Sold NTE, bought PALM, and COP

I sold half my position in Nam Tai Electronics (NTE) at $16.37 today, and bought Palm (PALM) at $14.08. I continue to balance my portfolio allocation at 50% cash and 50% equity.

NTE has a good ride, and go up over 30% since Sep. I have a uncertain feeling on this stock now - and decide to unload half of my position with a small loss (i bought around $17). I am very excited about the opportunity PALM presents at this point, I will write this stock in details in my next post. Stay tune!

Revisiting the post I wrote about ConocoPhilips (COP) in Sep, it is closed above $66 today, 11% higher than the price I recommended and bought in Sep. Also note that the crude oil price fluctuates a lot recently, and current price is comparatively low in this year. What COP's price will be if crude oil price goes up? I still recommend oil industry as a great long term and defensive investment vehicle.

A Tiny Gem - DAGM

Mentioned in the last post that I have 2 exciting stock ideas to do further research and share with you. One of them is DAGM - DAG Media. It is a micro-cap $5.7 million company, which is by far the smallest one I have ever interested in. (Interested to know if you ever bought something smaller than this, and share with us the experience)

It is in Yellow Page/Publish Directory business, specializing in Jewish community, and recently sold a few of their businesses and moved their focus to online. Revenue ranged from 4.5 to 6million, with about 0.5 million to 1 million operating loss in the last 2 years.

Very simple investment theory.

1. The company has $ 7million cash with no debt, yes 7 million cash! its other assets and liability are pretty much equal. In other words, if the company is liquidated today, its face value is 20% higher than the stock price!

2. Better yet, that evaluation hasn't included their new online product - http://www.nextyellow.com. The website where buyers submit their interest online, and the website will provide registered sellers the information, and let sellers contact the buyers - the website makes profit from the referral. Hard to judge this new product - only a few months old. In my opinion, it is an so-so idea in a very tough business (think of competing with Google), and honestly not having a high chance to be successful, but, consider the stock price, it is almost a gift! They also acquired a online shopping site http://www.shopila.com - a less significant and neglicable business line. But no complaint as a gift.

3. Last but not the least, I read their previous SEC filing, visited their website and checked their financials, and my gut feeling tells me I am dealing with an honest and hard-working group of people there. Look, when investing in a micro-cap company, people is the most important part that we need to rely on.

With over 10% price jump, and closed at $1.76 today, it is still a bargain. I recommend it with caution as micro-cap stocks are usually volatile. I bought a small hand today at $1.72.

IGLD and RICK

Sold 2/3 IGLD at average $9.70 this week, with over 80% profit in a few months. (thanks for introducing this stock to me, Jaewoo). In the meantime, I doubled my position in RICK at $6.72 - it is the largest holding in my portfolio now, with the average cost at around $6.60.

If you haven't yet bought RICK, do your study, and take actions now! You simply won't have that many chances. It is a fast growing business, with healthy finance, and reasonably priced.

With some consolidation in the last month, my portfolio has 10 stocks now. I have 2 exciting stock ideas, and will do some research / validation work this weekend, and hopefully introduce some new stocks early next week. Stay tune. Have a good weekend!

MSFT Review and Portfolio Overview

I recommended Microsoft (MSFT) on Apr30, 2006's post, when it was closed at 24.15. I considered that as a

safe pick for conservative investors with a projected 8% to 12% annual return in the next 18-24 months.

Check it out, MSFT is closed at $29.23 today, that is 21% return in less than 6 months! Quite rare for a super large-cap stock like MSFT, isn't it?

I consolidated my portfolio and sold SCHN and SNHY in the last couple of trading day. My current investment portfolio includes the following stocks: Large Cap: COP INTC, Mid Cap: SCSS NTE KOMG OVTI, Small Cap: IGLD UTK RICK MMG.

Let me pick one stock from each category and share my thoughts.

SCSS - a long-term winner. BUY now.
RICK - Don't chase now considering today's 10% jump - keep an eye on it, it is a long-term winner. Recommended entry point: $6.50 - $6.80.
COP - A necessary defensive player in my portfolio - also hedge against my annual gas expense.

CECO is up - Bought SCSS and UTK

I mentioned in my Oct26 post that CECO was the only one in my watch list that went down, and I said:

CECO was closed at $23.53 on 10/13, and closed at $21.05 today, down 10.5%....Will CECO be the next star in my watch list? I bet so. Well, don't let the stocks in my watch list go.

It is trading at $24.50 now, 16% higher compared to 10/26 when I wrote the notes.

Just let you know, I bought more SCSS and UTK stocks early this week at $19.52 and $12.52. I didn't get a chance to update you earlier (very busy work schedule this week), but the price is still cheap.

However, don't lose the big picture, I am still bearish on the market in 6-12 months period, so I am in the process of picking some sell candidates to balance my portfolio at 50% equity - 50% cash.

Here are my sell candidates: SCHN, IGLD, SNHY and KOMG. Please feel free to share your thoughts.

Also, RICK's price is closer to $7 again, worth watching.

UTK #2

I bought 1/3 invetment unit in both SCSS and UTK last week, at $20.50 and $13.99 respectively. Both closed at lower price on Friday, and they stayed in my watch list.

Sam asked about UTK in the last post:

You mentioned that you have UTK on your watchlist, but you didnt mention at what price it would be attractive to you. when are you planning to jump in, if at all?

In long term, the price right now is attractive. I bought 1/3 last week, and will continue to buy the remaing 2/3 next week. To me, Friday's report is neutral, its acquired stock value adjustment should be a normal part of this business, though the market disagrees, pushed the stock down another 10%.

I am amazed and excited by the way this stock is evaluated at this point. The stock is treated much similar to an American Auto industry stock(such as GM, F). Auto industry is a capital intensive and highly competitive business, very thin profit, or negative profit, its Book value played an important role to value the stock (P/B between 1 to 2). UTK is nothing like that - it has no debt, very decent profit margin in a less competitive business sector. Though the stock exposes certain risk in short term, I think it will be one of the most rewarding stocks in my portolio in next 1-2 year. BUY.

SCSS is another one I am excited about. In short, the company manufactures and sells mattress that can adjust firmness - called Sleeping Number. Details, please check its website. Here is why I am excited about it:

Attractive Product - I couldn't think of any better way to personalize a mattress (sleeping number), and it has a few product lines starting from +$1,000.

Disciplined Pricing Strategy - Simple pricing, some promotion from time to time, with 5% - 10% dscount only.

Efficient Store Setting - Compact store (that's cost saving, but I feel these stores neat and comfortable), knowledgable sales with no pressure.

Excellent Financial Numbers - No debt, health profit margin (6.5%), respectable ROA(24%) that reflects its management efficiency, steady revenue growth (>15%), and moderate P/E (21).

Enough reasons to BUY?