tag:blogger.com,1999:blog-128080932024-03-13T20:24:21.563-07:00RVB's Market MusingsWhat began here as an avenue to interact and learn has far exceeded those goals.
<br><br>
<em>If you are a prospective employer, please consider this site a place where you can see my passion for investing...</em>rvb1977http://www.blogger.com/profile/02913598787020964934noreply@blogger.comBlogger194125tag:blogger.com,1999:blog-12808093.post-67518692716278459482007-05-17T15:06:00.000-07:002007-05-17T15:07:02.367-07:00Sweet on CNBCSo, Sweet's supposed to be on FastMoney tomorrow. Should be a good time. I'm glad they picked the articulate one. I'd be screwed!rvb1977http://www.blogger.com/profile/02913598787020964934noreply@blogger.com3tag:blogger.com,1999:blog-12808093.post-41350381113479377482007-04-19T08:32:00.000-07:002007-04-26T13:38:57.430-07:00This Blog's FateHi all - I have enjoyed blogging for the past 2 years, but as I near graduation, CFA Level 2, Employment, and Marriage I am afraid that blogging has fallen in priority.<br /><br />As such, <strong>this message is the final one at RVB's Market Musings.</strong><br /><strong></strong><br />It is likely that at some point in the future I will return to writing on the blogosphere or somewhere else. I will keep this site alive - the links will continue to work - that is until they don't. The writings will stay up and continue to be searchable by google, technorati, etc. But, my holdings file will not update.<br /><br />Good luck to you all and I'll talk to you at some other future time...<br /><br />UPDATE: I do intend on starting a personal web page or a new, more balanced blog...but I have not yet figured out where it will reside. Until then...rvb1977http://www.blogger.com/profile/02913598787020964934noreply@blogger.com2tag:blogger.com,1999:blog-12808093.post-92218706884891941742007-03-24T09:48:00.000-07:002007-03-24T09:49:36.867-07:00Quick updatesThe blogroll on the right has changed a bit. Someone noticed I had yet to move Bill Rempel's link. I also added Wallstrip, Andy Swan, and Howard Lindzon...while removing some others that I have stopped reading.rvb1977http://www.blogger.com/profile/02913598787020964934noreply@blogger.com0tag:blogger.com,1999:blog-12808093.post-69839505985637865192007-03-12T19:44:00.000-07:002007-03-12T20:01:14.209-07:00Quick hit thoughtsSierra is getting bought by UNH? This morning, I wondered if UNH was the culprit sending Sierra bad business? Alas, the wonderful people at The <a href="http://www.thehealthcareblog.com/the_health_care_blog/2007/03/health_plans_un.html">Health Care Blog </a>are all over it and it was not UNH, but "one of United's big competitors" (of which there are very few). <br /><br />The more I use it, the more the <a href="http://en.wikipedia.org/wiki/Blogosphere">blogosphere </a>is proving itself to be a very, very useful research tool. Still not as good as talking to others, but taking a few minutes of traditional media away from everyday and supplanting it with the blogosphere seems to be a very valuable action. <br /><br />In non-market news, this will never happen again in my life (at least while I am a student): I am getting solicitations to buy tickets from my alma mater, <a href="http://www.mtu.edu/">MTU </a>who is playing my current school, <a href="http://www.wisc.edu/">Wisconsin </a>, in the WCHA final five. (That's hockey for you non-puck fans). Meanwhile, Wisconsin is sending me the same ticket requests. <br /><br />Oh, and Congrats to my other alma mater, Kimberly High School, on its improbable march to the Division 1 state boy's basketball championship, bringing the team's winning percentage to .500 in the process. RVB's littlest bro is on the team. GO 'MAKERS!rvb1977http://www.blogger.com/profile/02913598787020964934noreply@blogger.com1tag:blogger.com,1999:blog-12808093.post-81847714838324967262007-03-06T06:41:00.000-08:002007-03-06T09:47:58.067-08:00Unit Labor Costs<div align="justify">One of the things that I do not have the luxury of is years and years of experience. My adult memory only remembers one recession along with a major market selloff during that time. Even 1995's mid-cycle slowdown is a bit out of my memory - I was in High School. So I am unable to simply recall what it was like back then and try to draw conclusions for today.<br /><br />Sometimes, this is actually advantageous - one could argue that my decision making becomes much less biased and I am forced to look at data. When it comes to asking the right questions, though, that's where years and years of experience can help. So like practically everything else in life - it's a gray area or a double-edged sword, or insert your cliche here.