MCO -- yes I know this is one of the few non-energy stocks out there that is going up consistently and yet I've sold away my upside through the calls I wrote. oh well. I still have till June so no telling what kind of pull back we might see between now and then. Reality is that AFTER I sold my calls I realized that about 25% of the non-Buffett owned float was short the stock. that pretty much limits the downside. business is picking up but its still pretty slow and it has to pick up some just to make current estimates. so now we are around 21-22X estimates, which would seem to be the high end in this environment but who knows -- fundies are improving so should the valuation.
DFR -- key question -- what is forward earnings potential given all the changes to the company? some argue its 40 cents per year. that is possible but unlikely that too many others believe it given the $1 stock price. certain aspects worse than I thought so that is a little worrisome.
FLIR -- just saw a commercial about franklin resources (mutual funds) and they claimed to have made money owning an infrared supplier -- most likely FLIR. DRS Tech was a competitor too so the deal should help support FLIR's stock too.
I have owned UEPS for about 2 years now and so far the stock has done nothing. The business has continued to get more valuable and that is key but this is testing my patience. The stock has bounced since the earnings report but is still relatively flat with the last few years around $28.
When MA pulled back towards $100 some time in the last couple of years I wondered if I should buy some. I decided not to primarily because I thought UEPS had far more opportunity. Well the market has its own thoughts on opportunities.
This is an important lesson -- one which I continually relearn. Expanding margins and increasing returns on capital are key drivers of big returns in stock prices. MA's margins and returns have soared since they came public (Visa is working on similar improvements). MA has enjoyed strong earnings relative to expectations driven by higher margins. Revenues have been good too but they are not growing at the rates that UEPS has the potential to produce over the next couple of years. Between wage payment in SA, Nigeria, Ghana, Iraq, etc. UEPS has huge opportunities that should triple the earnings in 5 years. Margins though are already above 40%.
But the main issue for UEPS is timing -- it takes a long time to negotiate a contract and then to implement the process/strategy and then have enough new cards with people choosing to use them at merchants (rather than just getting cash). But once the cards are in place and people are using them for their shopping and their bill paying and other services, those cards are likely to be in place for many many years.
no reason for most to switch so UEPS ends up with a long term annuity on the growth and usage of their cards -- same business model as Visa and Mastercard although because UEPS is a smart card there are many more services that can be performed on these cards than on regular credit cards. More services per card offsets at least somewhat the disadvantage that UEPS is at from a spending per card basis -- obviously first world consumers spend more on their cards than third world types.
Once the SA contract is resolved and some of their current countries reach critical mass (i.e. enough cards and merchants that people that don't have one feel a pull to get one) the business will be very profitable (little incremental costs post set up) with high free cash flow and still pretty good growth potential. They will have a long term annuity from all their existing cards that will make this business very valuable -- I find it hard to believe they won't have a 20's PE.
The hard part is the wait -- a new country announcement is very exciting and everyone's first instinct is to ask how much is that going to help EPS -- that's a good question but don't forget the timing -- it may take 5 years for a country to be up and running and have a critical mass of users. When I first bought the stock in the summer of 2006, analysts were already talking about wage payment in SA and Nigeria as big catalysts. Here we are almost 2 years later and those are only now starting to build customers. Iraq is just finalizing the contract so it could take quite awhile to build out the infrastructure and start really having an impact on the overall P&L.
But Iraq could double the size of the company as it stands now -- so could wage payment and nigeria. Ghana continues to get bigger and they are trying to add more countries all the time -- especially because of what Ghana is doing. With all the catalysts I am comfortable they will be earning $4-5 per share in 4-5 years and receiving a 20PE on those earnings for a stock price close to $100.
This is without a doubt my biggest opportunity-- in terms of cash cost basis its one of my largest bets in the portfolio too -- I have larger positions but that is because those stocks have gained in value after I bought them. I would have bought even more of UEPS but I realize the timing of the business means catalysts can always take longer to play out. its hard in other words even though I have a lot of patience and enthusiasm for the story but in 2 years to have not much happen -- that's hard. I am confident the patience will pay off.
