My Stock Winners

========= Undervalued Stock #1 ==========

———- Chesapeake Energy Corp. (NYSE: CHK) ——–

Insider Name: Aubrey K. McClendon
Insider Position: Chairman and CEO
Insider Action: 50,000 shrs on 9/24/2007 - 9/25/2007
Insider Total Holding: 28,106,318 shrs

——————————————————-
Undervaluation Merits…

P/E Ratio = 9.8 (Industry Average 17.5)
P/S Ratio = 2.24 (Industry Average 5.53)
P/B Ratio = 1.72 (Industry Average 3.15)
P/CF Ratio = 5.00 (Industry Average 25.40)

Industry: Independent Oil & Gas

The Weekend Edition: If You’re So Smart Why Aren’t You Rich

It is still not well understood why some people are rich and others are poor. Luck, timing, parents, choice of spouse and many other factors play important roles in shaping an individual’s circumstances. Past analyses have mostly just looked at income, with studies of World War II veterans finding a link between smarts and a better salary. What good is it to be smart and have a better salary if you end up broke or spending it all on credit card bills? Looking at the National Longitudinal Survey of Youth 1979’s latest round of survey answers from more than 7,000 randomly selected participants, author Jay Zagorsky tries to tackle the question of whether better IQs lead to bulging bank accounts and less bankruptcy. The answer is no. “Being more intelligent does not confer any advantage along two of the three key dimensions of financial success (income, net worth and financial distress),” says Zagorsky, looking at the data with statistical tests. And when it comes to financial distress, smarts are no help at all.

People with 140 IQ scores (a score of 100 is average) missed payments and maxed-out their credit cards more often than their lower IQ counterparts. “Only among people slightly above-average does an increasing IQ score lead to a reduced chance of financial distress,” says the study. “The survey provides no data to explain why this occurs,” but Zagorsky offers these explanations for High IQ types getting into financial hot water:

They might be busier and less focused on routines like paying bills.
They might lead a lifestyle that is closer to the financial precipice because they feel they are smart enough to get away with the risks of credit card spending and saving less.
“Since intelligence is not a factor for explaining wealth,” he writes, “individuals with low intelligence should not believe they are handicapped in achieving financial success, nor should high intelligence people believe they have an advantage.”

———— Barnes & Noble, Inc. (NYSE: BKS) ———-

Insider Name: Leonard Riggio
Insider Position: Chairman of the Board
Insider Action: 100,000 shrs on 9/11/2007
Insider Total Holding: 13,064,597 shrs

——————————————————-
Undervaluation Merits…

P/E Ratio = 16.9 (Industry Average 18.4)
P/S Ratio = 0.42 (Industry Average 0.91)
P/B Ratio = 1.94 (Industry Average 3.22)
P/CF Ratio = 7.10 (Industry Average 12.10)

Industry: Specialty Retailer

——————————————————-
Other Merits…

Dividend Yield = 3.30%

———— Barnes & Noble, Inc. (NYSE: BKS) ———-

Valuation:
AMZN’s pe=110
HIMX’s pe=10

Company future Priced in:
AMZN=Investor has a false picture perfect image, but in fact, their plan are old concepts that will not make $
HIMX=Investor has a false picture of lawsuite, (price dropped to the lowest when being sued, but usually goes up from that point)

Technical Analysis:
AMZN:
http://www.stockconsultant.com/consultnow/basicplus.cgi?ID=sample&symbol=AMZN&4086#ttop

“Downside� TRADE QUALITY 95%, Excellent

TARGET 1 Price: 73.57 Profit: 12.2% , for a typical pullback.
Cover Limit/Trailing Cover Limit: 86.08 Loss: 2.8%
Profit/Loss Ratio: 4.4 : 1 - Excellent

TARGET 1 POTENTIAL Excellent, there are 1 support areas on the way to Target 1.
Stocks may quickly fall to Targets when there are not many support areas blocking the way.

