Tag Archive for CRM

North Korea Talkin Smack

January 24, 2013 www.hedgephone.com/network
50973.6a00d83451b05569e20112797a607928a4-pi

Could North Korea hit the United States with a ballistic missile? Could it mount a nuclear warhead on the tip of that missile?

Kim 101: How well do you know North Korea’s leaders?

The short answers to these questions are “in theory maybe, in practice probably not” and “no, not yet.” Longer answers revolve around the fact that experts in and outside the US intelligence community have struggled for decades to understand North Korea’s weapons programs and geopolitical intent….

READ MORE:www.csmonitor.com

Somehow this is wildly bullish for pumped up Cramer stocks like AMZN and (CRM), lol…

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Seriously, Gaps Get Filled

January 8, 2013 www.hedgephone.com/network
fletch

The best thing to do when the stock market makes a huge one day ramp up on questionable volume after overnight futures were bid way up in my view is to remember that GAPS GET FILLED.

While value investing is my personal bend, I have come to respect technical analysis because that’s what most pros use to trade equities and commodities. Right now, the gap on the SPY chart after the “Cliff Deal” means that stocks are precariously vulnerable to a large 5% or so sell off sometime in the next two weeks. My suggestion is to buy some type of protection either via IWM in the money put options or through the selling of front month call options on your liquid large cap stocks.

Gaps almost always get filled because many times traders with huge books and inside info simply bid up a market before major news (like a Cliff Deal) gets released. Once the news is out, the quick drop or run-up usually reverses and the gap in the chart gets filled, the traders who have friends in Congress are already out and the little guy who bought the hope sells out at a loss. Once this cycle is complete, the strong hands in the market return to rinse and repeat.

Right now, Hedgephone is suggesting investors short the IWM against their small cap long positions but only if they own 15 or more equities in a diversified portfolio. For investors with a more speculative bend, shorting the IWM via put options makes a lot of sense, but heed the January effect and remember that the short run may wipe out some short equity — it’s okay to dollar cost average into your shorts as well as your longs!

While CRM is certainly proving us wrong at hedgephone in the short run, the valuation bubble persists. IWM is similar (though it actually has real earnings) in that valuations are disconnected somewhat from reality. Don’t get caught up in the liquidity trap and buy based on fear of missing out. The rally from the 2009 lows has been remarkable, but investors should buy solid companies that have fallen not those stocks which have risen the fastest in the least amount of time. Value investing is about mitigating risk and optimizing reward so buying when their is blood in the streets is key. Right now, with the VIX at a major low, it’s time to play defense and to protect the capital you have earned since the 2009 lows. A bird in the hand….

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S&P 500 Trading Below 200 Day Moving Average

November 14, 2012 Equities

Hold the phone folks! This could be the big one… I wouldn’t own the market index funds if I were you, instead I would be looking for some short ideas like CRM, AMZN, LNKD, etc… We were pretty “lucky” with our calls so far and we still feel the “Hyper-Stagflation Trade” is due for a serious comeback (IE don’t sell your hard assets but short some stock with a tight stop order right at the 200 Day Moving Average on the SPY 1 year chart).

I may have toked a joint or two in my day and maybe Arizona State is not the Ivy League but I do have a degree in Finance, 10 years plus of financial market knowledge and the wisdom to say “hey, diversify a little out of those crappy slips of paper you own known as technology stocks.”

Look, investing here on the long side in anything other than gold or whatever is probably a total longshot. Given that every single Algo-Bot in the entire world is going to short the market beneath the 200 day moving average, you are fighting the smart money. With that being said, while we feel feel Bernanke is close to running out of bullets, we also feel he is skilled at creating one-day melt-up traps for short sellers. I secretly feel Dr. B loves nothing more than disrupting the natural flow of the stock market and the power that his market manipulations command, but we’ll never know his frame of mind when he decides to rip the faces off of some shorts.

The RSI is too oversold for the market model to switch to short here, though we certainly think the evil robots will send the markets into the abysmal pit of a deep bear market in the medium term. All in all, hold your gold and buy some puts on CRM, QQQ, and AMZN.

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Stock Market: Oversold and Overvalued

May 30, 2012 Equities

A tough combination for traders which is why we are on the sidelines at Hedgephone.com — We are fine with a flat year so long as we can find that one high probability trading set up to make a nice 8-12% yearly return from. Currently, the market is still overvalued and over-loved yet as we discussed here yesterday, on a technical basis the market is very oversold.

In this case, we have no real crystal ball except that summer trading is done on thin volume and means very little in general as all of the “big boys” are in the Hamptons. In our view, that’s a fine place to be as the opportunities to trade here are few and far between. We will update as stocks get cheaper — the lower they go the better they become from an investment/value standpoint and the more we become interested in them. All in all, we think the S&P is fairly valued at around $1050-$1100 so we wouldn’t step in front of the current down leg just yet…

In another 20%, I am sure we will have a lot more to talk about at Hedgephone!

