Wednesday, April 23, 2008

Some trade ideas with "decent" conviction level.

U want long "asian" ideas with fundamentals AND minimal "decoupling" dependency or any of the commodity monkey balls trade.

Longer term trade:

  • Long DHR - impressive growth in asia (NOT growth INDEXED to asian growth thesis - the decoupling people's idea) and niche medical equipments, good moat. Current $75, my target $90 in 3 months.
  • Long IF - Indonesia Fund. 10% discount to holding. Very correlated to China. Risk is if food riot escalate out of control. Current $10, my target is $12 in a month with a stop at $9.30.
  • Long JNJ - No target, chinese can't compete with these brands. To graduate to upper class there need JNJ product in household. Chinese will also discover KY-jelly is also a must in any household.
  • Long BRK/B. The guy is travelling again, to Europe. The last time he travelled around the stock did an impressive nearly 50% gain. (last year). Don't miss the boat.
  • Long SMN. These are double-inverse basic materials company. The cost is inflation in raw materials and labor. Check out AA and DD, tell me what you think. No time target.
  • Short DSL and FED at ANY price.
  • Direct short GS and DONT blink. ABS head trader has quit and this should tell you something about what's the level 3 assets look like. Hint: http://mtgspy.blogspot.com/2008/04/finished-reading-asset-level.html

Spare change allocator:

  • Buy FXI calls $10 out of the money, short term.
  • Buy 200 FRE every $3 down with NO stop loss.
  • Experiment with covered calls in SRS.
  • Experiment with market timing in SKF.

Note on the long SMN:

  • zero profit margin for industry + general anxiety + $3 gas when SMN @ $40,
  • collapsed airline/transportation + negative margin on general industry + food riots + $4 gas when SMN @$30.
  • would you like a ring-side seat with me when SMN hits $20? Yeah, I knew you would.

7 comments:

Penn said...

In your spare change allocator, you are actually suggesting to go long Freddie Mac (FRE)? You seriously believe their equity is worth something in the longer term!!!!

MTGSPY said...

I do think losses are very severe to the extent credit capital is negative at this point. But ... I am betting on something bigger thant that ;D

gtt said...

mtgspy - awhile back on TF you insinuated it was bad to go long BRK - what caused you to switch - just the news you reference? I'm long BRK/B.......

MTGSPY said...

I bot BRK/B at last year in May and Aug.

At the time S&P spot P/E was 16 and BRK/B was also 16. And that was a period when I had close to $2M short and puts riding in the market. Generally speaking I was very uncomfortable and needed a long position with an almost certain alpha. Thus the BRK/B purchases.

Watched it carefully as S&P wallowed to 19 P/E while BRK/B shot to 24 P/E in Dec and sold them at $5025. The alpha was DONE at that point.

I even posted in TF asking people to the same. (I even remember poster ChampaignetoLemonaid went in to buy BRK/B that day and I pleaded with her to turn around and sell).

Now here we are again, and BRK is trading at sub 20 P/E while S&P spot P/E is 22+. Another stab at alpha while I am planning to rebuild short position after being cash since late Jan.

MTGSPY said...

http://www.tickerforum.org/cgi-ticker/akcs-www?post=19563#180189

gtt said...

Now GS mortgage chief has quit as well!

MTGSPY said...

yes quad. These people are not betting lightly considering how well they are paid and how hard it is to actually make money on your own out there.