About UTK

UTK was added to my watch list yesterday after an over 30% drop in one day solely due to an analysis report from http://sharesleuth.com/.

A long story short - UTK business model is to acquire technology from university/lab at a low cost, and transfers to companies (usually micro-size/start-up) in exchange of the shares from them.

The report challenges the background of those companies as well as the valuation of the shares.

Here is my opinion.

The report is biased, to begin with. The author shorted 75,000 shares before the report was published. To be fair, he does disclose his position in the report. To be precise, "biased" doesn't mean the report provides inaccurate information (I have no idea the level of accuracy in the report), however, it could filter and only provide the information he wants you to hear.

Furthermore, I wasn't surprised that some of their partners has questionable background, or has a questionable business. However, I don't think that shall be the reason to sell the stock, here is why.

By the nature of their business model, they mainly deal with micro-size company - Pick Sheet, Over the counter, or start-up. Very few investors buy those stocks in anticipation of 10% - 15% annual returns - instead, it is either 100% loss, or huge gains. This indeed, makes UTK's model more attractive - it diversifies the portfolio by making deals with a lots of those companies, and allow a reasonable portion of those companies to fail eventually.

So, if you believe in their business model, the real question is do they have a competent management team with good judgement, execute deals in good faith, each and every time?

To that question, I don't have a answer.

My friend Jaewoo's blog has a few updates on the subject. Worth reading if you are interested.

My Watch List: PLT, NVT and CECO

In my last post 10/13, I mentioned 3 stocks in my watch list, they are: CECO, NVT, PLT.

NVT was closed at $ $27.44 on 10/13, and closed at $33.59 today, up 22.4%.
PLT was closed at $18.25 on 10/13, and closed at $21.33 today, up 17%.
CECO was closed at $23.53 on 10/13, and closed at $21.05 today, down 10.5%.

For both NVT and PLT, around 20% profit in 2 weeks, what a watch list! All these stocks in my watch list shares something in common.

1. Numbers - Have sound financial numbers, no or little debt, healthy profit margin.
2. Product - Have competitive/attractive products compared to its peers. I like both PLT headphone, Altec Lansing Speaker from PLT, and use google route planning very often (NVT)
3. Beat up - Price is at least 30% lower than its peak in the last 52 weeks.

Will CECO be the next star in my watch list? I bet so. Well, don't let the stocks in my watch list go. Also Oil / gold stocks are going up as I predicted, COP is already above $62. Buy before crude oil reaches $70 again, before the winter.

Now, here is the important part - my new addition to the watch list: UTK and SCSS. I bought SCSS today at $21.00, and still watch UTK. If you are interested in the sudden drop of UTK, please check this out: http://sharesleuth.com/.

Just a quick notes...

Dow hitting new high is the headline news everyday now, (as if it really matters). As a second thought, it does matter. Do you know the market hit the highest in 1987, right before the crash?.

It may not happen this time. The truth is nobody really knows. But I do think the current market high comes too quick, and yet to prve that it is sustainable. And I continue to hold the bearish view on the market in the next 6 months.

Let's talk about the strategy first.

1. I thinkthe next 30 days is the excellent opportunity for the energy / gold sector sector investment. My recommendation for energy sector are COP and APA. Gold sector is simply GLD. This is a quite denfensive strategy and is based on my bearish view on the market in the next 6 months.

2. If you have appetite for global market, EWJ (MSCI Japan iShare) is currnetly very reasonably priced. It is a double bet on both Japan Market and USD/JPY exchange rate. This is based on my bearish view towards USD.

3. Investment is much less fun without small cap. Some new small cap stocks I am watching now are: CECO, NVT, PLT. I still hold NTE (You can still buy NTE if you haven't yet), RICK (quite high now, my friend Jaewoo has a few articles about the stock ), SNHY and SCHN.

p.s. as I mentioned in the last 2 posts, COP is a good buy around $56 - $57. Don't miss the chance when it gets there in the coming 2-4 weeks.