Doctor Jack's Stock Medicine

[Websman]

As you stated, the surgery was performed nearly 25 years ago. With respect to the torn Medial collateral ligaments, I never heard of a Boyd Staple. The repair of choice is to use a monofilament K-wire in a figure 8 and anchor the torn ligament to the bone; I wouldn't anchor it to the femoral chondyle but to the posterior aspect of the femur's ridge... There is more stability there.

Have you had an MRI recently? It will be interesting to view the alignment of the joint. My guess is that you probably have internal tibial rotation of the lower leg and external femoral rotation, causing a transverse stress on your knee joint? I also wonder if there are any arthritic changes present (osteophyte production).

I got all this info from a copy of the original report that I have. I got it a few years back after I began waking up at night with the severe cramps in my knee. I figured it might be a good idea to keep a copy of it, in case I ever had to have the knee worked on again. When I lay my knee the wrong way, the muscles feel like they're getting stretched too far and get in a bind.

As far as the Boyd staple...It must be obsolete. All I know is that it's listed in the report. I may have to do some research on it.

I haven't had an MRI as of this date, but it would be interesting to find out if your intial suspicions were true. What you said about the stress on the knee joint makes sense.

I doubt I would ever consider having my knee operated again, unless it got worse. I consider the loss of flexibility and the cramps a minor inconvenience...It could always be worse. At least I have a leg that works... LOL

[Lyehopper]

As far as the Boyd staple...It must be obsolete. All I know is that it's listed in the report. I may have to do some research on it.

Webs.... I called Dr. Goodman.... He said he borrowed the stapler from his second cousin whose name is Boyd.... Thus the reference to a "Boyd Staple" in the report. He sent me this picture and said he didn't have stainless staples back then but they were indeed zinc plated and they should have lasted for 20 years before you would start to experience pain from it. He said if you come back into the office he could repair it by drilling a 1 13/16 inch diameter hole below your kneecap 25.4 mm deep and re-staple it with a stainless steel staple.... Says he still is using Boyd's old stapler.

[Websman]

Webs.... I called Dr. Goodman.... He said he borrowed the stapler from his second cousin whose name is Boyd.... Thus the reference to a "Boyd Staple" in the report. He sent me this picture and said he didn't have stainless staples back then but they were indeed zinc plated and they should have lasted for 20 years before you would start to experience pain from it. He said if you come back into the office he could repair it by drilling a 1 13/16 inch diameter hole below your kneecap 25.4 mm deep and re-staple it with a stainless steel staple says he still is using Boyd's old stapler.

If I could get you to do it, I could save a bunch of money...

We could use Goji for the anesthetic.

[Lyehopper]

"The GoJi" is very versatile....

We could use Goji for the anesthetic.

And the Antiseptic.... No germs can survive being doused with "The GoJi".... Makes a great mouthwash too.... PLUS you get to swallow it after rinsing!

[IIC]

According to James Welsh, The Financial Commentator, in the nest 2 years, 25% of all mortgages will be increased with some as much as 50%! I'm beginning to see that here in the Silicon Valley, Santa Clara County. 15,670 default notices were issued in the past 3 months to homeowners-- very freightning. Also, the default rate in Santa Cruz, CA has risen to a scandelous 62.8% from the same period last year, according to county records.

It's a shame how banks lured everyone into a borrowing spree with teaser rates and other promotions. Almost everyone borrowed agianst their primary home to either purchase a second investment home, pay credit card bills or renovate their homes. In sum, the consumer is over-extended with debt. I keep telling everyone that thus far we had one bubble-- which is the collapse of the nasdaq in 2000. We still have 2 more-- the housing bubble and the consumer debt bubble!

Contrary to the above statistics, hedge funds have been buying into oversold distressed homebuilders. According to Research Director at Rochdale Securities and SAC Capital, hedge funds are taking stakes in homebuilding stocks. Tontine Partners took a 9.98% stake in Beazer Homes USA , just six weeks after the Atlanta builder announced an aggressive 200 to 250 million share repurchase program for 2006. Others with outsize cash hoards, up to 10% to 14% of their market caps, are following suit. Centex, Toll Brothers, Brookfield Homes, and Pulte Homes have all announced plans to buy back shares.

I still think the entire sector is severely undervalued at 7 times 2006 estimated earnings. That said, trading opportunites with TOL, and HOV are presenting an excellent set-ups.

Comments? Opinions?

See a little contadiction in your post Doc...I agree w/ your statements in the first 2 paragraphs...

Now let's take the rest...Hedge Funds are sharks...If they don't eat up Mr./Ms Individual Investor and spit them out...Then they are No Where...Builders offer DT opps...But anyone who wants to buy/hold any of them should send their $$$ to that Nigerian Prince spammer.

It always happens...They build till the demand is gone...Unfortunately when the demand is gone there are still plenty of projects unfinished...It happened circa 83 and 92...It is happening again...I am waiting till next year to get some nice Distressed RE...It should be very easy as it always has been...Best, Doug(IIC)

[DSteckler]

Hedge Funds are sharks...If they don't eat up Mr./Ms Individual Investor and spit them out...Then they are No Where

Not all hedge funds work that way, Doug.

[IIC]

Not all hedge funds work that way, Doug.

C'mon Dave...When is the last time you saw a Hedge Fund Manager walk a little old lady across the street?