<br /><br />Today's headline from Marketwatch states: "<em>Unit labor costs rise 6.6% in Q4, a worrisome signal</em>". When I read this, I always ask about the conclusion part of the headline, "Who says it is a worrisome signal?" This is very important to me because much of the time the conclusion is drawn from data that is purely noise.<br /><br />So I pulled up the historical Unit Labor Costs. Saying to myself, "Alright, Factset, give me the year-over-year Unit Labor Cost % change...and start at the first available data you have". Below is the chart.<br /></div><div align="center"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjSj9RZ-MLucKznQZZY-TbIcGoaUabhAoIX7SEVLip0CwS0QfWNIMwk7M4RTGFoYG7rIm1-YRVDGiVKOS432vWbXSmDVvjAu4QpDiO8QkvYvsH_kDGt26cW97JCIlFnr-SeIshM/s1600-h/Unit+Labor+Costs.jpg"><img id="BLOGGER_PHOTO_ID_5038826168239848818" style="DISPLAY: block; MARGIN: 0px auto 10px; CURSOR: hand; TEXT-ALIGN: center" alt="" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjSj9RZ-MLucKznQZZY-TbIcGoaUabhAoIX7SEVLip0CwS0QfWNIMwk7M4RTGFoYG7rIm1-YRVDGiVKOS432vWbXSmDVvjAu4QpDiO8QkvYvsH_kDGt26cW97JCIlFnr-SeIshM/s400/Unit+Labor+Costs.jpg" border="0" /></a> <em><span style="font-size:85%;">Source: Factset, Ecowin database (click for larger image)</span></em></div><em><span style="font-size:85%;"></span></em><div align="justify"><br />I've highlighted my thoughts. Essentially, not much can be determined from today's data point. While the cost is a bit higher than we had in the slowdowns in '85 and '95 (the only two slowdowns worth comparison), it could be possible that a) the data is revised lower and b) unit labor cost y/y % change moderates.<br /><br />That being said, on an absolute basis, labor cost inflation is a bit higher than in '85 and '95, and <em>could</em> keep the fed from cutting. <strong>That would be bad for stocks</strong>. </div>rvb1977http://www.blogger.com/profile/02913598787020964934noreply@blogger.com0tag:blogger.com,1999:blog-12808093.post-81696214944575421382007-03-05T15:28:00.000-08:002007-03-06T09:47:04.574-08:00Are we in a bear?<div align="justify">This thought has briefly entered my brain in the past week, but I don't think we're in a bear...the data doesn't conclusively say anything's changed. We're just entiering a long overdue correction. The <a href="http://www.federalreserve.gov/pubs/feds/2006/200607/200607pap.pdf">Wright Model</a> (from Jonathan Wright at the Fed) still suggests about a 45% chance of recession, though. If you think the fed will cut, this should be just like '95 again. If not, then more like 1990. Maybe that seems too simple, maybe not but that's what I see right now. If you want higher prices, seems we need commodities to move lower and help cut inflation off so Bernanke et al can swing the machete at 5.25% ...<br /><br /><strong>Update</strong>: Upon looking at this entry this morning, I realized that without a picture, the words are fairly meaningless. See below.<br /></div><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgXFNAXr4_LIQ67LFP7wjDcHz3mjxz2VY2lTWwo4Dx7IkgEI1EmmPi4DxT7XC8zFkpOyGJXClCL1qn6x3LtVUa1A5-mK8ic0CjowiUy8IhNTrUSU6NS4kRrBPQ5EWMG0nUr0SZJ/s1600-h/Wright+Model+early+07.jpg"><img id="BLOGGER_PHOTO_ID_5038868744250654082" style="DISPLAY: block; MARGIN: 0px auto 10px; CURSOR: hand; TEXT-ALIGN: center" alt="" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgXFNAXr4_LIQ67LFP7wjDcHz3mjxz2VY2lTWwo4Dx7IkgEI1EmmPi4DxT7XC8zFkpOyGJXClCL1qn6x3LtVUa1A5-mK8ic0CjowiUy8IhNTrUSU6NS4kRrBPQ5EWMG0nUr0SZJ/s400/Wright+Model+early+07.jpg" border="0" /><div align="center"></a> <em><span style="font-size:85%;">Source: Colin Twiggs, Incredible Charts</span></em> </div>rvb1977http://www.blogger.com/profile/02913598787020964934noreply@blogger.com1tag:blogger.com,1999:blog-12808093.post-38423494755674310312007-03-01T07:47:00.000-08:002007-03-02T13:13:53.163-08:00Healthcare IT Survey just released by AHA<div align="left">The <a href="http://www.aha.org/aha_app/index.jsp?SSO_COOKIE_ID=0a2f011430d72186eb8aaad24e25a656cfdf8c8463da">American Hospital Assocation </a>just released an absolute <em>GEM</em> of a <a href="http://www.aha.org/aha/content/2007/pdf/070227-continuedprogress.pdf">report on Healthcare IT usage by U.S. hospitals</a>. It really sheds light on how much growth is left for vendors of these systems. It also clearly points out that bigger hospitals have adopted quicker (which is not a surprise) and that the small hospitals face more financial constraints due to their size. This, by the way, is why we own CPSI which targets these small hospitals and has operating cost advantages.