Author Archives: Scalper1

Vinyl Records, Record Players Singing New Tune: Back In Groove

It seems like Bob Seger was being prophetic when he sang the opening lyric of “Old Time Rock and Roll”: “Just take those old records off the shelf.” Vinyl records are making a comeback. The old “8 records for a penny” Columbia House Record Club and its parent companies have gone through bankruptcy, but the newest owner has plans to relaunch a record service, as hinted at by the “coming soon” on the columbiahouserecordclub.com website. (Competing record subscription services cost about $30 a record, so don’t expect “8 records for a penny.”) With two subscription-record services operating and plenty of vinyl records available in used-record shops and online, now might be a good time to re-evaluate you audio equipment. We put together a list of some reasonably-priced audio setups that would let you pull those old records off your shelf: 1) If you’re going to play records, you need a turntable. The one we chose is the Audio Technica AT-LP60 USB, which sells for about $95. This model has a built-in phono preamp so you can use it with an amplifier or receiver that doesn’t have an input for a turntable. It comes with several adapter cords, so it can also be used with just a set of powered speakers. It also has a USB output, so you can plug it into your PC or laptop and record your records with the included Audacity software. The turntable is belt driven and has controls for speed (33 1/3 or 45 RPM), record size (7 or 12 inches) and on/off. There’s also a lever to raise and lower the tonearm so it can positioned over the record. 2) If you’re using the turntable with a pair of unpowered speakers, you’ll need an amplifier or receiver (which contains a radio tuner). For our setup, we chose a $120 Griffin Technology Twenty Digital Audio Amplifier. This stereo amp has inputs for an optical connect used with devices like a game console or Apple ’s ( AAPL ) Apple TV, and a 3.5 mm adapter so you can use your turntable. It puts out 20 watts per channel, and has an output jack to add a subwoofer for even better low-end sound. It has Bluetooth, so you can pair the amplifier with your smartphone or tablet and play the music stored on those devices. 3) With the turntable and amplifier, you’re going to need a nice pair of speakers. Monoprice, owned by Blucora ( BCOR ), has a stylish pair of two-way bookshelf speakers for just under $100. “Two-way” is audio-speak for saying there are two speakers inside of each cabinet. Each brushed finished black speaker measures 9.9-by-6.1-by-10.5 inches and weighs a hefty 8.5 pounds. With a 5.25-inch woofer and a 1-inch tweeter, these easy-to-hook-up speakers sound even better than they look. No speaker wire, which is needed to connect the speakers with the amplifier/receiver, was included with our review speakers, so figure on ordering some. 4) If you want to do without the amplifier completely, consider the $249 Grace Digital Bluetooth speakers. One of the speakers has a built-in amplifier that powers both speakers with 18 watts each. These bookshelf speakers are a bit smaller than the ones from Monoprice, measuring 8.5-by-4.6-by-7.5 inches, but at 8.6 pounds they weigh a tad more. Inside each speaker cabinet are a large magnet 3.5-inch woofer and a 1-inch tweeter. The controls are positioned at the top of the left speaker and include volume and audio source. The input is 3.5 mm jack, and while the Grace Digital speakers include an adapter, it’s the wrong one for the Audio Technica turntable. The adapter included with the turntable, however, worked just fine. The speakers have another advantage — built-in Bluetooth, so you can sync up your smartphone or tablet and play music stored on those devices as well as play records. Connect one speaker to the other (speaker wire is included), plug in the turntable or sync your mobile device, and you’re good to go. 5) Last but not least, if all you want to do is listen to your old records without fussing with components, we tested an updated record player — the Archer Turntable Home Stereo System from Canada-based Electrohome. For about $100, this small-suitcase-sized phonograph has a good quality turntable, stereo speakers, a USB plug so you can connect it to your PC and make MP3s to listen to your “records” on the go, and an AUX input so you can plug in a smartphone or tablet to listen through the Archer’s stereo speakers. While the turntable and speakers aren’t quite the same quality as the components we tested, the whole system, ready to use out of the box, costs less than just the Audio Technica turntable. For a hundred bucks, you’re up and listening in minutes. Not a bad deal.

