GROW (US Global Investors) - take two

I am giving this name another shot as it appears the stock has found support above the 200 day. The stock traded up sharply on strong volume this week and today when it pulled back in lighter trade I was able to pick up 7,500 shares. I expect to see the stock challenge its old highs in short order assuming the market holds together. There is no way to hedge the position as of yet so if things get sour I will have to sell out the position again.

For a review of the fundamental information see my previous post http://zsramblings.blogspot.com/2007/02/grow-us-global-investors.html

Hopefully this trade will fair better than the last time i trafficed in this name.

CTCM (CTC Media)

I was impressed with the way CTCM has traded up in recent days despite the weaker market overhang. The stock came public last summer at $14 and made a nice run from that point. It has since pulled back and appears to have found support just below $20. I am encouraged with the strong selling volume earlier this week as the weaker holders were likely shaken out of the name. Then as it traded back up the volume picked up even more showing institutional interest in the shares.

The company is a Russian television network and as such bears some international and political risk. It would not be unprecidented for the Russian government to confiscate private assets and nationalize them. Media companies could be especially vulnerable to this and so I would not want to take an extremely large position because of that risk. However, the potential is great and I think taking 7,500 shares allows me to benefit without running the risk of a devestating blow to investors capital if things should go south.

ATHR (Atheros Communications)

ATHR is a semiconductor name and while it is hard for me to fully grasp what the company does, I am impressed with the way they have ramped up sales and earnings over the last 5 quarters. The stock is trading at a relatively rich valuation for a mature company but it is reasonable for the type of growth trajectory they are experiencing now.

I purchased the stock in mid-November at $24.12 as it was breaking out of a handle after forming a base dating back to April 2006. The chart to the left is as of November 13, the day of my purchase. You can see that it broke to a new recovery high on above average volume. Right now the company is slated to report earnings late January or early February. Currently expectations are for sales of 86.2m and eps of 0.20 compared to 52.1m and 0.11 in Q4 2005.

After about 3 weeks of trading the stock did not follow through on the breakout. The action is not extremely concerning as negative days have been met with lower volume, but as a precaution, I sold January 22.5 calls against half of the position picking up 1.90 which still leaves me a small profit if the calls are assigned. So far the pullback has rested above the 200 day average which should offer some support providing the market remains firm.

Looking at my entry from a technical perspective, hindsight makes me wonder if it was the wisest purchase because the RS line didn't move to a new high before the stock broke out. However, it was an early stage base and is early in its trend of rapidly increasing earnings and sales figures so there are some cross currents i am looking at.

Jan 12, 2007

The company is rounding out the right side of its base and looking much more healthy. I am looking into next week and realizing that I will lose half of my position due to options being assigned and so I decided to add that stock back in that would be called away. The position is still fairly small and i am waiting for a definitive break above this consolidation in order to feel comfortable taking a larger position but for now I am intrigued enough to stay involved and watch carefully.

Jan 25, 2007

The stock was unable to break resistance at the $25 level last week and had a couple of high volume sell days after failing. The overall market has been moving higher but some of the technicals I look at (breadth, volume, dow theory) have thrown up some red flags. I have had a good month and am wanting to lower my exposure a bit so I sold calls against my full position getting $1.30 for the Feb 22.5 calls. I will re-evaluate the stock closer to expiration to see if I want to continue to be involved.

Jan 30, 2007

The company reported earnings and updated guidance. The report looks fairly positive with guidance up a bit for next year. Not much has changed and the stock is not moving much so I sit with my position hedged $1.50 in the money which is a pretty secure position for right now. I have no desire to add to the position presently but will watch it the next 2 weeks and decide whether to buy stock versus the calls that will likely be assigned.

Feb 16, 2007

Today is options expiration. I should mention that I decided a bit earlier to add another 6,000 shares to my position to replace those that will be assigned versus my calls. I am a bit torn because this 6,000 shares is really only half of what i should own to be a true position and yet I'm not comfortable holding too much of this stock until i see if it can really break free of this consolidation in strong volume. The overall market has me a bit unsure as well. Still, if the position is worth holding, I should stick to my rules of having 3% to 5% core positions and if it is not worth risking that much I should not hold it at all. I need to figure out soon whether to dump or add to it.

