The Haiku of Finance for 12/31/24

End of year recap

Resolve to find bonanza

Bulls and bears will run

Christmas Eve 2015 Wish List

The whole world waits for Santa Claus while I count my natural intellectual gifts. I enjoy dispensing grace, like a benevolent monarch blessing worshipful subjects while posing regally upon my resplendent throne. I willingly carry the burden of genius through this season of joy. I am sufficiently joyful for a whole bunch of you readers. Sharing my Christmas wishes multiplies such joy.

My first wish is for Wall Street to quit ripping off investors. This happens in so many guises you'd think it's hard for crooks in suits to think of new scams. Lo and behold, their creativity never ceases. Hedge funds, structured notes, multi-manager funds of funds, late-stage unicorn startup funding, and other such garbage are things the investing public can do without.

Here's another wish: Wall Street needs to quit hiring trust fund kids. It's easy for these lazy creeps to bring in new money because they just whine and cry until their parents cough up dough. The problems come later when they refuse to do work and their less privileged co-workers have to pick up the slack. The whole banking sector would be better off not hiring these mental weaklings in the first place but those new asset referral bonuses are just too good for some managers to pass up.

I wish economic annihilation for all of my enemies and bonanza for myself and my many friends. Haters crawl out from their caves to spew racism at me on Twitter or slander me anonymously online. A whole bunch of English-speaking morons can't handle my genius so of course they compensate by embracing pure evil. True friends are more fun to have around, especially when they swoon after exposure to my overwhelming talent.

Finally, I wish the idiots who take shopping carts out of grocery store parking lots would acquire their own conveyances. I used to think this phenomenon was confined to low-income neighborhoods. Now I see it in well-off San Francisco neighborhoods. A whole bunch of financially secure people think it's okay to drag a grocery store's cart all the way home and not return it. The store then has to send its workers in a truck all over the place to haul these things back. They pass the cost on to you, people, while the staff in the store remain short-handed. If you're too weak to carry more than one bag of food home, then buy your own cart, for crying out loud.

Pass the eggnog and I'll mix it with brandy. I do that all the time during the holidays. I can metabolize booze like you would not believe because I'm the next step in human evolution. Santa can squeeze his fat red behind down someone else's chimney tonight, unless he has a big pile of cash to give me with no strings attached.

The Haiku of Finance for 04/17/15

Bonanza timeline
Compound growth makes it shorter
Reach success sooner

The Haiku of Finance for 12/05/14

Maximizing wealth
Unbroken winning record
Feast on bonanza

The Haiku of Finance for 12/01/14

Misdirected trip
Stumble onto free reward
Hidden bonus deal

The Haiku of Finance for 04/29/13

Pricing is power
Raise it ahead of cost base
Cash flow bonanza

Look For The Offshore Oil Bonanza

Drill, baby, drill!  Remember that mantra from 2008?  It still has some mileage left.  The world's top 31 oil producing countries will see their best existing wells peak or decline between now and 2030.  The bad news for many oil-rich countries is that they face declining national wealth unless they get serious about exploration.

Peak Oil is looking more and more like Plateau Oil thanks to technologies that extend the life of existing wells.  Doomsayers predicting the end of civilization will have a lot of crow to eat when they wake up from their Rip Van Winkle naps to find the lights still turned on a century from now.  Bring on the fracking and horizontal drilling for wells on land.  Fracking is still an imperfect technique after five decades of widespread use but the next generation of petroleum engineers will command hefty salaries figuring out how to perfect it.

The UK is pursuing new methods for recovering unconventional offshore oil.  The U.S. should do likewise.  The main obstacles to enhanced offshore oil recovery in U.S. waters are regulatory, not technological.  The BP Deepwater Horizon blowout is now ancient history and Americans will ignore offshore permitting as long as "American Idol" keeps them preoccupied.

My only problem is finding a company capable of exploiting an offshore bonanza.  I sold out of Tidewater (TDW) a long time ago with a decent capital gain once I realized they were larding up their balance sheet with long term debt.  Their share price has been all over the map for the past year but their net income has steadily declined since 2010.  They need to shape up their finances before I will ever take a second look at going long the stock.

