Sunday, December 9, 2007

odds and ends

CME -- an analyst report recently included charts that showed compound growth rates of 25% or more for the volume traded of each of the major contracts that are traded on CME's exchange. This year the growth is even faster thanks to the higher volatility. I have expected $20 in 08 EPS for some time but now the stock is at 35x those estimates. either the stock will settle in here or the estimates are going to have to go higher. not sure what volume estimates people are assuming now but I don't think we are up to 25% volume growth yet. I will have to double check and report back.

MCF -- Contango Oil and Gas. Fascinating company. They determined that exploration is the point where most of the value is created in the natural gas industry so they outsource everything else and focus just on that. They partner with top geologists and others in the industry to carry out operations. They construct their contracts to provide the right incentives to encourage the best from people. They have taken a small amount of capital and created enormous amount of value from it in just several years -- say $60 mill to $850 mill in just 8 years. The beauty is that they are still small and the value is asset based rather than revenues and earnings so I think there are fewer limits to how big they can get. I am not an oil and gas value expert but I understand a good strategy and management team when I see one -- these people know how to add value and generate returns for shareholders. this is old -- from dec 06 but check this link out:,dwp_uuid=d8e9ac2a-30dc-11da-ac1b-00000e2511c8.html

TSRA -- they just signed a license with Toshiba -- another feather in their cap. good news in terms of their ability to get the consumer business up and running.

For those of you inclined to buy large cap stocks -- I think CSCO is pretty attractive right here -- I expect once they report again the stock will be back into the 30's. No way they are struggling while the rest of tech is doing well. they are just too well positioned. If I somehow had lots of cash, I would add this one but for now I have MSFT, GOOG, plus FLIR, TSRA, UEPS and FDS. plenty of tech exposure already. I would gladly trade MSFT for CSCO but tax costs make that impossible.

No comments: