Chris Lau - Seeking Alpha

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Wednesday, December 14, 2011

1 Day: $10,000 to $170,000

To illustrate the magnitude of possible returns, look no further than the options market.
An article exclusively published this Monday on seeking alpha called 1 company a sell and 5 a buy (article).

Today, First Solar warned that it would not make earnings or revenue forecasts. The market for solar energy is so dire that the company is changing its business model to adjust for the rapid decline in solar energy prices.

Had an investor purchased a December $35 Put, the return would have been a 12-fold return in a day:


Options can provide phenomenal returns, but an investor needs both bit of luck and skill in this area of investing. Most options expire worthless.

An investor needs to have an advantage over other participantsalpha.



First Solar's problems are big. Competitors were able to enter quite easily, tripling supply over the last three years. 80% of industry was subsidized. As the world now knows, government funding is constrained. The growth in supply to feed growing subsidies no longer applies.

In its conference call, the company said “The central learning from this experience is that open, transparent and uncapped markets cannot survive politically in an oversupplied industry with no entry barriers.” First Solar is now transitioning its business towards sustainable markets. This market was identified in its presentation as growing 5 to 10% per annum.

The main risk for investors is stated here:
“We believe this translates to a levelized cost of electricity, or LCOE, of $100 to $140 a megawatt hour, or $0.10 to $0.14 a kilowatt hour in most markets. As Mark will discuss, achieving these LCOE levels without subsidies will require the First Solar to reduce its manufacturing costs, increase module efficiencies, streamline operating expense and transition its business model to deliver superior returns at much lower gross margins than in the past.”

First Solar is now exposed to the regulatory and planning of the electricity market.
Uncertainty is high for investors bullish on First Solar. In that climate, risk aversion has risen, and share price will be under negative pressure.

Further reading: Crash-Proofing A $100,000 Portfolio From A European Crisis With These Companies

Tuesday, November 22, 2011

How To Save Your Portfolio: TradeFields

Seeking for Alpha is the only way to truly differentiate oneself from the masses and the herd.


Taken from seekingalpha's web site, 'Alpha' is a finance term referring to a stock's performance relative to the market; it's used more loosely by fund managers to describe beating their index - so every stock picker is essentially "seeking alpha."


The first step of surviving the stock market is to not lose money. As easy as it sounds, anyone invested in stocks or mutual funds, for that matter, will know that "waiting it out" or holding something "for the long term" does not constitute as a strategy for protecting from losses.


Taking decisive steps, and learning by doing, goes a long way. On a stock simulator app on Facebook, tradeFields is one way to take practice steps. 


In the last few weeks, my performance improved from months of "loss" to a gain of 20.10%:


Account Information
Short Balance
$3.00M
Long Balance
$355.35K
Available Cash
$8.66M
Spendable Cash
$8.66M
Account Value
$12.01M
Return:
20.10%


Holdings as of November 22 2011:

LONG POSITIONS
Company
Buy Price
Qty
Last Price
Market Value
Gain ($ | %)
GILD
$38.29
4,865
$38.76 ($2.50)
$188.56K
$2.28K
NVDA
$14.92
8,173
$15.04 ($0.41)
$122.92K
$966.86
ORCL
$31.00
54
$29.71 ($0.20)
$1.60K
$69.91
PANL
$44.62
988
$42.75 ($1.41)
$42.23K
$1.84K
THRX
$21.04
1
$21.78 ($0.26)

$0.74
SHORT POSITIONS


Total Long:
355K

Company
Buy Price
Qty
Last Price
Market Value
Gain ($ | %)
AAPL
$396.86
13
$375.57 ($6.56)
$5.43K
$276.79
FSLR
$42.44
29,565
$40.83 ($2.70)
$1.30M
$47.66K
GRPN
$22.71
891
$20.20 ($3.38)
$22.46K
$2.23K
LNKD
$71.88
2,891
$68.69 ($1.31)
$217.03K
$9.22K
NFLX
$70.96
2,085
$70.70 ($3.77)
$148.49K
$542.10
NVTL
$5.45
1
$3.00 ($0.14)
$7.89
$2.44
OCZ
$7.41
149,206
$6.08 ($0.15)
$1.30M
$199.14K



Total Short:
$1.7M


The positive return was accomplished in a number of ways:
  1. Short solar energy
  2. Short Netflix
  3. Short LinkedIn
  4. Short Groupon
  5. Long large cap technology
  6. Long pharmaceutical and health care
For more real-time updates, follow tweets here.




Monday, October 31, 2011

How to Navigate Through This Downturn

The market's massive rally last week, on the back of many weeks of positive returns, should not be used to justify a positive return in mutual funds or stocks.