Feb 23, 2007

Yesterday the stock broke to a new recovery high and volume was above average but only by a small margin. The overall market is beginning to show chinks in its armor and I am concerned that this name could fall quickly in a declining market so I went ahead and sold out the remainder of my position for a nice gain. I expect to keep the exposure and volatility in my account a bit lower until the macro picture becomes a bit clearer.

FIG (Fortress Investment Group)

Fortress is the first public Alternative Investment company and the IPO was met with a lot of enthusiasm. The stock came public at $19 and immediately traded to a high of $37 before closing at $31. I got a small allocation but with that kind of move, every bit of stock helps.

After the stock came back in some on declining volume, it began to show life on Wednesday and so I picked up 5,000 shares. The multiple on the stock is very reasonable although it is hard to tell just where forward earnings will be since most earnings are tied to manager performance which is difficult to forecast.

It will be interesting to see how the stock performs with professional and retail investors alike trying to build positions in this name.

Feb 23, 2007

The stock has traded relatively well selling off a bit but finding its footing and trading back up. There has been some insider buying which helps confirm the smart money is after this name and so today I picked up another 5,000 shares to add to my winning position. This is not a long-term hold in my opinion as there is not enough information out there to fully evaluate the stock, but the available information point to higher prices and I think the risk reward profile supports taking a small position on this potentially explosive name.

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VIVO (Meridian Bioscience Inc)

Meridian reported earnings this week adn the market has seemed to accept the numbers well. The company makes diagnostic kits for various medical tests. Although flue season has gotten off to a bit of a weak start, other products have picked up the slack allowing the company to beat expectations and guide higher.

I am impressed by the diversification of products as well as the geographic spread. The company seems to have insulated itself from many of the business risks prevelent in this industry. As this is the case, the company should trade at a higher multiple due to its inherent stability and forward visibility.

Technically, the stock broke out of a relatively well formed base on strong volume today. I picked up 8,500 shares just before the close as I completed my research on the name. I was impressed that Bear Stearns (Shelley Bergman in particular) were able to get the trade done quickly and efficiently.

I'm anxious to see how the stock follows through and if the market gets a bit choppy it will be very informative to see how the stock weathers volatility.

Feb 23, 2007

The stock has backed off significantly after breaking out. I became a bit uncomfortable with it due to overall market conditions as we have seen signs of distribution and not much extreme buying pressure as we hit new highs. Also it is concerning when the market advances but a stock does not follow the trend at least to some degeree. So this week I turned out my position at a slight loss in the interest of lowering the overall volatility in my portfolio.

GOOG (Google Inc.)

Google has been a hard name for me to trade. Pictured is a weekly chart since the IPO in mid 2004. The advance has been incredible and the company is one of the most innovative growth stories in business. Last summer I got suckered into making a short bet on the stock when the overall market stumbled and GOOG was having a hard time staying above it's 50 and 200 day averages. I was quickly proven wrong and as the stock turned to make a new high in an advancing market, It made sense to be on board.

I took my long position November 15th. The timing was a few weeks after the Q3 EPS announcement that drove the stock up so quickly mid October. The stock had consolidated the move and then made a new high on stronger volume and appeared ready to continue its stellar run. I purchased 500 shares (or about 3% of my capital) at 497.65 and was pleased that the next few days saw higher prices as GOOG pushed to a new high above 510 within a week.

Since then the stock has pulled back and dropped below the 50 day average. Looking at the overall long-term pattern, this does not appear to be an abnormal retracement and fundamentally the stock continues to appear healthy with new products and other announcements being met with excitement. The relative strength line is becoming more concerning as it failed to pass the high from the January spike so it may be that I entered at the wrong time. I am watching the 450 level carefully as i will have a 10% loss below that level and will need to close my position out of discipline. However, I believe that if the overall market is strong early in 2007, GOOG will continue to be a leader and will be a name I would wish to have a position in so for now I feel the need to be disciplined about holding it until the stop point is hit or the fundamentals change.

Jan 12, 2007

Google has fought back from its normal correction and finally brought my original purchase back into black ink. There seems less risk in the stock now that some of the weaker holders have been shaken out and the subsequent rise has been in strong volume. I added another 300 shares just below $500 which now puts me at a full 5% position. The number of shares (800) is one of the smallest positions in my account but this mamoth stock price makes it a large holding.

