Calls for Registration-- Tracing Insider buying Strategy

The forum is closed temporarily.
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Dear friends here,
Since the initialization of this activity last week, we have received kind offer from many friends here. Carol offers the conference call, and Brisk helps us to setup a forum to discuss such a strategy. The reason to keep such a forum a closed one is simple, we want you to join but not abuse it because it would become an asset of all the contributors here. And we would get it public after we got satisfied results.

Now the forum has been setup, friends here are welcome to join. To get into access, you need to register a username in http://www.fortuneseeds.com/ and then leave a note here with your username. I will add them into the access list. We don't have any limitation but welcome anyone to contribute.

Thanks for understanding and waiting you there!

Metronic

Motley shares the similar opinions as us in term of AOB 's share offering

As we pointed out before that AOB is not in shortage of money, because it has a free cash flow. The reason he offers new shares could only be explained that he has a buyout task or expansion task in Queue. The motley fool shares the same idea as we did.

So if you want , can check which could be the buyout target for AOB
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Another Buyout in the Works for AOB?
By Brian Lawler June 5, 2007
34
Recommendations
Whenever shares drop by nearly double-digit percentage points, something bad is usually amiss. Yesterday Chinese health-care nutritional supplement provider American Oriental Bioengineering (NYSE: AOB) suffered this fate after it announced that a large dilutive share offering was in the works.

AOB has 65 million shares outstanding, not including warrants. So the new equity offering of up to 15 million shares (not including the 2 million shares the founder and CEO is selling) represents up to 23% dilution to shareholders. Ouch!

The good news is that the offering could raise close to $150 million. This would make AOB's coffers flush with cash, considering that it already has over $90 million on its balance sheet. AOB has made numerous acquisitions in the past, and this financing could mean that a major acquisition is in the works for the company.

There's no way of knowing beforehand whether the assets AOB is considering are a good value or not. But its main method of boosting its top line has been via numerous acquisitions of formerly state-owned companies, so AOB can't be called inexperienced with buyouts. This strategy has helped the company grow its revenues 10 times over in the past six years, from less than $10 million in 2001 to over $110 million in 2006. AOB had operating cash flow of $29 million last year.

I'm generally very wary of China-based companies, especially ones doling out nutritional supplements and other, often pseudo-medicinal products. Nonetheless, AOB and other supplement manufacturers like NBTY (NYSE: NTY) have proven to be strong outperformers over the broader markets in recent years. How AOB chooses to deploy the cash that it generates from this offering will determine whether it can keep up this streak in the future.

As expected, today marked the first day of correction

We have pointed out in last week's quick review that the market will have a short correction less than a week. Today will be marked the first day of that if later on we review. And of course today as you have seen, mms shift their holding into those traditional tech area such as AMZN, GOOG,AAPL, BIDU, NTRI, CMI. Also small tech like RACK continues to rally. Try to remeber the way they did this time, and do the similar thing in the future:)

Also From IBD top 100, only 2 stocks out of 100 increase 2% with increasing volume. They are SPWR and SPAR. Look similar? hehe.We haven't see any sign of recoverance yet. Keep our eyes open and watch how GOOG and AAPL, AMZN can play in the next day.


Pls also check TRT at this time, its performance today signal a bottom at this support level.

The stocks tend to bottom out today

The bottom out is defined as they pull up from their latest 20 weeks low, and getting close to their low position again. Normally if double bottom patter is formed, they could have a nice chance. This is the logistics behind this method.

Those stocks include
SIRF ALK BDN ACTG ORA OSTE SONO AVZA

For those traditional stocks today,
GOOG : extremely overbought and close lower than 508, its previous high.
FMCN : close to its resistence level, likely to breakout.
ICE: though raise about $7 today but volume tamp,RSI tamp,not sure what he can do.
AAPL: though I haven't sold it but already add the $120 stop to this guy. Volme tank, extremely overbought.
HMIN: typical bottom out.
AOB: got hammer today due to the new offerings.
MA: its time to come back .

====== Update notes =====

Carol will like to hold a conference call, hehe
Brisk kindly offer a forum for our discussion during strategy building. Shall we keep the discussion public? or underground?

Strategy Section--Trace the Insider Buying Stocks(1)

1) Introduction

Before start to discuss about this, I would like to clarify that even I just explore this strategy which first knew from the book " Finding the next starbucks " and further proposed by bobobobo. The inputs from all of you are necessary and appreciated so that we can build a reasonable sound model for consistent performance. Can we do that? I think we can.

Trade based on insider buying has been existing for quite a while and has been used by peter lynch quite a lot ( described in his book << One up on the street >> ). The method won't be obsolete even it has been used widely for its fundamental reasons which can be summarized as below:

1)Insider behavior matters because research based on real-time signals has shown that a properly modeled picture of insider actions can provide the most accurate reflection of the prospects for the company, industry, economic sector, or even the stock market in general, going forward.

