Novastar Financial (NFI) & Apple Computer (AAPL)
By Yaser Anwar, CSC of Equity Investment Ideas Novastar Financial (NFI) The US expects to have rate cuts by 2nd half of 07. If that happens you can expect sub-prime mortgage lenders to do well, savings and loans and banks…
By Yaser Anwar, CSC of Equity Investment Ideas
Novastar Financial (NFI)
- The US expects to have rate cuts by 2nd half of 07. If that happens you can expect sub-prime mortgage lenders to do well, savings and loans and banks such as Wells Fargo.
- Why? Because the margin pressure will be reduced as the overnight lending rate is cut. When interest rates fall and re-financing boom will take place then sub-prime mortgages will benefit.
- The time to buy these stocks is at least one-2 months before the rate cut comes. I expect a little correction in Jan/Feb for the US market, which will be the time to buy them.
- I like NFI, its in the mortgage business and right now people don’t like it much. Its got good fundiz and a hefty dividend yield. If I had to buy it, I’d buy 25% now, 30% when correction came and the rest after its gone up 5-8% and cut by that much if it goes down.
- Find out which pro funds hold NFI
Apple Computer (AAPL)
- If you go back and look at AAPL’s trading pattern you will notice it usually sells off before its about to report earnings.
- I’ve traded 6 AAPL earnings, and if my memory serves me right, 5/6 of them some analyst has come out saying AAPL can’t sustain the edge, yet each time it kicks ass.
- Even though AAPL is my key holding I would prefer if it didn’t release the iPhone next month. Why? It will result in a shake-out. All those investors who got in for the announcement will dump the stock and people who really understand AAPL will get to scoop it for discount prices.
- I asked the good Dr. Steenbarger to provide some historical short-term action, this is what he told me- "I did a few quick stat runs on AAPL and really came up with nothing. It’s been an anomaly in this market–a true buy and hold winner with solid trending." Tx!
- Either way it pays to be positioned. If you bought it before 70 hold on to it- if you bought it after its always good to hedge a little (do a long straddle- buy calls/puts 3 months out). If you’re looking to buy, position yourself with a 25-30% stake in it now, if it drops you get to buy a majority of your position at a cheaper price and if it releases the iPhone you won’t miss out.
- Find out which pro funds hold AAPL
Disclosure: I own AAPL
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