TARGET 1 SUPPORT -6.2% at 78.55 ± 1.73, type single, strength 3
-12.2% at 73.57 is Target 1

TARGET 2 Price: 70.21 Profit: 16.2% , Profit/Loss Ratio: 5.8 : 1 - Excellent for an extreme pullback.

HIMX:
http://www.stockconsultant.com/consultnow/basicplus.cgi?ID=sample&symbol=HIMX&6502#ttop
“LONG” TRADE QUALITY 100%, Excellent
Good trade quality is a combination of good profit, profit/loss ratio and target potential.
TARGET 1 Price: 4.81 Profit: 22.4% , for a typical rally.
Stop Limit/Trailing Stop Limit: 3.79 Loss: 3.6%
Profit/Loss Ratio: 6.2 : 1 - Excellent

TARGET 1 POTENTIAL Excellent, there are 1 resistance areas on the way to Target 1.
Stocks may quickly rise to Targets when there are not many resistance areas blocking the way.

TARGET 1 RESISTANCE +10.9% at 4.36 ± 0.11, type single, strength 5
+22.4% at 4.81 is Target 1

TARGET 2 Price: 5 Profit: 27.2% , Profit/Loss Ratio: 7.6 : 1 - Excellent for an extreme rally.

HIMX is a stock which has a very real chance to be up 50%+ by Christmas time.

Low volume selling indicates weak hands. Let hope the smart money will stay. Based on Fundamentals. It is a screaming Buy. But technicals are getting streached and we are at a point of bottoming. I will not trust any drop on low volume and will remain a holder.

After researching this company and looking that the fundamentals, I just loaded up some today.

This stock is so undervalued. It has great fundamentals. Today is the bottoms. With the market down 250 points today, next week is due for a jump.

This suit is a tatic and it is going to be dismissed. Once that is out of the way, there could be a 15-20% rally.

When it’s $4.23, its only 4.03 because you’re going to get .20 back per share in a month. This thing has doubled rev in the past two years, upped guidance past WS expectations, beat WS expectations, trading with a 10 PE (actually only 9 because its .20 cheaper than its trading price)….oh why go on. I’ve never seen anything deny logic as much as this. And it just flippin sits everyday. Stale money everyday. Actually, it just keeps crawlin lower so worse than stale money. Unbelievable.

Cheer for value investors.

Dow, Nasdaq Finish Lower As Investors Grow More Uneasy About Economy. The stock market found little to assuage concerns in minutes from the Fed’s last meeting, released during afternoon trading. The major indexes’ losses steepened after investors parsed the minutes for signs of a possible cut in interest rates.

But don;t you worry. This only kills high flying stocks such as AMZN

Let’s say AMZN’s revenue grows 30% in ‘08, and 20% in ‘09, ‘10 and ‘11. I think that is extremely aggressive. Growing top line from such a large number.”

Let’s examine what this poster might mean by “such a large number”.

Isn’t the largeness of numbers pretty relative, and simply based on our own mostly brick and mortar experiences and perceptions about what is feasible or possible, i.e., enterprises like Target Stores circa 1991 tended to grow from a base (revenues of 16B) similar to Amazon by next years estimate at only about 10% per annum?

Target Stores
Revenue Growth
FY 92: 11.2%
FY 93: 7.3%
FY 94: 10.7%

But Target’s conditions for growth in a physical, landbased environment were different from the online marketplace in a number of ways. For example, you need more time and capital to build out a brick and mortar enterprise, that and the fact that the customer base, a subset of the population, is just not growing that fast anyway, even if you did not have those limitations.

The population Target was drawing from was probably not growing too much more than 1.1% per annum, but the population Amazon will be drawing from will be growing at a rate of 6x that much:

“JupiterResearch says the worldwide online population will increase at a compound annual growth rate of 6.6 percent during the next five years, far outpacing the 1.1 percent compound annual growth rate for the planet’s population as a whole.”