Full disclosure:  No position in TDW at this time.  

The Limerick of Finance for 01/22/12

The Davos elites will convene
As the world is perched on a ravine
They're all joined at the hip
But we need leadership
Total chaos could come to this scene

The Haiku of Finance for 12/1/11

Geothermal heat
Tapping old oil and gas wells
Watch out for earthquakes

Alfidi Capital Gives Thanks On Thanksgiving Day 2011

Publicly giving thanks on Thanksgiving Day is a tradition in the United States.  Many Americans give thanks to their parents, a supreme being, their alma mater, and whatever other forces and entities they feel have helped them become prosperous and happy.  I see no reason not to join in the holiday fun here at Alfidi Capital.

I am thankful to live in a country governed by the rule of law and not a monarch's whim or a mob's passion.  The rule of law is sometimes called into question when crony capitalists play questionable games with their clients' money, but I still believe justice prevails in even the most privileged cases.  America is still a country that convicts billionaires for insider trading.  No one is above the law.  The wheels of justice may turn slowly sometimes but they turn nonetheless.

I am thankful to live in a country that allows me to start and run my very own business without having to pay a bribe to a corrupt government official.  I pay my taxes on whatever revenue I earn without fear that some bureaucrat will surprise me with hidden fees out of spite.  This would be impossible in a socialist or Communist country where there is no such thing as private property. 

I am thankful for intelligent, thoughtful followers on the web who link to my site, read my blog, and follow my social media feeds.  Many people want financial analysis that is honest, independent, transparent, and entertaining.  My website management tools and traffic counters tell me that people from all around the world can't get enough of what they find here. 

I am thankful to be financially independent.  I have enough money to pay my expenses and live in comfort without fear of bankruptcy or a decline in my standard of living.  Being frugal and debt-free helps, but I could not have achieved this status without years of living well below my means. 

I am thankful to live in San Francisco, California, the greatest city in human history.  I have lived in Europe, Asia, the Middle East, and the South and Midwest of the United States.  Nothing compares to The City's quality of life.  The physical beauty, economic prosperity, and cultural treats here are unmatched.  There's no place like home. 

I am even thankful for the existence of stupid people who don't like me personally.  They're not intelligent enough to understand anything I have to say.  They make me look good by comparison.  I enjoy their hatred and relish every chance I have to defeat them. 

Finally, I am thankful to be extraordinarily handsome, supremely intelligent, and undeniably witty.  Those qualities set me apart from the stupid people referenced above.  I'd rather live this way than be sentenced to a miserable life of ignorance. 

Thanksgiving is a pretty cool holiday.  It's the perfect excuse to overindulge an appetite for the agricultural abundance of America, the most productive economy in history.  I enjoyed a buffet meal at The Cliff House, one of The City's oldest and best restaurants.  It was a great time to sample plenty of dishes and watch the world's commerce sail through the Golden Gate.  America is awesome. 

Boeing Bonanza From China

Boeing got some big news.  Hong Kong Airlines is buying $10B worth of 777s and 787s.  That figure is a list value before discounts, so the real gross is closer to about $6B (including another order from Air China for some 747s).  The deals add up to almost 10% of Boeing's gross revenue given the company's performance for the last three years. 

China's air travel sector is banking on continued growth.  One of the biggest problems facing any airline is the cost of fuel.  China's additional hurdle is the mere availability of fuel; it must seek oil exploration deals abroad.  Middle East unrest is getting worse and will make oil prices very unpredictable for months.  Libya's production is increasingly at risk of destruction and its eventual resumption is very much in jeopardy. 

Blanket bets on ever-expanding air travel are no sure thing in this kind of environment.  Boeing should hope that rising fuel costs don't price its airline customers out of future sales. 

Full disclosure:  No position in BA at this time.

Raw Energy And Market Action

There is no advanced civilization without energy.  How the world meets its energy needs determines whether nations can life impoverished masses out of despair with growth. 

