5/31/2009

Dramatic run up justified?

Is the recent dramatic run up justified?

Link Bloomberg

<“The economy is still a scary place,” Steinhardt, 68, said in a Bloomberg Television interview. “My net feeling is that this rally doesn’t have all that much more to go and the dangers out there remain consequential.”
‘Danger Is High’>>

Spending too much effort trying to gain additional macroeconomic insight may provide little reward given how closely this topic is covered. I prefer to allocate my investing time finding new ideas or gaining additional understanding of my current positions.Trying to look 3 - 5 years out,for some ideas,and determining normalized earnings seems like a more profitable use of time.

Regardless of the direction of the economy I will continue to follow and buy micro cap value ideas. I’ve never given much weight to insider activity but instead relied solely on fundamental data. But at this time with economic uncertainty and forecasts changing daily correctly using insider transactions coupled with fundamental data may add additional value to the investment process. I’m adding this approach to assist in finding potential new ideas.

Link

http://seekingalpha.com/article/130846-how-to-interpret-insider-transactions

Some stocks I was buying this week; These are not recommendations but for me they were worth adding at that time to an existing diversified micro cap portfolio.

Brief points

RFIL:
High ROIC plus earnings yield combination, large share buybacks over the last two recently reported quarters. Solid balance sheet, stable dividend,clean capital structure, reversion to mean valuation

CLRO:
Strong fundamental valuation with exceptional insider buying over the past month, institutions such as Royce have been increasing their ownership

RAIL:
discount to normalized earnings several years out imo,
Mohnish Pabrai in the past talked about relevance of clean coal and that coal use will increase. He believes there is a 30-40 year bulge in railcar demand. Negative is that the business is unionized and narrow. Pabrai sold last year for a small profit given he had a better opportunity and thought the 40 year bulge may be off by 2 or 3 years. He made the correct move as the stock has a -63.63% 52 week return.

Source SeekingApha

UTMD:
Consistent and generous dividend yield, high ROIC and earnings yield with strong balance sheet , reducing shares outstanding, take over potential

Utah Medical: A Small Cap Gem

http://seekingalpha.com/article/131134-utah-medical-a-small-cap-gem

SIDG.PK:
VERY RISKY and although not a traditional value stock SIDG.PK does have additional attributes that can make the idea work, again very risky with no margin of safety. Good management team, Warren Kanders, recent large contract with world trade center to supply counter weights, seeking listing on major exchange, actively looking at acquisitions. Be careful as the auditors recently added a going concern statement due to loan convent violations.

Link to portfolio

2 comments:

Anonymous said...

awesome! thanks for the update!

ShadowStock said...

Appreciate your kind remarks

John