GlobalSpeculation.com
Because it does not make sense not to

So,

I’ve been overwhelmed due to unforseen circumstances (birthday, MBA BS, etc.). I’ve come across a couple interesting situations where I’d like to poll the audience (that’s you). Here goes.

I know that I don’t know. These are special situations where there may be some really easy money/huge gains.

——————————SITUATION 1 CIT———————————————————-

Good evening fellas. I’ve been doing this trade with multiple accounts today…As much as I could…I can now share the wealth with others.

This is the deal:
Buy CIT-A at $1.75 (current price)
We will get a MINIMUM of 4.4 shares of common per share of CIT-A, right? (I know its over 4.2, do the math yourself for exact #)…Maybe as high as 6 if the minimum bondholders tender. Let us assume 4.4.
$1.75 / 4.4 = $0.40 cents per share of common.
Sell 4.4 $1 Nov(or January) calls per CIT-A share bought. Current calls with bids: 0.35(Nov) and 0.40 (Jan).

Net effect? With January calls sold, we are buying the CIT-A for *FREE*. We pay like 4 cents with the November calls.

If company goes bankrupt? calls worthless, we break even.
If company does not go bankrupt and exchange works? Two cases:
a) Common above $1, we get $4.4 per CIT-A when call exercised. 4.4 / 1.75 = 250% gain in 2-3 months with ZERO risk.
b) Common below $1, calls expire worthless. We thus get (common-price * 4.4) / 1.75 percent in profit.

One thing with this deal: Selling naked calls can be expensive with regards to margin requirements. I had to sell MANY positions, the ones which were 100% margin requirement, to put as much into this trade as I could.

One further point:
Bankruptcy sucks with this scenario. You can easily ’spend’ a little of the guaranteed profit from the non-BK scenario and buy some Nov $1 puts. This easily gives you huge profit in BK or no-BK scenarios.

Enjoy the trade.

————————-SITUATION 2 – TMI ————————————————-

Warrants are basically rights to buy the stock at $5.5 until 10/2011. Their value is comprised like options of a time-premium and intrinsic-value.

Right now there is almost 0% chance the acquisition does not go through. What is unknown is how many IPO shareholders (roughly 10M shares) will choose to liquidate at $7.01, but the company has cash to pay the ones who do.

So the cash-after-acquisition will range from 20-25M and 100M. The share-count after acquisition will range from 23M to 33M or so.

For the company to make their 2009 performance-bonus of 1M shares, it needs a net income of 42M (15M in 1h 09 but second half is usually stronger). If it makes the 42M target, that means $1.8 EPS if 23M shares or $1.27 if 33M shares (but 100M cash balance, or $3 per share).

So the warrant to buy at $5.5 would be a P/E of 3 or 4.33 under those EPS numbers.

The fact is, just the TIME value of the warrants alone will be worth more than the current $0.40 level.

——————————————-SITUATION 3 EAR HearUSA + AARP = $90? ——————————–

estimates:

Profit margins 20/5, so they take 75% of their hearing aid revenues as gross profit.

Center operating expenses are $10M, which is currently equal to 1/2 their revenues.

Spun off helix for $23.1M

$63M market cap

Average hearing aid is $2000, so they are tracking about 40K a year

1/5 of people that can use hearing aids use them. (low estimate, age increases use up to ½)

50M of AARP potential buyers — 10M will likely use them, 500K in unit sales/year probably (5%)

500,000*$2000*0.5=$500M

50% profit margins (lower than 75% with AARP)

$500M in gross profit probably in the next 3 years.

Price per share: @ P/E of 8

$89.16

Time to call ear doctors and ask them what they think about AARP people and getting hearing aids.

Glen

——————-CT—————

forward P/E very low. most of their losses are from writing off their portfolio. looks like this could be more easy money if you can wait 5 years.

By Glen Bradford

Ready to go! I don’t see why I shouldn’t point out companies that are ‘Fired Up, Ready To Go’ as Obama would put it. I’ve got three Chinese companies that are heating up NBA Jam style. There are three parts to this madness. The first is that I need to believe that the risk of losing money is negligible in the long run. That is to say that they are so cheap right now, it doesn’t make sense not to own them as far as I can tell. The second is I want uplisting potential. Lastly, I want to be able to light the product produced on fire. Fire it up!

Puda Coal (PUDZ)  is a company I’ve covered several times as one that I felt would uplist. They are doing it tomorrow (Tuesday). They are currently a supplier of metallurgical coking coal in the PRC. Since I’ve covered them their ticker has changed from PUDC to PUDZ and is now changing to PUDA tomorrow. Why do I think they are Fired up? They’ve talked about consolidating 6 mines in Yuncheng City, they’re priced to shrink, and they are uplisting this week. Don’t forget that there is a coal mine consolidation party in that neck of the woods. It’s my belief that you’ll be lucky if you see these prices ever again as they are currently floating above $5 making them a candidate for mutual funds who likely can’t wait to get their grubby little fingers all over this value play.

