2009 - Ideas For The Year Performance Update

At the beginning of the year I made a list of picks and pans for the year which I planned to review at the end of each month. The purpose of this exercise was to provide ideas for your own research, some potential opportunities for 2009, as well as some companies I feel are best avoided. We're five months into the year now and there has been a lot of movement across the board.

Interestingly, had I owned real life positions in a number of these stocks, I would've most likely gotten out while the going was good. For instance, shares in Anadys (ANDS) skyrocketed over 300% on positive clinical data before losing most of their gains a few months later following a poor earnings statement. A gain that large in the biotech arena would've been too much for me to resist and I would've been out of there right away! However, for the purpose of this exercise there will be no changing of picks, no matter what happens to the underlying companies.

So here are the performances for 2009 to date.

My Long Picks for 2009, with 05/31/09 closing prices

Himax Technologies (HIMX) - $3.63 (+125.47%)
Yanzhou Coal (YZC) - $12.63 (+67.95%)
Anadys Pharmaceuticals (ANDS) - $2.22 (+41.40%)
Quicksilver Gas Services LP (KGS) - $13.00 (+37.13%)
Urban Outfitters (URBN) - $20.42 (+36.32%)
Natural Resources Partners LP (NRP) - $23.66 (+35.59%)
Dorchester Minerals LP (DMLP) - $20.49 (+29.11%)
Ecology & Environment (EEI) - $14.22 (+18.70%)
Raven Industries (RAVN) - $27.46 (+13.94%)
Versar, Inc. (VSR) - $4.52 (+9.71%)
Chase Corporation (CCF) - $11.70 (+3.63%)
Highveld Steel and Vanadium (HSVLY) - $7.85 (+2.21%)
Hugoton Royalty Trust (HGT) - $13.88 (-13.52%)
UFP Technologies (UFPT) - $4.16 (-21.36%)

Shares in Himax Technologies (HIMX) continued to rise from $2.73 to $3.63 this month despite reporting a huge slump in earnings revenue. The company is expecting a recovery in Q2 prompting the move in the share price. The top performer of the month was Versar, Inc. (VSR) moving from $2.60 to $4.52, following the announcement that the company would receive stimulus money as part of an alternative energy study. Dorchester Minerals (DMLP) and Hugoton Royalty Trust (HGT) both put in significant moves this month. I continue to be bullish on commodities which I still believe will be one of the few sectors that will finish the year on a high note. Raven Industries (RAVN) announced a dividend increase this month, something of a rare commodity in these times, leading to a moderate movement in the share price.

Not so stellar was the performance of United Foam Technologies (UFPT), falling from $5.05 to $4.16 and currently sitting bottom of the pile in my long picks for the year. The move is largely due to a drop in sales and revenue, however, I still believe the company has a strong balance sheet and will emerge from the current crisis as a strong player in the industry.

My Short Picks for 2009, with 05/31/09 closing prices

Office Depot (ODP) - $4.66 (+56.38%)
Ann Taylor Stores (ANN) - $7.32 (+45.24%)
Red Robin Gourmet Burgers (RRGB) - $17.30 (+2.79%)
Build-A-Bear Workshop (BBW) - $4.48 (-7.82%)
La-Z-Boy (LZB) - $1.87 (-13.82%)
Bank of America (BAC) - $11.27 (-19.96%)
LaCrosse Footwear (BOOT) - $9.40 (-24.68%)
Citigroup (C) - $3.72 (-44.56%)
Mercantile Bancorp (MBR) - $5.65 (-46.45%)
Converted Organics (COIN) - $1.48 (-58.19%)
Circuit City (CCTYQ) - $0.021 (-84.62%) - Bankrupt
Smurfit Stone Container Corporation (SSCC) - $0.00 (-100%) - Bankrupt

As a group my short picks continued to rally this month, despite poor fundamentals. I think this is a trend that we will shortly see reversed as the bear market rally gives way to the next leg down. The biggest mover of the month was Office Depot (ODP) moving from $2.70 to $4.66 following a number of analyst upgrades, while La-Z-Boy (LZB) retraced most of last month's impressive gains. Office Depot (ODP) has made an impressive recovery from close to $1 a share back in March so I'm beginning to suspect that its days as a good short pick may be behind us.

