Contango: The Most Profitable “Buy-and-Hold” for 2009

by Matt Weinschenk, Senior Analyst, White Cap Report

A different buy-and-hold strategy has become the #1 profit-maker for 2009. And I’m not talking about stocks.

Direct investments in oil, right now, are paying off in spades. And it’s because oil markets are… well, totally screwed up.

Right now, you can buy oil for $36 a barrel. And you can lock in a contract to trade oil in June for $51.30. When futures prices are higher than current prices, it’s a situation called “contango.” Oil markets expect a little bit of contango, but the spreads we’re seeing today are off the charts.

Of course, any time there is a market anomaly this severe, there’s got to be a way to profit. 

The Forbidden Contango

The reason such a large contango is rare is because it’s too easy to profit from it. If you were so

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The eDOORWAYS Corporation (EDWY) website is now more than a simple landing page. The website (www.eDOORWAYS.com) now highlights company information such as press releases, corporate partners, investor relations, and filings. Most importantly, the site provides screenshots of the upcoming brand platform so users can get an idea of what everything will look like. For those who aren’t sure what the site is about, there is information regarding what the company hopes to achieve.

“We will capitalize on (1) Web 2.0 community democratic Internet service offerings (like MySpace, Craig’s List, and Wikipedia); (2) micro or “niche” marketing and targeted service offerings in place of traditional mass marketing; (3) emergence of new technologies enabling the aggregation and presentation of information; and (4) the changing behavior of consumers, who now actively seek online information to answer their questions and gain information prior to purchasing.”

By the second week

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Although the retail picture for many apparel companies has been a bit less encouraging then many would like, some have been riding a wave that has yet to crest. Playing to the tween and teen markets always seems to find that little extra disposable income for the shopper to stay in style. A company that can tap into this demographic is one that will find many sources of “way-cool” profit.

Volcom Inc., a retail brick and mortar/online marketer of young people’s apparel, works to serve an apparel lifestyle niche oriented toward board sports such as surfing, skate boarding and snowboarding. The company was founded in 1990 and has since grown to begin offering its products through various channels in Europe. The company made its first acquisition at the end of 2007 and currently carries $93 million in cash (and very little debt) on its books. Yearend figures for 2007 showed sales

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My Vintage Baby, Inc. (OTC: MVBY) recently announced that they have sold $250,000 of senior-secured, fixed-price convertible debentures to a New York institutional investor, Agile Opportunity Fund, LLC. My Vintage Baby engages in the design, production, and sale of clothing and accessories.

David Propis, Agile’s managing director, stated, “My Vintage Baby has undergone a significant balance sheet and operational cleanup over the past year. In my opinion the Company is poised for growth and sustained profitability. Our investment was based on our analysis that MVBY should become profitable within the next year. The Company’s design team, headed by Jessica Wiswall, has the resources necessary to fulfill its mission to create and distribute niche, high-end children’s apparel.”

“I am pleased to announce that we were able to complete the debt transaction convertible at a fixed price with no stipulated registration requirement,” said Jeff Walsh, CEO of My Vintage Baby.

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