Seeking Alpha by Adding Beta

As we are getting closer to enter into 2008, I started thinking about potential stock recommendations which could return 50% by end of 2008. Due to recent turmoil in financial markets, even after markets recovering in last 2 weeks (S&P is up by 7% in last two weeks), there are still quite a few stocks which would fit the bill. Here are my recommendations. Disclaimer: I may have positions in some of these recommendations US Stock Recommendations: VeriFone (PAY): This company's stock got penalized last week (down by 54%) due to accounting errors on how they accounted for inventory in first 3 quarters of 2007 even though they increased the revenue guidance. This company makes products which you come across almost everyday when you go shopping in malls or for groceries. They make devices which read your credit or ATM cards at the counter. This company is leader in that space. So fundamentally nothing has changed as far as business is considered. Credits cards are here to stay and

After my trip to meet with Mr Warren Buffett, everytime I think about an investment idea, I take a pause and ask myself: What would Mr Buffett would do ? Hope I can make some wise decisions with this question. November was an unusual month where markets went down (only 2nd time in 13 years markets have gone down in November). Is it good or bad ? After strong and volatile October, it's good for markets to get excesses out, get the correction (10% down from peak) and get ready for another high. With major banks taking big writedowns, companies like Countrywide, E*Trade and many builders trading like they are going to declare bankruptcy, finally Fed and US Gov have realized that this sub-prime issue is much larger than they originally estimated. Late last week, things have started lining up for some kind of arrangement to avoid recession due to sub-prime meltdown. With that context in mind, here are my predictions and recommendations (Disclaimer: I may have positions in some of the r

As part of Berkeley MBA, on Monday Nov 19, 2007, we had a trip to Omaha, Nebraska to meet with greatest investor of all time, Mr. Warren Buffett and I must say that we all were totally impressed by his intellect, sharp mind and simple life he is living. Students from Haas School of Business, UC Berkeley, London Business School and University of Arizona, Tuscon came to meet with him. Here are some observations, tips we heard from him about investing and life and photos: Even though he is one of the richest person on planet, he was so simple, approachable and down-to-earth person. He came driving his old Cadillac, had lunch with all students, spent 4 and half hours and went back driving his car He is extremely sharp with numbers and still remember numbers about his investments, various macro-economic statistics and how he makes money on every 12th coke bottle consumed in the world Mr Warren Buffett is funny and extremely good speaker. We wer all surprised when he started his talk with a

Finally October month is over and as every year, this year was no different as far as market volatility is considered. Let's see how my macro predictions are doing: India's BSE sensex crossed 20000 5-months before my target date HangSeng crossed 30000 Fed reduced target interest rate to 4.5% Dow almost reached 14000 before today's fall of more than 300 points So most of the predictions are on target. So where do we go from here. With credit markets still in turmoil, expect quite a bit of volatility for next few weeks. Almost all big banks are issuing warnings, taking big-baths, creating cookie-jars for future quarters and in the process cleaning up their books. This is good for economy and that's why I love US financial system. Companies/Banks are not kept on life-support as zombies the way other economies. For example, Japan kept their banking system on life-support for whole of 1990's which impacted overall economy and had multiple recessions. I think with Fed

As every year, October month seems to be keeping up with its promise of being one of the most volatile month for stock markets. It started with a bang with Dow reaching record level on Oct 9 just to fall back about 5% in next 10 days culminating on 20th anniversary of famous 1987 crash! What a day Friday was with all events like options expiry, India and China markets crashing and on top of it wide coverage of 20th anniversary of 1987 crash in mainstream media! No wonder people got little scary and that's when it presents great buying opportunities. As I predicted in mid-Aug, I think this slide presents another excellent buying opportunities for long-term investors. My hypothesis is based on following analysis: Even though results from companies from financial and to some extent industrial sector are weak, other sectors like technology are producing very handsome results due to weak dollar and exports. Employment is still very strong with no major layoff annoucements outside mortag