Well, I will review the list again at the end of June to see how my picks and pans are performing. Until then, happy investing!

Disclosure: At the time of writing the author held shares in Highveld Steel and Vanadium (HSVLY), Himax Technologies (HIMX), Hugoton Royalty Trust (HGT), Yanzhou Coal (YZC), UFP Technologies (UFPT), and Versar, Inc. (VSR).

2009 - Ideas For The Year Performance Update

At the beginning of the year I made a list of picks and pans for the year which I planned to review at the end of each month. Well, it's that time again and there's definitely been a lot of movement this past month!

So here are the performances for 2009 to date.

My Long Picks for 2009, with 04/30/09 closing prices

Himax Technologies (HIMX) - $2.73 (+69.57%)
Anadys Pharmaceuticals (ANDS) - $2.50 (+59.24%)
Quicksilver Gas Services LP (KGS) - $13.46 (+59.24%)
Natural Resources Partners LP (NRP) - $24.09 (+38.05%)
Yanzhou Coal (YZC) - $9.91 (+31.78%)
Urban Outfitters (URBN) - $19.14 (+27.77%)
Ecology & Environment (EEI) - $13.43 (+12.10%)
Dorchester Minerals LP (DMLP) - $17.63 (+11.09%)
Raven Industries (RAVN) - $24.64 (+2.24%)
Highveld Steel and Vanadium (HSVLY) - $7.45 (-2.99%)
UFP Technologies (UFPT) - $5.05 (-4.54%)
Chase Corporation (CCF) - $9.70 (-14.08%)
Hugoton Royalty Trust (HGT) - $11.10 (-30.84%)
Versar, Inc. (VSR) - $2.60 (-36.89%)

The top performer of the month was Yanzhou Coal (YZC) moving from $7.17 to $9.91. I continue to be bullish on commodities which I believe will be one of the few sectors that will finish the year on a high note. Urban Outfitters (URBN) also put in an impressive month, moving from $16.37 to $19.14, although I am still interested to see what this months Q1 figures look like.

Shares of Anadys Pharmaceuticals (ANDS) fell off a cliff after reporting larger than expected expenses in their recent earnings, demonstrating once again the volatility of the biotech sector. I still believe that Anadys has great potential, however, had I been sitting on a real life +300% gain from a biotech stock I would've sold right away! Anyway, let's not dwell on this, moving on.

My Short Picks for 2009, with 04/30/09 closing prices

Ann Taylor Stores (ANN) - $7.39 (+46.63%)
Red Robin Gourmet Burgers (RRGB) - $22.71 (+34.94%)
La-Z-Boy (LZB) - $2.85 (+31.34%)
Build-A-Bear Workshop (BBW) - $5.13 (+5.56%)
Office Depot (ODP) - $2.70 (-9.40%)
LaCrosse Footwear (BOOT) - $7.79 (-37.58%)
Bank of America (BAC) - $8.70 (-38.21%)
Mercantile Bancorp (MBR) - $6.41 (-39.24%)
Citigroup (C) - $2.97 (-55.74%)
Converted Organics (COIN) - $1.52 (-57.06%)
Circuit City (CCTYQ) - $0.021 (-83.85%) - Bankrupt
Smurfit Stone Container Corporation (SSCC) - $0.00 (-100%) - Bankrupt

As a group my short picks continued to rally this month, despite poor fundamentals. I think it's a classic case of "a rising tide floats all boats". La-Z-Boy (LZB) put in a particularly impressive month moving from $1.25 to $2.85, but I really have no idea why! In my opinion the company has poor valuation and fundamentals and I don't expect them to survive the year. Build-A-Bear Workshop (BBW) missed analyst earnings estimates with a pretty unimpressive set of figures which has since been reflected in the share price reversing most of last months gains.

