Wednesday, May 30, 2007

Portfolio Holdings

Top Five Largest Holdings as of 5/30/2007

1. NYMEX Holdings (NMX)
2. Silver Wheaton (SLW)
3. Chipotle Mexican Grill (CMG)
4. Cerner Corporation (CERN)
5. Corrections Corp of America (CXW)

US Stocks 80%
International 20%

Large Cap 24%
Mid Cap 63%
Small Cap 13%

Blackberry Curve Debuts May 31st

The much anticipated Blackberry Curve will be available from AT&T (T) on Thursday May 31st for $199 with a two year contract. Data fees are $30 a month with an existing line. The total cost of ownership will be the $200 plus (24*$30)= $920 or $460 per year. Accessing corporate e-mail will cost an extra $15 per month. Some folks might be able to write this off as a business expense come April 15th.

Overall the phone looks impressive, although the Curve will not have WIFI for AT&T. Stop by your local wireless store and check out the hottest smartphone of 2007.

Note: I am long RIMM

Tuesday, May 29, 2007

Circuit City Buyout?

With speculation that CDW (CDWC) could be taken private I created a comparable analysis of Circuit City (CC), Best Buy (BBY), and CDW (CDWC). CDW is not directly comparable since they are less consumer focused than Best Buy and Circuit City.


P/Sales 0.22, 0.62, 0.85
P/Book 1.50, 3.62, 4.08
EV/EBITDA 5.68, 7.22, 11.01

Circuit City does have a tough road to recovery ahead but its valuation should make it an attractive LBO candidate. CC has over $4.00 in cash per share and a negligible amount of debt outstanding. Unprofitable stores could be sold off to reduce the debt issued to take the company private. CC has eliminated many of their high paid vice presidents and hourly workers to cut costs. Although this could have a negative effect on sales, it shows initiative by management to make changes and improve the company even if CC fails to get a bid from private equity.

"We view CC as one of the best risk/reward opportunities in our space."-Pacific Crest Securities (5/3/2007) (Outperform)

Note: I have no position in CC

Saturday, May 26, 2007

Blackberry Curve Will Have WIFI !

There have been rumors on the Internet that the new Blackberry Curve 8320 for T-Mobile will have WIFI and regular cellular calling capabilities. Technically if your phone has WIFI and you are out of minutes you can switch over and make your phone calls over wireless networks without paying overages. WIFI phones won't lead to death of cell phone carriers.

The WIFI feature is similar to VOIP/Skype technology but for cell phones. Having WIFI on cell phones will be a big win for consumers. I remain bullish on Research in Motion (RIMM).

Note: I am long RIMM

More Pictures of the new Curve with WIFI

Thursday, May 24, 2007

Specialty Metals

I have been following three specialty metals stocks very closely over the past 2 years. All three have pulled back from their recent highs and offer attractive buying opportunities. The titanium industry has been red hot since the market bottomed in 2003. Titanium is a major component of new airplanes. Just take a look at Boeing’s backlog and see the high demand for titanium. Or look at Harold Simmons, CEO of Titanium Metals (TIE) who has been consistently buying his stock under $30.

Three Titanium Stocks Worth Owning
Allegheny Technologies (ATI): Forward P/E: 12
RTI International Metals (RTI): Forward P/E: 14
Titanium Metals (TIE): Forward P/E: 16

Attractive valuations and future growth prospects will drive M&A activity in the metals sector. We are already seeing this with the aluminum and steel stocks. Titanium is next. RTI looks the most compelling because it will be the easiest to swallow with a market cap just under $2 billion. A company like Arcellor Mittal (MT) can do an all cash acquisition of RTI. An all cash acquisition is more friendly to the company being acquired. Issuing stock to make an acquisition can signal to the market that management of the acquiring company believes that their stock is overvalued and is using the strength in their stock price to make an acquisition. The cash component also protects the shareholders of the company being acquired to serve as downside protection against any merger difficulties. The downside of the cash component is that shareholders in the acquired company will not receive any potential upside from the merger synergies except in the form of the acquisition premium (cash).

Note: I have no positions in ATI, RTI, or TIE. I am long MT.

Tuesday, May 22, 2007

Three Biotech Stocks That Could Double by '08

The biotech sector is an exciting space. There is always hope that you might discover the next Amgen (AMGN) or Celgene (CELG) before everyone else. I selected three biotech stocks that could double on any positive news. I should mention that there is also a greater than 50% chance that the stocks I am about to mention could lose half or all of their value by the end of the year.