Bought some more CLB on Monday to get close to a full position. Thankfully I timed it well -- $123.50 so I enjoyed yesterday's pop to $133.
Wednesday, May 14, 2008
Monday, May 12, 2008
still here
I realize its hard to believe but I'm still here. only 9 days since my last post -- that sucks. I'm hoping this week will be better. This will have to be a short one too -- running late for work.
The big story for me last week was UEPS earnings -- everything is going great for this one except they have a major contract up for bid with the south african gov -- the total value of the contract for the next 5 years is 2 billion. UEPS is bidding on all of that as well as just parts. UEPS already serves this market so the market is nervous about them losing revenues or margins under a new contract. I think everything will balance out -- maybe not as good as now but they have so many growth opportunities that a little drop in their SA business won't slow them down too bad. I expect they could easily earn $5 per share in 2013 (5 years out) and sell for 20x earnings. not bad given the stock is only 26.
more later.
The big story for me last week was UEPS earnings -- everything is going great for this one except they have a major contract up for bid with the south african gov -- the total value of the contract for the next 5 years is 2 billion. UEPS is bidding on all of that as well as just parts. UEPS already serves this market so the market is nervous about them losing revenues or margins under a new contract. I think everything will balance out -- maybe not as good as now but they have so many growth opportunities that a little drop in their SA business won't slow them down too bad. I expect they could easily earn $5 per share in 2013 (5 years out) and sell for 20x earnings. not bad given the stock is only 26.
more later.
Saturday, May 3, 2008
Yes I'm still alive and making money
So its been what 10 days? I have been feeling it too -- blog withdrawl -- but life has just been tooooo busy of late. Last weekend was the party for my 2 year old and then my work presentations haven't stopped. but I do have a few moments to catch up on what I have done in the portfolio and the market stuff.
MCO -- bought back the $35 options for a $2 gain and then sold the $40's for June for $1.5. So best case I can only make 20% for owning the stock about 6 months. I can live with that. I expect this rally to peter out soon and us to have a pull back -- too many indicators flashing overbought and sentiment bullish -- if we can any kind of drop I can buy back the options for a gain and look to sell another batch later. I am not as worried about a drop in MCO after their last EPS report so that's why I moved out to the $40's.
FLIR -- wow. what a report. the increase in backlog was huge. the growth in commercial was huge. their momentum is very strong. even high 20's would have been a good buy while the $24 price was an absolute gift that I passed on. Dr John mentions where do you have the big money -- this is the stock I wish I had my big money but so far it hasn't happened. Its an average size position at most for me and it should be one of my largest. just too much of a fraidy cat so far because of the valuation -- trouble is part of the story is the potential upside to the numbers -- something have to keep in mind when worrying about valuation. If FLIR earns closer to $1.5 this year instead of the $1.20, then at $30 the stock was at 20x rather than the 25 I thought it was. A pullback towards $30 and I'll try to add some more and keep trying to get this towards a bigger position.
ILMN -- I sold some May $85 calls for $1.55 on the day after the earnings report. I sold them during the day when the stock was around $80 -- it peaked closer to $82 so I was a little early. Still a few days later when the stock was around $77 I bought them back for a $1 gain. not bad for a few days work. I am working on my timing for June calls -- still looking at the $85's but hoping to get something like $2.25 or so for them. Best case then I will end up selling ILMN for $87 or so -- that's not bad. I am reasonably confident the stock won't get too much above that and therefore worst case I roll the options forward.
DFR -- they issued a press release suggesting book value of over $3 and the stock jumped quite a bit. still haven't sold any but will definitely think about it around $1.80 or so. I am waiting also for the Q1 report. I would like to see some numbers on their current situation and future earnings power. I am betting the UBS guy is right that they can make 40 cents per year, which puts them at about 3x earnings. I think more people will be reassured and buy more of the stock post earnings then will be disappointed with their earnings power and sell.