For now, consider the following short ideas: These “leaders” could soon become the laggards if this is the start of the next bear market crash for equities.

CRM

ANGI

AMZN

LNKD

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Observations for May 22, 2012

May 22, 2012 Equities

The behavior of traders in the stock market is a lot like that of a flock of migrating birds. The action is random, but coordinated and a little crazy. All in all, the herd is scared and greedy right now, chasing the hot dot and neglecting anything with a PE ratio under 55X. Not that any of this matters to hedgephone readers because you are all out of the stock market or short stocks during the selloff if you are following our market model. Hedgephone has been off line for a few weeks due to some personal business issues with our staff. We have elected to push forward, however, to deliver our readers an unbiased and seasoned view of market conditions.

Currently, we think the stock market remains overvalued by around 25% and that investors would be better served in income producing real estate, timber or farmland, antiques, select undervalued equities, short select overvalued equities, and in cash.

While Hedgephone is a completely free service for readers and is just one guy’s trading idea blog, readers can at least take heart that none of what we do here is influenced by a sell side or paid promotion bias. We may be invested in the stocks we mention here or we may not be.

Current potential shorts:

AMZN

ANGI

LNKD

QQQ

IWM

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Current potential longs:

BRK-A

KO

PEP

VLO

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We will be back shortly… Apologies for delay in content production. We don’t like to rest on our laurels, but at the same time we would rather be right about the wrong stuff than wrong and long!

The sell off may finally be losing steam, but keep in mind stocks aren’t super-attractively priced until around $1100 on the S&P 500 in my view. The same old manipulation pump and dump BS rules the tape but for now it appears the bears have a pretty good hold of the rope.

That said, like a pulled rubber band the market is oversold based on the RSI and could snap back violently at any time. That’s why we remain mostly in cash.

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Netflix Was A Total Pump and Dump… We Think These Stocks Are Too…

May 7, 2012 Scams

Most investors are taught to assume that markets are efficient and that investment decisions are made in an honest and professional manner. In fact, none of the major finance textbooks (think CFA and MBA here) cover things like pools, pump and dumps, affinity fraud, market manipulation, marking the tape, front running, cooking the books, etc… in an in depth and exhaustive manner.

Many times, investor ignorance costs the general public dearly. At www.hedgephone.com our main goal is to help investors steer clear of investment scams and pump and dump companies. We have learned the hard way that fraud in corporate America is an ever-present, ever-persistent problem.

Netflix (NFLX) investors learned the hard way about investment pools (loose agreements between big money traders to manipulate a stock). We believe that Netlflix was indeed a massive pump and dump (whether this was criminal or simply chaotic randomness) orchestrated by management, institutional investors, the media, and other interested parties whether they were actively manipulating the stock or not.

In our view, corporate insiders decided to go for a stock bubble valuation by juicing cash flow in the short term, moving toward an internet only “revolutionary” business model, and getting Jim Cramer to relentlessly pump the stock via Mad Money. The team is confirmed by interlinking director members from TheStreet.com, Netflix, etc… and from huge insider sales near the top of the bubble. If Cramer and company liked the stock so much, why were the corporate insiders who knew the business better than anyone else dumping shares like there was no tomorrow? In my view, this was simply a case of insiders dumping into the pumping whether they believed the hype or not. As a professional investor and part time fellow journalist, I was astounded to see nothing but positive articles (except of course from other authors at Seeking Alpha….) on the company from the likes of TheFool, The Street.com, Investors.com, etc.. etc… right before the implosion. We were extremely bearish. Not that it makes us special but it means that this was predictable (if we got it right, the big money managers from Harvard Business School certainly should have!).

The onslaught of BS in the financial media led to Netflix being priced at $300 per share and for over 100X what in hind sight look to be questionable earnings because they were later erased by huge losses. While most people simply believe the action in Netflix was based on a rational, efficient markets we think the stock traded the way it did because of speculation, media hype, and some old fashion stock promotion. Many authors argued that developments within the company caused the stock crash, but we think the action of the name was more typical of a micro-cap stock promotion. The fact that thestreet.com was so positive on Netflix while sharing board of director members with Netflix seems like a pretty obvious conflict of interest to me — nothing criminal, mind you, just a little bit slick.

At Hedgephone.com, we aren’t here to tattle on people but to educate them. We are looking for the next pool ready to blow up and we don’t think Netflix was the last organized pumped up and over-hyped stock to burn the little guy… Here is a quick and dirty list of companies we are investigating currently and why we think they are more hot air than hot stock at current valuations.

