Ruthless trader

Discussion in 'Journals' started by Jack Haddad MD, Jun 2, 2006.

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    The above 6-month chart on TSO is very interesting. Note the inverse head-and-shoulder pattern which spanned from Feb 15 to March 8. This has cuased the stock to propel to a a 52 week high of 75. Thereafter, the stock has recently trended down to test the intermediate term support of 65, but was not successful in breaching the 6 months support of 60.75.
  2. Intel's restructuring plan which was announced last April is a conglamerate move-- the most significant change since the 1980s-- When the giant chip maker abandoned its main memory chip business to focus on microprocessor chips. The company's broad revamp is aiming for savings. It's a methodical and strategic exercise, rather than an across-the-board cut. For example, the company may look at exiting their high-end microprocessors, dubbed Itanium, on which intel has spent well over 1 billion to develop since 1994. It might also unload its flash memory and communications businesses-- which are all losing money.

    Theyre also increasing their long-term investment design in microprocessors. The company is accelerating the timetable for introducing a major design change to its chips to every two years; in the past, Intel has taken 5 to 6 years to introduce a major change to its chip architecture. It's last major design, Pantium 4, was introduced in 2000. Design changes are more than just simple speed upgrades; rather, they involve a complete redesign of how a chip operates. The company will employ several engineering teams that work on different generations of chips in parallel. Currently, Intel has more than 1000 people working on designs for a new kind of product, the Ultra Mobile PC. These are small portable computers, such as Samsung's upcoming Q1, that weigh less than 2 pounds and run the full windows operating system. This new development approach explains why Intel has increased its work-force so dramatically to 103, 700 employees, compared with 87, 100 a year earlier.

    Ladies and gentlemen, this strategic move in development is likely to put heavy pressure on rival AMD, which has one-tenth the number of employees that Intel has. I have in the past interviewed fab supervisors, and senior engineer managers at Santa Clara headquarters who told me that Intel executes best when it's under pressure or when it's under a level of danger.
  3. In the first quarter of 2006, Yahoo generated 29 cents for each daily page view, up from 25 cents the year before and double the level of 2003. Yahoo's search results and internet advertising business has been the recent talk in an extensive presentation betwen Yahoo's executives and analysts. A new advertising technology platform, which will be available towards the end of this summer, will be more lucrative as Yahoo delivers more relevant advertising to people who have used its search engines.

    Moreover, Yahoo's new geo-targeting capabilities in the new ad platform could make it more competitive than Google. Yahoo would increase the quality of its search results by incorporating the knowledge of its users. Yahoo siad theyre going to include information from, (its social bookmarking service), and flickr (its photo-sharing site) into its results.
  4. Fundamentally speaking, AApl sold 8.5 million ipods in its fiscal second quarter-- a 60 percent leap from the same period a year ago. Also, Apple's computers are less than 5% of the total US market; that said, can you begin to phantom the remaining growth potential?! Accoring research firm NPD, AAPl gained more market share by climbing frmo 71% in december of 2005 to nearly 84% in march of 2006. No wonder why they have already spent 120 million on a new data center to support the second campus that they bought for nearly 500 million. This campus will house as many as 3, 500 employees, said their CFO. Their plan to build a 50-acre second campus signals that their frowing dominance, particularly in the digital era, shall continue.
  5. Moreover,traditionally, Apple has always found a strong customer base among school districts and universities. However, with Apple's new MacBook laptop containing Intel's chip, they are beginning to gain in the US education market. This move will dramatically boost sales of Apple's sales-- which make up less than 5% of the US market.

    The technicals may seem ill momentarily, but this is one stock that I would be afraid to short.
  6. Furthermore, I wonder how their energy chips (Woodcrest, Monroe, and Kenroe) are going to pan out when theyre released in August, September, and November, respectively; theyre supposed to be 40% more energy efficient and much faster then their current ones.

    I've been in close touch with several of their top level managers and employees. They all concede that AMD has finally gained on their competetive turf-- both a cost as well as a technology advantage! INTC"S Santa Clara Fab Building, known as D2, must go! The company admitted that its operation is too costly and too expensive to re-tool.
  7. Tol is particularly attrative at the levels because it will most likely be snatched by another company. And the CEO indicated so several weeks ago in a Barron's article. I like the housing sector because trading at 6.5 times 2007 estimated earnings is a steal! I'm carefully looking to spot consolidation/basing so that I could establish a longer hold core. The hourly chart has strengthened, and I'm so tempted to buy on strength at these levels. Shorterm support may hold at 27.50.
  8. According to James Welsh, The Financial Commentator, in the nest 2 years, 25% of all mortgages will be increased with some as much as 50%! I'm beginning to see that here in the Silicon Valley, Santa Clara County. 15,670 default notices were issued in the past 3 months to homeowners-- very freightning. Also, the default rate in Santa Cruz, CA has risen to a scandelous 62.8% from the same period last year, according to county records.

    It's a shame how banks lured everyone into a borrowing spree with teaser rates and other promotions. Almost everyone borrowed agianst their primary home to either purchase a second investment home, pay credit card bills or renovate their homes. In sum, the consumer is over-extended with debt. I keep telling everyone that thus far we had one bubble-- which is the collapse of the nasdaq in 2000. We still have 2 more-- the housing bubble and the consumer debt bubble!

    Contrary to the above statistics, hedge funds have been buying into oversold distressed homebuilders. According to Research Director at Rochdale Securities and SAC Capital, hedge funds are taking stakes in homebuilding stocks. Tontine Partners took a 9.98% stake in Beazer Homes USA , just six weeks after the Atlanta builder announced an aggressive 200 to 250 million share repurchase program for 2006. Others with outsize cash hoards, up to 10% to 14% of their market caps, are following suit. Centex, Toll Brothers, Brookfield Homes, and Pulte Homes have all announced plans to buy back shares.

    I still think the entire sector is severely undervalued at 7 times 2006 estimated earnings. That said, trading opportunites with TOL, and HOV are presenting an excellent set-ups.

    Comments? Opinions?
  9. Since 2003, Hansen's shares have risen from 2 to 130. And recently the stock skyrocketed to 183. It was 130 on April 18, 2006, little over a month ago. Earnings and revenues have also soared, from 28 cents to an expected 3.95 this year! For the three months ended 31 March 2006, Hans's revenues totaled $119.7M, up from $60M. Net income totaled $21.1M, up from $8.8M.

    I particularly like the fundamentals of the stock, especially the 5 -year annualized revenue growth rate which stands at roughly 37.5%, and the EPS growth rate at almost 70%.

    Technicals are very bullish, more so on long-term basis. The stock is 23% above the 50-day EMA of 148.52, and above the 13-day EMA of 176.00 as well. The 1-month chart shows support at 174.50 However, that gap on May 9, 2006 from 153 to 165 is a little concerning... But shorts keep piling on this stock without any success. They have pointed to Hans's lack of sophistication in its dealings with Wall Street as a reason to sell it short. The current short float is at almost 23%, 3.75 million shares. I attribute Hans's success partly due to their limited coverage on Wall Street (only one analyst follows it) and also management's refusal to have an investor relations department. I attribute these gestures to the company's focus on business operations rather than stockholders' satisfaction. I'll be looking to buy shares, should an opportunity presents itself.
    #10     Jun 2, 2006
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