi Story

2010-03-29T12:31:00.000-07:00

Kona Grill (KONA) is a unique dining establishment attempting to expand and become a popular dining chain in a tough economic environment. The drinks are great, the food is good, and the prices are fantastic at happy hour. My experience at the Kona Grill in San Antonio is that during happy hour it is so crowded you cannot fit in the restaurant. This obviously bodes well for restaurants in popular locations, and should help subsidize the underperformance of some restaurants in more challenged areas until they can be closed or business picks up. The question I have to ask myself is whether or not this exciting and trendy restaurant concept can withstand the test of time; and if the new management team in place is competent enough to make the business a consistently profitable one. This would allow them to expand their concept from the current 21 locations to many across the US and abroad- letting the shareholders rake in the phenomenal profits that we all dream of.

Investing in KONA right now is definitely a speculative play, but I think for a variety of reasons it could turn out to be a highly profitable one. The restaurant does have the street credibility and 'wow' factor that many other chains covet. The younger demographic of the population are enthusiastic about the restaurant and are loyal visitors. The sake bombs are fantastic and help facilitate your good experience, and for only $7.00 at happy hour you can't beat it (They are massive). Check out the company's menu here: http://www.konagrill.com/

My current belief is that this is a turnaround story that will take time to develop into a truly solid business; but with the potential for current shareholders to be rewarded handsomely for their patience. You are investing into the concept of what Kona Grill stands for, rather then the standard metrics and analysis by which most professionals quantify a business. Being a microcap stock with a market capitilization of only $30 million, a new management team in place, and many of the stores being the anchor in somewhat empty shopping centers, there is plenty of room for improvement in the business' fundamentals.

Another possibility is that the firm Mill Road Capital tenders another offer to buy the majority or entirety of the franchise. They have already tried twice, at much higher prices than where KONA currently trades, and are claiming there was mismanagement for not maximizing shareholder value:

"Kona Grill, Inc. (KONA, Free Analysis), owner and operator of 21 upscale dining restaurants across 13 states, is facing further pressure from Mill Road Capital, which owns 9.8% of the firm. The activist hedge fund sent a letter to the board on March 10th demanding the opportunity to make copies of certain books and records related to the resignation of Marcus E. Jundt. The move also follows several attempts by Mill Road to acquire Kona Grill at prices ranging from $10.75 in March of 2008 to $4.60 per share in May of 2009. While even its most recent offer was 101% above the closing price a day earlier, the company has seemingly refused to entertain the proposal and unlock shareholder value."

In addition, the latest conference call was not the most inspiring, but I believe management was being honest and down to earth in their discussion of the potential of the franchise. This includes candid disclosure of some of the biggest problems the firm has faced.

"The restaurants – some of the restaurants we've opened in the last 18 months have opened in newer real estate developments, where we may be the anchor tenant now and that was certainly not the intention when we went into those properties. So again, I think, as the real estate market continues to improve, which hopefully it will later this year. We hopefully, will be able to drive higher top line sales into those restaurants. Just really a factor of poor timing from a real estate standpoint on, where we located some of our more recent restaurants." - Marc Buehler – President and CEO, on the latest Conference Call: http://seekingalpha.com/article/187927-kona-grill-inc-q4-2009-earnings-call-transcript?source=yahoo

I think buying shares of KONA here at the $3.00-$3.50 level offers a decent risk-to-reward entry into a company that has high quality offerings and potentially huge growth prospects. The concept of offering healthy, delicious, and fun choices as well as an exciting and trendy atmosphere seems to be working in the locations that are fully developed, and bode well for their newer openings and initiatives. With an upturn in the economy, continued development and changing of the menu, continued use of popular promotions, and a CEO who truly wishes to unlock shareholder value; Kona Grill could be a growth stock with fantastic gains in the future.

Gastar (GST): A Natural Gas Growth Story

2010-03-25T11:41:00.000-07:00

Gastar Exploration Ltd. is an independent energy company engaged in the exploration, development and production of natural gas and oil in the United States and Australia. Its principal business activities include the identification, acquisition, and exploration and development of natural gas and oil properties. Its emphasis is on prospective deep structures identified through seismic and other analytical techniques, as well as unconventional natural gas reserves, such as coal bed methane (CBM).

