Novastar Financial (NFI) & Apple Computer (AAPL)

By Douglas A. McIntyre Published Dec 28, 3:57AM EST

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By Yaser Anwar, CSC of Equity Investment Ideas

Novastar Financial (NFI)

The US expects to have rate cuts by 2nd half of 07. If that happens you can expect sub-prime mortgage lenders to do well, savings and loans and banks such as Wells Fargo.
Why? Because the margin pressure will be reduced as the overnight lending rate is cut. When interest rates fall and re-financing boom will take place then sub-prime mortgages will benefit.
The time to buy these stocks is at least one-2 months before the rate cut comes. I expect a little correction in Jan/Feb for the US market, which will be the time to buy them.
I like NFI, its in the mortgage business and right now people don’t like it much. Its got good fundiz and a hefty dividend yield. If I had to buy it, I’d buy 25% now, 30% when correction came and the rest after its gone up 5-8% and cut by that much if it goes down.
Find out which pro funds hold NFI

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Apple Computer (AAPL)

If you go back and look at AAPL’s trading pattern you will notice it usually sells off before its about to report earnings.
I’ve traded 6 AAPL earnings, and if my memory serves me right, 5/6 of them some analyst has come out saying AAPL can’t sustain the edge, yet each time it kicks ass.
Even though AAPL is my key holding I would prefer if it didn’t release the iPhone next month. Why? It will result in a shake-out. All those investors who got in for the announcement will dump the stock and people who really understand AAPL will get to scoop it for discount prices.
I asked the good Dr. Steenbarger to provide some historical short-term action, this is what he told me- "I did a few quick stat runs on AAPL and really came up with nothing. It’s been an anomaly in this market–a true buy and hold winner with solid trending." Tx!
Either way it pays to be positioned. If you bought it before 70 hold on to it- if you bought it after its always good to hedge a little (do a long straddle- buy calls/puts 3 months out). If you’re looking to buy, position yourself with a 25-30% stake in it now, if it drops you get to buy a majority of your position at a cheaper price and if it releases the iPhone you won’t miss out.
Find out which pro funds hold AAPL

Disclosure: I own AAPL

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.