Say Hello to the New Leadership

The growth department has been besmirched over the past 3 months, thanks to the likes of FEYE, SPLK and others of their ilk. However, from the ashes of unprofitable pervert stocks is born an era of resurgence amongst new sectors with stocks that openly urinate into the faces of those who stand before them. Without further adieu, I give you a small view into a world that you will become all-too-familair with soon, as the soda jerkers on CNBC propagate innuendo and salacious stories about their prospects to further enhance the public erosion, humiliation and decapitation of a Mr. Rickard Santelli.

The full list is now running inside of The PPT (ten thousand apologies to the leeches who read this site).

BX
ZBRA
AKRX
GILD
AET
TPX
THC
CHK
DVN
SLCA
EMES
HCLP
EOG
XEC
SN
HLSS
BBEP
CLR
CXO
OAS
KMP
CBG
AVGO
FSLR
SUNE
POL
KATE

BTW: I am now +35% from my initial purchase of XON and have yet to hear from some of my staunchest critics.

The US oil production boon will lay waste of foreign exporters of oil, eventually. But until we can lay waste, we need to get the oil, via horizontal drilling.

Very simply, I am going to provide you with a few names, touching upon a theme. Feel free to add in a little expertise to assist our fellow self-directed gamblers scalp a few trades or two, to feed his son–Tinied Tim.

Fracking is the boom. These companies provide the drillers with the sand that they need to drill.

SLCA
EMES
HCLP

An old favorite, FTK, provides parts of drilling rigs. I am sure there are a slew of well-to-do companies that will benefit from this explosion in domestic production. As of now, SLCA is my favorite–despite what JESSE LIVERMORE has to say.

I sold EL for a 1.3% profit. If I was a banker in London during the early 1800’s, I’d be quite pleased with a 1.3% return in 1 month’s time. I might even treat myself to a shepherds pie. However, being that I am a man stuck in a hole, 1.3% in entirely ridiculous, if I were to celebrate it and all.

I swapped it out for MET, based off of the PL deal. Both PRU and PL are trading at a 20% discount to where the PL deal was done. But I mainly like it for its dividend. It is a reduction of risk on my behalf.

This is for the misinformed canaille, men clad in velcro under-garments, carousing and gerunding about the market place in a very solicitous manner.

Instead of giving you stupid subjective opinions on whether or not you’re holding onto a pin-less hand grenade, I offer you mathematical certainty, something absent and abhorrent to the clowns shooting themselves out from carnivale cannons all day long on Twitter. My beef with Twitter is uncompromising and relentless, so do not attempt to dissuade me from killing them.

I ran a screen to find stocks down more than 20% over the past 3 months, with market caps over $500 million. These are some of the traits that these bastard companies possess. Keep in mind, these stocks are already down.

Average loss: 32.2%
Average PE: 69.31
Average Qt. Revenue Growth: 55.6%
Average p/b: 10.8
Average p/cash: 4.86
Median mkt cap: $1.1bill
Median p/s: 4.2

The bottom line: If you own a stock that is losing money, it is subject to crush your skull in. If you own a stock with a PE above 50, it is subject to crush your skull in. Although your company is growing rapidly, should its hairy chested price to sales ratio be above 5, it’s prone to crushing skulls in during periods of duress.

By definition, an old man stock is one with a dividend yield above 2%, market cap above $5 billion, PE ratio below 15 and p/s ratio under 2.5. Now if you want risk and safety (oxymoron alert!), you’ll need to do some research into what I like to call GARP names. I’ve mentioned them numerous times on this blog and if you cannot remember the damned hallmarks of a growth stock at a reasonable price, then I am wasting my time here.

Futures are lower. Expect to see further blood letting in “bubble stocks.”

NOTE: Should your company ever parade animated candies on the NYSE, it’s probably a bubble stock.

Looking over today’s aftermath, I was surprised to see that over 185 stocks went down more than 4%. You’d think with the indices flat there wouldn’t be this sort of damage being done to the skulls of the lazy people still waiting for papa to come home with the chickens. Papa isn’t coming home with the chickens, ye lad, because he’s dead and now you have to go live with your one eyed uncle.

Old man stocks still rule the roost. Oil and gas stocks offer growth plus security, whilst FEYE and SPLK offer nothing but idle, or not so idle, degeneracy.