A tug of war exists between a positive desire for European's financial mess to be resolved, and the reality that creating more debt to resolve a debt problem is not a viable solution in the long term.

The point is not to cry about a financial market collapse: the point of any investor is to figure out how to minimize losses while maximizing returns.

Navigating through this downturn starts with formulating a thesis about the market. Central to the thesis is that stocks will be stuck sideways. Stocks will need to be sold at once price and bought back at another. What are the results?

Using kapitall.com as a "virtualized" portfolio planning tool, most equities were sold into the rally last week. The allocation is now 73% cash and 27% stock.

The total return since inception is 31.5%.



Holdings as of October 31 2011:


For further reading on what will happen next, stock picks are exclusively published on seeking alpha. Here is a list of these articles.

Wednesday, October 05, 2011

iPhone "5" Launch Hands Market to Android

Mobilesyrup reported that only 10% of consumers are intending to upgrade to an iPhone 4S. Consumers expected to be wowed, only to learn the update would still have a 3.5 inch screen. With Android making larger screens more appealing, the iPhone upgrade cycle will not be as strong as anticipated.

Android has 41% of the market share of smart phones. However, Apple has the largest profit share for smart phones.


Sunday, October 02, 2011

TradeFields Portfolio Beats Averages

TradeFields finally rolled out an upgrade to its virtual investing game site. It also released an updated iPhone and iPad app. Let's hope to see the Blackberry app updated.

For a more detailed analysis on stocks picked for the model portfolio below, navigate to my seeking alpha page.

TradeFields is accessible on facebook here, or on its own website.

Sunday, September 25, 2011

Is Gold/Silver a Bubble that is Popping? What $1.48M Says


Gold prices fell 9% last week. Which way is gold headed? Here were two comments that worth noting.

Bear:
"Gold doesn't pay a dividend, cannot grow organically or through acquisition, doesn't have a yield, is in unlimited supply (more is being mined all the time), and for some reason it was the vaunted vehicle of financial safety. It's shiny, but even for that purpose it's out of fashion and there's simply not enough gold-chained gangsta' rappers to keep the price high. Technology doesn't even use it anymore given availability of far better and cheaper conductors. This bubble has more helium than the dot com fiasco, or the real estate mess that followed a decade later. Always funny watching the sheople herd to the next BIG one."

Bull:
"As long as government's kick the can on their deficit spending and debt problems, gold will be a viable safe haven."

Source: http://online.wsj.com/article/SB10001424053111903703604576589210888153064.html

One factor amplifying the moves in gold prices is the use of leverage. CME modified its margin requirements. "Gold margins will be raised by 21%, silver margins by 16%, and copper margins by 18%, effective at the close of trading Monday," CME said Friday, after the market closed.

Put another way, with $100,000 to speculate with, you can buy $1,481,481.48 in gold futures.



Saturday, September 10, 2011

September Portfolio Performance: Kapitall.com

Gauging market sentiment is as every as bit important as analysing fundamentals. With a "bigwig" leaving the ECB on protest over ECB's management of country debt, expected headwinds for Obama's $447B jobs proposal, and the realization that only 1/3 or so will actually create jobs, there is plenty for Mr. Market to worry about.

Despite the macro headwinds, my model portfolio on the stock game, Kapitall.com is being managed to remove most risk and to maximize safety. This was accomplished by selling into the rallies and buying deeply discounted companies.

There is $77,953.66 in cash out of the $129,093.21 balance.


Here are the holdings:




Total return: 29.1%


Notice below the losses incurred from January (~40% gain) to August (~20%) were reversed by riding out the recovery, selling into the rallies, and accumulating great companies at a great price:


What value is there in writing about a play portfolio? 


One: the site's tools are used to plan out real positions.


Two: the companies held are further analyzed and discussed for publication. Here is the link to those publications:


http://seekingalpha.com/author/chris-lau/articles


To gain access to the above portfolio, login to kapitall.com (linking to your facebook profile will simplifying the login process), click on the contacts button and search for my name.

Monday, August 08, 2011

Portfolio Management: Dealing with the Market Sell-off

In the coming days and weeks, there will be a plethora of posts from mainstream media "advising" investors on what to do.

Truth be told, only the most prepared investors coming into this market drop over the past few days will be those who anticipated it. Those who held on to cash and gold will not see significant paper losses.

On Kapitall.com, I run and share two virtual/practice portfolios.

What is the value of a practice portfolio? An investor can use kapitall's interface to plan investments before putting them in real portfolios.

The 100K portfolio:
Down 3.1% today vs. the 5.55% drop on the DJIA and 6.66% drop on the S&P.
Total return is 21.8% vs. ~5% return from the S&P 500.