So if we couple this 6x factor with Target’s 1990’s growth rate of 10% we get a growth ceiling of about 60% per year for online retail between now and 2011.

Seen from that perspective perhaps the consensus 25% revenue, so far less than that 60% is a more conservative figure that some think. And one that already incorporates the slower economy and is based on Amazon’s most affluent customer segments. Meaning that when economies pick up 35-40% growth would not out of the question.

AMZN=30 in 1 monh

NASDAQ is set to launch what its executives are calling one of the most significant developments on Wall Street in decades: A private stock market for super-wealthy investors. Minimum requirement for traders: US$100 million in assets. Any private firm can list on Nasdaq’s new platform, which is called the Portal Market, and raise money by selling stock to an elite group of shareholders. Once a tiny influence on the markets, private money has gained unprecedented power on Wall Street. This year, the biggest deals have been swung not by public companies, but by private equity firms that are spending hundreds of billions of dollars to buy household names, such as Hilton Hotels, Sallie Mae and Chrysler, and turn them into private companies. These markets are creating an alternative and exclusive investment world buffeted from the turmoil that has roiled the major stock indicators in recent weeks. In the public markets, investors dumped stock during a credit crisis caused by the deteriorating mortgage industry. Private-market traders generally are sophisticated financial groups that take a long term view of their investments.

“One of the problems that business faces in America today is what I would call ’short-termism,’” said Howard S. Marks, chairman of Oaktree Capital. “There’s a lot of expense and complication associated with being a public company today… Now it is possible to gain most of the advantages of being public while sidestepping the disadvantages.” The rise of private money has created a new class of powerbrokers on Wall Street who have enriched themselves even as they provided billions of investment dollars to companies in all kinds of industries. But the trend is causing a backlash among working-class Americans who generally are shut out from investing directly in those circles.

Base Metals/Copper (PCU)
Bullish
Sector trading above its…
20-day Moving Average: NO
50-day Moving Average: NO
100-day Moving Average: NO

Sentiment: There is not yet an exchange-traded fund that allows investors to trade a basket of copper-related stocks, but one’s creation could be just around the corner. The Dow Jones AIG Commodity Index is partially comprised of copper and base-metal names, but also contains energy stocks. Right now, my favorite proxies for the group are individual equities Southern Copper (PCU) and BHP Billiton (BHP). Both stocks have seen their Schaeffer’s Volatility Index (SVI) readings spike in recent weeks to new annual highs, which can often be a bullish sign of future momentum. PCU boasts a short-interest ratio of 7.2, paving the way for a short-covering rally on any positive price action. And BHP has seen its Schaeffer’s put/call open interest ratio (SOIR) rise to 1.73, higher than 84% of the past year’s readings. Together, the 2 stocks have earned just 5 “buy” ratings along with 7 “holds” and a pair of “strong sells.”

Outlook: PCU has been in uptrending mode since mid-2003 and is fresh from a successful retest of its 10-month moving average. Technically speaking, BHP has performed in very similar fashion. The shares have increased nearly 6-fold since mid-2003 and recently pulled lower to test support from their 10-month trendline. The long-term uptrends combine with signs of skepticism to make these names intriguing contrarian opportunities. As for copper futures, the long-term contract is perched above significant support at the $3.00-per-pound level and is threatening to retake control of the $3.25 mark, which defines a 50% correction from the contract’s second-quarter 2006 peak to its first-quarter 2007 bottom.

Technicals
Oil Service (OIH)
Bearish
Sector trading above its…
20-day Moving Average: NO
50-day Moving Average: NO
100-day Moving Average: NO

Sentiment: Sentiment has been moving into more bullish territory in recent weeks, even while the price of oil stagnates beneath former all-time highs. The oil-service group’s composite SOIR has dropped to 0.58, reaching an extreme as it hits its sixth annual percentile. In other words, 94% of all composite SOIR readings on the sector have been higher (or more bearishly aligned). Analysts also continue to support the shares. Of the 208 analysts’ ratings on various oil-service names, 68.3% are of the “buy” or better variety, while just 28.4% are “holds” and 3.4% are “sells.” This makes the oil-service group among the highest-rated market segments, and leaves the related components vulnerable to downgrades.

