Put that Hot Dog Down

While I do not agree with the egregious foreign policy decisions our politicians have made for this country over the past 40 years, I am thoroughly grateful for the servicemen who served this country. It’s important that we remember and respect the fallen men who died fighting for the benefit of the rest of us, sitting idly in air conditioned offices, thinking we’re all tough because we bulk up at the gym.

Speaking of servicemen (82nd airborne, Iraq war): former blogger and friend of the site, Rhino, is working on a new project. You should give it a look and mark his progress (it’s still under development).

Have fun eating hot dogs and drinking out from budweiser cans. I’ll be enjoying my birthday, drinking a nice Bordeaux, courtesy of Ragin Cajun.

All of the panic and strife from two weeks ago has withered away, like pixie dust in the wind with the profits of professional short sellers. The stocks that everyone was afraid to own are now ownable, bankable companies, worthy of your attention. Look at FEYE, DWRE and NOW screaming higher.

The good folks over at GOOG have decided that they do not like SALE’s coupons and have prohibited people from finding it on the internet, in favor of COUP’s coupons. While some people might say “that’s punitive, anti-competitive and generally unfair.” I say to them, and anyone else, the internet belongs to Google, so shut up.

Most of my stocks are higher today and I am back on a profitable path, but there is a cost. No longer am I able to toss around millions of dollars into whims, play around like some animal in a field of garbage. I am much more selective now, imposing rules and order to my trading practices. Believe you me, there are so many degenerate stocks that I wish to own now, but I simply cannot afford to buy them. Until I make back 10% from my -32% loss, I am in the proverbial ‘fag box.’ In case you’re wondering, I am still down about 32%, so there’s nothing to get excited about just yet.

HOWEVER, I need  to remind you of the imperial powers of The PPT, flagging  the market to be oversold on 5/15, when the SPY was at $187.4. On that day, I purchased QQQ, as part of my new trading strategy, at $87.4. I will sell it  on the 7th day, which is Tuesday, most likely for a 3-4% profit.

Over the past 12 months, our mean reversion algorithm is 100% accurate, 10-0, over a 10 day hold. Over the lifetime of this algorithm (2008), it clocks in at 85% accurate.

To get ahead in the market, I do not need the holy grail. All I need is an edge. This provides me with that and I’d be remiss if I didn’t take full advantage of the tools god has bestowed upon me.

Amen.

https://www.youtube.com/watch?v=lF7C8NFzAGQ

Or as Mrs. Fly likes to call it: “frack-a-ling.”

There isn’t anything more pleasing to me than to see tap water being able to combust, blowing up houses, sending people far away from their yards because, well, it’s a toxic wasteland.

Ladies and Gentlemen,

This is the price for progress. Do you want to continue buying oil from terrorists who are jealous of our surveilled freedoms? Or how about sucking off of the maple tits of those bastard Canadians from up north? You and I can both agree that both parties deserve a good nuclear war, or two.

My point is this:

US rig count is going higher, thanks to horizontal drilling. With increased fracking comes the burden of needing sand for said holes. This is a finite resource and SLCA is the main supplier. They have that crack rock for your frack.

On that note, I added to my energy holdings (FANG) and bought SLCA–for the win, of course. There are several other plays in the field, all of which were discussed by distinguished gentlemen inside of The PPT. We do not discuss serious matters of money with the readers on the free site. Membership does have its privileges.

Aside from that, I bought more ANGI and a little more HBI. I also sold out of WCC and find myself up 0.8% at the time of this post.

From: J.B. BILDERBERG
Subject: 2013 Bohemian Grotto Economic Summit, Federal Reserve Bank of New York, Financial District, Manhattan
Date: December 31, 2013
Classification: Controlled/Restricted/Need-to-Know/Eyes-Only

Greetings,

Since addressing the delegation assembly in Tunisia last month, I’m pleased to report that the firm’s influence over global event vectors has strengthened:

Seizing upon opportunities linked to the unfolding Crimean Crisis, the firm increased its share of the world’s cryptocurrency supply from 80.7% to 81.1% of global units outstanding.

Within our capital markets division, the smart-beta-indexed inflation trading desk outperformed its benchmark. And despite increased public outrage and diminishing returns, our latency arbitrage desks delivered consistent profits yet again, boasting only one losing day in the trailing 36 months.

Our web presence remains a paragon of intense cyber victory. Sixteen of our seventeen SaaS portfolio companies have obtained mezzanine financing; four of which are scheduled to IPO on the NASDAQ next month. And our combined mobile reach now extends to over 2.3 billion app installs.

2013 was a good year for the firm. 2014 will be great.

-J.B. Bilderberg

Some of these dead IPOs have been crawling out of their graves, running about town, eating brains. I endeavor to anticipate the next zombie. Here are some ideas.

