Jeffrey McLarty

Mass transit is up double digits YoY in every state, yet they can’t increase capacity because of fuel costs.  Rock and a hard spot.  What goes up? -> fare prices + inner city real-estate.  Like prices, lifestyles are sticky.  Yes, economically sticky.  Get long elevators, if you know how. Otis isn’t public, I checked. I’m long cranes, for the same reason.

The 19th century belonged to the horse, the 20th…to the car, the 21st…the bike…I hope the jet pack makes a recovery before we hit the 22nd

It’s Tuesday, and I haven’t made it through this week’s economist yet…I’m sad.  But, I’m getting used to wearing a cape to work, and I’m glad I’m working on Bay-street all this week…(for you Americans that’s Canada’s Wall-street).

And…I’ve got to sell some stocks I own, so that the firm I joined can maintain independence with those who we audit and/or consult.  And, I can’t tell you which ones I have to sell because, then you’ll know that they are clients of ours.  Soo…blah…this really ticks me off about working for deloitte.  Luckily the carrot they hang in front of our nose referred to as ‘

…seems like a pretty sharp man, and if Dan Conway likes him, so do I.

I just discovered this site, and I hope this picture updates dynamically, as time passes…I think it will…but look at what time frame he has been BUYING…pretty heavy buying, THIS year, if you ask me.

Just click this, to see his buys and filings…pretty cool, and some interesting ideas.

…sort-of.

It’s on WALLSTRIP today, the explanation of the problem at least.

GOOD NEWS The problem has been solved! BAD NEWS is, Julie’s right that Bandwidth is finite. But who prospers when demand outstrips supply, I mean, beyond the obvious? I mean who wins? I’ll tell you, the guys selling the technology to make it seem less finite. Sandvine is that company. I hate being early. Stock chart gives me nightmares. But, the only reason I’m early is because Sandvine is in my backyard, I had an interview with them, a year ago…and they are hiring like mad and buying back stock NOW.

Did you see her offering $300M to the guy who can solve the problem? Well, the value is higher than that, much, But the solution is being offered by a $139M company. Quick math - uuughhh.

Not sure about the 95% vs 5% figure, it’s probably right. But she’s completely wrong about us catching up to the P2P group in usage anytime soon, like she hypothesizes. Our usage is growing, but so is theirs, Eg. Blu-Ray. But, that’s okay Julie, still love wallstrip!

Sandvine (AND CISCO) has said, last January, customers will push back purchasing technology for this solution, ‘because of the economy’. So Sandvine’s last 3 quarters have come up short, and revenue stopped going hyperbolic. But, my guess is, they understand their customers’ delaying the orders - and are going to surge when all the customers jump on it.

I went to a shareholder meeting in may, let me tell you, all systems are a GO baby!

Sincerly,
The bag holder

Yah…you know I keep getting more and more into the looming water problems for the world. Here is a July 3rd map of the droughts in the US.  Click it to see the entire thing

The monopolistic Bell & Telus, up in Canada, are going to start charging customers for incoming text messages. Not going to fly, unless Rogers does it too.

Look for yourself: http://tinyurl.com/5c5h7k

Scott & Thiago both told me, independently, a while back about a company soon to IPO called Energy Recovery.

Less than 48 hours ago, they filed a bunch of paperwork with the SEC.

I’ve spent about 30 minutes looking at the numbers so far.  $8, the midpoint of their expected range, implies 57x 2007 ep, and Q1 ‘08 came in with lower eps than Q1 ‘07 by a penny.   Of course, sales were higher, and we are talking small cap here, to be priced between $250M and $500M, likely.

…is frigging cool

Search for words that are IN THE PICTURE…yah, like OCR recognition.  I see Flicker, Google, Microsoft, Facebook et al, snapping up this company soon!

http://www.truveo.com/Evernote-Image-Search-and-Capture-Demo-full/id/755121582 

Ever since $80 a barrel, I’ve known guys way richer than me, shorting it.  I want them all to stop trying to be heroes, stop trying to call the top, and for heaven sake stop losing money.

