NaabTrade
A monthly newsletter provided by Naab Investments
& Trading
Bush Wins, Energy Wins!
November 2004 Issue
With the
elections past us, the markets will begin to focus on the economy and earnings
once again. We feel that Bush’s next four
years will be much better for the market than the previous four. We look to move to nearly fully invested in
the coming weeks in our managed accounts and the model Portfolios. We will be focusing on the energy sector,
with smaller forays into the financials and insurance stocks.
A new issue
this month we will be adding to the Long Term Growth Portfolio is Canadian Oil
Sands Trust (COSWF). The stock is very
thinly traded on the Pink Sheets, so we advise you to place limit orders only. COSWF is a trust that owns 37% of Syncrude, the only other major oil sands firm besides Suncor (SU). Syncrude is also 25% owned by Exxon, 12% by Petro-Canada, and 9% by ConocoPhillips. Plans are on the drawing board to increase
production from today’s 1 million barrels per day to 3 million barrels per day
in the next decade. Currently, it cost Syncrude about $12.50 per barrel of operating costs, so oil
above $30 is highly profitable. That
makes it viable for the oil majors to spend billions of dollars and several years
developing oil sands projects. Syncrude and Suncor will be at
the forefront. Remember it is estimated
that oil sands in
In 2003
COSWF is
the only pure way to buy into Syncrude. It currently trades around $48, near its
high. We are advising that limit buy
orders be placed at $46 per share. We
will be initiating an 8% weighting in COSWF in the Long term Growth Portfolio
at $46 once it reaches that price. This
will put us on margin slightly in that portfolio, but we are holding 15% MGM,
which is being acquired shortly. Once
the MGM deal closes, we will be off of margin.
Bigger
pipelines will also be needed to get the increased oil production to the
Pfizer is
still under pressure due to fears over Celebrex and
whether it is going to be the next Vioxx. Our readings indicate that this drug presents
none of the cardiac problems that Vioxx was
having. If Celebrex
can stay on the market, it will, undoubtedly, get 90% of the Vioxx subscriptions.
This would equate to several billion dollars for Pfizer without having
to do much. Vioxx
was approximately a $2.7B a year drug for struggling Merck. At this point the risk/reward is in our favor
for holding Pfizer. If Celebrex is proven safe, it goes to $40-42 within a
year. Pfizer might then approach all
time highs again after a major breakout above the $45 to $50 level. If Celebrex is
taken off the market, PFE probably falls $5 more at most. In the October newsletter, we recommended
purchasing new or additional shares of PFE on dips under $28.00. On October 22nd PFE did dip below
$28 and is still near that level. We
added 2% more in the LTGP on that dip to $28.00.
AT&T Wireless (AWE) was
finally bought out by Cingular. The deal closed October 27th at
$15.00 per share. We will be putting the
cash to work in several other stocks.
This was a great trade for us, and we are glad we held for the final
deal closing while the market treaded water.
We picked up an extra 8% or so while the market went nowhere. This freed up a lot of cash for us to do some
shopping.
Our short position in US
Canadian Minerals (USCA.OB) is going to be a winner for us. On October 28th the SEC issued
this:
The Securities and Exchange
Commission announced the temporary suspension, pursuant to Section 12(k) of the
Securities Exchange Act of 1934 ("Exchange Act"), of over-the-counter
trading of the securities of U.S. Canadian Minerals Inc. (OTC Bulletin Board
symbol “USCA”), of Las Vegas, Nevada. The suspension will commence at
USCA effected a 3 for 1 stock split the day before the trading
suspension. It was just another strange
move by the company. We have adjusted
the prices and reflected the new trading symbol in the Model Portfolios. We expect the stock to crater to under $1
once the suspension is lifted. By early
next year we look for USCA to be around 10¢-20¢. For managed accounts, we will try to push the
large capital gains out to 2005.
Our short
position in Travelzoo (TZOO) did not work out as
well. We were quickly stopped out at 77
on November 1st. This stock is still
being squeezed, and we have no idea when the bubble will burst. For now we’ll leave this stock alone, but we
will likely revisit a short position in the future.
We will
send a Flash Bulletin via email with any urgent updates or new stock
trades. Email any thoughts or comments
to sales@naabtrade.com.
Portfolio
Updates (Longs)
Altria Group (MO)
Gave an upbeat report to analysts
yesterday.
They plan to split the company into three separate stocks. Very bullish. We may look to add to position in the high
40’s.
Suncor Energy (SU)
This stock has rallied considerably since we added to the
LTGP. We are raising our buy price to
$30.00 per share. We may pull back to
that level if oil continues to set back.
TPL has run away since we recommended it at $63 and is now
near $100. We would definitely hold off
on any new purchases for now, but would not sell.
AT&T
Wireless (AWE)
The merger closed on October 27th and all clients
received $15.00 per share.
Portfolio
Updates (Shorts)
US
Medsys (UMSY)
Has dipped below support in the
$2.80 to $3.00 area.
We’ll cover below $1.00.
