The Financial Times reported that Lehman Brothers Holdings Inc (NYSE: LEH) yesterday said it had sent information to the SEC about possible abusive short-selling in its shares in recent days. Lehman CFO Erin Callan said the SEC was examining whether hedge funds collaborated to drive down the bank's share price in the days following the near collapse of The Bear Stearns Companies (NYSE: BSC).
Colombia's heavy oil area could hold 20B barrels of recoverable resources, the Financial Times reported, giving the country greater reserves than leading producers such as Mexico and Algeria, according to Colombia's government.
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The Silicon Alley Insider reported that Douglas Merrill, Google Inc's (NASDAQ: GOOG) CIO, is leaving the company to become the president of music company EMI.
To quote one of my college professors (with thick Chicago accent) "Ya pays yer nickle 'n ya takes ya bes' shot." This year I wrote over 200 stories and reviewed even more stocks. Going over all of this material I came up with the ones listed here as my four best and four worst of the year.
If you would have acquired these eight stocks you would be up 21.79%, about double the NASDAQ, triple the DJIA and 550% over the S&P 500. Had I followed the advice of some of my more astute readers or been more cynical about the forthrightness and leadership in the financial sector, I would have had a really smashing year. As it was, I cannot complain. I think this coming year I will have to analyze some of the feedback even more closely than I have in the past -- keep those comments coming!
Here are the results of the indices from December 28, 2006 through December 27, 2007 for comparison:
My newest portfolio is my worst portfolio and the only one that is negative. How did this happen? The poison financials and my bad timing, that's how! It is embarrassing, to say the least, and I take no joy in reporting my blunders. I hope readers will appreciate the fact that I am willing to discuss everything and not just the bright spots.
Furthermore when I put my foot in my mouth I do it with style and grandeur. Take note of the story titles because they would be hysterical except for the fact that I really did buy these stocks and I still own them with one exception; so I'm not laughing too loud. I sold Washington Mutual in all but one portfolio at $36 a share. The following indicates the date of the original story. The closing prices are from Monday, November 26, 2007.
No title could be more ironic and more wrong than the IMB story, unless of course your objective was to lose money. One of my older and wiser friends (A.L.) who manages money for high net worth individuals raised his eyebrows as he repeated the story title to me the day the story was posted. Now I hear his words every time I think about IMB. Had you followed my lead into the fog your average loss would be about 54%!
This is the fourth update on the stock price status of the first seventeen Chasing Value companies. Closing prices are from September 14, 2007.
The first quarter produced amazing results but the second quarter was downright sad. No one will be surprised to see that anything touching constuction or finance took a bath. I own most of these stocks, so if you do too, I feel your pain. Anyone considering my commentary should "do their homework" too, as James Cramer says on his Mad Money TV show. These recommendations are from the first and second quarter 2007 and I have linked to the original stories.
Cemex sank with the continuous reports of the deteriorating housing market in the United States. In the meantime it continues to move forward with the integration of Rinker, the largest supplier of construction materials in Australia. This makes Cemex the largest in the world and sets the stage for continued growth in Southeast Asia. It also is continuing to focus on reducing debt.
Of all the stocks I have written about in the Chasing Value section, I feel that this one suffered the most from guilt by association. I believe it was fairly valued before and it is on sale now. This company, with it's PEG ratio at .83 and lowered, P/E, P/S, P/B (SEE: AOL Money & Finance) has a ROE over 22 and pays about a 2% dividend yield.
You really should watch Hilary Kramer: Market has further to fall, but there is opportunity in KDN, CBI, ACH to get some market perspective. The video was posted on August 21, 2007 and she makes some very good stock recommendations. Over the past 18 months that I have been looking at her picks versus those of James Cramer, I have found that you would have done better with Hilary.
While giving her full credit for her stock picking and market coverage I find I must strongly disagree with a statement she made. Cautioning viewers that " There is going to be a meltdown" is not overly alarming, but I take great exception to her stating that "This market can go down 25%." She shared her fear that there are 9000 hedge funds and that 3000 might close down.
It is possible that people may panic in certain circumstances and the market can stray into irrational short-term behavior once again, but I find her reasoning a little soft. Let's assume that the 9000 hedge funds own 50% of the total equity in the stock market (they don't) and one third go out of business, that would equate to a 15% collapse of value (unscientific, I know, but there is some correlation).
Plenty of investment guru's have suggested buying on fear and selling when greed reaches its pinnacle. Well I think the fear side is self evident but I'm not hearing about many analysts who are brave enough to buy right now. As a matter of fact I only hear that this would be a very foolish time to invest in the financial sector, in particular, any stocks with sub-prime or "Alt-A" mortgage exposure.
For this reason, contrarian that I am, I thought I would speak out about my recent BAD CALLS, or at least very premature calls, and start tracking them for all to see -- accepting the ribbing, tomato-throwing and blunt comments about the error of my ways.
I own four of the five stocks I will be following for the next year, Bear Stearns (NYSE: BSC), IndyMac Bancorp Inc. (NYSE: IMB), Popular Inc. (NASDAQ: BPOP), and Washington Mutual (NYSE: WM). I wrote favorable comments on each and in the case of WM, more than once. Needless to say, I am under water on all of them. I do not own Countrywide Financial (NYSE: CFC) but it will make for a fine pace car in the middle of this storm.
Last week I was reviewing investment banks for potential inclusion in one of our portfolios. I looked at numerous factors. Initially, what got me thinking about this sector was opportunity for growth versus good value of prices for the shares. At the time I concluded that Bear Stearns Cos (NYSE: BSC) was the best value with the greatest upside. It was hovering in the $153 to $156 range when I put in a limit order at $148 per share, good-till-canceled (GTC). After enough headlines about sub-prime lenders and financial sector woes that cast a giant shadow on most financial stocks, BSC reached my limit.
Last week the quality companies went down with the junk which should not happen, but it often does. Historically, this has presented me with wonderful opportunities to make a good buy and indeed I got scooped up at our $148 figure. Yesterday BSC closed at $153.83.
This morning, Brent Archer posted about Goldman Sachs, reaffirming one of Cramer's nine picks of the year. Allan Halprin also called our attention to The Savviest Stock Picker in America -- Ken Heebner of CGM Capital -- a must read. Heebner favors most of the investment banks right now. I just favor BSC. Here are the tantalizing figures for your consideration:
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My newest portfolio is my worst portfolio and the only one that is negative. How did this happen? The poison financials and my bad timing, that's how! It is embarrassing, to say the least, and I take no joy in reporting my blunders. I hope readers will appreciate the fact that I am willing to discuss everything and not just the bright spots.
Big 3 CEOs drive to Washington to suck up to Congress
GM and Ford ready weak pitches for taxpayer bucks
Cramer on BloggingStocks: A troika of opportunity and trouble 
