Post edited 12:32 pm – July 23, 2009 by asafp

I’ve mentioned this one before. The P&F is interesting. Looks like it should break through the red line and two previous tops at $14.50.
Net 1 Ueps Technologies Inc. (UEPS)
A generally rising market might fuel takeover rumors and this low P/E stock might even get a Navellier pump.

It's got a Nav. rating of "D=sell" at the moment.

Motley Fool just issued a "back up the truck" for UEPS:

http://www.fool.com/investing/…..tocks.aspx

It did say that it was cheap because investors were scared of the volatility in South Africa.  however, the company does have $117mm incash.

Chaos in South Africa may prove to be a blessing in disguise for UEPS. Any company interested in buying their software or the company, could have the source code transmitted to them in a few minutes. Employees could continue to work from their homes in South Africa or move anywhere in the world and work there. There are few technical limitations on these things these days. I don't know what legal or political hurdles might have to be jumped.

It's a situation that's almost completely different from a miner. You can't transmit a platinum mine over the internet (yet). I've never been to South Africa, but it wouldn't surprise me that a software company would be far less of a political issue than gold miners that have a reputation of rich people and foreigners exploiting the hard working masses.

I'm hanging on to this one even though it's up nicely. P/E and forward P/E are around 10. Pretty low for a tech stock and a possible takeover candidate.

We've seen plenty of Great Story, Lousy Stock items here. But I think this is a Great Story and a Great Stock. There is plenty of room for improvement and growth in the Payment Solutions arena. It's not unusual for me to have a credit card transaction denied based on the current fraud detection methods. Then I have to make a phone call. It's a giant pain in the ass. Also, current payment transaction fees for credit cards and paypal are way too high. If these guys can improve on these things, they are worth more than the current market price.

There are also opportunities outside the payment area, such as voting.

What am I missing here?

Well this never looked back, did it?

Insider sales on UEPS are scary.

Time to pick up some UEPS Nov 20 puts for 0.85?

No, I didn't. I threw that out as a question hoping for some feedback but none came and it kind of faded from my radar. If I did, that would be kind of nice because that will mean that I am producing fruits of learning from all of you guys on this great forum. I am still learning but haven't much to show yetNevermind, the market will still be there on Monday

Have a great weekend!

Based on what I know, UEPS is awfully close to breaching the first significant support at 23.6% retracement (19.10). If it does that, the next support level is at 17.75 but that support appears weak and probably won't hold. The next significant support will be at the 38.2% retracement (17.00). If that doesn't hold the next support will be the 50% retracement at 15.34. If that doen't hold we are looking at 13~14.00.

I wished I had bought the Nov 20 put for 0.85 but that ship has sailed. The next best thing to do is to buy the Dec 20 put for about 1.70 or better. To cover the cost, you can elect to sell 3 Jan 15 put for 0.3 for a net spread of 0.8 (1.7 minus 0.9). You run the risk of owning 300 shares of UEPS at 15.00. If at expiration the price of UEPS is somewhere between 20 and 15, you would gain a maximum of 4.2 per share (5 minus 0.8). If it crashes below 15 and 300 shares of UEPS got putted to you, you should have no problem getting some defensive puts to protect those shares with the profit you made with the Dec 20 put.

A less risky and hence less profitable move is to sell 1 Dec 17.50 put for 0.6 for a net spread of 1.1 (1.7 minus 0.6). Your maximum gain would be 1.4 (2.5 minus 1.1) per share. The breakeven price would be 18.90. Likewise you might end up with 100 shares of UEPS.

ST: Please feel free to review/comment and/or add new strategies

ST:

Thanks for the encouraging feedback. I am learning from the best (as far as I am concerned-you will probably disagree)

I think timing is very important, i.e when to enter or exit a particular trade. When the broad market is rising, it is hard to sell short or buy puts, no matter what the charts say. Are there any resources that you would recommend that deal with market trends and timing issues?

Sector rotation is also very critical. I would say that my portfolio has taken an abnormally hard hit because I am heavy into oil/energy and precious metals and these two sectors were hit hard the last week or so. Likewise are there any resources that you would recommend dealing with sector rotation.

Once again, thanks!

Will

Insider sales appears to be a false alarm. Looking at the detail, it's mainly one insider who sold right before the stock took off.

5-Aug-09 BRAIT S.A.
Beneficial Owner (10% or more) 9,221,526 Indirect Sale at $13.50 per share. $124,490,60

Net1 Announces Acquisition of MediKredit Integrated Healthcare Solutions

I like the move into healthcare. Should be a good synergy.
I'm re-establing a small position.

With it's latest acquisition, UEPS has a small footprint in the US health industry. Most of their business is in South Africa and developing nations. If that US footprint expands, that would be a giant bonus to stockholders a few years down the road. But there is little risk that anything the Congress does here will harm UEPS.

I am very excited about small innovative software companies in general. Recent advances in hardware (greatly increased performance for less money and improved battery life), software, and mobile computing have created great new opportunities. I believe we are moving from the era of computers as game machines and glorified VCR players into a new generation.