How did we miss these stocks?!?

Nords

Nords

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Every once in a while Jon Markman manages to write a good thought-provoking column.*

Here' s the 16 best stocks of this millenium and their cumulative gains since Jan 2000:
Hansen Natural (HANS), 3,739%
KCS Energy (KCS), 3,251%
IRIS International (IRIS), 3,248%
Amedisys (AMED), 3,181%
Quicksilver (KWK), 2,929%
American Healthways (AMHC) 2,801%
Cheniere Energy (LNG) 2,746%
Chico's FAS (CHS) 2,367%
XTO Energy (XTO) 2,363%
Palomar Medical Technologies (PMTI) 2,225%
Quality Systems (QSII) 2,142%
Ceradyne (CRDN) 2,038%
Central European Distribution (CEDC) 1,841%
Holly (HOC) 1,752%
Tractor Supply (TSCO) 1,293%
Titanium Metals (TIE) 1,183%

Did anyone happen to stumble across these before they took off? If so, what brought them to your attention and where can we verify your prescience on a certified copy of your brokerage trading records?

If you believe his screening criteria, here's the list for the next six years:
Siliconware Precision Industries (SPIL), a China-based semiconductor manufacturing equipment maker whose stock broke out to an all-time high of $5.75,
New Jersey business-services provider Innodata Isogen (INOD),
Hong Kong-based jewelry maker LJ International (JADE),
Israel-based specialty eyeglass lens maker Shamir Optical Industry (SHMR),
financial-services provider Ocwen Financial (OCN).

Somehow I don't think I'm going to gain any amazing insights from reviewing their financials. But that won't keep me from trying.

You're welcome. Please wait for 10 minutes after tomorrow's opening bell until I've completed my trading.

* If the second page doesn't come up on your browser, either, select the "Print page 2 of 2" link under Markman's picture.
 
Nords: I bought XTO in 2002. I liked them because they were not too big and they had found a niche buying producing and drilling properties cast-off by larger gas and oil companies, the properties that were not productive enough for the likes of XOM. They have excellent efficiencies in taking marginal properties belonging to the giants and running them better and extracting more product. I liked the prudence of their gas hedges too. I rebalanced out as it went along, and finally sold out completely in June. Plus, they paid a dividend, although small. I still have a few shares of a royalty trust they spun off. I was on the prowl for commodity stocks when I found it, and it came up in a screener program tuned for dividends--but I liked it anyway. You shoulda seen the ones that got away, the ones that didn't pay dividends.
 
I'm pretty sure I owned most of them through my small and mid-cap index funds. ;)
 
I think the best chances of finding a company like that is if you are very very familiar with what the company does and know people who work there. Only time I think there can be a substantial advantage like when all of those people in Arkansas knew about Wal-Mart before everyone else.
 
Nords said:
Every once in a while Jon Markman manages to write a good thought-provoking column.*

Here' s the 16 best stocks of this millenium and their cumulative gains since Jan 2000:
Hansen Natural (HANS), 3,739%
KCS Energy (KCS), 3,251%
IRIS International (IRIS), 3,248%
Amedisys (AMED), 3,181%
Quicksilver (KWK), 2,929%
American Healthways (AMHC) 2,801%
Cheniere Energy (LNG) 2,746%
Chico's FAS (CHS) 2,367%
XTO Energy (XTO) 2,363%
Palomar Medical Technologies (PMTI) 2,225%
Quality Systems (QSII) 2,142%
Ceradyne (CRDN) 2,038%
Central European Distribution (CEDC) 1,841%
Holly (HOC) 1,752%
Tractor Supply (TSCO) 1,293%
Titanium Metals (TIE) 1,183%
Click to expand...
Well I recognize the first two cause one of my largest Fido funds (Low Priced Stock) is (or recently was) the largest fund holder of these stocks.  Many of the others are heavily held by Fido, but I can't place the particular fund at the moment.
 
Nords,

It seems that I bought PMTI 400@5,22 on 01/03/2000 & 700 @3,38 on 22/03/00 (loosers avereage losers !), and it also seems that I lost money on the stop a bit later which does not require to provide a brokerage log to certify the loss !

It was kind of a typical breakout as I used to trade at that time (I've made good money on these sort of securities CYTO, HYSQ, DTSX and many others, often more than 1000% !), but this one ended with a loss. Well in March 2000 the market did not support people trading breakout any longer... As I never look back I did not know it had been one of the best performers.