Outlook: Even while oil-service names earn the accolades of Wall Street and the speculative options crowd, the OIH has spiraled lower. The exchange-traded fund has dropped below its 10-week and 20-week moving averages, the former of which has rolled over into a descending pattern. A bearish crossover in this pair of trendlines could be a harbinger of future downside in the index. One concern from a bearish perspective is the OIH’s 160-day moving average, which contained the group’s pullback last week. Going forward, however, the lack of a concrete “wall of worry” could be harmful for the shares.

Courtesy of Schaeffer’s Monday Morning Outlook

When Businessweek came up with a list of the biggest brains in investing, they noticed how much each of them has influenced the way the world invests. They also noticed one other trait: Each saw opportunity well before the pack. John Templeton pushed international investing way before it was cool. Warren Buffett was buying up undervalued companies long before his brand of value investing became popular. Many of the world’s top investors got to the top by being first. They didn’t follow in the footsteps of others or copy wholesale the investing styles of others. They set themselves apart from the crowd. Standing out like that can require a lot of courage, especially on financial markets that, by their very nature, represent the epitome of the herd mentality.

Top investors “think for themselves”. They defy conventionalism. Perhaps this is why any list of the world’s top investors represents a vast array of political beliefs, personality quirks, and strange hobbies. While some keep a low profile, people like Buffett and bond king Bill Gross seem to love regaling others with their views. Another common trait: Most of the top investors, though not all, think long term. They have a confident belief in what their investments ought to be worth at some point in the future, and they stick with it. A long-term focus is crucial when you’re being judged on your record of not just a few months or years, but decades. The top investors usually stay active for several decades, at least. They have been survivors of every type of economy cycle. They’ve survived economic chaos, war, and volatility. True, not all the top investors make money by buying and holding investments. Some, like currency speculator George Soros, profit on the perfectly timed trade. But that requires being an independent thinker, too. Soros must understand conventional wisdom, but he is also willing to challenge it. He has bet billions by going against nations’ central banks.

How consistent are top investors throughout their careers? Do they pick one investment philosophy and stick with it? Walter Gerasimowicz, CEO of Meditron Asset Management, says they do:

“Everyone of these investment pioneers were successful because they operated with a coherent investment philosophy.” Most important, “they applied it consistently to all aspects of their portfolio,” he says. “They never wavered.”
One thing doesn’t change, however: It helps to be lucky. Even the best of the best can provide a long list of investing mistakes. Sometimes even the best investors wish they could turn back the clock and undo a big blunder. The brightest minds in investing are nothing if not adaptable, and can even use those missteps to fine-tune their future strategies. While ordinary investors may not be able to match their results, they could certainly profit by taking a page or two from the methods and approaches employed by our brain trust.

It was a bumpy ride for U.S. equities this week and by today’s close most of the major indices closed slightly higher on the week. After last week’s rout, it was no surprise that the best performing index this week was the Russell 2000, which recouped 4.4% (+33.36) to close at 788.78. In all fairness, it was the most oversold of the four we report on last week.

The S+P500 tacked on 1.4% (+20.58) to close at 1453.64, while the NASDAQ Composite gained 1.3% (+33.64) to finish at 2,544.89. The Dow Jones 30 Industrials only managed to gain .04% (+57.63) and ended the week at 13,239.54. Stocks picked up after an early sell off today, as the European Central Bank and the U.S. Federal Reserve both injected money into a world banking system that is still coming to terms with what no one wants to call in the U.S. mortgage and hedge fund markets.

