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Week 1: CNBC Million Dollar Contest Portfolio Update
Please note that in no way should the following be considered investment advice and that the author in real life, as per our full disclosure policy, does not have a position in any of the companies mentioned.
The first week of the CNBC Million Dollar Portfolio Challenge is nearly coming to an end. We’ve gotten off to a pretty good start, cracking the top 1% with a portfolio rank of 3027 on a return of 9.5% thanks to a couple of winners; Solarfun Power (SOLF) and E-Trade Financial (ETFC). We purchased Solarfun Power at $14.94 on the belief that it was heading towards a technical breakout above 200 day moving average resistance at $15.32 and because of its nature as a pure solar momentum play given the 15.2 million share short position that is quite substantial on a percentage basis of the overall publicly traded float which is just 43.5 million. Based on yesterday’s close of $18.47, the stock is up 23.7%, though we would be skeptical of how much longer the upswing might last and would be looking to lock in profits. The thesis for our E-Trade Financial buy at $4.00 is based on the fact that it’s a sleeper turnaround stock that has been for the most part overlooked, even after improved quarterly results in April that signified a turnaround in progress. Yesterday, the company reported daily average revenue trades that were up 5.8%. So far this week, E-Trade shares have appreciated 9%.
With cash to spare, here are a few companies that we have on our watch list and may potentially own soon;
Washington Mutual (WM) - Hovering near a 52-week low at $10.32, this is definitely a contrarian call. Yesterday’s 5.5% rise could be the start of a bounce after WaMu President Rotella told a crowd at a UBS financial services conference that the company has about $50 billion in “highly reliable” excess liquidity.
True Religion Apparel (TRLG) - On Tuesday, the chief executive of the jeans maker sold 3.2 million shares of common stock at $21.14 for estate planning purposes and to cover a divorce settlement. If there’s anything positive about that news item it’s that the market absorbed those shares and the stock has actually managed to gain ground since then. It could be on the move again with decent fundies, and 10.34 million shares short, more than half of the 17.57 million share float. A shout out goes to Tim Sykes, a fellow financial blogger and occasional CNBC guest, for a heads up on this one.
Circuit City (CC) – Could be a dead money dog, or not. In April, Blockbuster offered between $6 and $8 per share for the consumer electronics company which represents a decent-sized if not hefty premium still on the table of between 16% and 54% over the current stock price. Any development that would indicate Circuit City becoming more engaged with the offer could send the stock up 10% to 20% in a hurry.
Readers, it’s your time to chime in. What stocks are you holding and/or watching for the CNBC Million Dollar Portfolio Challenge?
May 16 CNBC Daily Bonus Bucks Trivia Questions and Answers
Click here to see how our portfolio fared during Week 1 of the CNBC Million Dollar Challenge
Squawk Box
Question: Boone Pickens is building a huge wind farm with General Electric turbines. How much is the initial order with GE worth?
Answer: about $2 billion
Squawk on the Street
Question: The geothermal industry is molten! But there are only 2 pure plays trading on U.S. exchanges. Name one.
Answer: Ormat Technologies
The Call
Question: The CNBC Stock Blog featured “Israeli gems” — picks by Merrill Lynch’s Haim Israel. What was his telecom pick?
Answer: Cellcom
Power Lunch
Question: Donald Trump told CNBC he sold his Palm Beach house for $100 million. What literary reference did he make?
Answer: Tale of two cities
Street Signs
Question: Erin Burnett is in South Asia, seeking global market movers. How big is India’s economy?
Answer: $1.2 trillion
Closing Bell
Question: In “Bill Miller’s Broken Legg,” what company did Jim Cramer call “an American comeback story”?
Answer: ArvinMeritor
Click here to see how our portfolio fared during Week 1 of the CNBC Million Dollar Challenge
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e-mail alerts to ensure that you receive answers to the daily Bonus Bucks trivia questions and for tips about the CNBC Million Dollar Portfolio Challenge.What’s Gotten Into EMC?
