A Walker's Investment Blog

SNDA: Latest Data

2006-08-22T21:33:00.000-07:00

Here are some new data related to Shanda (SNDA), which last week reported above-consensus earning. Other data I've found include a recent interview transcript of its CFO, a speech by CEO Chen TianQiao and an interview of a VC who happens to be a lead investor when SNDA went public. All things considered, the company is in good shape and its share value should recover.

#1: Short Interest Decreased

Aug. 15, 2006 4,786,613
Jul. 14, 2006 5,246,709
Jun. 15, 2006 3,874,942
May 15, 2006 4,905,655

#2: Q2 results comparison of top online game companies:

#3: Poll Result: SNDA rated the favorite Chinese game company.
Source: China Game News, 8/17/2006

#4: Poll Result: SNDA is the company that users like to host the new version of "UO" game
Source: http://vote.17173.com. Caution: my own testing showed that the site allows multiple clicks by one user. So the results can be manipulated.

[See Also]

Q2 earning conference call transcript, especially on the "free-to-play and pay-for-virtual-items" model.

Shanda Entertainment (SNDA) Now A Turnaround Play?

Shanda: A Nice Case Study

UTSI: Recovery In Progress

2006-08-22T21:28:00.000-07:00

[Originally posted on August 11th, 2006] The share price of UTStarcom (UTSI) went up 13% today to $7.47, following its Q2 earning report. Prior to that, the price had dropped from $8+ to mid-6s on a downgrade ("underperform") from a Bear Stern analyst, who stated that UTSI's high margin bussiness, PAS infrastructure and handset, will drop to insignificant level within a couple of years. In the mean time, the Yahoo! message board was filled with negative "assessments" by fundamental and technical analysts with allegedly good track records. Lessons learned here:

BS's downgrade, either the motive or his judgement, just before the Q2 report while the price was recovering was clearly questionable. This just adds to my long-time suspicion about the trustworthy of the whole financial "news" industry, which in my opinion is corrupt. [The same guy downgraded China Mobile a couple of years ago when CHL was priced $16. CHL now trades at $33.]
All the analyses by BS as well as other online commentators clearly missed the very important point: valuation. UTSI's Price/Revenue of 0.3 is the lowest in telecome industry, which averages above 1. The company has over $600 mil cash balance and has had five consecutive quarters in which the operating cash flow was positive. Even if the entire PAS revenue (30%?) disappears, its other divisions (broadband, PCD, IPTV, etc.) are worth something. Before UTSI had its PAS business prior to 2002, its share price were rarely below $12!
Contrary to hangman's TA analysis on the Yahoo board, which said that UTSI was technically in a downtrend, I believed the otherwise. The MA alignment is perfectly positive. In fact the recent pullback is almost necessary so that the weekly relative strength retouch the 20-period MA, which has turned up during last couple of months. UTSI formed a double-top breakout pattern recently and it's still valid.
Almost all of the UTSI-related news and articles found online recently had a negative tone, questioning UTSI's very survival and offering analyses of why it had "failed" as a company. This reminds me of early 2004, when every report about the Company was rosy. At the height of it, the Company was featured in a cover story on BusinessWeek and named the Best Employer of the Year by another news organization. Recently the Company has been labelled one of "the ten worst managed tech companies in US" on Seeking Alpha. In both times, the contrarian approach seemed working well.
It pays off to follow a company very closely and for many years. Doing so has, up to now at least, made me a better analyst than some of those working for big financial institutions. Theoretically the process can last forever and one can make money from the same company forever as long as it is publically traded and that its business, hence the share price, fluctuates.

In summary, my hypothesis is that UTSI will stay in an uptrend from now on, with its customary volatility expected along the way. The next quarter is a slow one and the real breakout may be six month away - when the Company reports positive earning for the first time in a long time. Any new contracts (IPTV in China/India/LatAm/Europe) or a PCD aliance with a tier-1 telecom in US) could cause spikes in price. Exit Strategy: Sell if price breaks below 5.9, which is the support for the recent double top breakout.

Access From China and Migration to Google

2006-08-22T20:55:00.000-07:00

To my surprise, I am able to access Blogger today from China. I hope this is permenant.

I also found out that, hopefully in a few weeks, I will be able to migrate to a new blog system created by Google, which acquired Blogger several months back. It's still in beta version, but there seem to be a lot of features that I could use (such as dividing posts into categories, allowing access controls, spelling check and a graphical layout manager).

