A Recap of Prior Plays

I felt obligated to share the performance of the trades I proposed on this blog. I went all the way back to my November posts (which apparently I was doing my best work) and found how each pick turned out.

The table below shows the performance of my November 10th picks. I simply assumed the investor would have bought shares at the closing price on November 10th and sold the stock after the week was over, sometime around November 15th.

The table below shows the success of my IPO evaluation on November 15th. For these stocks, I assumed the investor initiated a market order when these stocks started trading and sold the stocks at the end of the day.

The table below highlights my most recent round of earnings plays. Like all earnings plays, I assumed the investor bought the stock sometime after the post or around the close before the earnings report and sold the stock the next day sometime around the close.

The last table is my recently recommended "technical analysis" stock. I will try to add more of these as I learn more about TA.

You can interpret these tables however you like, just thought I would throw them out there.

IPO Plays This Week

I started trading IPO's about a month ago. Statistically, IPO's perform the best during the last quarter of the year, so I thought it was a good time to start looking into this dynamic asset class. I say dynamic because these plays offer strong fluctuations from one day to the next. If you know what to buy, and when exactly to sell it, you can make a lot of money. Since this is one of the most publicized IPO weeks of the year, it is a perfect time to share my IPO picks of the week.

The most mentioned IPOs this week include the rental car company Hertz (HTZ), the Halliburton spin-off KBR (KBR), and the commodity exchange Nymex (NMX). So which one(s) should you play?

Hertz
Hertz rental car may seem like a safe play (steady revenues, incremental growth, and legitimate expansion plan); I am concerned about the scalability of the rental car business as a whole. Thrifty, arguably Hertz' most notable competitor, has seen diminishing profits for several consecutive quarters. I feel that if you are going to play this IPO, get ready to get out in the short run. I look for a maximum of an 8% increase sometime during the first week - get out at that point. A competitive, diminishing market is not a long term play. Decision: Pass.

KBR
While KBR will likely be more volatile that Hertz, I feel that the stock has stronger earnings potential. This company's financials and growth potential are astounding (revenues over 9 billion and demand for oil should increase sometime shortly). One weakness is USA's potential withdrawal from Iraq. KBR has substantial construction business in Iraq and a U.S. withdrawal could pose problems for the company. The answer: play this one short term. The U.S. may remove troops from Iraq, but the country still needs to be repaired, yielding plenty of business for KBR. Decision: Play.

Nymex
This is the big one. Nymex is a commodity exchange with huge growth potential. Many investors have been salivating over this release, but there are some evident flaws. The over-hype and massive participation could push the open price of this IPO up to $150/share. By this time speculative investors could sell their shares and drop the price significantly. While the share price may deter some investors, there are many reasons to invest in NMX. I like the company's strong financials (Almost 120M in profits) and successes from similar IPO exchanges (NYX, CME and BOT). The positives outweigh the negatives, so the question is how to play NXM? While there is potential to make money buying and selling on highs and lows, I feel the best strategy is buy it and never look at it again. Decision: Play.

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