Monday, April 30, 2007

Festival of Stocks - 34th Edition

Welcome to the 34th edition of the Festival of Stocks. I want to thank George from Fat Pitch Financials for letting me host this weeks edition. It has been interesting to read all the entries I received.

1) Our first post comes from Tracy Coenen who authors a blog called The Fraud Files, where she seeks out those nefarious market particpants who deserve to be outed. Her post is regarding the latest earnings conference call by, a controversial company if there ever was one.

Read Todays' Earnings call for

Tracy does not fear the litigious nature of the management of this company.

2) Asif from brings us a review of the Indian IT industry with an emphasis on Tata Consultancy Services which he predicts may seek a listing on the NYSE at some point.

He reviews the four major Indian IT stocks, compares them on a fundamental basis, and gives advice on how to invest in that sector.

Read Tata Consultancy Services listing on the NYSE

3) I never knew there were so many Uranium stocks, and Babak of the Trader's Narrative gives a review of the fundamentals of this bull market, and a list of stocks with exposure to this sector.

The Stealth Uranium Bull Market is our third post in the festival of stocks.

4) Trent at The Simple Dollar describes his strategy in building his fortune step by step using the low cost, or in this case, no cost funds at Vanguard. The blog has many posts on using our limited dollars wisely.

Read A New Rebalancing Strategy: A Change in Vanguard and a Clear Definition of the Goal

5) Tyler at Dividend Money explains the virtues of buying high quality dividend paying stocks. He refutes the conventional wisdom that the baby boomer retirement wave will play havoc with the Stock Market and makes a compelling argument that the opposite will occur.

Check out Start Buying Dividend Stocks Now!

5) Steve Faber presents - Stock Investing – 4 Factors Precipitating Strong Growth in Stock Prices posted at Debt Free.

6) Jonathan presents Zecco Free Trades Broker Review, Part 1: Introduction and Opening Process Overview posted at My Money Blog.

Who knew there was a place where you could trade Stock for free?

7) Wolf Stone writes about Strathmore Minerals (STM: TSXV) (STHJF: Pink Sheets)

Posted at Canadian Economy, Commodities And Mining Stocks Through a Fundamental Lens - Wolf Stone.

8) Dr. Barry Burns presents "ME" posted at Top Dog Trading.

It is a blow by blow post of his recent visit to the floor of the Chicago Merc.

9) Thomas Ott presents Predict the S&P500, Win $100! posted at Neural Market Trends.

10) Silicon Valley Blogger presents 20 Typical Reasons To Sell Your Stock Or Mutual Fund posted at The Digerati Life.

She gives sound advice on how an investor can keep his emotions in check, and when to buy or sell Stocks and Mutual Funds.

11) Rick Konrad of Value Discipline gives us the lowdown on those so called "great" returns that Private Equity funds generate.

Go to Private Equity Envy?? to learn more about it. His post is based on the latest academic research by the Research Foundation of the CFA Institute,

12) Leon Gettler of Sox First discusses the recent changes at Hewlett Packard after the ethical scandal that engulfed the comapny last year.

Read about it at Fixing the leaks at HP.

13) Bill at Ask Uncle Bill presents the Bear Case for the Stock Market, including the dark side of the Private Equity Boom.

The post is at Taking Away The PunchBowl--Why The Stock Market Could Go Down "Big Time"

14) Last but certainly not least, George at Fat Pitch Financials provides investors with a tool called the Enhanced Annual Reports Feed, where one can get a feed of all 10-K's filed at the SEC.

Read how to sign up by clicking Enhanced Annual Reports Feed

Thursday, April 26, 2007

The Anguish of the Flipper

There is a great article on the AP wire today on the morning after hangover hitting "house flippers" in Clark County (Las Vegas). The article is at:

I am not one to get pleasure from others suffering but these people should have seen this coming. After all, many of us in the Value Investing genre in the blogosphere saw the signs of this housing bubble brewing. Many think that the housing market will turn up in 2008, but I think a multi year work out will be necessary.

Monday, April 23, 2007

BLMC - Adieu

(Update - I did finally make contact with BLMC. See my other posts regarding this company.)

So I tried my best to get a sit down with the Biloxi Marsh Land Company - a fascinating pink sheet company that owns tens of thousands of acres of marshland in Louisiana. I was at an investment conference in New Orleans and actually stayed in Metarie right near their headquarters. It was a strange sequence of events and I must recount it here for the record:

Early March - Called BLMC and asked them to mail information on their exploration and devlopment potential that they presented at NAPE in February. They asked me to send an e-mail so they would have a record of it. (I honestly think that I forgot to send an e-mail as I was overworked on other issues.)

March 20 - Sent an e-mail asking for a face to face meeting with anyone in management.

March 20 - Received a very prompt e-mail answer from IR asking me to call Will Rudolf, the CEO of BLMC.

March 21 or 22 - I called BLMC and asked to speak to Mr. Rudolf. I was told that he was on the phone with a shareholder and that he would call back. (This was the last contact or response that I had with BLMC)

March 27 - Sent an e-mail to IR asking for a face to face meeting and received no response.

April 4 - Sent an e-mail post conference and included a list of my questions. I have received no response to date.

I don't understand why they responded to my initial e-mails and then suddenly cut me off from further contact. My questions really weren't all that tough either. I am not a shareholder activist type of hedge fund and wasn't going to ask them to recapitalize and pay out a huge dividend, etc. It was the inconsistency of the response that continues to puzzle me.

Here are my questions that I had for them. It would be difficult for me to invest money in this company until they were answered:

1. Has all the operations recovered fully from the hurricanes? Are all wells that were producing back on line?

2. Is the Manti Group the only operator currently drilling on your land? And they have committed to a 5 well package? Are they on schedule?