That's life.

The Metastock explorer I had built to find those breakout securities follows:

ColA: {on reprend l'indicateur en le décalant de 4 jours}
BarsSince(Ref(Fml("JLM_Weinstein_with_volumes"), -4)) + 4

ColB:{Si fondation la MM200 doit être plate après une chute}
ValueWhen(1, Ref(Fml("JLM_Weinstein_with_volumes"),-4), ROC(Mov(C,200,S),100,%))

ColC: {on est obligé de décaler de 4j pour tester la valeur du volume sur 4 jours de suite}
ValueWhen(1, Ref(Fml("JLM_Weinstein_with_volumes"),-4), ROC(Mov(C,200,S),200,%))

ColD: {Calcul de l'evolution du cours depuis le jour du franchissement suivi du volume}
100*(C-ValueWhen(1,Ref(Fml("JLM_Weinstein_with_volumes"),-4),C))/ValueWhen(1,Ref(Fml("JLM_Weinstein_with_volumes"),-4),C)

Filter: colA < (4*20) {pour une recherche sur 4 mois}
AND colC < -25

With

JLM_Weinstein_with_volumes (formulae)
{PVBK}
ROC(CLOSE,1,percent) > 5 AND (V>Mov(V,50,E)) AND
{Passage de la MM150 E}
(Cross(H,Mov(C,150,E)) OR Cross(C,Mov(C,150,E)))
{Les MM200S et MM150E doivent être plates}
AND (
Abs(ROC(Mov(C,200,S),5,%)) < 3.5 AND
Abs(ROC(Mov(C,150,E),5,%)) < 3.5) AND
{On recherche un énorme volume dans les 4 jours qui suivent le passage de MM150E}
(
(V > 3 * Mov(V,50,E) AND V > 4 * Mov(V,200,S)) OR
(Ref(V,1) > 3 * Mov(V,50,E) AND Ref(V,1) > 4 * Mov(V,200,S)) OR
(Ref(V,2) > 3 * Mov(V,50,E) AND Ref(V,2) > 4 * Mov(V,200,S)) OR
(Ref(V,3) > 3 * Mov(V,50,E) AND Ref(V,3) > 4 * Mov(V,200,S))
)
 
It was kind of a typical breakout as I used to trade at that time (I've made good money on these sort of securities CYTO, HYSQ, DTSX and many others, often more than 1000% !)
Click to expand...

Who needs asset allocation with this kind of result?
 
Spanky said:
Who needs asset allocation with this kind of result?
Click to expand...

Because for every 1,000% gainer there are 15 goose eggs.

But you make it up on volume. :LOL:
 
Well, trading Price and Volume Breakout PVBK, which I automated much further than the simple metastock explorer above and I inspired myself from the fine book of Stan Weinstein (something like "making money on bull and bear markets") is a good trading strategy under strong late bull runs. In fact most of the value stocks already have astronomical PE at that stage of the bull run (and little potential) and the stocks triggering PVBKs are kind of penny stocks, well normally they trade between 1 and 4 bucks and rocket up to 100$ in two/three months.

Even though Nords is a bit pessimistic, you undoubtedly need to have a positive expectancy at that game which is tha case. If interested I could scan the hundreds of that kind of trades of placed and come up with exact numbers, but I would say that you have two "miss" for a big winner. Which means two small losses for a big runner. That's a very good expectancy. The problem is than you can trade 100k accounts with that strategy but past 250k it starts being very difficult to find enough stocks and trade this kind of low volume securities and getting reasonable entry points.

This is good trading, but anyway you can trade with 2 to 5% (max) of your assets. Therefore you stlill need asset allocation for 95% of the rest of your assets be they financial or others.

my two cents.
 
Here is one possibility for a high gain:

Cambridge Heart Inc. (CAMH.OB)
 
Well, that's a price breakout with still little volume and ROC MM200 highly négative. Sorry spanky, as of today (let's see later), I would not bet a penny on this one.
 
poyet said:
Stan Weinstein (something like "making money on bull and bear markets")
Click to expand...
A classic, still selling on Amazon despite Sam's mod 1970s hairstyle on the cover. I was amazed to read a quote from him in an article this week, so I guess he's still in the business.