Songzai International (SGZH) has a trailing P/E of 3.2 and is also engaged in coal production in the PRC. With 25% of their market capitalization in cash, some would argue it’s cheap. Combine that with their reported double in sales and net income year over year this last quarter. Note the results were unaudited. Currently Songzai trades at uplistable and mutual fund friendly prices. I think that’s where they are headed even though they’ve made no public statement. I would categorize this as a “no-brainer” because I think that it doesn’t take much of a braniac to figure out that they’re giving this away.

L&L Holdings (LLFH) gives off the distinguished aroma that I call uplist. Yes, they too are in the business of coal mining in the PRC. Do note that this is 100% personal speculation, but my instinct tells me that I’m hot on the trail. My instinct tells me that uplisting is coming in the very near future. Who knows? What I do know is that they appear to be an acquisition machine in the perfect market to acquire. They are priced to stagnate and grew revenues 70% last year. They are cents away from being mutual fund friendly.

In my opinion, the trick to buying undervalued companies is buying them before everyone else “realizes what’s going on.” It’s kind of like bargain shopping for sports cars — something you probably don’t do every day. Odds are that you don’t see a brand new Lamborghini or Ferrari for sale. But say that you do. Say that it’s priced at $10,000. Are going to wait for the next person to walk by or are you going to fire it up?

Disclaimer: Bradford was long Puda, Songzai and L&L at the time of publication.

bspm – i’m going with yes
jgbo – dilution, eek. http://investorshub.advfn.com/boards/read_msg.aspx?message_id=41680778
glf – no – ari5000 – not enough upside based on what i can tell from 10 seconds of looking at p/s ratio, and chart.
liwa – $2.4 cash per share $1.24 EPS per share price $6.25, triple digit growth, just IPOed. i’m in.
EMIS – no, no revs

JNGW – Completed acquisition that will add more than $2 million net income.
cgdi – http://investorshub.advfn.com/boards/read_msg.aspx?message_id=40542859 yes
gsl – good shipper
AMGY – low risk net cash, makes money. what’s up? no trading volume.
CAGM – i say yes. don’t confuse the subsidary CHFY with the stock. looks like a net cash/growth play for little downside risk and definate upside.
GRRF – hmm, maybe would need to understand net income applicable to ADR
gmn – net cash play in canada
TCM – maybe. need to understand adrs

Here’s the mail it never fails it makes me want to wag my tail … MAIL! (From Blue’s Clues)

———————————————————————-

Fernando,

It’s difficult to rank these as they are mostly my top picks as well. For me, it’s a mental matrix of risk which mostly results from “turn up the heat” plays.. like ccgy, or xing, or pudz.. and then there is straight upside potential, where companies like myst, ccgy, lpih, and chme dominate. and then there are the no brainers, sgzh, opai, ltus,  cnam, cdbt, (kind of chcg)

-Glen

Hey Glen,

I was wondering if I could get your 1-10 ranking for my list, like you did for that guy in your blog. Thanks! (Some of these are fernandos notes, my notes are marked with a -G

As you mentioned, I did do a quick and dirty “tier” system of the stocks I follow. My opinion on these stocks changes frequently, so it is nothing but a ballpark estimate… I’ll throw out my list, would appreciate your own rankings on them. My tier1 and tier2 are tough to distinguish, I like all of them and stocks move between the tiers frequently for me.

Tier 1:

LPIH (own) – 8 Largest position I have, bought more at $1.05 on latest pullback.

LLFH (own) – 3 Somewhat expensive. I could easily list this as Tier 2 based on price, but I like the management and know they will be uplisting to AMEX very very soon. Once that catalyst is gone, this will likely be tier 2 for me.

CCGY (own) 8

Tier 2:

SKBI (own) 9

CYXN (own) – 8 I love their remote-diagnostic thing. (i think that my article of doubling outstading shares is WRONG. there is no way, i re-read their convertibles… things are looking Significatnly better than my lazy worst case – g)

LTUS (own) 9 – (expanding with working capital, brilliant! -g)

SGZH (own) 9 (cheap + cash + growth + coal over there is consolidating, see pudz/puda/pudc – g)

CNAM (own) 9 – (trading at less than the $ value of loans they’ve been granted recently. For a chinese microcap this is RETARDED – g)

CNOA (own) 8 (hoping that the 3rd and 4th quarters are still big and they didnt spin off that business segment – g)

CDBT (own) 8 (needs to reverse split, pick up shareholders and uplist – g)

JGBO (own) 7 (has a problem with dilution because its cash is locked up – g)

CPQQ (own) – 6 Tier2 at current price of around $1. Used to be Tier 3.