3. Your land is on your books at cost – which is $234,000 – I know you would never sell but do you have any idea of the current value?

4. On your balance sheet you have categories called:

Other investment – $1,775,995 - was not there at end of 2005. What is this investment?

Marketable Debt Securities - $4,732,349 at cost. What type of bonds? Are they all investment grade?

Marketable Debt and Equity Securities - $7,183,412 – this is not listed under current assets but under “investments” indicating that it is a long - term type of investment. What are the details of these investments?

5. What sort of insider ownership is there in BLMC?

6. What is the relationship between BLMC and the Lake Eugenie Land Company? Is there a cross ownership? Why do you call it your sister company?

7. What is the effect on the title to your land if the marsh land should become completely reclaimed by the ocean?

8. Would you ever consider moving onto NASDAQ or the AMEX? If not, is that by choice or because that you don't meet exchange requirements regarding numbers of shareholders, etc.

Festival of Stocks #34

I will be hosting the 34th edition of the Festival of Stocks. Thank you George at Fat Pitch Financials for allowing me to do so. Please use this form to submit entries and follow the guidelines here.

Monday, April 9, 2007

Central Securities Corporation

It happened again. I was researching another stock and I stumbled over an even more interesting stock. This one is called Central Securities Corporation, a closed end fund that was organized on Oct 1, 1929 – what great timing. The stock trades under the symbol CET and if its annual report can be believed has beat the S & P 500 for the last 20 years. More info on this one at:

Nabors Industries

Is it time to buy Nabors Industries? Nabors is one of the premier land drilling companies in the Energy Sector with hundreds of rigs in its fleet. So here is the debate. The stock has sold off from a peak of $41.35 in January 2007, down to its current price of around $30 a share, which represents a drop of 34%. There is no doubt that there is a slowdown in the land drilling market. Day rates have come down off their peak and utilization is dropping as well as rigs are released. Is this the start of a long down cycle as in past years?

The optimists believe in what is called the “snapback theory,” which states that as rigs are released and drilling activity slows, natural gas production will drop sharply cutting inventories and boosting prices which will in turn lead to a rebound in drilling as the economics improve. The reason for this is because a large proportion of the wells drilled in North America in the last few years are unconventional wells, which typically have high rates of decline in the first year.

There seems to be too much risk for me to jump in now. I would rather wait for the 100-year flood to happen. What do I mean by that? The Energy sector is periodically rocked by catastrophic events that cause panic and investors run for the exits all at once. Energy stocks are also owned by a lot of fast money accounts, which will accelerate this. In the last two cycles, Nabors fell 77.5% (1997-1998) to $5.37 a share, and 70% (2001) to just under $10.00 a share.

I was at the Howard Weil conference last week and attended a breakout session with Gene Isenberg of Nabors. He provided no reassurance during the meeting. He indicated the following:

-That Canada was going to have a dismal year.

- He wouldn’t comment on leading edge day rates and deferred any discussion of it until the conf call in May.

- Older rigs would not be cannibalized for parts (which would reduce supply and help rates) unless they were unsafe.

- He was open to “concessions” on contracts, which means that they would cut rates on existing contracts if the operators agreed to extend the term or pick up more rigs.

- In short, he did nothing to reassure investors that things have bottomed out. Now the company is in much better financial shape than in previous cycles so don’t look for the stock to bottom in single digits. My buy target is $20 a share. I will admit that Nabors is looking cheap on price to EBITDA and price to sales vs. previous cycles, but keep in mind that both sales and EBITDA in those ratios are trailing not forward looking and thus will be coming down which will increase the ratio.

Sunday, April 1, 2007

Winners of the New World? (Part I)

So there is this CNBC commentator named Jim Cramer. Everyone knows him. He is richer than I am and probably smarter than me and perhaps even better looking. Once upon a time he wrote a piece at the height of the Internet Bubble called "Winners of the New World. (2/29/00) " It was a list of his top ten stocks - must own stocks for the new millenium. Here they are:

724 Solutions - SVNX
Ariba - ARBA
Digital Island - ISLD
Exodus - EXDS INSP
Inktomi - INKT
Mercury Interactive - MERQ
Sonera - SNRA
VeriSign - VRSN
Veritas Software - VRTS

There were some interesting quotes in the article about these must own stocks:

"We are buying some of every one of these this morning as I give this speech. We buy them every day, particularly if they are down, which, no surprise given what they do, is very rare. And we will keep doing so until this period is over -- and it is very far from ending."

"We don't use price-to-earnings multiples anymore at Cramer Berkowitz. If we talk about price-to-book, we have already gone astray. If we use any of what Graham and Dodd teach us, we wouldn't have a dime under management. "

Well guess what Jim Cramer? Tweedy Browne didn't forget about what Graham and Dodd taught them and they have quite a few pennies under management.

So I am going to waste some time and track every one of these stocks that were "must own" stocks from 2/29/00.

724 Solutions - SVNX

This one now was bought out by a Venture Capital firm for $3.34 per share after peaking at $200. The chart on yahoo only goes back to 2001 so it may have been even higher.

Ariba - ARBA

Ariba is still around and now trades at around $9.25 after peaking at $1012.50 a share. No, this is not a misprint as the stock had a 1 for 6 reverse split in 2004. And this guy has his own show?

Digital Island - ISLD

Alas, I can find no record on this one on either Yahoo or Google. It has been lost to history.

Exodus - EXDS

I am having trouble finding this one too - there is a mention of an Exodus Communications that in September 2001 filed a voluntary petition for reorganization under Chapter 11 of the United States Bankruptcy Code.