BOSTON EXIT

ALDA

Sold my BXS (26.27) and replaced it with ALDA (25), a small cap with tremendous growth. The company is growing at more than 50% and currently traded at less than 20X of its 2005 EPS. Clean balance sheet with a lot of cash, regular dividend, plus special dividend in December. The company is rather small (about 100 million market cap) and there is very little coverage.

CUX

I also opened a very small position on CUX. I will add more if it remains under 10. I believe this is severely under-valued, although all international plays are at this point.

PANIC CALPINE

CALPINE

CF.UN went down for more than 10% today due to an announcement from Calpine Corporation where its top two guys are ousted (CEO and CFO0, a few days after I bought it. How embarrassing! I averaged down a bit here (8.09) as I felt there was some panic (BUY PANIC). The market view is that Calpine is heading for Chapter 11. No doubt as it appears the only way out for Calpine. But how will a filing affect CF.UN, and how much? I believe under the worst scenario, CF.UN will have to find another off-taker for its generation capacity or take some merchant risks in the Alberta and ontario market. I believe the distribution is safe in both near-term and longer term. Therefore, the 10% decline is not warranted. I believe it will bounce back to 9-10 level in the next few weeks. With 12% distribution, I would be rather content to wait.

SWITCHING TO STRONGCO

WJX

Sold WJX.UN (25.25) late afternoon. I believe SQP.UN has more bang for the bucks, not to mention better yield. SQP has fallen down much harder and has not recovered to its 09/16 level. I would like to replace WJX with SQP. Unfortunately, my order for SQP is not filled today and I have to wait for Monday.

TRUST EXUBERANCE

TRUST EXUBERANCE

I have to raise cash in order to buy more trusts. I sold SXC (2.61, rather reluctantly, I would like to buy back this position once I have some capital), QC(2.10, dido), MKX (2.24), SGF (6.97), XMC(6.3) and I purchased BFC (29), CF(9.2), CDI (11.05), and SFI (18.40). As a result of these purchases, I am currently over-weight in the Trust sector. If the market runs by 10%-15% as I expect, I shall take some profits by the end of this year to bring the weighting to neutral. While the purchases may be considered as trades, the sales make sense here as none of these names will likely participate to the run here. Trusts and dividend paying stocks should have the most leverage. I can always re-take these positions after New Year.

Having said that, there is an aura of exuberance in the air, and I might be a bit of too excited this morning to the point of panic. Remember, panic never makes money. Stay calm and count 100 backward before taking any actions.

TRIMMING & SWITCHING

CNTF for HRAY

Sold half of my CNTF (15.75) this morning. It has gone up for more than 40% in less than a week, and discipline requires that I take some off the table. I still hold half of my position open and I will let it run a bit from here. I replaced CNTF with HRAY (9.5). This one will be a sleeper as volume is very small. It has a modest growth profile, but rather cheap here, trading at less than 10X of 2006E. There is a lot of concerns about competitive environment in this space, but I believe such deep discount appears unwarranted.

CMED

Sold my CMED on panic (36.15), how embarrassing and how amateurish! But it is running way too fast and furious and valuation starts looking stretched (more than 30X of 06EPS). I guess it’s never wrong to take profit. I also sold my entire position of ELOS (40) as it has lost some of its momentum. I still like this company and may buy it back on weakness.

FISHY IN SFCC

SFCC

SFCC continues to fall and it appears that the market is saying that there is something fishy. Is this an Enron? What do sellers know that I do not? If there is anything behind the story, I have a hard time to believe that management would not come clean, in today’s corporate governance environment.

TRIMMING

CMED

Sold half of my position at 33.5 this morning. I am still very much bullish on this name, but more than 30% return in a week is quite a run by any standard and discipline requires some trimming.

SFCC

It appears my idea is incorrect. My original thought was that if management comes out and strongly refutes the accusations, the stock should bounce back to lower 30s. It was wrong. Management came out this morning and swung. I thought management said all right things, and it even disclosed additional backlogs in the month of October (13 million, one of the key weaknesses of its Q3/05 report). Stock went down for another loonie anyway with rather strong volume. My instinct would be average down here, but prudence demands that I hold the line. The volume concerns me. Also I would have to add on margin, which is not very prudent. I noticed that most of averaging down decisions tend to be emotional (denying?) I would rather make less money than losing large amount of my capital. On the other hand, I do not believe I should be panic. The stock is traded at 10X of its 2006 EPS of 2.30. The management gives no indication that its business is adversely affected at this juncture. I remain convinced that it should recover to lower 30s level soon.