TSRA -- more revenue than expected but lots more legal -- not surprising given all the events that occurred. Amkor won't be known for another one to two months probably -- in the meantime we wait.
CLB -- wow. what volatility huh? one moment the stock is the 100-120 range and I am debating buying it and then it spikes up to $138 and then just as quick it plummets back to the 115-120 level before jumping back around $122 or so. I listened to their EPS call and it was impressive. these guys know how to run a business. they are very focused on margins and returns on capital. that's always a good thing. they have great technologies and are gaining share in the US. I will look to buy some more of this one and will think of it as a consistent grower as long as energy prices are reasonably favorable.
markets -- lots of old fuddy duddy types out talking bearish and arguing that financials are going to shrink as a percent of the economy and that the world has changed -- no more debt financed growth and all us good US citizens are going to become huge savers. A little bit of truth -- even I have said similar stuff in that mortgage volumes would plummet and that financials would not come back quickly -- that they would become like the tech's -- which remain in the teens in terms of their percent of the market cap in the S&P 500. I expect the Financials to end up there too -- not below 10% but in the teens. I don't envision the US moving huge away from debt -- otherwise I wouldn't be owning Moody's.
Energy/commodities are just about too much money being released by the federal reserve. I'm not buying that one either -- at least when it comes to energy because there just hasn't been enough increase in supply or in production. There are too many countries like venezuela that are pumping too much oil now without spending the money on maintenance and exploration that is necessary to maintain production rates or grow them. The only argument that folks make that makes me wonder is the WSJ editorial page when they talk about the 1970's and the similarities to now. They show a chart that compares oil in dollar and euro terms and it shows that in euro terms oil hasn't gone up nearly as much. This is relatively obvious though given the fall in the dollar. I think the drop in the dollar is the clearest sign the fed has been too easy and perhaps the food shortage commodity price hikes too but energy is harder.
others argue that its due to the speculators buying futures. maybe a few dollars worth but oil is too big a market to be dominated by speculators in my mind.
that's about it for now -- I hope to post again this weekend .
MCO -- bought back the $35 options for a $2 gain and then sold the $40's for June for $1.5. So best case I can only make 20% for owning the stock about 6 months. I can live with that. I expect this rally to peter out soon and us to have a pull back -- too many indicators flashing overbought and sentiment bullish -- if we can any kind of drop I can buy back the options for a gain and look to sell another batch later. I am not as worried about a drop in MCO after their last EPS report so that's why I moved out to the $40's.
FLIR -- wow. what a report. the increase in backlog was huge. the growth in commercial was huge. their momentum is very strong. even high 20's would have been a good buy while the $24 price was an absolute gift that I passed on. Dr John mentions where do you have the big money -- this is the stock I wish I had my big money but so far it hasn't happened. Its an average size position at most for me and it should be one of my largest. just too much of a fraidy cat so far because of the valuation -- trouble is part of the story is the potential upside to the numbers -- something have to keep in mind when worrying about valuation. If FLIR earns closer to $1.5 this year instead of the $1.20, then at $30 the stock was at 20x rather than the 25 I thought it was. A pullback towards $30 and I'll try to add some more and keep trying to get this towards a bigger position.
ILMN -- I sold some May $85 calls for $1.55 on the day after the earnings report. I sold them during the day when the stock was around $80 -- it peaked closer to $82 so I was a little early. Still a few days later when the stock was around $77 I bought them back for a $1 gain. not bad for a few days work. I am working on my timing for June calls -- still looking at the $85's but hoping to get something like $2.25 or so for them. Best case then I will end up selling ILMN for $87 or so -- that's not bad. I am reasonably confident the stock won't get too much above that and therefore worst case I roll the options forward.