In the meantime, I will still maintain my WordPress-based blogs on my own computer and gradually move some of the old posts to Blogger.

Link: China's Economy: Out of Control

2006-08-06T01:35:00.000-07:00

Jim Jubak's column in TheStreet.com: China's Economy: Out of Control. What's said in the article is unfortunately true.

Stock Investing as a Zero-sum Game?

2006-08-05T19:58:00.000-07:00

While doing research on machine learning and data mining, I encountered an online discussion on whether or not stock investing, as well as computer-assisted stock picking, is a zero-sum game.
The discussions were initiated because of a New York Times article "How a Computer Knows What Many Managers Don't". There are quite a few good and informative points raised by contributors that are on either side of the debate.

My personal answer to the debate is: it depends. It depends on the type of the investors concerned (speculators, manipulators, serious value investors, etc.) and investing time-frame (day-trader, short- and long-term traders). When a company continues to provide goods or services that the world needs, its value (and the stock price) increases over time and everyone could be a winner, though a better investor would win more. One such example is BHP over last three years. Almost everyone has been making money from BHP not because other people have "lost" money, but rather because the Company's value has increased due to the world's demand for its products.

Even if a trade is zero-sum, as it seems so on a short term basis, the trade increases the liquidity for the market, which is positive for the whole system.

One may compare stock-trading to sports. Each of individual games in a sports competition seems a zero-sum game: one side wins and the other loss, even though the outcome is not zero-sum for the players: the winers takes more home than what the losers loss. For the rest of the world, it provides entertainment value and, arguably, improves the health and well-being of human kind. Stock trading is a competition, participated by millions of people worldwide. Even though each trade may seem a zero-sum game, the system rewards hard-working, highly-motivated people and with better skills or tools, machine-learning tools included. In addition to liquidity, a trade, zero-sum or not, provides entertainment for everyone (that's what you are doing anyway when you watch CNBC), and rewards managers and company employees that work in the company and, hopefully, offers incentives for them to develop even better products and services for the rest of the world.

The debate will never ends, but in the mean time, let's work hard and try to stay on the positive side of the game.

Investing in Chinese national banks

2006-07-02T21:34:00.000-07:00

A friend forwarded me an article by MarketWatch: Taking Stock of Chinese Banks.

In addition to what's mentioned in the report [about the risks associated with investing in the Chinese banks which are rushing to go public lately], these companies, or any banks everywhere in the world, are companies that I try to avoid:

I simply don't understand their business or how to value them (even though financial stocks have out-performed the overall market in the US duing the last 20 years or so).
I prefer companies that run a simple business, i.e., with only a few key products/services whose market acceptance can be more or less tracked. Banks are not those kind of companies.
These banks offer few "hard data points" I can rely on to make investment decisions. These data typically include 10-Q/K reports, news reports and price actions. For the same reasons, I usually stay away from any company that just had its IPO, despite of the "fact" that these companies yield higher returns than the market average in its first year after IPO.
Banks make profit from _their_ investments. Logically speaking, _IF_ I am a good money allocator/investor, why should I ask someone else, i.e., a bank, to invest or allocate money for me and expect a higher return? In other words, I am supposedly a better bank myslef. [If I am not, I should invest in an index fund or mutual funds].

Of course what I said above doesn't mean that the banks' stock price may not go up in next few months or years. For example its IPO price may be too low. Or their business may be indeed very good. But who knows? I wouldn't gamble without at lease some hard data points.

It hurts!

2006-06-08T16:11:00.000-07:00

The market has been tanking lately, and hard. I must have lost half of the gain that I made earlier this year! It hurts!

Lesson learned: do not resist to sell in order to save tax! USG went from 60s to almost 120 and now is back to 70s. I should have sold it in 90s when it clearly broke down the uptrend.

Lesson two: always stick to the winning strategy. No second guessing. Especially when it comes to selling.

On the other hand, UTSI is looking good relative to the broad market. Loading it up, heavily. Hopefully it will pay off.

Staggering Pay for Top Hedge Fund Managers

2006-05-26T18:27:00.000-07:00

Hedge funds are where money is. According to an article in yesterday's USA Today, $363M is the average pay for the 26 top hedge fund managers last year, up from $251M in 2004. It's staggering! Outragerous!

