Tuesday, April 28, 2009

Bookkeeping: Some Selective Purchases

I am hoping the market itself sort of calms down and stays in a relatively wide range (although tomorrow at 2 PM will provide the normal nonsense knee jerk reaction to Fed announcement) and we can perhaps get back to stock picking for the first time since summer 2008. That said, I've been saying that for the better part of a year... but it almost feels "normal" at this moment.

Fidelity National Financial (FNF) was down about 3% after hours on the first blush on earnings but obviously my blog entry turned the tide ;) [Fidelity National Financial Misses; Underlying Metrics the Real Story] It is now up 6%, I added a bit this morning and I think the earnings story here should be powerful as we move forward. When your top problem is a flood of business is coming your way, and you are having a hard time dealing with it... that's a good thing.

First American (FAF) reports on the 30th and usually I don't bulk up ahead of earnings but I am going to buy some portion back of what I sold ahead of the FNF earnings... essentially FAF is a smaller version of FNF and won't have the acquisition noise.

I am also adding to Allegiant Travel (ALGT) - I didn't add yesterday on the big dip; some risk that the swine flu will accelerate and cause more damage but ALGT is not an international player so as long as the US situation does not get too whacky it should be ok. I bought some near $50 and continue to find this name dirt cheap at just over 10x earnings - there was what appeared to be a dilutive offering last week, but a reader commented these were not new shares but simply insider selling i.e. converting non float shares to future floated shares. In that case it is not dilution like I thought.

I have and continue to like Priceline.com (PCLN) - it was hit on the swine flu situation and I almost pulled the trigger but with earnings on May 11th I decided to wait. So far this earnings season being cautious on earnings has left some good profits on the table so this might be another one. [Feb 19, 2009: Priceline.com Impresses on Earnings] [Dec 19, 2008: Priceline - Back on my Radar]

There are some shorts I am eyeing but it is difficult to pull the trigger when every dip is so aggressively bought. They have to be done with such short durations that it is almost not worth it at this time; so I am mostly just watching. The Chinese large caps (US listed) continue to lag as has been the case (as we've noted multiple times) the past 2 weeks.

Looking through the list of names of interest we presented [Earnings of Note Monday-Tuesday]
  1. We said Office Depot (ODP) was the flier of the week as a sub $3 stock, it is up well over 20% today as they stated nothing much more than we plan to stay in business. And of course they beat lowered expectations even as small businesses across America shut down.
  2. Northwest Pipe (NWPX) is a small cap water infrastructure play - I didn't see a great report but great is not needed in this type of market - the stock is up nearly 15%.
  3. Under Armour (UA) is up nearly 15% on a nice surge in sales (new footwear lines) but profit up only a tad. Good enough in this market.
  4. Lazard (LAZ) - a peer to our Greenhill & Co (GHL) disappointed and is down 7%; I am not a big fan of Lazard but the market took up all these boutique firms on the same thesis. GHL is holding in there quite well considering the "student body left" environment at flat on the day - that is assuring. As I wrote when I started Greenhill [Apr 8: Bookkeeping: Starting Greenhill & Co] Lazard is the cheapest of the peer group I was looking at, but also had the worst chart. There is usually a reason for such things
  5. Traders continue to pile into restaurants as if they are internet stocks circa 99... Buffalo Wild Wings (BWLD) surging ahead of earnings tonight. Again, we are almost at the point where we will soon see "sell the news" reaction as expectations are beginning to get out of hand in casual dining - not sure how many times the same old stocks can rally on the same "surprise". [Apr 23: America's Hottest Sector - Casual Dining]
Dendreon (DNDN) publishes a more detailed analysis of their data around 2 PM today - the stock continues to fly so I assume "those in the know" know it's going to be good. [How One Reader Found Dendreon]

Outside of that I am seeing a lot of interesting activity in low priced tech/telecom stocks - the bar is so so so low - even Tellabs (TLAB) is a hot stock again. With the cash horde in the larger cap companies a lot of small / medium cap names are being tossed around by traders as "the next acquisition". Ciena (CIEN), a former holding, was the hot name of the day tossed around yesterday due to call buying en masse.

Long FNF, FAF, ALGT in fund; long ALGT, FNF in personal account

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