Well, I will review the list again at the end of May to see how my picks and pans are performing. Until then, happy investing!

Disclosure: At the time of writing the author held shares in Highveld Steel and Vanadium (HSVLY), Himax Technologies (HIMX), Hugoton Royalty Trust (HGT), Yanzhou Coal (YZC), UFP Technologies (UFPT), and Versar, Inc. (VSR).

2009 - Ideas For The Year Performance Update

At the beginning of the year I made a list of picks and pans for the year which I planned to review at the end of each month. The purpose of this exercise is to provide ideas for your own research, some potential opportunities for 2009, as well as some companies I feel are best avoided. At this point I am just going for a brief overview, I may get into some more in depth analysis later in the year. I will focus on specific companies in this instance, although later in the year I may look in more depth at specific sectors, or the economy as a whole.

So here are the performances for 2009 to date.

My Long Picks for 2009, with 03/31/09 closing prices

Anadys Pharmaceuticals (ANDS) - $6.79 (+332.48%)
Himax Technologies (HIMX) - $2.80 (+73.91%)
Quicksilver Gas Services LP (KGS) - $13.25 (+39.77%)
Natural Resources Partners LP (NRP) - $22.33 (+27.97%)
Ecology & Environment (EEI) - $13.15 (+9.77%)
Urban Outfitters (URBN) - $16.37 (+9.28%)
Dorchester Minerals LP (DMLP) - $16.33 (+2.90%)
Highveld Steel and Vanadium (HSVLY) - $7.85 (+2.21%)
Yanzhou Coal (YZC) - $7.17 (-4.65%)
Raven Industries (RAVN) - $20.78 (-13.78%)
UFP Technologies (UFPT) - $4.4899 (-15.12%)
Chase Corporation (CCF) - $9.30 (-17.63%)
Hugoton Royalty Trust (HGT) - $9.56 (-40.44%)
Versar, Inc. (VSR) - $2.29 (-44.42%)

The top performer of the month was Himax Technologies (HIMX) moving from $1.65 to $2.80. Also of note was Yanzhou Coal (YZC), moving from $5.68 to $7.17. I imagine that oil and commodities will continue to improve in the coming months which should lift struggling pick Hugoton Royalty Trust (HGT). I am considering increasing my stake in HGT, as I feel it is one of the most undervalued royalty trusts.

My Short Picks for 2009, with 03/31/09 closing prices

Build-A-Bear Workshop (BBW) - $6.07 (+24.90%)
Red Robin Gourmet Burgers (RRGB) - $17.63 (+4.75%)
Ann Taylor Stores (ANN) - $5.20 (+3.17%)
Mercantile Bancorp (MBR) - $7.2999 (-30.81%)
LaCrosse Footwear (BOOT) - $8.03 (-35.66%)
La-Z-Boy (LZB) - $1.25 (-42.40%)
Bank of America (BAC) - $6.82 (-51.56%)
Office Depot (ODP) - $1.31 (-56.04%)
Citigroup (C) - $2.53 (-62.30%)
Converted Organics (COIN) - $0.84 (-76.27%)
Circuit City (CCTYQ) - $0.0075 (-94.23%) - Bankrupt
Smurfit Stone Container Corporation (SSCC) - $0.00 (-100%) - Bankrupt

As a group my short picks rallied a little in recent weeks, particularly in the financial sector. The big surprise for me is Build-A-Bear Workshop (BBW) which is up almost 25% for the year. Converted Organics (COIN) continued its fall into penny stock territory.

Well, I will review the list again at the end of April to see how my picks and pans are performing. Until then, happy investing!

Disclosure: At the time of writing the author held shares in Highveld Steel and Vanadium (HSVLY), Himax Technologies (HIMX), Hugoton Royalty Trust (HGT), Yanzhou Coal (YZC), UFP Technologies (UFPT), and Versar, Inc. (VSR).

Are We Headed For A Credit Card Meltdown?

