Current Ideas and Framework

Currently I am considering some of the following ideas:

DDD

I followed this for a while back in 2013. At that time I made money on the long side, the short side, then the long side again, by identifying a reflexive trend – using stock sales to fund acquisitions. It was a classic reflexive boom-bust, as outlined in chapter 1 of Alchemy of Finance. I lost money in the 2nd half of 2013 when I called the top of the bubble too early. I was squeezed out with a number of other shorts, and the stock chart turned parabolic until it peaked in Jan 2014. After that, it has fallen for over two years from the mid $90’s to current prices under $10. I learned some lessons –

  1.  to wait until you see the “whites of their eyes” when you are shorting – wait until the chart sets up perfectly to short, or
  2. to size appropriately in order to have staying power.

I am not the best reader of charts, so #1 seems difficult. #2 seems more within my grasp, although it involves a lot of discomfort as you “fight the market”. Whitney Tilson entered the DDD short at about the same time I did, however he had the staying power to make a lot of money on it. This demonstrates that I have a lot to learn still.

I am more interested in the long side now. I think that it’s margins could normalize  because of its cost cutting efforts (it acquired lots of unnecessary workers as part of its acquisition spree), an exit from the consumer space (which has always had lower margins), and a new metal printer (I haven’t confirmed the technical merit of this new metal printer). Such a turnaround would give it an EBIT somewhere in the neighborhood of 70-80 mm. At an 8X EV/EBIT, it would justify the current share price. That is not good enough to warrant an investment however. After a reflexive bust, the stock ought to become a true value, with an adequate margin of safety.

I have been trying to build a financial model that would allow me to test my assumptions, however it is taking me far longer than I expected. In the meantime, the stock has rallied so much that even if it was a bargain, it may not be by the time I finish. This seems to be why George Soros adopts a principle of “invest first, invesigate later”. The only problem with that approach is that you have to remember to do the investigation after you have invested and not complacency set in. This is especially difficult if the trade goes your way – you tend to do minimal work to prove the thesis without assessing the risks adequately because things are working.

AGRO

This is an idea I first read on Value Investor’s Club. I would have been better off if I’d invested then, but I decided to wait out the global turmoil, attempting to be smart and time the markets. So much for that.

The thesis is that

  1. Macri, the new president of Argentina, has eliminated export taxes on many of Adecoagro’s products, which will give it somewhere in the neighborhood of $50 mm of FCF per year.
  2. years of capex in its sugarcane business are winding down, which also ought to contribute $50-60 mm of FCF per year.
  3. a 50% devaluation in the Argentinian peso has occurred, which ought to contribute $60 mm of FCF,
  4. Export subsidies of Argentina’s competitor countries have been eliminated under the Doha round of the WTO. I am not sure what the end impact of this will be, but it will assuredly be positive. India is a big competitor in the sugar markets, however it has massively subsidized sugar cane for years. At current sugar prices, few of its domestic sugar cane operations will be profitable. Also, The E.U. is a competitor in the dairy market (an area where AGRO plans to invest its new cash flows) and it had massive dairy subsidies.
  5. An agriculture inventory that has been building for several quarters. Management of AGRO anticipated Macri’s victory and the elimination of export taxes, and waited to sell certain inventories for several quarters. This depressed cash flow for prior quarters and will increase it in future quarters.

Risks include

  1. The Brazilian real has fallen. This affects the price of ethanol that AGRO sells directly into the Brazilian market. However, the dollar has risen, and the vast majority of its revenues are in dollars. I can’t really tell if the dollar bull market is a positive or not, for reasons of #2 below:
  2. The prices of commodities have been falling. This is largely due to the dollar. So the effect of the rising dollar doesn’t really benefit AGRO as much as you’d think – though it receives revenues in dollars, it is receiving less dollars per unit of product because the price of the commodities is falling.
    So far, I’ve been chalking currency changes to a positive, because many of its costs are in the peso which devalued much faster than the dollar. However, I may be totally wrong on this – there many forced pointing in different directions and its all a little confusing. The other thing is the Fed is likely going to abandon a strategy of multiple interest rate hikes this year, which ought to weaken the dollar.
    Will this increase commodity prices? So far it looks like the answer is yes. The commodity index is up today on news that the Fed is turning dovish. Perhaps the best tack is to just keep doing a bottom up analysis of this and if the value is there, whichever of the conflicting macro forces wins out will not hurt the thesis too much.
  3. El Nino. This is another possible risk, possible benefit. The yield of sugar from sugar cane decreases with increased rainfall, and half of its cash flows come from sugar. However, other crops have increased yields with the increased rainfall. Overall, it might be a slight negative.
  4. Dollar denominated debt. The company has some dollar denominated debt, and its borrowing costs have been increasing because of the rise in the dollar. The amount of debt is $580 mm, which is 4X EBITDA before all the aforementioned increases in profitability, which will come to something like 1.5-2 X EBITDA after those changes. Furthermore, the rise in the dollar could halt or reverse, and I think the company will be able to aggressively pay this down over the next couple of years, so I don’t think this risk is all that bad.