Jan 25, 2007

Today was a pretty nasty distribution day for NYSE names. The NASDAQ escaped the technical distribution day because the volume came in below yesterday, but the index still sold off over 1.25%. I'm not quite ready to sell everything and short the world but i think this may be a critical turning point in the market. As such, i am methodically working on reducing exposure to protect my capital. Today I sold calls against half of my GOOG position receiving $26.40 for the Feb
480 calls. This is a pretty good yeild to call return if the stock is called away, and if not, the calls give me some downside protection.

Feb 2, 2007

Google reported earnings the evening of the 31st and so of course the first day in february was pretty volatile. The earnings announcement was strong with EPS at 3.18 versus 1.54 last year or a 106% increase. Sales were similarly positioned with a 67% increase. The stock traded both above and below the previous day close but by the end of the day it finished at the low end of the range down 19.75 for the day. This is not a deal killer although i am glad that I had some of my exposure hedged. The next frew days will be important as managers analyze the numbers and analyst put out reports but for now i am content to continue holding the position.

Feb 23, 2007

The stock sold off before expiration so the calls were not assigned and i gained the full premium. After finding support around 460, the stock rallied but not on strong volume. This was a bit concerning to me and I'm also concerned that the overall market may be nearing a pullback if not a general decline. I went ahead and sold the stock out yesterday for a very small loss (roughly a wash) and am traveling lighter in my portfolio these days.

AAPL (Apple Corp)

Feb 10, 2007

Apple has been a wonderful stock and I'm thankful for the profits we have made on the long side over the past 2 years. However I believe that now everyone who would ever want to own AAPL now knows the story and either owns it or has decided not to buy it. I think the last hurrah happened at the beginning of the year when a few new products were announced. The stock traded up on extremely strong volume. It's often hard for a stock to hold up after an extended bull market and then a climactic buying point.

Since the final buying point, AAPL has been experiencing liquidation or selling on high volume. I decided to short after 4 positive days didn't make up much ground and didn't attract a lot of volume. I shorted 3,500 shares or 3% at $83.65 and expect overall weakening market conditions to continue to push the stock lower.

Feb 22, 2007

Yesterday the stock traded up on strong volume out of its consolidation. This was a result of an analyst raising expectations and since the market had such a constructive reaction I decided to close my position rather than wait for the full 10% stop. This will probably be a good name to short in the future, but the overall market environment is stubbornly strong so the odds are not as favorable for short positions as I originally thought.

CROX (Crocs Inc)

When i first began to look at CROX i was impressed with the growth in earnings and sales and the fact that it was a newer possibly undiscovered company. Their product appeared to be unique and it is assumed they have patent protection to keep others from blatently mimicking what they produce.

The original IPO was very successful. The stock was offered at $21 in February and hit a high of 32.50 the first day closing around 28.50. It subsequently traded down to test the IPO price before running up to a new high in May and beginning its first base. It shaped a healthy cup with handle base and I purchased on the breakout at $37.70 on Oct 11, 2006. The stock quickly ran up to near $40 and then I used a 2 day pullback to add to my position. Again the stock ran quickly to cross $50 in November before settling into a tight formation for much of the month of December.

Fundamentally the company is in super growth mode. Sales growth for the last 7 quarters have been phenominal with September's figure showing the least amount of growth with still an astounding 191% increase over a year ago. EPS figures show a similar trajectory and while they will obviously moderate at some point, the company appears to be very creative with initiating new revenue drivers off their original shoe products.

I have sold calls at various times to hedge against volatility in the stock. My track record in this name is a bit tarnished as I lost money with my hedging techniques but this did allow me to hold onto the stock through the pullback from 50 to near 40 without sustaining significant losses. The stock now rests above the 50 day average after pulling back to this level and holding support. I expect this support to hold but am watching my 5% position carefully as it is a lot of stock to own un-hedged if it begins to show weakness.

