Like almost all other financials, Citigroup’s stock is dropping like crazy. But Citigroup has more to worry about than just the economy: The treasury owns 18% of Citigroup shares and does not want them. 18% is just above 5 billion shares, and they’re currently dropping about 40 million shares in the market every day, which is putting pressure on the stock price and pushing it downwards.

Apparently the treasury is impatient, and doesn’t really care about making money with the stock, that was bought at $3.25 back in September of 2009. The treasury doesn’t want to lose money either, which means that the stock will probably never see a level below $3.25.

C is currently trading $3.66. Let’s see how low the stock will drop before it rebounds.

August 25, 2010 | In: Financial

Stay Clear from AIB

AIB is the stock symbol of Allied Irish Bank. Ireland credit rating was cut yesterday due to its weak economy, this only can only mean one thing, that the cost of borrowing will be higher. With a higher cost of borrowing, Irish banks will suffer and the government will find it harder to support them, in case they needed to be supported.

AIB does need government help right now, it has been losing money for a while now, and its latest numbers are very, very bad.

I know I have recommended the stock as early as yesterday, but things have changed after this report. I was going to buy about a thousand shares of this stock myself yesterday (just for fun). The stock has closed at 2.08 on Tuesday, and I expect the stock to close well below the $2 level today (the stock is trading $1.97 in pre-market).

I wouldn’t recommend the stock at all at the moment, regardless of the price.

August 24, 2010 | In: Technology

The Fight for PAR

I have written yesterday about PAR and how it tripled in about 8 days. Apparently the stock will continue its ascent at least for the foreseeable future, as the war between Dell and HP has just started. Both companies want to buy PAR, and they will keep outbidding each other until someone gets tired and concedes defeat.

It seems that DELL and HP are betting for a brighter economy, with all the current doom and gloom, both companies are offering a substantial premium to buy a small hardware company that is losing money, and is also under investigation for misleading investors. This is something in these uncertain times.

This fight lead to the increase in price of other similar hardware companies (producing components that are integrated in servers), including Quantum (which is currently trading at 1.38). Apparently investors think that these companies may be targeted for acquisition as well.

I wouldn’t buy PAR at the moment, for the sole reason that I think it’s way overpriced, at least for the current market, and any hesitation from DELL’s or HP’s side will lead to the collapse of the stock.

Let’s see how this will end…

August 24, 2010 | In: Technology

Revisiting Mellanox

I have already written about Mellanox and why I think it’s very interesting, especially in these days where acquisitions of small technology companies is the trend.

I have written that it’s a must buy below $15, well the stock touched $14.80 last week (which was a great buy), and rebounded yesterday, and is now currently trading at $15.59. If you bought (on Friday), let’s say, 300 (which was what I would’ve bought had I have the money) shares @ $15 (which was my minimum recommendation to enter the stock) and you sold in this bad day, then you would have made $177, not too bad for investing $4500 for 3 days in this stock.

Mellanox has a huge potential, and can be easily bought by IBM or another very large company. MLNX’s market capitalization is about half a billion. I don’t think IBM, Intel, HP, or DELL would have any problem buying this company for a billion, even at that, it would still be a bargain. They need what MLNX is offering,

The stock went up another 7 cents while I’m writing this post. It’s now trading at $15.65.

I would still wait for the stock to retreat to $15 or less to buy, right now the price is going up solely based on the current acquisitions happening in the market.

Don’t rush, but don’t ignore this stock… A good entry point is below $15, an excellent entry point is below $14.80, a super entry point is below $14.70. Don’t expect the stock to be traded less than that, at least in the foreseeable future.

August 24, 2010 | In: Opinion

The Slump Stopped

Interesting…

Existing home sales fell in July to 3.83 million annual rate, a horrible number which is even below the most pessimistic estimate of 3.83. But at the same time the data was made public (10:08), the slump of most of the stocks I’m watching stopped, and it seems that some are now ascending. It seems that investors now feel that the market has already overreacted, and that the federal government will now be forced to do something to pacify the markets.

BAC, a stock that has been doing horribly in the past few weeks, stopped its descent at $12.62, and now is trading at $12.66.

MAS stopped its descent at $10 and now is trading at $10.06.

AAPL stopped its descent at $239 and now is trading at $241.

Everyone was predicting that the market will be down by another 300 points when the data was released, but it’s now going up.

Let’s see how this day will end. It might not be that bad, after all…

August 24, 2010 | In: Uncategorized

Unbelievable Bargains

Due to the major selloffs because of the fear of a double dip, there are so many bargain stocks at the moment, including, but not limited to:

AAPL: Apple’s Stock is currently trading at $239. Support is at $235. This stock is now trading dirt cheap, a must must must buy.
AIB: AIB is almost at a 52 week low trading at $2.08.
BAC: Bank of America is trading at $12.65, the stock will definitely go up to at least $14.50 when the current market insanity is over.
BP: BP is trading at $34.50. Even more delicious!
C: Citigroup is trading at $3.68. Give me, give me, give me!
IMAX: IMAX is trading at $13.13. Wow!
MAS: MAS is trading at $10.07, but I’d wait to buy under $10, preferably $9.80.

Of course, I still have no money to enter the market now, wish I had, but this is a lesson learned for me not to invest all my money in one week.

The Dow will probably close below 10,000 today, but I do feel that optimism will soon replace pessimism in this insane market.

It’s stressful, it’s ugly, but it’s fun!

