After pounding on AIG for a few weeks, I finally realized that I should be making money on this call.  I hammered AIG from the reverse split point on.  (remember, I owned it from $2.02 to $1.45).  When they did the reverse, I felt there would be very little but down.  The parts of this company do not equal the whole.  The 1 for 20 offering didn’t do much other than mask the dismal condition.  Wait… do you know what else it did?  It allowed for certain entities to participate in the just announced shelf offering.  Innnnneresting!

When would you announce news that isn’t likely to help your shares or your company?  Friday after the market close!!  Wait, that is when they did announce their shelf offering.

AIG Shelf Offering

AIG is in trouble.  I finally placed a small short on AIG today by buying put contracts.  I have avoided doing so for quite some time due to the fact that AIG options are priced with a SICK premium.  The movement needed to get into the money is big.

The 40%-50% recovery in the shares, over the past week or so, initially felt like a dead cat bounce.  After a few days it felt like something more than that.  I tweeted about it a bit.  Didn’t make sense to me.  I was perplexed.  Well, the shelf offering that came out after the close today (Friday Jul 17th) might explain a bit of it. There is support for this dog from some high places.  People “in the know” can make money from these movements and events.  They can make money on all sides, from the buy side, sell side, and underwriting side.  I haven’t looked yet, but I am going to guess that Goldman is the lead.  Hang on… I’ll go look… no one listed yet.

The recent support could have been generated to garner a good price for the offering.  I know, I know, I sound like Mel Gibson in the Conspiracy Theory movie.  Or, I sound like Phil at PhilStockWorld.com.  Either way, I might be right.  Phil, what do you think?

Back on topic, I am pleased that I took the action today to buy some puts.  As always, when I am right, I wish that I committed more funds to the trade.  I bought August 14 puts based on the fact that I felt AIG moved back way too fast.  The move didn’t seem natural and there was no news that called for a 40% bounce.  A typical dead cat bounce would have died off much sooner and wouldn’t have bounced as high.  The action prior to today’s offering reeks of the action prior to an offering.  The higher the price, the more money raised.  Less of an impact on the shares (perhaps).  But in the end this is a dog that is in rough shape.

This offering will cause dilution and if it weren’t for the recent run, it would have been nearly impossible to place.  The terms on this one will be interesting.  Those who commit to the offering will likely be assured a profit thanks to recent action.

The shares are going to come back down.  They should reach 9 before they reach 14.  I am happy that I stand to benefit from this since I have been pounding the table calling it a dog. I am not alone.  Jared Levy, who is on Fast Money on CNBC, said it well when he said “They’ve got a lot of debt and I have no idea how they are going to service it”.   Well said, Jared.

Here is what it comes down to.

• They are selling assets of any value to pay down the debt.
• Continuing operations cannot support the debt.

I am out of my Corning  call options as of a few minutes ago.  I already miss them.

I took a nice percentage gain on these contracts over the past couple of weeks.  As I mentioned in my I love Corning post, I love Corning.  Why did I sell my contracts if I love Corning?  Well, the market is very likely to be tested again.  I really feel that the IBM numbers (especially guidance, or lack of) this afternoon will dictate the direction of the market to come. Earnings will be flowing for a couple of weeks and guidance will be critical.

I fought the urge to turn this trade into an investment.  I left something on the table, and will be disappointed if I am not back in this contract before earnings come.  I have traded this contract on 7 different occasions (really 6, but one was sold off on 2 different dates).  Each trade has yielded a nice % gain. Symbol: GLWKC (Nov 15 calls)

• Out 7/16/2009: +73.5%
• Out 7/14/2009: +33.6%
• Out 7/16/2009: +19.9%
• Out 6/12/2009: +13.65%
• Out 6/12/2009: +38.03%
• Out 5/27/2009: +11.54%
• Out 5/20/2009: +20.84%

I wish that I could do this more often, but we have to play what the market gives us.  I have simply been playing the market swings with this option contract as a vehicle.  If IBM comes out good, this one could be long gone.  GLW should rally with that sector.  I am a bit upset with myself for not holding on to some of the contracts that I sold off this morning.  We’ll see how it pans out.  I am not sure that I believe the rally will continue.  Feels tired already.  Too far too fast?

Corning - GLW

I have been rather active in the last few days.  I have been trying to resist the urge to be greedy.  I am going against my mantra of “Don’t turn a trade into an investment and don’t turn an investment into a trade!”.  I did sell some long term plays last week, but avoided my past mistake of simply putting the proceeds on the sideline.  I sold out of some dead money positions (so I thought) and moved into a couple of firm plays that are also dividend plays (BLK, PFE, BP, GS).  BP has been a solid winner and has a yield above 6% a year.  Thanks for the BP call Teddy!!