FALLING KNIFE?

CMED

I got to develop a strategy before the market open and put through orders early. For example, this morning, I should have put through an order to sell CMED @ 32.5. Because when panic occurs (particularly if it is involved short squeeze), it is usually rather short-lived. Nonetheless, I am rather pleased as CMED breaches $30 with ease. The next step is to see ELOS to breach its recent high of 43.80. For that to occur, it needs another strong day or two.

OBP.TO

I opened a small position on OBP.TO upon the news of receiving approval for its drug in Canada. While it remains a rather speculative stock, the fact that it will roll out the drug immediately partially mitigates the speculative nature, as it will soon generate revenues and cash flow. Potential trials and approvals in Europe and USA would be bonus. There is practically no one to cover it and it remains under the radar for most. My initial target is $3.0.

SFCC – FALLING KNIFE?

I am buying a bit of SFCC at 26.66 for a TRADE (on margin). The stock is down by more than 20% due to a small article in Bloomberg and is down by more than 42% since its quarterly results in November 3, 05, despite the fact that Q3/05 was a decent quarter (with the exception of backlog, which was a bit of disappointing). There’s a slightly chance that it will miss Q4/05 and its 05 consensus, despite the fact that management maintains its outlook guidance. At this level, the stock is obviously very cheap (12X of its 06 EPS, with 16% growth rate, vs. 16X of S&P average, and 22X of peer group), compared both to S&P and its peers. The company has come out and deny the accusation and is schedule a conference call tomorrow to deal with the issue (and I assume that it will reiterate the same line of its release today). There is a large stock repurchase program in place, and a lot of inside buyings recently. These should support the stock from further decline. I thought the market over-reacted. Even the accusation were true, I do not believe it warranted a 20% haircut. If not, it should recover to its prior level, i.e. low 30s, a decent trading opportunity. It is not the best breed in the pharm service space though (disappointing backlog, potential miss of Q4/05), therefore, do not turn it into an investment. This is a cheap stock, temporarily mis-priced, but not an excellent company. I expect the stock to recover to lower 30s, a level I should exit.

BUYING GAP-UPS

BCSI / CNTF

I am watching both stocks this morning. BCSI missed expectation by a couple of cents and its outlook is a little timid, particularly on revenues. It plunged mainly because it is priced for perfection and any hiccup will be punished severely. Even with this morning’s gap down, in my view, it remains expensive as it is traded close more than 40X of this year EPS and more than 30 of next year’s EPS. CNTF on the other hand, appears extremely cheap. Even with the gap up, it is traded about 10X of this year EPS and about 7X of next years EPS, while growing its business by about 100%. I would like to open a position on CNTF, but not too sure when to pull the trigger. There are a few risks here: increasing competition, political risk, and lack of coverage. Furthermore, I have added a few growth stocks lately. Is it prudent to add more here? The market also appears tired here, which will not favor growth stocks in general. Am I hoping another CMED with CNTF? Maybe.

I took a small position on CNTF ($11). My only discomfort is the fact that it shot up by 30% today. But on the other hand, my indecisiveness has caused me 10% already. Is it a good stock? YES! Is it reasonably valued, even with the gap up? Even more emphatically.

I also put a very small bid for HRAY, another Chinese-Concept stock. KONG’s results last night was pretty good too, although stock’s reaction has bee rather muted. The multiples for smaller Chinese concept stocks are deeply discounted, and it appears that appetite for Chinese-concept stocks is gearing up again!.

LOSING MORE TRUSTS

TIL.UN

TIL’s results out last night and it was not very good. While cash earned for distribution is alright and it appears that distribution is safe for now, most of its earnings were from foreign exchange gains. Operating results were bad. It is facing tough competition, slow down of housing market, and continuing high input costs. Outlook appears gloomy. There were not too many positives in the fundamentals. If there’s any lessen I have learnt this year, it is that it never pays to buy bad companies. I bought this one for its relatively high yield, but it is high for a reason. I have decided to sell it when it rebounds a bit. I also would like to listen to its conference call this morning to see what management has to say. Sold TIL.UN at 9.35, resulting a terrible 30% loss. This qualifies as a blowup for this year. Trust sector remains highly uncertain, and I have to try to trim more.