1. Medarex (MEDX): This stock has been mentioned on various programs and websites as a possible takeover target with over 30 drugs in pipeline. Almost every drug that Medarex is developing is in some form of partnership with big pharma. I wouldn't be surprised if a partner like Bristol-Myers (BMY) buys them. More importantly, Medarex will present June 1st - June 5th at the ASCO conference in Chicago. There have been some leaks that the data from Medarex's Melanoma drug (MDX-010) will be good. I also like the fact that Will Dannoff of the Fidelity Contra Fund is the largest shareholder. He has spotted past winners in New River Pharma, Genentech, and Celgene.

2. Dendreon (DNDN): This could be the most talked about stock of 2007. Lots of folks are betting against this one with over 40% of the float short. The stock has already fallen from its recent high of $25 a share. The company is more of a one hit wonder when compared to Medarex. Dendreon's prostate cancer drug Provenge is in high demand and has proven to extend life for several months. Instead of buying the common I suggest taking a look at the January 2008 $7.50 calls for $1.60.

3. Isolagen (ILE): This stock has not received much attention from the media. Isolagen is currently developing a procedure that rejuvenates your facial skin. Skin cells are taken from behind your ear and then taken to a lab. After about a month the cells are injected back into your face. It is a natural form of Botox that can last up to 2 years. Isolagen appointed Nicholas Teti as the CEO in June of 2006. He was the CEO of Inamed until it was bought out by Allergan (AGN) last year.

Note: I am long MEDX

Monday, May 21, 2007

iPhone Debut Will Lead to Cell Phone Upgrade

There is no question that the late June debut of the Apple (AAPL) iPhone will create a lot of stir. Much of the hype is already priced into the stock. Or at least most of the hype will be priced into the stock before the iPhone debuts in about a month. I still think you a can stay long Apple until the release. Apple will have a tough time selling the iPhone. An initial $500 price tag for a 4 GB music phone and a $600 price tag for a 8 GB phone will be too steep for most consumers. Still many iPhones will be sold and I remain bullish on AAPL.

Who Else Will Benefit?

1. Research in Motion (RIMM): Many of the same features of the iPhone can be had for a lower monthly fee and lower upfront cost with a Blackberry. The Blackberry Pearl runs between $59 and $149 depending on the carrier. Plus the data fees are $10 less per month than the iPhone. I believe consumers will upgrade their cell phones this summer and choose RIMM over the iPhone.

2. AT&T (T) will be a winner no matter what happens. AT&T is the exclusive carrier of the iPhone and will gain wireless subscribers. More importantly more consumers will add media bundles to their wireless plans when they upgrade to a "smartphone" in order to use all of its features. This is a homerun for AT&T, as the average revenue per user should increase with more "smartphone" subscribers.

3. Motorola (MOT) is my sleeper pick. Hovering near its 52 week low, I see lots of value MOT. Motorola has the RAZR 2 set to debut in July and the Q9 smartphone also set to debut shortly. The Q9 will put added pricing pressure on the iPhone and Blackberry Curve & Pearl.

One important thing to remember is that these cell phone upgrades come in cycles. I would never "invest" for the long haul in any of the above names. These are simply 6-8 month "trades."

Note: I am long RIMM

Friday, May 18, 2007

Adding Some Nitrogen

Today I closed my position in the DB Agriculture ETF (DBA) and purchased shares in Terra Nitrogen LP (TNH). Terra Nitrogen is a publicly traded limited partnership. If you do decide to buy shares in the stock you will have to file a few extra forms when you do your taxes next year. I think the stock will see $100 within the next couple of weeks. I have been waiting for a pull back in the stock and finally pulled the trigger today. Terra's fertilizer business is on fire with high soybeans, wheat, and corn prices.

I am long (TNH). I plan to add to my position next week.

Sunday, May 13, 2007

One Farm Play That Got Away

I have been watching fertilizer producer Terra Nitrogren LP (TNH) for over a month. I continue to tell myself that this stock is overbought and I should wait for a pullback. Since that time the stock has run from $60 to $95. This stock has gone up virtually in a straight line since September 2006. I wanted to at least mention TNH as a good momentum agricultural stock. TNH is too rich for me right here. For those who are not risk averse then I would recommend taking a look at TNH. Otherwise I personally prefer Scotts Miracle Grow (SMG) or Potash Corp. (POT) as less volatile plays.