Continue reading Chasing Value: Newcastle Shares Flying off the Shelf

Chasing Value: Newcastle Shares Flying off the Shelf originally appeared on BloggingStocks on Thu, 07 Oct 2010 16:40:00 EST. Please see our terms for use of feeds.

Continue reading Chasing Value: Government Still Selling Citigroup Shares -- I'm Selling Puts

Chasing Value: Government Still Selling Citigroup Shares -- I'm Selling Puts originally appeared on BloggingStocks on Wed, 29 Sep 2010 16:40:00 EST. Please see our terms for use of feeds.

Investors are running scared again and that always means that stock bargains are not far behind. Apple Inc. (AAPL) dropped another $5.87 Tuesday, landing at $239.93, and another 8 cents was lost after-hours. For most of the year I have felt that Apple was not cheap and was not going to hit $300 per share, contrary to almost anyone else with a voice. Now I feel it is worth watching as things might get silly to the downside.

Apple rose to a high of $279.01 before pulling back 14%. That is not enough of a margin of safety for me, but it has become interesting again. It clearly has earned a spot on my watch list.

Continue reading Chasing Value: Apple Falling, Opportunity Calling

Chasing Value: Apple Falling, Opportunity Calling originally appeared on BloggingStocks on Wed, 25 Aug 2010 10:00:00 EST. Please see our terms for use of feeds.

A few weeks ago, a good friend asked me for a stock recommendation that he might add to his Roth IRA. Three stocks with high yields came to mind that would be great in a retirement account. Note that I do not advise others what they should do, but share what I am doing or contemplating doing.

I recently included Merck (MRK) in a review of the granny portfolio, and discussed Royal Dutch Shell (RDS.A) in Chasing Value[TM]: Buffett Must Be Buying Oil. I own Merck in all of my portfolios and have made Shell the largest holding in the largest portfolio. The third stock that I thought of I don't yet own -- Telefonica SA (TEF). I looked at it last May, and it currently pays a whopping 7.13% yield.

Continue reading Chasing Value: Telefonica, a Work of Art

Chasing Value: Telefonica, a Work of Art originally appeared on BloggingStocks on Mon, 23 Aug 2010 09:30:00 EST. Please see our terms for use of feeds.

Continue reading Options -- A Foolish Bet on BP?

Options -- A Foolish Bet on BP? originally appeared on BloggingStocks on Mon, 28 Jun 2010 14:50:00 EST. Please see our terms for use of feeds.

Continue reading World's Dumbest Market -- Low Risk, High Reward

World's Dumbest Market -- Low Risk, High Reward originally appeared on BloggingStocks on Thu, 11 Mar 2010 14:20:00 EST. Please see our terms for use of feeds.

Yesterday my 2009 portfolio closed up 201% for the year. It has been an interesting journey, and while it is rather self congratulatory to discuss it, there are lessons to be learned.

Before I review some of the reasons I was able to do this I want to make it clear that I do not think this can be easily repeated; I look at the portfolio every day thinking this is too good to be true, and we all know what that usually means.

Continue reading Chasing Value: Journey to 201%: APC, ISRG, WFC and more

Chasing Value: Journey to 201%: APC, ISRG, WFC and more originally appeared on BloggingStocks on Fri, 18 Sep 2009 17:20:00 EST. Please see our terms for use of feeds.

Continue reading Serious Money: UPS -- No sure things, but ...

Serious Money: UPS -- No sure things, but ... originally appeared on BloggingStocks on Tue, 11 Aug 2009 15:30:00 EST. Please see our terms for use of feeds.

In April, I did a series of posts on Williams Companies (NYSE: WMB) starting with Chasing Value: Williams has the pipes and it's not blowing smoke.

I have also been writing about my investments in naked puts.

Now, I want to share one of the things I have done this year that has helped me obtain over a 100% return for 2009 at one point last month, which has since fallen back to 82%. This is not something I could have predicted, but I am not complaining.

Continue reading Chasing Value: Favorite trades -- Williams Companies

Chasing Value: Favorite trades -- Williams Companies originally appeared on BloggingStocks on Wed, 01 Jul 2009 12:00:00 EST. Please see our terms for use of feeds.

This is a continuation of a theme I have been writing about this year involving stock options referred to as naked puts.

This allows investors to take a position in a stock, most often below its current price, but depending on market sentiment. That sentiment remains relatively negative so the spreads are attractive.

I have been following BHP Billiton Ltd ADR (NYSE: BHP) the largest mining company in the world, with headquarters in Australia, for a while but I do not own the stock today. I view all mining companies as an opportunity because I think the diversified raw materials they control are the best hedge against inflation. I do not think inflation is imminent, but with the extreme increases in money supply and debt being created I do not think it will be avoidable a few years out.

Continue reading Chasing Value: Favorite trades -- BHP Billiton

Chasing Value: Favorite trades -- BHP Billiton originally appeared on BloggingStocks on Tue, 30 Jun 2009 13:40:00 EST. Please see our terms for use of feeds.

For those of you who are able to trade options, I have been writing more and more about naked puts, "selling to open" stock options that I have been doing all year with great returns due to an overabundance of fear.

Yesterday I reviewed one example in Chasing Value: GE -- maybe not eating out of trash cans after all, and today I review some of my favorite ways to make money and improve my portfolio.

