H J Mann

I wrote not too long about about buying Wachovia.  I got in just under $17, thinking that the worst of the carnage was over. If you followed me, you followed me off a cliff. Hitting an intraday low of $7.80 on July 15, it was a pretty awful call.

Luckily, it had an extremely speedy recovery, getting back into the $18 range earlier this week. Seeing that this was an unbelieveably aggressive move up for any stock, and that the indices for banks in general had jumped historical leaps in just a handful of days, the writing was on the wall that at least for the short term the way forward was down. So I took the opportunity to cash out for a very small profit and look for a new, much lower entry point.

Well goody for me. Now to the point: the fact is that this is not the first time I have completely missed calling a bottom in a troubled financial. I missed massively on AIG and on Citi as well. So how did I miss so badly on these two and yet hit so perfectly on Countrywide? One word: patience. I started watching Countrywide for a buy opportunity right after BofA bought in at $18. But I never saw the opportunity literally until the day I bought it at less than $4.50. And even then it was speculative, but I figured the fall from $4.50 to $0 isn’t too far so it was worth a chance.

So goes Wachovia and Citi and AIG. These stocks have put in new bottoms substantially lower than what I thought possible, so there is new opportunity to trade them. But this is going to require substantial patience and the ability to say no if conditions aren’t exactly what they should be.

I am still unsure on how to play Citi and AIG, or whether to play them at all. But with Wachovia, I think the chaos made clear the potential opportunity. On Friday, Wachovia again got smacked with a downgrade, so perhaps it will run all the way down again, and I am waiting for the new entry point. For me, if it gets under $10, I will take another look at it, with the notion that if bumps up a few bucks I will take a profit, and if it goes below $8 I know to get clear and reset. 

For long term investors, Wachovia may languish for a while, but it’s not going under. If anything, there are a number of majors with the wherewithal and the room under the deposit cap who would love to have Wachovia’s footprint (think JPM Chase). So if it approaches that 52 week low again, it’s worth a look.

As for Wachovia’s new CEO Robert Steel buying 1 million shares at $16? In the short term, this is going to work out to be about as brilliant a move as BofA investing in Countrywide at $18. Take my personal experience here, and for heaven’s sake, do not use that price as the measure of a good price to get in. The opportunity will come much lower than $16, trust me. Alas, I do not think Robert Steel a fool. And while yes, this purchase serves as a vote of confidence in the company he is running, I also believe he sees from the inside that he can right this ship and expects that his investment will pay him back handsomely. And with patience, you can do even better.

Finally, you long term investors just remember the most important thing, which is the thing that I forgot and barely escaped getting burned: that what started this whole mess for these institutions is the housing crisis. And until that improves, the financial condition of these institutions won’t improve either. Be mindful of where we are overall in working off housing inventory and writing down losses related to housing. Only when this resolves will these stocks become something less than highly speculative.

Disclosure: As of publication I am have no position in the stocks mentioned here, but positions can change at any time. I am not a professional, but I am trying this at home. It is highly recommended that you consult a licensed financial advisor or broker before making any and all investment decisions.

Tags: Business And Life // Add Comment »

I have written here previously about shorting Amazon, and if you played the trade and held on long enough, it paid off nicely.

But with this recent earnings report, I think my original assessment of Amazon was wrong. I think that I have somewhat underestimated their ability to get it done in a very tough consumer environment.

With the out-of-whack P/E and investors seeking the shelter of stability, I don’t see this making a run to $120 or even $100. But at the same time– without a catastrophic catalyst– I don’t see a drop to $50 or even $60.

I think for the time being Amazon is going to be stuck in a range, and for those daytraders out there who pay attention to the intricacies of its intraday movements, there will be the obligatory daily ups and downs of a few bucks that can be played. But for the investing crowd, I see this languishing mostly in place until the economy improves and the stock goes up, or the economy doesn’t and Amazon eventually misses estimates and goes down.

Either way, the pending results will be telegraphed… the macroeconomic indicators will show improvement before Amazon makes any real move, so there will be plenty of time to get in. In the mean time, I am on the sidelines in this one, except if time permits for the occasional day trade.

Disclosure: As of publication I am have no position in the stocks mentioned here, but positions can change at any time. I am not a professional, but I am trying this at home. It is highly recommended that you consult a licensed financial advisor or broker before making any and all investment decisions.

Tags: Business And Life // Add Comment »

“I am, I fully grant, a phenomenon, but not because of any speed in composition. I asked myself the other day, ‘Who else, on so many issues, has been so right so much of the time?’ I could not think of anyone.”  – William F. Buckley, 1986

$100 Oil: Correct. I said we’d be there before May 2008. We got there intraday in very early January, and closed above $100 on February 19. Now, what we’d all give just to see oil back down at $100.

$100 Oil Stocks: Wrong. I said that Conoco and Exxon would cross the century mark by the end of March.

The Crocs fad was fading and with it would the stock price:  I said this when CROX was at $48. The stock is now hovering at $10.

Starbucks does not have room to grow: Correct. On January 7, Howard Schultz reassumed the CEO spot at SBUX and immediately announced a plan to close underperforming and cannibalizing locations. This bolstered the stock price, but a short the day I wrote about Starbucks followed by a cover when Schultz retook the reins resulted in a 25% profit. Moreover, Starbucks said on April 23 that  the economic environment was the “weakest in our company’s history.”