<br /><br />If you are looking for investing in a secular growth area, HCIT is still a great place to be, and adding these stocks when short-term issues arise seems like a winning strategy to me. You just have to get in these names at valuations that are attractive. Below is a table of pure-play HCIT companies and recent transactions in the space. (note that RX is a slightly different biz than the rest)<br /></div><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj7L-GubGYakUyiN2TnV0dpbpjcKLmzE2McYDwDe-rnHOLAx5eFO4Hv5nPdqC9Gtxca5Z8RV5SHi-ope1vq0bODgzMchaxGapMKNf3vUAZSuEYodkY5dV-cutGPaSlRKI3neze9/s1600-h/HCIT+Companies.jpg"><img id="BLOGGER_PHOTO_ID_5036995443708946914" style="DISPLAY: block; MARGIN: 0px auto 10px; CURSOR: hand; TEXT-ALIGN: center" alt="" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj7L-GubGYakUyiN2TnV0dpbpjcKLmzE2McYDwDe-rnHOLAx5eFO4Hv5nPdqC9Gtxca5Z8RV5SHi-ope1vq0bODgzMchaxGapMKNf3vUAZSuEYodkY5dV-cutGPaSlRKI3neze9/s400/HCIT+Companies.jpg" border="0" /> <div align="center"></a><em><span style="font-size:85%;">source: My own numbers, Factset, Mergerstat</span></em></div><div align="center"><em><span style="font-size:85%;">disclaimers: I personally own shares in CPSI, but no shares of other co's mentioned in this post.</span></em></div><div align="center"><em><span style="font-size:85%;"></span></em> </div><div align="left"><span style="font-size:85%;"><strong>UPDATE:</strong> I should have also noted that DRTE is a different biz than the rest - a <a href="http://en.wikipedia.org/wiki/Customer_Relationship_Management">CRM </a>business to be exact. Interestingly, in today's news DRTE is being acquired Cegedim S.A. at a 22% premium. EV/Sales is rougly 1.5x</span></div>rvb1977http://www.blogger.com/profile/02913598787020964934noreply@blogger.com0tag:blogger.com,1999:blog-12808093.post-64701954796289506222007-02-28T20:17:00.000-08:002007-02-28T20:30:57.568-08:00Factset and Alpha TesterThis semester, we were encouraged to get to know <a href="http://www.factset.com">Factset's</a> <em>Alpha Tester</em> package. Wow, is this thing addictive (to me). After spending an hour with the online tutorial, I started testing away. I've built so many screens over the years that I have wanted to backtest, I can literally run a backtest per night if I want to. <br /><br />Thus far, with the tool I have merely figured out many of the nuances such as which database to grab pricing information from etc. Some of my results have also been fairly intriguing. We have long joked that the <a href="http://www.investopedia.com/terms/p/price-to-salesratio.asp">Price to Sales </a>ratio was pretty useless (<a href="http://www.fi.com/">Kenneth Fisher </a>swears by it, though). It turns out this may not be the case...because of the factors I tried (23 of them, mind you) from 1987 through 2005 P/S was the most statistically significant explaining excess returns. I think there may be some serious internet bubble bias however...<br /><br />I also ran a screen written during my internship <a href="http://www.camdenpartners.com">here</a> that has been shown to (initially) generate pretty strong returns. Alas, buying stocks from the screen results in a really risky portfolio, so the return can be explained, to an extent. I still have more work to do here, however, because I have learned some new <em>Alpha Tester</em> idiosyncrasies.rvb1977http://www.blogger.com/profile/02913598787020964934noreply@blogger.com0tag:blogger.com,1999:blog-12808093.post-27298525631837403512007-02-28T20:14:00.000-08:002007-02-28T20:17:34.683-08:00Portfolio holding upOur equity portfolio in <a href="http://www.bus.wisc.edu/asap">ASAP </a>is holding up pretty well through the selloff. We performed roughly in-line with our benchmark on the selloff day (Tuesday), but today we had a good day. YTD, we are officially 93 bps (0.93%) ahead of the benchmark. (I know this because I'm the one that runs the performance stats every day to make sure our numbers haven't been messed up)rvb1977http://www.blogger.com/profile/02913598787020964934noreply@blogger.com0tag:blogger.com,1999:blog-12808093.post-10086605756886207002007-02-27T13:00:00.000-08:002007-02-27T13:05:37.290-08:00Ding, ding, ding...Just caught the close on CNBC. The NYSE floor booed the close. So there's a correction happening, what does this change? Very little, really.