If this type of thing does not interest you please disregard and my apologies for sending it.

Ok, so I was looking at some charts tonight on BP and combining that with reading articles. Attached is a chart, and some data that I was going through. If I am crazy for thinking this, please write me back, but basically I am going short (this is a way to make money on a stock for the downside) on BP (British Petroleum) according to 3 things. If I get this right in my account I may soon retire Just kidding, but seriously… ( I would not try this at home)

My 3 reasons

1. Chart on BP looks horrendous. Absolute capitulation.

2. The data posted below.

3. Gut feeling.

My Price Target on the downside is $25.80 for now. and the second sell-off to $20. IF they get the well capped all bets are off.

Please read below. Very Interesting. May be the short of a lifetime besides Bear Stearns and Lehman Brothers.
In an exploration plan and environmental impact analysis filed with the federal government in February 2009, BP said it had the capability to handle a “worst-case scenario” at the Deepwater Horizon site, which the document described as a leak of 162,000 barrels per day from an uncontrolled blowout — 6.8 million gallons each day.
Now, I am warning that the amount of oil still in the reservoir might be much bigger than BP is admitting.

Specifically, BP claims that there are 50 million barrels worth of oil in the reservoir underneath the leaking spill site.

But the Guardian noted Friday:

But the 50m figure cited by Hayward took some industry insiders by surprise. There have been reports the reservoir held up to 500m barrels – the figure quoted by Hayward’s questioner, Joe Barton, a Republican from Texas.

“I would assume that 500m barrels would be a more likely estimate,” said Tadeusz Patzek, the chairman of the department of petroleum and geosystems engineering at the University of Texas at Austin. “I don’t think you would be going after a 50mbarrel reservoir so quickly. This is just simply not enough oil to go after.”
Indeed, Wolf Blitzer said:

One — one expert said to me — and I don’t know if this is overblown or not — that they’re still really concerned about the structural base of this whole operation, if the rocks get moved, this thing could really explode and they’re sitting, what, on — on a billionpotential barrels of oil at the bottom of the Gulf of Mexico.
Bloomberg notes:

The ruptured well may hold as much as 1 billion barrels, the Times reported, citing Rick Mueller, an analyst at Energy Security Analysis in Massachusetts.
Oil industry expert Matthew Simmons also puts the number above one billion barrels (see thisBloomberg interview, for example, where he says that – unless stopped – 120,000 barrels a day will leak for 25-30 years; that adds up to 1,095,000,000 to 1,314,000,000 barrels).

And Rob Kall claims that a source inside BP tells him:

Size of reservoir – estimated by BP and its partner, Andarko to be between 2.5B and 10Bbbl. (that’s 100,000,000,000 gallons and 400,000,000,000 gallons).
Yes – all of those numbers are BILLIONS.
Given that BP’s nearby Tiber and Kaskida wells each contain at least 3 billion barrels of oil (see this,this, this and this), estimates of more than a billion barrels for the leaking Macondo reservoir are not unreasonable.

Basically if this well blew up and billions of oil leaked into the ocean it would be the worst thing to ever happen to BP and in the world as far as manmade disasters go.

I used to work as a CDO Bond Trader and here is some more data as far as counterparties that would also blow up. RIG, APC and several credit facilities that banks are holding for this company.

BP’s Bankruptcy Would Impair 117 (18% Of Total) Collateralized Synthetic Obligations, Lead To Pervasive Losses

Even as increasingly desperate falling knife catchers try to convince someone, anyone to buy up some or all of their shares of BP stock, which is certainly on its way to a guaranteed doubling, tripling or more, the real investing community is ever more carefully looking at the worst case, and its implications. Said implications would be vast, and in addition to wiping out billions in capital from BPs direct counterparties which are already limiting their BP exposure, a topic we touched upon briefly previously, would also impair indirect holders of pre-packaged securitized BP exposure. Today Moody’s provides an analysis of which CSOs (just like CDOs but packed purely with synthetic products – think Goldman’s Abacus) would be impaired should BP go bankrupt. The rating agency does not stop there, and also analyzes what a bankruptcy of BP peers Halliburton, Anadarko Petroleum, Transocean Inc., and Cameron International would look like, and who would be wiped out. Below are the results, which upon further analysis will likely indicate total loss potential well beyond BP’s total outstanding debt exposure.