Maybe some of the risks pull the cash flow numbers a little lower for 2016. Either way, you are still going from a situation where cash flows were flat to slightly negative for the first part of 2015, suddenly turning at least $100 mm of positive FCF and possibly as much as $200 mm of FCF in 2016. The stock has rallied by about 40%, but I think this is far too small of a rally. The EV is currently about 2 billion, so the price isn’t that low, but once the debt starts getting paid off and new investments (like the dairy investments mentioned) start working, the stock will probably seem underpriced.

Now that I’ve gone through the value argument, I think the main reason why I’m so interested is that perceptions ought to dramatically change after the company starts reporting massively profitable quarters. So the time horizon on this isn’t as long as a typical value investment – I’m looking for this to work out in the next 6 months or so or I’ve made some wrong assumptions here.

DOC

This is an idea I saw on IBD talking about how investors turn to REIT’s during times of market turmoil. What I saw that got me excited was another possible reflexive boom-bust – the company is issuing a ton of shares and using them to acquire real estate. The company did several hundred million dollars in acquisitions last year, and management states they want to do over a billion this year. They just completed a share issuance for $320 million, and the stock rallied. I haven’t done a lot of work on this, but these seems like a prime “invest first and investigate later” type of investment – the stock has a perfect technical setup, so I dont want to miss it.

The stock has an inverted head and shoulders with a neck line of $16. After breaking through, it dropped, tested $16, and the level held. This indicates that it won’t likely fall through $16 again. As such, I can pretty clearly define the risk on this trade – if it falls through $16, I’m wrong. If it doesn’t, it ought to keep rising. The one thing I don’t expect, is that the price will stay where it is for the next year.

I would have to monitor this position closely, and I really must remember not to get complacent on this – that’s how you lose tons of money on these things.

Japanese stocks

I really don’t know which ones I like yet, but I’m putting this down as a theme I’m watching for now. The BOJ seems determined to make inflation happen, in an environment where one their key metrics of inflation, oil prices, keeps falling. This puts them in the struggle of printing more and more money by buying assets. The trouble is, those assets they are buying are JGB’s, which are now incredibly scarce. So they have turned to buying stocks outright through purchasing ETFs. They want the investment banks to make a custom ETF for them with Japanese companies that investing in Japan. Who the investment banks pick remains to be determined, but Mizuho put out a list of four possible candidates recently. After scouring those companies, I could only find one that I actually liked, Colopl, a mobile phone video game developer, now investing in VR games. It was cheap (7 X EV/EBIT), but not terribly cheap for a Japanese company – there are a ton of net-nets in Japan right now.

So far I have three possible strategies:

  1. Buy up net-nets. These are proven to outperform the market over a longer time period. But if Japan is devaluing the yen, then the value of holding cash decreases, and maybe this isn’t the best environment to do net-net investing.
    On the other hand, maybe Japan isn’t successful in further devaluations. Nearly everyone in Japan thinks the yen will devalue further, so this is a very against-consensus idea, but the yen might appreciate a lot if the risk-off dynamic persists.
    So then the yen might be a buy right? Well why not buy yen at a discount? If you buy up a bunch of net-nets, you can essentially buy cash at a 50-75% discount. Then, if the yen appreciates, the true value of your holdings has appreciated. If the yen continues to depreciate the core businesses and earnings improve, and the stock ought to go up. These might be a win/win
  2. Buy companies with lots of debt. These ought to be more volatile and their borrowing costs are decreasing, so they may go up more than net-nets in this environment
  3. Buy the companies I think will be included in an Abenomics ETF. Maybe this works, maybe it doesn’t. I don’t have a lot of confidence – after analyzing the candidates Mizuho put out there, they don’t look like great values.

