Position update

Position updates.

1. TSLA is playing out as I expected. 
2. VJET was a great short except I tried multiple times and never got into it.
3. FUEL gave me a lot of heartache after pulling back almost all the way. Latest short ratio has just been released. FUEL short shares have more than doubled from 1.27 million to 2.67 million which is almost 23.5% of the float. I am still bullish on this one and still think it is a 2.5X from these levels.
4. Covered the TWTR and LNKD short. Calls worked well for me. These companies stay short plays and you need to go in an out of your positions.
5. Sold JCP. It did great for me. 

Tesla Fire - part 2

Per my comments in the past on how to approach the TSLA stock based on the fire news, the inquiry is open now and the stock may pull back further. The hard thing about this is, that the news seems to be leaking. Yesterday TSLA was down 14 bucks on no news and today the news is that there will be an official inquiry. At this point I would buy a small position at the 200 DMA around 107. The build from there based on news. Remember, a full recall is the worst scenario but if some research can explain what the expense of a full recall would be, then there is some way to value the stock. Since it has to do with the base structure of the car that should protect the battery, it doesn't sound like an inexpensive recall.

This morning: Short LNKD at 230, TWTR at 43.54

LNKD is a fundamental short based on how big the market really is and how much more LNKD can possibly go before having to go into adjacent markets.

TWTR is a valuation short but I'll cover if I get a good price.

FUEL thriving; Glad I couldn't short VJET

FUEL is up almost 50% this week. How about that! If they can keep their story intact, they are on track for a 5 to 6 Billion market cap.

I am lucky, I couldn't short VJET at 51. Stock is at 59 today. I still think it is over valued. So we'll see how it plays out.

Why I bought FUEL?

Why did I buy FUEL? Here are the reasons.

1. The internet advertising and branding (rapidly growing) marketplace is HUGE. So there is enough opportunity. Programmatic ad buying is the future (do you own DD on this). Others like Tremor are losing market share.
2. Some numbers: Only 4 million shares were sold during the IPO. 11.3 Million float, 32.9 million outstanding and 31% owned by insiders. So a very small float. Run ups can be very quick on low volume.
3. 132% growth YOY this quarter. Okay, so this is probably the most important statistic. They are growing across all segments of their business.
4. Sell off after earnings report. The stock had a 20% sell off after earnings report that seemed to be more closely tied to the video ad tech companies such as TRMR and other video ad tech companies that have bombed in the market. The company came in with a slightly higher loss. Well, given where the market is in it's evolutionary cycle today, it is supposed to reward growth and shouldn't care if a company lost an extra 2 million. This was a great buying opportunity.
5. Valuation: We will not look at EPS but instead price to sales ratios. The company expects 2014 revenue of 426Million and market cap is 1.56B (@47.5). That's trading at about 3.5 times next years sales. YELP trades at 12.4 times sales, although this stock has higher growth and higher revenues. One reason is that Yelp is expected to be the winner in their business area but the market for video ad tech is still up in the air. Investors don't understand this business. If you are betting your money, you are betting on FUEL winning and FUEL's ad tech being better than everyone else. If this business becomes clearer and Rocket Fuel continues to win, this stock will trade higher than the YELPs and LinkedIn's of the world.

This stock can go up 4 times or so from it's current price (target 200). This can be a 6 - 7 billion dollar market cap given the above points in the next year.

FUEL: Couldn't find a good entry point but I am in

Out of YELP - Looking for an entry point in FUEL

YELP is too risky at these levels. Way too overvalued and technicals are breaking down. FUEL up big this morning on an upgrade. Need to find a good entry point here.

Entire 3D printing market space looks overvalued

DDD SSYS XONE PRLB and VJET: All these companies are in the 3D printing space. DDD has a short ratio of 28.9%. They've seen several recent IPO's. The entire market segment seems over valued at this point. 3D printing is suppose to be a super hot space but the trajectory of these stocks have been crazy. Some of these companies trade at 20 times sales. Reminds me of all the nano-technology stocks in 2004. Most of them went belly up in a couple of years.