The key reason seems to be the huge amount of asset the managers manage. They typically charge 2~5% management fee and take 20% (up to 40%) cut from profits. "A $10 billion fund would earn $200 million from the 2% management fee alone". If the very manager happened to bet on oil last year, it's no surprise that he/she could have gotten a pay check of more than $300M in total.

I wonder what the average pay and portfolio return for all hedge fund managers are. Do they get a return that is close to the whole market, i.e., the mediocre 4% return last year? Do the top managers consistently earn top pay every year? As I said in another blog, the hedge fund as an industry does not seem to outperform the market over the last decade. They do perform better in bad time because they are allowed to go shorting as a hedge against market downturn.

All things considered, there may be reason for slim hope that, someday, even I might earn $300M a year too, if I am given $10 billion to manage!

More on hedge funds:

Book Review: The Philosopher Kings Of Hedging

Shanda Entertainment (SNDA) Now A Turnaround Play?

2006-05-20T20:13:00.000-07:00

I've been accumulating Shanda Entertainment (SNDA) last week or so on its remarkable strength in the face of a sharp market sell-off. On Thursday, the company reported earnings that were far lower than last year (down 90%?), but revenue seems to have stabalized quarter over quarter. The market responded to the report very positively, raising the price over 10% the next day.

SNDA has been a near-disaster during last year when its price plummeted from a high of $45 to a low of $12s recently (see my analysis several months ago: Shanda: A Nice Case Study). I think that its business has somewhat stabalized and its free-to-play business model may actually be a workable one, meaning the company can survive even without a hit game. Its failure in venturing into IPTV business and scaling down its EZ Center (hardware) business may actually be positive for its stock price: the company will now stop throwing more money into something that may never work out and, instead, focus on what it does best: providing online game and entertainment contents to the ever-growing population of Chinese teenagers.

More importantly, I think it is now a value play. Its 19.6% position in SINA and net cash accounts for over $8 of its $13 stock price, making the market value of its own business only $5! Sounds a value play for me. The market's strong interest in China stocks lately and the positive technicals don't hurt either. The price may explode when the short positions (40% of the float) are covered on any positive news.

In the meantime, the analysts on the street are still very negative on the company after the release of the quarterly report:

J.P. Morgan maintained its underweight rating on the stock but cut its 06 price target to $11 from $12."1Q06 revenue was better than expected due to stabilizing online games revenue," said Dick Wei. But the analyst added that he believes "visibility on Shanda businesses remains low," given aging game portfolio, uncertainties in its new game portfolio and lack of initial tractions of EZ Center.

Bear Stearns reiterated its underperform rating and said it remains on the sidelines on Shanda stock.

[5/18/06] Analysts at Brean Murray reiterate their "sell" rating on Shanda Interactive (SNDA.NAS). The target price has been reduced from $10 to $8.

[5/24/06] Shaun Rein of China Market Research Group: Shanda Interactive and Importance of Guangxi.

They are right about SNDA's "low visibility" and it is also true that any negative news or market condition can send its price down again. But at today's relatively low price I will see how the analysts' records stand in the coming months. Besides, I wish the analysts had informed us Shanda's problem before its stock crashed from its high of $45, instead of now when everybody knows what's happened!

Updates ...

[8/6/06]: SNDA's price now stands at 15.5. I think it may keep going up until August 15, the date of earning release. The reason: short-covering. To play safe, I should sell just before the earning release.

First Day of Month Effect

2006-04-16T20:36:00.000-07:00

According to this study, the market performance of the first day of month during the last four years explains over half of the gain S&P500 has had. This is consistent with my own observation and with the performance of my own portfolio. Many times I've had over 5% return in the first trading day of a month, only to see mediocre or even negative performance for the rest of the month.

I am going to China

2006-04-01T19:23:00.000-08:00

I will go to Shenzhen, China, tommorrow and will stay there for several months. Since blogspot sites may be blocked in that country, I may not be able to update this blog until I come back to the States.

Meanwhile, happy trading!

[Update from China, 04/06] In China, blogger sites can be maintained/updated by the ower but cannot be accessed by others within China.

Sina's Saga Continues

2006-03-28T09:49:00.000-08:00

Following the rumor of Tom Group's buying Sina and the breakout in SINA's share price, the saga continues. More players are allegidly involved, as reported in Sohu's web site (isn't it ironic that the SINA's biggest rival is dedicating a full coverage on the rumor?). Even Google is said to be interested in at least a piece of the fat meat.