Everybody likes to point their fingers at the government, or blame the banks for the economic mess that we currently find ourselves in, but maybe we as consumers have helped facilitate things more than most of us like to admit. Everybody likes to accuse the banks of being greedy, but ultimately they are in the business to make money for themselves and their shareholders, not to be charitable to the general public. We are all grown adults, and those of us that have made poor financial choices should take responsibility for them, learn from them, and move on.

The current financial crisis stems in part from people over extending themselves in the real estate market, obtaining mortgages that they couldn't really afford to pay, for assets that were declining in value. Not to mention the individuals using their property as an ATM to fund their indulgent lifestyles. The rapidly depreciating real estate market led to many individuals being in way over their heads, leading to foreclosures, short sales and the like. Many of us want to blame the banks, but they didn't force anyone to buy a house they couldn't really afford, they didn't force anyone to borrow beyond what they could feasibly pay back based on their incomes, they didn't force anyone to take equity out of the homes to spend on luxuries they didn't need, they simply helped facilitate what the consumer demanded.

Now don't get me wrong, I am not supporting some of the banks actions - they were irresponsible and reckless at times. I believe that if we knew more of what goes on behind the scenes and off the balance sheets at many banks, then the markets would fall much more than we have already witnessed, but I do think we need to take part of the responsibility.

Now we are left with a situation where those of us that were responsible with our finances, and made "smart" choices, are the people having to bail out the irresponsible and greedy! The scariest part of the situation is where we are headed from here.

The government and the media seem to be painting an overly optimistic picture of the current economic environment, saying that the worst is over and that the Federal Reserve has everything under control. I don't think we could be further from the truth, as two further bubbles are readying themselves to pop. I have already touched on the treasury bubble in a previous post, so I will not discuss it here, but the other bubble that is looming large is the credit card bubble.

Credit card companies have been seen to be raising interest rates, cutting credit lines, and closing inactive accounts. This serves to reduce consumer spending and confidence, and is a self-feeding cycle as it leads to reduced FICO scores, leading to reduced access to credit which in turn causes a further reduction in spending, hurting the economy further in the process.

The worrying thing is that with the level of unemployment still rising, we are seeing more and more people using credit just to survive and make essential purchases. People have already cut back significantly on large purchases such as houses, cars and vacations, they have also cut back on luxuries, electronics and the like. People are now relying on credit for essential, day to day purchases such as food, clothing and energy. Now, I don't know about you but I find this scary! Credit card companies have been reporting increasing numbers of delinquencies, and I fear the worst is still to come.

The Federal Reserve already has it's hands full with the banks, auto makers, insurance companies and the like, it cannot start bailing out individuals too! With rising unemployment, and reduced access to credit, the economy is close to a tipping point where the whole house of cards could come down at any minute.

Disclosure - At the time of writing the author held shares in ProShares Ultrashort 20+ Year Treasury ETF (TBT) and Direxion Financial Bear 3X ETF (FAZ).

Reasons To Short Stocks

I was recently asked by a Mostly Money Musings reader about reasons that I would look for in order to consider shorting a stock. Rather than just post a comment reply, I thought this raised an interesting thought for a regular posting.

Put simply, when an investor goes long on an investment, it means they have bought a stock believing that its price will rise in the future. Conversely, when an investor goes short, they are anticipating a decrease in the share price.

Shorting is the process of borrowing a security, then selling it with the belief that it will fall in value so you can buy it back at a lower price before returning it to its rightful owner. The security will be loaned to you by your brokerage, either from their own inventory or from another client. It will be sold and the proceeds credited to your account, and after a time you will be required to buy the shares back and return them. A lot of the time, you can hold a short for as long as you want. However, you can be forced to cover if the lender wants the stock back for any reason.

The key difference between going long and going short is the potential loss in each case. If you go long, your potential for loss is limited solely to the money invested in the stock should its value fall to zero. If you go short, your potential for loss is unlimited, since the price of a security can (in theory at least) rise forever. In practice, this does not happen, however a shorted stock can easily rise enough to wipe somebody out! I'm sure that many short sellers lost their shirts during the technology stock bubble.