Rocket Fuel has some juice

FUEL: Rocket fuel, recently IPO'd. They trade at 2 to 3 times future revenues barely make a loss and yet grow 130% yoy. Concerns over its profitability is overplayed. Great insider ownership, stock has dropped dramatically from recent highs. This could become a 5 to 10 bagger in my opinion.

Rocket fuel in interesting

Watch this blog for more details on Rocket Fuel

Tesla fire woes

There was a damning article this morning. Here is what it says. “It appears there’s inadequate shielding on the bottom of these vehicles,” the executive director of the Center for Auto Safety told the news service. “Road debris is a known hazard to the undercarriage of vehicles.” 

So in short, I am lucky to get out of TSLA yesterday as it continues to drop. Here are the possibilities for Tesla at this point. 
1. There might be a formal announcement of an investigation. 
2. If the investigation leads to a recall, then this can be a lot of trouble. 

Net-net: There are probably investors and hedge fund guys who are calculating all the risks for bad scenario as well as worse case scenario. What are the costs for #2. I am sure someone will be doing the math. I don't have the details on tesla shielding in the bottom of the vehicles, so I got to sit this one out. This does though have the opportunity of a buy like HP in the 11's. When HP finally took the loss for Autonomy, the stock took a big tumble that day. Tesla might have a similar day. Which means buy on the drop on the news event, as smart money has probably pulled out long before that. This is all considering there is a formal investigation in the first place. If that clears up, then there is some hope. That said I do think the stock has suffered technically and so a wait and watch strategy for now is probably right. This is a momentum stock in the end and so if the momentum is over, it won't give traders what they are looking for. 

It's a traders market

Okay. This looks like a traders market. Out of TSLA at 142.8. Trading YELP for an upside move. It seems to be at the bottom end of it's trading range. Bought at 62.17.

Bought Tesla (TSLA) at 138.29.

Wanted to short solar city but didn't. Couldn't finish my research in time. All momentum stocks are down today. I think all that money just moved to Twitter for the IPO. Too bad I couldn't short Twitter. It's current market cap is 32 billion. So for less than 1/10th FB revenues and a big loss making company, they are at 1/4th the valuation. There will be better entry points on this one.

JCP continues to look interesting to me but company's price action is strange. CEO came out and said October sales were higher yoy and that October gross margins were better than previous month. I am bullish on the stock.

Update on positions and new interests

Great spike on JCP. This stock has a high likelihood of being in the 9's (bought at 6.56). Continuing to hold. Might sell before earnings to protect gains.

JMI still a good dividend bet for the next 2 months.

AOL has moved nicely after I bought it under 34 but just bought some protection today. I am limiting upside but stock has had a really nice gain and is at the top end of it's trading range. I think this one can breakout and really is the stock to watch.

New stocks to watch: Bearish on LinkedIn. The simple reason is, it's current valuation account for the entire market space. For the stock to move higher, they need to get into new markets and win them. Either ways, growth will slow and stock will take a hit before we find out if they'll win new markets or create new ones. I'll short this above 230's.

In JCP @ 6.56. J C Penney is priced for bankruptcy. The bonds are placing chances of default at 65%. The company has secured it's cash position with an influx of 932 million (30% dilution @11). Buying right now gives you a price 40% below the last major equity infusion. The company is looking for 2 metrics to improve. Better traffic and better conversion September was better than previous months. I am in.

Update on Trades

Yelp fell 9 points after the short (thanks to the debt ceiling issues). Unfortunately, I had mixed success there because I protected my premium on the puts. I still think it's a great long term short but company's can stay overvalued longer than you can stay liquid.

Invested in AOL at 33.8. This will be a really interesting wait and watch. Turns out Jim Cramer did a big song and dance over AOL after the market closed. This one is a turnaround story. While I still think it isn't a "confirmed" turnaround, the company is suffering from it's .com days branding malaise. They have great properties and have a sound strategic direction to move forward. They are also leading google on video ads and the big bet Tim Armstrong is making, is that brand advertising dollars will move to video ads. This seems to be a no brainer in the long run. Brands would want to be more picky about who they show their ads to and online video ads fill that gap in a big way. Company's financials look great. 2.5 billion market cap, around 2.2 B in revenues. I think there is less risk in this investment than many others.

