DARK HORSE HEDGE – Shorting Suntrust & BooKS
by ilene - September 2nd, 2010 12:26 am
DARK HORSE HEDGE – Shorting Suntrust & BooKS
By Scott Brown at Sabrient & Ilene at Phil’s Stock World
The markets appeared to like the calendar change from August to September today as all three major indexes close with +2.5% gains. The S&P 500 closed the day at 1080, almost exactly on the 50 day MA. This provides a good opportunity for DHH to replace a couple of SHORT positions that were closed to take profits while the market battled the support line at 1040.
We are going to go another round with Suntrust Bank (STI) which already provided us with a +11.2% profit the first time around. STI closed up 5% today at $23.65, earning it a spot on the SHORT list again. Joining STI is bricks and mortar book seller, Barnes & Noble, Inc. (BKS), which closed today at $15.63, up +3.24%, after reporting a wider loss in the second quarter. We are not sure what there is to like about widening losses. Ranking at #9 on the bottom of the Sabrient Outlook rankings provides plenty of reason to recommend adding BKS as a SHORT.
SELL SHORT STI – Again – Thursday, September 2, 2010 at the open.
SELL SHORT BKS – Thursday, September 2, 2010 at the open.
These additions to the DHH virtual portfolio establish the tilt SHORT called for when the S&P 500 trades below both the 50 and 200 day moving averages.
Chart by FreeStockCharts.com
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Dark Horse Hedge – Shorting HUSA, Again
by ilene - August 18th, 2010 11:47 am
Dark Horse Hedge – Shorting HUSA, Again
By Scott at Sabrient and Ilene at Phil’s Stock World
Short Houston American Energy Corp, HUSA, $10.54
We are going to re-enter our SHORT position in Houston American Energy Corp (HUSA) today. After shorting HUSA once, and covering last Friday before the earning’s bounce, we continue to believe the company is overvalued with a 327M market capitalization. Sabrient has a hold rating on the stock.
We wrote on July 1, 2010:
Houston American Energy Corp. engages in the exploration, development, and production of natural gas, crude oil, and condensate. It primarily focuses on properties located in the United States. Last Monday (June 28), Sharesleuth.com published an article about HUSA expressing a number of concerns, including concerns about the management team’s history, questionable valuations on the Columbian estimates, and significant ties to people with prior SEC troubles. From Sharesleuth.com:
A SPECTACULAR DEAL?
The gains are linked largely to Houston American’s deal last October for a 25 percent interest in a Colombian oil prospect controlled by SK Energy Co., one of Asia’s biggest producers, refiners and marketers.
Houston American said in an investor presentation and subsequent Securities and Exchange Commission filing that the prospect was estimated to hold anywhere from 1 billion to 4 billion barrels of “recoverable reserves.”
The latter figure exceeds the official proved and probable reserves for all of Colombia, and stands as one of the most audacious claims by any of the energy companies operating in that country.
Houston American did not cite a consultant’s report or any other independent study as the source of its estimate. Nor did the company offer any qualifiers, such as the percentage of those reserves it has a reasonable certainty of producing…
So, for all the same reasons we shorted HUSA before, we are jumping back in. In addition, the 10-Q released on August 16 stated that the board of directors authorized bonuses of $637,500 and pay increases of 10% for senior management. There were only three full time employees (one new employee just hired), according to Yahoo’s profile, so we take this to mean that either the CEO and the CFO or the CEO, the CFO and the other employee are all getting raises and bonuses. Moreover, the company declared a 0.2% dividend which seems as premature as the bonuses.
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You Could Now Be Arrested, In America, Just For Mentioning Europe’s Problems Over Dinner
by ilene - March 3rd, 2010 1:42 am
You Could Now Be Arrested, In America, Just For Mentioning Europe’s Problems Over Dinner
Courtesy of Vincent Fernando at Clusterstock/Business Insider
You know a company/country/continent is in trouble when authorities start cracking down on short bets against it.
That’s why it’s so disturbing how much heat European currency and sovereign debt speculators are getting these days.
Even the U.S. has climbed aboard the bandwagon now.
Reports of a U.S. Justice Department investigation into Soros Fund Management, SAC, and Greenlight Capital short positions against the euro broke last week.
Yet now the speculator clamp down is evolving into something completely terrifying. Apparently, it could now be considered collusion if you simply share economic opinions over dinner:
The Journal article disclosed that the big euro bets were emerging amid gatherings including an "idea dinner" involving a number of hedge funds including SAC, Greenlight and Soros, where a trader argued that the euro is likely to fall to "parity," or equal to, against the dollar on an exchange basis. The euro currently trades at $1.3609. One of the questions investigators are likely to examine is whether such information-sharing constitutes collusion, the people say.
…
At one such gathering, a dinner on Feb. 8 at a Manhattan restaurant, an SAC portfolio manager said he believed the euro could fall to a level equal to that of the dollar and urged other traders to "short," or bet against, the euro as his firm had, according to people at the dinner. The size of the bets against the euro is unclear.
In a research note issued to hundreds of hedge-fund clients shortly after the dinner, the research boutique that hosted the event summed up the SAC manager’s argument without mentioning his name. [But attributing it to an unnamed third party source, 'a presenter', which is standard practice]
One of the most dangerous misconceptions used to restrict economic freedoms is that opinions have more weight than fundamentals. Should we arrest people for threatening ‘economic stability’ if they argue against a particular stimulus bill or government and then collectively vote against it?
Because that’s all euro-shorts are doing. Whoever thinks that euro speculators are pushing the euro to unfairly low levels has an opportunity to vote against them any day of the week in the currency markets. So let’s not forget that a truly viable currency can carry the weight of open criticism, just like a strong nation or value-system can. Else traders better brush up on…
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Short Seller Fleckenstein: I’ll Start Selling AFTER Earnings Season
by ilene - October 8th, 2009 7:31 pm
Short Seller Fleckenstein: I’ll Start Selling AFTER Earnings Season
Courtesy of Vincent Fernando at Clusterstock
Fleckenstein Capital’s twelve-year-old short-selling fund that shut down last December is planning to start hunting around again for opportunities.
Yet they’re waiting until after earnings season, and could even wait until early next year.
For Fleckenstein Capital, while 2010 could be a very rough year for the market, 2009 could end strong. Even these shorts don’t want to step in front of earnings season right now.
Bloomberg: Future bets against U.S. stocks will “almost certainly” include technology companies, especially semiconductor makers, Fleckenstein said.
“They’re going to report good earnings, but a lot of it is a function of double- and triple-ordering, so their businesses are going to look better than they really are,” he said.
In a Bloomberg TV interview, Bill Fleckenstein said he expects weak businesses to run into trouble next year, especially if rates start rising. Nevertheless it appears he wants to see the economy’s "less worse" trend come to an end before he takes action.
What does he favor in the meantime? Shares in gold related companies.
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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
Ilene is editor and affiliate program
coordinator for PSW.