Typically October month is notorious for market volatility since all major market crashes have come in the month of October. But looks like 2007 October has started with a big bang with 2 big market rallies on Monday and Friday with Nasdaq jumping nearly 2.9% in one week. Next week earnings season starts in earnest and since there are no major pre-warnings, this earnings season should be pretty good. International markets especially emerging markets are on fire with BSE sensex almost touching 18000. If I have to make bold prediction, I won't be surprised if BSE sensex touches 20000 by the time 2007 wraps-up. That would be more than 100% jump since I was in India in June 2006. Even though Shanghai market was closed, all Chinese ADRs trading in US were highly volatile. One day, they were down by 5-10% and next day they were up by 5-10%. Is trading in Chinese stocks is becoming like gambling or fundamental landscape in valuations of these companies is changing? I hope it is later and

Now that Q3 is over, as promised, here is readout on how the model portfolio (on paper) I constructed and published at start of 2007 year is doing. Investment Quantity 1/5/2007 9/30/2007 Rate Amount Rate Amount %Gain UUPIX 156 32.09 $5,006 57.85 $9,025 80.3% FXI 47 105.94 $4,979 180 $8,460 69.9% FSESX 80 62.69 $5,015 100.67 $8,054 60.6% TABRX 397 12.61 $5,006 17.73 $7,039 40.6% VEIEX 211 23.68 $4,996 32.75 $6,910 38.3% VGTSX 573 17.46 $10,004 20.67 $11,844 18.4% CSCO 527 28.48 $15,010 33.13 $17,460 16.3% VDMIX 803 12.46 $10,005 14.28 $11,467 14.6% VFINX 77 129.87 $10,000 140.61 $10,827 8.3% VSTCX 492 20.31 $9,992 21.28 $10,470 4.8%

Finally long-awaited interest rate cut is here and that also came with big bang. For many folks and even for stock market which tracks every word of Ben Bernanke, this looked like surprise. IMO, this was very much expected move and one of the reasons I wrote my previous article "is it time to buy", it was clear that mid-Aug provided ideal opportunity to make some bets. Here is report-card on how my recommendations did over 5 weeks - pretty good record considering one returning over 50% and only one in negative (which is housing stock and looks like we have yet to find the bottom of housing market) Symbol Price on Aug 17 Price on Sept 21 % Gain UUPIX 33.56 52.57 56.6% FXI 119 168.48 41.6% IBN 38 50 31.6% APPL 117 144.15 23.2% AA 32 37.4 16.9% LLNW 7.56 8.47 12.0% VGTSX 18.02 20.16 11.9% BX 23 25.32 10.1% FISMX 25.58 27.98

I am a student of macroeconomics and like to read about various macro-economic factors such as inflation, interest rate, labor productivity, education and how it impacts long-term prospects of a country. Based on such analysis, I like to come up with investing strategy and find out mutual funds, stocks or ETF and recommend them and invest personal money to test out these strategies (put your money where your mouth is:-) Based on prominence of BRIC (Brazil, Russia, India and China) countries, I have been looking for ways to go beyond BRIC countries and look at other emerging countries. Countries in Laton America, Asia and Eastern Europe have been growing as fast or faster than BRIC countries and provide excellent investing opportunities. Check out following article - top 3 countries are non-BRIC countries in emerging markets with Peru topping with 168% returns Top 10 places to invest However investing in one country or index poses significant risks due to political, social factors which

In last post titled "Is it Time to Buy", I recommended 11 stocks. My post was so timely as markets have returned to normaly with discount rate cut of 50 basis points and Fed and Bush Government all assuring that they are not going to let market turmoil impact economy. Q2 GDP also came in very strong at 4%. Let's see how my recommendations did in last 2 weeks: Recommendation Symbol Price on Aug 17 Price on Aug 31 2-week Gain Target Price Profunds Ultraemerging funds UUPIX 33.56 45.41 35% 50 Ishares Trust FTSE/Xinhua China 25 Index FXI 119 150.31 26% 150 WCI communities WCI 7.76 9.32 20% 12 Apple AAPL 117 138.48 18% 150 ICICI Bank ADS IBN 38 44.45 17% 47 Alcoa AA 32 36.53 14% 40 Limelight Networks LLNW 7.56 8.25 9% 14 Fidelity International small cap FISMX 25.58 27.68 8% 2