Seriously, we’re running out of oil, get it through your head. While the price point for a barrel might be a bubble, it’s a price on a curve that is going to keep moving higher.  The only people who are going to make money shorting it, will be lucky or dumb, because to be successful you’ll have to call a top, and take profit on any sign of a pull-back.  Which it could very well do.  But, what’s the point in that? You’ll make a few bucks and get to brag, but that’s not a sustainable investment. That’s not something you can learn from then apply to another phenomena (at least not in your lifetime).  And suppose it goes against you, in my opinion, the worst kind of loss, is one you can’t learn from.

You, and your offspring, would be far better off putting your brain to better use, and trying to spark a little creativity. Look for good investments…instead of sure thing gambles.

There are tons of companies that are going to profit, if oil falls, and they are still okay businesses if oil keeps trucking higher.  Invest in those, if you’re really bearish on short-term oil.

Me, I’m glad to have not touched it, and glad there are tons of other opportunities where I get to be optimistic instead of trader on the brink of getting steamrolled by the next stride oil makes towards $150.

…these are my thoughts, likely not yours…sigh…good luck all!

Many things in my life have changed, because of the internet.  Biggest change has been noticed in my portfolio.  I owe all the smart people I interact with a thanks!  To encourage even more discussion, and cause I know the investors, I’ve installed DisQus to make commenting, and vomenting (video commenting) even easier.    So, let me know what you think of the new theme, and just so we’re clear, I did not plan on my shirt matching my blog - it just worked out that way.

Let’s get things straight, I’m an investor - not a speculator.  But, when I own a stock, I get intament with it, and often trade calls around owning it.  When @coffeygrinds said Cameco could see a $50 bid from China Nuclear, a bunch of clues fit together.  None of them are solid, and you might be dissapointed after reading this, but here is a summary of my last 2 weeks in Cameco.

I was short CCJ 2010 $50 puts.  Position was going against me for a couple months, but that was okay with me.  Then, on May 2nd, I woke up to find somebody excercised them early.

http://twitter.com/jmclarty/statuses/801857120

Sweet, he ate the time premium.  It was only a few points, but none the less a little bonus.  But think about this, he would have had to send that order on the 1st of may, check out the chart where that puts CCJ.  I thought nothing of it on May 2nd, but by May 8th,

http://twitter.com/jmclarty/statuses/806412897 

it’s was as if he knew something and wanted to get out of a very illiquid position and quickly.

That was reason #1. 

#2 - I was worried about the earnings, I sold calls, because I was worried and I was ready to part with my stock for $45 if it hit it. I twittered I sold $45 calls for june.  I’m just proving that I was skeptical on the earnings.

They missed, the stock sold off in the AM, and analysts setiment was mixed to mildly bearish.  The stock closed even - that’s the wierd part.  I was in Cancun so didn’t think much of it, and tweeted:

http://twitter.com/jmclarty/statuses/810572538.  The stock not selling off after both I predicted it, and the results coming in warranting a sell-off, is point #2.  Don’t worry, I covered my calls for $0.10 more than I wrote them for, after Andy Coffey’s tweet - see point #4.

#3 you got some crazy action on the front month calls and IV climbing.

http://twitter.com/jmclarty/statuses/812825420

#4 @coffeygrinds twittered

http://twitter.com/coffeygrinds/statuses/812798240

you could add a #5, that the stock is definately moving north on no news.

…The part where I’m skeptical is China National Nuclear ready to anti up the +$20B?  That’s the million dollar question, and why I’m not more bullish.

But I’m long the stock, and short puts, cause I don’t mind owning more in the $35 range.

That first part is the painful cheer of my University - *shakes head*

None the less, the world’s got problems ahead when it comes to Water.  I went through PHO, skimmed every 2007 report, and came to some conclusions…PHO sucks as a ‘water’ play. Tons of noise and random other segments.  As far off the topic as ‘Defense’ and ‘Oil’.  Also, too much emphasis on infrastructure, which is debatably not the best way to play it…I want to be in the names purifying, measuring it, desalinating if possible.