Angie’s List (ANGI) — We started covering ANGI at $15.50 a share and so far this short has been a nice winner similar to our call to short Groupon at $22 a share. Angie’s List reported dismal earnings last week as the company managed to lose another $14MM in the last quarter. Sure, revenues were up big but paying for business only makes sense for start up web companies right now because there is a bubble in these names created by massive economic stimulus and mal-investment (think 1999). Without this bubble, ANGI should probably be worth around 1X sales or about $150MM — a full 80% drop from current levels. The balance sheet looks sketchy, the bottom line is blood red, and even though web traffic is up the stock looks like a great short at today’s prices.

Linkedin (LNKD) — While this is clearly a great company, the stock is not a great investment in the classic Ben Graham 1934 Security Analysis sense of the term. LinkedIn is a bubble stock trading for 900X earnings. There is no rational explanation for this other than it is a repeat of the 1990′s technology bubble. While I wouldn’t short LNKD, I do think that investors should try starting their own web company versus investing in this clearly overpriced security.

Salesforce.com (CRM) — While cloud computing is a “revolution” in innovation, we don’t think that the market valuation for CRM is a real one. In fact, we think Salesforce is another “pool” manipulated by the big guns in the trading world. We also think the current technology bubble is so important to the Federal government that fraud charges will never be levied on any of the major manipulators or bubble company executives in the future even though these crimes are clear and identifiable. You see, we have created a culture of fraud on Wall Street and Main Street loses every time. That’s just the way it is — expect Saleforce.com to “beat” earnings and ramp a little higher before ultimately blowing up sometime in the next year or two.

YELP (YELP) — Yelp is a lot like Angie’s List because it is clearly just an eyeball and mouse-click valuation. The company lacks earnings, cash flow, book value, etc… but the market loves anything with a dot com at the end of it’s name. Yelp is one of the worst investments I can remember at this price but like all internet businesses anything can happen and the company may eventually grow into this astronomical valuation.

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4 Possible Short Candidates

May 1, 2012 Equities

Corruption in the stock market is nothing new. Even before the FED and the SEC there were rules for investing in the stock market. Trouble is, nobody actually followed them and it didn’t get any better after the private banks pushed the Federal Reserve into existence in 1913. The Fed was implemented to prevent financial collapse, but they are a huge part of the reason the country entered the Great Depression in 1929 and I would argue that the Fed (after Congress and the Treasury) is the biggest culprit behind our current financial malaise.

What does this historical data have to do with Travelzoo (TZOO) or the price of eggs? Well I’ll get to that in a minute. You see the market price of eggs is a supply and demand issue but it’s also a money supply issue because the more money the central bank prints, the higher the prices we pay for goods and services. The more money we print also means higher prices for internet-bubble equities as well because people make “mal-investments” to keep up with inflation as money comes cheap from low interest rates and QE and needs a sexy investment class to call home. Lately, there has been some dissent amongst Fed members and it seems that the QE free lunch may be the actual reason behind $104 a barrel oil and not the evil speculator. Many Americans are waking up to the fact that the formation of a corporate new world order is not in their best interest.

Speaking of speculation, here are 4 overpriced stocks to short with a tight stop loss or by using call options as a hedge if you think the current ponzi architecture will fail. One thing is certain — watch the 50 day moving average because trend followers will likely short these stocks after selling them if the market heads back below the 5 day. Buying leading stocks is a great strategy in bull markets and many traders follow the Jesse Livermore blueprint by shorting a leader after the overall markets break down. Today’s leading stocks are no different, but timing is everything and investors have to keep an eye on unemployment rates, CAPE PE ratios, the 50 and 200 day moving averages, macro trends, technological developments, innovation, etc. …

READ MORE HERE: http://seekingalpha.com/article/546541-4-possible-short-candidates

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4 Overpriced Web Stocks To Avoid

April 22, 2012 Equities

Most investors think a good business idea equates to a solid long term investment. While this is true on balance to some degree, many people don’t understand that stocks trade in a market and like all markets things are marked up and go on sale for many different reasons, not all of them rational or honest. Indeed, in many markets items are overpriced or sold below wholesale cost because of supply and demand factors. The stock market, despite what efficient market theorists believe, is no different at all. If a certain large trader for a bank or hedge fund wants to mark the tape and “make” a stock he is long or short move in a desired direction the trader can simply push the stock where he wants it to trade. If you are in cohorts with other major players in the market, this type of market manipulation is as easy as third grade math. When ABN and Fidelity decide that XYZ should trade for X one of the institutions simply places the bid out there and the other institution can move in behind the bid with more buy orders to “beef up” the tape even if that institution doesn’t really want the stock in question. While this type of “bad boy” trading is technically illegal, it happens all the time and in just about every equity imaginable. What astute traders have to learn is how to decode a “promotion” or a “pool” in order to find out when the party ends and the stock in question is going to blow up.