Last week it was Bear Stearns, this week’s bad news centered on two Goldman Sachs hedge funds getting whacked with word out today that Countrywide Financial may now be on the ropes. That news and more like it has recently has finally proven enough such that this country’s elite investors are finally beginning to unravel their hedge fund positions.

Market-neutral hedge funds utilize considerable leverage to generate a return, being 100% long and 100% short both at the same time. When investors suddenly request liquidation to pull in their capital, losses can often be exacerbated. It reminds us of the old adage, leverage up and leverage down. While this market rewarded leverage, it appears the tables are now turning.

Needless to say, when the President of the U.S. is quoted in the newspaper as saying there is enough liquidity to absorb a correction in the stock market and everything should work out okay, we don’t feel comforted. It’s also probably what pushed markets lower today before they lifted into the close. While we hate to say it, the trend is your friend and despite this week’s pause, let’s say, to reflect, the trend ain’t lookin’ real good lately. And yes, we’d love to be proved wrong on that.

situation right now. Current Liabilities are 1,936 million
cash+equilants are 1,004 million, marketable securities=661 million=total 1,665 million. They are short by 271 million.
But account receivable= 384 million. If they receive the account receivable on time they are ok. But if there is any problem there AMZN is in trouble meeting obligations. In that case they may have to start liquidating inventory of 735 million. Some of that inventory may not be good may have to sell cheaply or written off. This is the cash crunch problem of AMZN. In a lousy economy; they definitly have trouble. The real problem is market cap of 34.5 BILLION for assets of less than 300 million. Stock could tumble if there is liquidity CRISIS or SALES going down. AMZN is showing profits by one time items such as Lower tax, forex conversions and juggling Depreciation, FCF, stock based compensation expenses, cap exp.

A reversal of Friday’s misfortune, as U.S. stocks enjoyed a bounce back today. The Dow 30 added 286.87 points (+2.18%) to close at 13,468.78. The S+P500 gained 34.61 (+2.42%) to 1,467.67, the NASDAQ added 36.08 (+1.44%) to 2,547.33, and the Russell 2000 gained 10.97 (+1.45%) to 766.39. Volume was slightly ahead of Friday’s sell off.

Tomorrow, the Federal Reserve’s policy committee meets and is expected to hold the Fed-funds target at 5.25%. Obviously, market pros will be looking to see if there is any mention of the sub-prime market mess anywhere in the statement. We don’t expect the Fed to ride to the rescue any time soon. Non-farm payrolls are expected to advance to about a 2% annual growth rate in the second quarter after a 1% first quarter gain. Consumer credit is expected to increase $6B in June after a $12.9B jump in May, as higher energy prices increase revolving credit.

Wednesday is relatively quiet, with wholesale inventories seen rising 0.4% in June. Thursday is the day all large publicly traded companies are due to file their quarterly 10-Qs with the SEC. Wall Street will be scouring the wires looking for any additional financial related casualties that might create further panic. Retailers report their July chain store sales numbers as well.

Friday, the July federal budget deficit is expected to hit $33.2B, and import prices are expected to rise 1.0% in July, but remain flat when gas prices are removed from the equation. We will look forward to show you our Weekly Market Commentary after the close on Friday.

Let’s keep things real simple here…Inhibitex should have about $55 million in cash or $1.75 per share when the company reports its second quarter results next week. Based on Monday’s close of $1.20 per share the stock would need to gain 45% to reach its cash level. People need to understand that biotech and their underlying stocks are tremendous gambles because the drug approval process is slow and expensive. When things don’t turn out well, like the Veronate failure, investors run for the hills as it should. But when is a decline too much….when is pessimism overextended?