Brazil sucks again and Europe is up way too much. America is the best investment choice for people with real money and reasonable expectations. Do not become hoodwinked into Nigerian get rich quick schemes, for those gents mean to do you harm. Trust in that.

There will be trading opportunities, stocks that we can nimbly exchange our time for modest 20-100% short term gains. However, in the meantime, I strongly suggest that you exile yourselves under the isolation and comfort of an olde man wheeled chair.

(God knows what half this blog post was about)

For the past 4 years, I’ve been winging it, using “artistic” license to balance out portfolios the way I deemed fit. After all, I am a genius and what could go wrong?

Since my comeuppance, I’ve implemented a series of rules that must be adhered to, dated until I make back all of my losses–which should take about a year.

For example: 40% of my holdings must be earmarked for conservative, long term, positions. Frankly, the word “long term” only means until they stop working higher. I am cutting losses at 5-10% from basis.

Another 40% go towards my GARP strategy (growth at a reasonable price). And, lastly, 20% go towards the sewers, craps shots in the dark, vagrant securities without a hope in the world, if only for a brief period of momentum. For the time being, leverage has been ruled out.

In the past, I’d toss positions around carelessly, uninterested about my prints and I’d oversize XYZ straight out of the gates, like some savage animal out in a field of garbage. But now, the more refined tea drinking Fly exercises a bit of discretion when buying securities. Although I still rip out offers like Sub Zero rips out spines, I size them at 5-8%, 8-12% and 12-20% of holdings–staggered over a number of days. In the case of XON, for example, I started off at 8% of holdings, upped it to 12% of holdings a few days later, then finally super-sized it to 20%, after my urinal shadows had a sit down with me and told me “the fucking stock, see, is heading higher, now” (Edward G. Robinson voice). Post victory, I dialed the position down over two days to 10%, then finally back down to 6% of holdings, where I intend to hold it indefinitely.

In the case of JAZZ, SLCA and now TEDU, all three positions are between 10-15% of holdings.

These are my new rules, ones that must be adhered to and respected, if I am to walk my way back up the boulevard of dignity– without throwing myself into lit fireplaces along the way. I am sure there will be a time and place for unchecked hedonism again, a time when “The Fly” might throw a glass of beer on his monitor and buy ten million dollars worth of stock because of dream that I had the night before. But times are tough now and we must comport ourselves like good stewards of coin, respecting the labor that went into acquiring said coin.

Amen.

I added to my TEDU position, overweighting it.

I am 100% invested long.

Right now the market is on edge over these “bubble stocks.” The indices do not show the stress, but it is there. Truth be told, these bubble stocks are alluring because of the amount of selling that has taken place in them over the past 3 months. We’ve been programmed to believe “all will be well” and whatever sold off will come back. I do believe this time is different, but the same, however. It’s different in that FEYE and SPLK are not coming back, not for years anyway. It’s the same because we’ve seen bubbles pop before (2000, 2008) and the process is something to keep in your memory.

When assessing risk, first, I look to the leaders: AAPL, QCOM, SNDK, MSFT and GOOG. If those are doing alright, I move on up the risk ladder. Stocks like TWTR, FB, MU and Z come to mind.

If those are doing well, I then travel inside of the sewers to see what the rats are doing. Names like CRTO, FEYE, CSLT, SPLK and CRCM come to mind. If you happen to work for one of these rat infested companies, I feel for you. Your jobs are woefully insecure and your stock options are under-water. You pretty much have nothing to look forward to and your CEO is a loser. That being said, everyone should be assessing risk, at all times, in order to get a feel for the market.

Are you investing in your trading business or winging it? Not to toot my own horn, but the services of The PPT, 12631 and After Hours with Option Addict are of immense value and will help novices and experts alike in trying to decode this junkyard of a market.

For example, right now overall market breadth is at 38%, a paltry number.

However, if I were to look under the hood and examine breadth on an industry by industry basis, a tool available in The PPT, I see that Banks, Machinery Tools, Automakers, Auto-dealerships, Airlines and Semiconductors are all strong. Couple that with the fact that biotech looks to be finding a floor here and TWTR is actually up, I’d say there is a good chance this market firms up soon and sprints higher into the bell.