My problem is making the effort to devote the daily attention to the breakouts. I'm getting more patient and a lot smarter with stops & limits, but I think that temperamentaly I'm much more comfortable buying 60-cent dollars than I am with momentum.
 
This is good trading, but anyway you can trade with 2 to 5% (max) of your assets. Therefore you stlill need asset allocation for 95% of the rest of your assets be they financial or others.
Click to expand...

Poyet,

It is interesting to see this advice from a successful trader. A warning, perhaps, to some of us.

Thank you.

Ed
 
Did own CEDC for a while (from a Yahoo stock screen). Made a few bucks, but not 1800%... :'(
 
Have Funds said:
Did own CEDC for a while (from a Yahoo stock screen). Made a few bucks, but not 1800%... :'(
Click to expand...
I think most people would bail out after seeing a 2x jump within a short time. I don't think too many people would hold on to a stock since IPO for years.
 
Three comments:

You're right Nords, to trade breakouts - when the market is favorable - you need to run the explorer on kind of 9000 securities (nine thousands - basically the database) everyday to find enough of them. Then you screen the top (say 30/40) and select manually a few (2 or 3 everyday) until you get fully leveraged and mad as the account goes up (or down) 15% per day (when you just own that kind of securities). It has then more to do with gambling (and the tense addiction that goes with) than with cold trading. The final crash is not too far then as you loose common sense. Nevertheless, it is much easier to crash a trading account on a bear market going short line nuts and then having greenspan suddenly lowering rates and getting a +16% on the index overnight. Even with stops, the account is then devastated !

Yes Nords, the book from Stan Weinstein look old fashioned, but still worth reading. There is no real (portfolio level) money management in it but the global picture is worth it.

Spanky, to make money you need to let the winners run as long as they do not violate the stop ! never cut a winner, a big winner will pay tens of mistakes and you need them to stay in business. Having the nerve to slowly move stops (and putting them where they should be) not thinking about the money is key. Trading automation is the way I have found not to even think about it. The system does what I have taught it to do ! dot

Success to you all in your trading.
 
poyet said:
You're right Nords, to trade breakouts - when the market is favorable - you need to run the explorer on kind of 9000 securities (nine thousands - basically the database) everyday to find enough of them. Then you screen the top (say 30/40) and select manually a few (2 or 3 everyday) until you get fully leveraged and mad as the account goes up (or down) 15% per day (when you just own that kind of securities). It has then more to do with gambling (and the tense addiction that goes with) than with cold trading.
Click to expand...
Ah, yes, it's good to know that I'm not the only one!

And then there's the internal debate that occurs when your stock has risen over 100% in the last six months but just retrenched 25% that week with no news. Thank goodness for sell stops.

poyet said:
Yes Nords, the book from Stan Weinstein look old fashioned, but still worth reading. There is no real (portfolio level) money management in it but the global picture is worth it.
Click to expand...
Stan's book is on my shelf next to Kathryn Staley's "The Art of Short Selling".

In my perpetual quest for the ultimate stock screener, I've been surprised to see how robust Fidelity's Active Trader website screeners have become. Access requires a Fidelity account, but it looks like the major firms are starting to give away products that used to require third-party monthly subscriptions or vendor's big software purchases. Have you read any evaluations of the relative quality of the brokerage's screeners?
 
Brookerage's stocks screeners are certainly a plus that can help customers select one brooker instead of another beyond costs, quality of execution and rate on margin. I haven't got a picture of the competition on that service. My experience with the brookers I use is that they tend to deliver securities screening / ranking based on fundamental analysis that they deliver to their "best" clients, say most active (and generating fees) or having big accounts.

Fidelity's screener is certainly very interesting but though I own some funds from them (as everybody :) I have no direct access to their platform.

As an aside comment on brookers, the costs (on execution and on margin) are very important to the end result for a trader not the leverage. The "on margin" market in France on stocks (i.e. SRD) supports a leverage of 5 instead of 2 as for the T Reg. One would think that with that additional leverage given, one (trading well) would make more money. This is the contrary for a simple reason. On US margin accounts you start paying margin costs when your market exposure is greater than your NAV whereas in France as soon as you get the position you have to say first whether it will be on margin or cash (for marginable securities which can always be bought cash as well). Therefore instead of paying margin costs for (Market_expo - NAV) * margin_rate if (Market_expo - NAV) > 0 you pay margin costs from the start. Believe me or not, but over 10 years this is worth between 5-7% of yearly return that you leave on the table !

