"By the time we make any money we'll all be so old that we'll be drooling our oatmeal"
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The Drooling
Oatmeal Investment Club "By the time we make any money we'll all be so old that we'll be drooling our oatmeal" |
 Poodah Back to the D.O.I.C.
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Poodah’s
Picks Poodah apologizes for being boring. Being unable to find even one new stock with appreciation potential greater than the least of his picks for 2006, he is sticking with the same portfolio. Highlights of justification for picks: Chart source: Thomson via Scottrade Finisar (FNSR) appreciation target – 300% Revenues
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Debt to Equity Recent win against DTV for patent infringement. $72M damages plus $1.60 per settop box per year until 2012. Appealed, but expected to hold up. Best of Breed. Orasure (OSUR) appreciation target – 200% Revenues
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Debt to Equity Near monopoly: 20-minute saliva test for HiV I & II. Sales increasing. Approval for over-the-counter sales anticipated in 2007. Near monopoly: 20-minute saliva test for for controlled substances. Sales increasing. Near monopoly: 20-minute saliva test for Hepatitis ‘C’. (Soon to be approved) Automated plant ready to come on-line when approved. Replaces 20 employees with 2. Best of Breed. Brocade (BRCD) appreciation target – 100% Revenues
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Options backdating problems have artificially depressed the stock. Best of Breed. EMC Corp. (EMC) appreciation target – 50% Revenues
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Debt to Equity Very weak justification here. I just think it ought to be selling for somewhere around $20/per share. Analy Capital Management (NLY) appreciation target – 50% Revenues Earnigs per share Cash Flow
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Debt to Equity Hurt lots by the inverted yield curve. It can’t stay inverted forever, can it? Dividends have been increasing.
Strange behavior for FNSR on Friday (15sep06). Flatline for about 4 hours on low volume--3.33, 3.34, 3.33, 3.34.......Then big drop in last few minutes on high volume. Then good upside this morning. The really strange behavior is that long flatline. Never saw anything like it for Finny.
Poodah’s Story – Part 2 Now for a bit of tedious background before getting to the good stuff. I began to accumulate BRCD, FNSR and, an outlier for me, Orasure (OSUR), originally buying Epitope before OSUR bought them out (curses). I still believed in the eventual ascendancy of these three companies, and I noticed the pattern of their volatilities. Through eking out 5 and 10% gains on fast trades (buy 5% down, sell 10% up), plus injection of fresh capital, I reduced my basis to ~$4 on BRCD and under $2 on FNSR. OSUR, being a newer component of my portfolio, was not burdened with the Spring of 2000. Nevertheless, through gradual accumulation and trading, my OSUR cost is about $5. After five years, I have recovered all plus ~20%. If OSUR ever gets FDA approval for OTC sale of their OraQuick 20-minute saliva test for HIV I & II, I have no clear target for how high it can go. I’m holding what I have indefinitely. I used to trade it a lot, but for now, I’m just holding. Pretty much the same for BRCD – I still like it and still hold it, but I don’t trade it as I did in years past. More recently I have zeroed in on FNSR for trading. I have a core holding which is not for sale any time soon, and I trade, day-to-day, week-to-week, sometimes month-to-month, an extra amount equal to about 20% of my core holdings. It is still working, in the main, but I recently made some embarrassing moves I can only attribute to loss of concentration and straying from the plan. Straying from
the Plan Seeing the striking gains over recent weeks (March06), I decided that, since my FNSR had approximately doubled to $4.87, I should lock in profits with strategically placed stops. I set them in 1/3s of my core holdings: $4.39, $4.19 and $3.89. I figured that if it fell through those three stops, I would have more or less doubled my money and be well out of a stock that was in serious trouble. It fell to $4.27 and I lost 1/3 of my core holdings. You can probably begin to see that I had become enamored of the stock. A bad thing to do. FNSR looked strong that day and I resolved to buy it back the next trading day at anything $4.27 or lower. Then, that night, Cramer decided to pump it and it rose to $4.65+. Damn! I wanted back in, but not at that price! Damn Jim Cramer – he wasn’t cooperating with my schedule. Feeling incomplete with only 2/3 of my core holdings, I pined through most of Monday, agonized as FNSR rose inexorably until, on Tuesday, it was skipping back and forth across the magic border of “fundland” - $5.00. It was during the DOIC meeting at Nosti’s that Half-Wit and I made our moves, while the Oracle observed, uncharacteristically calm and pensive, disquietingly tolerant of our unhealthy behavior. He had been there before (as, indeed, had we) and knew nothing he could say would dissuade us. Half-Wit hied to his office to buy FNSR online ($5). I resisted until just before the market closed and phoned my broker to place an order ($5.02). Discipline was a faint memory. Shades of the BRCD trade in the Summer of 2000! But this was different – I was recovering my core holdings. I needed to be whole. Incompetence After somehow connecting to the Stockton, CA office of my broker, I was politely informed that I should be talking to the Albany, NY office, where I had opened the account. What are the odds of misdialing and getting another branch of the same brokerage? Maybe not so low – maybe they bought a block of similar numbers.