On a more serious note...Is there now a registration or licensing requirement for hedge fund managers? How about managers of private investment funds or joint ventures?...thx...Doug

[Jack Haddad]

The relative group strength of the Builders - Residential/Commercial group has been improving the last few weeks, rising from 4 to 11 (I'm using a three-week lookback on RS). This coincides with several days of lows around 80.25 - 80.75.

In the group, TOL is the 5th best performing stock and HOV is the 12th best performing stock (out of 24 companies). Earnings estimates for the next two quarters are much better in TOL than HOV.

LEN, which has a higher RS rank within the group than HOV, also has better estimates. ROE for LEN is about the same as HOV but cash flow per share is better ($9.22 vs. $8.05) and LEN's P/E is lower. OTOH, HOV's float is 1/4 that of LEN's so a push into the sector will give a bigger bang in HOV than LEN.

The homebuilder's index ($HGX) completed a five wave impulse move down (4/7 - 5/24) and may be starting a corrective wave up.

As fas as TOL is concerned, the current stock price would seem to discount 15% annual cash flow shrinkage for the next five years, with just GDP-level growth forevermore after that.

[Jack Haddad]

Hans

Since 2003, Hansen's shares have risen from 2 to 130. And recently the stock skyrocketed to 183. It was 130 on April 18, 2006, little over a month ago. Earnings and revenues have also soared, from 28 cents to an expected 3.95 this year! For the three months ended 31 March 2006, Hans's revenues totaled $119.7M, up from $60M. Net income totaled $21.1M, up from $8.8M.

I particularly like the fundamentals of the stock, especially the 5 -year annualized revenue growth rate which stands at roughly 37.5%, and the EPS growth rate at almost 70%.

Technicals are very bullish, more so on long-term basis. The stock is 23% above the 50-day EMA of 148.52, and above the 13-day EMA of 176.00 as well. The 1-month chart shows support at 174.50 However, that gap on May 9, 2006 from 153 to 165 is a little concerning... But shorts keep piling on this stock without any success. They have pointed to Hans's lack of sophistication in its dealings with Wall Street as a reason to sell it short. The current short float is at almost 23%, 3.75 million shares. I attribute Hans's success partly due to their limited coverage on Wall Street (only one analyst follows it) and also management's refusal to have an investor relations department. I attribute these gestures to the company's focus on business operations rather than stockholders' satisfaction. I'll be looking to buy shares, should an opportunity presents itself.

[DSteckler]

C'mon Dave...When is the last time you saw a Hedge Fund Manager walk a little old lady across the street?

Saturday afternoon...and she doesn't like being called old!

On a more serious note...Is there now a registration or licensing requirement for hedge fund managers?

If they have 14 or more clients, then yes.

[Runner]

Dr. Jack, what are your thoughts of this article? http://www.hussmanfunds.com/wmc/wmc060522.htm

[Runner]

I think I’m going to pick up some of HSGFX as I like the fact that they hedge and or also short positions when market conditions are unfavorable. I’ve not really been a longer-term investor and would welcome comments on HSGFX. I’ve got some free cash in my Scottrade account that needs to be put to use. I do not use this account for short term trading.

http://www.hussmanfunds.com/pdf/diligence.pdf

[DSteckler]

The problem with that fund is that you you have no control over how hedged the portfolio is (if at all). If you want to hedge your portfolio, you're better off in a Rydex or Profunds inverse market fund.

[Jack Haddad]

Dr. Jack, what are your thoughts of this article? http://www.hussmanfunds.com/wmc/wmc060522.htm

Several points in the article made by Hussman invite reflection and debate...

1. The author points to the fact that stepping out of the market on a price/peak multiple of 19 while waiting for the markets to plunge 30% before returning would benefit the investor in capturing all of the market's longterm returns. This school of thought goes against the priniciple of hedging. It is my adamant opinion that one should not be sidelined at any given time if he/she practices hedging as a way to safeguard positions. Besides, the author refers to a multiple of 19, but relative to what?

2. He states that his Strategic Growth Fund is fully hedged and that he is not concerned about valuations and future forecasts. First, what are the hedging techniques that he employs (long/short equities, arbitrage plays, distessed securities, etc..)? Second, regardless of how certain the hedging techniques may be, examining valuations on a periodic basis is a "rule of thumb" to ascertain the pan out of your strategies.

[Runner]

Dr. Jack, you bring up some great points. Here is how he explains his hedging of the fund.

Typically, the Fund uses option combinations. Buying a put option on a stock index,
and simultaneously selling short the call option having the same strike price and
expiration, is equivalent to an interest-bearing short sale valued at $100 times the
underlying index. So for example, if the S&P 100 Index is at 500, buying a put option
and selling short the corresponding call option (regardless of the specific strike price
or expiration chosen for the pair) is equivalent to selling short $100 x 500 = $50,000
worth of S&P 100 stocks.
The most defensive position held by the Fund is a fully hedged stance where the
entire value of stocks held by the Fund is offset by a short sale of equal value in
major market indices. So for example, if the market falls by 10% and the stocks held
by the Fund fall by 5%, a fully hedged position would result in a positive return of
about 5%. In contrast, if the market falls by 10% and the stocks held by the Fund fall
by 15%, the Fund would experience a loss of about 5% despite being fully hedged.
Similar examples apply to market advances. In either case, the return of a fully
hedged position is driven by the difference in performance between the stocks we
own and the indices we use to hedge, not by absolute market direction.