Gains accelerated to about 5% this week. The star was ALSWF, which reported blowout earnings. I added after the announcement on Thursday when the stock was up about 5%. It finished up 18%. Operating cash flow was C$.19 per share and extrapolating this with growth gives me an estimate of $1.00 or more for calendar year 2008. Which means you get a high-growth moneyspinner at about 13x cash flow. This could easily double in the next year or so. Though I am way overweight I will probably add a little more. Could anything go wrong? There is some patent litigation which is still in the works. Market growth seems all but assured and at present they have no competition.
I sold a bunch of options on Friday. Some are covered by positions I own, but others were purely directional and aligned with current positions I have. I suppose my confidence in those names is high (or at least I don’t think the mostly out-of-the money prices will be breached). I sold: a bunch more NRF 7.5 puts, these with June expiration; KBH April 35 calls; KBH Apr 15 puts (covered by my short); WM Mar 12.5 puts (covered by a newly added short); ANH July 10 puts. The last position is currently in the money — with interest rates falling ANH earnings and dividends should rise and the stock should be well above 10 by July — if nothing unexpected happens. Additionally, I sold and re-added NRF for a .50 swing, sold some AHR (seems tired after the big run-up), added more SGTI (like the growth) and shorted LEN. I don’t think all the bad news is out for housing and financials. I added to my shorts after the big run-up of the past couple weeks. As mentioned, I also added some ALSWF and re-shorted WM.
My general outlook remains the same — keep looking for good stocks in a choppy market. My options sales seem to indicate I think the choppiness will be confined to a range, and my head confirms this.
Long: ACY AHR ALSWF ANH CHNG DHT DSSPF FFHL GA GREXF MDNNF MFA MLKKF MMG NFYIF NLY NRF OCNF ONAV QADMF QMAR SGTI SNEN XSI.
Short: GCI KBH LEN MEG MNI TOL WM.
Options Short: NRF Mar 7.5 puts, Jun 7.5 puts, Jun 12.5 calls; KBH Apr 35 calls, Apr 15 puts; ANH Jul 10 puts; WM Mar 12 puts.
Short Pct: 11.9
Positions most worried about: .
Positions most sanguine about:
Biggest market worries: credit contagion fear-induced meltdown
Outlook ( up-flat-down surety rating: 1-5 reasoning):
US: flat-down, 2.0; credit woes.
Japan: not invested – don’t care anymore.
China: up, 3.0; strong economy.
Silver: up s/t, 2.0, price action; l/t up, 1.0, industrial demand.
Gold: up s/t, 2.0, price action; l/t up, 1.0, industrial demand, GFMS study, US$ weakness.
Copper: flat-down, 2.0. China, but stocks rising.
Zinc: flat, 2.0. Stocks stabilizing.
Real life: working on projects
Weekly sleep and exercise: have been having some heel pain, probably planar fascitis so been biking but no soccer or boxing. Sleep fairly regular.
Mood: calm, good