Saturday, January 24, 2009

01.26.09 Festival of Stocks

As the host of The Festival of Stocks for this week (the 125th week, mind you), I had the privilege to read a bunch of articles, and select the ones that were (in my opinion) the best... I was really happy to get a ton of submissions, and as a result, now have a few more blogs to add to my daily reading!

Here are the write ups that spoke to me the most. (-:

1) As I am a sucker for nano sized companies with a pile of cash and little debt... Old School Value wrote about an arbitrage situation with Emageon.

2) Magic Diligence takes a pass on Deluxe (the company that I get checks from!)

3) There was a great rating and review of online brokerages at Money Blue Book. Upon reading it, one brokerage really caught my attention. Zecco. There was a separate review of them at Cash Money Life, which upon reading, has me investigating if I should transfer all of my funds to their hands. If any of you all have experience with them, or knowledge about them, drop me a line!

4) At Dividends Value, they did a write up on Cullen/Frost Bankers; a bank that actually turned down TARP money!

5) The Intelligent Speculator analyzes Valueclick.

6) College Analysts do a book review on a movie that I have been wanting to watch for a while; I.O.U.S.A.

7) Moolanomy.com talks about the very important issue of 401K and IRA funding limits... HINT! If you have yet to fund yours, click over to your online brokerage account and do it!

Next weeks festival will be at what is currently an undisclosed location, so it may well be here again. If you are interested in hosting, go here for more info.

BTW- I am gonna take this time to bump my somewhat satrical write up on what the government should have done with all of the bailout money... buy 1/3 of the nation's housing and demolished it. Check it out.

Have a good one,

Thursday, January 22, 2009

we could have bought over 1/3 of the nation's houses...

$7.36 TRILLION...

That's right folks, over 1/2 of our annual GDP has been borrowed or printed in order to fix the problems of bad mortgages and freezing credit markets-at the behest of our hedge fund government. Feel like working for free for 6 months?

Me either.

In light of our central planners' actions, I will throw out my solution for the problem at hand; keep in mind, this is a satirical solution in the same form of 'The Candle Makers' Petition' and 'A Modest Proposal', from times long past.

I, Jeffrey Moore, hereby proclaim that the government should use all bailout monies to buy up no less than 1/3 of the nation's residential real estate. In turn, this act will stabilize not only the housing market, but the world economy.

Presently, the bailout and related actions have cost the taxpayers roughly $7.36 trillion. If that number is divided by the US median home price of $200,000, the government could have used the money to buy just a hair under 36 MILLION houses-granted, the median price is not the average, but, it certainly gets my point across... 36 million houses is just over 3/10 of the roughly 113 million households in the US (which is significantly higher than the number of houses in the US-it counts apartments as households). While this would be difficult for anyone (including Uncle Sam) to do because of supply and demand issues, they can conveniently do a Texas Two Step... Eminent Domain would be a convenient and constitutional way to temporarily repeal The Law of Supply and Demand!

Now that the government has bought all of these houses, what in the world are they going to do with them? What else could they do but tear them down!? This would in effect, create a ginormous shortage of housing; which, when coupled with interest rates that are far too low for comfort, would rejuvenate the economy.

'How would this rejuvenate the economy?' you ask... well, we could start off by using the Law of Supply and Demand (which the central planners in DC would have again allowed to take effect); a housing shortage will drive prices up-quite significantly at that. With prices going up, it would make all the CDOs floating around out there suddenly worth well more than their weight in gold. Thus, all the banks with 'bad debt' on their books would also be sitting on a pot of gold instead of enough toxic waste to make them sterile for generations.

Just think-no more cash infusions from Washington would be necessary! The construction industry would buck up! People would be employed in a way that is much better than in 2007! We wouldn't have to worry about insurance companies collapsing either-after all, who wants to worry about their annuities being worthless?

Sure, with this solution, a bunch of people would have to be temporarily housed in homeless shelters, but these shelters would be made up of people that have good jobs... as contradictory as it sounds, America would quite literally be full of rich homeless people. I don't guess that it would be too bad of a problem to have. I mean, Ruth's Chris or Steak n' Shake could cater to the shelters-so it wouldn't be all bad (most would eat much better than they presently do).

Aside from the overflowing homeless shelters, the only other 'problem' would be that the price of treasury notes would fall precipitously, since money would be rushing into areas of the economy that actually have room to grow-I can hear Ron Paul's reaction now... 'Dammit! Now the government can't spend it's way to our success!'

Heck, my solution is practically the only thing that could make TBT be more or a sure fire winner than at present.

To a better economy (and slightly more oppressive government),

-Jeff

Friday, January 16, 2009

My Letter To Dataram (DRAM)

Members of the Board,

As a shareholder, I feel that I need to occasionally share my thoughts with you, my elected representatives, on the happenings of our company. As you know, in recent quarters, our company's stock price has been hit hard by the effects of a slowing economy, frozen credit markets, and skittish investors. However, this market valuation seems to reflect little of the inherent and intrinsic value of Dataram. Today, when I briefly spoke with a member of management, I asked him if the board had plans to repurchase any of our common stock, he stated that to his knowledge, there were no such plans, and that the company is still going on with it's previously disclosed plans of expanding through acquisition.

While I am in favor of the company expanding, I am against acquiring any companies at this present moment; this is due to the fact that Dataram common is trading at a significant discount to it's cash minus all balance sheet liabilities. While we all hope that this suppressed share price is temporary, the market is not valuing virtually any and other company at such a discount to it's tangible worth. With this being the case, we must jump at the chance to repurchase shares on the cheap.

It is a fundamental lesson in business and finance schools around the world that cash is matter of fact, whereas, speculation of other companies worth or the value of a patent is significantly harder. With a market capitalization of $11.26 million versus cash of $16.02 million (quite literally 70 cents on the dollar), it seems that the market as a whole, does not feel that our company will be able to acquire another company in a manner that will help earnings... in fact, the market must feel that presently stated plans will burn through significantly more cash than they will produce!

For these reasons, I strongly urge the board to enact an aggressive share repurchase plan. As previously stated, a repurchase plan executed at the current market valuation of the company, would be the same as purchasing $1 dollar of cash for approximately 70 cents of common stock. Such a plan would make shares rally, significantly improve earnings per share, and show that the board is extremely confident in both the company's short term liquidity and it's long term operational excellence.

In line with understanding that the company needs significant reserves of cash, a buyback plan of $6 million dollars would leave the company with well over 2 times the cash that it had in the quarter ending in July of 2002-roughly the same time in which the tech bubble had fully deflated. Despite this, it was a time when the company's stock was trading at a significantly higher level- despite having half the revenues and significantly lower earnings than at present.

Once share price recovers to a level that is at least that of our cash, it would be a more appropriate time to continue expanding through acquisition.

To better share performance,

-Jeffrey Moore