What a week with so much volatility, Dow falling below 13000 and having almost 10% correction from its peak. In my previous posts, I did predict that Dow would touch 13000 again before heading back to 14000. So now question to ask: Is it time to buy again ? To get to an answer, let's consider some macro factors: World's economy is having one of the strongest growth it has seen anytime in history. Almost all countries (save few countries in Africa) are growing at 2 or more percentage with some of the big emerging countries like India and China growing closer to 8-11%. Given right policy by central bankers, almost all countries are seeing relatively moderate inflation unlike in past when Latin American countries were known for their hyper-inflation Global economy is more integrated than any other time giving rise to productivity as there is most optimal use of capital not within country boundaries but across world Dow and all other indexes are going to stay here - they are not he

It was Harry Potter mania which has engulfed world forced me to come out of my summer hibernation and start writing on my blog again. I also went with Yash and Isha to buy final installment of Harry Potter series book. I must admit that it went just for the fun and till now have seen only movies (not read the first 6 books). I started reading the book and the plot is really interesting. We saw hindi movie called "Partner". It is loosely based on Will Smith movie Hitch with all ususal bollywood masala. All of us did liked the movie - nice dance numbers at exotic locations and good comedy. If you are into bollywood movies, I do recommend this movie. In last 6 weeks, I was more active on contributing articles to SeekingAlpha site. In fact couple of my articles did got published (editors of this site decide which ones to publish). Check them out: 1. Six reasons Yahoo should buy Joost http://internet.seekingalpha.com/article/39271 2. Seven Reasons Why ICICI Bank is a Better Invest

I thought I will write anout something else today. Now that summer is almost here, I have break from my MBA classes and studies, kids are also wrapping up their school year, we love to go to Farmer's markets on Sunday morning. One of best Farmer's markets I have seen is at Santana Row, San Jose It's all year round every Sunday from 10 am to 3 pm. They have lot of varieties of fresh fruit and vegetables. My most favoruite is of Ana's Corn. You should take a corn with butter and spices and relax on chairs nearby. Near Maggiano's they have band playing. Overall it is a great experience to spend Sunday afternoon at Santana Row - you should definately experience it! Quick Commentary on Stocks: As I predicted earlier, correction in Chinese markets have started with Shangai Index falling from 4300 to 3800 (as of Monday Jun 4 morning). That's about 12 % correction. I think it would go down till 3500 before rebounding in major way. Fortunately this time it has not brough

Recently one of my stock recommendation Teledata has been on a roller-coaster ride. In recent times, it has been locked in either upper or lower circuit limit of 5% (in India, many smaller stocks have circuit limits of 5 to 20% to avoid extreme fluctuations). When I recommended it first time on one of my post, it has gone from 47 to 96 and back to 63. As per previous news, it should be demerging in 3 different companies by end of May. My recommendation is to HOLD and BUY more if it goes below 50. From financial point of view, it has excellent balance sheet and is winning orders from many state governments. It has good product in education and shipping management software. Unfortunately there is not much information available on management. So at this time I am giving them benefit of doubt and would hold onto these shares for potential windfall. I recommended Zee news at 40 and finally it has started moving. Last week it was trading at 46. Finally market has started realizing the pote

Last week I completd second year of my part-time MBA at UC Berkeley - I was so looking forward to summer break after hectic spring quarter. I took Financial Information Analysis, Brand Management and Risk Management courses. All were pretty good courses. Did a marketing plan on Ebay and got a chance to take a closer look at how Eddie Lambert made billions with his smart move on Kmart. Learned couple of excel tools like Crystal Ball and Solver in Risk management course. Overall it was a good learning quarter. It was an interesting week for markets which are becoming little bit frothy even for an aggresive investor like me. It is definately climbing peaks every week but I almost feel that end of rally is coming anytime. Here are my predictions for rest of year: Now that SSE index has crossed 4000 (my earlier prediction was that it will reach 3500 by year-end), it reminds me of Nasdaq of 1999-2000 when it was crossing thousdand milestones in months. SSE index is almost reaching similar st

Emerging markets (India, China) are hot again. Both SSE and BSE indexes are making records every day. From macro economic point of view, these markets are getting slightly ahead of their economies. If you are a long-term investor, then you don't need to worry since macro-economic, demographic factors are in favor of continuing growth for years to come with some bumps along the way. However if you are momentum player, you may want to watch out next few months. Remember last summer (I was in India at that time) when BSE index came from 12000+ to 9000. You may want to cash out some of your winners by Apr end and keep some cash handy to invest at lower levels. Same goes for China market As saying goes in US, sell in May and go on summer vacation! Coming to my individual recommendations in previous posts, here is quick update: Teledata Informics still going strong. It is at 87+ and nearing my target of 100 within 3 months of my recommding at 47. Latest Q results were great and on annua