So, why short any stocks at all? The most common reason to short is to profit from an overvalued stock or market, although some will use shorting as a means of hedging - to protect their long positions.

What should you look for when considering a short sale? I believe that the most important factor to look at is deteriorating fundamentals. Ultimately, it is strong fundamentals that cause a stock price to rise, as they are the foundation of a company or market, conversely deteriorating fundamentals damage the foundations of the company or market.

In particular, you may wish to consider factors such as rising debts, rising inventories, falling sales and revenues, over-valuation. You may also wish to look for outdated technologies, companies that fail to keep up with the times. You may wish to consider the effects of changes in management or keep a watch on the amount of insider ownership.

In addition to looking at deteriorating fundamentals, it also pays to look at technical factors too, as they offer a clue that all the buyers have bought and there is no-one left to hold up the security. In this case, a price drop would be expected, and a short sale could be possible.

Disclosure: At the time of writing the author did not hold any short positions.

Ann Taylor Stores - ANN

Ann Taylor Stores (ANN), one of my short picks for 2009, reported a set of pretty appalling results yesterday, including a staggering loss of $6.66 per share. This hardly came as a surprise to me, as I feel the company caters mostly to the section of the population most affected by the current economic climate. It is significantly more expensive than a number of discount retailers, but it is also far from high-end fashion. I don't see things improving for the company for some time yet as people seem to have significantly less disposable income available at present. Investors greeted the news by sending the stock price down 38%!

Prior to these results, Ann Taylor Stores (ANN) was the only one of my short picks to have posted a stock price gain for the year, now all of the picks are in negative territory.

Disclosure: At the time of writing the author did not hold shares in Ann Taylor Stores (ANN).

AIG - A Money Pit

Ok, so I don't know about you but my head is spinning! Not only has American International Group (AIG) posted the worst quarterly results in the history of the stock market, but it has been rewarded with more government bailout money! The insurance group managed to lose an historic $61 billion in just three months, and has just been granted access to a further $30 billion from the US government.

It is a mystery to me that American International Group (AIG) can still be a publicly listed company, it is a mystery to me than any single individual would go anywhere near their shares, and it is a mystery to me how they didn't see this coming!

Only the government can provide insurance where private companies cannot - after all, they are the only ones with enough resources available. Essentially, American International Group (AIG) got into the business of insuring a significant amount of the world's financial system against the consequences of a global financial meltdown. The US government had to step in and bail them out because AIG was totally incapable of delivering on that insurance. Ultimately, American International Group's (AIG) business of selling credit default swaps was a huge scam, as there was no way they could ever pay out on them.

The total bailout for AIG so far is in the region of $170 billion, which blows my mind. The worst part of the whole thing is that, I very much doubt that that will be enough. With American International Group (AIG) so intertwined in the global economy, they pretty much have the US government held at gunpoint whenever they need more money because of the disasterous repercussions following potentially bankruptcy of the company. Simply put, the government cannot afford not to bail them out, which is a really scary thought! If AIG were to fail, then the entire global economy would end up in a lot of pain, and very very few individuals would not feel it in some way or another.

Disclosure: At the time of writing the author would not touch shares in American International Group (AIG) with someone else's barge pole.

2009 - Ideas For The Year Performance Update

At the beginning of the year I made a list of picks and pans for the year which I planned to review at the end of each month. I started out posting further thoughts about some of the picks, but failed quite miserably to add much new stuff over the past month. I'll try to fix this over this next month! The purpose of this exercise is to provide ideas for your own research, some potential opportunities for 2009, as well as some companies I feel are best avoided. At this point I am just going for a brief overview, I may get into some more in depth analysis later in the year. I will focus on specific companies in this instance, although later in the year I may look in more depth at specific sectors, or the economy as a whole.

So here are the performances for 2009 to date.