Countrywide found it’s bottom in the $4.50 range: Correct. Two days later, Bank of America bought Countrywide out for $7.16 per share, if you bought in just above the bottom at $4.37, this yielded a minimum of a 60% profit in just two days. It has since gotten back the $4.50 range, but I would not mess with it now.

Citi was good to go at around $26.50. Wrong. The promise of massive layoffs and writedowns send shares into the teens. Still believe its too big to fail, but staying away for now.

Merrill Lynch found support at $47.50. Yes and no. It found it twice, and on the third try plummeted through the floor. It has not held that level again convincingly since. 

Merrill Lynch is a buy on dips into the $40s. Right. In separate posts, I wrote about this twice, and both times the trade worked out. Merrill would dip into the high 40s and return to highs above $55. It happened a third time on March 4, with the stock hitting an intraday low of $47.98 and rallying immediately. A nifty trade if you played it. Again, on the third plunge, it fell through the floor, which was your signal to get clear. It is well below the levels where anyone should be holding. I am steering clear.

Yellow Roadway looks good at around $14.30. Yes. Dipped lower, then ran to around $20.

Mastercard looks like a buy at around $179.00. Right. It dipped to the low $170s first, and then screamed to above $220. That is a 25% gain really quickly. If you were holding, I hope you took at least some profit. If not, no worries. It dipped to the mid $190s and ran back up to over $300. Today, sitting pretty in the $280s.

Amazon looks like a short at around $82.00. Right. After I wrote this, it never saw this level again, and dipped into the 60’s, a nice gain in such a crappy market. Wrote about this again in April. It went from $80 to around $70… and quickly back over $80. I would stay away from it altogether.

Blackstone looks like a buy at around $16.75. Right and wrong. It got hammered into the $13 but now trades at more than $18. I still say that anywhere below $20 is a good long term play.

AIG looks like a buy at around $46. Right and wrong. It made a speedy return to the mid 50s, and has since absolutely collapsed into the low $30s. The issue: substantial exposure to the UK mortgage market, which isn’t faring much better than our own. I am still watching this for a long-term entry, but am in no hurry.

Buy Wachovia at $17. So far so good. Just a handful of days and its up about 8%.

Tags: Business And Life // 1 Comment »

I bought some Wachovia today.  I have been watching it for a while… man has it been pounded. Let me tell you what tipped it for me: this article saying that Goldman has been hired to advise Wachovia.

Goldman’s involvement is a clear signal to me that they are shopping a buyer. Goldman can help value and negotiate the deal. These advisory services are what Goldman does, and they do more of this than any outfit on the planet. 

Even if they don’t get bought, it is so knocked down that if your timeline is a year or more you will be rewarded handsomely, and at this point, with very minimal downside risk.

Disclosure: As of publication I have am long WB, though my positions may change at any time. I am not a professional, but I am trying this at home. It is highly recommended that you consult a licensed financial advisor or broker before making any and all investment decisions.

Tags: Business And Life // Add Comment »

Very recently I took a new short position in Amazon. I had written previously about shorting Amazon, and if you played it, it returned a tidy sum in a relatively short period of time. Amazon earnings are out tomorrow. What I said previously is every bit as true today: Amazon is priced for perfection, and when they cease to deliver it, the stock will get clobbered. My guess is that they will provide an OK report and then offer lousy guidance. The stock will be at $65 within two weeks.

Disclosure: As of publication I am short AMZN, but positions can change at any time. I am not a professional, but I am trying this at home. It is highly recommended that you consult a licensed financial advisor or broker before making any and all investment decisions.

Tags: Business And Life // 1 Comment »

From last week’s Olympic Torch Protests in San Francisco. Hang in there… I mean, was it over when the Germans bombed Pearl Harbor? NO!

Photo credit here

Tags: Business And Life // 1 Comment »

So when I started writing this thing I said that I would write when I had something to say. The last six weeks have been a whirlwind in my personal and professional life.  While I have been napping, indeed the world has not stopped turning. So I will share some commentary now, and look for more entries soon. 

Headline: Elliot Spitzer’s political career blows its wad, goes limp. I know, too easy. At least I didn’t make some comment about ‘living by the sword.’ We all know the story, so two things: First, what a complete idiot, paying for prostitutes with money from a personal account. While you’re at it why not write your coke dealer a check? Ever heard of a Visa gift card in the amount plus four percent for the ATM fee? Or two or three for those larger amounts when any old hooker just won’t do? There’s a CVS with a gift card kiosk not 200 feet from the front door of the Mayflower hotel (no promotional consideration has been paid by CVS, by the way).   

Second, let’s cut to the chase about what really happened here. This guy is a sanctimonious ego-maniacal prick who spent years jamming up the trail of the guys on Wall Street. Did you think these guys would let bygones be bygones? When these same guys so vehemently supported his run for Governor, it was not because they we’re happy to get him of out of the AGs office. Oh please, as if they were scared of him. No, it’s because you can bet they already knew his proclivities for behavior unbecoming–like four-figures per night call girls– and they knew this or something else would eventually catch up with him. They hoisted him to the top of the mountain because from there the whole world could see his head being lopped off, and know without a doubt who is really in charge. True, Spitzer is a cautionary tale about out-of-control hubris and and why you shouldn’t cheat on your wife. But he is more a brutal example of what happens when those who think they run things are brought into check by those who actually do. 

Since I’ve been out, the market has taken one giant step sideways. We’re not too far from where we were when I dozed off. If you bought Blackstone or AIG when I said, you made a nifty short term profit. Expect the market malaise to continue into June. But some stock opportunities are cropping up. Stay tuned.