As the recent civil case involving Goldman and the Abacus (and soon potentially others) CDO showed, collateralized products have a special place in the heart of the regulators, due to their avalanche quality of blowing up seemingly completely unrelated entities, which share merely the stupidity of having invested in the same entity. BP, as a company with over $20 billion in debt outstanding, has over the years, seen many of its CDS packaged and repackaged in the form of many and increasingly more complex CSOs. Last week’s blow out in BP spreads, in which the 1 Year CDS surged beyond 1,000 bps, has got many people concerned: the least of which are counterparties that are on the other side of the short risk trade. Others include investors in just such CSOs, and other companies whose CDS comprises various tranches in these synthetic obligations, as forced liquidations in any given CSO would result in the blow out spreads in even perfectly solvent companies who just have the displeasure of being packaged in one and the same CSO.

Moody’s summarizes:

In the event of BP’s restructuring or bankruptcy, CSO transactions referencing BP or its affected subsidiaries may experience what is called a “credit event.” If the credit event occurs, the CSO transactions will have to meet their payment obligations to the protection buyers, which will result in the loss of subordination to the rated CSO tranches. In cases where the subordination is no longer available, CSO investors will incur the loss.
The rater elaborates:

Last week, credit default swap (CDS) spreads on BP plc widened to all-time highs, reflecting the mounting costs of the Gulf of Mexico oil spill and the ensuing rating actions. BP’s credit deterioration is in turn a credit negative for collateralized synthetic obligation (CSO) transactions that reference BP or the companies involved in the Gulf incident.

Rising Costs of the Spill. After almost two months of unsuccessful attempts to stop the worst oil spill in history, BP is potentially facing billions in containment, clean-up, and litigation costs. It is unclear what these expenses will ultimately amount to over the coming years, as the assessment of the damage is just beginning.

BP Downgraded, CDS Spreads Widen. Our recent downgrade and placement on watch for further possible downgrade of BP and its guaranteed subsidiaries reflects intensified risk that the extended oil spill in the Gulf of Mexico will significantly siphon the company’s free cash flows. Spreads on BP’s credit default swaps rose as much as 124.5 basis points (bp) in one day to a record 630.6 bp as of 16 June 2010. BP’s debt maturing next year recently traded at distressed levels, and there is a growing concern among credit investors over a scenario where BP plc might default.
Enjoy your evening,

www.csquaredtrading,com

Regards,

Ben Brinneman

                      

The reason for this stock BAC rising is that it is at new highs and with the market weak, it has strength, I loaded the boat and went all in, tho I would not recommend this to normal traders, there was such a low risk for downside I could not resist. Currently the stock is moving in my favor and I will hold overnight if it closes strong.

The interest rates on US Treasuries are rising and that is causing money to come out of the Bond Market and Flow into equities. Nobody is going to stick their money in a money market acct, because of the super low return, so everyones best option is to be in the market with individual stocks. EBIX BAC C RF etc…

I hope you are profiting in this market the same way we are!

                      

This piece below is written by a guy that has almost 1,000,000 shares and is the second largest shareholder in the company. I am long about 20,000 shares and am waiting for this to go up to 1.40 from it’s .92 cent price it is currently trading at.

GAXC reported their Q4/ Year End 2009 results yesterday after the close and also had their conference call this morning. I’m not going to get into Q4 results that much because you can read it for yourself. I was paying more attention to guidance, RP (request for proposal count) for ATM and DVD, and any potential guidance going forward.

The company surprisingly did give guidance. GAXC management team is ultra conservative, but since their public peers provide guidance they likely felt compelled to provide some base line case for the 2010.

