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Thursday, August 19, 2004


Who gives a shit what I think? In all likelihood no one and I comfortable with that. I ll use this as a trading/research journal as well as posting reviews of bars, joints,taverns and eateries that I come across just for the hell of it. Perhaps when induced to think overly deep thoughts,inspired by generous helpings of the illustrious grouse, I shall record them here for later see just how how stupid my great idea sounds when not aided by liquid self awareness.

As for current market thoughts...the volatility trigger fired back on the 6th and it was also the 4th down day for the sp500. This signal has been bullish historically with excellent 10 and 20 day gains..I guestimate the near term range as 1050 low and 1120 high for next week or so..we re right in the middle soI remain fairly bullish right now,especially on semiconductors. Naturally this group has been battered like a trailer park wife with the insensitivity to allow the pbr supply to dwindle and has continued down in an orderly fashion. Im underwater in them in a big way but with a focus on companies that provide chips for consumer goods..pcs,dvds,autos,cell phones right down to washer/dryers, Im confident that is virtually impossible for the economy to recover without group participation. With the back to school and christmas electronics seasons looming, I think the recovery by year end will be dramatic,. They all trade at the very low end of historical price to book, price to sales etc and I m long cnxt and atml particularly heavy. In typical melvin fashion they have plunged well below my entry points. I also picked up shares of pep boys on the earnings miss sell off. trading near book and 11 times earnings the stock is cheap and has decent franchise value to drive future revenue gains....we re up nicely in a short period here, better than 11% in last week. Dog of the year remains krispy kreme..what the hell was I thinking? Im not sure there was much to the low carb field research shows a whole lot of don't eating fat people remain in the world and they do love their krispy kremes...the franchise amortization issue weighs on the price as well but even should they restate and change their accounting practices its not a huge hit to earnings. I was early by 7 and a half tons but at 12 times sp's conservative estimate and 1 times sales for a company still growing at better than 15% we hold for the eventual recovery. If we run out of fat people I ll consider selling.

In the arb/semi arb world, the king deal is trading poorly on news that ichan is picking up shares of mylan. there seems to be a thought that he will vote to block the deal. arbs getting bbq ed on this right now as myl up sharp and king not following along. I f deal falls apart I see king dropping some but not overly so..the female viagra type drug they are working on has blockbuster potential...women may not be enthused but I m willing to bet this stuff ends up in every medicine cabinet in America..Probably in the aspirin/midol bottle so she ll take them by mistake but their nonetheless. Im playing this one by just being outright long king shares. malan is getting ready to convert to a liquidating trust..with price at 5 and value near 6 worth buying if you can accept the illiquidity of the trust shares over next year or so.still think titan is likely to be taken over by another suitor in a year or less and continue to buy any dips in the stockselling jan puts on strong down days in stock not a terrible idea either..continue holding eidsy shares as near term offer extremely likely..wish I had bought a ton more when it moved down last month.We continue to bid for shares of perini pfd and carriage service pfd..both are dep in arrears on dividend and are improving their financial condition. Potential payoffs are large but they are hard to buy.....also fcfco now that they have paid off arrears and are rapidly improving financially, the 9.95 yield is attractive.

As usual I got bullish way too soon and have to accept the draw down that follows as sure as day follows night. I f I use the old mason hawkins trick of computing market price to assessed value I come up with a ludicrous figure of .40 on the dollar of of the lowest ever. i doubt the market will rally enough to capture the move back to full value, a move to more normal levels of .70 to .8 would be a double from here..I ll take half that. the wild card for performance right now is the westpoint stevens bonds...they trade anywhere around 3 cents to a nickel but sine I entered my position both ichan and whitmans have entered the position. Along with lampert at esl, already a holder, I m having a hard time seeing these 3 taking the kind of beating current prices represent. They cannot get paid without paying us so we either lose the last few pennies we have in it or it will be a monster performer from here..I suspect an equity payoff for us in the reororg and with no debt...this thing will print money. Time will tell but as always I am cautiously optimistic.

so if we have a model pertfolio it looks like this..

pcr pfd...32
westpoint bonds.....04

bidding for csvsp at 36..last 38

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