Casino Capitalism

Red Means Go

The other day I was reading an investment quote from a famous investor (forgot the name) in the stock market in the early 20th century. The quote went something like this: "If I find something good and nobody wants it, I buy some shares and put it away."

T-3 Energy Services (TTES) Earnings

TTES out with a 10Q tonight. Stock was down big today. Clearly, somebody knew about earnings and sold beforehand. But, I didn´t see much in the financial report that changes anything as it relates to the stock, and there is no reason to sell now. However, there are two non-financial items that are worth noting.

Proxymed (PILL)

Well, Proxymed (PILL) is on the surface a complete disaster. This must be the first conference call I have ever listened to where the company did not release its earnings report prior to the call. Wondering why? PILL´s net loss was nearly $100 million! This is mostly all non-cash writeoffs, but since the company did not have a strong cash position to start, it´s unclear as of now what the actual financial position of the PILL is.

My recommendation: I´ve dumped all my shares and I´ll wait to re-enter this name when the financial picture becomes clearer. Normally I would not sell a stock in this situation, since these massive write-offs can coincide with a bottom in the stock, but in this instance the financial picture is so murky, I´d prefer to wait on the sidelines until a clearer picture emerges.  I see no near-term catalysts that can support this stock in any manner.

The lesson: Always be diversified in the stock market casino. PILL appeared on paper to be a good bet, and it may still turn out in time to be a good gamble, but as of now the stock and business is way too risky.   

Graham (GHM) Earnings

I´ve been late in posting this, but Graham (GHM) came out with earnings last week, that far exceeded my expectations. As I recommended in previous posts, the stock was clearly undervalued during the last sell-off in late October. Subsequently, the stock has rebounded, by nearly 50%, and seems headed to new highs. Below are some highlights from the recent quarter.

Motley Fool talks about Interland

Another Interland (INLD) post. This is getting boring, but we thought we would post our thoughts on today´s Motley Fool article on Interland. The reason? If the Motley Fool is following Interland and they get positive on the stock, you can be sure the stock will go up alot. It did from one of my best picks in the last several years, Natus Medical (BABY).

Interland (INLD) Update

Interland reported earnings today. Here are some of my takes from the report and the conference call:

Interland (INLD)

Investment Summary: I believe that Interland (INLD) represents an excellent investment opportunity at current prices. I would buy the stock up to $3.25 and hold for as long as the business is being run prudently.

March 2006 Update: Please note that Interland (INLD) has changed its name to Web.com and now trades under the ticker symbol: WWWW.

Option Grants to Employees

I've long believed that many stocks in  the stock market are basically a mechanism of transferring wealth from investors to senior management. The way this is done is via stock options at prices lower than the market price. So employees and/or executives excercise their stock at low prices and then sell it to investors at market prices. Does this sound crazy? Not convinced? Just read the latest news out of Mercury Interactive. I don't think this is an isolated case, though of course not all stocks/companies are doing this.

Stem Cell Banking

The banking of stem cells, particularly cord blood cells, appears to be a very interesting and lucrative business, particularly given the recurring revenue model and the huge base of consumers who will choose to bank stem cells. Our top pick to making money from this growing trend of stem cell banking is Cryo-Cell (CCEL). Recently,  CRYO-CELL Signed an exclusive license to market a new stem cell banking service around Plureon Stem Cells (PSCs).  Below are some key points from CCEL's recent press release.

Increasing Refinery Capacity

Graham's (GHM), one of our top stock picks, recent earnings report gives a good indication of the potential growth in the build out and enhancement of refineries and refining capacity worldwide. In addition, as refiners continue to rack up profits, one can only expect that these companies will spend more cash on refinery capacity upgrades and enhancements. All in all, these trends will continue to benefit Graham's bottom-line leading to solid gains in the stock price.