Pettit Funds

Is the magic back?

I’m not sure: I’ve had a confidence-crushing six months or so in the market. On the other hand, my last pick (Twin Disc, Inc.) from 3 weeks ago is up over 34% since then. (You’re welcome). Additionally, some of my “dogs” of last year have bounced back (Australian railroad company Genessee & Wyoming, Inc., coming to mind–having coming back up about 40% since the beginning of the year). So let’s try, try again:

With some trepidation (there’s always some trepidation), I’m going with Hauppage Digital, Inc. (HAUP), but I’m taking a smaller than usual position because it looks pretty risky. They make digital video recorders. My last “tech” pick, Ceradyne, still remains an embarrassment to me (but I’m “keeping the faith” and haven’t sold)–but Hauppage was the only one that jumped out at me this week. Very thinly traded, at less than five bucks a share it’s practically a “penny stock”, and yet…well, it’s what I’m going with. Be careful!

From the NY TIMES:

First thing Friday morning, before anyone showed up to rent a television for theSuper Bowl, Deborah Williams walked in the door of the Rent-A-Center store under the Broadway el in Bushwick, Brooklyn. She was delivering $109 in cash, her February payment for a 27-inch television that she is buying over time.

If she does not miss any payments, she will own the television by the summer, for a total of about $900. Such televisions can be bought retail for well under $400, but that would require more money than Deborah Williams can put her hands on at one time.

This is a big week in the television rental business. Fliers were slipped under the doors at the Astoria Houses in Queens that urged people to hurry to the Rent-A-Center on Steinway Street so they could have a big new TV for the football game. Among the offers was a 40-inch Bravia, with payments of $47.51 a week. In 117 weeks, the customer would own the set outright, for $5,558.

If this were set up as a loan, the interest rate would be 71 percent and illegal under the usury laws. But this deal is called “rent to own.” In all other particulars, it is much like a subprime mortgage for pull-out sofas and television sets….[Rest of article]