Sina is making me richer, but I really feel sorry for the company.

Updates:
[4/14/06] VC Michael J.G. Gleissner has acquired 6.4% stake in SINA.

Stock Log Analysis?

2006-03-27T09:53:00.000-08:00

Analysing a stock chart is equivalent to analysing a well log. In fact if you rotate a stock chart by 90 degrees, you will get something very similar to a well log.

Well logs are very often the closest information we can get about a reservoir thousands of feet downhole. Similarly the stock charts, i.e., its price and volume data along with the other charts derived from these data, are very often the most direct information about what's happening to the stock, from while we can then make extrapolation on what's likely to happen to the stock price in the near future.

The recent chart of SINA, above, is a very good example of showing the value of reading charts. The time period that I call "T2" is the most interesting. The candle-sticks, its relative strength chart and the CMF chart all leads to the conclusion that, for some reasons, SINA is under accumulation in spite of the weak earning guidance for the next quarter. It could have been due to its red-hot, though free, blog service it just released. A week later after the breakout ("T3"), it was reported that another Chinese internet company, Tom Group of Li Kaching, is to acquire Shanda's 20% stake in SINA. No wonder!

In log analysis, we identify where the oil or gas is. In stock chart analysis, we identify where the money is flowing to or out of. Both are technical analysis and, when used correctly, adds value to an investment portfolio.

Hedging Against Market Meltdown

2006-03-24T19:21:00.000-08:00

Anticipating a tough year or years ahead for the stock market, I am now trying to manage my personal portfolio as a hedge fund, more specifically a small long-and-short equity type fund. The purpose is to hedge against a possible sudden market melt-down and, in more normal periods, to improve the overall return. My goal is to maintain a long/short ratio at a more-or-less constant level, say 70/30, but it will take some time to get there because most of my accounts are restricted (from shorting).

Chart above shows the historical performance of hedge funds (dark-green and blue) vs. $SPX (purple). Source: Credit Suisse/Tremont Hedge Fund Index. Note the lowered volatility, especially during the bubble-bursting years in early 2000s.

Stock Investing vs. Oil Field Development

2006-03-19T22:32:00.000-08:00

As someone who've spent over ten years in the oil industry, I am seeing great similarities between the businesses of oil field development and stock investing. Understanding these similarities - and the differences - may help us better understand the business of stock investing by analyzing it from another perspective and, hopefully, improve our investing performance.

Obviously the similarities of the two businesses start with the fact that both are risky businesses. In the oil industry, which is capital intensive and with high risk, the geologists and engineers (including the reservoir, production and financial engineers) try to evaluate and optimize the value of a portfolio of oil and gas fields by making predictions that are based on scant and indirect information as well as on assumptions that are thought reasonable, say, about the future oil price or the geologic models of the fields. As smart as we are - many of us have a Ph.D. degree - we still have to be aware that these predictions could be very wrong because the data or assumptions we use may be wrong, or simply because some future events are just unpredictable. How to manage the uncertainty and risk thus becomes the most important aspect of any oil field development project, even more so than making the predictions themselves.

In fact I would say the same principle should apply to any risky business, stock investing included, if the optimal outcome is to be expected. [Another example that comes to my mind is the business of medical care/diagnosis of patients.]. In reality however, many individual investors have no knowledge or a mindset of treating stock trading as an investing process that requires researches, i.e., making unbiased predictions that are based on data, assumptions and experiences, and requires managing, i.e., what to do when things do not work out. Trading on hot tips or emotion ("it's so cheap, let's buy more!") will most likely lead to disaster over time, as I painfully lived through several years ago.

The other similarities between the two risky businesses are:

