Casino Capitalism

Stem Cell Banking Stocks

Well my #1 pick in the Stem Cell sector, Cryo-Cell (CCEL) keeps flying. I´ve been long this stock for almost a year now. Am I selling yet? Not a chance. I´d look to buy some stock on any dip, as this recent rally appears to be quite different than past rallies which petered out after a couple of days. For some reason, people believe this stock is speculative. Maybe it is because it trades on the bulletin board. But since when is a company that is generating cash, and has over 100,000 clients and growing speculative? So why am I still bullish on CCEL?

Canadian Oil Sands

It is generally a good idea to have a macro-theory or theme behind all your specific investments. At least that is how it seems many of the great investors have made their money, e.g. Buffett in Insurance. When you are riding a strong secular business/industry/economic trend, it is simply a matter of finding the right companies in the strong sector and holding on.

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.   

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.

Oilfield Services Industry

As oil and gas prices remain high, I've been researching and investing in various oilfield service companies. In particular, I have been looking at companies that acquire, process, market and sell high quality seismic data worldwide. Oil and gas companies use this data to explore for hydrocarbon accumulations, to develop new oil and gas fields, and to manage those fields in production. Many Seismic oilfield services companies went banktrupt several years ago and hence Wall Street still views them cautiously. That's why there appears to be an opportunity in investing in the  shares of seismic companies.

One of my favorites in the sector is: Petroleum Geo-Services (NYSE: PGS). Briefly, PGS is a technology focused oilfield service company principally involved in providing geophysical services worldwide and floating production services in the North Sea. The company provides a broad range of geophysical and reservoir services, including seismic data acquisition, processing and interpretation plus field evaluation. In the North Sea, PGS owns and operates four floating production, storage and offloading units.

Some Random Stock Picks

Some stocks I have researched,and which I think are interesting, but I have not yet bought include:
EXPE, ASGN (been watching since $6 and never pulled the trigger), ACLI, PLNR, and PLMD.

Of the bunch, PLNR seems to be the most undervalued and yet risky plays. It's got an interesting story, and it appears to be a good turnaround play. Generally, when I rush into turnarounds I lose money (e.g. PILL), so I'm prepared to wait on the sidelines here a bit to get a better feel for the potential here.

T-3 Energy Services (TTES)

I just bought some more of TTES at $12.13. The stock, like many other energy plays, has dropped significantly in the last few weeks, pretty much back to where I first bought it in August.

Before getting to this particular pick, I do believe that energy stocks, in general, are good buys here. The stocks have recently sold off dramatically, for no apparent reason, other than that crude oil is down a bit, and speculators in the energy stocks are either booking gains and/or taking losses. As always, though, I'm generally inclined to purchase stocks like TTES over other stocks in these types of declines, since there is a special situation here which, to my mind, limits the downside risk.

In any case, the long-term outlook for energy is still very bullish. I doubt, as the market appears to imply, that the world's supply/demand issues energy has changed dramatically in the last three weeks. Once again, it is the casino atmosphere of the market, with little attention paid to actual business fundamentals, which is causing prices to fluctuate wildly.  I'm not sure many people realize that oil at $40 is still very bullish (all the stocks are valued at $40 or so a barrel and big companies have already hedged to benefit for quite some time from high oil prices). For a good discussion of oil investing see this post: http://lobg2.blogspot.com/2005/10/items-of-interest.html (read the section entitled: "Still Stoked About Energy").
Now on to why you should buy TTES.

Graham (GHM)

GHM is one of those stocks that can drive you crazy. The company is involved in a hot industry (oil refining), backlog is increasing by over 50% (see below), the valuation is cheap, but the company is a micro-cap and hence its shares are extremely volatile and subject to manipulation (especially it seems by a completely unscrupulous specialist). I´ve been buying GHM since June, and have recently taken a huge hit on some of my recent purchases (wiping out all of my recent stock market gains in 2005), but I still feel this stock is an excellent buy and hold for the next year, especially after the recent dip.

Proxymed (PILL)

I have been long Proxymed for a couple of months and still recommend going long this stock, despite the bath I have already taken (long at $6). I think the stock is a potential double or more in the next two years.

Proxymed´s Business:

Proxymed essentially is a third-party electronic clearinghouse for healthcare claims. As such, they act as somewhat of a middleman between payers (insurance companies, Medicare etc.) and healthcare providers (doctors, hospitals etc.) providing each with various transaction services to make healthcare payment processing more efficient and effective. The different types of services offered by Proxymed is not all that relevant to the analysis, the more important point is that healthcare is one of the most transaction-oriented industries in the country, (it generates over 35 billion financial and clinical transactions each year), and as the second largest independent medical claims clearinghouse in the industry, Proxymed has the experience and relationships to offer some very valuable and profitable services to the industry. Notwithstanding this fact, Proxymed is currently a complete mess, offering way too many services and lacking any real focused product position. In short, the company is in desperate need of some sort of strategic makeover.

Redback Networks (RBAK)

Bought a small position of RBAK at $10.05

The primary qualitative reasons why I bought this stock are that:

• RBAK is a play on the telecommunications sector, particulary for equipment that improves broadband Internet applications, i.e. enabling voice, video and data services over a common architecture. The telecom sector (and RBAK´s stock) was a huge favorite of investors during the bubble and it has performed miserably since then. However, the fact remains that the Internet continues to grow, and broadband applications are finally becoming mainstream. Investment in the real world is picking up again for telecommunications gear. RBAK will be a beneficiary of this predicted renewed, albeit much steadier, investment in telecommunications for broadband applications.
• RBAK is a post-bankruptcy play. During the bust phase of telecom, RBAK went bankrupt. It came out of bankruptcy in 2004. I have generally been successful with post-bankruptcy plays and these sometimes make for great stocks, primarily because the financials are still a bit confusing and there is a large potential shareholder base that can buy the stock as the story becomes more well-known. In other words, there is supply/demand imbalance for post-bankruptcy plays that favors the long side.
• RBAK has a new product, called SmartEdge, which is generating new contracts and leading to strong revenue growth. Because of SmartEdge there is potential for alot of good news coming out in the coming year.