Buying some Palm...market cap just to small?

Just bought about £10,500 worth of Palm. Range over the last couple of years has been between about $12 and $24, currenly trading at $16.95. Market cap just $1.75bn, seems tiny for such a well known "tech" company. Yes, earnings have come off over the last year, giving it a P/E of ~26, but if you look at the long-term, surely the future is mobile computing? Was contemplating double the size of this position, but will do a little research first.

Yahoo Profile of PALM

The UK slowdown should begin soon...shorting a retailer (Next)

Sold ~£24,000 of Next today, the high street clothing retailer. Stock up significantly lately on private equity speculation, but I don't think this happens as it has been talked about for years with nothing happening. So I am viewing the recent spike as a great entry point to get short. Stock trading about £23.50, pretty close to the all-time high.

Not only am I not convinced by the quality of the company, it seems to me that the UK slowdown should start soon. House prices are clearly peaking, with the final burst higher in recent months thanks to City bonus money piling into property, despite the fact that these supposedly intelligent people in the markets should be able to see the speculative bubble that has formed. Once house price growth stalls, I don't see much to keep consumer spending going at a decent pace, as income growth has been fairly stagnant in the UK for the last few years, especially due to immigration from Eastern Europe holding wages down. In this scenario, retailing should be a sector that suffers.

Click here for details of the stock. Market cap £5.33bn, P/E ~16.1

Looking to take about 10% out of this trade, so first target is around £21.00.

Closing SalesForce.com

Closing out my SalesForce.com short, £1,630 profit. Stock down about 9% since I shorted it just a couple of weeks ago. That'll do me.

 

Still a complete P.o.S. company and valuation, but will take my money.

Selling cable

Sold some Jun '07 Cable (USD/GBP) at 1.9997 in £5/tick, putting a tight stop loss of about 20 ticks on it. Trying to catch a move here, think the just maybe with US stocks through all-time highs, but UK stocks lagging, maybe we can't price in too much of a differential in the respective economies and rates.

 

Was stopped out in a similar trade on USD/JPY recently, but only risking about £125 here.

Dumped Vonage

Sold all my Vonage stock yesterday, a little below $3. Too much talk of bankruptcy, and too much hinging on a court case (I think today?). Not convinced by this one any more, and lost too much, so cutting out. Probably won't revisit this one in a hurry...

 

Down ~£6,000 on it.

Took profits on the Eurodollar long

Sold Dec '07 Eurodollar at 95.03 today in £200/bp. Profit was just under £2,000. Not bad, quite pleased with this trade, and plan to get in and out of it. Am sure we'll continue to cycle this year through periods where the consensus view is that the FED won't cut rates, then will, then won't etc etc. I plan to play this from the long side only, every time it sells off decently.

Adding Starbucks...definite upside potential

Starbucks trading at ~$31.00, I just bought ~£32,000 worth.

 

Market cap of $23bn, on last year net income (Sep '06, and according to my bloomberg) of $564mm, sales of $7.8bn, and the company looks to have solid sales growth and good (although less solid) earnings growth. I think Starbucks is an ambitious and well-run company that still has plenty of growth and expansion in it, and that should keep shares on the up, despite a slightly high P/E for my liking (~40, and a forward P/E according to bloomberg again).

 

And finally the entry point looks ok. Has traded up at $40 in the last year, and it was trading at 30 way back at the end of 2004, so maybe the stock has some room to run.

 

Doubling the Eurodollar Dec '07 position

Paid 94.915 for another £100/bp of Dec '07 Eurodollar (I already had on £100/bp at 94.965). I like this trade, and want to be big enough to make some decent money if it performs. A reasonable worst-case scenario is that more hikes come along and I take a 100bp hit, so £20,000, which wouldn't be ideal but would not be a killer.

Trying to catch a big trend in USD/JPY

Buying some September '07 USD/JPY at 117.54 in £5/cent. Think the Yen could move into a long-term down trend...back in 1985 it was trading at 277, in 1995 it hit 82, and is currently just under 120. The 200-day moving has been steadily moving up since hitting a low in mid-2005, and it seems to me the Japanese are in no hurry to normalise rates, and although the US could be cutting rates this year, I have that trade on in Eurodollars so can think of myself as having a bit of protection on that front.

 

I'm putting a 50 cent stop on it (from the mid of the market where I put it on), so down ~£300 is my worst-case. And I plan to add to it if it moves my way. Lets see.

Shorting SalesForce.com...what a joke of a market cap!