I just posted a screen inside of The PPT, scouring for insider buying. While many of you get frantic over insider selling, most of the time it’s meaningless rabble. The jobs for most insiders are ephemeral, regular moonlighters. People have mortgages, brats in college, demanding battle axes who like to shoppe 24/7, gambling afflictions etc. An insider, mind you, sells for a hundred different reasons, but buys for only one.

Remember that for as long as your pathetic organic shells last on this diseased planet.

Here are a few stocks that have been under accumulation by insiders.

Oh, one last thing, don’t just accept this data on face value. It has been generated by computers and is subject to error. Also, in some cases, large blocks of stock have been purchased by others companies, as is the case with WES (APC bought a chunk). Do your due diligence first.

WES
PKY
OPK
SD
HLF
VMW
SCTY
AGCO
NRP
BXMT

And here are some stocks that have crushed over the past 3 months with some insider activity.

PBYI (they were wrong!)
OLED
MDRX
VPRT
AMRS
BAXS
ALQA
TTPH
SNTA
AMSC
LIOX
HDY
KBIO
AEGR
HNSN
LEI

Let me know if anything pops out. Get to work.

If one of you little trollops mentions my foray into high beta tech again, I’m gonna punch your ears off. I don’t mind differing opinions. Truly, they can be thought provoking. Not to isolate one person’s comments and toss him onto the BBQ grill, but I have a bone to pick with “I AM JESSE LIVERMORE.”

First of all, the stupid name suggests he’s some sort of wannabe short seller, based upon the assumption that he thinks he’s Jesse Livermore– ergo, the name choice.

After I posted my buy of SLCA, which is +2 from my cost basis, JESSE “fucked face” LIVERMORE had this to say:

jesus christ, the object is to buy LOW and sell high, not the other way around Fly.

What the fuck does that even mean? I guess he assumes I shouldn’t buy stocks when in a roaring bull market, because, ummm, stocks are trending the fuck higher?

He continues, after being called out on the carpet for the dog that he is:

Certainly not when the weekly RSI is at 80, which is what SLCA is at now.

Or when a stock is up 98% since the SPX bottomed in early Feb. And insiders are dumping the stock like crazy.

This is the exact same thing you did w/WDAY, YELP, FEYE, SPLK etc. Chased big winners.

So because I lost money over the past month, I should discontinue the methods that have made me successful over the past 18 years? Moreover, he cites insider selling, which has been proven to be absolutely nonsensical bearish points about any company. And, lastly, of course, he cites my losses in The Four Horsemen of Financial Disaster.

Oh, by the way, there was an insider direct purchase the other day.

He’s not finished:

marcus,

““Up 98%” – so don’t buy a stock because other have been buying it?”

No, you exercise some patience and buy strong stocks on pullbacks. Not when it’s massively overbought.

And did you really think I was using cloud/saas internet stocks as comparable “peers” to a drilling supplier? Those were merely to illustrate Fly chasing big winners at highs instead of waiting for an entry point with a good risk/reward and defined downside.

And lastly, you mad bro?

Ok, here’s the thing that pisses me off about his whole train of thinking.

1. He believes in bullshit like RSI’s and how stocks that are going up should “breathe” and go down, as if it were that easy. Look at any major winner over the past 100 years and bear witness to their breakneck ascension into the stratosphere. Understand that scores of people, who thought just like you, shorted NFLX from $60 to 100 and AMZN from $60 to 100 and CMG from $60 to 100, only to get their fucking space helmets crushed into tiny pieces and their brains strewn out–all over their living room floors.

Rule #1: don’t assume to know anything. You are a pleb and the market kills people like you every single day, even the real Jesse Livermore.

Rule #2: don’t attack me for averaging up on a stock that is working for me, in a sector that’s highly profitable and should continue to do well for the next decade–literally.

Lastly, I’m not married to these stocks, as demonstrated by my willingness to cut losses rather quickly as of late. I’ve sold out of about 6 stocks for small losses and held one giant position for a mammoth sized win. The net result has been a +10% advantage to the good over the past month. If SLCA reverses on me, I will sell it. I certainly do not need a sermon about the tenets of investing and how I might comport myself should things go awry. Don’t assume anything, Mr. Jesse Livermore. I’ve been eating the livers of people like you for over a decade now and will continue to do so until your brokerage account assets have been depleted into pixie dust–a dream, a fantasy, a nightmare.