Chen is Buying:

I know the US egg market very well, I remember that I made a killing in CALM 10 years ago. You can see its rapid rise on the historical chart from 1-2 dollars all the way to 17-18 dollar in 2003. At that time, people tried to use egg for weight loss, so called Aktins Diet. This lead to shortage of eggs. When the egg price rises, the egg producers like CALM has huge leverage, suddenly their profit margin increased by 10 folds. Because it takes time to raise hen to produce egg, the price cycle typically last at least 1-2 years. I decided to make my first trade after coming back, buying Cal-Maine Foods Inc (CALM) at 39.5 area. CALM is also a heavily shorted stock. 21% float were shorted. I think the shorts were betting on rising feed cost to squeeze its margin. However, if the egg price starts to rise in the US, the shorts will have no choice but to cover. CALM is paying 1/3 of its profits as dividend, currently about 3%. It has excellent balance sheet with very little insider selling.

CALM technically looks really strong. Its volume jumped in the past a few days though the stock hasn't moved much yet. It was up on Monday and Tuesday when the market dropped 200 points, very impressive. My guess is that some people(funds) already took notice of the EU egg crisis and start accumulating. I don't want to miss the upside and start accumulating today. I checked on CNBC, they haven't said anything about it yet from its website search. Once the story breaks out, the stock can have a huge run. I hope it could be 2003 all over again.

In addition, I bought Cal-Maine Foods Inc (CALM) April 40 calls at 1.3 for some leverage. Remember calls are highly risky and always check with your financial advisers first.