SLRY (Salary.com Inc)

SLRY was yesterday's IPO and it traded well out of the gate. There was a good bit of anticipation on this name and i waited for the stock to pull back a bit off the initial excitement and then picked up 20,000 shares at $12.80.

I expect the stock to move further as more people jump on board with this growing company. So far sales levels continue to increase quarter over quarter and it is likely that the company will turn its first profit this year.

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HLYS (Heelys Inc)

This is another IPO that had a lot of hype built around it. The stock has seen a very nice run even after gapping up 50+% from its IPO price, but has recently pulled back to the $35 level.

Yesterday the stock traded up for the 2nd day and appeared ready to continue to run and challenge previous highs. I decided to pick up 5,000 shares and got them done just over $36. I expect that the quarterly report will fuel some additional excitement as the company should have done well this holiday season. Furthermore, I expect continued demand as the "coolness" factor does not seem to be wearing off and this is still early in the product cycle.

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OIS (Oil States International)

Jan 19, 2007

The year started off with a sharp drop in oil prices and consequential weakness in energy stocks. OIS fit the profile as the company provides products and services to drillers. The stock started the year by tradign down sharply through the 50 day average. This is after a broad top formed in the first part of last year, a weakening price pattern and then a brief rally into the end of the year. This pattern has likely shaken out the initial short sellers in the name and pulled in some long investors. The drop will likely now spark some fear and I anticipate a steady liquidation for a good bit of time. I shorted 8,000 shares the first of the year as noted on the weekly chart to the right and I have made a quick gain at least initially.

Feb 16, 2007

The stock has been acting well as I was able to see a quick gain in my position and then on lighter volume, the stock began to climb back up. It found resistance around 30 where the 50 day average is coming down to meet the stock and so I took the opportunity to add another 4,000 shares. I will conitnue to monitor both the macro environment as well as individual stock issues that will drive the price.

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DLB (Dolby Laboratories Inc.)

Jan 23, 2007

Dolby is a household name and has enjoyed increases in consumer entertainment trends. In November they announced earnings and suprised significantly on the upside. Sales are increasing and the demand for their products in many different types of entertainment vehicles should continue to be strong.

The company makes most of its money through licensing its technology so margins are very robust. There is a bit of concern that the conflict of which HD DVD format will become the standard may cause consumers to delay purchasing new hardware. However, there are many other vehicles for DLB to excel in and to offset any weakness that may occur in the DVD area.

The stock followed through after the November announcement and has picked up significant volume. It has pulled back to the 50 day and seems to be rebounding in respectable volume. This seems a lower risk area to get involved and I think the technology could drive this stock significantly higher over the next few years. I took a 3% position to start with today and will monitor for opportunities to add to that.

Feb 16, 2007

Somehow I neglected to post earlier that I sold calls versus my entire position when the stock broke to a new high but then could not hold that level. It just signaled to me that there was some risk that I may need to protect against. So far the calls have not brought me any additional return but have helped lower my volatility. They are March 30's so they are well in the money and give me plenty of stability.

If the stock makes a new run and is able to bring in some volume, I will likely add to my position but for now I am just waiting and letting the premium in the calls slowly disapate.

WFR (M E M C Electronic Materials)

WFR is in the semiconductor equipment industry and they hae a great track record of sales and earnings growth. This summer the stock traded down and broke the 200 day average and scared a lot of people (I'm included in that group as I got burned shorting the stock). It quickly found support and has rallied back up to form a nice base. In essence, it shook out a lot of the weak holders paving the way for a more heathy run as long as the group and the overal market are healthy.

After breaking out of the base on strong volume, the stock pulled back during the holiday period to find support at the 50 day average. When it bounced off this level I was ready and put a 3% position on buying 6,000 shares at 41.20. It continued to trade higher and yesterday with a somewhat weak market it showed relative strength so I added another 2,000 shares at $42.34.

Today had me a bit concerned, though, because althought the stock moved quickly and positively, the volume didn't come in nearly as strong as I would expect for such a move. I am not ready to kick out the position for this red flag, but I decided to sell 30 calls out of the money (I got $2.10 for the Feb 45's) in order to hedge my exposure a bit until it becomes clear whether the stock will follow through in a healthy manner or not.

