Daily Dose of Optimism

Investment Roundup: Seykota, AMD-MU-LKX, Steinhardt, CBH, OXPS

* "Everyone ultimately gets what they want from the market. [...] The best measure of your intentions is the result you get." - Ed Seykota (How's that for a zen interpretation of your struggles? - Ed)

* Salacious Rumor: AMD, MU, LXK to go private? Based on a perusal of AMD's cash flows, I can't imagine it, but it's possible a private equity firm has aggressively hacked up their forecast. EE Times has the news:

Rumors are running rampant that AMD, Micron and Lexmark are separately mulling over plans to go the private-equity route, according to various reports. There were other rumors last week [...] but private equity dominated the rumor mills. According to the Idaho Statesman, Micron Technology Inc. is rumored to be a buy-out candidate amid wild activity with its stock late last week. CNBC late Friday (May 25) reported that private-equity giant Blackstone Capital Partners is interested in Micron (Boise, Ida.).

Last week, rumor had it that ''Lexmark, Micron and AMD were all on the verge of going private,'' according to a report from SG Cowen Securities. Micron lost money in its recent quarter amid a downturn in the DRAM and NAND flash markets. Advanced Micro Devices Inc. (AMD) is struggling and is seeing red ink. Freescale, NXP and others went the private-equity route last year.

* Aspiring professional investors take note:

Steinhardt doesn't think superior portfolio management can be taught. "The greatest teacher is experience," he says, noting that his own stock-trading days began at 13 when his father gave him more than $5,000 in shares of two companies. "By the time I graduated from Wharton at the age of 19, I had more trading experience than most people have at the age of 30 or 35," he says. "I made more mistakes by the age of 19 than most people make 10 or 20 years later into their lives."

It's important for a hedge-fund manager "to really feel miserable" for their mistakes and to be galvanized by "the sense that their own personal security is at risk. I felt that more than once," he adds, implying that these factors are missing in today's more comfortable and well-compensated hedge-fund world.

Ed's interpretation: you're mostly on your own as far as learning about investing, there is no substitute for real trading experience, and when you do figure things out, make sure you align your interests with any outside investors.

* I've started looking at unusual call activity as a means of humoring myself while I drink my coffee in the morning. Recently, two interesting names came to my screen, both with 15-20x the normal volume of calls: Commerce Bancorp (CBH) and OptionsXpress (OXPS). Commerce is rumored to have good news pending on an OCC investigation into related party transactions by executives, and OptionsXpress is rumored to be an acquisition target...by E*Trade.

Reuters: "Given the recent consolidation among online brokers, the rumor might have some merit," said Frederic Ruffy, analyst at options education firm Optionetics in Redwood City, California. OptionsXpress declined to comment. E*Trade Financial was not immediately available for comment.

Both of these are plausible outcomes, and I think that the news would lead to happy trading for both...so I'll be watching. Emails and comments welcome. - Ed

Note: all references to investments on this site should not be interpreted as endorsements or recommendations for you to take action. Any investment actions you take as a result of something written here are your responsibility, so do your own homework.

The First Ever DDO Investment Roundup (TFSM, FCSX, AMD, SRSL, Chinese ADRs/GDRs)

I've said many times that I wanted to increase content around individual companies on this site, but I've had a hard time following through. Generally, that's because my model is the kind of write-up I did for TSCM and CMG, which took days to complete, and if that's the bar, then this blog can't get written. So as the year proceeds, I'm going to try a few different options, one which is the "investment roundup," where I will run through things I'm seeing and hearing on a variety of investments. I'll leave comments open on these posts so readers can provide feedback. Emails are also welcome.

• First off, I want to share the website of Jason Raznick, who has been writing about some interesting ideas lately. Recent coups for Jason were his calls on 24/7 Real Media (TFSM) and aQuantive (AQNT). Both of these companies were acquired shortly after the Google-Doubleclick acquisition. The trend here was that both major technology companies (Microsoft) and old-school advertising agencies (WPP) realized they were either hopelessly behind the game in web advertising, or in danger of getting locked out of the market by the 900-pound gorilla in this space, Google. Other recent stocks include Iowa-based commodity broker FC Stone, which has the unique distinction of being the only market maker in ethanol futures.

• I like the look of AMD right now. The company has been absolutely clobbered leading up to, and through, the announcement of the company's worst quarter ever, and the stock has dropped from around $42/share to a recent low of $12.60. However, all is not lost: the company completed a $3bn financing, and AMD has a new chip coming out, the Barcelona series, raising the bar in the endless one-upmanship in the commercial server space. Even Fred Hickey, the ultimate bear, had guardedly positive things to say about Barcelona:

May 2007: Barcelona is expected to be significantly faster than Intel's quad-core offerings ... Barcelona will help AMD regain share at the higher-margin, high-end, putting Intel's forecast of improving gross margins in great jeopardy. If the economy's outlook wasn't so bad and if there wasn't such a tremendous excess of capacity at both Intel and AMD, I'd once again buy AMD's stock for a rebound.

• Another company I'm looking at is SRS Labs (SRSL), a company that makes surround sound audio technology for use in flat panels, set top boxes, automotive and other home audio equipment. A sample product would be SRS WOW, which is used to improve the performance of compressed audio. For a more complete list of products that currently use SRS technology, see here. The price/sales multiple is ludicrous, but the company is profitable, has huge profit margins (~30%) and is showing good growth. Micro-cap (~$200mm).

• After using Yahoo Finance for about six years, I am being won over by Google Finance. The number one differentiator in my experience is the ability to search on either a ticker symbol or the company name in the same search box and get the results you are looking for. Yahoo finance feels stale, and the beta charts function doesn't do much for me at all. Yahoo's constant admonishments of "ticker not found" also make the website feel ridiculous over time. Google's annotated flash price graphs with news, plus easy time scrolling ability are fantastic.

• I'm trying to compile a list of the most promising Chinese ADRs and GDRs out there. If you have any suggestions, drop me an email or post a comment. The best list I've seen so far is Fortune's China 100 list. Unfortunately, about 50% of the companies on the list are ORDs listed in Hong Kong or Shanghai. I'm thinking smaller/micro-cap stocks if you've got them.

Note: all references to investments on this site should not be interpreted as endorsements or recommendations for you to take action. Any investment actions you take as a result of something written here are your responsibility, so do your own homework.