<br /><br />Good news forrvb1977http://www.blogger.com/profile/02913598787020964934noreply@blogger.com0tag:blogger.com,1999:blog-12808093.post-47266295157677328122007-02-27T09:36:00.000-08:002007-02-27T09:38:36.783-08:00Will today be the day?...that we get a 2% market sell-off so we can stop hearing about it? <br /><br />Let's be real - there are far more short sellers today than at anytime in history. I am not speaking about the short interest ratio - I am talking about the percentage of market participants that actually sell short. Maybe this is the reason for a reduction in volatility?rvb1977http://www.blogger.com/profile/02913598787020964934noreply@blogger.com2tag:blogger.com,1999:blog-12808093.post-17161773442113413542007-02-22T11:37:00.000-08:002007-02-22T11:44:14.329-08:00Google piloting secondary market for employeed options<a href="http://www.marketwatch.com/news/story/google-test-run-employee-options-auction/story.aspx?guid=%7B43896A80%2DC93B%2D4C36%2DA054%2DB1C34676B584%7D&dist=dist=rss&siteid=mktw"><span style="font-size:180%;">Google to test-run employee options auction plan</span> </a> (links to original Marketwatch blurb)<br /><br />Google has chosen 20 employees to test its "Transferrable Stock Options" plan whereby employees can sell their options to the highest bidder. This gets me to wondering, why would Google do this? The first thought that came to me is that Google likes to be innovative and this would be. My second thought is that they believe the stock is priced too high and want employees to be able to cash out without any kind of backdating-esque scandals surrounding options practices. <br /><br />My next thought is, "Why don't other companies do this?" Maybe we could begin a secondary market for these plans and sell the biz in a few years to an exchange. <br /><br />Maybe I'm overthinking this altogether and it is a non-event.rvb1977http://www.blogger.com/profile/02913598787020964934noreply@blogger.com0tag:blogger.com,1999:blog-12808093.post-35594578395675686942007-02-21T17:25:00.000-08:002007-02-21T17:28:11.228-08:00Oversupply of funds?<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjjsBjDTCANh97mi0RSkNMaPHyN-yQuyQClku51yrxw_r9JQmBNbZKxMrnRCb1IoSwfP8BRUQ7WtZh3N0HamP55E62bwXNwdd0wOz1-8GHOeeM0VpESaNBi3C7f-R_xUCBiEDye/s1600-h/Huh.jpg"><img id="BLOGGER_PHOTO_ID_5034163540627549938" style="DISPLAY: block; MARGIN: 0px auto 10px; CURSOR: hand; TEXT-ALIGN: center" alt="" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjjsBjDTCANh97mi0RSkNMaPHyN-yQuyQClku51yrxw_r9JQmBNbZKxMrnRCb1IoSwfP8BRUQ7WtZh3N0HamP55E62bwXNwdd0wOz1-8GHOeeM0VpESaNBi3C7f-R_xUCBiEDye/s400/Huh.jpg" border="0" /></a><br /><div></div><br />Take a look at what you see in the graphic above. While 535 stocks in the US and Canada were hitting new highs today, 5,842 Mutual Funds did the same. Borderline ridiculous?rvb1977http://www.blogger.com/profile/02913598787020964934noreply@blogger.com0tag:blogger.com,1999:blog-12808093.post-89468665025332430262007-02-20T19:46:00.000-08:002007-02-20T20:29:29.795-08:00Top Investment Books<a href="http://www.marketthoughts.com/images/stock_book_cover/one_up_on_wall_street.gif"><img style="FLOAT: left; MARGIN: 0px 10px 10px 0px; WIDTH: 93px; CURSOR: hand; HEIGHT: 133px" height="307" alt="" src="http://www.marketthoughts.com/images/stock_book_cover/one_up_on_wall_street.gif" border="0" /></a> My list of favorite / most influential investment books:<br /><br /><div><div><div><div><div></div><div><strong>1) One Up on Wall Street - Peter Lynch</strong> If I could give my parents one investing book to read, this would be the one. Lynch takes a complicated subject (investing) and boils it down to some simple lessons. Earnings drive stock prices, overpaying can be painful, and the best investments are all around us - just pay attention. Even professional investors should probably read this book once a year to dampen some of the <em>noise</em> we are subjected to daily.<br /><br /><a href="http://www.windsorpublishing.com/catalog/images/3123M_150.jpg"><img style="FLOAT: left; MARGIN: 0px 10px 10px 0px; WIDTH: 89px; CURSOR: hand; HEIGHT: 139px" height="151" alt="" src="http://www.windsorpublishing.com/catalog/images/3123M_150.jpg" border="0" /></a><strong>2) Trading in the Zone - Mark Douglass </strong>This book isn't technically about investing, rather it is meant for traders. In the end, we're all just traders with different time horizons, anyway, so who cares? Douglass' lessons are all about the psyche needed to partake in our capital markets. This book should be read every year. Its genius is in its simplicity and the visual examples he uses. Anyone with intellectual curiousity will realize the discussion also could help explain many life experiences.