Gastar is a relatively small company (mkt. cap. ~250mil), that within the past year sold off all of it's Austrailian assets in order to enhance their liquidity position and become essentially debt free. They are now focused on developing and proving their Marcellus shale play, as well as further developing their Bossier/East Texas and Powder River Basin CBM plays. It is my belief that with natural gas prices being currently depressed and their being a glut of supply on the market, GST is in a favorable position to ramp up production and increase proven reserves in time for the next rise in gas prices. Gastar is also trying to hold that $5.00 level which is crucial for institutional investors, and could help provide stability to the upward movement of the share price.

I think it is worth mentioning that Chesapeake has a sizeable investment with Gastar (16%), and the fund Palo Also Investors also hold a 9% stake in the company. Gastar recently changed their corporate governence structure to split up the Chairman of the board and CEO roles into two separate people, as well as adding additional independent board members. I believe this well positions the company as a potential buy-out candidate for a significant premium in the future. GST being bought out for over $10.00 in the next year or two is completely reasonable in my estimation, due to their strong balance sheet position and high-reward potential of their properties.

Below is a summation of their properties and resource plays:

Bossier/ East Texas Plays: Gastar has approximately 33,000 gross (15,350 net) acres in the Hilltop area of Leon and Robertson counties, about halfway between Dallas and Houston. The Company participated in its first well in the deep Bossier in 2001 with Anadarko Petroleum and has since successfully completed 16 out of 17 wells. It is continually improving the economics of the play by applying results of a 3-D seismic survey conducted in 2007 to better target well locations and through greater efficiencies in drilling, fracturing and completion over time.

For the first half of 2008, the Company produced an average of 18.6 MMcfe/day from East Texas. Gastar believes that it has as much as 425 Bcfe of total risked net potential from its East Texas leases in the Bossier and Knowles Limestone plays combined.

J. Russell Porter, Gastar's President and CEO, commented, "We are encouraged since the Donelson #4 encountered several strong drilling breaks and gas shows in the targeted lower Bossier formations. We have obtained certain log information that confirms the presence of the B5 sand and the top of the B6 sand, which are the sands producing in the offset Belin #1 and Donelson #3 wells. While the additional costs and delays to re-drill a portion of the well will affect our first quarter 2010 production levels and capital expenditures, these deep Bossier wells provide the opportunity for excellent rates of return and prolific production levels."

Link: http://finance.yahoo.com/news/Gastar-Exploration-Updates-prnews-3110048264.html?x=0&.v=1

Chesapeake Energy Corporation is a one-third working interest partner in Gastar's interest in East Texas, and it holds approximately 16.1% of Gastar's common shares outstanding.
Link: http://www.gastar.com/globaloperations.cfm?pagesect=deepbossier

Marcellus Shale Plays: The Marcellus Shale play is rapidly becoming home to one of the hottest E&P plays in the United States, with more than three times the areal extent of the prolific Barnett Shale play in North Texas. Gastar has acquired a total of 36,800 net acres in northern West Virginia and southwestern Pennsylvania near acreage held by the most active participants in the area. The Company's leases are strategically located in areas where it believes the Marcellus Shale is over-pressured and where operational issues such as water sources, water disposal and gas transportation will be easier to manage than in other parts of the play. Gastar has an average working interest of 81.5% and as operator will control the timing and approach to development. Link: http://finance.yahoo.com/news/Gastar-Exploration-Announces-prnews-3818447592.html?x=0&.v=1

Marcellus well data released to date by the largest operators in the play indicate potential estimated ultimate recovery (EUR) for horizontal wells of 3.5-5.5 Bcf per well. Based on these industry estimates, Gastar believes its acreage exposes the Company to as much as 1.4 Tcf of unrisked potential using horizontal development.

CEO on Gastar's first Marcellus vertical well: J. Russell Porter, Gastar's President and Chief Executive Officer, said, "These results are very encouraging and confirm Gastar's belief that thinner portions of the Marcellus Shale are capable of yielding excellent results. Â The James Yoho #1 encountered approximately 46 feet of Marcellus Shale and was completed with a single stage frac. Â Our longer term development plan for Gastar's Marcellus Shale assets will be orientated towards horizontal development, but this well demonstrates that excellent results can be achieved with vertical drilling in the Marcellus Shale."