Got out of DXM before the drop. Out of Tumi but now back in big at 19.5. Out of JMI after one month dividend.

YELP short becoming a promising possibility long term. Very important to not have a time restriction on this one as this baby can spin out of control. This would be a valuation short and not a fundamental short.

Good market to invest

Okay UNG was the right call that long back but I am finally getting to a point where I am not messing with Short term options calls.

Two basic tweaks: Buying on margin (for trades) but trying to avoid margin calls. No short duration naked calls and puts anymore - Odds are stacked too much against you. And so, the performance has been quite good for this year by keeping some basic tenets in place. Making most calls right. A little luck helps. Returns for this year are in the 100% range (inclusive of margin fees) -  thanks to margin. Also, trading with a small portion of your money gets the emotion out completely.

Here is a list of my recent successful runs.

Bought HPQ 11.87, sold 20.64.
   Super undervalue and oversold at those levels. Market cap was around 26B when they did sales of about 120B or so. Just crazy. Meg is going to tweak this company and bring the stock price back up.

Bought AAPL average 419, sold 447 (little early but worked out fine as I bought Tesla).

Bought TUR (Turkey ETF) 57.01 and sold 58.27.
    Got lucky on this one. Just got uncomfortable with this trade. Didn't see the collapse coming in the emerging markets.

Bought TSLA 132, sold 157
    Incredible strength in this stock. Great product. Over priced but the possibilities are vast. I'll look to buy again (as a trader not as an investor). Really like the story here.

Bought TUMI 21.59
    I like this company's products very much (so I am an investor here). I was looking for a good entry point. Waited a few days after the earnings miss to buy. Feel confident about the company's fundamentals. I think they can accelerate growth.

Shorted YHOO at 29.18 but covered at 27.91
   Shorted after the earnings jump that felt undeserved. The story hasn't changed at Yahoo. The stock appreciation is due to the new multiple the market is comfortable with and the fact that they are unwinding their Alibaba investments (and Alibaba is doing great). That said, I was uncomfortable with the way it was trading and the over all market is still quite strong.

Bought JMI 11.85
Mortgage REIT that was giving 24% dividend when I bought it. They might cut dividends as interest rates start to go up but there has been an extreme reaction to the interest rate news and stock became dirt cheap. Book value is above 15 (book value will come down too but I still think the risk / reward is in my favor here). Spoke to the guys at Bulldog as well who took in a 5% stake. These guys are activist investors and have an excellent track record of creating change. Before you invest in something like this make sure you fully understand how this mREIT is created, who runs it, what is the incentive for the managers and what is their relationship with the ARR guys.

Bought DXM 9.51

Over sold. Slightly risky bet but they payoff can be 3 times. I am too tired to go into these details. Prem Watsa bought a position in here as well at a much higher price. This company is going through transformation and I think they will be successful. Don't buy unless you understand their debt position and understand their transformation plan.

LNKD is setting itself up for a great short. You just need to have a long term perspective on this one. And as a friend once said to me, a stock can stay overbought way longer than you can stay liquid.

Happy investing and trading!!

Getting into Natural gas: ETF is UNG

Buying call options for UNG. Gas prices are at 10 year low. There is a trend of trucking companies slowly going the route of natural gas. I think this has bottomed or close to it's bottom. UNG has had an 85% drop over the last 3 years. Time to get in. Fundamentals are sound. Also, this is the cleanest form of fossil fuel. Many catalyst for moving into this direction for Obama as well. North America has a lot of natural gas and the economy can truly benefit by tapping more into natural gas.

Another stock to consider to play natural gas story is the fueling pump builder CLNE (Clean Energy). This is another potential riser.

Okay RIMM now a acquisition play

Stock is still a value. They aren't going to lose profitability any time soon IMHO but they need to take serious action very soon in getting value.

CEO fired old guard, is talking strategic alternatives (open to buy out), refocusing the business and getting maximum value for shareholders. Subsriptions up to 77 million but might turn soon.

Still depending on QNX (BB10) which is a big risk but think about this. Motorola mobility was bought for 12.4 billion with a shitty business and very low profitability. These guys can do much better and their current market cap is at 7 billion.