My Long Picks for 2009, with 02/28/09 closing prices

Anadys Pharmaceuticals (ANDS) - $6.12 (+289.81%)
Quicksilver Gas Services LP (KGS) - $12.20 (+28.69%)
Natural Resources Partners LP (NRP) - $20.73 (+18.80%)
Urban Outfitters (URBN) - $16.64 (+11.08%)
Ecology & Environment (EEI) - $12.49 (+4.26%)
Dorchester Minerals LP (DMLP) - $16.31 (+2.77%)
Himax Technologies (HIMX) - $1.65 (+2.48%)
Highveld Steel and Vanadium (HSVLY) - $6.742 (-12.21%)
Chase Corporation (CCF) - $9.12 (-19.22%)
UFP Technologies (UFPT) - $4.10 (-22.50%)
Yanzhou Coal (YZC) - $5.68 (-24.47%)
Raven Industries (RAVN) - $18.18 (-24.56%)
Hugoton Royalty Trust (HGT) - $9.93 (-38.13%)
Versar, Inc. (VSR) - $2.44 (-40.78%)

A pretty dismal performance from my picks this month. Shares in Anadys Pharmaceuticals (ANDS) skyrocketed last month following the release of promising HCV data and have maintained a steady run. Highveld Steel and Vanadium (HSVLY) was the best performer of the month, although still sitting at a loss for 2009.

My Short Picks for 2009, with 02/28/09 closing prices

Ann Taylor Stores (ANN) - $6.58 (+30.56%)
Red Robin Gourmet Burgers (RRGB) - $14.21 (-15.57%)
Build-A-Bear Workshop (BBW) - $3.62 (-25.51%)
LaCrosse Footwear (BOOT) - $8.5185 (-31.74%)
Mercantile Bancorp (MBR) - $5.94 (-43.70%)
La-Z-Boy (LZB) - $0.90 (-58.53%)
Converted Organics (COIN) - $1.27 (-64.12%)
Office Depot (ODP) - $1.05 (-64.77%)
Bank of America (BAC) - $3.95 (-71.95%)
Citigroup (C) - $1.50 (-77.65%)
Circuit City (CCTYQ) - $0.007 (-94.62%) - Bankrupt
Smurfit Stone Container Corporation (SSCC) - $0.00 (-100%) - Bankrupt

Well, as a group my short picks worked out a whole lot better than the long picks. The banks in particular had a rough month, with Bank of America (BAC), Citigroup (C) and Mercantile Bancorp (MBR) all suffering big drops. The one jewel among the short picks is Ann Taylor Stores (ANN) which is up over 30% since the beginning of the year. In fact despite the economy, certain retailers seem to be holding up a lot better than most people expected.

Well, I will review the list again at the end of March to see how my picks and pans are performing. Until then, happy investing!

Disclosure: At the time of writing the author held shares in Highveld Steel and Vanadium (HSVLY), Himax Technologies (HIMX), Hugoton Royalty Trust (HGT), UFP Technologies (UFPT), and Versar, Inc. (VSR).

2009 - Ideas For The Year Performance Update

At the beginning of the year I made a list of picks and pans for the year which I planned to review at the end of each month. Over the past month I have also tried to post further thoughts about some of the picks, I'll try to continue this through the next month also until I've covered each one. The purpose of this exercise is to provide ideas for your own research, some potential opportunities for 2009, as well as some companies I feel are best avoided. At this point I am just going for a brief overview, I may get into some more in depth analysis later in the year. I will focus on specific companies in this instance, although later in the year I may look in more depth at specific sectors, or the economy as a whole.

So, without further ado, here are the performances for 2009 to date.