Coalbed Methane - Powder River Basin: Gastar owns a 40% average working interest in approximately 55,000 gross (21,900 net) acres in the Powder River Basin of Wyoming. Primary areas of activity are the Squaw Creek, Ring of Fire and adjacent fields, which are located north of Gillette in an active drilling area. The majority of the remaining working interest is owned by the operator, Pinnacle Gas Resources, Inc.

Gastar currently has approximately 460 gross coalbed methane wells in the Powder River Basin. During the first half of 2008, our average net production from our properties in the Powder River Basin was approximately 5.5 MMcf/day. The Company will continue an active development drilling and re-completion program in the second half of 2008 targeting the Canyon, Cook, Wall and Pawnee formations.

This is a promising company with strong potential for future growth, and the ability to seriously expand resource production and shareholder value. Natural gas itself is an undervalued asset in my opinion, and investing in Gastar stock is a levered way to make money off of the inevitable rise in this commodity.

Time to buy some cheap insurance: VXX, VXZ

2010-03-11T08:50:00.000-08:00

With the VIX hitting multi-year lows recently, I think it is time to take a look at purchasing some insurance against market uncertainty and downside risk. The SPY is hovering around it's highs and very well could keep charging up higher. However, at this point in time I believe the downside risk of unaccounted for macroeconomic problems and potential negative surprises in equities could create a downward spiral that could shave 10-20% off of current valuations.

I am not a doom and gloomer, and I think that for the most part SPY is close to fairly valued, but perception is reality and the disaster of 2008 is still not erased from investors' minds. I do not believe it would take a black swan event to create a scenario where investors scramble to take profits, and/or buy the VIX for protection.

So my solution to investors who are mostly invested long at this point would be to scale into a position in VXX and/or VXZ (depending on your personal preferences) and start buying some insurance against surprise risk while the premiums are at lows. It was not so long ago when the VIX took off into the stratosphere as everyone scrambled for protection against the market crash. I feel this accomplishes two important things for your portfolio:

1) Hedges your long positions and helps you to protect your gains from the past year's powerful bull market.

2) Allows you the time to liquidate your positions you feel are most at risk to a market correction and lets you sleep at night knowing you will not be caught with your pants down by an unforeseen risk.

Disclosure: The VXX and VXZ are not long-term investment vehicles, they are short-term (3-6 month max) hedges against negative market surprises and increased perception of risks. The importance of scaling in to achieve a good overall price cannot be underestimated, it is crucial to establishing a good priced entry.

Del Monte Foods Company (DLM) is a Buy

2010-01-28T20:35:00.000-08:00

Del Monte Foods Company and its consolidated subsidiaries ("Del Monte" or the "Company") is one of the country's largest producers, distributors and marketers of premium quality, branded food and pet products for the U.S. retail market, with leading food brands such as Del Monte, S&W, Contadina, College Inn and other brand names, and food and snack brands for dogs and cats such as Meow Mix, Kibbles 'n Bits, 9Lives, Milk-Bone, Pup-Peroni, Meaty Bone, Snausages, Pounce and other brand names.

Del Monte is a company that has a very strong product mix of recognizable brand names that will continue to be consumed throughout the future. The company has a 100 + year history of established products that have saturated the shelves of both grocery stores and consumers shelves alike.

Their namesake brand of Del Monte has strong name recognition, with it's emphasis on quality fruits that forsake the additives, preservatives and artificial ingredients of other lower quality substitutes. They also have recently introduced a line of organic fruits and vegetables to capture some of that fast growing market segment. I think Del Monte's favoring of quality ingredients will only help establish a stronger brand identity in the future. The increase of information about the negative health possibilities of long-term consumption of mass produced preservatives, additives, and artificial flavors commonly found in canned/packaged foods will offer a tailwind for the company's success.

In addition, the pet product division is a major part of Del Monte's revenue source, and also offers several commonly identifiable products. The Milk-Bone brand is now interchangeable with the actual product, which bodes well for the sustainable success of the brand. Meow-Mix, Kibbles-n-bits and 9Lives are also very recognizable pet product brands that I think will continue to succeed in the future. Their strong mix of pet brands could act as a hedge against future economic problems- it is possible that people will cut back on their personal consumption of higher-quality products before they do the same to their beloved Fido.