DFR -- they issued a press release suggesting book value of over $3 and the stock jumped quite a bit. still haven't sold any but will definitely think about it around $1.80 or so. I am waiting also for the Q1 report. I would like to see some numbers on their current situation and future earnings power. I am betting the UBS guy is right that they can make 40 cents per year, which puts them at about 3x earnings. I think more people will be reassured and buy more of the stock post earnings then will be disappointed with their earnings power and sell.
TSRA -- more revenue than expected but lots more legal -- not surprising given all the events that occurred. Amkor won't be known for another one to two months probably -- in the meantime we wait.
CLB -- wow. what volatility huh? one moment the stock is the 100-120 range and I am debating buying it and then it spikes up to $138 and then just as quick it plummets back to the 115-120 level before jumping back around $122 or so. I listened to their EPS call and it was impressive. these guys know how to run a business. they are very focused on margins and returns on capital. that's always a good thing. they have great technologies and are gaining share in the US. I will look to buy some more of this one and will think of it as a consistent grower as long as energy prices are reasonably favorable.
markets -- lots of old fuddy duddy types out talking bearish and arguing that financials are going to shrink as a percent of the economy and that the world has changed -- no more debt financed growth and all us good US citizens are going to become huge savers. A little bit of truth -- even I have said similar stuff in that mortgage volumes would plummet and that financials would not come back quickly -- that they would become like the tech's -- which remain in the teens in terms of their percent of the market cap in the S&P 500. I expect the Financials to end up there too -- not below 10% but in the teens. I don't envision the US moving huge away from debt -- otherwise I wouldn't be owning Moody's.
Energy/commodities are just about too much money being released by the federal reserve. I'm not buying that one either -- at least when it comes to energy because there just hasn't been enough increase in supply or in production. There are too many countries like venezuela that are pumping too much oil now without spending the money on maintenance and exploration that is necessary to maintain production rates or grow them. The only argument that folks make that makes me wonder is the WSJ editorial page when they talk about the 1970's and the similarities to now. They show a chart that compares oil in dollar and euro terms and it shows that in euro terms oil hasn't gone up nearly as much. This is relatively obvious though given the fall in the dollar. I think the drop in the dollar is the clearest sign the fed has been too easy and perhaps the food shortage commodity price hikes too but energy is harder.
others argue that its due to the speculators buying futures. maybe a few dollars worth but oil is too big a market to be dominated by speculators in my mind.
that's about it for now -- I hope to post again this weekend .
Wednesday, April 23, 2008
MCO
I wasn't as sick as I let on -- Doc Holiday. At least that's the way I remember the line from Tombstone. Well Moody's reported this morning and it looks like a solid beat -- revenues about $13 mill higher than estimates (3%?) and earnings way above estimates -- 48 cents instead of the 35 cents people expected. not sure how much of that is due to operating factors -- higher rev or lower costs as opposed to lower tax rate or lower share count. I expect some is due to lower share count but a large part has to be because of the higher revenues.
I expect the stock to jump a lot today -- I'm guessing 10% based on the fact that they beat, maintained guidance while some probably figured they would cut again but the conference call is important in terms of their tone and their comments about whether there has been any improvement in the business. I know at least some of the upside was driven by non-ratings business.
Options means my upside is capped at 39.60 but I can always buy them back and then resell some calls from the next month to try to earn some money.
this is better than the alternative -- holding calls and the stock on a rapidly falling stock -- the calls only cut the losses a little bit.
I expect the stock to jump a lot today -- I'm guessing 10% based on the fact that they beat, maintained guidance while some probably figured they would cut again but the conference call is important in terms of their tone and their comments about whether there has been any improvement in the business. I know at least some of the upside was driven by non-ratings business.
Options means my upside is capped at 39.60 but I can always buy them back and then resell some calls from the next month to try to earn some money.
this is better than the alternative -- holding calls and the stock on a rapidly falling stock -- the calls only cut the losses a little bit.
quick thoughts
its getting late but its been too long since the last post -- figured its time to get something posted.