Both are about making predictions and assessing uncertainty/risks by integrating all avalilable information. Some information is better ("harder") than the other. More information does not necessirily mean better predictions or lower uncertainty/risk.
From the viewpoing of a statistician, many variables in the stock market and in an oil project are all random variables that behave as stochastic processes over time or space. Any individual's prediction of these variables, e.g., the fair value of a stock or an oil field, no matter how smart and experienced the individual is, is just one of many possible estimates in the market place or the workplace. The implication is that you should not bet (all your money) on any one particular outcome. Specifically we should not set or act on a fixed price target.
[I always get a kick out of analysts who state/raise/lower a price target for a company with the precision after two decimal points, without specifying a time frame].
[Based on the same analogy, I would go a step further and say: do not trade options, because it involves evaluating the probability of two events happening simutaneously: (a) a fixed price floor/ceiling (strike price), and (b) on a pre-set date - much harder to do than predicting a stock's movement direction (up or down) only.]
It seems true that people always under-estimate, thus are unprepared for, the maganitude of volatility in the market or the complexity of geology in an oil field.
The methodologies for analyzing stocks and oil fields are remarkedbaly similar: most people use a combination of fundamental (valuation or physics-based) and technical(statistics-based) methods. [Here is another view on fundamental and technical analysis, in Chinese].
Trends: the golden rule of trend-following applies in both stock trading and reservoir modeling ( e.g., in reservoir mapping:
"Do not go against a trend while it lasts, unless you have information that suggests otherwise, i.e., its reversal".
In statistics, this is called "unbiasedness". Yet many people lose money simply because they are biased. They stubbornly believe that they are right and the market is wrong.
Discontinuities: an oil formation may encounter faults or other boundaries, causing abrupt changes in reservoir and/or fluid properties. Similarly a stock can gap up or down, sometimes significantly. Discontinuities cannot be predicted precisely, but there are things that can be done to anticipate or manage them.
Each stock or potential candidate for purchasing can be regarded as an equivalent of a unique project in one's entire investment portfolio. Just like in the oil business, a project calls for thorough researches beforehand and, once commissioned, requires frequent monitoring and management.
All theories of probability and risk management apply to both businesses. Nobody can garrentee 100% success rate, but the goal should be to win consistently in a probabilitic sense.

My experience is that, if you find a winning strategy, tecknically it is much easier to profit in the stock market than to profit from an oil project. In other words, it carries less risk. The reasons are:

Even though there are countless factors that affect stock prices in any given moment, it is still a 1D game - you just need to predict what will happen in another future time. By no means an easy task, it is possible in a probabalistic sense (for a small investor anyway). For the oil field, we need to build models in 4D, i.e., what happens in adjacent wells, blocks or layers and how things will change over time in each of these units. We also need to deploy sophiscated physical models in addition to imperical/statistics-based techniques.
The stock market is very liquid - in most situations you can cash out and go away. You can not, however, abandon an oil rig without taking huge loss and dealing with lots of related business and legal troubles.Your decisions are vindicated soon - in days or months, unlike in the oil industry it takes years or decades, if ever at all, to show the impact of the work that you are so proud of.
Stock investing can be done by one person. In fact, many very successful investors are loners who otherwise would not prosper in a corporate world such as a integrated oil company.
It's your own money and you are motivated. You don't need to beg other people for a budget in order to, say, drill a well. Of course you don't get free donuts either, and all loses are yours!

To be continued.

Energy Watch 06/03

2006-03-05T21:26:00.000-08:00

Nice report on alternative energies: Identifying Opportunities in Alternative Energies, by Wells Fargo Bank.

In the news,

Ivan Energy claims to have succeeded in applying its in-situ heavy oil processing technology in improving oil recovery in its Bakesfield, California, field. Its stock has been more than doubled in last couple of months.
Rentech: It seems that the local government of the Natchez Adams County, Mississippi, is really working hard to land the Rentech's CTL project. Together with Rentech officials and banker Credit Suisse First Boston, they will make their case for state funding tommorrow before the Senate Finance Committee. They are asking for a $15 million fund to build the infrastructure for the plant. The project is said to cost over $650 millions before 2008 and will create at least 200 jobs. Rentech's stock is acting very strong.
Syntroleum: On the other hand, Syntroleum, one of Rentech's competitors, saw its stock tanking today after it announced supposedly good news that it has created a partnership with Bluewater to use Syntroleum's GTL technology with offshore floating production storage and offloading (FPSO) vessel.

Shanda (SNDA): A Nice Case Study

2006-02-28T09:49:00.000-08:00

Shanda （盛大）, the largest online game provider in China, droppd almost 20% today following its quarterly report which showed its first (big) loss in its young history. I've followed SNDA even before it went public - back in early 2003, when I seemed to be the only person not playing Shanda's online games everytime I visited the crowded "net cafes" in Shenzhen.