Tier 3:

PUDZ 6 (Own a little, was tier2/tier3 for me at $4. Uplisted and spiked) SGTI (own) MYST – Waiting for R/S and to see what direction restructuring takes.

Could easily become Tier2.

CGDI – (just rallied like 40%.. sucks cause i was trying to fill 100,000 shares at .28 only got 10,000 -G so i’m buying cheap, tell geoinvesting to stop picking up my stocks a month after i find them. when are they going to hire me to “find their stocks?”)

WKBT – 7 (a lot of people are excited about this, i must just be missing something)

CHCG – 8 (Its trading at almost cash-on-hand) OPAI – 7 (own a little) GFRE – 5 CHIO – 7 (own) CBPO – 8 RINO – 4 CHME – 8 XING – 5(own) – Speculative but trading below cash-on-hand.

Speculative Watch list: CHFI and JADA. Not sure where i’d rank them.”

-Fernando

———————————————————————–

EROC – should outperform S&P500. should have clicked this instead of UNG for outperform on motley fool caps – from plan maestro see below -glen

Glenn, this is a series with comments to EROC. At current prices the potential I would say is 4x-5x not the 10x you are looking for. However, there are not many of those anymore in the US… China maybe I bought in the low 3s.

Intro: http://messages.finance.yahoo.com/Business_%26_Finance/Investments/Stocks_%28A_to_Z%29/Stocks_E/threadview?bn=69301&tid=1641&mid=1641

Hedges and Commodity Risk
http://messages.finance.yahoo.com/Business_%26_Finance/Investments/Stocks_%28A_to_Z%29/Stocks_E/threadview?bn=69301&tid=3281&mid=3334

Haynesville
http://messages.finance.yahoo.com/Stocks_%28A_to_Z%29/Stocks_E/threadview?m=tm&bn=69301&tid=2041&mid=2080&tof=-1&rt=1&frt=2&off=1

Recent Proposal
http://messages.finance.yahoo.com/Stocks_%28A_to_Z%29/Stocks_E/threadview?m=tm&bn=69301&tid=3726&mid=3733&tof=6&rt=1&frt=2&off=1

Very Conservative Valuation
http://messages.finance.yahoo.com/Stocks_%28A_to_Z%29/Stocks_E/threadview?m=tm&bn=69301&tid=3726&mid=3747&tof=6&rt=1&frt=2&off=1

———————————————————

LS,

It sounds to me like you are stuck in the land of opportunity cost.

The only service I provide is private asset management. Everything else I do is for fun (at least for now).

Remember to not forget that when a company goes up in price, it becomes more risky to buy and less attractive to acquire.

Conseco should be $10+. I haven’t stayed up to date on the Citigroup dilution story. http://www.globalspeculation.com/archives/223

In Seinfeld and in life, just because the other lanes of traffic appear to be moving faster does not mean that you will get ahead by changing lanes at any given point in time. The trick is doing your best to anticipate which lanes are going to be going the fastest in the long haul.

If your objective is to buy back into CNO, do it immediately. Above $5, the mutual funds will carry it to $10. That’s what dumb money does. Dumb money loves to pay what things are worth. If Citigroup ever breaks $5, expect to see it run. That’s my sentiment. I don’t own enough Citigroup to look deeper. There is so much easy money out there that I’m already invested in.

Good Luck

Best regards,

Glen Bradford

CEO ARM Holdings LLC

TheStreet.com/Stockpickr.com/Seekingalpha.com

www.glenbradford.com

Disclaimer: Anything above is not advertising or advice to buy or sell securities or do anything. Any stocks or companies or legal entities mentioned Glen may own at any time and sell for any reason without warning. Glen maintains that following his advice will likely lead you to bankruptcy. Glen believes that he has no idea what he is doing and you shouldn’t follow him. Anything that he says is his best guess for what may be happening and is likely to be wrong. He strongly advises that you question why you even bother listening to him. The websites that he may list or manage also are a source of unreliable information and should not be taken seriously. This is not investment advice.

Frm:
Sent: Thursday, September 17, 2009 4:26 PM
To: Bradford, Glen Richard
Subject: (no subject)

Hi Glenn

I sold CNO around 3.21 and bought C at around 4.14.

CNO has almost doubles since then, and C just about the same.

I really liked CNO, and I want to get back in however I will be buying back only half the shares.