My attention was brought to SalesForce.com from the BloggingStocks blog, after an analyst downgrade. Looking into it briefly, this company has basically never made money (P/E of 11,137 anyone?) and yet is valued at $5.12bn...yikes! So SalesFarce.com is a sell...sold ~£23,000 worth, with the stock trading ~ $44.16.

 

Was thinking of shorting twice the size, but find it interesting that it's only down about 2.5% on the day. Will keep an eye on this P.o.S.

 

Check out http://www.marketwatch.com/news/story/cowen-analyst-predicts-sobering-future/story.aspx?guid=%7B331628CF%2D24B9%2D4E97%2DBBDB%2D6CADD1C06345%7D&siteid=yhoo&dist=yhoo for a starter on the company.

 

Fyi, the 52-week range is 21.60 to 50.40, so this is looking like a decent entry.

Admin update...closed EBay last Thursday

Closed my EBay position last Thursday (same price as it closed today) for £525 profit. Couldn't resist a 3% profit in 3 days, and that was even after paying the bid/offer.

Back in the Dec '07 Eurodollar after recent falls

Just paid 94.965 in £100/bp of Dec '07 Eurodollar. One rate cut this year looks like the breakeven now, at some point this year I'm sure the markets will get jittery over potential rate cuts again...this contract traded as high as 95.28 recently (although seemed overly aggressive at the time, hence why I sold my previous long around 95.22).

 

You have to own this.

Shorting some JC Penney...US retailers surely can't go higher?

Selling about £42,000 of JC Penney (JCP), £5/cent of the Sep contract at $84.76. Stock trading at $82.84 just now.

 

Market cap of $18.7bn, with a P/E of 16.6, far too high given we are probably at the high-end of the earnings cycle generally in the US, and with some significant risks retailers face if the housing crash unfolds as it looks like it will, not to mention the warning signal of recession from an inverted yield curve and falling M1 money supply.

 

Risks to this trade? That they get bought by private equity. But I think this risk is giving a fantastic entry point, as the stock has been bid up on these rumours.(52-week range is $57.43 to $87.18). Looks compelling.

Buying some VeriSign

Just bought about £27,000 of VeriSign (VRSN), the company which operates .com and .net addresses. Only read about this company for the first time today, sounds like an interesting medium-term play, they are able to raise prices on .com and .net addresses, good margins, and have RFID technology which sounds like it has potential in the coming years (I need to read more on this).

 

http://www.bloggingstocks.com/2007/04/09/verisign-increases-pricing-for-com-and-net gave me the first thoughts on this one, it's worth a read.

 

Stock trading ~$26.20 just now.

Closed out my Oil, and increased SP500 short

Trade posts from Thursday:

 

Bought back my Oil short for just over $1, about £575 profit. Clearly took it too early, as Oil is off about $2.50 in today's trading. Dammit, another example of me taking profits too early. I need to think about this.

 

And added to my SP500 short in £100/point. Still (think) I believe that their are major risks to the US economy, and want to have a decent size position in it. Plus I'm so out of the money on my original short from the middle of last year I could do with averaging in...

 

Closing Ford for a small profit

Selling back my ~£20,000 of Ford just at the close, £620 profit from my purchase on March 19th. Stock trading about $8.08.

 

Think they are reporting sales numbers tomorrow, didn't have time to study it, as I wanted out before the close. This is a stock I'd like to keep moving in and out of from the long side, and I'm happy to book some small profits and wait for the next pullback. Having stated that they won't be profitable for the next 2 or 3 years, and a product that could suffer in a slowdown, I'm sure I'll get a chance to re-enter this one.

Buying some EBay, monopoly position should bring growth

Just bought about £20,000 of EBay, stock trading at $32.85 just now.

Was reading a blog earlier, and it was going through the rationale of Goldman who are tipping the stock, saying that it should easily see good growth for the next few years. EBay has such a stranglehold on the auction market, it will be very difficult for anyone else to break into (more users/content just encourages more users/content!). I also think that PayPal is an excellent long-term business and is here for the long-term, and Skype is just a bonus alongside the core EBay offering and PayPal. I've never used Skype, but internet telephony seems like it could be a decent business model as bandwidth speeds increase over the coming years.

 

I may look to increase my position here after a while, I like the long-term story.

Time to sell oil

Shorting Jun '07 Oil @ 67.40 in $5/cent (spot is trading around $65.90).

Market seems overly focussed on Iran issues right now, whereas the danger move for Oil to me seems to be lower on increasing evidence of a US slowdown.