Don’t Be Fooled By The Short Squeeze

By Alan Gula, CFA On November 18, 2015, KaloBios Pharmaceuticals Inc. ( OTCPK:KBIOQ ) announced that Martin Shkreli and a consortium of investors had acquired more than 50% of its outstanding shares. The stock, which had closed at $2.07 that day, traded above $10 the day after the announcement. The next day, shares rose above $23 and closed at $18.45. The following Monday, the stock miraculously traded for over $45 per share. In just six trading days, the market cap of KaloBios had risen from under $4 million to over $160 million. It was a blatant example of market inefficiency. But what could cause such an irrational spike? The answer is an acute “short squeeze.” A sharp rally in the price of a stock puts pressure on short sellers, who are betting the stock will fall. They may feel the need (or be forced) to close out their short sales by buying the stock. The buying pressure from this short covering causes the stock to move higher, compelling even more traders to cover their shorts. Over the past month, we’ve seen a bevy of short squeezes as the U.S. stock market has bounced along with the price of crude oil. These squeezes haven’t been as spectacular as the above example, but judging by how heavily shorted some of these stocks are, they’ve been very painful for the short sellers, nonetheless. The following table shows a few of the largest squeezes: The short interest ratio (SIR) is the number of shares sold short divided by the average daily trading volume. The average SIR for S&P 500 constituents is 3.3 times. At 9.5 times, the average SIR for these stocks is much higher – and for good reason. The risk of bankruptcy is very high for the companies on this list. Thus, they all have Standard & Poor’s credit ratings of CCC+ or lower. Two of the companies are already in selective default (SD). Others will eventually join them. Many of the stocks on this list will end up worthless. Risks notwithstanding, the short squeezes have been eye watering. Chesapeake Energy Corp. (NYSE: CHK ) shot up 208%. Linn Energy LLC (NASDAQ: LINE ) annihilated the shorts with a 398% maximum gain over the past month. In spite of these equity gains, though, many of these companies won’t have fairy tale endings. For example, the 6% bonds due 11/15/2018 for Peabody Energy Corp. (NYSE: BTU ) have rallied, but they’re still trading around $7 ($100 par). The bond market is saying that there won’t be much recovery for senior unsecured creditors, which means that equity shareholders will be left with approximately zero. The equity shareholders of the companies listed above are deluding themselves if they think the market cap reflects underlying fundamentals. It’s important to recognize that a sharp rally in a stock doesn’t necessarily signal all is well. In most cases, these stocks aren’t rising from the ashes. In fact, many of the companies with the most violent short squeezes will end up filing for bankruptcy, just as KaloBios had to do on December 30, 2015. Safe (and high-yield) investing. Original Post Editor’s Note: This article covers one or more stocks trading at less than $1 per share and/or with less than a $100 million market cap. Please be aware of the risks associated with these stocks.

Better Times For Apple Could Start With Spring Product Launch

It’s been a rough few quarters for Apple ( AAPL ) stock, but Nomura Securities sees “brighter days ahead” for the iPhone maker. Nomura analyst Jeffrey Kvaal on Monday reiterated his buy rating on Apple stock with a price target of 135. Apple stock was up a fraction, above 102, in early afternoon trading on the stock market today . “We expect a drumbeat of positive news items — new products, improving supply chain, rising capital returns, iPhone 7 — to drive the shares higher,” Kvaal said in a report. “We expect the rising iPhone subscriber base to restore unit volume growth sooner than consensus estimates anticipate.” Apple has managed to keep Android smartphone rivals at bay despite mediocre sales of its iPhone 6S series phones, Kvaal said. On Thursday , Apple announced a spring product launch event to be held March 21 at company headquarters in Cupertino, Calif. Apple is expected to unveil a new 4-inch smartphone (iPhone SE), a next-generation 9.7-inch iPad and some new Apple Watch accessories. Another potential catalyst for Apple stock is the company’s annual update to its capital return policy. Apple is expected to raise its quarterly dividend and stock buyback outlay in April. “Apple’s dividend increases have averaged 11% since the dividend returned in 2012. The yield is now 2.1%,” Kvaal said. “Apple is likely to increase the dividend by approximately 10% to the 57-cent range and continue its share repurchase program. We estimate a $5 billion share buyback will boost EPS by approximately 8 cents to 10 cents on an annual basis.” RELATED: How Much Will Apple Raise Its Quarterly Dividend?