I need your guidance if there is any other good stocks that I can get into in the meantime: my objective is to buy back into CNO at least the same amount of shares of CNO.

I would gladly pay for your service. You are a professional and I need your help.

Thanks

LS

——————————————————–

Hey Dustin,

This is one of the better lists.

Great Stuff, I’ll just do my best to ballpark rank them 1-10 quick. 10 is the best. Do note that my sentiment changes all the time and I own most of these. Fernando put out a list recently somewhere with his 3 tiers of companies and ranks. I believe some post on finance.yahoo.com — if he’s reading this, feel free to comment at the bottom with a link of that list.

In the past, I’ve given mine out. The issue with that is that when collaborating, it’s best to collaborate with people that aren’t biased to what you already told them — because you get two independent opinions. I was having a lot of people just give me my own information back, wasn’t helping me at all. And then I don’t mind when people make a ton of money off my ideas, that’s what they are there for.

Best regards,

Glen Bradford

CEO ARM Holdings LLC

TheStreet.com/Stockpickr.com/Seekingalpha.com

www.glenbradford.com

www.armholdingsllc.com

Disclaimer: Anything above (or below in this case) is not advertising or advice to buy or sell securities or do anything. Any stocks or companies or legal entities mentioned Glen may own at any time and sell for any reason without warning. Glen maintains that following his advice will likely lead you to bankruptcy. Glen believes that he has no idea what he is doing and you shouldn’t follow him. Anything that he says is his best guess for what may be happening and is likely to be wrong. He strongly advises that you question why you even bother listening to him. The websites that he may list or manage also are a source of unreliable information and should not be taken seriously. This is not investment advice.

From: Dustin [mailto:dustin
Sent: Wednesday, September 16, 2009 8:20 PM
To: Bradford, Glen Richard
Subject: Another question – quick one

Hey man,

Sorry for bugging you again – quick question:

I’ve always been an advocate of “less is more” in a portfolio. Basically, own fewer, better companies rather than diversifying over several (which I know is your philosophy as well). However, I find myself in a difficult situation due to all the great bargains out there. I have about 14-17 stocks that I really like, but I’d like to narrow it down to 8-10, maybe less. My question is, how to do that? Now, I definitely do my DD on all my stocks, but I really do like them all and their growth potential. After I research my stocks, I usually look at what you have to say about them since I consider you a great investor. So Glen, when you have to narrow down a list of stocks, how do you do it? I lean towards the stocks that are in industries set to grow rapidly, but I can’t ignore some of the valuations on the others.

Here are my following stocks. Some I already own.

CHFI – 5
CNOA – 8 (however, I feel like I could get exposure to this by investing in CHFI)
LTUS – 8
PUDZ – 8
OPAI – 8
CEU – 3
SKBI – 7
CNAM – 9
LLFH – 4
CPQQ – 6
CPHI – 3
RINO – 3
CMFO – 3
CHGY – I like this one and am way optimistic – 7
SGZH – 9
CCGY – 7
LIWA – 5
NEP  - 4(own)
CHIO – 5 (own)
MYST  - 6(own)
LPIH – 8(own)

Whenever you get a chance, shoot me an e-mail. I definitely appreciate all that you do on your blog and other websites.

Dustin

My college roommate, Mazen Abdu (765-543-8201), called me the other day and has 250 tons of this Iron Ore powder form (described in attached document) in double plastic bags stored inside containers in Kuwait.

My understanding is that this kind of Iron Ore is used for:

1. Anti rusting paints (mostly primers in the paint industry).

2. Tiles and ceramics for pools, as it makes them difficult to break (ceramic industry).

3. Protection of oil pipes before laying them in saltwater (chemical processing in the oil industry in general).

I also understand that the market value is above $300 C&F per ton. We are looking for a serious buyer and are looking to sell immediately. Prices are highly negotiable.

http://glenbradford.com/files/Storage/Iron%20Ore.doc

I’ve run out of stocks to look at, but am fine with the ones I have for now.

glf – no – ari5000 – not enough upside based on what i can tell from 10 seconds of looking at p/s ratio, and chart.

lpiw – could be, any big deals going forward?, probably an easy triple, maybe more depending on if there is a double or triple in the works (fundies)

www.glenbradford.com hop on my email list if you like my ideas.

UPDATE: I threw together an excel sheet that illustrates my viewpoint is mutually beneficial for all parties involved.

http://glenbradford.com/files/Stocks/LPIH.xls

Hey, don’t email these guys. call them. they’ll never reply to your emails.