OPEC claims it can boost output to lower the rising price of crude oil.  Good luck.  Many of OPEC's larger producers are at or near the peaks of their reserves.  Better drilling technology can flatten a peak by reaching previously unrecoverable reserves, but that takes time to deploy.  OPEC's smaller producers - yes, Libya - will have a tough time producing anything if their workers are revolting. 

Constricted supply means other producers are free to pump and reap windfalls.  Russia likes the windfall profits and support for the ruble that have come with high oil prices.  Net oil importing countries have every incentive to start pricing oil imports in a currency other than the U.S. dollar. 

Option traders aren't sleeping through this bonanza action.  The betting game is on, wagering any attempt by Saudi Arabia to meet world oil demand will be nixed by protests on a "Day of Rage" and afterwards. 

All of this oil action makes it easy for other energy sources to escape notice.  Resource-rich nations don't want to miss the next phase of the global commodity boom.  Mongolia needs help from big Western coal companies to develop its coal deposits.  It's a dirty job, but someone has to do it. 

Plenty Of Oil Left In U.S.

Forget what you've heard about Saudi Arabia's oil fields approaching their production peaks, if they haven't already passed them.  New techniques involving proppant injections, hydraulic fracturing, and horizontal drilling are unleashing the untapped potential of oil fields right here in the U.S.:

This new drilling is expected to raise U.S. production by at least 20 percent over the next five years. And within 10 years, it could help reduce oil imports by more than half, advancing a goal that has long eluded policymakers.

Shale oil and gas are going to be big domestic winners thanks to petroleum engineering.  Don't thank policymakers for this bonanza.  Thank high world oil prices that have incentivized new exploration and production.  The free market works just fine when we leave it alone.

Companies are scrambling to line up shale oil and gas properties for production.  Chesapeake Energy just sold a large shale gas property to BHP Billiton for $4.75B.  EOG Resources wants to double its rig count this year in the Eagle Ford shale oil formation.  Occidental Petroleum has long been confident that its shale properties in California will drive its future growth.  Shale producers are not pure-play situations; companies like BHP (with ROE over 34% and a very healthy balance sheet) are in a much better position to deploy capital and expertise into virgin territory. 

Full disclosure:  No positions in CHK, BHP, EOG, or OXY at this time. 

A Bonanza for Aardvark

Google recently bought a startup called Aardvark. I wouldn't normally comment on a Web 2.0 buyout but I'll mention this one for a special reason. See, last night I crashed Aardvark's celebratory party at a SoMa nightclub called Temple and saw their employees partying like it was 1999. Remember 1999? It was the height of the dot-com boom and everybody in SoMa was launching Internet startups that were supposed to make us all rich forever.

I missed out on all of the early web hoopla in the '90s as I was otherwise employed. This Aardvark deal is a rare throwback to that era. Congratulations, folks. The outgoing CEO (and now nouveau riche Web 2.0 rock star) gave a rousing speech thanking his employees. I enjoyed the open bar but I tripped over the giant Buddha statue in the entryway on my way over to claim a free Heineken (and I hadn't even had my first drink yet). I met one of their software engineers who'd never been through a transaction like this. I only had one piece of free advice: The best job security comes from one's own abilities and not some big corporate parent. I'll bet some future serial entrepreneurs were born that night.

BTW, if you're wondering how I found out about this party, let's just say I'm well-informed enough about The City's social scene that I can always find a way into places where I'm not supposed to be. ;-)

Nota bene: I have no investment in Aardvark or Google at this time, although Google is the web ad distributor for Alfidi Capital. I have no investment in Heineken but I do contribute to its bottom line with the occasional purchase (just not last night, thanks to Google's generosity with the open bar).

Updates to the Alpha-D for Jan. 2010

A few of my option positions expired unexercised. I always like it when that happens because I keep the cash I received when I opened the positions.

Here are the new positions I've opened:

Sold covered calls on FXI and GDX, expiring Feb 10.

Sold cash-covered puts on FXI and GDX, expiring Feb 10.

