Wednesday, December 24, 2008

Madoff: Lawsuits starting to fly against advisors/Buy of Sunopta: Highly Speculative

I would like to be a bug on the wall when the deposition of the principals at Fairfield Greenwich are taken and the examination turns to their compensation for steering the gullible rich to Madoff and to their alleged due diligence. Suits have already been filed Worldwide  Do you think that they will just fork over most of the outrageous fees that they charged their investors for being financial whizzes in selecting Bernie or will they just delay and delay until a settlement is reached leaving them with most of the money collected from their investors over the years?  Gabriel Capital, a hedge fund run by Ezra Merkel, has also been sued for alleged breaches of fiduciary Worldwide

I returned today to revisit a small cap that worked well for me last year with over a $800 profit on a small position with the last sale in November 2007 at close to 15.  I allowed my 18 year old nephew to time the sale and gave him $300 for being right about it (he called me at night, told me to sell, and I followed his instructions the next day and he just about hit the high with his call). This is the same one who was asked to leave an Indian Casino a few days ago for allegedly counting cards successfully at blackjack (not paying any attention to the wisdom and advice of a sage and exceedingly generous uncle) and who may soon be attending Harvard, Columbia or some other school that would have shredded my application after giving it a 1/2 second glance. 

The stock is Sunopta (STKL). I just bought a 100 shares at $1.65 of this now troubled company, which is speculative, but to an old gambler I would just say to all that I am playing with the house's money. STKL: Summary for SunOpta, Inc I would not touch it now without that consideration already in place. One of the negatives is the class action suits filed against the company after some major problems turned up at their berry operations. Who knows how that will turn out?  So, given that uncertainty, I would not risk much now. It does have recovery potential in the event the lawsuits are resolved without too much damage to the existing shareholders. I will give it close to 12 months before making a decision to sell my shares.  If things start to look better late next year, I will hold for a long term capital gain.  S & P has a report on it but there is little other brokerage coverage. Earnings are estimated at .28 for 2009 and the price to sales is currently hovering at around .10. Analyst Estimates for SunOpta, Inc Its main operation is its food group mostly in organic foods. Sunopta also owns 66.6% of Opta Minerals which is probably sensitive to the economic downturn since it provides materials for use in the steel and roofing industries. A review of some of the recent 10-Q's at the SEC would reveal some of its problems and a more complete description of its operations than I am giving here for such an immaterial holding for me. 

Since I was already familiar with this company, and it was being monitored before its purchase today, I spent only about an hour reviewing the more recent information on it. Otherwise, I would have devoted at least 3 hours to it.   That proves just how bored I am now and why I am writing this blog.  My VIX asset allocation model has severely restricted my normal routines in stock buying to the point that I am not allowed to do much of anything anymore. 


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