DRNA
FEYE
CRCM
LITB
PTCT
NMBL
MGNX
BNFT
ECOM
WIX
RNG

There will be a monster winner or two from the above list.

Today we climbed the wall of worry. Stocks like YY, SOL and GOGO took off like rocket ships. In the past, I’d use today’s enthusiasm to press longs. But, we are in the different tape. There will be overhead resistance for a lot of these garbage stocks.

Buy growth…but with earnings. Companies like JAZZ, GILD and FANG flush with cash and earnings.

Feel free to reserve 20% of your assets for the YELPs and XONs of the world. Remain strong enough to say no to the naked prostitute lying there on your bed, for she has aids.

I have meetings this afternoon and I wish you well.

Today is even better than yesterday. Breadth is terrific and the bears are on the ropes. Let’s be honest, those clowns never had a chance.

All of the momo names are running. I really like JAZZ, XON, FANG and CNQR here. Then again, I’m just talking my book.

Back to the micro cap sector, I love IFON. I know people haven’t gotten around to the micro caps yet. But if and when they do, IFON is gonna rip.

GOOG is releasing its latest search engine software, Pando 4.0. Apparently, SALE and EBAY get hardcore penalized. Early reports indicate that SALE’s search engine results will be 50% less relevant with this new software. Really? I mean, that seems a bit punitive, no? I wouldn’t consider SALE a spam site. That’s why the stock is getting lit. If there isn’t any truth to this rumor, then SALE goes back up. Who knows?

Solar and biotech are being bid up continuously today. Good vibes.

After I catch my sea-legs, I will be sashaying (no homo) out of the amber of olde man, wheeled chair, restrictiveness– back into something a bit more aggressive. For those of you in the money management business and solely focused on gathering assets, this is probably not for you–as you should be more interested in preservation of capital over outperformance. As to why I do what I do: I enjoy shooting for the stars. It keeps my blood flowing like a raging river.

On June 1st, I will be updating the GARP (growth at a reasonable price) Index inside of The PPT. Year to date, excluding dividends, it is down less than 3%. Considering the pressure applied to growth stocks, I’d say it could’ve been a lot worse. However, being down is never acceptable. Most of the GARP loss is in one stock: NUS, which was cut in half since the beginning of the year. Ex that out and it would definitely be up. I intend to right the ship in that index during the second half of the year.

If I was putting together a portfolio today, I would pick 10 stocks. Three of them would be mega cap dividend payers aka olde man stocks. Five of them would be GARP plays. And the last two spots would be reserved for high beta growth plays–equal weighting of 10% across the board.

Just to give you an idea, here is one portfolio that I put together for someone just yesterday (new money comes in all the time).

PG
COP
BUD
KORS
GILD
ABC
FANG
YNDX
YELP
SCTY

An alternative portfolio, one that I am also modeling might look like this:

KMB
OXY
TGT
HAR
JAZZ
TRN
SLCA
EPAM
LNKD
CSIQ

My actively traded accounts would look a lot different, as they’re structured for short term trading. A stock like XON could be plugged in there, instead of YELP or SCTY. The point is, if you are doing this professionally or self-directing your own assets, it’s a good idea to have a plan. It’s also worth noting, plans work out incredibly well until something goes wrong. Be prepared for extreme tomfoolery and stress test your account under a number of scenarios. You should never manage your money the way I just did, over the past two months. Going forward, I intend to exhibit a lot more discipline and structure in my investment approach, in order to mitigate “full body detonation.”

Bear with me as I scribble a bunch of bullet points on this screen. I’ve been researching XON for some time now and it is ongoing.

What is Intrexon?

Some people call it the google of biotech or “the next Monsanto.”

Here is how the company describes themselves:

The world population is currently seven billion and continuing to grow at an exponential rate. With this growth, food and energy supplies and environmental and health resources are becoming increasingly difficult to access. The current path of the global economy is unsustainable— new solutions are necessary to preserve and globally expand a high quality of life. We believe that synthetic biology is the solution.

Synthetic biology has the capacity to fundamentally change the fields of medicine, agriculture, fine chemicals, manufacturing and energy production. It can reduce our dependence on non-renewable resources like petroleum, increase the productivity of renewable resources such as food crops, and improve or repair environmental damage through bioremediation.

Intrexon is focused on collaborating with companies in Health, Food, Energy and Environment to create biologically based products and processes that improve the quality of life and health of the planet. The science underlying these products is known as synthetic biology – an engineered approach to the field of biology.

Essentially, they are the “DNA guys.” For the love of God, their website is DNA.com. They form collaborations with other biotech, energy or food companies to improve their products, using their proprietary knowledge in cell analysis. I will be the first person to say the semantics of what this company does is above my pay grade. However, I do outsource this stuff to people in the industry to get a better understanding.

