These Short Squeezes Can Go Parabolic

This is exactly the type of market that produces epic short squeezes, as the wall of worry and disbelief grows larger.

Naturally, my top pick is VHC.

The criteria is as follows:

-Stock price underperformance over the past 3 years
-Market Caps between $1-25 billion
-Net Cash per share/price ratios above 0.1 (meaning its net cash is 10%+ of market cap)
-Ex out financials, healthcare and ridiculous Chinese burrito scams
-Profitable

Here are my top candidates to go private and help generous bankers leverage up the balance sheets in order to, umm, generously pay themselves dividends under the shroud of secrecy.

VECO
NVDA
MRVL
NTAP
SYNA
PLCM
DLB
LRCX
CREE
MSTR
FWLT
MDR
JNPR
LOGI
EA
CAJ
ERIC
ISIL
IM
GLW
GVA
ADTN
GES
ADBE
SLAB

All of a sudden, AAPL is un-investable. It appears the “laws of large numbers” have finally applied to the company, leaving buyers of the name exposed to a massive Exodus and institutional strike. I always knew Tim Cook would destroy the company. Anyone who bothered to read S Jobs’ biography knew that the company could never thrive under different leadership. It was his eccentricity, aka insanity, that fueled Apple’s innovation. Tim Cook is just a technocrat.

Because of news that AAPL’s suppliers have scaled back, due to lack of end user demand, any and all suppliers to AAPL are getting hit today. What’s sad about the whole ordeal is that these stocks barely benefited from the relationship in the first place. Apple treats everyone as an inferior, forcing them to supply goods and services at Walmart prices, else lose the business. Since AAPL had a virtual monopoly on handset growth, suppliers bowed down to the almighty Apple elite and lowered prices.

With the success of Samsung and possible resurgence of both Nokia and RIMM, I believe this is a net positive for the suppliers. Monopolies kill innovation and gross margins. Perhaps once the AAPL bandwagon gets derailed, the parts makers can reassert themselves and attain respectable margins.

The following stocks are getting hit today because Tim Cook has destroyed AAPL:

CRUS, NTE, QCOM, BRCM, TQNT, AVGO

In other news, the short squeeze in VHC continues, the anti-Apple, literally and figuratively.

Prime Minister Abe has the Bank of Japan in a cage, like the gimp from Pulp Fiction, forcing them to conduct perverse acts of monetary policy. He has ordered them, emperor style, to create inflation–out of thin air, mind you.

“The statement must say clearly that 2 per cent is the target. That would lead to fundamental changes” in the way it guides policy, he said.

I want you to appreciate the candor of Mr. Abe, for he is intent on making investors in Japan a great deal of money. You’re all familiar with “The Bernanke put”, correct? Well, now there is an even bigger put in Japan, in order to reverse the endless tides of recession that’s been plaguing Japan since the 1990’s.

Will it work now? Will the new mantra of “inflation by any means necessary” lead Japan to a new era of prosperity?

The answer is decidedly yes. Japanese stocks are the cheapest in the world and Abe is fixed on seeing that reverse.

Some of the internets are worried about the downward spiral in the Yen, exclaiming “OMG, it’s sooo gonna stop going down so fast, lol, LMAO, SMH.” Ignore these people are being retarded, incapable of deciphering the difference between a poached egg from one that is soft boiled.

On a much longer time horizon, the Yen has significant downside from current levels. Dare I say, it can drop another 20% and no one would think anything of it.

Hence, “The Fly” is long HMC and it is his favourite pick for 2013. He is also long SNE and would purchase “the gentleman’s ETF”, DXJ, if he was in the market for a more conservative/diversified approach to his thesis trade on Japan–which he is not at this juncture in time.

5 year chart of Volatility

We take it for granted, the seemingly endless barrage of buy orders taking the markets to new highs, compressing volatility and reducing it to a story to be woven near the fireside to the grandkids.

“Back in my days, we’d deal with this instrument called volatility. One day it really went up. Boy you had to be there.”

“Grandpa, what’s volatility?”

What is taking place in the markets is nothing short of extraordinary. The markets go up, constantly, for years and everyone doubts them. God bless the souls of Tim Knight and Zerohedge. I have no idea how they can remain on the interwebs after being treated so brambly by the markets.

Now based upon historical precedence, which doesn’t seem to mean anything these days, a $13 handle on volatility should mean we are near the highs, if not the high of the markets, and something is going to surprise us in such a way– we will regret the day our fathers decided to do without a contraceptive. Theoretically, markets are about to plunge and all of you stupid readers out there will wallow, like fat men in kiddie pools, stuck in egregious losses.

“The Fly” is immune to such occurrences, since he would be in outerspace, enjoying the view, while firing his Orbital Space Cannon (OSC) at the indigenous folks in Africa. There is nothing redeeming, whatsoever, about that God forsaken continent.

But you know it’s all poppycock. The markets will crumble no more than a person inside of the lower class will live life without bitterness, contempt and honour.

Inverse volatility has been all the rage, with XIV being the number one performer in the ETF/ETN world last year. I see no reason to believe it will stop edging higher. After all, NOTHING seems to be able to derail the markets.

Agreed?

RC

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The moment of truth awaits the shareholders of VHC. We’re coming down the stretch here, the day of reckoning for Apple approaches in the form of court ordered injunction. Court is in session starting 1/15, lasting to 1/25, to discuss the matter of settlement, because Apple infringed and a judgement of $368 million was given to the fine folks over at VHC.

Unlike Chuckard Bennitis, I do not sell when the moment of truth is upon me. I’ve been holding this stock for 6 months and have seen fortunes come and go like the seasons.

I’m all in, despite hating the way the stock trades. I won’t have it any other way.

I added to my NAV position. It’s what I do every afternoon.

As you know, I’ve been doing some traditional research over the past week, in order to expand my universe of stocks. I’m only as good as my last trade and my last few have really stunk. Thus far, only a few names strike a cord, like ELLI, BCEI, CADX, AMBA and maybe ERII. I’ve moved over to seasonal factors and was reminded how well ag names do in February, ahead of the planting season. Stocks like MOS, CF and ANDE are of interest to me.

Then I came across the best performing stock for the month of February and was awestruck by the results.

THLD

Does anyone know the name and why it tends to explode in Feb? Are there oncology conferences that I need to be made aware of? I only ask because I tend to avoid biotech names, but have recently become interested in a few–thanks to an overzealous doctor that I know.

It’s also worth mentioning that silver does phenomenal in February, with AGQ averaging +14% for the month.