Sure, developing economies are growing fast. But that doesn’t guarantee their stocks will soar.
Is Vertro the Next Travelzoo?
October - 31 - 2010
John Gilliam submits:
In April of 2004, a small company called Travelzoo (Nasdaq: TZOO) had a number of investors who started pushing a concept – buy shares of TZOO, subscribe to their email travel specials newsletter (give them your email address) and then get as many of your friends and associates as possible to buy the stock and subscribe to the newsletter too. It was a grass roots marketing twist on the old Peter Lynch concept of investing where you shop and shopping where you invest.
Travelzoo’s business model was driven by the distribution of travel discounts and specials through email newsletters, so the company was able to charge travel suppliers higher rates when they had more subscribers. The concept apparently worked, as the number of subscribers increased significantly and TZOO reported sequential revenue gains of 11% for the first quarter this movement began (Q2 2004) and then 32% the next quarter (Q3 2004).
Marty Whitman: Great Stock Picker, Wrong on Diversification
October - 31 - 2010
Roger Nusbaum submits:
The Barron’s interview this week was with Marty Whitman who is probably most known as the manager of the Third Avenue Value Fund (TAVFX). The fund is 20 years old and since inception it has absolutely clocked the broad market. According to Morningstar, $10,000 at inception would have grown to $112,949 versus $43,800 for "World Stock" and $30,772 for "MSCI EAFE NR USD." When the market dropped 44% ten years ago TAVFX only went down 17% (per Google – may not include dividends). However at the March 2009 low, when SPX was down 55%, TAVFX was down 62% as Whitman got caught in a lot of the "wrong" stocks during the meltdown.
There are several quotes from the interview that I think are very instructive. As I cast a critical eye here I would note that no single method of portfolio construction and cycle navigation can be the best for all times. Whitman is a hardcore value investor. In the interview he says that things like MPT and diversification are "absolute garbage." Diversification to protect against the downside is "worse than useless."
Digging Into Rare Earth Investments: Behind the Sudden Surge in Popularity
October - 31 - 2010
Zecco submits:
By Richard Bloch
If Google Trends are any indication, there’s been a surge of interest in rare earth elements lately.
Expect a Post Election Rally
October - 31 - 2010
Money Morning submits:
By Don Miller
The Democrats and Republicans have spent a record $3.5 billion in preparation for this year’s midterm elections. But regardless of the outcome, the good news is that the stock market traditionally has performed well during midterm election cycles.
Small Stocks With Potential to Graduate to S&P 500
October - 31 - 2010
StreetAuthority submits:
by David Sterman
The Russell 2000 index is widely seen as a proxy for small cap stocks. Yet the definition of "small cap" can be quite loose. Riverbed Technology (Nasdaq: RVBD), the Russell 2000’s largest component, is worth more than $4 billion, while a number of members of the index are worth less than $200 million. Historically, the biggest names in this index eventually graduate, often to the S&P 500, where they become one of the smaller companies in this large company index. Such a move often triggers a nice little gain, as index funds need to buy up shares of any new S&P 500 entrants to ensure that they own the whole portfolio.
Jacksonville Bancorp and Atlantic BancGroup: Merger Arbitrage With Attractive Paper Profits
October - 31 - 2010
Adam Sues submits:
Similar to the FCEC/TOBC merger from a few months back, small community bank mergers can provide a tremendous source for arbitrage profits. Jacksonville Bancorp Inc (JAXB) and Atlantic BancGroup Inc (ATBC) are two tiny micro-cap banks that agreed to merge back in May.
Due to their small size – a market cap of $13m and $2.6m for JAXB and ATBC respectively – the transaction seems to have flown under most investors’ radar and offers attractive returns for patient individual investors who are able to pull off the trade – at least in theory.
Savient: Risky but Promising Small Cap
October - 31 - 2010
Ian Wyatt submits:
If you’ve never experienced the painful symptoms of gout, consider yourself lucky. The buildup of uric acid crystals in joints has been likened to having skewers pushed into flesh.
It’s estimated that over one million people suffer from gout attacks every year – and if a person with a proverbial skewer sticking out of their joints isn’t a motivated buyer, I don’t know who would be.