For more information, please contact:

At the Company:
Jim Crane, Chief Financial Officer
Tel:   +1-617-209-4199 (U.S. Office)
+86-152-0120-8012 (P.R.C. Cell)

Investor Relations:
Dave Gentry
RedChip Companies, Inc.
Tel:   +1-407-644-4256 x104
Email: info@redchip.com
Web:  http://www.RedChip.com

anyway. let me know what you find out via email. here’s my take for the record. it’s story time.

a couple months ago (back when lpih was around 80 cents):
a redchip insider informed me that longwei had leaked to them that they intend to understate everything and say that this is going to merely double revenues and net income. I asked how they were going to finance this, i was informed around 15M shares of dilution once LPIH was above $1

so i was like, heck yes. i can handle 105M shares outstanding, putting earnings at about 80 cents based on ballpark calculations. and seemingly triple digit growth.

how has my viewpoint changed since then?

take a look at the slides, worst case scenerio outstanding shares are now 122M.

Note that their 2010 estimates are only running the new plant at 60% of capacity for half the year. LMAO. that’s chump-tastic.. because most people don’t know what that means.

in other words, you take the $200M in revenues ballpark going forward, cut it in half (half the year), and then take 60% of that (to be ultra conservative because it’s “starting up”), and add that to your baseline of 2009.

So, who cares about that crap. The bottom line is their estimates are pulling $400M in top line. and we’ve already established that these estimates are retardedly conservative. My 2011 estimates are $500M+ in revs. Tripling would have been about $600M.

ok now what, their margins are probably increasing, so i’d chalk up your net income margin at 13%

now, a quick class in “incentives” — their ceo and treasurer own 69M shares, ballparking 84% of the company. Dilute this and you have 76% o the company.

I would imagine that they don’t mind diluting if it means growing their empire as long as they continue to control the company. So now they can go up to 138M shares and still call the shots. not only that, but one of the best ways to get more shareholders is to sell them some stock. in order to uplist, you need more shareholders, with more stock. so this is in line with the company uplisting.

again, this is worst case scenerio.

anyway, 500M revenues at 13% net income margin puts them at $65M net income on what i think is probably going to be 110M shares outstanding, as they probably overstated the dilution — but who knows.

that puts normalized going forward eps at 60 cents a share.
if they full out triple, that’s 70 cents a share.

if they just double, 50 cents a share.

if they increase their o/s, double their numbers, and reverse split 5:1, they can uplist within the next year, and odds are that with all this free cash flow they will open up another station somewhere, hopefully without the additional financing help.

my absolute worst case scenerio puts earnings at 40 cents a share. at $1.50, that’s a P/E of less than 4 on a company set that just more than doubled, has strong cash flow, could uplist in the next year, and just spooked the heck out of investors by understating everything to the extreme imo.

if i had any advice for management, it would be the following.

dilute to 110 million shares outstanding using some sort of preferred/convertibles that pay 10% over the life of them and convert at $1.50; if you need access to large investors to finance this, contact redchip. actually, the best way to structure this is to back it with the CEO and treasurer’s shares. put up 5M of each of your shares to back this financing to show how strongly you feel about the company. if you do that, your net worth will more than double in the next year.

so, in that case you’d both be sitting on 30M shares still. 60M total, you could dilute to maybe 100M, back it with debt financing, and away you go. i know that in china, loans are given with respect to assets, not cash flow, and it’s pretty obvious that this is an ASSET investment.

good luck

http://www.ritholtz.com/blog/2009/09/liquiditysentiment-review/

http://oldprof.typepad.com/a_dash_of_insight/2009/09/fighting-the-fundamentals.html

vstm – ticker? – got something like this over the phone, miswrote the ticker
bstm – ticker?
cage or ctec – too expensive for me, reverse split 4:1 makes it confusing, used to be 25M shares outstanding, FP/E around 8 at $13
rner – no, not big enough
pfgy – hmmm. can’t decide. so i bought some.
rino – yeah, but it’s more of a long term. i dont own it.
hoggs – can’t invest in london. upside of 300%+
hqs – no
llfh – sure. why not, just not good enough for me anymore.
Have you looked at ETLT?  Looks like a scam but do you have any insight?
ETLT – no
cnwi – no. got an email pumping it

last thoughts:

understand incentives
when it comes to operating margins:
banks are to interest rates as the US government is to inflation

banks make more money with low interest rates because their spread is higher, meaning that the lower interest rates go, the larger the difference is between the rates at which they borrow and loan. as this difference increases, their profits increase.

when it comes to the government. the lower they can state inflation, the less they have to increment the wages of their employees, as a lot of salaries are adjusted to stay in line with inflation numbers. thus, you have the incentive to understate inflation.

