musings

I have dumped PNSN after a nice gain. I almost and should have deployed that capital into San gold resources, which i told a friend i would buy below $1.5 if the opportunity rose. Well i am a liar. I watched it touch $1.35 and did nothing. Now its $1.6 ish.

I have also added Aldila to my watch list. It is a unique company which i have used their products and like. I stumbled upon it using some new screens available on google finance. Has good cash flow and a pretty balance sheet. Company has a product with some moatish properties, but this US economy could hurt earnings.

CLCT is almost break even for me after my average down and latest dividend payment. CGS and BVF not so lucky.

As the market volatility continues so does my lack of buying options. Too much volatility premiums for me... but not enough for me to write covered calls and justify the risk involved. While i pondered it with PNSN i am still toying with the idea of writing calls on bvf. I wonder how long they will pay the dividend with their new strategy of growth? I suspect '08 will be the last full year they payout nice dividends if any? Dividend policy is too big a cash burn.

A friend is buying MGM and LEH. While i continue to look for balance sheets and business's i can grasp he continues to speculate. He has more money available to lose than i (he has no mortgage, wife or kids). We both owned shares of CGS (last we talked a few weeks ago) which is my spec asset play.

Some article i read said Canadian western bank was the best of Canadian banks to own now. I don't agree and seeing house price's slide in Alberta adds to my pessimism. Now that i have recently bought a newer house and dramatically increased my mortgage i take notice of these headlines more.

While i have no illusions that my house can't fall in price i was heading into this purchase half expecting it. I was already in the housing market so i was destined to lose anyways. I am not planning to flip and i have 50% equity, at current levels, in my house. Amortized at 15 years its comfortable, but i still dislike debt all the same. I wish my wife had this same disdain for debt?

One last company i am looking at is liquidation world. Its very thinly traded and in a sector which stands to suffer if downturn gets worse. But another value investor i follow, see CKI-T, bought and seems to like the story? I continue to watch with interest.

Seth Klarman is another investor i have been reading about. Interesting stuff.

I have done less market watching than normal since my daughter was born last week and likely will continue this trend for a few more months.

markets

Well its been a rough month in the markets thus far. I watched many banks melt and then come back some after falling. BAC, BMO, and WFC were the ones i watched closest.

If i had a few more dollars to spare i may of bought calls on some last week, but it is now too late. I have some spare cash, but that should be put to work shortly by my wife and her furniture shopping for our new house.

What little cash i did have i used to average down on t.CGS and N.CLCT ($2.50 and $7.50 respectively) which was prematurely early as both fell further.

I had to laugh when Citi group 'beat expectations' by only losing 2.5 BILLION! this quarter. Wow how many businesses can say we had a good quarter cause we only lost a couple billion?

I am contemplating on selling out some of BVF if it gets up over $12. I could also write covered calls on the remaining shares. I fear that after the next vote for the new board it will still be the old board. The market is telling us this isn't good because last vote shares fell after it was announced who won.

I personally like Eugene's board better than the current slave proposed. Seems to have less risk in the new alternative.

Two other companies have come to my attention from reading the many blogs, articles and sedar/edgar reports. WLP-N seems to be popular with the larger Value guys (Buffett, Klarman). UNH-N is in the same sector and equally beatin up.

Refiners VLO-N and SUN-N have fallin 50% in a short period and oil is now dropping. Refiners can't lose money for too long. Eventually prices will catch up and these might be good picks.

CUS.UN-T got below $4 briefly and still has a good yield. GCI-N has a similar chart to CGS-T and appears to be going bankrupt (according to the chart). This sector is getting hit bad with all the recession fears flying around.

I hate to break the bad news, but we've been in a recession (in US) for a year now and possilbly longer. Canada appears to be heading that way, but likely not as bad (hopefully).

I watch all sectors in order to try and bottom fish for some 'cheap companies'. LUN-T ($5.09) and BWR-T ($0.35) seem to be two that are distressed right now. For different reasons. LUN has aquired many companies and is trying to swallow them still. BWR is just not getting its costs in order and needs to improve margins.

Besides health care companies which continue to drag lower some consumer goods companies are feeling the pinch. One bright spot is K-N which seems to be on an uptrend? SBUX-N has been on a nice slide, and oil companies like TLM-T have pulled back far more and faster than the price of crude.

For a longer term play one might look at CCO-T in the mid $30's or PWF-T below $30 and write covered calls. Both are attractive for differing reasons, but may provide some good yields in a poor market (yield= dividend + call premiums).

DH