Jan 26, 2007

I had a nice gain (not a huge gain) built up in the position and began to feel a bit uncomfortable. The stock is having a rough time holding above $45.00 and the last 3 days it traded down it did so in strong volume. I felt caution was in order especially considering some distribution in the market and overly bullish sentiment so I hedged the rest of my position with Feb 40's ($3.50 in the money) which i sold for $4.60. Now as luck would have it (and no i really don't believe in luck), the company reported a good number last night and this morning it is indicated above 47.50 before the market opens. This gets me a little hacked off as I have sacrificed this opportunity by protecting my capital, but those are the sacrifices I am going to make from time to time to keep from taking big hits to my capital that are devastating to a long-term record.

Feb 16, 2007

With option expiration here today I thought I should update the post on this position. When the stock consolidated after its gap up, I bought in some of my Feb calls. I now have 13,000 shares but will lose 3,000 today as the feb 45's are assigned. The rest is half hedged with March 55's. These calls are just out of the money and still cary decent premium that will slowly decay over the next 28 days. I expect further strength out of the name but am a bit concerned with the overall market so I will hedge with calls if needed.

ICE (Intercontenentalexchange)

Its hard to believe that it's been a full year since i took my initial position in ICE. It's also hard to believe that just a year ago it was trading in the high 30's after coming public just 2 months before. The stock was a quick winner as the entire sector was full of excitement over possible mergers and the increasing trend of previously pit traded assets being listed on electronic exchanges. It also didn't hurt that ICE's main specialty was trading energy products and the country experienced one of the most volatile price swings in this area in quite some time.

To the right is a weekly chart of the price pattern. One can see there was a bit of volatility in the 2nd quarter but from that point it has been very steadily marching upward. I have used call options along the way to back out of some of the volatility while still allowing me to be in the stock and eventually get to a long-term gain on my initial position.

Currently i have 4,000 shares and all of them are hedged although 1,000 shares are hedged out of the money. Looking at the stock and options net, i have $176,000 in unrealized gains with $40,000 in realized losses. This works well from a tax perspective because our partners are deferring their tax consequences until 2007 and at least a portion of the gains will be taxed at a more attractive rate when realized.

My intention is to continue to be involved in the stock as the growth story is still intact and the multiple is not extremely high if the $3.11 eps estimate for 2007 is accurate. However, since the premiums in the calls are so attractive, I can periodically sell calls and then if i need to buy additional stock to stay involved in the position, i can do that before the calls are assigned.

Jan 12, 2007

The stock has continued to run up and I am concerned that it is getting ahead of itself. I will lose 1/2 of my position as the January calls are certain to be assigned. I have Feb 120's and 130's sold against my remaining position. Today I decided to go ahead and sell a naked lot of calls (10 Feb 140's) which are still $7.00 out of the money. I got $6.40 in premium for these calls and that means if the stock trades up I can buy anywhere below $146 and still have a gain on the calls if they are assigned. This seems prudent as it is likely that the stock will fall quickly when the momentum runs out and if I am early it will be easy to buy in stock versus the additional calls. To the left is a chart of the daily run-up of over 160% in the last year.

Feb 2, 2007

Yesterday was a good showing for the market. ICE began to move up from its current consolidation and I decided this was a good time to buy in stock versus the 140's that i am short. I don't want to wake up one morning and have the stock gap through that level and lose money on a position i am bullish on so I bot in the stock leaving me long 3,000 shares, and short 10 each of the feb 120'2, 130's, and 140's.

Feb 16, 2007

Since my last post i have rolled out 2 lots of my feb calls in order to be able to hold on to 2,000 shares. I am now short 10 each of the Feb 140's, March 145, 150, and 165's. The 165's I sold yesterday and they are $10 out of the money but there was a good bit of premium in them and I felt it was a good place to pick up some protection. I can buy in an extra 1,000 shares if we approach that strike price but I anticipate the stock flattening out or selling off a bit and I wanted to protect some gains. At present I have 1,000 shares long term with a basis of $40, and 1,000 shares that will go long term in June with a basis of $50. As long as the stock holds up, my intention is to hold both these lots for good LT gains.

LVS (Las Vegas Sands Corp)

LVS has some exciting plans for development in the Macao project in China. This is going to be the Las Vegas of the Asian world and LVS owns a significant portion of the development rights. The company has very steady EPS and revenue growth over the last several quarters and the expectation is that these numbers will significantly improve as construction is completed in China and the resorts begin to draw in crowds.

Lehman gave me stock in a 2ndary offering at $50.25 back in March and I have managed to hold 2,000 shares from that purchase. Since that time I have traded in and out a bit trying to get a larger position but hedge my exposure from time to time as the stock has been a bit volatile and the option premiums have been very attractive. I have managed to rack up realized losses of $55,000 (good from a tax standpoint) while accumulating unrealized gains of $136,000 on the current 4,000 shares I own. I have half of my position hedged with Feb 90's and those are likely to be called. If the stock is still trading well I will likely buy in stock sometime before expiration in order to keep a lower basis lot and have the calls assigned versus this higher purchase.