<br /><br /></div><div><strong>3) Expectations Investing - Alfred Rappaport & Michael Mauboussin </strong>This book helps to better explain how stocks are priced...that is it attempts to give a methodology for understanding the <em>expectations of future company performance</em> built into today's stock price. It is NOT for my parents - it uses finance and accounting terms that the layperson cannot understand, which is unfortunate. Nonetheless, the framework of thought is a good one to understand because it helps to understand how stocks are priced and why. The authors created a <a href="http://www.expectationsinvesting.com">website </a>to aid with the concepts, too.<br /><br /></div><div><strong>4) How to Makes Money in Stocks - William O'Niel</strong> This book sort of breaks all the "rules". O'Niel will tell you that the P/E is useless (true from the alpha tests I have run) and that buying stocks high and selling them higher is the key to big returns. Who can argue with his track record? Professionals would simply call O'Niel a momentum investor - the equivalent of a used car salesman among money managers. But, his lessons are quite important and his methodology is tried and true, albeit not for the faint of heart type of investor. <p><br /></p></div><div></div><div><strong>5) The Little Book that Beats the Market - Joel Greenblatt</strong> Simple, but effective in its approach to finding stocks that can generate excess returns based on [generally] short term share price weakness in high return on invested capital (ROIC) companies. The book has a <a href="http://www.magicformulainvesting.com/">free website </a>that gives its top picks at any point in time. <p><br /></p></div><div></div><div><strong>6) The Warren Buffet Way - Robert Hagstrom</strong> I like this book because it tells a story and gives great insight into what the world's greatest investor actually did. It also reminds you that traditional thinking does not lead to excess returns. Many managers today still rag on Buffett's methods - most likely because they are jealous of his success (plus he lives in Omaha, not on either coast - adding to the jealousy perhaps?) <p><br /></p></div><div></div><div><strong>7) The New Market Wizards - Jack Schwager</strong> Another book that breaks rules. It is filled with interviews of the best traders and money managers out there. What I glean from the book is that the people Schwager interviews are very confident in their ability even after losing tremendous amounts of money. Just wait till you get to the ZEN part! <p><br /></p></div><div></div><div><strong>8) Japanese Candlestick Charting Techniques</strong> Many do not believe in technical analysis. Nonetheless, if you want a great reference this is one to keep handy - it contains pretty much all the basics. <p><br /></p></div><div></div><div>My investment library has some other books that I have yet to read and many that I have read but did not put on this list. I also didn't include any textbooks, like the McKinsey valuation "bible" which isn't much of a "read" although its topics are certainly useful for investors. The same would go for anything by Damodaran or any accounting professor (ugh). </div></div></div></div></div>rvb1977http://www.blogger.com/profile/02913598787020964934noreply@blogger.com1tag:blogger.com,1999:blog-12808093.post-53592934038267064172007-02-20T19:27:00.000-08:002007-02-20T19:46:47.245-08:00Buffet buys UNH?<a href="http://news.moneycentral.msn.com/ticker/article.aspx?Feed=AP&Date=20070216&ID=6495457&Symbol=UNH">This headline</a> last week confused me. Warren Buffet bought shares of United Health (UNH)? What?<br /><br />This seems out of character for Warren. UNH has a technology product (Ingenix). Granted, he's old (76) and probably knows alot about health care costs. He certainly likes to invest in things he knows - that's one of his famous teachings. Another of his, is to picture "where the business will be in 5 years". This explains his purchase of BUD. He knows that in 5 years, people will still be drinking plenty of beer. Same goes for Coke, See's Candy...the list goes on.