Potential Investor,

Great to hear from you. Yeah, the age thing definitely is one of the things that I always seem to be up against since most of my peers have a tendency to be predictably unreliable and have a grace of entitlement. My dad is an adjunct business professor and I hear all sorts of stories.

I’ve heard of Epic Advisors before, I believe through covestor; actually. His strategy makes a lot of sense to me and I agree that stock trading isn’t the correct frame of reference, but if you look at it from a business ownership perspective — that’s the way to go.

Off to the questions:

1) Do you have some sort of chart/history of trades made that shows P/L in the last two yrs or so? Something that shows actual profit/loss and preferably the % of times you were right (and wrong), etc.

No. I had been studying stocks loosely and building a mental framework for probably the past 10 years and in the past 4 gotten really serious about it. I found a mentor that was annualizing 25%+ and at the worst of the market crash was still annualizing 15%. I wanted to see companies the same way he and other successful investors do. I’ve built a loose history of Print Screens that show that over the last year I made money in a down market June to June. At the worst, I was down about 60% in a market that was down about 40%. I have been advised to make charts and calculate IRR’s but have been too busy analyzing companies to purchase.

I would say that for all of my investors I have made money for in the last year but I just picked up a very large new client and am down 6% in the last 2 weeks. So, I can’t say it at the moment

I focus on not losing money. You might be interested in some of my lecture material since you are a teacher yourself:

http://www.youtube.com/user/globalspeculation

2) When you trade do you normally use Call Options or does it depend on the stock?

a) What determines when you use a Call Option?

b) What is the percentage of investments do you make using Options?

c) Do you ever use Covered Call Options? If so, when?

This last year I was buying call options as the market was crashing starting around mid-October (10% of my portfolio, 2010 and 2011 leaps). I also bought a round of call options on bank stocks mid-April (10% of my portfolio expiring around December 2009, AIG, BAC, C, HBAN, FITB).

What did I learn? Don’t buy call options. Call options are expensive during a market crash and cannot be justified because the market takes a while to re-value companies correctly, if it ever does. It is a lot easier to just buy and hold the most undervalued companies in the world and wait for them not to be the most undervalued companies in the world, and at that point in time, switch.

I never plan on using covered calls.

3) Do you short stocks ever? How often?

I have no experience shorting anything but US-Treasuries. I recommended shorting them in January 1, 2009 as a way to beat the market in 2009. At this point, I understand that it makes sense to short overvalued companies when things are starting to head south in the underlying fundamentals, but otherwise my stance is long.

4) Do you use margin when you manage accounts?…Or, would you use margin when you managed my account?

I use margin in a couple of my accounts, but I started using it around April and just haven’t taken it off the table. I don’t really like to be heavily leveraged. I’d say 1 of my accounts is $1.6M and has $123K of margin. Another is maybe 0.001% margined (a commission fee).

5) To get a better understanding of what you aim for when you choose a stock I glanced over your analysis of each stock and at times you comment that the stock will double. To me doubling sounds like a big deal. What time period do you have in mind when you comment that a stock will/may double? It seems like you are implying your investments will more than double.

As far as the time frame, not sure. Just because a company is intrinsically worth more than double what the current price is does not mean that it will ever increase in value. That’s why I do my best to own growing companies. As long as the company is growing faster than the market and is priced cheaper than the market, I can confidently say that in the long run, people will discover it and bid it’s price above the market price for that rate of growth.

6) What is the average time frame you see one of your more than double returns on a stock pick? Months, years?

I make decisions with a 5-year time horizon. That said, I’ve had a couple 10-baggers in the last year and proceeded to take some off the table in those cases to roll it into other more undervalued companies. I don’t look for short term gains as most of my investors are in the highest tax bracket and I am perfectly fine rolling into long-term capital gains. That said, in one of my accounts I get to make $3M with no tax consequences and intend to be more aggressive as far as reallocation goes. A couple of my investors expect them and try to get me to play favorites and swing trade some of these companies. That’s just a lot of work for me that doesn’t really justifiably add any significant value to what I do.

I will say that I don’t look for doubles, especially not now. There are so much bigger, easier opportunities out there that a mere double is just not enough to warrant my investment dollars.

I do occasionally arbitrage though. I run across companies that are selling less than cash-total liabilities. Meaning that theoretically, you can buy the company at the current price, take the cash and pay off the liabilities and keep the leftover cash and assets risk free.