GPRO – GoPro

Okay, the TTM EV/EBIT is 3.6X. Okay, sure, I know trailing numbers include this huge fad trend, and Gopro might never regain that kind of popularity again. But 3.6X!

I’ve generally observed that EVERY time that I’ve ever seen a fad stock crash to this kind of crazy level, it rebounds. I’m not saying it’s never happened that a stock falls and doesn’t recover, but I think there is usually at least a “dead-cat bounce”.

I think there’s a lot of potential for upside surprise here. What if the drone product takes off? What if people have a Gopro replacement cycle every 3 years and sales start picking up? What if other countries really start digging the Gopro thing? There’s a lot of ways it could go right.

Of course there are a lot of ways it could go wrong also, but I get a feeling that its all priced in.

I still have work to do, but I just get a hunch that there is value there. The last thing that makes me bullish is this article I saw at Motley Fool. When long term bulls are throwing in the towel, it’s usually a sign of the bottom.

The way I’d play upside surprise would usually be a simple call option, but the calls are so darned expensive. I’m thinking about buying a call spread – long a call at $10 or so, short a $20 call. This ought to lock in a 300% gain to 100% risk ratio, which seems about right for the probabilities here.

 

Outlook and Ideas

After re-evaluating from a defensive position, I have a few solid gains.

Recent Investments

The majority of my recent gains have come from a large upward move in Penn West Virginia (PVA). This was the undervalued natural gas play I bought earlier in the year. My theory was that natural gas prices were rising, yet natural gas companies had failed to respond in kind, so I expected this to be corrected by the year’s end. As it turns out, the thesis was actually false – natural gas did not remain in an uptrend for long. However, two things added up to make this play successful: 1) I purchased a company trading at a price/book of 0.4, which gave me sufficient margin for error, and 2) the company had recently used its financial position to purchase oily shale acreage in the Eagle Ford.

The oil acreage allowed the company to accumulate significant income, so it is growing its book steadily. Even now, it trades at less than 0.6 price/book, so for the time being, I am leaving the full amount invested. I will likely hold until it reaches a price/book of 0.8.

In addition, I have made a few successful short term bets. I took some modest profits shorting XONE on the way down, but I did not get out in time, and the majority of the profit from the trade was lost. In addition, I took small profits from catching the bottom of the S&P 500 ETF last week. I also entered a trade on the Euro. I had intended to hold this for some time, as I believed the continuation of United States’ QE at the same time that periphery Euro countries pay down their loans would lead to an upward surge in the Euro. However, I do not believe I adequately understand the situation to profit from this, so I took today’s pop as an opportunity to get out with some profits.

New Investments

My largest new position is in Take Two Interactive (TTWO). Though the stock has already had a big run, I believe that the success of Grand Theft Auto V has not been fully accounted for. This is the best selling game of all time, and the stock has not reacted since the game broke all expectations in late September. Further, I have noticed that companies which turn from unprofitable years to profitable ones generally have a large pop on the announcement. I am hoping to take advantage of such a move when Take Two announces its earnings for both this quarter and the subsequent one. In addition, the company has poured significant cash expenditures into both developing the game and marketing it. Now that the game is out, the cash flow situation should change dramatically, with massive cash inflows against much lower expenditures. I have established a position in call options for next March, and I am slowly accumulating a stock position as well.

New Ideas

I keep questioning when the bubble in speculative stocks will collapse. Salesforce (CRM), Workday (WDAY), Tesla (TSLA, of course), 3D Systems (DDD), Stratasys (SSYS), and the like continue higher. The trend has gone too far, and I am at an impasse about what to do. To short would likely be suicide – the market still has legs, and these will run up more than the market. How long until general economic weakness forces a re-evaluation of all of these names? I could attempt to play alongside the market – but I fear I have missed my entry point (last week, when the market bottomed). Thus, I have no clear strategy here.

I am still investigating stocks in other countries. The trend of capital seems to be flowing into the United Kingdom.

The stock that has been on fire in the London Stock Exchange is Ocado (OCDO). It seems to be in the midst of a reflexive boom, but the process may be too far along to begin a speculation. The company does have a truly revolutionary product – they have actually been able to build a working business model on home delivered groceries. As a result, the fundamentals have been improving at the same time that the stock price and perception have been improving. I expect this trend to accelerate. The company is using financing for its growth, turning mostly to the debt markets rather than equity. As a result, it may be an ideal candidate for making a speculation.