2) This makes perfect sense from an intuitive perspective. Corporate insiders possess all the necessary skills and characteristics that one could use to describe the "successful" investor. These include: A deep knowledge and understanding of the company and/or industry; A demonstrated ability to produce success; The training necessary to understand risk and to control it; The wherewithal (capital) to take advantage of opportunity when it presents itself and finally; A tendency to go against the crowd.

3) Further, insider buys are especially useful. Since insiders have exclusive information on the company performance, if they are risking their own money on the stock, usually they should have good reasons, especially when several insiders buy the stock at the same time.

Pls pay attention here, we only care about insider buying not selling with an assumption of a long position in the stock not a short one. The insider selling have different explanation sometimes that we will further elaborate in the future. But as an initiative, we wanna focus on a long position first, not to be distracted.

In order to fully explore the benefits of such strategy, we propose to investigate from several perspectives highly related to potential gain in a middle term, i.e. 6 months, with an expected return on investment about 30%. You may argue it could be a little bit high, but through our further research, the portfolio build from such strategy could yield at least more than the general market yield. The perspectives will be divided into 3 sections which are 1) Building the universe of active insider buying stocks, a methodology to find those companies that have intensive insider buying in the past 3 months or 6 months for different time frame. 2) Reducing the trading candidate, a process that we use fundamental research to filter out those candidates that having high probability to succeed. 3) Entry and Exist Analysis, a strategy that describes how we are going to trade into those stocks after step two. Step 3 is quite important for implementation. We could find if we invest at a wrong time, loss could be huge even the company is pretty good. For example, if we pay $1000 for GOOG now, would it be a good one?

Those three steps are complementary to each other which can't be separated to ensure that our goal can be achieved. Each step in the strategy needs to be investigate the potential pros and cons so that drawbacks in each step could be minimized.

NOTE: if you have any ideas and thinking in each step, pls email me at totalmerrill@hotmail.com or leave your msg here. Any ideas would receive fully attention during such strategy building process. You know a strategy can't be improved without different sources.

by the way, all of the articles related to this strategy would be published at Investshuttle.com, the site that I built to upload our pdf files. The introduction page can be downloaded now.

Quick Market Review for last week

Hey pals , since my absence from big market last week due to my CFA exam, I haven't been following up the market for a while. But based on my quick review of several bellweather stocks and market performance indicator shown on my rador, I am here to say we are going to have over 80% chance to see a correction in less than 1 week. Why? the reasons include both the macroeconomics which points to housing market performance together with fiscal policy and stock market performance itself.
The stable housing market data together with the latest FOMC minutes lower market's expectation that FED will cut rate pretty soon before September. The forward rate of T bill hasn't shown any downward sign as it did last month,to our surprised, it reverses up. You know what the effect could it lead to big market right? This is just from macro aspects.

from stock perspective, I feel really surprised that AAPL has a negative divergence with the GOOG and big market on last friday. Whenever we see such a negative divergence, a warn signal should be sent into your mind right away. Also try to get that whenever we saw a positive divergence, a bullish sign is coming. Remember when overall maket sold off the day bobobobo dude warned, a positive divergence between GOOG and AAPL , big market was monitored. And you have seen what have happened later on when GOOG was green.

Above is just a quick review of the market based on my scan. As a result, the exact timing would be quite difficult for me to decide. Combining with the BH trading info (by bobobobo), it could raise our chance to avoid the loss. and here trying to remember, we got a double digit increase only in a month in index. If greenspan called bubble in Chinese stock market, we can call a short term bubble in us market now. The strategy to avoid such a caught up will be to switch your position into those stocks who has not increased as much in the last month. To be more specific, into those tech growth stock will be a good move. Reducing your exposure in commodity and energy could be a good and short term strategy even though we have called up a hedging strategy before.
the correction is expected to be 80 points down from NAZ and 300 points down from DOWS if it comes. All these expectation come from our experience for the second wave correction.Just for a reference, we don't wanna time the market but to watch it.

Cooling down hot water will take time!

And recently I will try to start to building a strategy with all of you into the insider trading strategy. Although not mature now, the idea should deserve deep investigation as many hedge fund managers use such a strategy to allocate their position.

****** Downgrade MA in my list ****************
Also I would downgrade my MA ratings from Buy to Hold since it has almost reached the target price in 12 months.Current price means overall market has fully appreciated its value for the whole year, I won't rec to add it into the portfolio at this moment.

Thanks God, back to normal life

finally done with the test and need to come back for the normal life. Thanks all of you for your caring, really appreciate:)
Pass or not is not important now, compared to the back of normal life with so many friends here!:)