<br /><br />It's also what I find confusing here. I mean, can you say that in 5 years you know that UNH will be around? Probably. But 10 years from now? Investing in managed care businesses comes with a huge array of fiscal policy risks. In fact, fiscal policy is directly responsible for making HMO's the great investment they've been during the Bush administration.<br /><br />But what if, in 20 years, we figure out that our privatized health care experiment doesn't work and we decide to build a new system a la Canada? Ok, a stretch, but not completely impossible. However, it wouldn't even take that for the managed care investment to go awry. The dems hate Medicare Advantage and significant cuts could wound some HMO's (albeit it would hurt UNH alot less than Humana, for example). (I fully expect this to happen, btw)<br /><br />So, while the stock is up 4% from the announcement of Buffet's buy, I must admit that I still find this one out of character for the world's second richest man. Then again, he didn't get to be that way by worrying about my thoughts...rvb1977http://www.blogger.com/profile/02913598787020964934noreply@blogger.com0tag:blogger.com,1999:blog-12808093.post-28880314335194453572007-02-20T19:10:00.000-08:002007-02-20T19:26:34.653-08:00Haemonetics (HAE) making software pushLong ago, I mentioned that I would write about a small-cap blood medical device company named Haemonetics (HAE). I did - you can find a link to my report on the right hand side of this page. Without getting into too much detail (there is plenty in my full research report), I believe the company is well-positioned for growth along with higher margins in the future. Conservatively financed, the company has $7.50 per share in cash on the balance sheet. When I wrote the report, the stock traded at $45 and now trades at $47.25, not quite the bargain it was. Nonetheless, the company has a very strong competitive foothold on this market and I still believe strongly in my investment thesis (<em>after all, I do personally own shares</em>). <br /><br />Recently, the company has made it very clear that it is serious about its software business by buying IDM Medical Software. This software essentially provides data management capabilities for blood centers. Already growing around 20% this year, HAE's software business is beginning to become a significant revenue contributor to the company. I will admit that I do not yet understand what this means for HAE. I mean, how well can this company, whose core competency has historically been design and assembly (manufacturing) of its devices, run a software company? Clearly, the synergies here are the ability to cross-market the software along with the hardware. But, there is some integration risk now embedded into the business, albeit the risk is still small at this time. IDM is a one-location company with only $6M in revenues. Furthermore, the existing 5D software acquisition appears to be going very well.<br /><br />The stock is niether a true value stock, nor a high-growth stock. In fact, it is not beating earnings estimates, nor is it a momentum mover. All of this probably explains why it has moved very little in the past year. Yet, something here (read: new product pipeline & cost cutting opportunities) still leads me to believe that the company's future earnings potential is still very attractive. (<em>In addition to me owning shares personally</em>, w<em>e do own the shares in ASAP, as well</em>)rvb1977http://www.blogger.com/profile/02913598787020964934noreply@blogger.com0tag:blogger.com,1999:blog-12808093.post-10009575303137321842007-02-19T19:11:00.000-08:002007-02-19T19:20:41.642-08:00Midwest Cold IdeasSo off the sports, I am thinking that Panera (PNRA) may put up a poor comp number for February on the first Wednesday of March. I mean, the first two weeks of this month, I barely left my couch and when I did it was only when I absolutely had to. Friggin' cold. Period. (PNRA still has a strong Midwest bias in its geographic footprint) I tried to look at weather trends and compare them to the same-store numbers. Alas, I could not detect a significant pattern with precision. However, I do recall the company citing weather in other press releases. Two data points of anecdotal evidence here in Madison also counter my idea. Nonethless, if a poor number comes, it could be another buying opportunity. That said, the company does need to work out growing its same-store sales because lunch is so strong it is getting hard to grow that part of the biz. I'm still a buyer in the low 50's - love the risk/reward there.