My Long Picks for 2009, with 01/31/09 closing prices

Anadys Pharmaceuticals (ANDS) - $5.21 (+231.85%)
Quicksilver Gas Services LP (KGS) - $14.00 (+47.68%)
Natural Resources Partners LP (NRP) - $23.39 (+34.04%)
Dorchester Minerals LP (DMLP) - $19.00 (+19.72%)
Himax Technologies (HIMX) - $1.68 (+4.35%)
Urban Outfitters (URBN) - $15.58 (+4.01%)
Ecology & Environment (EEI) - $12.41 (+3.59%)
UFP Technologies (UFPT) - $5.30 (+0.19%)
Chase Corporation (CCF) - $10.91 (-3.37%)
Raven Industries (RAVN) - $21.81 (-9.50%)
Versar, Inc. (VSR) - $3.68 (-10.68%)
Yanzhou Coal (YZC) - $6.50 (-13.56%)
Hugoton Royalty Trust (HGT) - $13.06 (-18.63%)
Highveld Steel and Vanadium (HSVLY) - $5.112 (-33.44%)

A wide range of performance from my picks this month. Shares in Anadys Pharmaceuticals (ANDS) skyrocketed following the release of promising HCV data. Also strong movement in the natural gas sector helped lift picks Quicksilver Gas Services LP (KGS), Natural Resources Partners LP (NRP), and Dorchester Minerals LP (DMLP). The performance of Highveld Steel and Vanadium (HSVLY) prompted me to pick up a few shares at $5.48. I still believe that this company will be a major player in years to come, but right now it is holding up the bottom of the table.

My Short Picks for 2009, with 01/31/09 closing prices

Ann Taylor Stores (ANN) - $4.92 (-2.38%)
Mercantile Bancorp (MBR) - $9.85 (-6.64%)
Build-A-Bear Workshop (BBW) - $4.20 (-13.58%)
LaCrosse Footwear (BOOT) - $10.76 (-13.78%)
Converted Organics (COIN) - $2.80 (-20.90%)
Office Depot (ODP) - $2.16 (-27.52%)
Red Robin Gourmet Burgers (RRGB) - $12.18 (-27.63%)
Citigroup (C) - $3.55 (-47.09%)
Bank of America (BAC) - $6.58 (-53.27%)
La-Z-Boy (LZB) - $0.97 (-55.30%)
Smurfit Stone Container Corporation (SSCC) - $0.0331 (-87.27%) - Bankrupt
Circuit City (CCTYQ) - $0.006 (-95.38%) - Bankrupt

Well, my short picks fell across the board, although some more than others. Circuit City (CCTYQ) and Smurfit Stone Container Corporation (SSCC) both ended the month in the bankruptcy court, and both Bank of America (BAC) and La-Z-Boy (LZB) fell more than 50%. I fear that the economy may not recover in time for La-Z-Boy (LZB) who may also find themselves in the bankruptcy court before year end. After all, who is going to opt for a new recliner over a mortgage payment?

Well, I will review the list again at the end of February to see how my picks and pans are performing. Until then, happy investing!

Disclosure: At the time of writing the author held shares in Highveld Steel and Vanadium (HSVLY), Himax Technologies (HIMX), Hugoton Royalty Trust (HGT), UFP Technologies (UFPT), and Versar, Inc. (VSR).

Stem Cell Research - The Bubble of 2009?

It is anticipated by many that President Obama will lift the ban on federal funding for stem cell research, a historic move that is expected to boost the US health industry. Just last week, the Federal Drug Administration (FDA) revealed that Geron (GERN) will be allowed to initiate phase I clinical trials of its early-stage treatment for spinal cord injuries. Obviously, short-sighted investors welcomed the news.

Firstly, this is a phase I trial, it will be expensive to carry out and there is no guarantee of success. Geron (GERN) is burning through cash at a rapid pace (in excess of $30 million a year), which is obviously a very dangerous thing to do in a recession, especially for a company which has practically no sales! The company is trading at over 80 times annual revenue and at a yearly high. Clearly investors are riding the "Obama Wave" and this one has to come back down to Earth soon. This is clearly all hype and no hard evidence of profitability. Yes, Geron (GERN) may turn out to be the next "Microsoft of the biotech industry" and make some investors incredibly wealthy, but at this stage it's far too early to make that call.

