TFN eNews 08/24/2009: The End of the Russia Gambit?
Published via e-mail broadcast on August 24, 2009
In today’s TFN eNews:
* Double-digit gainers #46 and #47
* Carbon-neutral Hummer
* TFN Reader Grapevine update
Dear TFN Reader,
There’s nothing like kicking off the trading week with taking a juicy gain.
Maybe taking two juicy gains.
Back in mid-May, TFN’s Pythia of Profits Laura Cadden suggested that members of our premium service Hot Stock Confidential buy shares of the beaten-down energy supplier El Paso Electric Company (NYSE:EE). She thought we could pick up 20% gains over the next 4 months.
Right on schedule, we hit her target today. Members who took our advice and purchased shares under $14 today were instructed to sell their shares of EE for 22.3% gains in 69 days.
Laura scored double-digit gainer #46 since we started the 2009 trading year on January 5.
We sure enjoy watching our gains stack up in our closed positions portfolio.
But we enjoy even more that these recommendations are generating serious money for our HSC members: “Thanks Laura,” writes HSC Member Joyce C. from Loas Angeles. “I enjoy reading your e-mails. All your recommendations are all rewarding. For sure, I will continue my subscriptions with you. Wonderful job, Laura! Have a great day…”
That not made Laura’s day!
*** A couple hours later, we jettisoned double-digit gainer #47, French oil and energy magnate Total S.A. (NYSE:TOT). This one we had recommended as part of our “Russia Gambit” back in November of 2008… and held on to during the roller coaster ride that followed.
Total is a bit of an oddity. It’s a larger company than we usually like to recommend. And we’ve been holding on to it for longer than we do in this kind of market. The reason for this was that we used TOT as a conservative “backstop” for a bundle of more speculative stocks we thought were going to go through the roof as Russia resumed its adamant stance against Ukraine relating to natural gas deliveries.
While most of our predictions played out (Russia did indeed cut off Ukraine from gas deliveries on January 1), the various market crashes mussed up our strategy: We took a 21% gain on Toreador Resources Corp. (NASDAQ:TRGL) on June 19 and took a smallish -10% loss on Bmb Munai Inc (AMEX:KAZ) on May 11. Total’s 11.1% gain offsets that loss.
And closes the book on our Russia Gambit.
“With oil prices ready for a drop later this fall, let’s lock in today’s gains and save the fresh capital to enter a play with a larger upside,” wrote Andy Snyder today.
Total brings our tally of double-digit gainers to 47 so far this year.
(I keep asking you: What other services do you know that have actually taken 47 gainers in 2009? Let alone double-digit gainers… or better! Don’t you think it’s bid those guys a fond farewell… and join our HSC members in making actual money?)
*** Out in the rough-and-tumble world of the markets, rumors leaked out that Government Motors Co. may be close to getting rid of its Hummer SUV brand. Environmentalists will no doubt rejoice that the over-sized and ever-so-slightly under-powered behemoths will no longer be produced by an American company.
But the world works in mysterious ways: Happily unconcerned with the politically incorrect image Hummer enjoys among American liberals, the Chinese are more than glad to add the car maker to their “List of things to buy with worthless dollars”.
Which should make Hummer’s change of ownership a carbon-neutral transaction.
The prospective buyer is Sichuan Tengzhong Heavy Industrial Machinery, based in Chengdu, China.
Sichuan Tengzhong PR punsters claim the company “doesn’t take its products lightly”. Like many other Chinese companies, its product line reads like the Christmas list of a ten year-old boy: It’s a designer and manufacturer of heavy machinery for the transportation sector, builds dump trucks, asphalt spreaders, concrete conveyors, bridge piers, road-expansion joint fittings, as well as special-use vehicles, oilfield equipment, fuel tankers, and other machinery for the petrochemical and energy sectors.
Hummer should fit right in.
The company is privately held. But I think a feather in the cap like Hummer might be a ticket to a fast-track IPO on the Shanghai stock exchange.
*** “I’m a new member of your free newsletter and am very happy to be onboard,” writes TFN eNews reader Ryan C. “I have a question about a stock I have been watching and hearing a lot about, Xcellink International Inc. (OTC:XCEL). They have developed a unique process enabling people to pay and receive payment for all types of transactions in real time, from anywhere to anywhere, from ones cell phone, without the need for credit cards. I heard that this will be a major innovation worldwide and now is the time to get in at $0.650. What are your thoughts on this company?”