Many one hit wonder biotech companies never really make it back after their leading candidate falls off the wagon. In our experience, many of the senior management teams at these “failed” biotech companies are ill equipped to run the business when things are bleak. These people are used to success… whether it be raising money from venture capitalists…doing the IPO…or getting good clinical results. It takes a different type of person to steer a ship when things are just not going your way. We commend Inhibitex on a good job of cutting costs, protecting cash, and spending money wisely. With an annualized burn rate of $11 million, INHX has over 48 months of cash left. Maintaining the discipline to acquire FermaVir for only stock was very smart.

Post merger:

INHX will have approximately 42.5 million shares outstanding and based on yesterday’s close of $1.20 the market cap would be $51 million.
$55 million in cash
Leading drug candidate Aurexis (antibody that targets S. aureus or commonly known as staph infections), which has completed phase II clinical trials and has also been granted fast track designation by the FDA.
Potential Pharmaceutical Partner For Aurexis
Partnership with Wyeth (possibility of Phase I clinical trial)
Partnership with 3M
FermaVir’s FV-100 (which should enter Phase I trials in Q3 2007
In closing, the SmallCap MarketWatch believes that for a company worth less than nothing, shares of Inhibitex represent the best value in all of biotech

Nearly half of the Q2 earnings reports has been positive.
All the major indexes made multi-year highs last week, with AMZN hitting another 52-week high.

The economic news include a variety of other economic reports. The Q2 Employment Cost Index will be released on Tuesday followed by the Purchasing Managers Index (PMI), and the Consumer Confidence report. On Wednesday October Truck and Auto Sales, Construction Spending, ISM Index and the weekly Crude Inventories will be announced. September Factory Orders, the weekly unemployment claims, and the Q2 Productivity report will be announced Thursday. The Non Farm Payrolls, Unemployment Rate, Hourly Earnings, and Average Workweek will be announced before the market opens Friday to close out the week.

In summary, investors should continue to be focused on the corporate earnings reports and any signs of inflation. Sell when you see profit, short when it reach 100 pe ratio.

This is not a good report for the longs despite the temporary enthusiasm shown in AH. 19 cents was where a number of analysts already were. As many of you saw on CNBC, two analysts had their numbers at 18 and 19 cents and both were tepid on the stock. The “beat” occurred on conservative guidance … big deal. It still puts them at maybe a dollar per share in earnings for 2007, or over 75 times earnings based on AH price. Ridiculous.
International growth is slowing. Electronics is capturing a larger share of sales where they will have no edge over Best Buy, Wal-Mart, Costco, or Circuit City, and where consumer spending slowdown will be felt first. Tax rate is back up to a more normal level of 30%, and applied to even the high end of their full-year operating income guidance yields $1.03 per diluted share (analysts have been at $1.01, so there is no big news here, and if they hit the low end of their guidance, they will hit only 87 cents for the full year and miss the next two quarters expectations by WIDE margins). Share count is up over 1% for the quarter even though they announced a $500 million repurchase program in last quarter’s release (they did say, last quarter, that it would be used opportunistically when they thought the shares were undervalued … guess they didn’t think it was undervalued this past quarter). Operating profit Margin was a whopping 4.0% (go look at posts from Nemesis and other longs who are dreaming of 6% and even 8% profit margins).
Shares outstanding went up by about 4 million, and if you multiply by the current market price of about $75, you get what should be an increase to the firm’s equity of $300 million, and coupled with the net income of $78 million, we should have seen an increase of close to $400 million. But, equity only went up $197 million. The close to $200 million difference shows the effect of dilution from the stock compensation program. Basically, over twice the entire net income was wiped out by dilution. (by the way, if you used a more reasonable price like $35, then the $197 million in equity increase makes sense ($78 net income plus 4 million shares times $35 totals $198 million).
I’ll post more, but feel free to respond. Remember, short term market moves can be nasty, but also dead wrong. Look at any homebuilder like PHM. Look at a one year chart and the price action at the beginning of this year and what analysts were saying about the “recovery” in the housing market. Analysts were dead wrong then, and those stocks are down 30-60% in the past 6 months. Same here. Don’t panic.