Monday, January 30, 2006

Kraft reports

Kraft reported today and it seemed okay. It definitely wasn't great, but they may be taking steps in the right direction. They will cut 8,000 jobs in attemps to slim down operations (and continue to close facilities). In the near term, this will lead to more restructuring charges. In the long term they are hoping the restructuring plan will slim down operations and lead to more efficiency. More efficient operations will lead to better margins (which they need).
Earnings were up, but they also had one extra week. Backing out this week caused earnings to be up only marginally. The stock is up in after hours and it will be interesting to see how it reacts tomorrow.

A small post on hedge funds
I might post a few random things about hedge funds in the next few posts. One interesting thing about hedge funds is the commissions they pay. We're used to paying whatever our brokerage charges us ($7/trade, etc.), but at hedge funds it depends on the trading firms. We work with a bunch of different traders/firms and they usually charge different commissions. Some charge 5 cents per share (that's usually the max), while others charge 3 cents. You can also put trades in through an automated system and the commission is usually 1 cent per share.
So we might put in a few orders and one of the traders who works for us will give us a call saying "we bought 50,000 shares of XYZ at 20.5678; 3 cent commission".
Another type of trade is the net trade. This is when we're not really charged a commission, but the commission is built into the price (the stock price). We normally use this for foreign trades rather than U.S. trades.

My next post will most likely be on Wednesday since I'll be busy with school tomorrow and possible the doctors (I may have fractured a part of my foot, I'm okay though). Wednesday's post will be a recap of January.

Thursday, January 26, 2006

Time for some Links

The market had a great day today (and the way things are looking I might be losing my FRX shares at $45). In an unrelated note, I logged into my Think or Swim account and I'm still incredibly impressed with this brokerage. The software is incredible, you can do so many things, and their commissions are cheap. Even if you're not into options, you might want to check it out for stocks (I think stock commissions are only $5)

Some stories I read throughout the day

Microsoft reported today and more people are saying that the shares might actually start moving (it's been practically flat for the past few years) due to new products (Xbox, new operating system, and I think a new Office package). I'm pretty sure I've heard similar stories last year, but maybe this is Microsoft's year.

Another interesting article is on J&J (on my watch list) about any upcoming acquisitions.

Business week put out an article on 4 cheap stocks. I don't know if I'll have any time to look into any of them (I'm only really familiar with EMC), but it might be interesting for others.

This stock has been on my watch list for awhile and now there's a little more press about it.

That's all for now. I think next week I might write a few posts (or one) about certain inside workings of a hedge fund. I usually have people ask me questions and I thought it would be good to share a few things.

Wednesday, January 25, 2006

A few things I'm looking into

I'm not recommending any of the stocks below. This is just a post about a few stocks I'm either looking into or want to look into.
The central theme behind these stocks is that they are all more or less having problems. Pricing issues, rising costs, squeezed margins, etc. So why even spend time on these stocks? Because everyone else is bashing them and I want to see if these problems can be taken care of in the near future.

Another common theme among the stocks is that they all have to do with food. I like this industry because it's somewhat stable in a sense that everyone will continue to keep eating. Are these companies going to grow double digits per year? Maybe, but only through acquisitions and not organic growth.

The first one is ConAgra Foods (CAG).
First of all, I like the chart. This is a packaged food product company that has a ton of products.
The bad thing about this company is that it's balance sheet is not very good looking and its free cash flow can be questioned. The cash flow problem can be detrimental because CAG does have a 5.3% yield.

The next one is Kraft (KFT)
This is a well known brand that has a multitude of products at your local grocery store. Walmart accounts for over 10% of their sales and they are trying to pair back some businesses. They want to sell off some divisions that are not as profitable, while maintaining their market share in the more profitable divisions. This is a fairly major restructuring program, which brings along some risk. Based on the chart, I'm waiting for it to level out a bit. KFT has a 3.2% yield. While they are restructuring they are getting rid of certain businesses and taking on charges. Their margins are getting worse and I would want to see that stabilize and then reverse course. The one thing that I like is that their products have very good brand names.

Who likes chicken? Next up is Sanderson Farms (SAFM).
These companies are getting hammered because of falling chicken prices and worries about the bird flu. I think the bird flu could be a little over-reaction, and this is leading to the falling chicken prices. I seriously doubt chicken companies will go away, and I'm looking forward to a bottoming out in the industry (then I'll start buying).

The last one is Chiquita Brands (CQB)
The name should be familiar to most people. They are going through the same problems as SAFM in terms of product pricing. The prices for bananas and pineapple have been softening and this is causing problems for the company. I think I read that banana prices were starting to rebound. It has a yield of 2.2%

Although I find these companies interesting, I think it will be too risky for me to invest in all of them. They are all generally in the food business and if I bought 100 shares of each, then I would be allocating almost 25% of my net worth into this industry. That might be putting a little too much into food, but some of them might be worth a look if they can over come their problems.