The debt of the company was upgraded by Moody's and S&P at the beginning of January, as well as an upgrade from Hold to Buy from Deutsch Bank recently. Furthermore, with a P/E of 9.11 and solid fundamentals behind the company, I believe this stock is priced for solid future gains, and can be held for long-term price appreciation.

Some highlights of their last quarterly report:

Our second quarter results include net sales of $958.9 million, which represents growth of 6.4% over the second quarter of fiscal 2009. Increased volume in existing products in the Consumer Products segment was the primary driver of the growth in net sales.

Net sales in our Consumer Products reportable segment were $938.2 million for the six months ended November 1, 2009, an increase of $62.8 million or 7.2%, compared to the six months ended October 26, 2008. The increase in net sales was primarily driven by increased volume of certain existing products, primarily vegetables relating to increased promotional activity in the current period as compared to the year-ago period. Additionally, growth in lower margin South American sales contributed to the growth of existing products. Net pricing (pricing, net of the volume decline associated with price increases, or elasticity) and new product sales also contributed to the increase in net sales.

Net sales in our Pet Products reportable segment were $834.4 million for the six months ended November 1, 2009, an increase of $82.6 million or 11.0% compared to $751.8 million for the six months ended October 26, 2008. The increase was driven by volume growth (excluding the impact of elasticity) in existing products (primarily pet snacks) and net pricing (pricing, net of the volume decline associated with price increases, or elasticity). New product sales also contributed to the increase in net sales.

Cost of products sold. Cost of products sold for the three months ended November 1, 2009 was $649.7 million, a decrease of $16.8 million, or 2.5%, compared to $666.5 million for the three months ended October 26, 2008. Cost of products sold for the six months ended November 1, 2009 was $1,203.5 million, a decrease of $29.8 million, or 2.4%, compared to $1,233.3 million for the six months ended October 26, 2008. These decreases were primarily due to continued productivity savings, lower transportation-related costs and lower commodity costs, partially offset by higher raw product and packaging costs.

For the six months ended November 1, 2009, our gross margin percentage increased 7.9 points to 32.1%, compared to 24.2% for the six months ended October 26, 2008. Pricing benefitted gross margin by 5.5 points. This increase was also impacted by a 1.5 margin point increase related to the lower costs noted above and a 0.9 margin point increase due to favorable product mix.
A Quote from Del Monte's website:

"That's why we pick and pack all of our fruits, vegetables and tomatoes at the peak of freshness — to lock in the vitamins, antioxidants and essential nutrients, just like fresh fruits and vegetables. No preservatives. No artificial colors. No unnatural flavors. Just the great taste and simple nourishing goodness of nature.

For over 100 years, Del Monte has represented quality American foods. And today, Del Monte continues to bring nutritious, high-quality products to the tables of American families. No wonder Del Monte products can be found in nine out of ten households across the United States.

It's nutrition everybody loves."

Well, I sure can't argue with that.....

ZBB Energy: On Obama's Buylist

2010-01-08T22:58:00.001-08:00

Today Obama had a press conference announcing the allocation of 2.3 billion dollars to help stimulate job creation in the new 'green technology' sector of America. According to Obama, the awarding of the project money was oversubscribed threefold, and they had to select only the most efficient companies that had projects that were "shovel ready", as well those deemed to create a significant amount of jobs. One of the winners of this government stimulus was seen in this press release that first hit the wires at 1:28 EST:

ZBB Energy to receive $14.87 mln in clean energy tax credits - The Business Journal (Milwaukee) (1.54 +0.21) -Update

The Milwaukee Business Journal noted that The Obama administration announced Friday the awarding of $2.3 bln in stimulus tax credits for clean energy manufacturing projects across the country, including $33.5 mln for projects in Wisconsin. Another significant tax credit award, $14.87 million, will go to ZBB Energy, a Menomonee Falls-based manufacturer of large-scale zinc bromide batteries for alternative energy applications.

This is a significant long-term plus for ZBB, and shows that the government is supporting their efforts toward energy storage and efficient power management strategies. The nearly $15 million dollar tax support is just about the size of ZBB's current market capitalization of $19 million dollars, making this a very fortunate turn of events for a company in such an early stage of growth. The government's ties to this company do not end there however; on November 9, 2009, ZBB announced it had received an order for its systems on a government facility as a demonstration site.