Best regards,

Glen Bradford

CEO ARM Holdings LLC

TheStreet.com/Stockpickr.com/Seekingalpha.com

www.glenbradford.com

www.armholdingsllc.com

—–Original Message—–

From: Potential Investor

Sent: Monday, September 07, 2009 5:10 PM

To: Bradford, Glen Richard

Subject: ARM Holdings

Hi Glen,

I have been looking over your blog, resume, etc. and I am most interested in possibly becoming a customer of yours sometime in the future. I am just looking for more information about what I am potentially getting into. Although when it comes down to it shouldn’t really be an issue, the age thing makes me pause…22 seems really young to me. I am an instructor at a large university, so it makes me think that if I were to let you handle my money, to some degree it would be like me letting one of my students handle it since I teach students who are roughly your age. However, at the end of the day I just want my money to be well taken care of, so if you could do that, I wouldn’t have a problem handing you the reins over to you. I do have a few questions I was hoping you could shed some light on so I could get a feel for how you trade and if it fits into my comfort level. I am currently with EPIC Advisors (http://www.covestor.com/mbr/epicadv), and Sean has  been doing a great job taking care of me. With him, customer service is topnotch. He is great about communication and answering questions. He is the guy you have to steal me away from to get my business. Here are some questions I was hoping you could answer for me as I weigh my options and while I keep in mind the way Sean invests on my behalf:

1) Do you have some sort of chart/history of trades made that shows P/L in the last two yrs or so? Something that shows actual profit/loss and preferably the % of times you were right (and wrong), etc.

2) When you trade do you normally use Call Options or does it depend on the stock?

a) What determines when you use a Call Option?

b) What is the percentage of investments do you make using Options?

c) Do you ever use Covered Call Options? If so, when?

3) Do you short stocks ever? How often?

4) Do you use margin when you manage accounts?…Or, would you use margin when you managed my account?

5) To get a better understanding of what you aim for when you choose a stock I glanced over your analysis of each stock and at times you comment that the stock will double. To me doubling sounds like a big deal. What time period do you have in mind when you comment that a stock will/may double? It seems like you are implying your investments will more than double.

6) What is the average time frame you see one of your more than double returns on a stock pick? Months, years?

Well, I will leave you with those questions for now. If your answers are what I think they will be and my comfort level to transfer my funds to your control is in the green, I look forward to exploring doing business with you in the future.

Thanks for taking the time to answer my questions. I look forward to hearing back from you soon.

Peace,

Potential Investor

The trick to making a lot of money in the stock market with the least amount of personal effort in my opinion results from the ability to own parts of underpriced small companies as they transform to larger companies. Every year, Rodman and Renshaw hosts an Annual Global Investment Conference. This year is no different and it’s going down Sept. 09- 11, 2009 at the New York Palace Hotel in NYC. Why should you care? You should care because the most undervalued opportunities in the world stay that way until people find out about them and bid up the price. It is my belief that this conference has enough to make it worth your while.

So, there you go. If you know anything about natural gas shoot me your ideas.

Provocation:

you’re in way over your head. you’re going to lose a lot of people a lot of money. if you can live with that, fine, but don’t be a shill. you seem too smart for that.

tim hanson

I wasn’t sure how to respond to this so I outsourced the response:

Wow, he sure gave you a clear, well thought out argument for why your investment methodology will lose people money, huh? Funny that it is coming from someone at the Motley Fool, I wonder if he is from the Global Gains segment.

The way I would respond to an email like that is to either ignore it completely…Or say something like this:

I believe in my investment strategy. It has worked for me, it has certainly given me greater average returns than any service at Motley Fool would have. If I lose money for people who invest with me, which is always a risk for anyone in the stock market, I will also be losing my own money. I do not believe this will happen as I am a strong believer in the potential of China. As China companies gain greater acceptance in the US, I believe their P/E multiples will expand strongly. Now is the time to exploit this ‘China Hesitation’ among the US investor-class and get into this segment before it becomes flavor-of-the-month. The China-exposure is the greatest risk anyone faces when they invest with me, as I diversify my positions well among the China-stocks. That is a risk they know and choose to take for themselves, I will not take responsibility for them choosing that exposure with putting money at my disposal.

An article by your fan, Tim Hanson:

http://www.themoneytimes.com/featured/20090905/buying-opportunity-you-wont-want-miss-id-1082657.html

Weird how he sent you an email like that when he is pumping companies like YONG and CMFO. Obviously he is ok with the China risk.

CMFO is a nice company, so no complaints there. Just too pricey for me.

If his objection was not to your China exposure, is it due to the specific China picks? There is always the risk of ’scams’ in these China companies, but many of the names we both like seem fairly solid and clean-cut.