As the company is already in a strong uptrend, I am wary of entering, because I may be caught in a correction to the downside. Usually, trends like this are tested by a wave of negative perception. Because the company is rapidly improving fundamentals and the idea does seem to be catching on with the public, I believe it will survive such a test. After surviving a test, the trend should emerge stronger than ever. So I will wait for such a point before considering entering a position.

I am also looking for extremely undervalued cases in European countries, but the search is yielding no strong candidates so far.

Update 3D Systems Corporation Position

I had written an article arguing we were now in an acceleration of the boom phase, and I am beginning to doubt my own investment thesis. I had been expecting analyst upgrades, based on the 250 basis point increase in the gross margins that 3D systems was generating. These have manifest, at both Canaccord and Janney Capital.

However, 3D Systems was recently downgraded by William Blair’s analyst Brian Drabb. Mr. Drabb had appeared very anxious about organic growth on the previous conference call, and it seems the CEO’s answers were unable to satisfy his concerns. This event is important because it indicates a possible shift in perception.

One analyst downgrading is not indicative of a whole market shift, but it does show a weakness in the bull thesis. What I am questioning now is whether we are really in a twilight phase – where both investors and analysts don’t truly believe in the underlying thesis anymore, but they continue to play the game. If this is true, we could be in for a catastrophic downward acceleration soon.

An addition weakness in the thesis comes in the form of a technical sign of a reversal. There was a doji on May 14, a downward hammer on May 15, and a down-day to confirm the hammer signal on May 16. This is a pretty strong reversal sign.

Technical Sign DDD May 2013

The stock is still quite popular with retail investors, who don’t seem to be doubting the thesis. But a second downgrade could mark the beginning of a sudden catastrophic downward acceleration (Stages 7 and 8 of the reflexive cycle, as outlined in my article), which increases the risk/reward ratio enough to make my position dangerous.

I hate to change my position so soon after arguing for a continuation of the boom phase, but if my investment thesis has been weakened, I have no business staying long the stock. Thus I have closed my position.

Market Position May 15, 2013

I have had some big successes in the market lately. The short yen position has been yielding truly incredible profits lately. Almost simultaneously, the long position in Tesla (TSLA) has nearly doubled. Nearly every day after the earnings announcement has given us a new breakout to higher prices. This signals that there is a big money position being established in the stock, or that short covering is occurring now. If the huge money behind these moves are capable of mobilizing so quickly to positive news, this signals to me that they will be equally quick to mobilize in reaction to negative news.

I am not sure how long this continuation move will last. Eventually there will be a pullback – that is almost certain. But I still suspect we are only in the early phases of this boom for Tesla. I expect Tesla to generate more buzz and excitement as the year goes on.

In addition, I re-established the position in 3D Systems (DDD), according to the logic outlined in my article. Events are playing out as I had expected, with upgrades in the stock, and higher prices. This lends credence to the idea that we experienced a test phase from January to March, and we are now in a phase 4 type boom. Therefore, there should be additional room to go with the DDD long.

C & J Energy  (CJES) continues to be a dead weight in both the portfolio. The bad news about the state of the hydraulic fracturing market is out, and I believe it has been priced in. I think we have put in a bottom in this range (~$18). I dont expect the stock to dip below $17 unless the market turns worse.

I expect the market to improve as the year goes on and higher natural gas prices lead to renewed excitement in dry gas plays.

I am working up a position in some dry gas E&P companies as we speak. I do not want to reveal names and tickers, as they are tiny companies, and I have to be very cautious to establish a position at the prices I would like. I have been able to find several that are trading well below book value currently, and I have reason to expect that the book value itself is artificially low, because it is based on a past price environment, where natural gas prices were much lower than today. I will write an article soon explaining the logic.

I am using my unleveraged portfolio to purchase the dry gas companies. I am selling off a previous purchase of Halliburton (HAL). Halliburton has also come to a fair valuation in the current environment. After the settlement of the Deepwater Horizon litigation, the shares have been relieved of the pressure that was depressing them. I suspect HAL will benefit if the activity in the North American gas market picks up, but I believe the benefit will be more pronounced in CJES, so I prefer an investment in the latter.

I also sold my shares in Petroleum Geo Services (PGSVY). It is a shame to sell off such a well run company, with such growth potential. It is still undervalued, and I expect that investors at these prices would do reasonably well holding this for the long term. 3D and 4D seismic technology is only becoming more and more important, and PGS has already accumulated the Multiclient studies for the vast offshore Africa fields. However, I think there are better opportunities, like BBBI.