ZBB’s Vice President Sales and Marketing, Mr. Kevin Dennis said, “This project is the initial 24hr photovoltaic powered system for a US government facility, that firmly places energy storage as the cornerstone for an integrated, renewable energy system that not only can shift energy outputs across the daily use and generation cycle associated with PV, but has the capabilities to send surplus power to either storage or to the grid, based on time of day or other priorities. Though this is only the initial demonstration system, the architecture used by SEI for this project is readily scaled up to much larger systems capable of producing, storing and managing renewable energy for entire sites.”

Mr. Mark Kelly, Vice President / Program Manager for the Energy Technologies group at SEI said, “ZBB’s system approach for integrating next-generation zinc-bromide energy storage units and renewable energy made this a straight-forward design and implementation for our engineering team that wasn’t available previously. The ZESS POWR system will make renewable energy more stable and valuable as a generation source.”

About ZBB:

ZBB Energy Corporation (ZBB) develops and manufactures distributed energy storage solutions based upon the Company’s zinc-bromine rechargeable electrical energy storage and power management technologies. The wholly owned subsidiaries of the Company include ZBB Technologies, Inc. and ZBB Technologies, Ltd. The Company designs, develops, manufactures and distributes energy storage systems and solutions under the trade names ZESS 50, ZESS 500 and ZESS POWR. The ZESS 50 and ZESS 500 energy storage systems are built using a process based upon the zinc-bromide rechargeable electrical energy storage technology while ZESS POWR hybrid power conversion system is manufactured by the power electronics partners utilizing their components.

In summation, with this new contract there is much to be excited about for the future of ZBB Energy Corporation. Not only do they seem to have an inside track with government officials' seemingly strong approval of their technology; but they are now positioned to take a much smoother path to profitability if they continue winning projects in the future. I took the opportunity to buy some shares in the $1.50 range today, and I believe this is a strong buy at current levels since the company's shares will now reach the $3.00 level within one years time.

Successful Active Investing Strategy

2009-12-30T22:18:00.000-08:00

I have been thinking on a very alternative investing strategy I first discussed with a friend at McCoy Business School at Texas State University.

This is a strategy that bases its success upon the individual investors stock selecting skills. The key to making this strategy effective is being able to profit from a trade more often than you lose. A higher success rate is directly correlated to higher future returns. The general idea is to invest in stocks that you think are good values, however, instead of cashing out all of your gains when you hit your profit target (20% is my first profit target), you leave all (or part) of your gains in the company’s shares. Now you forget about those shares existing (only sell in extreme circumstances) and move on to search for your next winner. You have locked in a long-term asset that basically cost you nothing, but will continue to contribute dividends, distributions and capital gains into your portfolio. There is no need to keep doing research on your holding, and no need to stay up at night worrying about the companies that are left in your holdings. Another beauty of this strategy is that with continued success, you will become increasingly diversified with your number of assets acquired. I would recommend attempting to profit on as many different assets, sectors, countries, commodities, etc. There is no need to be in a hurry with this strategy, take your time, sit in large amounts of cash, and slowly make profitable trades. It takes some superior trading skill to know when to give up on an investment rather than double down, or just hold tight. There will be times in the market where the profitable trades will roll in like an unstoppable tide, and other times you will be left high and dry. It is crucial to have a consistent plan that centers on being a conservative (read winning) stock picker throughout both times. There needs to be some individual discretion on knowing when to open up the floodgates or tighten up the hatch.

There are a couple helpful hints that I have developed to turn the odds in your favor for this strategy. The first is to buy your stock selections in no less than three separate purchases, never buy twice on the same day, and never risk more than 10% of your total account in one position. By scaling in you afford yourself more leeway to become correct in your purchase. If your first buy is the only one to get filled, then that’s fine-you profit on the trade. If all three buys get hit and you get stopped out the next day that’s fine too. If you can manage to be right more than 50% of the time on your investment selections, you will most likely be able to succeed in increasing your portfolio value over an extended time period. It is also important to never invest more than 10% of your portfolio in any one selection- in case disaster strikes. An Enron, Lehman, or GM moment would decimate your portfolio and leave you sobbing on the floor with a bottle of cheap tequila. Just don’t let it happen, nothing is ever a ‘sure thing’. Buying twice on a single day is being hasty and acting on emotion rather than logic. If your first buy target is that far out of the money within a trading day it is definitely best to sleep on it before buying more. If you still want to buy more the next day you will have an opportunity at a similar price. Being impatient in the stock market will get you your head handed to you.