The 10K Portfolio:


The 10K portfolio suffered devastating losses at the start of 2011, due to various Chinese RTO fraud investments. Thankfully, this lesson was learnt in the practice environment.

David Neubert, co-founder of kapitall.com was on Fox discussing today's investment environment:

In summary, the S&P downgrade is mostly a non-event. Recall that S&P failed to downgrade MBS securities when they were clearly not worth AAA. This is not to say that the market shift in sentiment is temporary. 

It is to say that there are more serious risks to watch closely than what S&P says: the debt problem in Europe, the inflation problem in China, and the effect of U.S. debt yields dropping (with the world still treating the US as being the world's reserve currency).

Tuesday, June 21, 2011

$RIMM marketing: get aggressive against Apple

Here's an exclusive publication on RIM: http://seekingalpha.com/article/275733-catalysts-for-a-rebound-in-research-in-motion-shares

Another marketing executive left RIM. This gives insight on how the company will approach its cost-cutting: the marketing department.

That said, a clean-house in the marketing department can mean good things for consumers if RIM gets aggressive. A user posted this comment (prior to this announcement) about what RIM can do in marketing:

But their marketing department could use a bit of an overhaul. They need to be much more in-your-face. Trade any iphone for a BB promotions. Trade any ipad for a playbook promotion. 10 free apps with every purchase, regardless of price. Max cost for new phone without plan = $200, not $600. Go for volume. Offer deals to Bell et al if they shun Apple products -- you know that's done in the states.

The major drawback from the BB OS is it doesn't feel as 'silky' as the iphone OS. The Playbook fixes this, and the ports to other phones of that OS has to happen NOW, not months from now.

And in marketing faux pas, RIM decided (wrongly) that its v6 OS would not be made available to phones before the latest Bold, crapping on all the new Tour et al owners. This is the type of mentality that has to stop.

Monday, June 20, 2011

Why $RIMM Will Not Go Away

The popularity for Android and iPhone resulted in a massive decline in sales of Blackberry in North America. That, and slow operating system updates and a relatively slow refresh cycle for newer models of the device resulted in RIM's demise Friday.


RIM, however, is not dead. It will not die, as most would wish, because of three reasons.


1. Battery life is very good, provided a user does not install a "leaky" app (unlike with Android).
2. No presumptuous spell check system (iPhone)
3. Some users will not give up a keyboard


Here's a comment summing up what went wrong with Blackberry over the last 8 quarters:



I had a Blackberry for years (for business) and loved it, then made the switch to Android thinking it's the next generation smart phones and would be better. WORST MISTAKE EVER! Android and Windows phones are made for 12 year old girls who like to gossip and send pics to each other. Blackberries are the no nonsense utility phones. Unfortunately RIM lost sight of their strength and started competing directly with the others by coping their models and thus its failure. They should have stuck to what they did best.

Read more: http://www.businessinsider.com/chart-of-the-day-rims-astounding-collapse-in-the-us-2011-6#ixzz1PolRqS00

Thursday, June 09, 2011

Two Publications

Two articles were accepted by SeekingAlpha for publication. The RIM piece was ready after using the Playbook for over a hundred hours and after gaining the experience of updating 3 generations of Blackberry Phones and moving the devices over to RIM's Blackberry Enterprise Server (BES) 5.

1. 6 Things You Should Know Before Writing Off Research In Motion 
2. Microsoft Looks to Gain From Hardware Deal, New Revenue Stream

Tuesday, May 31, 2011

Notes on Nokia 14% Share Price Drop

Barrons covered an opportunity may exist for RIM as Nokia warned that it faltered in Europe.

One comment that stood out was that shift among smartphone makers lies at the developer software level.



I don’t understand why people are so surprised with the sales decline, since that is very obvious when changing technology. When Nokia announced their alliance with Microsoft I saw it as very smart move. I guess I’m one of the only ones, but I am also a developer ;). The lack of channels and usability has been the biggest problem for Nokia and the alliance cures this, since Microsoft have some of the best developer tools, biggest user base and now they have Skype as well. An acquisition which I think is not as stupid as many have stated, but lets see.
Nokia is one of the best at mobile and network technology and still not to forget has the largest mobile user base. And I really don’t understand why people are so dissatisfied with Steven Elop, since he is doing everything which is needed. Cutting expensive, making a quick shift, fast in executing, targeting the developer community and is very aware of the competition he is up against.
And as I said Nokia technology is good they have the patents to prove it. Moreover as a former Symbian C++ developer I know this technology is good. Very fast, the architecture is very well designed and has a low energy use. The problem has always been the developer tools, the multiple platforms and the distribution channels. I remember trying to get Symbian development to work under Microsoft Visual Studio and with no luck, shifting to Borland which is not my favorite. It was just a drag. I think most developers will agree ;)
Now it’s going to be one platform where there is one of the largest developer bases in the world. I would reckon just a bit larger than iPhone developers. That was with sarcasm for those of you who don’t know anything about this, there is lots more and I would reckon this is largest developer base in the world. Moreover this base is ready to easily push application on a platform where the usability and the channels have been radically improved. Just look at the numbers of applications in the last period of time. Not to forget that this platform actually has gotten a warm welcome from end-users taken into account the competition.
The problem with this kind of stock is that people don’t anything about these things, which means that it will probably continue to decline and then there the few who are going to make a huge profit. Maybe Microsoft?
Microsoft in general not doing so bad. Moreover have they made mobile the primary key concern and they have the money to do it, lots of it. Not to forget, how they did concerning Internet Explorer not so many years ago, do you remember?
Google is cool but I must also admit that I am not that impressed with Android. They are already facing the same problems as with Java Microedition – J2ME. With different platforms, functionality, different user interfaces, etc. This is crap work for developers and ends up making software for the lowest denominator. It is not fun now and this is only going to get worse.
I am impressed with Apple wow! I love my iPhone and had to have it even though I am not an Apple fanboy. Fantastic phone, but they have done their share and it’s only to copy now. Moreover when people in the future realizes how closed and tightly coupled they are to this platform when new technologies arise they are going to be surprised and I don’t think it is going in Apples favor. Look at the history it just repeats.
Well let’s see, this is very interesting. I’m quite sure that we are going to see some long faces once again.
Believe me I don’t think Nokia will be as big as before but to announce that they are done I would believe is very wrong.

Sunday, May 29, 2011

Name this Phone Maker's Ad Campaign: iDoalotmore

In India there is an ad campaign, iDoalotmore.


Which smartphone device maker does this ad represent? Here are some of the features for this phone:



  • True multi-tasking
  • USB On-The-Go
  • Wireless file transfer (BT 3.0 or wifi)
  • FM transmitter
  • Hot swappable Micro SD
  • Faster GPU
  • Better camera with Xenon
  • AMOLED display
  • Single piece Aluminum chassis
  • "Replaceable" battery
  • Applications store with 70,000 apps
  • Customizable fonts/themes/ringtones/wallpaper
  • HDMI out (w/display fully repeated)
  • Dual charge ports (USB and micro pin) to support continuous play over USB OTG
  • Dolby Surround 5.1
  • Pentaband 3.5G
  • Free on and off-line globally supported voice navigation
It's not Android.

It's not iPhone.

It's not Blackberry.

It's Nokia. It's quite remarkable how rapidly Android and Apple are growing in North America. 

Overseas, however, Nokia is still doing quite well.

Nokia is still the #1 phone maker (by units) in the world. 

Research in Motion is also doing quite well overseas, much like Nokia. RIM recently saw somewhere between $5B to $12B in market capitalization (share price) evaporate as the excitement over RIM's Playbook waned. As that value flattens or falls over the next 2-3 quarters, QNX, an operating system used in autos and power plants, will prove to be an important transition for RIM. 

RIM's market capitalization is $23B. Nokia's is $30B. Apple's is $312B.

More articles on RIM Here.

Saturday, May 28, 2011

Blackberry Playbook Post-Processing Showdown

Original: From Playbook 5MP


Modified with $2.99 Photo Touchup App in 30 seconds: 


As angry analysts issue 'sell' reports on RIM after the fact (the time to issue this warning was prior to the stock running up), let's take a step back and think of what the Playbook can do in the area a photography.

This entry was blogged from a Playbook. Additional edits made on a desktop.

Above: 5mp rear camera Playbook, no processing.

Photo 2: post-processed with 'Photo Touchup' - app available on app world

Below: post-processed in Photoshop:


Modified in Adobe Photoshop in 5 minutes including upload time:


It is unfair to compare the abilities of Photo Touchup App to Photoshop. Photoshop is a professional tool with thousands of post-processing options, and costs 500 times more. The Playbook has a good 5MP lens with f/2.8. This makes the lens faster than the average camera.

In the above example, it was easy to adjust color amounts (of green/blue), light balance, etc. 

What Touchup allowed was the ability to quickly touch-up the photo in-tablet.

Conclusion: RIM Playbook has good apps available for processing photos. What's more important is finding the few apps that matter, and Photo touchup is one of them. 

To find the best apps for the playbook, select featured or top. The apps with the most comments alongside the ranking are usually the best ones that make the "favorite" section of the Playbook.