We were going to title this article “We’re so smart”, but we thought that there was at least a small possibility that readers would fail to appreciate the depth of our humility if we did that, so we went with the second most obvious title we could think of.  Besides after SeekingAlpha’s editors picked up our article “Houston, we've got a problem - Bevilacqua” a few weeks ago and exposed it to their 50 million visitors a month by featuring it on “Market Currents”, then selecting it as an “editors pick” once we did finally submit it to on our own, we began to think that our humility may actually not be as secure as we once thought.  

Exactly one year ago, on September 28th, 2010 we purchased shares of Sanderson Farms for investors. Two days later we published our opinion on Amvona in our article "Can you say 'Chicken Feet' in Russian? The case of SAFM and PPC". Three days later SeekingAlpha published the article Here.

We thought we would take a look back at the thesis in that article, now that the period for short term capital gains tax has passed and examine how the issues performed against one another, but also against the benchmark S & P 500 (Alpha).

On August 11th, 2010 we acquired shares of Western Digital Corp. for others accounts at $24.15 a share in the midst of tremendous pessimism about the storage industry.  On September 17th, 2010 we outlined a few simple views that brought about this decision and published our article “640K ought to be enough for anybody…” WDC vs. STX (we used prices as of Sept. 10th, 2010 for the purposes of the article, although the shares were actually purchased on August 11th, as noted in the article itself in reference to “early August”).  On October 1st, 2010 Seekingalpha also published the article here.

Losing other people’s money isn’t as much fun as it sounds.  We either bought, or gave directions to buy shares of CSCO on December 3^rd, 2010 at $19.09 to folks who trust us enough to let us make some investing decisions for them; they’ve now lost 1.89% on their investment in just about two months.  We have no intentions of selling; on Monday we'll be buying for their accounts.

Up until last Wednesday, February 9^th, 2011 these folks were making about 15% on the same investment, since it had only been about two months, as we just pointed out, we were feeling pretty smart, and getting ready to do some bragging about our track record, when Thursday rolled around. Let’s just say it was “a day that will live in infamy” (hopefully nobody has used that line already).

Since we do a great deal of explaining how we make money for others, we thought this would be a good chance, actually the first, to explain how we also lose it.

SKX fell almost 8 percent on Tuesday after an analyst said it may have overestimated demand for its toning shoes. He downgraded the stock to "Sell."  From Bloomberg:

“Sterne Agee analyst Sam Poser said Skechers has more toning shoes inventory than it can sell as sales of the specialty shoes slow. Poser said he has seen the shoes at discounters Ross Stores Inc., TJX stores, which include T.J. Maxx and Marshall's, and Costco, selling for $39 to $52.99. That puts pressure on Skechers partners like Famous Footwear, where the shoes sell for $59.99, Poser said.”

It has been said that there are only two directions in life “the right way and the wrong way”.   This is a simple and true statement.   However, human nature being what it is, we perfect techniques of taking the simple and making it complicated.   If this statement is true, and there are really only two roads, or perhaps it could be said two different directions on the same road, and we discover that we have gone down the wrong one, and that indeed no “fork in the road” lies ahead that will ultimately bring us back to the path we desired, then we come to the realization that we must retrace our steps and begin (seemingly painfully) at the beginning of the journey – it is all the more difficult when we have invited followers.

Much fuss was made this week over China’s proposed tariffs on American Chicken.  At first glance, the situation is grave; 50-100% premium on imports of chicken from the US.  However, upon closer examination there are two other important data points to consider:a) the Chinese have a particular interest in parts of the chicken that we typically discard (namely the feet and the wings) and are virtually worthless in the US market and b) Russia announced that they would be allowing exports of chicken from the United States into Russia after a nearly  one year ban.

“640K ought to be enough for anybody…”            

Recently the hard drive crashed on one of our home computers, suddenly and without cause.  When we took it apart to replace the hard drive, we discovered it was a Seagate SATA 500GB / 7200 RPM.  It was a good opportunity to upgrade the operating system, and install a larger drive… perhaps 1TB.  About a year ago when the machine was purchased, 500GB still seemed large, now it seemed small and inadequate, particularly for storing our large and growing collection of home videos.  Cost to replace (without price shopping): $49.00.