Most impressive about the XON story is its CEO: Randal J. Kirk

In 1983, Kirk and his partner founded GIV, which later spun off King Pharma. In 1998, Kirk sold GIV and his partner sold King to Pfizer in 2010. At the time, King was the 39th largest pharmaceutical company in America.

Kirk founded New River Pharma, brought them public in 2004 and then sold it to Shire in 2007 for $2.6 billion. He owned 50% of the company at the time of sale.

After New River, Kirk started Third Security LLC, an investment firm.

Aside from his private investments, Kirk and his company own a variety of publicly traded biotech firms. Here is the full list.

As you can see, XON is by far his largest holding.

Apparently, owning 63% of XON isn’t enough for Kirk, as he’s been buying large blocks of the stock into this decline.

Aside from Kirk, several other officers at Intrexon have been buying. Zero sellers.

This is a man, who is widely considered one of the most astute investors in the biotech space, buying his companies shares in the open market–following a staggering 33% decline over the past 3 months. The stock is now trading just $1 above its IPO price.

As for other well-noted investors, Dan Loeb’s Third Point owns 3%, and value investor David Einhorn owns 1.4%.

Here’s what Loeb said about Intrexeon:

We initially invested in Intrexon in 2011 in a private round and have continued to accumulate shares since its IPO in August 2013. We believe that Intrexon is an innovation leader in synthetic biology with a unique value proposition and proven leadership team. Most attractive to us is Intrexon’s potential to transform multiple industries, including the health, food, and energy markets.

Synthetic biology is an emerging discipline that applies engineering design principles to biologic systems. Broadly speaking, synthetic biology is about the design, modification, and regulation of gene programs to produce a desired outcome, such as the production of a novel antibody from a cell culture, the optimization of a specific gene trait in crops, or the amplification of wild type natural gas metabolism into an industrially feasible process. Over the past 15 years, Intrexon has developed deep expertise in synthetic biology as well as the adjacent fields of process optimization and data analysis to create a unique technology platform that enables the iterative, directed improvement of experimental design.
To leverage its technology with collaborators, Intrexon has developed a unique business model that centers on Exclusive Channel Collaborations (ECCs) with partners. In exchange for providing access to their technology, Intrexon receives cost reimbursement (thus mitigating the need to raise additional external funds) and significant downstream economics. Because Intrexon’s technology is scalable, its capacity to sign ECCs across multiple industries is limited only by the ambition of its partners. Indeed, to date, Intrexon has already signed over 15 ECCs including, notably, with Johnson & Johnson. Over the course of 2014 and beyond, we anticipate that Intrexon will sign multiple ECCs, creating a broad pipeline of projects and diversifying away from specific product risk.

Intrexon is led by Chairman and CEO Randal J. Kirk, one of the most successful healthcare leaders of all time. Kirk founded and led New River Pharmaceuticals until its acquisition by Shire, and led Clinical Data through the successful development and approval of the anti-depressant Viibryd before selling the company to Forest. While his track record of value creation speaks for itself, we especially like that Kirk has personally invested significantly.

It’s worth noting, Michael Dell’s foundation recently bought about 500,000 shares.

Here’s how the numbers might look, out a few years. They should have over 120ish collaborations  by 2018. By the end of this year: 30.

source: Griffin Securities

Bottom line: this is a high beta play. However, with about 75% of the shares locked up in firm hands and another 21% sold short, this stock is poised for a massive short squeeze, should it get going. Kirk isn’t selling. Loeb isn’t selling. Einhorn did reduce his position, which might’ve contributed to the recent weakness. But if you have a strong stomach and penchant for massive upside plays, take a good look at XON.

That microbe, Rickard Santelli, has been running around the television cameras screaming fire in a crowded movie theatre for the past 8 weeks. With every downtick, this barbarian in a suit gets sexually aroused and he starts to yell at people, pointing towards this and that, that and this.

SILENCE for a moment.

It’s all noise.

For the better part of 5 years now, the stock market has been rising, fueled by Federal Reserve asset purchases AND corporate profits. Our largest corporations have performed coups abroad, taken over whole cities, established governments, without firing a single shot. From my vantage point, from any vantage point, I’d say there is money to be made from all of this modern day colonialism.

This rally will be built upon the skulls of men like Rick Santelli, men 1/3rd as smart as your average jungle bonobo ape. Rest assured, there will be trading lulls and periods of moribund starvation, but the rally will continue until men like Rickard are extinct.

This is America, land of the surveilled free, home of the chemically induced brave. We do not have many things to export, aside from war and dollars. However, we are the greatest financial engineers the world has ever known. Municipal budgets rely, mind you, on the profits had by pensions funds in the stock market. The bid you are looking for is everywhere. If you are keen enough to survive the valleys, you will soon enjoy the peaks too.

NOTE: It appears my thesis trades for both EZPW and BALT are materializing. Stay tuned for my next conviction trade.

NOTE II: I was up 1.48% for the day.