I am currently in a TimothySykes.com short of DRGZ.  I will stomach the short term pain over the next couple of days since I don’t expect to be able to find shares to short.  Short them while you can.  I had some success with a past call where shares were available during the run but not during the fall (GWSC).

I am speculating on the earnings of FNFG (First Niagara Financial Group).  They are a regional bank (In my back yard) who have been clicking on all cylinders for the past 6 months.  They did 2 offerings during the worst of it.  Took TARP and were one of the first to pay it back.  They report earnings on Friday.  My option play is a speculation that the numbers will be good and will move this stock back up to the level the reached in late April.

I also placed a buy of ERX (energy bull).  This is a volatile way to play oil and the energy sector.  As I write this, half of my position sold off (7.48% gain in 1 day).  I am holding the other half to speculate on the EIA petroleum status report due at 10:30 today.

I have written many times about how much I like Corning.  I placed an option trade and the shares got caught in the market downturn.  I bought 10 more contracts.  I sold 8 of the 10 contracts yesterday for a 33% gain.  I am holding my last 9 contracts for a longer term play. If the recovery is real, Corning will be a big winner.  These are Nov 15 call options.  Plenty of time left and well into the money.

Bob

Check out my trading log to stay up to date with what I am up to.   I might not be writing lengthy articles regarding each move, but you can catch up on my thoughts with the Bob and Scott Twitter feed.

BTW: Scott has been on Vacation.  He’ll be back to share.

If you are a regular reader, you will probably know that I am a big fan or Corning (GLW).  They are positioned so well for the spending that is still occoring in the economy and also to take advantage of the spending that will come once we recover.

Flat panel: TV shift continues
Green Tech: Filter products
Network build outs: ongoing and stimulous money helping to spike the current spend
Cell phones and other devices: Gorilla glass ®.  Let’s hope for that Apple tablet type device to boost 2h 2009.

If you are looking for a nice long term investment, consider Corning.  There has been a bit of a swing in share price, but anything under $15 a share should look like a fantastic entry point in a couple years time.

I am trading in some option contracts right now.  Down a bit on one batch and up a bit on my second batch.  I might just see myself out of these contracts tomorrow.   However, I am getting a bit greedy and will consider a hedge of a gain rather than an outright sale on these contracts.  We’ll see what tomorrow brings.

Corning - GLW

I am treading into this horrible market and buying some corning calls that expire in Nov 2009.  There is some time left in these contracts and I have owned them for a few trades over the past couple of months.

Corning - GLW

Corning appears to be performing well.  A couple of bits of good news have trickled out this week and the price target was raised today by RBC Capital Markets.

Corning is getting dragged down with the rest of the market in this rough economy.

This trade in WLP was outlined by Andrew Wilkinson today. It shows how you can utilize options to make a bullish play on a stock without laying out the cost for the shares. If successful, this trade could yield 3x your money within a two month period. Try to follow below.

WLP– The Indiana-based health benefits company edged onto our ‘most active by options volume’ market scanner after one investor appears to have established a ratio call spread in the August contract. Shares of the firm are up slightly by about 1.5% to $49.71. Hoping for continued bullish movement, the trader purchased 5,000 calls at the just out-of-the-money August 50 strike price for a premium of 3.50 each and simultaneously sold 10,000 calls at the higher August 55 strike for 1.54 per contract. The net cost of the transaction amounts to 42 cents and yields maximum potential profits of 4.58 if shares can rally up to $55.00 by expiration. The investor would begin to amass profits if shares increase just 71 cents from the current price to surpass the breakeven point at $50.42 by expiration in a couple of months. – WellPoint, Inc.

I have been in and out of AIB over the past couple of months. My first “trade” in AIB was at $1.61 on 3/20/09. Things have come a long way.

AIB cracked above $7.00 a share two weeks ago. I am looking for a quick profit on this one to make up for some recent losses. The rising tide of the market today is helping today. We’ll see if the fed comments, a bit later, will help or hurt the banks.

AIB Allied Irish Bank

I made a trade in M & T Bank (MTB) today.  Because Scott and I put restrictions (loose as they may be) on the trade sizes that we record on this site, you won’t find it in my log.  However, I did include an ongoing discussion (with myself) in the Bob and Scott Twitter Feed.  I have clipped it and included it below.  There are times, when a stock appears bound in a range, that you can safely play the range.  Some of the amazing charting tools provided from your broker should help you identify buy/sell signals.  However, you can get stuck (as I did earlier in the week with Beazer).