<br /><br />We bought some CPSI the other day. At some point, the current softness in the rural HCIT market should ease and the company could trade at 20 times 2+ dollars of earnings potential. This means there could be some 40-plus % upside all the while collecting on a 5% dividend to wait for the turnaround. Seems like a solid opportunity to me - not much downside while there remains some serious upside. For "surprise" investors or momentum players, wait for the next quarter to see Q2 guidance. Backlog is still up 6% Y/Y while analysts think revenue will only grow 2.7% this year. <br /><br /><em>disclaimers: I do not own shares in either of these companies currently, however, I am planning on buying CPSI tomorrow (2/19)</em>rvb1977http://www.blogger.com/profile/02913598787020964934noreply@blogger.com0tag:blogger.com,1999:blog-12808093.post-15557076713096068582007-02-19T19:07:00.000-08:002007-02-19T19:11:43.935-08:00Some things make no sense...First off, why did the Chargers fire Marty who went 14-2 only to hire a guy who, after two head gigs has a losing record? Senseless! <br /><br />Why won't Ron Rivera be back? It's not his fault that he lost the most important defensive player (not Urlacher, Tommie Harris). He's been doing a heckuva job there in Chi-town. Guess that's good for me. I'm a Packers fan.rvb1977http://www.blogger.com/profile/02913598787020964934noreply@blogger.com0tag:blogger.com,1999:blog-12808093.post-7585316322443199252007-01-03T11:37:00.001-08:002007-01-03T11:37:40.385-08:002005 all over again?Today feels just like 2005 all over again. Anyone else?rvb1977http://www.blogger.com/profile/02913598787020964934noreply@blogger.com0tag:blogger.com,1999:blog-12808093.post-48152040296121557092006-12-19T09:40:00.000-08:002006-12-19T09:49:39.522-08:00Wal-Mart articleI wanted to link to a a great little article called <a href="http://www.forbes.com/business/2006/12/18/jack-trout-on-marketing-oped-cx_jt_1219walmart.html?partner=rss">"The Wal-Mart Flap"</a> about Wal-Mart's positioning, written by Jack Trout in Forbes. I agree with Mr. Trout - Wal-Mart needs to realize it is the low-cost leader and position itself so. It even reaffirmed this fact with its $4 prescription drug-plan. If Wallieworld grasps this and rolls, the stock will probably head up because, let's face it, the company still has alot going for it. It is earning above its cost of capital and that is after years of deteriorated returns and their distribution system is still quite a competitive advantage. Could the release of this marketing exec be signal the start of some needed change at WMT?rvb1977http://www.blogger.com/profile/02913598787020964934noreply@blogger.com0tag:blogger.com,1999:blog-12808093.post-35252647698072382072006-12-10T17:49:00.000-08:002006-12-10T18:09:52.715-08:00RVBXX checkupSo I bragged about my <a href="http://rvbmarketwatch.blogspot.com/2006/11/rvb-value-and-income-rvbvi-in-top-1.html">Value and Income Fund (RVBVI) reaching the 99th percentile </a>at Marketocracy, but I didn't touch on the other fund. To be fair, I've got to talk about both!<br /><br /><a href="http://www.marketocracy.com/cgi-bin/WebObjects/Portfolio.woa/ps/FundPublicPage/source=OcHlGdAlEbLaNoOdMaKiAbDc">RVBXX, My "Smart Buys" fund</a>, hasn't fared as well. For the past year, the fund was in the 49th percentile of all funds. As a result, it has undergone some serious changes and you can see that in the performance.<br /><br /><div align="center"><strong>RVBVX</strong></div><img id="BLOGGER_PHOTO_ID_5007084417737085922" style="DISPLAY: block; MARGIN: 0px auto 10px; CURSOR: hand; TEXT-ALIGN: center" alt="" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi7BB8ruxo04a7tJHEMSbhUvYYKdcJ5dWTo6MtFV2AxIejvUbjH2NOmDKcQ459-Jzit5b8D7z8bsPKkh3Pgh7zzmp5tcv3AJ022PHVQMNpW55j1OG0Qmz2kWmUEO0ZjGshHzrTB/s400/RVBXX+Dec+10-06.jpg" border="0" /><br />What you used to see is a very volatile, high beta, fund. This summer, I've focused more on limiting this - it was simply too risky, and though it outperformed to a degree, it didn't compensate for the additional risk. <br /><br />Lately, I've gone defensive. Thus, you see recently the market has been moving, but RVBXX has not been moving higher at the same pace. If you read my previous post about RVBVI, this is my stance - I'm a believer in the yield curve at this time.rvb1977http://www.blogger.com/profile/02913598787020964934noreply@blogger.com0tag:blogger.com,1999:blog-12808093.post-1164903157136104432006-11-30T07:39:00.000-08:002006-12-13T10:39:35.029-08:00RVB