by Jim Oberweis, Jr., editor The Oberweis Report
The May 24th edition of the Financial Times just ran a cover story
titled "The Death of Equities?", reminiscent of the 1979 Business Week
cover story of the same title.
Similar to today, investors
were disgusted with the stock market after sustaining serious losses.
But as is often the case after periods of large market declines, the
doomsayers all turned out to be wrong.
By the end of the following year, equities finished up 26%. They rose
54% over the next five years and 1,100% over the next 20 years.
psychologists have documented the tendency of human beings to
over-extrapolate the recent past in predicting the future.
large stock market losses, the future often plays out less badly than
anticipated. Buying at peak levels of fear (which usually correlate with
extremely inexpensive stock valuations) can lead to fat returns for the
Meanwhile, here's a look at two of our featured recommendations, both involved in the mortgage sector: Ellie Mae
) and PennyMac Mortgage Investment Trust
). Both stock may be appropriate for risk oriented investors.
Ellie Mae provides business automation software that helps streamline
and automate the process of originating and funding new mortgage loans,
increasing efficiency, facilitating regulatory compliance and reducing
The Ellie May network electronically connects 54,000 mortgage professionals to mortgage
lenders, investors and service providers.
2011, approximately one-third of the total U.S. residential mortgage
applications were initiated over Ellie May solutions.
company's latest reported first quarter, sales increased approximately
97% to $20.9 million from $10.6 million in the first quarter of last
Ellie Mae reported earnings per share of $0.20 in the
latest reported first quarter versus a loss in the same quarter of last
year. Clients of Oberweis Asset Management own approximately 157,000
PennyMac Mortgage Investment Trust is a specialty
finance company that invests primarily in residential mortgage loans and
The company has been focused on
investing in distressed mortgage assets which are purchased at discounts
that reflect their distressed state or perceived higher risk of
In addition to an interesting growth profile, the stock offers investors a quite attractive approximate 12% yield.
the company's latest reported first quarter, revenues increased
approximately 170% to $46.6 million from $17.3 million in the first
quarter of last year.
PennyMac reported earnings per share of
$0.65 in the latest reported first quarter versus $0.35 in the same
quarter of last year. Clients of Oberweis Asset Management own
approximately 133,000 shares.