Finally, I've been disappointed with "execution" with some brookers in the US (big name). You place a stop @ say 4,61 and the day after my system reports that the stop was triggerred (low is say 4.60) and when I check the account the stop stands there waiting for what, who knows :confused: then you ring/mail the brooker and they say, well either bla, bla and pay the difference or the best I've heard is: well 4.60 printed on the tape but as no exchange heppened at that price, the stop was not executed ! This prevents any total automation and lead to check all accounts everyday, though the system makes all decisions...
 
That's fine spanky, but it's just the volat on those last three days. Can be down 30% tomorrow as well. If it is a big winner after a big breakout, should make more than 1000% (thousand). Anyway, even if it is a future big winner it will very probably make a pullback where you'll have a nice entry. I dont believe this stock will really skyrocket without a base ! but who knows ? :)
 
Spanky,

I'm sure you feel frustrated, but to be more complete:

1) It lost 28% between the opening on the 19th @ 0.4$ and the 21st @ 0.28$ but

2) I had a look again and this time the volume is there, it starts looking like a real breakout ! price and volume breakout PVBK. It might be the beginning of the real story. If it unfolds as a real breakout, starting form 0,5$ it can go up to 10 bucks or more.

It's always difficult to buy a stock which is up 50% from the day before, but this is what breakouts are about. If it is a real PVBK the entire ride is ahead !. Nevertheless most of them make a pullback on the top of the base, or even retrace 68% of the initial move. It should not violate the gap below 0.4$ but traders will try to test, the stop should be below but not too far as the stop will be then at more than 25% ! and if you get right in, you'll have high chances to be hit on the stop. If you do not put a stop, 75% of these breakout fade and when the stock is back to the base @ 0.25$ it's a 50% loss until it is - often - unlisted and you get a (100%) loss.

I wish you the best.
 
I bought CHS (Chico's FAS) the day I first shopped there (they sell clothing designed for women in their 40s-60s). Unfortunately (a) I was feeling gloomy about retail after Christmas 2004 and sold it in February when it was up ~100%, and (b) I bought it in my taxable account! At least it was a long-term gain.
 
Poyet,

Thanks so much for the trading tips. I really appreciate your time to analyze this stock.

Spanky
 
Well, considering the two GICS sectors GSPBIOT and GSPHC and using the Metastock explorer I gave above, here follows a small list of which DYX, EPMD, PTN, VGNI.OB are kind of similar breakouts. CAMH.OB is well spotted out and the column W_with_V gives how many days since the breakout occured.

Security Name W_with_V Ticker Symbol
DiaSys Corporation 4.0000 DYX
CAMBRIDGE HEART 6.0000 CAMH.OB
MEDWAVE 18.0000 MDWV
Molecular Diagnostics, In 18.0000 MCDG.OB
Magna-Lab, Inc. 19.0000 MAGLA.OB
SPECTRX 28.0000 SPRX.OB
US CHINA IND 28.0000 CHDX
CELL GENESYS 6.0000 CEGE
GeneMax Corporation 8.0000 GMXX.OB
SIGA PHARMACEUT 8.0000 SIGA
Dyax Corp. 11.0000 DYAX
PACIFICHEALTH 11.0000 PHLI.OB
Vyrex Corporation 15.0000 VYRX.OB
VIRAGEN EUROPE 22.0000 VGNI.OB
Viragen, Inc. 24.0000 VRA
Naturewell, Inc. 25.0000 NAWL.OB
Palatin Technologies, Inc 27.0000 PTN

Best luck again.
 
Hi Nords

I followed Palomar closely for a couple years. I had associates leave long standing positions join PMTI. Having been mostly burned physically and financially by medical laser companies like CLZR COHR Laserscope (LSCP?) PHLZ etc. I decided to stay away from the sector. They are very hi priced items that are inherently risky to own and operate compared with their industrial counterparts. A doc or hospital may buy 1 or 2 lasers for infrequent use but a semiconductor manufacturer might need 100 lasers running 24/7 to mark their product.
Today's hot $100k medical laser or hi energy light source could be replaced by tomorrow's cheap LED array.

For me buying, selling and renting that iron was the best approach.

Merry Christmas

BUM
 
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