I am slowly accumulating more shares of Birmingham Bloomfield Bancshares (BBBI). It is currently trading at a price to book of .5, and it seems to be generating earnings at a comparable pace to BNCCorp (BNCC). The deep discount offers a considerable margin of safety, and the growth, fueled by the automotive industry boom, is bound to continue for the foreseeable future.

Reflexivity fails to explain the latest moves in 3D Systems Corporation

I am glad I exited the short at $30. 

3D Systems (DDD) has continued to make acquisitions. However, it is currently funding these acquisitions with cash on the balance sheet, rather than new equity issues. This eliminates a major component of the original long investment thesis. 

I would ordinarily take such a signal as a positive sign that the company has escaped the reflexive boom and bust unscathed, and thus is poised for the “plateau of productivity”, as outlined in my article. However, the stock still trades for a P/E of 96 (using GAAP earnings). Even if we use the company provided non-GAAP growth rate of 43%, the company trades for a PEG ratio above 2. 

This is still an overvalued company. And, as long as the company is not utilizing the high share price to fund growth, I can see no benefit to the overvaluation except an increase in risk of investment. 

It’s cash levels will not sustain acquisitions indefinitely, so it might be supposed that 3D Systems will eventually switch to leverage-funded acquisitions, but without any proof that this is occurring,  I believe it is too risky to take a long position in the company. 

The Short on 3D Systems Corporation (DDD) is Finally Paying Out

I was a little too eager to call an end to the twilight phase in my Seeking Alpha post two weeks ago. I did not anticipate the large run up in the stock, but probably should have. At the peak of a bubble, it is normal to see a test of the highs.

As the stock rose last week, I shorted shares, but did not add to the options positions. Risk control is easier when shorting a stock outright than in buying put options, because I can set a stop limit that is logically derived. For 3D Systems Corporation (DDD), the natural stop limit would be in the $72-73 range, because this is the all-time high for the stock. If it were to blow through this point, it will have passed a test, and the reflexive boom phase could continue for the foreseeable future.

However, it seems that this week has shifted the momentum back to the negative. I feel more secure in the short position now. In a reflexive bust, the further the stock declines from the high, the more likely it is to continue declining, until the stock reaches undervaluation territory. For DDD, I would not be interested in investing on the long side until the stock nears $30/share.

The only risk to the bust process at this phase is the upcoming earnings announcement on February 25. I suspect these earnings will show high growth rates, because the stock was so highly priced during the fourth quarter that 3D Systems Corporation could spend freely on capital expenditures and acquisitions for growth.

This alone would be a positive event for the stock price. However, the perception on the stock has already shifted. According to George Soros’s model of reflexive boom-bust processes (see model in my DDD article here), it is typical for the stock to continue declining for a significant period after the peak, even as earnings increase. That is, the peak in earnings typically follows the peak in stock price (this is due to the delay of acquisitions’ effects on earnings, coupled with the 1-2 month delay in reporting earnings). So good earnings will not necessarily de-rail the bust process.

But it pays, in the long run, to be cautious. Therefore I will likely reduce my short position before the end of next week to lower my exposure to an earnings-related upward move. But, in the mean time, I am letting my profits on the short position run, and am considering adding to it to cash in on a likely move downwards during the beginning of next week.

Disclosure: I am short DDD via stock sales and the purchase of March and May $45 put options. I am considering shorting additional shares of DDD in the next 72 (business) hours.

And the Bubble Goes “POP”!

So I was correct last week in assessing that we were in the twilight period for 3D systems corporation (DDD). I was wrong for not selling then.

I did not realize how quickly the bubble would deflate after it popped. And I have paid for that mistake.

Most of the profits on the trade have been lost in today’s crash. I believe stage 6 (of the stages I outlined here) is now over. I will have to reverse the position to a short as soon as possible, but short-sales have been restricted for the stock until Wednesday morning’s session. At that point, stage 7 will begin. So for the mean time, I will make a hasty exit.

Rapid Repositioning

So I have not followed through on the moves suggested in my previous post; I have done things very differently.

The trading in Activision (ATVI) does not make any sense to me. In the wake of the Newtown shootings, Vice President Joe Biden has been spearheading an effort to reduce gun violence, and a discussion on gun violence in video games is in the agenda. Several media outlets specifically mentioned Call of Duty (Activision’s best selling game) when discussing the story.