Sold cash-covered puts on TDW at 45, expiring Feb .10. I wouldn't mind being forced to go long Tidewater as I suspect its fair value is much higher than $45.

I haven't sold any FXI this month even though I'm becoming increasingly concerned about both the sustainability of China's growth and the veracity of their published statistics. I'm willing to let FXI keep riding for a month, but I'm going to take a serious look again in February about taking some money off the table.

I am hanging a big chunk of money on GDX (and some on ANV) on the likelihood that financial instability will return.

Dangling Over The Precipice

Lots of juicy news items today indicate just how close we are to the cusp of a big downturn (or several). The rally was driven by the emergency stimulus, so much so that even the possibility of withdrawing the housing tax credit is enough to make the stock market very nervous. Meanwhile, the debt we're incurring with gimmicks like that housing credit is making the bond market nervous.

The housing market isn't faring much better and has yet to return to a realistic historical norm specifically because of government intervention.

All of this nervousness afflicting big asset classes should be good news for gold. I'm seriously considering unwinding some of my gold holdings to have more cash available if these other asset classes crash. Only time will tell whether that's a wise move on my part.

Allied Nevada Finds Gold And Raises Capital

I continue to be proud of the only single stock holding in my portfolio, a junior gold producer named Allied Nevada Gold Corp. They have recently reported good results from exploratory drilling at their Hycroft property:

Successful drilling in 2008 suggests that a large blanket of sulfide mineralization, associated with veining and brecciation, exists directly below the oxide mineralization at the Vortex. An inferred resource of 62.0 million tonnes grading 0.78 g/t gold and 48.1 million tonnes grading 68.14 g/t silver, for inferred resources of 1.5 million ounces of gold and 105.3 million ounces of silver was released for the zone in March 2008.

Suffice it to say that this is a very positive result. If the Vortex zone's mineral grades remain higher than those of the overall Hycroft property, it may very well become the "bonanza zone" of that property.

Results like this are the reason Allied Nevada is successful at raising more cash to fund further operations:

Allied Nevada Gold Corp said it would raise about C$100.4 million ($92.45 million) by selling 11.2 million common shares to a syndicate of underwriters co-led by GMP Securities LP and Genuity Capital Markets.

The underwriters have enough confidence to subscribe to the entire issue up front. Good for them. I felt the same way when I first met Carl Pescio, one of Allied Nevada's largest shareholders, before he helped create the company.

Nota bene: Anthony J. Alfidi is long ANV, with the intention to continue selling OTM puts under its market price.

More Alpha-D Action for June 2009

It's that time of the month again . . . time to rebalance the Alpha-D Portfolio and refresh some option positions. Let's make a long story short. I'm staying long China (FXI, with covered short calls) and gold (IAU and GDX, with covered short puts, and a small long position in junior miner ANV). I'm staying short the broad markets (short uncovered calls on SPY, IWM, EFA, and VWO).

Don't ask me when my research website will be updated with new research and portfolio reports. I've got bigger fish to fry right now.

Alfidi Capital Hits 5,000 Page Views!

Thanks to my loyal readers, Alfidi Capital LLC has reached an important milestone. The combined page views for both the main website and this blog have now reached 5000 (exactly!) as of April 25, 2009. This helps validate my business model. I would of course like to market this firm more aggressively to get more viewers, but unfortunately I am engaged in a major project right now that takes up all of the time that I would otherwise have available for marketing. Let's keep those hits coming! :-)

Unwinding XLF

Yesterday I sold the long put I had against XLF. I have noticed over the past couple of months that the put's time value was declining even though its intrinsic value was increasing. I decided not to push my luck much farther, as this put has showed an enormous gain since I bought it near the beginning of 2008. I'm glad to pocket the extra cash.

Given the probable success (ugh!) of the revised bailout plan, the share values of XLF's components will probably be propped artificially for months to come. Keeping zombie banks and brokerages alive indefinitely might make political sense to some people, but it makes zero investing sense to me. I'll have to look elsewhere for more special opportunities, because this one in financial services has run its course.