Wednesday, March 16, 2011

Dear Internets

Since 2007 I have toiled in the cellars of the capital markets, breaking off enough winnings to devote full attention to this gig.  One of my very earliest plays was a stock called Goldspring, which is now Comstock Mining (LODE).  By winter of 2007 I had become convinced that the gold bulls had it right, the case for hard assets was clear, and to a new trader, the requirements put upon resource producers in the wake of the Bre-X scandal make doing the due forthright, scientific.  Interest had been gathering in Goldspring for some time as they were early in a drilling program in the historic Comstock district of Nevada, and were consolidating properties with reckless abandon.  The choice was clear, I had to get my money in the game.  150%, unfulfilled financing activity, and broad market turmoil later, the exit hatch.  GSPG will always be close to my heart because it's the cornerstone of my career.

GSPG, entry and exit areas

Following that, I started trying to trade a little, hiding in "diversification" in the oil business, banks like FITB, and finally, GNW. In fact, James Altucher did a video in the snow during the spring of 2009 calling Genworth one of the best bets in the market.  I had 46,955 shares averaged in the 1.30's or 1.40's (even bought some for 0.78, I remember because that's my lucky number) about the time that he made that prediction, and sweet damn, traded them out in the high 1's.  Probably one of the worst trades of my life, but how the fuck should I have known better under the circumstances?  Thereafter, owned XTEX in the low 2's and sold covered calls against it for 20% profit on it's way to the 10's that same year.  Then KFN in the low 1's, and again sold in the high 1's because the financing situation looked terrible.  But about this time I found a company called Nanoviricides.  It also had the indications of a stock on its way up.  Gathering interest, an interesting story, and in one of those gray areas that markets seldom choose to penetrate, the bulletin boards.  150%, awful financing arrangements, and unfulfilled promises later, the exit hatch.

NNVC, entry and exit areas

For better or worse, my losses were forgettable, if memorable.  I had some ETFC, and covered calls against them, that frankly, I got bored with and sold.  By the spring of 2010 I had produced 10x my initial investment from the fall of 2007.

So in the spring of 2010 I decided to make a career of the stock market.  Read the twitter feed and this blog for how that story goes.  It's been work, tough work, and with varying degrees of success, but my accountant and wife seem to think it's working out ok.  When reviewing my first 6 months performance early last fall, I discovered that picking winners comes naturally, and trading doesn't.  Philosophically, dude has decent market timing, but not the chops to execute said ideas, yet.  And so, when an opportunity presented itself, I knew what had to be done.

The following is taken from Soros:  The World's Most Influential Investor by Robert Slater:
To Stanley Druckenmiller, Schlesinger's "clarion call" made betting against the pound crystal clear.  "The real decision was not whether to take the position we took but how deep to go.  At first, I was thinking in the range of 3 or 4 billion.  But that's where George's instinct, his sixth sense or whatever, the thing that made him such a great investor, came in.  For him, it's not whether you're right or wrong, but when you know you're right, making sure you have the maximum in play.  Actually, he - we - would have bet more, but we just ran out of time."
Druckenmiller deserved no little credit for initiating the play on the pound, but Soros, as usual, provided the extreme self-confidence that encouraged Druckenmiller to bet so much.  "I told him to go for the jugular," Soros said.  "It's like shooting fish in a barrel.  As long as the barrel holds up, you keep on shoorting the fish."
As such, I have made the following proposal to a list of angel investors, VC's, and high net worths (Mark Cuban, for example):
I would like to raise $1MM to form a Special Purpose Vehicle for the purpose of owning only one stock.  It is NYSE listed, and trades over $6.  In my view, there is a serious price dislocation on this security, and I have been and continue to be willing to stake my worth on it.
In consideration for this proposed investment, I would back the first 10% of any losses incurred, and will post cash collateral up front, and in return would like to halve the profits after one year's time.  The SPV would contain only two conditions:  1)  The SPV has an explicit 1 year term, unless the stock doubles, at which time we would liquidate and split after tax profits;  2)  There is no trading, hedging, or any other simple or esoteric activity to be conducted in the account.
To be sure, I have no investment credentials aside from experience.  I am not tested, trained, certified, or otherwise.  I have been trading since late 2007, and will provide 3 full years of trading logs on my broker's header, upon request.
No takers.  So, dear internet, if there's anyone out there that wants to at least hear the pitch send me an email,  I'd rather lick the underside of a toilet seat than go to my deathbed asking myself "what if?"

ps - As a bonus, I offer up the email sent to NNVC's CEO (dated 5.12.2010) upon closing of the shitty financing deal that destroyed value for his "faithful shareholders":