Jan 25, 2007

LVS has had another incredible run and I have some nice unrealized gains stacked up. I am growing a bit concerned that the stock may become overheated and while half of my position is hedged deep in the money (Feb 90's), i decided to hedge the other half just out of the money. The premium for the Feb 110's looks good and so I got $3.80 for the 20 calls. I will want to keep at least 2,000 shares past expiration so if we trade up to where the new set of calls is in the money, I will have to buy in stock at some point, but it seemed best to have a little defense here at the top portion of the channel LVS has been running in.

Feb 10, 2007

The stock traded down this week which is actually ok with me. I decided to cover both the Feb 110 calls and the Feb 90 calls at different points during the week. I only had to pay 35 cents for the 110's but recognized a moderate loss on the 90s. Alltogether, these 2 lots of calls netted me a small amount of profit, but the main thing is they cut down on the volatility in my account as I didn't capture all of the gains from the stock moving up, but then also was not hurt nearly as bad by the subsequent decline.

Now I have 4,000 shares un-hedged. I have a realized loss of $54,000 but an unrealized gain of $140,000 most of which is long-term which is nice for the tax ramifications for our partners.

Feb 16, 2007

The stock has sold off through the 50 day average which is a bit concerning and the first 2 trading days after that selloff were in light volume and didn't make much headway. I have become more cautious the last couple of weeks and decided to turn out the short-term portion I own and hedge my original position with March 90's. This way I can hold my original stock for long-term gains (to the tune of $85,000 or so) but still have at least some protection against falling prices.

KNOT (Knot Inc)

www.theknot.com is a website dedicated to helping plan weddings, engagements, and all the extras that go along with getting married. The company makes over half of their revenue through selling ad space on their site, and the rest through selling wedding supplies and publishing associated magazines.

The company is only recently profitable but it has good experience in growing its name brand. Earnings have picked up exponentially this year as much of what has been built over time is now finally paying off. The company has also opened a new site (www.thenest.com) to offer help to newlyweds as they set up life together.

I got involved in the stock after it offered a 2ndary pricing in August and the stock subsequentially ran up out of the base created when the stock was weak around the secondary. I have traded in and out of some of the shares while keeping a good portion of my initial purchase to hopefully hold for significant long-term gains. I bought an additional position today (1/8/07) as the stok moved off the 50 day in strong volume. This brings my position up to 14,000 shares or just under 5% of my portfolio.

Currently earnings for Q4 are expected at 0.10 versus 0.06 last year. This wll translate to $0.42 for the year which means that the stock is at a pretty steep multiple. Growth must remain strong in order for the stock to continue, but this should be feasible. Sales are expected at 23.83mm versus last year at 12.8mm.

Jan 16, 2007

One of the KNOT executive's caught the market's attention today as he excercised options to add to his holdings. The stock rose 1.57 or 5.3% in the heaviest volume we have seen since August. It paid off to have a large position but as i thought about it, I realized that this was probably a good time to take some profits. I believe the stock will keep running, but there was ample liquidity to sell into today. If the stock was declining, it would be difficult to unload my shares without pushing the market lower so instead i am using this buying pressure to unload just 4,000 shares at a nice profit. I may take the opportunity to add those shares back at a time when the risk is lower but for now I am content to hold my remaining 10,000 shares which still represents about a 4% position. I currently have $34,000 in realized gains and $70,000 in unrealized gains.

Jan 26, 2007

The market is flashing some warning signs and while KNOT is holding up close to its previous highs, it has gotten a bit choppy and may be ready for a bit of a pullback. The options have a decent amount of premium in them so I decided to hedge half of my position with March 30's selling them for $2.40. This still leaves me with 5,000 shares un-hedged to run if we trade up from here, but gives me a little income or some downside protection if the stock doesn't continue to make new highs.

Feb 14, 2007

Yesterday the company came out with their Q4 earnings report and conference call. The stock didn't trade so well on the announcement even though EPS was up 167% from last year and revenue up 70%. The forward guidance still seemed pretty robust but obviously it fell short of what was hoped for. During the day I bot in the calls at a very low price and then late in the day I bought an additional 5,000 shares because I still had a profit and thought the chances of a rebound were pretty high. The stock closed right about the level it broke out from in November propelling it to a nice run so hopefully there is support here.