Value and Income (RVBVI) in top 1%My Value and Income fund (RVBVI) has outperformed 99.2% of all <a href="http://www.marketocracy.com">Marketocracy </a>funds in the past 6 months and 94.4% for the past year. For more about this fund, you can visit the <a href="http://www.marketocracy.com/cgi-bin/WebObjects/Portfolio.woa/ps/FundPublicPage/source=JcMiAdDeEbPfEeDiMaKiAbDc"><img style="DISPLAY: block; MARGIN: 0px auto 10px; CURSOR: hand; TEXT-ALIGN: center" alt="" src="http://photos1.blogger.com/x/blogger/6307/915/400/978669/RVBVI.jpg" border="0" /></a><br />Since Marketocracy doesn't show the actual holdings, here they are:<br /><br /><a href="http://photos1.blogger.com/x/blogger/6307/915/1600/648766/RVBVI%20holdings.jpg"><img style="DISPLAY: block; MARGIN: 0px auto 10px; CURSOR: hand; TEXT-ALIGN: center" alt="" src="http://photos1.blogger.com/x/blogger/6307/915/400/215758/RVBVI%20holdings.jpg" border="0" /></a><br />I've gone defensive - as I noted in my last post, I am not terribly bullish right now. The sector bets aren't explicitly made, that's where the opportunities have pointed me. AEOS used to be one of the biggest holdings, but I have been trimming on the way up, despite the fact the stock still looks cheap to me. LUK and WDC are the only new positions - LUK being a bet on the management team and WDC being an internet video / DVR / MS-Vista play (that trades at a ridiculously low 10x earnings.rvb1977http://www.blogger.com/profile/02913598787020964934noreply@blogger.com0tag:blogger.com,1999:blog-12808093.post-1164900949267842422006-11-30T07:27:00.000-08:002006-11-30T08:14:38.996-08:00New economic data thoughtsFrom the stream of conscious thoughts desk:<br /><br />Yesterday was "the big day" for the semester. Now I've three weeks to finish some reports and that's it. I expect my blogging will fill in the time gaps.<br /><br />Today's PMI and jobless claims numbers are interesting. One data point does not make a trend, so I won't be writing that the world economy is collapsing. But, I'm not one to view the economy through rose-colored glasses either. I just go where the data leads me. <br /><br />Our ASAP economic forecasting team has been neutral on the economy, but recognized that there was much more downside risk than up. We have been notably bearish towards housing and unemployment and continue to be. <br /><br />My personal stance is that we're heading towards a mild '08 recession, similar to 1990. IF I am right, I hope it's far enough away so that finding a post-MBA job is still possible!rvb1977http://www.blogger.com/profile/02913598787020964934noreply@blogger.com1tag:blogger.com,1999:blog-12808093.post-1164683489266266822006-11-27T19:15:00.000-08:002006-11-27T19:11:29.276-08:00Profit taking todayIs today's action any surprise? With the frozen-rope-like upward action since August, we need a mini-correction. Today probably signals it, although the bulls will probably battle back. <br /><br />Soon, I'll be posting my thoughts on a small-cap company, <a href="http://www.haemonetics.com">Haemonetics</a> (<a href="http://stockcharts.com/h-sc/ui?s=HAE&p=D&b=3&g=0&id=p51489318230">HAE</a>). The stock is a pretty interesting longer-term investment, in my opinion. I don't own the stock, although I believe the company I worked for this summer does own it. We own it in <a href="http://www.uwasap.org">ASAP</a> as well.rvb1977http://www.blogger.com/profile/02913598787020964934noreply@blogger.com0tag:blogger.com,1999:blog-12808093.post-1163791462678411342006-11-17T11:20:00.000-08:002006-11-17T11:24:22.706-08:00Housing Starts Chart, updated<a href="http://photos1.blogger.com/blogger/6307/915/1600/HousingStarts.jpg"><img style="display:block; margin:0px auto 10px; text-align:center;cursor:pointer; cursor:hand;" src="http://photos1.blogger.com/blogger/6307/915/400/HousingStarts.jpg" border="0" alt="" /></a><br /><br />The pink line is a smoothed expected price, based on a long-run average of inflation + 1.5%.<br /><br />The blue line is the actual pricing data, adjusted by inflation. I start both lines at 100, and see where prices are vs. where they should be. In the background, you can see raw housing starts data from the Ecowin database, gathered via Factset. <br /><br />Finally, the pink line ends where there is no more data - later data is my prediction.<br /><br />One's got to think there's no bottom yet.rvb1977http://www.blogger.com/profile/02913598787020964934noreply@blogger.com0