Jungle Boogie

I started a very small position in [[AFK]] @ $41.89 (11:46 ET).

This is the new Market Vectors Africa Index Fund, the first ETF to focus on the African markets. It’s the next emerging market to take off, imo. I took a position in it, so now I have to follow it.

The political climate in Africa is improving, but remains fragile. The largest economies are South Africa, Egypt, Algeria and Libya, which account for 62% of economic activity on the continent. I’m hearing about more investments in the infrastructure in a number of the countries, which is a precursor to growth.

[[AFK]] tracks an index of stocks from eleven African countries. Stocks related to  South Africa, Nigeria, Egypt and Morocco account for 81% of the fund. I say “related to” because many of the companies in the index aren’t actually based in those countries, but derive a significant portion of their revenues from the region.

Sector exposure is in banks, basic materials and resources and oil & gas.

Disclaimer: This is not intended to be investment advice. Due [sic] your own due diligence and trade at your own risk. Know that if you buy AFK without checking it out, baboons will invade your cornfield and you might be de-banked. 

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Sold my remaining 1/2 of my [[RKH]] position @ $90.98 (11:09 ET). All out with over 11 points on average cost basis.

Due to this pleasurable experience with the banks, I’m now honing in on [[KRE]] as a potential buy to piggyback on the potential smaller regional bank rally. Just looking, mind you.

 

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I just sold 1/2 of my [[RKH]] position @ $93.91 (10:40 ET) based on a reversal from 97 back down to 94.

I’m keeping a vigilant eye on the remainder of RKH. The major components of this ETF are JPM, USB, WFC, WB and BAC, which account for about 61% of cap-wgt.

I’ll sell the remainder on a 91 stop.

As always, trade at your own risk, and be careful out there.

 

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In a strange twist of fate, some of the big bank stocks are ripping. Much to the “bank bears” chagrin, [[WFC]] started this whole fiasco yesterday by reporting better than expected earnings.

“Where there’s smoke, there’s fire”, my late grandpappy used to say, God rest his soul.

This morning, [[JPM]] is ripping because they beat profit estimates. They said profit fell 53 percent, a smaller drop than analysts estimated, on mortgage-related writedowns and costs from the takeover of Bear Stearns Cos.

May we expect more of these kind of surprises?

In “sympathy” other names like [[BAC]] and [[WB]] are rallying. However, this run up isn’t getting a whole lot of endorsement by traders of [[WFC]], [[USB]], and [[NTRS]], so be ready for some late day shenanigans by the bank bears.

As I had alluded to in a previous post, we could possibly see regional banks have a nice pop of 20% – 30% during the Q2 earnings reporting season. If they are so inclined to play with flaming balls of fun, contrarians may want to investigate some of the worst, tired and poor names that have been beaten and bombed, of late.

What to do with the [[RKH]] that I bought yesterday at $80.92 ? That is the question. When I look at the “tic tac toe” chart, I see a possibility that it could sashay to over $100 based on continuing surprises by its components and banks, in general.

If it breaks $106, the downtrend will be reversed, as it will breakthrough the bearish resistance line (red). So I will continue to hold it for now, letting the profit build to a creszendo and then (hopefully) adeptly sell it and go out an eat a buffalo ribeye.

However, a one point this morning it was up over twenty-two handles since the close on Tuesday, so I may be inclined to sell it today—-very soon.

Keep your eye peeled to this development.

Finally, we may be seeing all the cluster-facking by the banks come to a head in the residential mortgage bidness, with the backstopping of [[FNM]] and [[FRE]]. Is the worst behind us?

I still don’t think so.

Disclaimer: I don’t know your sitrep, so don’t take this as investment advice. Trade at your own risk.

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Sun Microsystems [[JAVA]]…oversold. Trade the bounce with a buy stop @ $10.50

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DRS Technologies [[DRS]]…overbought. Sell short @ $77.

Disclaimer:

Momo players, do not try this at home. These are contrarian plays. The idea here is to screen for stocks in favorable sectors that are oversold, and buy as they reverse up on a bounce. And conversely, screen for stocks in weak sectors that are overbought, and sell them short as they reverse down.

I don’t know your sitrep, so don’t take this as investment advice. Trade at your own risk.

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I bought shares of [[CFR]] @ 50.39 (15:30 ET)

I will buy more on a pullback.

I’m fucking kicking myself because I took a look at this last week on Friday, brushed it off, filed the research info in a stack of shit and forgot about it……until today.

CFR is the largest bank holding company in Texas, with over 80 offices in the state. They’ve been in existence for over 140 years, operating solely in the State of Texas.

If there’s one area of the country where bidness is goood, it’s Texas. Reason: an oil & gas based economy, among other things.

The knock on this stock in the past has been it’s slow loan growth due to conservative lending practices. This, for obvious reasons, has actually turned out in their favor.

Q1 earnings were $0.89. I think they will report $0.90 for Q2. Given the current environment for regional banks, this would be a favorable comp to Q2:2007, when they reported $0.89.

Even with the gain in price of almost 12% today, the dividend is still over 3%. They announced an increase in their quarterly dividend from $0.40 to $0.42 in April, and paid it 06/13.

CFR also has one of the highest net interest margins in the business. Non-interest bearing deposits totaled 34% and low interest bearing deposits were 53%.

They pay virtually nothing on their deposits, but people keep doing business with them. “Why?”, I have asked, repeatedly. No toasters, free check re-orders or shit like that. But I think I found their secret….. 

A friend living down there told me that they must have some kind of hiring policy like, “flat-chested women need not apply”. He says, like,  half the women in the bank are racked and stacked! The other half look like about a C-cup….. He says he almost busts up (no pun) laughing whenever he goes into the bank, because the “hiring policy” is so obvious! Where was I?  Oh, yeah….their high net interest margin relative to peers helps to insulate them should credit spreads narrow egregiously.

Loan portfolio: At the end of 2007 they reported a loan portfolio of $7.7 billion, with 47% commercial and industrial; 13% land and construction; 16% commercial mortgage; 9% residential mortgage, 5% consumer loans and 10% “other”. Don’t aks me what “other” is. I don’t know, B. However, if you care to venture a guess, just leave it in the comment section.

Credit quality is very high. Net charge-offs for 2008 are estimated at 0.30%. A pittance. However, expect higher loan loss provisions, due mainly to a rise in loan balances, as management looks to build reserves.

They also have been in acquisiton mode, buying smaller banks in Texas, even an insurance company in December

One final thought: CFR would be a nice takeover candidate.

Secondary final thought: The women in Texas are HOT. 

Disclaimer: This information is not intended to be used as the primary basis of investment decisions. Because of individual investors requirements, it should not be construed as advice designed to meet the particular investment needs of any investor. Consult your financial prior to taking any actions. The information and opinions contained here are those of the author and are not necessarily the same as those of iBankCoin, its principals or its affiliates. Trade at your own risk

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