“Assuming similar transaction levels in 2010 compared to 2009, and based on what we believe to be is a stable base of predictable revenue, we are targeting 5% to 10% organic growth from our ATM business,” Mr. McQuain concluded. “Our DVD kiosk business will provide upside to this guidance, and we expect this new and emerging segment to add 5% to 10% in incremental revenue for calendar 2010. As we continue to carefully manage our expenses and focus on higher volume locations and higher margin opportunities, we anticipate accelerating our profitability in 2010 compared to 2009.”

10-20% growth in itself would be quite an achievement given their relatively flat performance the last four years. That said I believe the company has a good chance of hitting the top end or beating this guidance.

One of the most interesting tidbits of the call was the RP (Request for Proposal) tally for both ATM and DVD divisions. RP’s are the number of ATM’s we are currently bidding on and same for DVD’s. The current ATM RP’s stood at 5,000 at year end. To monetize this further, GAXC is currently bidding on $25 – 45 million in annual ATM business. This gives investors the growth potential for the ATM side moving forward. A major win is a big deal.

GAXC also stated that their current DVD kiosk RP’s stood at 550. They said that most of these RP’s are on accounts that are currently using Redbox, NCR, or another incumbent. To monetize this further, GAXC is currently bidding on $13 – 16 million in annual DVD kiosk business. Management stated that demand is so high that they are being very cautious in cherry picking the most profitable locations/accounts.

So in totality, GAXC is currently bidding on new business that represents $40 – 60 million in ANNUALIZED revenues ATM/DVD combined. This is why I’ve been saying since November that GAXC can wake up and wake up quickly on any significant ATM or DVD win. The company has squeezed as much blood from the rock as they can with internal efficiencies and any new win would have a direct and meaningful effect on both top and bottom lines.

The company also said they expect to have their third kiosk initiative narrowed down by the Q2 2010 conference call. The company has a vast client base in which to sell further kiosk offerings, so I look forward to hearing what the new initiative will be.

I’m one of the largest individual (non institutional) investors in Global Axcess and will be a buyer of more shares on pullbacks.

                      

This dip that it is on now is a great buying oppurtunity, I hope they panic sell it tomorrow and if it starts to run up I will add to my position. I rarely do this, but this stock will make a quick and great comeback. I will be offline for the rest of the time and will be touring CA.

This market continues to move higher. One of our subscribers banked today on BIDU entry at close now up 7% on his play.

Ben

                      

This is in relationship to our CHOP and CHNC holds currently in our longterm account.

China’s surging demand for steel this year is expected to dominate the landscape of the steel industry as never before.

Already the world’s largest producer by far, the country is expected to rev up production by nearly 10%. But the higher output likely won’t exceed demand, pushing prices higher world-wide for steel, its raw materials and even coal.

Steelmakers, which idled dozens of mills and cut production as the global economy slowed, are now ramping up. Rio Tinto, which sells the most iron ore to China, is restarting production. Iron ore is a key ingredient in making steel. Arcelor Mittal, the world’s largest steel producer, is raising prices, as is China’s largest steelmaker Baosteel Group Corp.

China also is trying to unify a fragmented and sprawling domestic industry to present a strong, unified voice in price negotiations for sales and purchases of raw materials. The idea: Capitalize better on the country’s huge appetite for the materials that make everything from refrigerators to bridges.

China is expected to produce a record 600 million metric tons this year—about half the world’s total output. The next biggest producer, Japan, will make just one-sixth of what China is expected to produce. The U.S. was fourth in production, behind Russia, last year.

China’s continued resilience was the dim light in an otherwise dreary year for miners and steelmakers, marked by layoffs, mine closings and production and investment pullbacks as prices for commodities tumbled. And it looks to be the beacon going forward, along with India, to a lesser extent.

While other economies are strengthening, they don’t offer the same potential for growth as China, which makes penetrating that market critical. “Chinese steel production and demand is likely to continue its inexorable rise,” says Peter M. Fish, economist for MEPS International, a steel consulting firm.