US
Canadian Minerals (USCA)
Has been suspended from trading
until November 10th.
We’ll cover sometime in 2005.
Travelzoo (TZOO)
We were stopped out at $77 in all portfolios on
Portfolios (Latest updates in blue text)
NaabTrade Short Term Growth Portfolio (STGP) |
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Date
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*All returns
calculated without dividends
Symbol |
Action |
Yield |
Date Bought |
Entry Price |
Current Price |
Return (w/o divs) |
% of Portfolio |
Current Advice (Latest updates in blue) |
MGM |
Long |
N/A |
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$12.00 |
$11.83 |
-1.42% |
18.00% |
To be bought for $12.00. |
EMC |
Long |
N/A |
|
$10.25 |
$12.96 |
26.44% |
15.00% |
Reported strong earnings on October 19th. |
SIE |
Long |
N/A |
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$36.00 |
$51.24 |
42.33% |
5.00% |
Likely takeover target in consolidating
industry. |
MGM |
Long |
N/A |
|
$11.80 |
$11.83 |
0.25% |
5.00% |
To be bought for $12.00. |
RIGS |
Long |
0.97% |
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$20.75 |
$20.85 |
0.48% |
5.00% |
PNC to buy for roughly $25 per share. |
TVL |
Long |
N/A |
|
$20.02 |
$18.40 |
-8.09% |
5.00% |
Takeover target. Look for $26-$27. |
MGM |
Long |
N/A |
|
$11.45 |
$11.83 |
3.32% |
8.00% |
To be bought for $12.00. |
Cash |
N/A |
N/A |
N/A |
N/A |
N/A |
N/A |
24.00% |
Waiting for opportunities |
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UMSY |
Short |
N/A |
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$5.30 |
$2.35 |
55.66% |
10.00% |
Company a delisting in the making. Target is below $1.00 |
USCA |
Short |
N/A |
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$5.00 |
$5.65 |
-13.00% |
5.00% |
Trading suspended by SEC until November
10th. |
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Symbol |
Action |
Date Bought |
Date Sold |
Entry Price |
Exit Price |
Return (w/o divs) |
% of Portfolio |
Current Advice (Latest updates in blue) |
AWE |
Long |
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$10.50 |
$15.00 |
42.86% |
12.00% |
Acquired for $15.00 per share |
TZOO |
Short |
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$55.00 |
$77.00 |
-40.00% |
5.00% |
Continues to feel the short squeeze. |
GREY |
Long |
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$950.00 |
$1000 |
5.26% |
5.00% |
Achieved our $1000 target on October 4th. |
WHIS |
Short |
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$5.90 |
$2.75 |
53.39% |
5.00% |
Dipped below $2.75 on July 13th. |
AMTY |
Short |
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$12.00 |
$7.99 |
33.42% |
5.00% |
Dipped below $8.00 on July 9th. |
ABIX |
Short |
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$9.83 |
$3.75 |
61.85% |
5.00% |
Had to take quick gain handed to us by daytraders. |
IMM |
Short |
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$22.50 |
$14.10 |
37.33% |
10.00% |
Will look to short around $20.00 again. |
VAPH |
Short |
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$8.22 |
$0.65 |
92.09% |
8.00% |
Company has little chance of survival. |
EDS |
Long |
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$20.25 |
$20.01 |
-1.19% |
10.00% |
A small winner after selling calls in
consecutive months. |
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Symbol |
Action |
Yield |
Date Bought |
Entry Price |
Current Price |
Return (w/o divs) |
% of Portfolio |
Current Advice (Latest updates in blue) |
MGM |
Long |
1.90% |
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$12.00 |
$11.83 |
-1.42% |
15.00% |
To be bought for $12.00. |
PFE |
Long |
1.90% |
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$35.25 |
$28.84 |
-18.18% |
8.00% |
Core LT healthcare holding. Added 2% more on |
EMC |
Long |
N/A |
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$10.25 |
$13.02 |
27.02% |
8.00% |
Core LT technology holding. Buy below $11.00. |
COSWF |
Long |
4.00% |
N/A |
N/A |
$48.43 |
N/A |
8.00% |
Core LT energy holding. Buy below $47.00. |
TRP |
Long |
4.20% |
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$22.70 |
$22.70 |
0.00% |
5.00% |
Core LT energy holding. Buy below $23.00. |
SGP |
Long |
1.32% |
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$16.30 |
$18.58 |
13.99% |
5.00% |
Turnaround/Takeover candidate. Buy below $17.00. |
NXTL |
Long |
N/A |
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$23.70 |
$27.66 |
16.71% |
5.00% |
Takeover candidate and growth story. Buy below $24.00. |
SU |
Long |
0.72% |
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$22.94 |
$33.72 |
46.99% |
5.00% |
Core LT energy holding. Buy below $30.00. |
WMB |
Long |
0.38% |
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$9.20 |
$13.33 |
44.89% |
5.00% |
Turnaround story in energy industry. Buy below $10.00. |
MRO |
Long |
2.95% |
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$29.78 |
$38.50 |
29.28% |
5.00% |
Core LT energy holding. Buy below $30.00. |
MO |
Long |
5.46% |
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$34.00 |
$54.02 |
58.88% |
5.00% |
We may look to add to position in the high
40's. |
RAI |
Long |
6.54% |
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$36.25 |
$70.51 |
94.51% |
5.00% |
Hold. |
TPL |
Long |
0.79% |
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$63.20 |
$94.40 |
49.37% |
5.00% |
Hold.