With MTB, I was in at $45.27 and out at $46.27 (400 shares). Nothing earth shaking, but it felt good to have something react in the manner that I anticipated.

1. Out of my $MTB at $46.27. Patience paid off!about 1 hour ago from TwitterFon
2. Reversal.about 3 hours ago from web
3. Turning quick. $MTB on the way up to my sell point soon?about 3 hours ago from web
4. $MTB Looks headed down shortly. Hold or sell?? I think we have another move up later.about 3 hours ago from web
5. $MTB little battle @ $46.00about 3 hours ago from web
6. As noted. A buy of $MTB @ $45.50 would yield $0.50 – $0.60 by end of day. Who made it? I am debating sell $$. Basis is $45.27. @ $46.02 nowabout 3 hours ago from web
7. $MTB buy here. 45.50 mid-morning lull. Quick 50-60 cents by EOD?about 4 hours ago from web
8. Let’s not forget that it is quad witching day.about 5 hours ago from web
9. $MTB is in the mid-morning trough a bit early. $45.14about 5 hours ago from web
10. $MTB in a great place here. Ripe for a tradeabout 5 hours ago from web
11. I feel like the morning is giving me a chance to take positions. Gun shy.about 5 hours ago from web

MTB

A wise investor once said that the time to buy is when everyone else is selling.  Well, who is doing the buying of assets right now?  Blackrock is one of them BLK.  The chart on Blackrock is pretty impressive.  If you feel we are at a bottom for markets, assets, companies, Blackrock could end up a huge winner 3-5 years down the road.  I just picked up a small number of shares.  I gave up on some AIG shares at a loss to pick up the BLK shares.  Sounds like a fair trade to me.  I don’t see how AIG is going to make it through this mess.  Might as well wipe out the common and fold them into the new bank oversight agency.

Keep an eye on Blackrock.  This will be one to watch for many years to come.  A well capitalized entity, picking up assets at a discount, at or near the bottom will be a winner.  The key is the pricing.  They are buying assets that can support themselves.  When they are spun off in the future, expect huge returns for BLK.

Blackrock

This is an excerpt from Tim Sykes (timalerts.com) regarding GWSC.  It doesn’t appear the lofty (relatively speaking) stock price that GWS Technologies has reached is going to hold for long.  The crash of the shares is probably only being supported by the shorts who are covering.  As Tim Sykes mentioned, he expects it to head down toward $1.

When looking into the press that was issued on this company, you have to pay attention.  The “news” that they released had to do with a proposal that the company submitted for a project.  It wasn’t a contract win.  It wasn’t a closed sale.  It wasn’t a partnership.  It was for a submission of plans for a project.  That would be like me saying that I might get Wal-Mart as a customer simply because the checkout clerk gave me the name of the person to send something to.  Is that newsworthy?  Hardly!

I will keep my sell order in place at a conservative number and hope to bank a fair profit (I could use one of those).  I would expect to reach my number today especially as news/analysis reaches more sites and more sellers show up.

From Tim Sykes…

the company has less than $1,000 cash, no audited financials, they’re delinquent in paying suppliers, they can’t pay their workforce so they’ve laid people off, they can’t raise $ because lenders want personal guarantees from management (who don’t appear to be willing to give those), they’re in a legal battle with rumored stock promoter/manipulator Douglas Furth & Co. (one of the largest shareholders in the blatant pump & dump SPNG) and they have a $100,000 loan that they can’t pay back!

Yup, it’s pretty much the worst news all around, the only positives, which they are quick to mention in PRs galore (which they’ve paid for with big cash compensations) is that they’ve submitted plans for a big solar project…yup, that’s right, they didn’t win any contract, they just submitted plans…and given the company’s dire financial situation and sketchy sketchy background, I’d say the chances of them winning this contract is less than 10%…

Oh yes, that CEO interview on SmallCapVoice.com the other day was paid for with (read the disclaimer HERE):

GWSC: Small Cap Voice received $40,000 from the company and 150,000 restricted shares subject to Rule 144 of the Securities Act of 1933 from the Company on 7-15-08 for 90 days of service. Small Cap Voice received an additional 275,000 restricted shares subject to Rule 144 of the Securities Act of 1933 from the company on 11-15-08 for an additional 180 days of service.

via The Single Worst Company I Have Ever Shorted, Prepare To Laugh | TIM – Timothy Sykes.