SNDA went to a high of 45 after it went public. I tried to short SNDA when it was down to 20s, but couldn't do it because no shares were available for me to borrow. Anyway I think I made the right call and it can be used as a classical case study for not buying such a 'hot' company, even though it had the number one market position. The rationals for my trying to go short at the time were the following:

First the fundamentals:

Although Shanda had its spectacular growth in recent years, almost all of its revenue was from a few game s such as ChuanQi and PaoPaoTang.
Shanda's games were developed by South Korean companies, which means that SNDA really doesn't have its own IP rights.
Its business model, technologies and products can be imitated by others, i.e., with no barriers to new entrants.
Kids tend to get tired of old games and instead want to play games from competitors: Netease and 9City.
Government-imposed rules limiting playing time by youngsters.
On my visit to Hunan Province in October '05, the “net cafes" there were almost deserted, a shocking contrast to a year ago.
Teenagers in Shenzhen told me that the hottest online game then was another game called ReXueJiangHu，which was NOT Shanda’s game!

And technically the chart clearly showed that the best time was over for Shada:

Note that, below SNTA's chart, I've also shown the one of UtStarcom (UTSI) albeit it's for the years of 2003-04. UTSI is another company that I've followed for many years (and did make a profit from it). See the striking similarities between the two charts? The similarities are not incidental: Both companies were growing rapidly by taking advantage of the explosive market demand for its products/services. However both had esentially one product and no technologies. Both are at the mercy of the Chinese government policies. When the market cooled down, competition heated up, they started to suffer greatly, and very rapidally indeed.

The prices for the companies today? UTSI at 6.4 and SNDA at 13.8! Both had a high of 45 not too long ago.

One more piece of information: during SNDA's stock price decline in the past year, the stocks of its competitors have been doing much better. Another warning sign!

The company have tried to to diversify reveneu sources, but it takes time to implement the strategies and chances are that they will fail to meet the expectations. Shanda also made investment in other companies such as Sina and a South Korean game developer, but have actually lost money on these investments which explains the bulk of the huge loss in the past quarter.

Lessons here? Be careful with companies with one hot-selling product or service but no competitive advantages in technology or business model. Secondly, charts do work, at least in this case it did. Very often charts are the only hard data an individual investor will have access to.

The flip side of this is: if timed right, these companies offer great opportunities for shorting.

What should I do about USG's rights offering?

2006-02-25T15:15:00.000-08:00

As part of its plan for Chapter 11 reorganization, US Gypsum (USG) annonced on January 30th that it is issuing a $1.8 billion rights offering to the existing shareholders, backstopped by Berkshire Hathaway Inc. (for a $67 million non-refundable fee). The proceeds from this offering, plus USG's cash on hand, tax refunds and new long-term debt, would help the company fund its asbestos personal injury claim settlement and merge from the bankrupcy.

As a shareholder, I am having problem understanding this rights offering and its implication on my shares. After some research, specifically on the Yahoo message board, I've at least got some questions answered.

=> What are the 'rights'?

The right USG is offering is a stock option with a strike price of $40. As an existing shareholder, you have the rights to get an extra share of USG by paying the price of $40 per right. Suppose that USG trades at $85 just before the rights-offerring period, if you exercise the rights, you will end up having 2 shares of USG each priced at (85+40)/2, or $62.5.

=> What choices do I have?

You can exercise the option, sell it, or allow it to expire (in the case of this security, letting it expire is entirely illogical unless the share price goes below $40).

=> What is the exercise date?

The exercise data is 11/15/2006???

=> How do I calculate the price for the rights?

Take the post-rights price ($62.5), you subtract the 40 you have to pay to exercise the right to come up the proper value for the rights: 22.5 per right.

=> What if I don't have extra cash to exercise the rights?

"You could sell part of your regular share before the ex-date then exercise the right. The best result will be if there is a runup in USG stock during the exercise period. This will drag the rights trading price up also but the exercise price of $40 remains fixed. The larger the delta between share price and $40 the fewer shares you have to sell to exercise rights."

=> What if I do nothing?

I don't know yet. Will I be credited the value of the option at the time of closing, i.e., $22.5.

=> How about tax consequences for the choices above? For IRA accounts or otherwise?

=> Or more importantly, should I ignore all this rights things and trade the existing shares based on my usual trading rules?

Quarterly Performance Update

2006-02-25T15:14:00.000-08:00

2006 YTD (end of Q2): up about 30.9% vs. 3.0% for S&P 500.

... and the total return since 2002: 505% (pre-tax):

$SPX: S&P500 Index, i.e., with divident included.

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