Thursday, July 10, 2008

Always a Silver Lining - We no Longer Own FCStone Group (FCSX)

As bad as things are, we could always have it worse. For example, FCStone Group (FCSX) could be our largest holding; or a top 10 holding; or any sort of holding! It's a derivative of the commodity boom. Would seem like a safe bet. Not so much - down 45% this morning off of earnings. Did I mention every day during earnings season is like running through a mine field?
  • Commodity risk management firm FCStone Group Inc (FCSX) reported third-quarter profit below analysts' view, hurt by bad debt write-off and decline in value of derivative instruments.
  • Net income for the quarter ended May 31 fell to $8.0 million, or 28 cents a share, from $8.1 million, or 29 cents a share last year. Excluding items, net income was 42 cents a share.
  • Analysts expected the company to earn 47 cents a share, according to Reuters Estimates.
  • Revenue, net of cost of commodities sold, rose 29 percent to $83.4 million, while analysts were expecting $82.55 million.
We owned this name briefly, took a $1600 loss after that hellacious March selloff where ANYTHING remotely "financial" (and this is very remotely financial) took a slashing to the throat - but said we are taking our ball home @ $33.65. We were early - the stock eventually rallied to the low $40s. Today, the stock is now in the $16s. Better to be early, than never. Revenue is up 30%, they are making money (not as much as analysts had wished for but still very profitable) and you still get destroyed to the tune of 45% loss. The market is simply sinister right now. There are going to be some major oversold rallies at some point - for those who actually have capital remaining. Much like Croc (CROX) there must be some price that some of this merchandise is a good value, but I thought that with Crocs in the mid teens, and it's down 50% from that level. It's very easy to lose your shirt out here in this type of market (or your holey shoes)

Again, I realize retail traders absolutely love to "bet" before earnings - but I don't understand the mentality. The idea of the stock market is to put the odds in your favor, not take a 50/50 chance.

No positions - thank god

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