Jan 19, 2007

Wednesday (17th) the stock finally broke through 50 again to post a new high. The volume was above average but not extremely high. Since the position has run significantly and I had a large holding to begin with, there were some significant gains unrealized. Yesterday as we traded up initially, I decided to hedge just less than half of my position with Feb 55 calls (still a good bit out of the money). This allows me to collect nearly $8,000 in premium over the next month and still gives me room for the entire position to run up before i cap my gains on 4,000 shares (leaving 5,000 shares still un-hedged).

Jan 26, 2007

The market is becoming a bit more concerning and as such i have slowly added a bit more protection to this position. Earlier in the week i sold 30 of the Feb 50 calls for $2.10 and then yesterday as the stock traded below 50, I sold 30 of the Mar 45's for $5.40. This should give me a good bit of protection and still pay me well to hold the position until the market firms up or i decide to liquidate the position. I'm still bullish overall on CROX, but i want to be protected in the event of a significant drop or a consolidation.

Jan 30, 2007

Today the stock made a new high and I have 100 calls total sold against 9,000 shares. While the Feb 55's are still out of the money, I went ahead and bot in 1,000 shares to round out the position and that way if the stock pushes through 55 quickly i won't be left with short exposure to this name i like so much.

Feb 6, 2007


CROX has continued to perform nicely and yesterday crossed over 55 which leaves my entire position hedged in the money. Since I have a lower basis on most of my stock and would like to protect that, and also would like to stay involved in the name; I went ahead and bot an additional 4,000 shares. This will allow me to turn out the 7,000 shares that will likely be assigned next week while still keeping much of my lower basis stock and a decent size position.

I also sold March 60 calls as I was able to get a decent amount of premium for them and I think the stock may be a bit extended so I wanted some protection while still maintaining a reasonable amount of exposure in this name.

Feb 10, 2007

Yesterday the overall market was much weaker than i have seen in a few weeks. The Russell 2000 which has more correlation with the stocks I trade was down over 1% and CROX was down over 4%. I am not overly concerned with the long-term picture for this name as some pullback is necessary and healthy. However I want to decrease the volatility in my account and it looks like a strong possibility that the Feb 55's next week will not be assigned. So I went ahead and pre-emptively sold some March 55's for $3.40 to add more protection to this large position.

Feb 13, 2007

Yesterday in what was a weak day for the overall market and especially for many of the growth stocks I follow, CROX stood out and traded very well. When it became clear this stock was going to outperform I went ahead and bought in my 30 Feb 50 calls that were in the money but the premium has been wrung out (expiration is Friday). This morning the stock held fairly well testing the low of yesterday and I went ahead and bought in the rest of the Feb calls buying 40 of the Feb 55's at $0.60 cents to take most of the possible profit in the hedge. I still have 2/3 of my position hedged (some of it out of the money) with March calls but I would be disappointed if the stock traded back above 55 this week and i lost part of the position knowing I could have covered the hedge for a small amount and still get the upside potential.

Feb 21, 2007

The company reported earnings last night and the numbers looked very good. Guidance was raised and the product offering is becoming more diversified both in terms of products offered as well as location including many international markets. For now the company is performing well and there is no reason to expect a correction at this time. The stock opened up but during the day it sold off a bit. I used the weakness to buy in the March 45 calls that had no premium left in them. This will increase my realized losses but allow me to continue to accumulate more unrealized gains as the stock continues its upward trend.

CSIQ (Canadian Solar Inc)

Feb 16, 2007

Solar IPO's were popular late in 2006. CSIQ didn't pan out as well as expected as the IPO priced at 15 and quickly turned down and broke lower. The stock traded as low as 9.26 early this year but has since caught some eyes as a cheaper stock and is trading up nicely in volume now. I picked up 5,000 shares yesterday as the stock cleared its previous swing high on the strongest volume this year.

Earnings and sales figures have been positive and the stock is trading at a reasonable to low valuation for the potential growth in the company. I don't expect to hold this one for a long-term position as it has more work to do before becoming investment quality, but it should make a nice run up towards the IPO price which could make for a very nice shorter term trade.

Feb 21, 2007

After a quick move higher the stock is getting closer to it's IPO price (it is still trading under water from that area). The volume on today's up move was just above average but not impressive. So I decided to go ahead and take my profits on this name and was able to sell the position for $13.43 to lock in a decent quick profit.

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HWCC (Houston Wire & Cable Co.)