Today as i watched it trade, there didn't seem to be too much buying interest and so I turned out the 5,000 shares at a $0.50 profit which was ok and i still hold my original investment. I guess it is fair to say this stock is "on probation" and will be cut soon if it doesn't show some life from these depressed levels. I like the company, and think they have a unique and exciting business model but if the stock isn't trading right I have to have the discipline to cut it.

Feb 16, 2007

Yesterday the stock got some strength but only took a dent out of the sharp selloff from Tuesday. I decided that the potential reward in holding for further gains was overshadowed by the danger now that the stock has broken down in such strong volume. This may be a name that works out a base and comes back stronger later but until I see it consolidate and develop a better pattern I am more comfortable watching from the sidelines.

I booked about $64,000 in profit from the trade so I guess I should be satisfied and willing to let this one go for a while.

SMOD (Smart Modular Tech Inc)

Jan 19, 2007

Yesterday (Jan 18th) the company offered a secondary priced at 12.50 which was significantly below the previous day close. The stock has had a strong run going into the offering and seems to be turning its fundamentals around nicely. After the pricing, the stock was a bit weak but the overall market was holding up early in the day. Since I got a small allocation on the deal I decided to buy 10,000 shares as a trading position. I expect a turnaround in the next few days as the stock should work off the excess supply and move back into line with the improving fundamentals.

Feb 14, 2007

After slowly trending up as a profitable position, the stock fell out of bed this week and I decided to go ahead and cut it quickly to protect my capital. I took a loss on the position and it was a bit difficult to exit as I had trouble executing the sell. The bid kept moving every time i put any stock out there so it took me two days to execute and I wasn't happy with the price i got.

HRT (Arrythmia Research Tech)

HRT has a long and checkered history. It originally started as a medical tech company and was not very successful. In '92 it purchased Micron Products which makes sensors and snaps for electrocardiograms. This is a stable business but had little growth potential. More recently in 2004 the company bought New England Molders which makes injection products for the medical industry as well as other plastic products for a diverse number of industries. HRT was able to combine both company's manufacturing facilities thereby saving expenses and this year it has finally begun to see significant growth in earnings and sales.

The stock broke out of its slump in August and began a very quick run-up in October through early December. After it peaked, it pulled back to the 50 day average. I had been watching it understanding that it was a good fundamental story but wanting to get involved at a technical juncture that offered less risk than buying when the stock was vulnerable to the inevitable correction.

I purchased 10,000 shares on Dec 28th which is a 3% position. This was on a day where the stock traded lower early and then reversed just above the 50 day to finish the day stronger. Volume came in above average even during a holiday week which underscores the buying power of institutions in this name right now. I don't expect to add to this position until we have cleared the previous high but at that point i will likely look for opportune times to increase until i have a 5% position. There are currently no options trading and the average volume is 139,700 shares per day so I have to be a bit careful about liquidity.

Jan 25, 2007

HRT is a fairly thin stock and while it has made new highs, the volume hasn't picked up substantially. I still like the position and feel the company has some great trends behind it but i wanted to lighten up on my exposure a bit so I sold 3,000 shares yesterday. This was actually a pretty difficult trade as the stock is quiet. It took some time to complete but eventually my friends at Knight Securities got me filled and I have less exposure now. I began to think, if it is this hard to get stock sold on a positive day, imagine how hard it will be to turn out if things turn poorly.

Feb 14, 2007

Yesterday the stock experienced its second day of selling after making a new high last week. The volume was definitely under control and I decided to take this opportunity to buy back in the stock I turned out as a precaution late last month. I now have more capital to manage so I actually bot an additional 5,000 shares to bring my position to 12,000 shares or just over 3%. Since the stock is a bit hard to get much volume done, I am going to have to be careful with how I trade it and often expect to turn small pieces out on days with strong demand, and possibly buy them back when the market is willing to sell them to me.

UA (Under Armour Inc)

UA has an incredible base product and has spent a lot of time, effort, and money to create a top notch brand image. The apparel made by UA is not easily duplicated and the brand is so sought after that the company is able to demand top dollar for its line. Retail stores like Dicks, Sports Authority, Target, etc are all clammoring for more UA products and are willing to give valuable store real estate to showcase these products.

The stock is relatively new having come to market in late 2005 and the company issued a 2ndary offering in June of 06 increasing the float to 48m shares. I made my first purchase in October buying 4,500 shares at 44.91 after the stock cleared a base on base pattern. Since then I have used options from time to time to hedge my risk and have bought and sold stock to have these calls assigned against. All of this has allowed me to reduce volatility, add to my gains, and keep my original position undisturbed for tax reasons.