That, in turn, is good news for all metals and minerals sellers.

Iron-ore spot prices, at about $110 a metric ton, have been climbing toward their highest level in more than a year. Coal prices for steel mills and electricity production have surged by more than 30% as the Chinese last year curbed production due to environmental concerns. Copper, aluminum and zinc prices also have risen.

“The recovery of all commodities has exceeded expectations,” says David Butler, analyst at J.P. Morgan Cazenove.

Australian ports are becoming congested again, with coal ships in line on the ocean, waiting to load and unload.

Robin Walker, a spokesman for Rio Tinto, the largest seller of iron ore to China and which sells a substantial amount of coal, says its economists are revising projections from August regarding Chinese demand. “The new update could show that growth is stronger,” he says.

BHP Billiton, the world’s largest miner, Rio Tinto, Australia’s Fortescue Metals Group Ltd. and Brazil’s Vale all are increasing production of iron ore, and in some cases coal, to meet the expected increased demand in China.

China’s Baosteel, an industry bellwether, told buyers last week that it would increase steel-sheet prices by 5% beginning in February, marking the third steel price increase in as many months.

“With January hikes now sticking well, we expect to see further price increases announced in China as well as Europe and the US,” says Michelle Applebaum, an analyst at steel research firm MARI in Chicago. “Chinese steel demand is profound, and rising raw-material costs are driving an inflationary spiral in the region as steelmakers and their customers clamor for material.”

Massive government stimulus and infrastructure plans—including for rails, roads and bridges in eastern China and for general construction and factory building in the western part of the country)—are fueling demand. Most of the steel production will be consumed internally, says the China Iron and Steel Association, the main steel trade group in the country.

China’s exports have dropped between 10% and 50%, depending on the product and country in the last year, which is welcome news for ArcelorMittal Chief Executive Lakshmi Mittal. Mr. Mittal says that last fall, China’s steelmakers remained fairly disciplined about keeping their steel from flooding foreign markets, which has helped steelmakers around the world raise prices.

The downside for ArcelorMittal and other steelmakers is that raw-material prices will likely rise as the companies compete with Chinese steel mills to secure the coal and iron ore needed to fuel and feed steel plants.

This week, Australia and China signed a $3 billion coal deal, the largest buyout by a Chinese firm in Australian mining history. The purchase of Australia’s Felix Resources Ltd. by Yanzhou Coal Mining Co. could open the door to more acquisitions this year.

Write to Robert Guy Matthews at robertguy.matthews@wsj.com

                      

GAXC DVD Kiosks

Transaction processors and ATM companies have received a lot of positive press this past week. Barrons and AP both put out bullish articles on the industry and Global Axcess’s (GAXC) closest comparable, Cardtronics (CATM).

From Barrons Article: Transaction Processors See Some Action

For the month of December, group average 2009 and 2010 price/earnings multiples increased to 17.9 times and 15.0 times from 16.7 times and 14.1 times, respectively. 2009 and 2010 group average Ebitda multiples also increased to 10.4 times and 8.9 times from 9.9 times and 8.6 times, respectively.

From AP Article: Payments Processors outlook

Among smaller payments processing companies, Mammone recommends Cardtronics Inc. for 2010. He rates the stock as a “Buy” and set an $18 price target for the company, which operates thousands of ATMs across the U.S., United Kingdom and Mexico.

Conclusion:

Global Axcess (GAXC) at $1.00 per share is trading at about half of its peer group average. Deutsche Bank analyst Christopher Mammone has an $18 price target on Cardtronics (CATM) which when you break it down is valuing it at 21x the average 2010 EPS estimate. Global Axcess will likely grow net income yr/yr at a higher growth rate then Cardtronics. After reading both articles and doing a peer analysis and analyst expectation analysis, GAXC is considerably undervalued. GAXC’s ATM division alone should be currently valued over $2.00 share. My GAXC baseline EPS estimate for 2010 is 13-14c (40%+ EPS growth) which doesn’t include additional ATM wins or any DVD kiosk contribution. A baseline price target on GAXC would be close to $3.00 by using comp PE analysis. With additional ATM or DVD kiosk wins/contribution, GAXC’s price target would increase considerably.