EMC Corp. (EMC) is dramatically higher by 5.22%, or $.87, to $17.55. On top of yesterday’s gains, that’s a 9.5% run over two days. One explanation could be that the EMC-VMware trade is back. There is a surge in shares of VMware Inc. (VMW) which are up 7.1% to $71.11 this afternoon and have been on a 21.7% tear since Apr. 22 when the virtualization company reported first quarter revenue of $438 million that beat the consensus estimate and reaffirmed its full year outlook of 50% growth on $1.99 billion in revenue. EMC owns an 86% stake in VMware. But given the volume in EMC yesterday of 57.1 million shares, and 42.5 million shares so far during the current session (note that average volume is typically only 31.7 million), and call option volume that is roaring with heavy buying in out of the money June and July calls, there has to be something more to the move. It could be just coincidental, but following Hewlett-Packard’s Tuesday takeover of Electronic Data Systems for $13.9 billion, trading has been extremely active. There has been mild speculation that EMC will spin off some of its VMware stake, but that remains to be seen especially after CEO Joe Tucci was pretty adamant about not having any such plans during the latest conference call and it probably doesn’t make sense anyways with VMware valuation discounted as the stock has fallen well off its highs, and it’s even less likely that the upswing has to do with next week’s EMC World Conference. Nonetheless, something has gotten into EMC, but what that is still has yet to be determined.
Subscribe to our RSS feed to ensure that you receive the latest word on the street.May 15 CNBC Daily Bonus Bucks Trivia Questions and Answers
Squawk Box
Question: On May 14, Pimco’s Mohamed El-Erian warned that the Fed is:
Answer: particularly challenged
Squawk on the Street
Question: Jeffries’ managing director Paul Fremont loves dirty coal. On May 6, he recommended which energy stock?
Answer: Allegheny Energy
The Call
Question: What did Jim Cramer call “the Tony Soprano stock”?
Answer: Waste Management
Power Lunch
Question: Web video hunt: Strategist James Altucher spoke on the May 14 Street Insider segment. What color was his tie?
Answer: No tie
Street Signs
Question: On May 6, Fast Money asked “Is The Housing Crisis Over?” Guy Adami said the best trade was:
Answer: Home Depot
Closing Bell
Question: In the slideshow, “Highest Paid CEOs,” which big boss has the No. 1 paycheck?
Answer: John Thain
Check back tomorrow for more Bonus Bucks questions and answers and a first look at our CNBC contest portfolio.
Subscribe to our RSS feed or get e-mail alerts to ensure that you receive answers to the daily Bonus Bucks trivia questions and for tips about the CNBC Million Dollar Portfolio Challenge.LDK Solar Vulnerable to Profit Taking on Margin Concerns
LDK Solar Co. (LDK) failed to break above its April 7 high of $39.25, topping out intra-day at $38.56 before falling to close up 1.75% to $36.57. It’s surprising that LDK has managed to hold its ground and even flirt with a three month high after issuing margin guidance on Monday that was much lower than anticipated. It seems that the stock has remained artificially high because of the continued flow of money into the solar sector while continuing to rise in sympathy with other “green” names that have been quite euphoric as of late – take for instance Canadian Solar’s 25% move yesterday on blow-out numbers and Evergreen Solar’s 9.83% pop on an analyst upgrade today. But that could change quickly if there is some rotation out of the sector once the severely propped up price of oil decides to retrace from current levels. LDK is vulnerable because although first quarter revenue and earnings were better than consensus estimates, the full year picture is quite mixed. Revenue guidance in the range of $1.08 billion to $1.18 billion is much better than the $1 billion previously expected, but potential gross margin erosion over the next few quarters is troubling. During the first quarter, gross margin was 27.7%, down from 30.1% from the prior quarter and is expected decline further to a range of between 23% to 28% for the remainder of the year, well below management’s previous estimate of 26% to 31%. With the construction of a plant still underway and unlikely to be a positive factor in the near term, higher polysilicon costs will persist in exerting pressure on the outlook and leave LDK shares vulnerable to profit taking, especially after nearly doubling in value since March.
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