BCSI

BCSI earnings missed consensus by a couple of cents and it plunged by about 20%. I had an idea to buy some way out-of-money puts yesterday as I thought this one is priced to perfection. It would have been gold tonight. I put this thought here not because I thought about it, but for the thinking process.

BUY PANIC

PJC

I averaged in some PJC (13) earlier in the morning which appeared to be a mistake here. I thought the market over reacted this morning for a piece of insignificant news, and there is a smell of panic and it could bounce back for a TRADE. I guess I was wrong based on the pricing (12) now, but I think more on timing than on instinct. I have a hard time to believe that it will go down further from here. At this level, I believe the downside risk is limited. These guys have a reputation as good operators, although most investors have given up on these guys. They need one decent quarter to change the heart and perception.

I am a bit of upset of myself for missing the small print of Moody’s downgrading. I guess the concern is that it may breach its financial covenants in the November quarter. The risk is increased significantly if balance sheet is in question. Am I compounding my earlier mistakes? This starts to look like a BLOWUP candidate for this year. Abandon the ship now? The lessen: RUN NOT WALK! I still say my idea was correct, (BUY PANIC), but my timing was off.

On the conference call, it appears to me that the management is slightly more confidence than they were in last quarter conference call and it clearly indicated that there were no additional bad news hidden (breach of covenants, further decline of SSS?). In fact, I sensed that its SSS for the month of October, which will be released next week, could be slightly better than expected. If that is the case, today’s 10% decline clearly would be over-reaction. The change is also unrelated to Moody’s downgrade announced last night. It was purely a coincident.

FCE.UN

I also disposed my position of FCE this morning. The earnings were in-line, but bond yield is up. FCF does not look good, not to mention the political risk.

EV3

EVVV / WEBM

I opened a small position of EVVV (13.84) late afternoon. To raise capital, I sold my entire position of WEBM (7.25). I bought this one at 4.9 in late May this year and it has gone up by almost 50%. Unfortunately for me, the strong C$ took about 15% out of it and I ended up with 35%. Still not a bad result for half year. I have high expectation of EVVV (20 by the end of 2006). This one is much more speculative though as it has no earnings at this point, nor in 2006.

LOOKING GOOD

NTSC

I was rather concerned about the earning report this morning and I was really considering scale back a bit yesterday, particularly after last quarter hiccup. The report is fine as it met expectation, and raise its 2005 revenue guidance, although only marginally.

qRevenues reached a record $97.7 million, up 27% year-over-year.

qOperating income increased to a record $7.7 million, up 42% year-over-year.

q Net income increased to a record $6.0 million, up 63% year-over-year.

q Backlog increased to $439 million, up 24% year-over year.

qGlobal workforce increased by 295 sequentially

The stock responded poorly, partly due to the poor mood of the overall market, and partly due to the 7% run yesterday. I continue to believe the stock is undervalued. At this level, it is traded at 14.6X of 2005 EPS of 0.65. Assuming it is able to maintain its 20% growth target, it is traded at 12X of its 2006 EPS, while growth its top and bottom lines at more than 20%. It should be trade at least at S&P500 average of 16X of 2006 EPS, i.e. $12.5 (30%). I believe it should be traded at 20X. My target is $15 by the end of 2006, more than 50% return. I shall stick with it for now. Management sounds pretty confidence during the conference call, which give me the comfort that Q4 is pretty much in the bag. The key will be 2006 outlook which will be released during Q4 conference call. Management indicated that we should see decent growth in both top and bottom line. The stock is under-valued mainly due to lack of coverage from major institutions.

A

My A got stopped-out this morning. This is rather stupid and undisciplined on my side, and it should not happen again.

I DON'T KNOW WHAT I'M DOING

A

I can’t believe I am doing this. I took a small position on A, a true dog nobody wants at this point. I thought A has bottomed here and it has stopped going down and moved up smartly. It unlikely to get worse from here. Input costs could improve slightly, along with modest increase of pulp price, could move this dog above five in the next few months. However, industry fundamentals are still against this firm (over-capacity, high labor costs, raising C$, increasing competition, declining newsprint usage, not to mention one of the poorest management team I have never witnessed, Need I say more?). Therefore, this is only a TRADE. I would like to get out at any level above five. If it break four again, I shall take my loss. In the short term, it needs to overcome its 50-day SMA of 4.58.

