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Random Thoughts: Will Santa Bring A Rally Or Coal This Year?


Sharp swings both ways should continue to frustrate the highest number of players.

  • Perhaps as a function of my positions and what I have on my watchlist, it seems that prices are gravitating to "obvious" strikes even more than on your random expiration day.

  • I picked a fine time to get out of CGV Veritas (CGV), and the question now is whether it's an opportune time to get back in it. While I am net short energy through the Oil Serv. Trust (OIH), it doesn't mean I am not looking to add specific longs in that space.

  • Does this look like the kind of company that is ready and able to absorb more derivatives risk?

  • Paragon Shipping (PRGN) is certainly not the kind of quality dry-bulk shipper the likes of Quintana Marine (QMAR) or DryShips (DRYS), but the fact it's back in the high teens and has nearly a 10% yield is making me take a repeat look.

  • Though I still would have some gains to pocket in sticking around my Jones Lang (JLL) short (because of some related option positions), my gut tells me the bulk of the dark side profits for this one are in the bag. Recall that its last quarter was not really bad at all, hence in my humble opinion the damage is being dished out by overarching macro themes.

  • An old time Minyan asked me whether Santa will bring a rally or coal this year. Neither? My sense is that the bears are firmly in control but if I were them I'd wait to pile in when 4Q comes in and companies will start being really cautious with their outlooks; if they have dry powder they'll be able to do some real damage. In the meantime, sharp swings both ways should continue to frustrate the highest number of players.

  • Over the last several weeks there's been a lot of "deals" activity in the wind-power space of the type that suggests some big players (General Electric (GE)-kinda big) believe the story may have long-term legs. It made me look for players, but I could not find any pure names in the U.S. I have put Spain's Gamesa Corp (GAM SM), Germany's Nordex AG (NDX1 GR), and Denmark's Vestas Wind Systems (VWS DC) on buy watch, and just a bit more of a pullback is what would push me over the edge.

  • Fortunately, I have to leave early today so I won't have to watch the S&P (SPX) 1460-1440 ping-pong game for the full 6 1/2 hours. Have a great weekend and start thinking "Turkey"!
Positions in CGV, DRYS, SPX, JLL and OIH.
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