Stock ran away from us. |
CP |
Long |
2.00% |
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$22.40 |
$28.89 |
28.97% |
5.00% |
Buy at $23.00 or less for LT appreciation. |
PFE |
Long |
1.90% |
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$28.00 |
$28.84 |
3.00% |
2.00% |
Core LT healthcare holding. Added 2% |
Cash |
N/A |
N/A |
N/A |
N/A |
N/A |
N/A |
-6.00% |
We are now on 6% margin after TRP buy. Await COSWF. |
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USCA |
Short |
N/A |
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$5.00 |
$5.65 |
-13.00% |
5.00% |
Trading suspended by SEC until November
10th. |
AMR |
Short |
N/A |
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$19.00 |
$9.04 |
52.42% |
5.00% |
Stay short as fuel costs skyrocket. |
UMSY |
Short |
N/A |
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$5.30 |
$2.35 |
55.66% |
5.00% |
Company a delisting in the making. Target is
below $1.00. |
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Symbol |
Action |
Date Bought |
Date Sold |
Entry Price |
Exit Price |
Return (w/o divs) |
% of Portfolio |
Current Advice (Latest updates in blue) |
AWE |
Long |
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$9.90 |
$15.00 |
49.49% |
5.00% |
Acquired for $15.00 per share |
TZOO |
Short |
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$55.00 |
$77.00 |
-40.00% |
5.00% |
Continues to feel the short squeeze. |
UAIRQ |
Short |
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$5.30 |
$0.71 |
86.60% |
5.00% |
Probably as low as it will trade for awhile. |
IMM |
Short |
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$22.50 |
$9.15 |
59.33% |
5.00% |
Continues lower now at $8.80. |
VAPH |
Short |
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$8.22 |
$0.65 |
92.09% |
8.00% |
Company has little chance of survival. |
UALAQ |
Short |
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$18.00 |
$1.00 |
94.44% |
5.00% |
Finally traded at our buy-in price. |
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Date
last updated: |
11/5/04 |
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Symbol |
Action |
Yield |
Date Bought |
Entry Price |
Current Price |
Return (w/o divs) |
% of Portfolio |
Current Advice (Latest updates in blue) |
MGM |
Long |
N/A |
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$12.00 |
$11.83 |
-1.42% |
20.00% |
To be bought for $12.00. |
MGM |
Long |
N/A |
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$12.30 |
$11.83 |
-3.82% |
15.00% |
To be bought for $12.00. |
EMC |
Long |
N/A |
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$10.25 |
$13.03 |
27.12% |
15.00% |
Reported strong earnings on October 19th. |
MGM |
Long |
N/A |
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$11.80 |
$11.83 |
0.25% |
10.00% |
To be bought for $12.00. |
RIGS |
Long |
0.97% |
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$20.75 |
$20.86 |
0.53% |
5.00% |
PNC to buy for roughly $25 per share. |
TVL |
Long |
N/A |
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$20.02 |
$18.38 |
-8.19% |
5.00% |
Takeover target.
Look for $26-$27. |
Cash |
N/A |
N/A |
N/A |
N/A |
N/A |
N/A |
10.00% |
Waiting for opportunities. |
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USCA |
Short |
N/A |
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$4.71 |
$5.65 |
-19.96% |
10.00% |
Trading suspended by SEC until November
10th. |
UMSY |
Short |
N/A |
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$5.30 |
$2.35 |
55.66% |
10.00% |
Company a delisting in the making. Target is $1.00 |
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Symbol |
Action |
Date Bought |
Date Sold |
Entry Price |
Exit Price |
Return (w/o divs) |
% of Portfolio |
Current Advice (Latest updates in blue) |
AWE |
Long |
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$9.90 |
$15.00 |
51.52% |
20.00% |
Acquired for $15.00 per share |
TZOO |
Short |
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$60.00 |
$77.00 |
-28.33% |
10.00% |
Continues to feel the short squeeze. |
AWE |
Short |
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$9.90 |
$14.84 |
49.90% |
20.00% |
We chose to sell early to raise cash for
short sales. |
GREY |
Long |
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$950.00 |
$1000 |
5.26% |
5.00% |
Achieved our $1000 target on October 4th. |
ABIX |
Short |
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$9.83 |
$3.75 |
61.85% |
15.00% |
Had to take quick gain handed to us by daytraders. |
IMM |
Short |
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$22.50 |
$14.10 |
37.33% |
20.00% |
Will look to short around $20.00 again. |
VAPH |
Short |
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$8.22 |
$0.65 |
92.09% |
15.00% |
Company has little chance of survival. |