Another blog added: Consumerism Commentary

Monday, January 23, 2006

Time Management

Time management is key in a lot of areas of life. Someone might have a bunch of good ideas, but if they can't manage their time well then they might never get around to developing these ideas.
This site has some time management tips.

I manage my time by keeping a day planner. The night before I take a few minutes to jot down all the things I want to get done the next day. The list doesn't have to contain really important things, but just all the tasks I want complete. This method helps me keep track of the things that need to be done and the act of checking things off a list also motivates me to finish the entire list.

Over the weekend I spent a little time reviewing the things that I needed to get done in the long run and decided that I wouldn't have enough time. I thought about cutting things out, but I think if I move things around I'll be able to free up some time. From now until June, my main focus should be on the CFA. It's hard to fit enough time for this when I still need time to: go to the gym, work 40-45 hours per week, and take two college classes.
I need to go to the gym and I can't cut back on my work hours, so I decided to drop one class. I dropped the one I thought would be the most challenging (visual basic programming) because I have no programming experience. This will basically free up my Monday nights, which is a huge time saver. By counting class time, commute time, and homework time I think I'll be saving at least 7 hours per week. I can take the class next semester, when I'll be a little less busy.

I'm doing fairly well in 2006 (so far!). During market hours (so they don't reflect closing prices) I checked out the indices and the three major ones are between 0 and +2%. My holdings are between +0.4% and 13.9%, and three of them have double digit gains. Hopefully this continues!

Important News
I received two great emails earlier today and time to share the news.
NCN over at No Credit Needed has started a podcast! I think this is fantastic news and I hope people listen to it (you can also download the casts in mp3 form; the first one is about 11mb big).
I wish him the best of luck and if you want to check it out please go to his podcast site, which is right here.

Another huge piece of news comes from Free Money Finance. A new personal finance blog network has started by uniting five huge finance blogs. The network is called the Money Blog Network and the five blogs are: Free Money Finance, All Things Financial, Blueprint for Financial Prosperity, Consumerism Commentary, and Five Cent Nickel.
These are five fantastic blogs and I'm sure the new network is going to be a huge success.

Wednesday, January 18, 2006

Random Things

Tech got crushed today as the Naz dropped 1%.
Apple was down 2.6% during the day and it's down another 3% or so in after hours.
Google dropped 4.75% after a downgrade.
Ebay was down over 2% during the day and another 2% in after hours.
The big news was between Intel and AMD. Intel came out with a poor report that sent its shares down almost 11.50% (although I think they are increasing their capex numbers, which some analysts saw as a good thing). On the other side, AMD came in with a profit and is up over 10% in after hours.

I'm going to buy the Schweser notes/study guide tomorrow and I'll post a review (this goes along with the last post). I'm at least a little happy that I passed the sections that matter the most to me (equities, derivatives, fixed income, etc.), but I'm still pretty mad that I didn't pass overall. I can't wait for the June test.

Internet: my cable modem kit finally arrived, but I need to install it. I'm *hoping* I'll have a reliable connection by tomorrow. Then I'll be able to post on a regular basis and thanks for putting up with these sporadic posts! I know they haven't been too good lately due to the lack of time I have on a computer, so I'll try to make up for that in the near future.

When is it good to sell some premium (options)? When volatility is high, because this leads to more expensive options (higher premiums). FRX came out with a somewhat poor report last week, but the stock reacted positively due to other news. I sold a call on FRX to lower my cost basis in terms of return calculations. It was down pretty far early in the day and I was hoping for a rebound later on. I got the rebound and sold the call for a little more than expected (.90)
I sold the Feb 45 call and got back $90 in return (only one contract). I did this because there is uncertainty around FRX, it is in a volatile state, and I wouldn't mind selling my shares for $45.
There's a chance they could receive some good patent news, but the probability might be on the low side. Plus the option only has about one month left and I'm hoping time value decay will kick in and the premium will start to go down.

Think or Swim now has automatic transfers (cash withdrawals and deposits) so I'm setting that up tomorrow. It should take a few days, but then I'll be able to transfer some money over. I have a good amount of cash in my bank and I want to move it into another account.
If I have time, I'm also going to contribute to my Roth IRA sometime this week.


I'll try to post later tonight, but I got my CFA results back. As you can tell from the title, I'm taking it again in June. I scored high on the parts that matter to me the most (equities, financial analysis, fixed income, derivatives), but not so well on some of the other parts (ethics being the big one). I think if I passed that section I would have passed overall.
The pass rate was 34%

I'm confident I will pass in June because now I know how to prepare. Forget the books! I'll be using Schweser products: notes, practice tests, etc.

I will try to post more later because I have a few more updates.
The next few months should be interesting as I try to balance working 40-45 hours, two night classes, and the CFA test (oh yeah, and maybe a social life too!)