After my analysis, if you’re going to own PHO - well don’t. Instead, pick up these names:

AMN, DHR, CCC, PNR, TTEK, BMI/ITRI

They are the leaders of the fund, in my opinion, they are the ones offsetting the dogs. They still span the major areas that the rest of the stocks do and even still include some noise (eg DHR).

I liked TTEK and AMN, cause they are in ‘wind’ as well.  TTEK was the only company (that wasn’t a directionless conglomerate) that was into desalination.  BMI/ITRI have the market cornered on automatic metering….for now (boom/bust cycle happening there forsure).  CCC is into purifying water and air, and they add ultra-violet light systems exposure.  I have an ultra-violet light water purfication system at my cottage - it kicks ass.

I think I’m buying ITRI, CCC, and TTEK.

Update: New friend Buck Woodford, money runner at Teewinot Asset Management, likes TTEK too, he picked it before reading this piece, and it was in my head as the top choice (or the 3) before he added his two cents.  Great minds think alike I guess

You can now follow my money printer, on twitter.  http://www.twitter.com/MoneyPrinter.  It is a feed of my algorithmic actively managed market-making buy-write.  It’s everything including sent orders (SO), canceled (CO), and executed (XO), as well as my observations…and anything else.  ‘w’ means ‘write’ and ‘c’ means ‘cover’.  Right now, it’s produced manually, as are the trades. I funded $11K Canadian and the manual part of my algorithm has me writing puts to get assigned.  I decided it would be better not to do this part for the initial round, and instead start the algorithm already long…that way I can get the automatic portion up and running quicker.  I’m still working on the automatic version, but to do that, I need a better feel for the liquidity, because the automatic version will take constants to tweak things.

So, I bought 100 SSO $76 and 100 HXU at $35.53 on friday afternoon, soley because it’s the May option expiry…that way I start with one entire month.  I would have bought more HXU, I’m planning on doing so, before June, but I just need to transfer another ~15K into Interactive Brokers.

Eventually, I’m going to get my algorithm to tweet the orders it sends, automatically…but this likely won’t be done until July.  It’ll be super cool to just get tweets on my phone telling me the trades the algorithm is making.

I’ll publish summaries after a bit of time.

Myron Sholes was just on bloomberg, he’s originally from Timmins, Ontario…cool!  He moved to Chicago because of the economics research coming out of the school ’spoke to him’.

He spoke in a fluid prophetic manor with respect to those who are “Flexible”. They inherently possess more ‘options’ than those who are inflexible.  Since options have value, flexibility is valuable, which can be invested just like any other form of value. It makes so much sense at any level of an organization’s hierarchy.  From a single person’s perspective to a multi billion dollar empire.  It also parallels the law of large numbers.

He also spoke on ‘Intuition’ and said it can lead us to believe stuff that we don’t correctly understand.  So, true. Guilty. Creating a model, then testing it against data, eliminates this problem and returns progress.

Glad I tuned in.

I sent some good money after bad, and picked up a little more Sandvine. I also bought RIM at $139, and MFC at $38. I’ve been patiently trying to sell some puts on HXU.TO, in order to get assigned, but nobody has hit me, and I got to believe it’s hitting a short term peak. I just want a couple days of red, in a row, and i’ll be long.

I also got IB finally funded. I only funded the minimum, $10K, because I’m just learning the software. Trying out my account, I wrote a single put on SSO, $75, expiring tomorrow. Yah, I know, it’s only ~$50. But I was playing with the cool VOL (volatility) order type.

Check this math out. I put up $1900, and hypothetically make $50 minus the $1 in fees. *If it expires worthless* that’s a smooth 2.5%, or 36% per year pre-tax. The cool part is, if you could pull that off once a month - your money is only on the line 12 days per year…all you need is the balls/stupidity to risk getting assigned. But, I kind of want a little SSO so I can trade the calls on it.