The trading pattern has been a bit choppy as of late with the stock finding support at the 50 day on several occasions. The volume flow has been mostly healthy but i am a little concerned that we have not seen volume pick back up as the stock has traded up the past week. I have half my position hedged with Jan 50's which will either be assigned or expire next week. At that time I will need to make a decision whether to add back those shares, or leave it as a smaller position until the technical side clears up.

Jan 23, 2007

Heading into options expiration, I was a bit torn about whether to buy in stock that would be called away from me. Because the stock didn't trade up in strong volume after testing the 50 day the week before, I elected to let the calls be assigned taking half of my position away. That turned out to be a good decision as Barrons posted an article outlining why they thought the stock was overpriced. Monday morning the stock gapped down and sold off hard all day. Tuesday has seen the stock rebound and if it trades back up above the 50 day difinitively, I will be much more interested in adding to the position. For now, I am thankful I sidestepped some of the volatility.

Feb 2, 2007

UA reported Wednesday night and yesterday the stock sold off $3.63. The move was in strong volume but one encouraging sign is that the stock closed well above the low end of its range for the day. I think it is completely natural for the stock to sell off a bit given its high multiple and the grand expectations investors have for this name. The key will beto watch how the stock behaves in the coming days. If it is able to stabilize and halt its decline that will likely point to higher prices longer term. If, however the stock continues to slide in strong volume, I will not hesitate to turn out what is left of my position and look for other opportunities.

Feb 14, 2007

This week I became less comfortable with many of my long positions and since UA has turned into a laggard I decided to let it go in order to lower exposure and hopefully cut down on volatility until I get a clearer picture. I still booked $29,000 on the trade but that is much less than I had hoped for this strong retail name.

NDAQ (Nasdaq Corp)

NDAQ has been a strong horse over the last couple of years. It ran from below 10 to above 40 in 2005 and then spent most of last year trading in what looks to be a large top formation. The company continues to grow earnings but I am a bit concerned that so much competition in the business with many ECN's and exchanges competing for volume could be detrimental to the company's forward earnings. The stock isn't cheap but is probably reasonably priced given it's growth history.

Yesterday the company hosted a conference call after stating the day before that it lost its bid to acquire the London Stock Exchange. The stock had already begun to sell off in strong volume so I started building a short position as the conference call began. Sure enough the sellers got more aggressive as the day went on and I slowly added to the position until i had 10,000 short at an average price right about 34.00. The stock ended up closing at 31.10 so it was a nice trade in an otherwise challenging day for me.

Towards the end of the day I decided to take a little of the quick profits by buying in 5,000 or half of my position and buying 50 of the March 30 puts as they were less than $1.00. Subsequently, this morning when the stock experienced a relief rally, I bot another 50 puts at $0.85 to give me short exposure while capping what i can lose on this position. I feel confident that the momentum will pick up as momentum investors and swing traders will become uncomfortable with their positions and liquidate.

GROW (US Global Investors)

GROW had an incredible move in the last half of 2006. Every day it seemed it would make a new high and I would be left wondering how I could have missed such a name but I was paralyzed and could not get into the stock because it was clear that the risk of a pullback from such a lofty height could result in significant losses and a quick failed trade.

Sure enough, at the beginning of this year, GROW sold off and lost 30% of its value. It broke through the 50 day but held significantly above the longer-term 200 day average. Most recently, the stock has consolidated in a tight formation right around $45.00 and I put it on my watch list as it looked like a good setup.

Yesterday, the stock broke out swiftly on strong volume and I was quick to jump on it taking a 3% position at $47.20. The stock traded well througout the day and into this morning leaving me a quick 10% gain in less than 24 hours. While I don't expect this type of movement to continue, I do expect a challenge of its previous high at some point in the coming couple of months.

The company's earnings and sales growth is tremendous and because of this growth, the stock is actually not all that expensive. Currently there is not much of a following which makes forward visibility a little difficult but could add to incremental demand for the stock if an analyst or two picks up coverage on this name.

Feb 13, 2007

The stock traded down quicly yesterday morning and stopped me out. I took more than a 10% loss on the position exiting at $41.30 but this was mainly because the stock droped so quickly i couldn't get my position off before i was down 12% instead of the 10% mandatory stop point. I am definitely disappointed but I know the stock is volatile and is bound to shake investors out from time to time. I will continue to watch for better spots to get long this name as fundamentally I really like the company but discipline says I need to cut my losses before they become a bigger problem.