I'll try to post later tonight.

Thursday, January 12, 2006

Gone for the weekend

I'm going away for the weekend, so the next post will most likely be on Wednesday.
For those who emailed me, I'll get back to you then.

Have a nice weekend!

Wednesday, January 11, 2006

Alpha Guy is going back to school

The above title is correct. Didn't I just graduate?? Well I did back in June, but after taking a semester off I'm ready to continue. This time I'm going back to further my education and help my career in the long run. I want to be fully prepared in the next decade and I think a math degree with help me. I'm definitely interested in options/derivatives, but sometimes I feel lost while looking through different models that use advanced calculus. I really don't like that feeling, so I'm going to change it.

I did contemplate trying to teach myself, but I think for this subject a more structured environment will be better. I haven't taken some of these basic courses since high school, so I'll be re-taking a few of those. I figured I could pass the placement tests with a little studying, but I want to have a strong background before I get into the harder courses. I signed up for visual basic programming (it's required) and trig. This will also mean my Mondays and Tuesdays will be incredibly hectic because I'll be busy from 4am to 11pm (I'm saying right now that if I can't make it, I'm not going to force myself- I'll drop the classes).

I made a comment about raising my year end goal and it is due to some changes at work (bonus and raise). My new goal is $60,000!

I still haven't had time to research anything, but here's my list of stocks I'll look into first:
(these are on here for various reasons, so some might seem out of place)
GSH (although it's up roughly 15% since I last mentioned it)
TCHC (I shouldv'e bought more, it's up 75% in my IRA)
CQB (I'm glad it went down today, made it cheaper!)

Some of these companies might not be good at all (SPC may be one of them), but I'm still interested in at least looking into them a bit.

One last thing: there's a new blog for people who are in college or have just graduated (financial advice, etc.) called Ask Uncle Bill

Monday, January 09, 2006

Dow tops 11,000

I still don't have a reliable internet connection, so my posts might be short for a little bit.
Today the markets had some excitement as the Dow topped 11,000. The indices have moved up a good amount compared to their moving averages, so I wouldn't be surprised if they back down a bit. The technical analysis newsletters that I read said that another run might be forming, but also there are some signs of weakness.

I still haven't researched any stocks...

There is a Carnival of Investing over at Free Money Finance, and I suggest you check it out.

One last quick note: I'm going to have to adjust my 2006 year end goals and I'll hopefully post about it on Wednesday. The goal will be going up, but I haven't figured out what the new goal will be.
That's all for now, more on Wednesday!

Friday, January 06, 2006

Quick Update

So the cafe I go to had internet problems on Thursday. I'm sure it will be fixed next week, and then I can continue posting.
In the mean time, just some quick statements.

-thanks to the comment about Paypal, I'll have to check out their money market yield. I wasn't aware that it was that high.
-to the one who commented on European stocks, any suggestions? I'm always looking to add foreign stocks to my portfolio, but sometimes it can be difficult with the lack of info (see: GSH).

That's all for right now!

Wednesday, January 04, 2006

Paycheck plan for 2006

I won't have an internet connection for at least a few weeks. I just ordered the kit and it takes up to 10 days to arrive....but I did find a nice cafe down the street with free wireless so I'll be able to go online (and post here).

This cuts into the time I wanted to spend looking for new investments since it's hard to concentrate while at a cafe. I have been adding to my list of stocks to look into. Some have been beaten down, but I still want to research them a bit. I've been looking into the food sector (chicken companies are getting hit, PPC, SAFM), and various other food related companies: KFT, CAG, CQB, HSY, and a few others but my list is at work. Some of these have been going through tough times (PPC, CAG), but it might be worth a look especially if they have strong cash flows. Most of these have decent dividend yields as well. I also might look into tanker stocks again, this time dry bulk shipping. I made some very good returns in 2003/2004 off oil tankers and now I'm going to look at a few others (DRYS and DSX). I might also add to my SFL position because it's being treated like a tanker, but it's more of a leasing company (so the yield might be safer).

I'm going to use ING to help with my savings plan. I originally stated my goal is to have a savings rate of 40%. This might be a fairly high number, but I think I can accomplish this.
Rather than just letting my paychecks sit in my bank account until I figure out what to do, I'm going to transfer a portion of each paycheck to ING. The money will sit in ING until it's ready to be put to use and I figured I can always buy on margin for a few days since the margin interest will be low (to give time for the money to transfer over from ING to my brokerage account).
So starting with my next paycheck I'm going to follow this plan. Every two weeks I'm going to have ING automatically take out 40% of my paycheck. This will total about $570 every two weeks and about $13,680 for the year. I'm going to try this out for awhile and see how it goes.

Quick Update

I don't have internet access at my apartment, but there will be a post tonight.
I'll hopefully be back to my regular postings next week!