Recovery Since these aberrations, Poodah has recovered some stability and hopes he can face the future with equanimity, engendering the sanity and discipline he has, but for some few lapses, maintained ere these long years. He has reconstituted the missing 12% of his core holdings at $4.92 and regained his 20% trading shares at $4.74. FNSR closed today (22MAR06) at $4.95. The Bells are buying last-mile fibre; corporations are upgrading data centers. FNSR is miles ahead of the competition, in both technology and production capacity. BRCD has the best fibre switches. OSUR will attain OTC. EMC – well at least I doubt it will deteriorate much. If the FED ever stops raising rates, NLY will come back. Poodah is back on track. Life is sweet. [Note: the preceeding was written on or about 22MAR06. Poodah may or may not continue his tale, recounting the disappointment of being strategically misplaced when Finny tanked in June. Probably not.] POODAH Gloats - 06APR06I have been investing for many years. During this time I have made only three trades that I consider home runs. Not necessarily for the profit they brought – sometimes it was modest. Not for the brilliance of my analysis, although I must confess that I felt pretty smug about the first one. The other two were like an eagle in golf – yeah, maybe I was in the groove, but luck was the determining factor. Home Run #1 – Sometime in the early 70s, PanAm airline was in big trouble. Their 4 ¼% convertible bonds were going for $250. In five years they would mature at $1000. One only had to hope that they would still be around in five years to pay off. My reasoning went as follows: PanAm was the major means by which the Army was transporting troops to Viet Nam. The government would keep them afloat. So I bought the bonds, which yielded 18% per year for five years and were redeemed at maturity for $1000 – an additional 400% return. Sweet. Home Run #2 – A couple of years ago I bought FNSR at one penny above its low for the day and sold it for a 5% profit that same day at one penny below its high for the day. Almost a perfect trade. Home Run #3 – This week. On Wenesday, I saw BRCD and FNSR at prices I could not resist. I bought both, knowing that I was already overweighted in these stocks. I backed up the truck, unloaded all but $500 of available cash in my account, and loaded up with BRCD and FNSR. The next day (06apr06), I was in meetings all day and didn’t have a chance to follow the action. At about 5PM, released from the last meeting, I called up the following two graphs: BRCD – Bought 05APR06 at $6.23
The graph above is the most beautiful I have
ever seen – Look at that climb! Look at that perfectly matching
volume spike! It wasn’t a lot of money, and I take no credit for
the results; they were wildly beyond my expectations. A day later,
I still don’t know why it happened. Some give credit to Jim
Cramer, but this seems larger than his usual pump effect. It’s
just that feeling that, for at least a moment, I was perfectly in
tune with the Universe.
The FNSR graph is almost as beautiful, though not quite as dramatic. Two masterpieces in one day. Forgive Poodah if he gloats. One must relish and celebrate his victories, no matter how small, few or fleeting, for he will certainly curse, regret and bemoan his defeats, which are as inevitable as red squirrels in the attic.