There are some potential flaws I have come up with that could derail this strategy, and I feel should be mentioned. First is that if your amount to invest is small this strategy would be much more difficult to employ due to trading costs and their impact on your total investment, and the lack of ability to make scaling-in your purchases price-effective. In addition, if you are a terrible stock picker; than you are most likely doomed to a slow, miserable decline of your portfolio value. If there is a protracted bear market where equity values continuously decline for long periods of time, it will be near impossible to profit with this strategy. Also, if an individual does not have the time, knowledge, dedication, means of research, sound stock-selecting strategy, or lack of care for the international capital markets; you will most likely lose money. I do think a beginner investor could make this a profitable strategy with careful research and dedication to the plan; meanwhile learning to study equities, macroeconomic changes, asset selection, international monetary flows, fiscal/monetary/political actions on capital markets, and fine tune their own personal trading strategy in the process.

Float Rate Goldman Sachs Group Bonds

2009-12-27T22:08:00.000-08:00

These Goldman Sachs STRATS (Structured Repackaged Asset-Backed Trust Securities) (http://quantumonline.com/search.cfm) GJJ & GJS; are trading at very different premiums compared to their intrinsic value in my opinion. I think a risky investor could short GJJ and get long the GJS and make a handsome return for their efforts. The market values GJJ at a signficant premium over GJS, but when you dig deeper this premium is excessive considering their underlying yield potential is not significantly different for these two securities. Look up both of the STRATS prospectus through QuantumOnline.com, and see for youself...

GJS: SECURITY DESCRIPTION: Synthetic Fixed-Income Securities Inc., Floating Rate STRATS (Structured Repackaged Asset-Backed Trust Securities) Certificates, Series 2006-2, STRATS Trust for Goldman Sachs Group Securities, price to the public $25 per certificate. The underlying securities are the 6.125% Debentures due 2/15/2033 issued by the Goldman Sachs Group Inc. (NYSE: GS). The certificates pay floating rate distributions monthly on the 15th of each month to holders of record on the business day immediately preceding the payment date. The floating interest rate of the certificates will adjust for each distribution date and will be based on the weekly average of the three-month Treasury Bill rate plus 0.90% and are subject to a maximum interest rate of 7.50%. The underlying notes are subject to early redemption any time if the underlying security issuer redeems the underlying notes or if they cease to or fail to file periodic reports with the SEC. Certificate ratings at the IPO were A+ by S&P. Synthetic Fixed-Income Securities, Inc. is a wholly-owned subsidiary of Wachovia Corporation. For further information on the STRATS Trust Certificates, their interest rate calculations, and their redemption provisions see the IPO Prospectus by clicking on the ‘Link to IPO Prospectus’ provided below.

GJJ: SECURITY DESCRIPTION: Synthetic Fixed-Income Securities Inc., Floating Rate STRATS (Structured Repackaged Asset-Backed Trust Securities) Certificates, Series 2004-8, Class A-1 Certificates, STRATS Trust for Goldman Sachs Group, price to the public $25 per certificate. The underlying securities are the 5.25% Notes due 10/15/2013 issued by GoldmanSachs Group, Inc. (NYSE: GS). The certificates pay floating rate distributions monthly on the 15th of each month to holders of record on the business day immediately preceding the payment date. The floating interest rate of the certificates will adjust for each distribution date and will be equal to the Treasury Bill Average plus 0.65% with a minimum interest rate of 3% and a maximum rate of 6.5%. The underlying notes are callable by the underlying issuer at $25 plus accrued and unpaid interest if the issuer is obligated for additional amounts on the notes due to a change in the laws or regulations of any U.S. taxing authority. Certificate ratings at the IPO were A+ by S&P. Synthetic Fixed-Income Securities, Inc. is a wholly-owned subsidiary of Wachovia Corporation. For further information on the STRATS Trust Certificates, see the IPO Prospectus by clicking on the ‘Link to IPO Prospectus’ provided below.