What could be more boring than a company that makes wires and cables? And yet this appears to be a strong growth story with a good fundamental business and steady growth and profitability measures.

HWCC concentrates on specialty wires that provide safer environments and offer better quality. The composites that make up the insulation around the wires do not give off halogen gas when they burn which is especially important when being installed in factories. There have been several cases where expensive equipment was destroyed not by a fire in the building but by the gasses given off from the wires burning.

The company is finding plenty of customers as building continues both domestically and abroad. Earnings continue to ramp up as sales increase quarter after quarter. The stock is trading at a 19 times 2006 expected earnings, and if the 2007 estimates are correct, the stock is only 17 times those earnings.

Technically the chart pattern is healthy with the company only being public since June of 2006. It has traded up quickly from the IPO at $13 but then has consolidated for some time. Its most recent break to a new high came on strong volume which shows institutional demand for the shares. I expect a continued run as long as the overall market holds up.

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INFY (Infosys Technologies)

INFY is an offshore service company based in India. I came across the name while looking at SAY a competitor. After comparing the two I decided that INFY had better prospects as their growth trajectory appeared stronger and they had better relative strength. The chart appeared much stronger as well with a 2ndary offering bringing the stock back just a bit but not having much of a dampening effect of the pattern. This does, however, explain the high volume down days as much of the syndicate stock was likely dumped on the markets.

The company has a strong background of sales and earnings. Even during the rough periods early this decade, the company continued to post increasing EPS numbers. They appear to be the leader in their field and are therefore trading at a higher multiple. The chart is an excellent pattern with the base count reset in June as the stock undercut a previous base and then began a nearly 90% run from a low of 32 to a high of 57.

I was able to buy after the 2ndary stock hit the market as the stock held its 50 day average. I then added more shares as the stock cleared its consolidation several weeks later. I have 2/3 of the stock hedged (some in the money and some at the money) as the premium is attractive and i want to lower some of my volatility. So far 6 weeks into the trade it is mildly profitable but I expect to increase those gains significantly.

The company reports earnings this week (EPS 1/10 BMO and C-call 1/11 at 8:30 AM). I expect this to knock the premium out of the calls once the uncertainty is out and I think all signs point to a positive release that will add to my profits in this name.

Jan 12, 2007

After the conference call this morning the stocked jumped up in strong volume. I haven't had time to listen to the conference call yet but the institutional investors obviously gave it their vote of confidence. I increased my position by 2,500 shares keeping in mind that i will now almost surely lose 5,000 shares next week when my calls are assigned. The December EPS figure was 50% above last year and the revenue figure was 48% above last year. This continues to support the higher multiple and should drive continued interest in the stock.

Feb 16, 2007

To update the post before options expiration today, I wanted to mention that I now have 5,000 shares and 25 Feb 55 calls that will be assigned today. This will leave me with a very small position (less than 1.5%). So at some point over the next week I need to decide whether to bring it up to a reasonable and worthwhile size or whether to kick it out. My concern is that the stock is a little extended so it doesn't seem the opportune time to add more, but at the same time I don't necessarily want to kick out the position that is trading well.

Feb 20, 2007

In looking closely at the stock after expiration I am a little concerned that the volume has not been very strong as the stock makes new highs. I have had a good run with this name but it seems overdue for a pullback, it is a bit expensive, and there are some technical red flags so I sold the remainder of my position to lock in a good gain.

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HITT (Hittite Microwave Corp.)

This company "Designs analog/digital/mixed-signal ICs, modules and subsystems for RF, microwave and millmeterwave applications." If you understand what that means you should be working for the company... But the part that I understand is the company is in the semiconductor manufacturing business which has seen some good growth lately and the company is growing sales and earnings impressively. The balance sheet is healthy with virtually no long term debt and the multiple while higher than the average S&P multiple, is reasonable considering the growth trajectory.

Friday the company announced earnings and issued guidance for the coming year. The information was well received with the stock gapping up on the strongest volume in over a year. This comes after the stock had pulled back to form its first major base after coming public in early 2006.

I took a 3% position in the stock buying 7,000 shares at 43.22. The stock finished in the high end of the range Friday and traded in a healthy manner yesterday as well. It may face resistance at 51 (previous high from November) but I don't see that as a major hurdle unless the overall market gets sloppy.