Disclosure: LONG GAXC and continuing to add to my position
www.iancassel.com

                      

Back in October zagg announced a new project called zaggbox, which would store recorded video, pictures, and music on its 1 terabyte hard drive, and allow you to access the media on your home entertainment system as well as on your mobile device. As impressive as that is for a company that started off selling stickers high-grade protective polysomethingerother skins for cell phones, it’s only the beginning – full home automation through zaggbox is in the works, which will let you lock doors, control and view security cameras, and adjust the thermostat from your smartphone. Recording media for later consumption is huge, and with the Xbox 360 connectivity, you’ve got an easy way to create and share gameplay videos. The price point will sit somewhere between $600 – $900, and the mobile app will be in the neighborhood of $20, which might sound like a pricey proposition overall, but at least they’re only charging a subscription fee if you want all of your media backed up in a cloud storage service. I can only imagine what Sling and Unify4Life think about zagg now…

Source ZAGG Inc.

                      

I mentioned TRIT at the lower (secret strategy) and the stock just rocketed up over 2 dollars or almost 10% after that entry. After selling and taking about $400-$500 in profits I moved on to sell SYNM in my short term account while still holding in my long term account.

Purchased SIAF the other day at 1.19
Purchased CHOP at 5.24 a month ago or so
Purchased NEP at 4.90 average price still holding currently at 10 and some change in one of my clients accounts
Purchased SYNM longterm account.

A lesson on portfolio balancing, when you trade you want to alot your portfolio and risk about 10% towards speculative plays and the rest should be used towards for sure things when you trade.

Guys I am working on a trading plan that is going to be awesome for this year so that we can consistently be on the same page money management wise. This is going to be on the house if you have already purchased the courses.

Today was a great day, and yes the market is going up but I don’t care all my plays are circumstantial and when that happens, doesn’t really much matter what the market does. I am up 70% for the last 6 months.

Tomorrow, I will be adding to CHOP as it looks like it is ready to explode, I will also back the truck up and buy some zagg on any pullback. I might even mortgage the house

On any major pullback on NEP I will load up.
Here is some research done by a friend on CHOP, AMMMMMAAAZZZZZZIIIINNNNNNGGGGG COMPANY!

Way to show what a great investment chop is. I will split chop into two divisions.

Presently, division one which is the present division that is making money, is turning down business and if it does nothing else this division will generate year in and year out at least a dollar plus five cents a share. That is 42 million Net Income and up, going forward..

Where in the hell could you get a 20% return on your money today, a 5 dollar investment. Chop division one will go up in stock price we all have to be patient.

Based on a do nothing approach this division is worth today at least 10 bucks a share, minimum.

Ok, now we look at the new plant to be built and we will call this division two which will be funded by just the cash on hand and the secondary offering cash in division one. Even with this cash coming out of division one it is still worth at least ten bucks a share. Note division one will have the cash offering of 21 million and the additional allotment of 3.6 million on 720k shares and the 21 million net income to be earned from 7/1 to 12/31/09 and the 42 million net income next year 2010 totalling 88 million cash on hand to go to division two. But division two only needs 58 million so division one can keep the other 30 million for working capital. That is why divsion one in my estimation is still worth 10 bucks a share minimum.

Now, onto division two which will generate at least 55 to 60 million a year net income as opposed to division one. Why you say?

Well, both will generate about 200 million a year on metric ton capacity of 500 million. But division two will have machinery that will be manufacturing 75% of its revenue at a higher margin than division one. I would say around ten percent more, per the CC dialogue stating chrome producing products are at a ten percent higher margin. Therefore, 75% times 200 million is 150 millin at a ten percent higher margin which will result in a additional 15 million to the bottom line. Add another 2 to 3 million to net income for efficiencies stemming from running two divisions splitting a lot of shared costs, duplication costs, etc. etc. and we could see 60 million net income from division two, (42 million, plus 15 million plus 3 million).

