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Small-Cap Recap: Random Tells


A quick look at tell-tell signs.


Going through sell side research is often a good way to find the proverbial "canaries in the coal mine". From yesterday's read:

  • Put Bankunited Financial (BKUNA) on your monitor list. This small bank is up to its eyeballs in the residential ARM's lending, and the bulk of its growth this past quarter consisted of non-cash negative amortization revenues. In other words, borrowers were opting not to make payments on their mortgages, but rather to accrue the payments against their equity. The assumption there is that there is equity, which is . . . well an assumption. Together with Herbela's Corus Bank (CORS), these two banks might give us the heads up as to when the real estate implosion starts filtering down to the lenders.

  • With Petrofund (PTF) having been bought out, I am looking for a high yield substitute. Raymond James spotted 9% yielding Iowa Telecommunications (IWA). With the telco M&A frenzy in full force, this one deserves some research time.

  • Boat retailer Marinemax (HZO) reports this morning. May want to listen to the call for color on how the consumer is handling $72 oil and higher interest rates when it comes to large ticket items.

  • Morgan Stanley (MS) is giving a heads-up on the Household and Personal Care names. While defensive on the surface they warn about the intensive use of energy and specialty chemicals in the freight, packaging and manufacturing process. Good point.

  • A "Honey I Shrunk The Stock" warning this morning from Portalplayer (PLAY). Apparently Apple (AAPL) is ditching its Nano interface. I don't really care about PLAY as much as I do about Cypress Semi (CY), which, I believe, supplies the "System on a Chip" that operates the interface. CY will have its quarterly call later this morning and hopefully will clear things up.

  • Watch for a later piece on homie MDC Holdings (MDC) whose business is landing about as softly as a ton of bricks.
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Positions in AAPL, CY
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