August 23, 2010 | In: Energy

BP Is Looking Delicious at $36

BP is one of my favorite stocks, and I always made money with it. It is currently trading at around $36, which is just $1 over the $35 mark, which is a major support level that causes the stock to spike when touched.

I would (of course, if I had the money) buy 1/3 of my position right now, and then wait for the the stock to move in either direction and buy another 1/3 of my position if goes up or down $2 (though I think it’s very hard to see that $34 level again).

People are now less and less interested in the oil spill after BP secured the well, and there are no more negative news about BP, with the exception, of course, that they have $20 billion to compensate those damaged, among other fees, but that tap is already accounted for in the current stock price, which is trading at 40% below its April high of $60.

Let’s just examine a fair value of BP, after taking into consideration $30 billion, and not $20 billion of expenses because of the oil spill.

Back in April, the market capitalization of BP was $60 x 3.13 Billion shares = $187 Billion, but that was at the year’s peak, so let’s take a low price of $52 (during February) and estimate the market capitalization. Market Capitalization (fair) = $52 * 3.13 Billion shares = $162 Billion. Let us subtract the $30 Billion of different expenses and we get $132 Billion. Now let’s divide that by the number of shares: 132 / 3.13 = $42. That is probably a very fair value of BP at the moment, and if you notice, the stock reached that peak on August 6th (a couple of weeks ago) before retreating.

BUT, if we compare the current oil price to previous months, we see that it’s almost identical to March’s, where the stock averaged $56 and the market capitalization was $175 Billion. Let us subtract $30 billion of expenses from this amount, and we get $145 billion, now let’s divide that by the number of shares: 145/3.13 = $46.

BUT BUT, BP is selling assets like crazy (they’re selling different non-critical operations in several parts of the world), and the American public still hates the company. Although the sales of assets can be considered part of the $30 billion expense.

SO, the stock will probably settle at around $44, but I would never ever buy the stock above $40, unless crude goes above $80.

BP is underpriced by $10 at this very moment even when considering that the total expenses are $30 billion, but don’t expect the market to jump these $10 tomorrow. It’ll take time, but BP is always an excellent investment, and oil (because of the huge demand in emerging economies), has nowhere else to go but UP.

PAR went up almost 100% on Monday August 16th, and will go up another 40% today after 2 bids to buy the company from DELL and HP, respectively. Hmmm…

A quick check on 3PAR:

- They’ve lost money in the last quarter for their investors yet they went up the same day. This is unusual, maybe DELL and HP were subtly acquiring stocks at that time? Which leads me to my second point…
- They are currently under investigation by a law group.

Stocks are dirt cheap at the moment because of the so called slowdown, but is it worth it for HP and DELL to go after companies that are losing money? Only time will tell if it’s worth it, and if there will be a bidding war on this stock.

PAR closed today at $26, up almost $16.50 from 9 days ago. Here’s a stock I wish I owned, and sold today. DELL and HP closed around 1% and 2% lower, respectively.

While I always thought the most annoying song in the world was this one, it becomes even worse when I hear it every 15 minutes in a GM advertisement, who are generous and kind enough to give “employee prices” to the Canadian public that bailed out their Canadian operation. Thanks GM!

Now let’s talk about GM from purely an investor’s perspective, GM is a company…

- That is loathed by the American public.
- That is now owned by the US government.
- That has no transparency, and that misleads the public opinion by paying a government loan with another government loan.
- That is producing a car that costs $81,000 to make while selling it at around $40,000 (and you can get it for much less after federal and state subsidies).
- That is controlled and manipulated by the UAW, the automobile (and other things union) that will suck the blood of any company.
- That produces bad cars that are constantly recalled, but nobody really cares, after all, it’s not like a scandal.
- That changes names. GM first stood for “General Motors”, then it changed name to “Garbage Motors”, and ultimately to “Government Motors”.

Now look at all the above, would you like to buy into this company, and support its debt, so it would continue to produce bad cars, suck taxpayers money (who’ve had enough already), and probably will never get out of debt anyway, without federal support.

Maybe there’s a glimpse of hope but I (as well as most other investors) don’t see it.

Save for the elect few, nobody really knows how many shares will be listed and the price of each share. The only thing that we do know at the moment is that the stock symbol will be “GM“.

GM closed at 0 on Friday, which is probably more than what it’s really worth.

August 23, 2010 | In: Financial, Opinion

Is AIG Becoming A Buy?

I first looked at AIG back in May, the stock around $34 then. I asked a friend who recommended avoiding this stock.

But lately (with the exception of the last couple of weeks), the stock has been performing very well, as there were always good news issued by the company or about the company. AIG was once the world’s largest insurer, and required two bailouts that resulted in what was called the nationalization of AIG. The stock bottomed in March of 2009 to less than $10, after it was trading for $1450 2 years earlier. Wow…

A year and a half later, the Feds have decided to cut AIG’s credit line by $3.6 billion, claiming that the US insurer probably no longer needs taxpayers money. This is an extremely positive sign but should be looked at with scrutiny. The US government is still the largest holder of stocks in AIG, and wants to dump them at a decent price. These good news will increase investors’ confidence in the company and thus will have a positive effect on the stock price at the short term, which will allow the US government to start dumping its stocks. AIG is still heavily in debt, and is still losing money (current EPS is -43.15). I would buy (if I had the money) AIG tomorrow, but I would sell it when the stock goes up $2 or $3. This stock is still very risky, and AIG’s exposure to risky markets is always very high. Be warned…

AIG closed at $35.17 on Friday.