This, to me, reads like negative news, which would affect perception negatively, and cause the stock to fall. However, last Friday, when the story was breaking, the stock popped instead.

I cannot find sufficient reason for why the perception would get so positive, save for perhaps the recognition of Call of Duty’s success by its infamy. I have not been enthused with the stock’s performance, and there is no blockbuster video game on the horizon. The two biggest drivers of revenue planned for this year are a Starcraft expansion and continued growth in Skylanders. A quick chart of Google trends confirms the idea that Skylanders was a huge seller this previous holiday season. The Starcraft expansion could be a hit or a miss. It is a huge question mark as to whether the Skylanders earnings boost is enough to counter the lack of other major titles during the holidays and the negative perceptions of gun violence. To avoid the uncertainty, and perhaps out of my own negative bias, I have sold the stock. It will remain to be seen whether this was the right decision or not.

There are many less risky plays. The oil price has resumed the upward climb as global demand revives from its dip. The place to be is, and has been, in international and deepwater projects. I still have no exposure to the emergence of African oil, and the ensuing consumer-products boom, which is unfortunate. I was expecting perception of African investments to grow positive throughout December and January, so I was originally planning on speculating in AFK (a broad Africa index), but the index has not performed well enough to suggest that perception is turning around. I will continue to monitor AFK, and look for more targeted ways of playing the African growth story.

C&J Energy (CJES) is now becoming dangerous. Though it remains VERY undervalued, the perception has gotten stronger against fracking. CJES has returned to the resistance point at $22-23, but I do not think it will break through. The anti-fracking movie “Promised Land” has come out, and though it has not been very successful, it should turn the perception even more negative, and depress the stock price. In addition, natural gas prices have not risen as fast or as far as I would have hoped to use up the spare fracturing fleet supply. The U.S. onshore activity (represented by the rig count) dropped throughout the 4th quarter, so I expect that competition was more fierce than the rest of 2012 for CJES’s fracturing services. So I have sold out a portion of the position.

I am unsure how much should be sold out, because 2013 will likely be a much better year for CJES. The natural gas price will probably continue to slowly rise, and oil and gas companies may begin to spend again on natural gas drilling. In addition, the price of oil is already much higher than it was during the 4th quarter, so demand for U.S. onshore oil will increase.

But the combination of a worsening perception for fracking and weak 4th quarter earnings will drive the stock down, so I must sell some of the position.

I have traded out the CJES shares for an investment in Core Labs (CLB). I respect the management of this company more than any other oil service company for their knowledge of and foresight in their industry. The company shifted to international and deepwater projects several quarters ago, so they are relatively immune to the poor 4th quarter earnings that I expect for most U.S. onshore oil service companies. While the profit margins at CJES have worsened, the profit margins at CLB have widened. CLB has a wide moat around its core analysis business, while CJES has a relatively small moat. CLB trades at $113, $2 less than what I sold it for a year ago, though the earnings have increased by 22.6%. It is one of the few companies I would buy at a P/E to growth ratio above 1 (it currently stands at 1.13), because of its excellent management, high profitability, and relative monopoly in the core analysis business.

I have invested in Corning (GLW), which is in the glass business. The TV industry has been experiencing a cyclical trough period as an after-effect of low employment. As employment picks up across the United States, the down-cycle in TV sales should end. In addition, I believe that new buyers of homes will also be likely to buy a new TV for their home. With the housing industry fully on the rebound, a pickup in the TV industry should be close behind.

LCD TV glass has been the most important driver of GLW’s earnings in the past, so the pickup in the industry should cause the fundamentals and perception to become more positive and lead to a stock price increase. As an added bonus, GLW has a near monopoly on smart phone and tablet glass, a segment which has been continually growing. The earnings for these devices is very small compared to TV glass (because of the size of the devices), but this segment should provide an additional earnings boost on top of the TV rebound.

GLW is currently trading at a cheap 9.23 Price/Earnings ratio. I think this is more than reasonable given the prospect of a TV industry rebound. I have invested a fairly large position (~10% of portfolio).

The speculation in 3D systems corporation (DDD) continues. I only wish I had more on the table. I am wary of adding to the position now, because there is really no telling when it will reverse. I will not be shy in shorting the stock when the reversal comes.

Disclosure: I am long CJES, CLB, GLW, DDD. I may sell shares of CJES in the next 72 hours.