CMED

Man, I hope I know what I am doing. I just bought some CMED @24.50, after a 10% jump today. It has a tremendous quarter, revenues up by close 81%, and 43% sequentially, and EPS up by 61% and 43% sequentially. Based on my back of envelop calculation, it shall make about 0.95 this year (03/06) and based on 50% growth rate, 1.46 next year (03/07). It is traded at 17X of next year EPS and growing at 61%. The growth rate is GOOGLEish and the share is certain not. Using 20X of next year’s earning, it should be trade at 30, which is 22% return. The same stock would have been traded at least 25X if it is a US-based company, which would make it 36.5 stock. I am not even talking about BADU. The stock remains under-covered by the Street I believe it is still early to own this one, although it appears I could have bought with much lower entry price.

SPECULATIVE GROWTH

EVVV

I am taking a hard look of EVVV as it fell off its IPO level. Obviously this is a speculative stock as it does not have any earnings. However, it does have a pretty good growth profile as its revenues have been growth at 50%+ over the past couple of years and it is expected to continue. It expects to turn into profit in FY07 with EPS of 0.67. The stock is traded at about 20X of E07, with a 50% top-line growth rate. It has a good product pipeline with a number of approvals and launches in FY06, starting in Q1. Q3/05 results and outlook are pretty good, and at current level, valuation appears reasonable.

Technically, it appears it could test its low at 13. It is in the medical equipment sector, which has fallen out of favor lately. Overall market could peak here as well. One more factor is the expiration of lock-out, which happens on December 13. While management maintains that it has no intention to sell, perception alone could bring more pressure on this stock. Shouldn’t I wait for sale?

In any event, I intend to take a small position in the next few days, preferably at 13 level and hold it into 2006. It the company could maintain its growth profile, it should be traded back to 20s. A couple of approvals or launches in early 2006 could provide some catalysts.

BUY OR SELL PROFILES

JNPR

I sold my JNPR (24.16) this morning. This is supposed to be a trade and I got about 6.5% in a couple of weeks, and I certainly do not want this become an investment, not on margin. NASDAQ and S&P have gone up by approximately 5% in the last five trading sessions, and given my view that this rally is a short-term relieve rally, I would like to sell more and raise more cash. The market appears losing some steam here, and there appears to be a lot of profit taking going on.

My problem is that I would like to raise more but I am having a hard time. ELOS exceeded this morning by a large margin, raised its revenue outlook, and it shot up. While I am rather satisfied, this seems not the stock I want to sell. I only wish my position is greater so that I can scale down a bit in the early morning. SXC also exceeded significant. Again, this seems to fit into “BUY� profile, rather than SELL profile. I would trim some if SXC over 3.0 in near term. Otherwise, I would hold it.

Wrote some cover calls on WCG (March 40 @2.4). If it gets exercised, I will sold my WCG at 42.3, on a net basis, for about 25% total return. If it does not, I will lower my purchase price by 2.4, to about 30. I still like this stock and I do not mind holding it at all for the entire 2006-2007. Timing wise, it is consistent with my near term view. Moreover, WCG’s Q1/06 results may not be as robust as results in later 2006. Either way, I would be rather happy with the end result.

TO SCALE OR NOT TO SCALE

ELOS

A few stocks have (UNH, ELOS, WCG) worked alright. Now the question is should I scale back a bit. There are a few arguments for peeling: this rally smells like a bear-rally, macro economic environment remains questionable, ‘DON’T FINE THE FED�, long term sentiment remains too bullish, and earning momentum is fading somewhat. I am also concerned about ELOS’ run in the last couple of days in front of its earning report tomorrow morning. Should I take the profit here and wait for the earnings, or should I hold on and take the earning risk? Here is the largest tactic differences between retail investors and institutions, where they can have a much bigger position and take some off the table right now, and small investors are limited by their rather small positions. On the other hand, this rally could have a few days to run and fundamentals argue for holding. I have had the problem of selling winners in the past and I am trying consciously to let my winners run. Also, these stocks are in relatively defensive sectors (health care) and therefore are less vulnerable than cyclicals. Earning risk remains to be the biggest concern for ELOS. Punishment will be swift and severe if it fails to deliver its earnings and positive outlook.

Put through an order to write a few cover calls on WCG (Jan 40 @2.30). It probably won’t get filled unless there is a last minute push. To sell WCG at 42.30 by January, I would be rather happy even though I think it has potential for 50 next year.