Let me start with United Parcel Service Inc. (NYSE: UPS), a company with a great balance sheet, strong management, and trading 29% off its 52-week high, about where I sold it last year. I bought it earlier this year at the bargain basement price of $44, and now wished I had bought more.

Continue reading Chasing Value: Favorite trades -- UPS

Chasing Value: Favorite trades -- UPS originally appeared on BloggingStocks on Tue, 30 Jun 2009 12:00:00 EST. Please see our terms for use of feeds.

This week I closed out an option on General Electric (NYSE: GE) I had discussed four months ago regarding the absolute fear in the market place that I felt had driven investors off a cliff (see Chasing Value: Will we be eating out of trash cans?).

At the time I had noticed that GE naked puts, a "sell to open" put option, would pay me, on the spot, 52 cents a share if I would commit to buying the shares if they dropped below $2.50 by January 2011. This meant that my break-even position was $1.98 a share when GE was selling for five times that.

Continue reading Chasing Value: GE -- maybe not eating out of trash cans after all

Chasing Value: GE -- maybe not eating out of trash cans after all originally appeared on BloggingStocks on Mon, 29 Jun 2009 13:50:00 EST. Please see our terms for use of feeds.

Continue reading Serious Money: Still running naked on Wall Street

Serious Money: Still running naked on Wall Street originally appeared on BloggingStocks on Tue, 07 Apr 2009 18:00:00 EST. Please see our terms for use of feeds.

Continue reading Chasing Value: Will we be eating out of trash cans?

Chasing Value: Will we be eating out of trash cans? originally appeared on BloggingStocks on Mon, 23 Feb 2009 13:40:00 EST. Please see our terms for use of feeds.

Continue reading Chasing Value: Has BNI become 'Berkshire' Northern Santa Fe

Chasing Value: Has BNI become 'Berkshire' Northern Santa Fe originally appeared on BloggingStocks on Tue, 17 Feb 2009 12:25:00 EST. Please see our terms for use of feeds.

Continue reading Investor fear puts me 'naked' on Wall Street

Investor fear puts me 'naked' on Wall Street originally appeared on BloggingStocks on Tue, 17 Feb 2009 11:30:00 EST. Please see our terms for use of feeds.

The subject of "naked puts" has been mentioned in several of my posts (most recently Keep your eye on Black & Decker and Black & Decker follow-up -- a few more thoughts), and I have received some inquiries about this trading option. Again I emphasize that this is a very risky proposition. I have only made these trades five times in my decades of investing all in the last few years after gaining a lot of knowledge and experience, with mixed results. Here's a definition from the Investopedia:

• Meaning: A put option whose writer does not have a short position in the stock on which he or she has written the put. Sometimes referred to as an "uncovered put."
• Caution: Naked puts are very risky since the writer can lose big if the underlying asset moves opposite to the desired direction. But, profits are huge if the underlying asset moves in the right direction.
• Still more discussion: TheStreet.com: Naked Puts Are a Dangerous Game

Why?: I have only one open option 'naked put' at this time and chose a very conservative position. About eight weeks ago I was looking at the Southern Company (SO) which I own in my Roth IRA for inclusion in our investment company portfolio. It was trading around $32. I was interested in getting a bargain and would have liked to buy it at $30. It has not traded at this price for quite some time and may not.

Continue reading What are naked puts and why take the risk?

What are naked puts and why take the risk? originally appeared on BloggingStocks on Thu, 10 Aug 2006 15:15:00 EST. Please see our terms for use of feeds.

Since posting Keep your eye on Black & Decker last week I have had some discussion among other investors and business associates on-line and off about Black & Decker (BDK). There seems to be a general consensus that it is a solid company with strong fundamentals that has cyclical tendencies. This will be weighing on future earnings and no doubt is reflected in the decline of the stock price and the recent earnings report.

I do not own the stock but have been watching it for several months. It came to my attention through reading various business publications and I thought there was some merit to the positive commentary so I put it on my watch-list $25 dollars ago.

On rare occasion I trade options, (puts or calls), and usually have at least one option outstanding. In my original post I had concluded that BDK may be very close to fair value from all the data I had examined. I was thinking out loud that I may want it $10 cheaper seeking a deep value perhaps around $60 per share so I reviewed CBOE cboe.com/delayedquote/QuoteTable.aspx to get a look at options opportunities.

Since I might be willing to buy shares at $60, could I get paid to do so by selling naked puts (TRADING NAKED PUTS CAN BE VERY HIGH RISK!!) at that strike price. Well two things I learned. First, even with the large 25% decline in stock price of the past few months there was not much money in these options. The second is that there is very little "open interest" at all in doing this trade. There was opportunity at $65, $70 and up, but almost none at $55 & $60. To me this indicates that consensus has developed in the options picture supporting my thesis that we may be at fair value for BDK in the $65 to $70 range in the current market... and that I should keep tracking it for that possible deep value.

BTW, Black & Decker is not a must own stock, nothing is. So I can wait forever, buy something of better value, or do nothing. Patience absolutely pays off.

"You do things when the opportunities come along. I've had periods in my life when I've had a bundle of ideas come along, and I've had long dry spells. If I get an idea next week, I'll do something. If not, I won't do a damn thing." -Warren Buffett

Sheldon Liber is the CEO of a small private investment company and the vice president for Design and Research of an Architecture & Planning firm.

Black & Decker follow-up -- a few more thoughts originally appeared on BloggingStocks on Wed, 09 Aug 2006 08:41:00 EST. Please see our terms for use of feeds.