With web 2.0 names, the key is to stick with the smaller players and trade from the short side. Wait until the issue becomes extremely overbought on all chart time periods from the 5 day to the one month to the one year and short small amounts with tight stop losses. When a bubble finally pops, you have to be in it to win it from a short selling perspective and a bunch of tiny losses can be made back and profits reaped by holding short with tight stop orders in place.

Another technique is played out using options. Many shorts find an overvalued and over-hyped pump to short but constantly get stopped out right before a massive crash. The traders in these think that nothing can be done to short such momo darlings and give up with losses because they either lack the time or discipline it takes to trade with the trend in the stock. Waiting for the right entry point is key, but another strategy is to buy call options in the same notional amount as the shares you are shorting. For example, you may think Salesforce.com (CRM) is going to blow up so you short 1,000 shares and buy 10 slightly out of the money or in the money three month out call options on CRM as a hedge. If the stock moves higher, you can sleep easy knowing that the call protects your risk and that your max loss on such a position is around 5-7% depending on your strike price.

Read the rest of this article here:http://seekingalpha.com/article/514431-4-overpriced-web-stocks-to-avoid

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Trade with HEDGE PHONE and Make Money… Our Latest Seekingalpha Research…

April 20, 2012 Equities

Most investors think a good business idea equates to a solid long term investment. While this is true on balance to some degree, many people don’t understand that stocks trade in a market and like all markets things are marked up and go on sale for many different reasons, not all of them rational or honest. Indeed, in many markets items are overpriced or sold below wholesale cost because of supply and demand factors. The stock market, despite what efficient market theorists believe, is no different at all. If a certain large trader for a bank or hedge fund wants to mark the tape and “make” a stock he is long or short move in a desired direction the trader can simply push the stock where he wants it to trade. If you are in cohorts with other major players in the market, this type of market manipulation is as easy as third grade math. When ABN and Fidelity decide that XYZ should trade for X one of the institutions simply places the bid out there and the other institution can move in behind the bid with more buy orders to “beef up” the tape even if that institution doesn’t really want the stock in question. While this type of “bad boy” trading is technically illegal, it happens all the time and in just about every equity imaginable. What astute traders have to learn is how to decode a “promotion” or a “pool” in order to find out when the party ends and the stock in question is going to blow up.

With web 2.0 names, the key is to stick with the smaller players and trade from the short side. Wait until the issue becomes extremely overbought on all chart time periods from the 5 day to the one month to the one year and short small amounts with tight stop losses. When a bubble finally pops, you have to be in it to win it from a short selling perspective and a bunch of tiny losses can be made back and profits reaped by holding short with tight stop orders in place.

Another technique is played out using options. Many shorts find an overvalued and over-hyped pump to short but constantly get stopped out right before a massive crash. The traders in these think that nothing can be done to short such momo darlings and give up with losses because they either lack the time or discipline it takes to trade with the trend in the stock. Waiting for the right entry point is key, but another strategy is to buy call options in the same notional amount as the shares you are shorting. For example, you may think Salesforce.com (CRM) is going to blow up so you short 1,000 shares and buy 10 slightly out of the money or in the money three month out call options on CRM as a hedge. If the stock moves higher, you can sleep easy knowing that the call protects your risk and that your max loss on such a position is around 5-7% depending on your strike price.

 

Read More Here: http://seekingalpha.com/article/514431-4-overpriced-web-stocks-to-avoid

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Angie’s List is a Short…

April 19, 2012 Equities

As readers of Hedgephone know, I have long argued that Wall Street’s last and greatest bubble was going to pop somewhere around the time that Facebook (FB) goes public. The reasoning was that the web 2.0 bubble is almost as vile and deplorable as the 1999 technology bubble. Most investors don’t have the type of long-term memories to avoid the pitfalls and bear-traps of investing in the latest growth idea.

Call me crazy, misguided, out of touch, behind the times, or whatever you like, but the bottom line is that investment bankers on Wall Street receive some of their largest underwriting fees from tech bubble IPO banking. Once the Facebook deal is unleashed on the investing public, the bubble will be so large and ominous that the relative mouse-click and eyeballs valuation game might end violently with a loud Hindenburg pop.

While investment bankers are supposed to be a respectable bunch who provide growth capital to innovative businesses, these guys also have an inherent conflict of interest and are looking for huge payouts with little regard to the small investor who buys into the frenzied hype that these IPO’s create. Additionally, many bankers on Wall Street are simply A-moral as opposed to immoral and could care less about the valuations they come up with using their pro-forma models – which really only have a use in a class room or sales floor setting.

Read More Here:http://seekingalpha.com/article/510171-angie-s-list-a-pump-to-short-before-the-dump

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