Also in the news is the company StemCells (STEM) which holds a significant stake in ReNeuron - a company that is about to undertake clinical trials in the UK. StemCells (STEM) also hit new highs this week, despite having no evidence of profitability. Geron (GERN) and StemCells (STEM) do own close to 300 patents between them, however, the question remains whether their research can bring either company through to profitability.

In these difficult economic times I am not brave enough to roll the dice on GERN or STEM, and not lucky enough to know when to hold them and when to fold them. Stem cell research may prove to be the bubble of 2009 as weary investors try to recoup some of their heavy losses from 2008. At times such as these, I will be looking to invest in solid, proven market leaders with low debt and a high degree of free cash flow. A decent dividend would also be nice.

Disclosure: At the time of writing the author did not hold shares in Geron (GERN) or StemCells (STEM).

Circuit City - CCTYQ

Circuit City (CCTYQ) is a specialty retailer of consumer electronics, or should I say "was"! Circuit City (CCTYQ) today announced after failing to secure financing from creditors that it would liquidate its remaining stores. The bankrupt retailer had a poor business model, despite over $10 billion in sales this past year, failing to effectively compete with Wal-Mart (WMT) and Best Buy (BBY), both of whom will benefit greatly from the demise of Circuit City (CCTYQ).

Circuit City (CCTYQ) is the first of my short picks of the year to declare bankruptcy.... who will be next?

2009 - Ideas For The Year

Welcome to 2009!
The past year has been a rough ride, and I imagine that many of you (like me!) are considerably worse off than you were a year ago. The events of 2008 exposed many weakness in both the national and global economies leaving bankruptcies, falling sales, job losses, lower real estate prices, foreclosures.... the list goes on.... and it ain't pretty!

There are many challenges that lie ahead in 2009, but with them come many opportunities for those looking in the right places. There is money to be made in 2009, but it may not come as easily as in years past.

The purpose of this post is to make a few picks for the year which I will review at the end of each month. In the coming few weeks I will post further thoughts about each of the picks. The purpose of this exercise is to provide ideas for your own research, some potential opportunities for 2009, as well as some companies I feel are best avoided. I will focus on specific companies in this instance, although later in the year I may look in more depth at specific sectors, or the economy as a whole.

My Long Picks for 2009, with 12/31/08 closing prices

Highveld Steel and Vanadium (HSVLY) - $7.68
Chase Corporation (CCF) - $11.29
Versar, Inc. (VSR) - $4.12
Natural Resources Partners LP (NRP) - $17.45
Hugoton Royalty Trust (HGT) - $16.05
UFP Technologies (UFPT) - $5.29
Anadys Pharmaceuticals (ANDS) - $1.57
Yanzhou Coal (YZC) - $7.52
Ecology & Environment (EEI) - $11.98
Quicksilver Gas Services LP (KGS) - $9.48
Urban Outfitters (URBN) - $14.98
Dorchester Minerals LP (DMLP) - $15.87
Himax Technologies (HIMX) - $1.61
Raven Industries (RAVN) - $24.10

My Short Picks for 2009, with 12/31/08 closing prices

Citigroup (C) - $6.71
Bank of America (BAC) - $14.08
LaCrosse Footwear (BOOT) - $12.48
Red Robin Gourmet Burgers (RRGB) - $16.83
Office Depot (ODP) - $2.98
Ann Taylor Stores (ANN) - $5.04
Mercantile Bancorp (MBR) - $10.55
Circuit City (CCTYQ) - $0.13
La-Z-Boy (LZB) - $2.17
Build-A-Bear Workshop (BBW) - $4.86
Smurfit Stone Container Corporation (SSCC) - $0.26
Converted Organics (COIN) - $3.54

Well, I will review the list at the end of January to see how my picks and pans are performing. Until then, happy investing!

Disclosure: At the time of writing the author held shares in Himax Technologies (HIMX), Hugoton Royalty Trust (HGT), UFP Technologies (UFPT), and Versar, Inc. (VSR).