Jim (cont'd):     

Pay attention to the Sell Block… This is what really matters now… and if you have any doubt of what the Sell Block can do for you… I want you to go read the Voice of Cramerica blog analysis that is posted right now on CNBC.com… I say all of this because in today’s Sell Block we are going to go off the charts… to look at a company called Life Partners Holdings Inc. (LPHI)…

It's too simplistic to call this, but to boil it down for a second… it is a life insurance broker… Why is it simplistic?… Because the company helps people who are terminally ill and helps them sell their life insurance policies at a discount to investors for immediate cash up front… now I know on principal what this firm does seems pretty appalling… but you can hear them say how much they help people on their website… and I want you too… I want you to know everything about a company before you sell it… you want to make your own call about the morality of it… this may look like a low life proof of capitalism… and proof that you can make a market in anything… but from a business prospective… Life Partners has been a tremendous growth story…. with sales increasing at a 39% clip in each of the past 8 quarters… and earnings up 39% in the most recent quarter… so it is a sexy story and it is working.

Now, we don’t care about what Life Partners does right now… we care about where its stock is doing… and according to Ken Shreve and Kate Stoulter, a tremendous team of technical analysis from Investors Business Daily… the charts say that this one is on a one way ticket into the house of pain… now you know that I am skeptical about all of this technical analysis… but a lot of really big money managers follow it… particularly in this environment… and I have to tell you the reader outpouring, the viewer outpouring on this particular chart is the most we have ever had since we started this show… I subscribe to IBD because I like their technical so much… in fact, I think that I am one of the original subscribers because it is that great of a publication… it has taught me a great deal about the technicals and the fundamentals particularly in growth stocks… like Life Partners… so what do the chart watchers from Investor Business Daily think of this one.

Take a look at Life Partners… this is taken directly from IBD, okay… keep in mind that this is a small thinly traded stock with a market capitalization of just 338 millions… and only about a 143,000 shares trade hands on an average day… so this is the chart of Life Partners… now… to use authentic chartists jibberish… Life Partners staged a technical break out on heavy volume during the week that ended on January 2nd… according to Shreve and Stoulter at IBD… the base was wide and loose… something that is seen a lot in thinly traded stocks… to technicians wide and loose patterns indicate investors indecision… and can precede what is known as a false or failed breakout… something that has happened to a lot of stocks lately as the averages have been crushed… I am giving you all of the terminology so you can play this game at home… Life Partners rallied for less than a week before pulling back on huge volume during the week ending January 9th… to a technician these large pull backs are a clue that big investors are selling… remember, we are trying to figure out… the pictagraphs tell you what might be happening with the people that are in the know… and they are leaving it… and when the big money starts leaving… that is usually a good time for you the individual investor to get out… okay, now take a look at the chart again from IBD… at first Life Partners found support…. along its ten week moving average… it is a little bit of technical mumbo jumbo meaning how closely a stock has hugged its short term trajectory, for 3 weeks in January… so the stock was holding up… I want you to think of this as a trampoline underneath a tightrope walker… but then last week Life Partners… started retreating below its ten week moving average on larger than average volumes… that is another sign to chart watchers that big institutions are selling… trampoline taken away… Life Partners has continued to drop even further below its 10 week moving average on heavy volume… which indicates to the technicians see this volume… it is a big, big volume stripe… that really matters to these people… that indicates to the technicians that the big money guys again are taking huge profits right here… and it is time for you to get out… there is no ifs, ands, or buts… this is just sell, sell, sell according to IBD.

But let’s talk about what the fundamentalists think… Warren Buffet, not Cramer anti-fave Imashimine… you know, that Iranian guy… what do we think about Life Partners, okay?… I have to agree with the technicals on this one… I think Life Partners has the feel of a broken momentum stock… the recent downturn in the stock is not a chance to get in on a great trend at a lower price… remember, when we do fundamental analysis… sometimes, like if we are talking about a stock, a really good company that we like and the stock goes down… VF Corp last night, it is an opportunity to buy it cheaper … we are saying that this decline… is not an opportunity… not an opportunity… it is just the stock is starting to loose steam… a lot of money has been made in Life Partners…. and you can see that from the long term trend… I mean sure this has been a big win right… I agree with the technicians… now the big money guys are taking profits… and so are the insiders… there have been a ton of insiders selling from the CEO, Brian Parto, and his family…. this CEO, who by the way according to Cetrum Research has previously been sanctioned by the SEC for materially misrepresenting financial results at a previous company… actually sent out a letter to all of his shareholders telling them not to lend their shares to short sellers back in 2007.… I wonder about this… especially given that the shorts are all over this one… 1.15 million shares are held short on 12 million shares outstanding… since the CEO and his family own 6 million shares… that is about 19% short interest in the shares that actually trade… that is high… often a red flag… not every time… but often.

Company is also facing pending legal issues in Florida… and in December, just a month and half ago… the Securities Commissioner of Colorado won a court case against Life Partners, which ruled that their investment products… trading life insurance policies… called viatical investments… how is that for double speak… were securities subject to all of Colorado’s securities laws… if more states do this… I have a feeling it could really put a dent in the companies business model… let me quote Colorado’s Security Commissioner on why…. “ They have to disclose to investors all the risk inherent in viatical  investments, including the risk on gambling on someone will die.”… it is true that this company offers some very alternative investments that people might want to put their money in given the horror show that the market has been lately… but I just don’t think the opportunity in this decline is there… because so much wealth has already been destroyed… and so many people would find gambling on when somebody dies to be kind of repulsive… plus Centrum Research, Life Partners has so far made its money by charging investors a $500,000 commission on the action., the is from Centrum… much higher than the industries standard… fees that high are going to be much harder to sustain I think in this environment.

Here is the bottom line…