-Fernando

———————————–

Anyway, I figured the least I could do is analyze stocks he owns:

http://boards.fool.com/Profile.asp?uid=214846910

abb – no, not enough upside, at most a double in 2 years

amx – not sure, not interested, fair price

aob- hmm. not bad. looks like they cut their dilutionary ambilical cord, i still own call options on this 2011

bbbb – overpriced, i hate this software as a student, expect some web2.0 stuff to replace it
bbsi – at most will double, not interested
brk-b – haha, who owns berkshire and hathaway, i just sold it out of one of my new investors accounts, paying the buffett premium are we?
bsv – short term bond? this is a terrible investment. I advised shorting US-T’s in january (TBT) and made more than this will ever make.
cfx – nice chart, nah
cmfo – i believe i’ve expressed interest in this one back in marchish.. some guy from NYC raised my awareness on it then. good but not great. definately a doubler
cmg.b – as much as i like chipotle, no. too expensive
cresy – wow. what’s with the explosive groth and suck share price?, could be a 3 bagger. would have to research more
dhil – no. way expensive. own better for less.
dwsn – i rec’d this one back when i started on seekingalpha. should double, but not enough for me.
esgr – no clue, not enough upside for me.
faf – no
fhco – female health? cool. but not with my investment dollars; pricey
fmx – no clue
hdb – nah
iaac – looks interesting, no clue though, but if you research, could double, looks good at first glance
mmm – no
mpel – prolly not. no clue though
nvs – too expensive
pm – loves the smokes ( i don’t smoke) but buy ckgt instead
praa – hmm. expensive
oxps – i use etrade. but i dont like oxps. wayy expensive
ushs – if they can do better than break even. worth looking into. but their profit margins stink
wti – could do some serious upside damage, maybe 5 bags, natty gas is about to bottom. or has. heads up.
wynn – too expensive for me.
yong – is this the old yuhee, ygii one? or the one that raises chicken eggs and then sells them? this should definately double.

some more:

akyi – pink, nah
csgh – yeah, duh
ckgt – yeah, screw the whole ciggy thing, this is still a yes (whatever people on boards are griping about… some ciggy thing. ignore them. it’s going to happen. it could be huge. and it’s very cheap.
apwr – nah

Still have no idea how to embed youtube video

mtpr – no clue. absolutely none. it’s a pink, the share structure is iffy, and growth appears huge. I gave up.
SLNX – no – recieved spam emails on them, so someone is pumping
——————————————————————-
I had to send an unfortunate email to potential shareholders recently.
Management at ———- has decided not to allow me to manage your self-directed IRA.

It could be for a variety of reasons, most of which I can guess:

1.    I’m 22.
2.    I buy the most undervalued companies in the world.

That about sums it up. Unfortunately things don’t always work out as anticipated — this is one of those times. What they allowed my hedge fund mentor to do with virtually the exact same contract they will not allow me to do — and there you have it.
———————————————————————-
Close out this Mammoth List:
hqs – nah
dustin ran a zacks screen:
sho – upside 400% ballpark, i’m not interested, but appears undervalued
acas – don’t like their semi-cash dividend, but this is undervalued imo
dac – i’m the club of people that believes in danaos
cbl – nah, malls and community centers!
fch – nah
aht – nah
prgn – seems like dac at face value. long term shipper?
rjet – dont want it, but is probably more likely to outperform than underperform if analysts are right
aer – run with the boeings! i dont want it. sounds good like gls. both should outperform
nrf – should outperform.
pei – not interested
mic – could double in the next 2 years, dont see more than that, so nah
shsh – no
wkbt – no but should triple
NCTY – nah, but may have a lot of upside
NED – should double
NTES – nah
NINE – no
NPD – nah
NTE – nah
NWCN – nah
NWD – not anymore, been out of this for a couple months
OLOU – nah
OPAI – yes
ORS – nah
PTR – nah
PWRD – nah
QKLS – nah
QXM – the qxm/xing dilemma, i play xing
RADA – nah
RHGP – nah
RINO – yes, joe says 100 bagger in several years
SCR – nah
SDTH – prolly an outperform, just dont care, 100% guess
SEED – nah
SFBE – wayyy to small
SGTI – yes
SGZH – yes
SHI – nah
SHND – ticker?
SHZ – nah
SIMO – nah but nice chart
SINA – nah
SKII – nah
SMI – nah
SNP – nah, close to fair value i think, no clue
SOHU – better than bidu. but nah. sell those shares i told you to buy at a profit
SNDA – nah
SNPY – nah
SOL – grew into a non-profit
SOLF – nah
SORL – no
SPFJ – nah
SPRD – nah
SSHZ – +90% today. NAH
SSRX – nah
STP – nah
STTA – nah
STV – should double
SUWG – nah
SUWN – nah
SYMX – no revs
SVA – nah +53% today
TAO – nah, real estate in china doubled. good to know.
TBV – no