11/22/05 Pre-Market

Hey! It's War Out There. Watch yourself.
...Interesting article by Paul Farrell on MarketWatch this morning. Interesting because of its downright belligerence toward the Wall Street establishment. Farrell is often different from most of the financial writers you read, but this one is bold even from him.
...His contention boils down to this - it's war out there. And the people who should be looking out for you, and who are providing your guidance and the information you use - they are your enemies. Here's the link to the entire article:
http://www.marketwatch.com/news/story.asp?guid=%7BF5F5DB02%2D70B6%2D41C2%2D94A4%2D0DD58C71D5FC%7D&siteid=mktw&dist=
...Did you know, according to Mr. Farrell, that Wall Street tells you that for every $10,000 income you expect in retirement, you'll need about $230,000 in investments?
...Mr. Farrell wrote an article a few years back that I saved somewhere - can't find it right now - on how one could retire with a lot less money than anyone would think. His point on that article was to tell you to not let anyone tell you that you could not retire. He has done it three times. I plan on doing more writing about that subject myself for several reasons.
...I like freedom, and I think we have become a nation of serfs. I have seen people live in retirement on what would normally be considered poverty level incomes, and seem to do as well as most other lower middle class folks. The secret? They were debt free, not in bondage to any lenders, especially those of the credit card ilk.
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Better to be lucky than good? Sometimes, for sure. Some time ago a friend urged me to get into Convera (symbol CNVR). I don't normally take stock tips, from friends or from those friendly advisors giving out all those free stock tips on tv. (Incidentally, I get great amusement out of those disclosures that some of the financial shows use now when interviewing an analyst about a pick he or she is making. Here this person is telling you how much they like this stock while the disclosure info on the screen shows that the analyst doesn't own the stock, nobody in his/her family owns the stock, his/her firm doesn't own the stock, but hey, they think it's great anyway!) But I put CNVR on my watch list.
...And when I saw it moving, I picked up a few shares just so I wouldn't have to hear about it in case my friend turned out to be right - you know how those friends can be. But as I kept track of it every day on my stock watchlists, I saw that the up/down volumes suggested accumulation. That set off my radar detectors. So I checked further into the stock.
...They have about 200 customers currently for their paid search engine, and many of those customers are U.S. government agencies, including our defense agency. Convera's search engines are able to handle complex queries that lesser engines cannot. And their largest shareholder is the investment bankers the Allen Group. Mr. Allen has been listed as one of the 400 richest Americans according to Forbes magazine. All of that made me think that something might be going on here, and I bought more.
...So now CNVR has become my largest holding, at least for now. And I'm thinking about adding more as a trade if the positive volumes keep occurring. They report earnings December 1, and they are also coming out with an updated product launch.
...The BB's are very mixed about this stock. Some folks seem to think that they are going to rival Google, others think that they are all hype and very over-priced at cheaper levels than they are now. I guess that's what makes a market. There's even one disgruntled ex-employee bashing them on the boards and I like to see what folks like that have to say as well. I see that back at the peak of the dot-com bubble back in 1999-2000, they once traded as high as $70 a share. Who knows what will happen from here? What makes it tradeworthy for me, in addition to the government agency contracts and the quality financial backing, is that I see the volumes higher on up days than on down days - sometimes it is tough to tell, but that normally means accumulation.
...As for frequenting BB's, I take everything I read on them with a very large grain of salt. People are posting anonymously, and without verifiable track records. But every now and then you run across a nugget. Besides, they can be entertaining and I like to hear everybody's opinion on something I'm checking out, whether they be knowledgeable or a whack. That's where I came across the following link somebody posted. Convera was mentioned in an article on the online edition of Military Information Technology. Here's the link:
http://www.military-information-technology.com/article.cfm?DocID=1245
...This is not a stock that I would have found using any of my pre-determined screens, and it is not the kind of stock I would normally be in, but the ride has been good so far. Better lucky than good? Sometimes.
...Along those same lines, I'll mention BMD. I first heard of this company on Cramer's Mad Money show on CNBC. Sometimes Booyah Cramer has a segment where he invites callers to try and stump him on a stock. That's what happened with BMD. He didn't know anything about them. But then he checked them out later and featured them on a subsequent show.
...What I decided to check then was the market reaction the next day. Sure enough, BMD opened up about 20% at the open, and at one point during the day was up over 30%. Proof again that the mania still lives. And that people are always still hanging on the words of a guru instead of thinking for themselves, but that's another story. I considered shorting them based on that explosive over-reaction, but didn't.
...But I did check them out for myself. On their web site they have a picture that would be a tree hugger's worst nightmare, big equipment, downed trees, excavated earth, etc. But I digress. They also have a 34 page slide show explaining what they do and why they think they will be profitable. The company was formed in 1994 and to this point has been in a developmental stage. They are becoming an operational company in Q4.
...They are located in the heart of Canadian oil sands country. That got my attention because I am a long term energy bull, and Suncor (symbol SU for home gamers as Mr. Cramer would say) is a core holding for me. But they are not in the oil sands business. They apparently lease the mineral rights under the oil sands.
...They are going to mine rocks and limestone, with limestone being the main focus starting about 2007. Apparently the oil sands companies use a lot of limestone. And BMD believes that they can provide it, due to their proximity to the oil sands companies, at a significant discount to their nearest competitor. So that should give them an edge over any competition. This looks like a classic pick and shovel play to me. Anyway, I picked some up for the long term port. I put stuff like this in an account that I don't watch daily. It is on a momentum run right now, and those can end badly and be nerve-wracking. But this looks to me like a good longer term play, and a natural fit and different way to play the energy market.
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