Enterprise storage stocks (EMC, NTAP, FIO, STEC, etc.)

I’ve been researching this industry.  On my first pass at it, I’m not very excited about these stocks at the moment.  I think it would be prudent to patiently wait for Mr. Market to have one of his mood swings.  Valuations are not compelling at the moment.

There is a lot of hype surrounding flash technology.  Many companies making flash-based products have very high short interest (e.g. FIO, STEC).  While these stocks will likely go down, they may not be compelling shorts due to expensive put options and high short interest affecting the borrow on the common stock.  Basically… nothing in this sector is really compelling to me at the moment.

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Gold Resources (GORO): I am mostly wrong on this one

Originally, I thought that Gold Resources was a scam because they did not try to prove to investors that they had a real deposit/mine.  They have no proven and probable reserves according to SEC guidelines.  There is so much scumbaggery in the mining sector that I automatically assumed that they were lying.  But… I think that they really do have a profitable mine.  It’s likely that the management team at Gold Resources felt that it was an unnecessary use of money to put out the necessary technical reports.  Hindsight vindicates this view as the stock price is/was high, the mine was financed, etc.

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Reading financial statements: options

When reading financial statements, it is worth checking to see if stock-based compensation is being expensed properly.  Here’s how.

Usually they will use the Black-Scholes model to value options and they will state the expected volatility figure.  Compare that number with the historical volatility of the stock.  One easy way to get historical volatility information is to look at the Morningstar Options website (here is the page for Berkshire Hathaway).

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Advant-E (ADVC) quick update

It looks like the arbitrage trade discussed previously is off the table.

http://www.dailymarkets.com/stock/2012/12/13/advant-e-corporation-announces-update-on-reverseforward-stock-split/

DAYTON, Ohio, Dec. 13, 2012 /PRNewswire/ – Advant-e Corporation (OTCQB: ADVC) today announced that its Board of Directors has determined that it is in the best interest of the Company and its shareholders to abandon its reverse and forward stock splits announced on November 5, 2012.

This action is being taken due to the timing of the special dividend announced on December 12, 2012, delays in obtaining regulatory review and approval, and other factors.  The Company remains committed to the voluntary suspension of its public reporting obligations, which it intends to achieve as soon as practical.

Walter Isaacson’s biography of Steve Jobs

Some key points are:

  1. Steve Jobs is a real asshole (e.g. he would unnecessarily insult and put down his employees)… it doesn’t seem to have hurt his success too much.
  2. Jobs is obsessed with great design and making amazing products that are the intersection of great design and technology.
  3. He worked hard to attract A players and to weed out the “bozos”.
  4. Jobs would push people to do the unimaginable.  Sometimes they would do things that they wouldn’t think were possible.  Of course, this doesn’t work all the time.
  5. He is obsessed with perfection… even for details that consumers wouldn’t see.  The robots making Apple/Next computers had to be beautiful… along with the interior of the case and how the circuit boards are laid out.

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Portfolio Update Nov. 30 2012

Queenston Mining (QMI.TO) – closed at a profit

Sold Queenston Mining at $5.27ish for a nice profit.  Osisko announced a takeover of Queenston (0.611 Osisko shares for every Queenston share).  I sold because it seemed to me that Queenston was close to fair value.  At this point in time, a competing bid seems unlikely to me.  One reason is that Osisko’s bid has a non-solicitation clause that Queenston management agreed to.  Agnico Eagle Mines, which has a strategic investment in Queenston, will not be bidding on Queenston as it struck a deal with Osisko.

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