Poodah’s Story – Part 1 Half Wit harangues me constantly to contribute content. I demur and delay – nothing to say. In the end, inevitably, the starfish wins, the clam opens up. [Defensive self-edit: the metaphor is a non sequitor – starfish do not harangue. I know that and I don’t care.]. So here is Poodah’s investing tale. I late 1999 or early 2000, I read a comprehensive report on the nascent Storage Area Network (SAN) industry. Since this technology was related to my work, I understood the benefits it offered and became enthusiastic about its potential to enrich me modestly should I venture a modest investment. After two weeks of due diligence, I chose three or four from the list of about 30 players discussed in the report. I can’t remember now why I chose Ancor (ANCR). It got absorbed by QLOGIC (QLGC), which I played with for a while and finally sold out at $39.41, after the Great Meltdown (GM), for a tax loss I considered more valuable than anything QLGC would ever return to me. That seems to have been a good decision – see chart. I also bought Brocade (BRCD). As I remember, I thought their fibre switches were the bee’s knees and would form the basis of astounding efficiency in the large enterprise SAN environment. At one point, I was so enamored that I lost all perspective. Having previously committed all but some $200 of available cash in my account, I bought two shares of BRCD in late May2000 at $110.57 per share, paying, in the event, a $24 commission. Madness! No sweat – Poodah sold those two shares in mid-Jul2000 for $193.99 each. Those were the days. Then, of course, the Great Meltdown. I resumed buying BRCD over the next few years, mostly just accumulating as it slid ever downwards with everything else in fibre space. The lowest price I paid over the years was $3.94. I think I’m ahead these days, but not sure. I need to look into that. I bought Finisar (FNSR) for two reasons – their technology seemed superior to that of others in their field, and I read in at least two places that FNSR had good, solid management. Being a long-time denizen of the technology world, I recognize the rarity and value of good management in high-tech ventures. Don’t get me started! Over the years I bought and sold FNSR everywhere from $40.25 to $0.78. Combining profits from trading with averaging down, I now have a core holding at a price of somewhere below $2. The Great Meltdown hit me hard. At the bottom, my account was worth 33% of what I had invested. Not to worry, not to cry, Ante up again and buy, sell, buy! To be continued…
OraSure: Cramer Slander by: dreamer1976md As many of our fine readers and posters on this Board know by now, Mr.Cramer has made some unfortunate remarks about our fine Company OraSure last night on his CNBC Show. Here is my analysis of the situation and my opinion. To start, here is a little Quiz. 2. Who knows more about OraQuick Advance? a.A highly esteemed poster on this Board who is a Doctor at a Detroit Hospital who has used OraQuick Advance extensively on his patients over a long period of time (Post 33558). b.Mr. Cramer 3. Who knows more about OraQuick Advance? a.Student Researcher wsucbaker who has personally worked with OraQuick Advance extensively and who has reported on this Board the amazing performance of this revolutionary product in the field (Posts 33685, 33689, 33690, 33694, 33701). b.Mr. Cramer 4. Who understands the real meaning of False Positives better? a.You, the Reader of this Post b.Mr. Cramer I believe that the majority of you fine readers of this Board can easily pick the right answers even in your sleep. I have reached the following conclusions. 1. Mr. Cramer shows that he lacks understanding of the implications of a False Positive result. 2. Mr. Cramer has reached an investment conclusion based on this lack of understanding. 3. Mr. Cramer can be excused for not knowing all the complex implications of False Positive results and the complex Medical Terminology and Statistical Analysis behind it, but his arrogance and his refusal to question his own ignorance is totally irresponsible. In this individual, a little knowledge is indeed quite dangerous. 4. His comment "this stock is killing people," was incredibly inappropriate, irresponsible, and slander to a fine Company that makes a revolutionary new product that is helping to save countless lives through early detection of HIV, the deadliest disease to affect Humanity. 5. I believe that his comments will have little effect on the long term prospects of OraSure, because a successful company is not created on prose, it is created with fine revolutionary products, and OraSure Advance is just one of many for OraSure. 6. Truth and wisdom will inevitably win over ignorance, so time is on the side of patient investors. 7. Mr. Cramer should face serious consequences for his inappropriate, uninformed and slanderous remarks. He has not only damaged the reputation of a fine Company and a fine product, but he may have indirectly influenced potential users of OraQuick Advance, with possible devastating consequences. I am outraged at Mr. Cramer's remarks not so much because I am a beneficial shareholder, but more because I am also a Healer and a Citizen that believes in common decency and social responsibility. I believe that his unfortunate remarks about our fine Company were totally inexcusable for someone in his position. Sincerely, Dreamer1976, M.D.
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