Since my last posting on "seeking alpha in Indian market", my recommendation "Teledata Informatics" has increased nearly 40% in 2 months (from 47 to 65+) when BSE sensex has moved only sideways. Similary my last year's recommendations (Aptech) is doing great and just crossed 260+. I wish I can start some type of hedge fund focusssed on Indian market and apply my "alpha" finding skills:-) My another prediction about SSE Composite Index crossing 3500 has already came true. It is trading at 3560+ as of Monday 4/16. IMO it is getting way overheated even to my taste. But momentum is very strong and I won't be surprised if it crosses 4000 by year end but along the way there would be lot of volatility. Here is another "alpha" stock in India market: Zee news: This is spinoff from Zee entertainment mainly focussed on news in various languages. There are many news only channels in India (NDTV, Aaj-Tak, Doordharshan and so on) but Zee is one of t

As promised, I have been tracking my model portfolio regularly and here are the results and highlights of Q107 results. Model portfolio resturns were 2.22 % (compared with .6% for S&P). So at least till now, I am track to beat S&P by 2% points by end of year Best performaing asset was FSESX: FIDELITY SELECT ENERGY SERVICES which returned 15.59% and Yahoo stock was second with 12.73% return Worst performaing asset was Cisco stock which was down by 10.36%. Second worst was FXI:ISHARES TR FTSE INDX which was down by 3.31% Overall till now the portfolio is well balanced and even during late Feb sell-off held pretty well. I am not doing any adjustments to this model portfolio Here are my forecasts for overall market: USA market will go sideways for next quarter till there is clarity on economy and interest rate direction Chinese market will keep on going upwards and Shanghai Index may break thru 3500 by quarter end (from 3250+ now) Indian markets will continue to go sideways and BS

If you haven't came from another planet, you would have noticeed that lately Indian stock market has been on fire. Economy growing at about 9% per year, BSE index has been up about 40+ % in last two years. In such market, it's very difficult to beat the market when any stock you pick would do well. By defination, seeking alpha is nothing but find stocks which would return better than just by investing in any index funds. I have been successfully investing in India for some time and have developed few skills to pick some stocks. At start of 2006, I have selected Aptech which I picked up at 130 rupees with target of 200 in 12 months. Check out in blog archives at: Today it is 209 rupees. I recommended to some folks back home when it was 60. But that was past (in stock market - no one cares about past) Let's talk about which stocks would do better going forward now that BSE index is at 14300 and it has become difficult to pick wining stocks. I am planning to write about one or

Our Trip to Paradise 2006 By, Yash Maniyar " Swimming clothes Sunscreen Candies Beach toys Excitement Camera ...," I read off the list I made while my mom packed the bags for tomorrow's Hawai'i trip. We were all so excited. My mom & dad were waiting to go to Hawai'i for 14 years. "Go to bed you guys. Tomorrow you have to wake up early," my mom said. So we went to sleep in our cozy beds. The only ones awake were me & Isha. We were talking about how much fun we were going to have in Hawai'i. "We're going to go snorkling!" I exclaimed. "Mamma said that we're going to have a swimming pool near our hotel room," Isha said as if she knew everything about our hotel already. I didn't know when we fell asleep but I had a feeling it was late. The next morning, I woke up by the call o

Based on my not so good track record of 2006 returns on my stock picks, I decided to design a portfolio with a mix of stocks, many mutual funds and for first time mix of bond and cash. (yesterday when we were playing bridge, one of our buddy mentioned that his portfolio returned 60% - congratulations to him on this excellent record. I would be interested if he can repeat and sustain similar results with large amounts - say 100K) On Friday when Yash had gone to singning class, I designed this model portfolio based on closing prices of Jan 5, 2007. My goal is to beat S&P by at least 2% by Jan5, 2008. I promise to update the blog with quarterly results on this portfolio. (Diclaimer: I personally don't have 100K to invest in such a portfolio. This is just to test application of some of the learnings I am getting in my MBA classes) Symbol Shrs Holdings Value Name - 5-Jan-07 28.47 527 15,003.69 $15,003.69 CSCO 527 15,003.69 $15,003.69 CISCO SYS INC - 5-Jan-07 27.7