Now here is the beauty, division two also gets the benefit of the 90 million of cash from the warrant and unit exercise on a fully diluted share basis of 19 million shares.

@#$%, 90 million in cash and 60 million net income results in 150 million sitting in division two after a complete full year of operation speaking of course on a pro-forma basis.

Results mind boggling, 150 million in cash and a division two doing 3.16 EPS ……yes over three dollars a share in net income.

Now to simplify it bring the two divisions together and we have around 225 million in cash, now don’t forget division one makes 42 million net income a year too.

Both divisions together will make 102 million a year and their combined eps will be 1.75 a year.

What would you say the value of a company with 225 million in cash no long term debt and tops 31 million in short term debt after aplication of restricted cash against short term debt 75 million and making 1.75 a share.

Shall we say Chop divisions one and two together are worth at least 21 dollars a share with a multiple of 10 plus cash of 3.50 a share all the way up to a top valuation of 30 dollars with a multiple of 15 plus cash.

Note, also that the 225 million will most likely buy a few of the small companies in this fragmented sector. No true leader in this sector right now , and I am talking domestically of course. they will be all cash deals and net income accretive immediately upon purchase.

All in all this is a great investment for the wise and long term investor.

Disclosure: LONG CHOP

Market Summary:

The new year began on a strong note as all three major indices made their way to new 52-week highs on the back of broad-based buying. Though trading volume wasn’t quite back to average levels, the move was supported by a solid pick up in participation… Stocks spent the entire session sporting strong gains. Initial support came amid handsome overseas gains and a pullback by the greenback… News that the ISM Manufacturing Index for December exceeded expectations (consensus called for 54.3) by improving to 55.9 from 53.6 in November helped keep the bullish bias intact. Participants generally shrugged off two-month old construction spending data that showed a slightly steeper-than-expected 0.6% monthly decline for November (consensus called for a 0.5% decline). Construction spending for October was revised downward to reflect a 0.5% decrease… After stocks ascended to new 12-month highs in late morning trade, they spent the rest of the session drifting sideways, which left the S&P 500 to remain in a range that spanned less than three points. Still, the steady grind locked in the stock market’s best single-session percentage gain in eight weeks… Energy stocks and materials stocks underpinned the gains. The two sectors both advanced 2.8% with help from both the broader market and higher commodity prices… With the dollar down 0.4% against a basket of foreign currencies, the CRB Commodity Index advanced 2.1%. Crude oil prices climbed 2.7% to $81.51 per barrel as they broke the $80 per barrel barrier for the first time since November. Meanwhile, precious metals prices, as a group, gained 3.1%… Though they weren’t quite the leaders that energy stocks and materials stocks were, financials also had a strong session. The financial sector tacked on 2.1% with particular strength exhibited by investment banks and brokerages, which spiked 3.4% in conjunction with an upgrade of Morgan Stanley (MS 30.91, +1.31) by analysts at both UBS and Credit Suisse… Despite broad strength this session, the defensive-oriented utilities sector was a relative laggard. It advanced a mere 0.2%… Retailers also lagged. As a group they finished flat. The uninspired performance came after shares of retailers bested the broader market for the past month; during December retailers advanced 2.2%, while the S&P 500 advanced 1.8%… Participation wasn’t quite back to normal, but it did improve so that more than 1.0 billion shares exchanged hands on the NYSE. The past two weeks have been underscored by poor participant turnout as many trading desks went thinly staffed amid end-of-year holidays. Dow +1.5%, Nasdaq +1.7%, S&P 500 +1.6%, Nasdaq 100 +1.4%, S&P 400 +1.6%, Russell 2000 +2.4%

Until next time;

HAPPY TRADING!

the C² Trading Team

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