Investment Journal

This is what I’ve been waiting for with Dana (DCN). Too bad I had to take a hit with the pop on Monday.

Dana Says Restatements to Reduce Profit by Up to $45 Million; Company Cuts Dividend

TOLEDO, Ohio (AP) — Dana Corp. said Tuesday that its planned financial restatements will reduce profit by as much as $45 million going back through 2004 and the auto parts maker slashed its quarterly dividend to one penny.

Dana shares fell 89 cents, or 12.8 percent, in after-hours trading. They fell 22 cents, or 3.1 percent, to $6.97 in the regular session on the New York Stock Exchange.

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Up this week are Ford (F) and Dana (DCN). I’m shorting both. The main reasons were this article, and Citigroup’s downgrade of Ford.

The article’s headline says it all: “October U.S. Auto Sales Plummet.”

New-vehicle sales were down 33 percent in the first nine days compared with the same period a year ago, and down 44 percent compared with the first nine days of September, the survey found.

Sales at No. 1 automaker General Motors Corp. were down 57 percent compared with early October 2004, while Ford Motor Co.’s sales were down 45 percent. The other seven major automakers also showed declines.

“The aftermath of the employee pricing programs is having a dramatic impact,” said Jeff Schuster, executive director of global forecasting at J.D. Power. “A lot could happen between now and the end of the month, but at this point, we’re on track for an October like we haven’t seen since the early 1990s.”

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Here’s my latest trading idea: short the homebuilders. It’s not the most original idea – more like the pink elephant in the room – but where there’s opportunity, doesn’t hurt to coin it. I’m currently shorting KB Homes (KBH) and Toll Brothers (TOL).

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Here’s a 1 day chart of today’s trading in Protein Design Labs (PDLI). Beautiful isn’t it?

Do you see the flat part of PDLI’s chart on the left, oh around 10:20am EST? That’s when I sold my 600 shares of PDLI, missing out on $800 of gains. Hurts don’t it? The market has a particular knack for making one feel stupid. My original reaction is a bit less academically objective; more along the lines of “AAARRRRRRRRRGGGGHHHH”…

So as a public service to the Chicagoboyz, here is a lesson in what not to do in the market. (Don’t worry, there’s a happy ending)

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Here’s a witty read from Bessemer Venture Partners, speaking to the woulda should coulda in all of us. Some highlights:

“Bessemer Venture Partners is perhaps the nation’s oldest venture capital firm, carrying on an unbroken practice of venture capital investing that stretches back to 1911. This long and storied history has afforded our firm an unparalleled number of opportunities to completely screw up.

eBay
“Stamps? Coins? Comic books? You’ve GOT to be kidding,” thought Cowan. “No-brainer pass.”

Federal Express
Incredibly, BVP passed on Federal Express seven times.

Google
Cowan’s college friend rented her garage to Sergey and Larry for their first year. In 1999 and 2000 she tried to introduce Cowan to “these two really smart Stanford students writing a search engine”. Students? A new search engine? In the most important moment ever for Bessemer’s anti-portfolio, Cowan asked her, “How can I get out of this house without going anywhere near your garage?””