XCEL may indeed become the major player in next-generation payment systems it hopes to be. The company has secured important patents and could indeed, over time, absorb a substantial chunk of credit and debit card transactions.
When that is, I don’t know. The stock seems like a decent-enough speculation. But it looks like it’s been used a number of times for stock-pumping schemes. That’s frequently the danger investing in small, illiquid stocks: The moment you have reached a critical mass in liquidity, those pumping up the stock take their short-term profits, sticking you with a stock you have no buyers for.
This situation can be remedied by adopting a long-term approach… and the discipline not to chase rising stock prices when you buy. Most importantly, this kind of stock should be treated like an option: Even though it has no expiration date, only play with capital you can afford to lose!
*** TFN Reader Grapevine Maven Charles D. filed this with us:
“Quepasa.com (OTC:QPSA) has done very nicely since you referred it to your readers. The stock closed at $1.50 on Friday on ‘no news’. But remember, we expect big news coming. We bought this in the $0.60 – $0.75 range (personally, I got in at $0.62 and bought more at $0.74). Nice 100% gain in about 60 days or so.
“I remain convinced it’s going to $4 plus by year-end and I truly believe this one is going to become a ‘teenager’. Just too many things add up to a winner: There are 2 billionaires actively involved. (Rick Scott and Alonzo). They have bought stock as per recent filings. Alonzo is Matt Inc., his non-profit group. They have a new CEO, they have reduced burn down from a $1mill a month. They have partnerships with Playboy, Dr Rey, the Battles of America etc, and these are just the beginning.
“I know they are adding 500,0000 to 750,000 members a month. Although a few more deals and some Investor Relations will would really help. So far, they have zero investor relations support for the current move. The recent delisting really provided a great opportunity to pick up shares of this outstanding company as it created forced sellers, some retail but a lot of institutional selling for institutions that could not own a de-listed company. It appears that all the short term sellers are gone.
“The delisting was only done because the company didn’t want to raise the equity amount needed to stay listed. Why dilute themselves just to keep the NASDAQ Listing? They made a good choice for investors at that point, but it was viewed like the company was going out of business. It’s not!
“There are only 12 million shares outstanding. With just 15 million users of www.Quepasa.com, it suggests they are trading at $1 a member. The Russian investor who just invested in Facebook (a private play) did it at $40 a member. I would think a leading Spanish-speaking social network company would sell at a minimum of 25% to 50% in a comp or $10 to $20 a member, after hitting 20 million members. That’s equates to a $200 mill. to $400 mill. possible market valuation or $16 to $32 a share. So I don’t see why we couldn’t go substantially higher than the current $1.40.”
Quote of the Day:
“When the leader of the free world is complaining about a posting on the former governor of Alaska’s Facebook page, he’s got problems.”
– Chris Stirewalt, WashingtonExaminer.com
*** HSC members just bagged their 47th double-digit gainers this year. Can you really afford to go it alone?
Recommended Reading:
Fearful investing: Smith and Wesson puts the gun on the table
NEW Special Report: The Top Swine Flu Vaccine Stocks under $20
The 3 Best Chinese Stocks Under $5!
4 Top Energy Stocks You Need to Own
The TFN Complete Guide to Biotech Penny Stocks
Today’s Top 3 Financial News Stories:
Reuters.org – Obama to raise 10-year deficit to $9 trillion “The Obama administration will raise its 10-year budget deficit projection to approximately $9 trillion from $7.108 trillion in a report next week, a senior administration official told Reuters on Friday.”
Bloomberg.com — China’s Stocks Rise, Led by Metal Producers; Sinopec Advances “Chinese stocks rose for a third day, led by metal producers, after copper jumped the most in 11 weeks. China Petroleum & Chemical Corp. gained after profit surged.”
WSJ.com – Oil Industry Details Costs of Climate Bill “The report’s findings, which are expected to be released Monday, project that by 2030, U.S. refining production could drop 17% from today’s levels if the climate bill is passed as currently proposed. The drop would have to be made up by foreign imports, the study says, meaning the U.S. could end up relying on other countries for 19.4% of its refined fuel — nearly twice the amount it imports today.”
Cordially yours,
J. Christoph Amberger
Executive Publisher, TodaysFinancialNews.com
Next Article: Two companies taking advantage of the growing deficit
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