GOOG -- that will teach everyone to pay attention to those comscope or whatever they call themselves numbers. I will need to do some more work to determine a price where I might trim some -- whether it is $600 or $700, I am figuring there should be a price where I choose to trim.
CME -- ouch. they miss by a little bit but everyone freaks out and sells it down 10%? don't get it yet but I'm sure after some reading it will become clear. rate per contract fell and that is a key issue (regardless of whether it should be or not).
LH -- DGX had good results so I suspect LH might finally be ready to get moving.
ILMN -- never did the trade prior to the report tonight. realized that about 23% of the stock is sold short -- no way it was going down under those conditions but quite likely it was going up. most of that short position is probably hedge funds or similar investor types who will buy tomorrow regardless of the news -- its a discipline thing. they shorted because they believed ILMN would miss the quarter -- they didn't so now everyone has to cover and that's several days worth of volume. If the short position doesn't meaningfully drop, that's more worrisome because it means the short sellers are concerned about something else that may not be in the stock yet.
anyway, they had strong results -- in line with what Cowen said yesterday that they would report. stock was up $3-5 in after hours trading.
MCF -- the company has put itself up for sale -- question is how much are they worth? I have seen estimates between $55 and $100 or more. The idea is they will sell the stock but the undeveloped portions -- the wildcat parts will remain with a new company called Contango Energy. The name Contango comes from the futures market condition where future prices are consistently higher -- a bit cocky huh? he has created a billion dollar company out of thin air so I'll cut him some slack.
Trouble for MCF is that Peak (CEO) is moving on to the golf course and the board room. That adds some risk because it means he won't be around to handle day to day issues any more. After listening to his latest conference presentation I realized the difference -- he doesn't want to be big but profitable. He doesn't want to be in production because that is a commodity. He only wants to create new reserves out of what is currently nothing. Most every other E&P company that I have read about says some stuff about their "manufacturing" reserves but most of the time is spent on growth in production -- the commodity parts of the business. Growth in production means they care more about being bigger and less about profitability -- key is to focus on value per share not how big the production number is.
I have been trying to find another MCF to replace this one and now I realize I might as well stick with MCF's successor firm.
CLB -- this could be the other main play on the nat gas -- did some reading of their annual report, which lays out their shale play in the US using the Super HERO stuff. interesting article too in the WSJ today about saudi arabia's attempts to get their latest huge field into production -- some of the stuff they talked about are the kind of services that CLB performs.
that's it for tonight -- sleepy.
GOOG -- that will teach everyone to pay attention to those comscope or whatever they call themselves numbers. I will need to do some more work to determine a price where I might trim some -- whether it is $600 or $700, I am figuring there should be a price where I choose to trim.
CME -- ouch. they miss by a little bit but everyone freaks out and sells it down 10%? don't get it yet but I'm sure after some reading it will become clear. rate per contract fell and that is a key issue (regardless of whether it should be or not).
LH -- DGX had good results so I suspect LH might finally be ready to get moving.
ILMN -- never did the trade prior to the report tonight. realized that about 23% of the stock is sold short -- no way it was going down under those conditions but quite likely it was going up. most of that short position is probably hedge funds or similar investor types who will buy tomorrow regardless of the news -- its a discipline thing. they shorted because they believed ILMN would miss the quarter -- they didn't so now everyone has to cover and that's several days worth of volume. If the short position doesn't meaningfully drop, that's more worrisome because it means the short sellers are concerned about something else that may not be in the stock yet.
anyway, they had strong results -- in line with what Cowen said yesterday that they would report. stock was up $3-5 in after hours trading.
MCF -- the company has put itself up for sale -- question is how much are they worth? I have seen estimates between $55 and $100 or more. The idea is they will sell the stock but the undeveloped portions -- the wildcat parts will remain with a new company called Contango Energy. The name Contango comes from the futures market condition where future prices are consistently higher -- a bit cocky huh? he has created a billion dollar company out of thin air so I'll cut him some slack.
Trouble for MCF is that Peak (CEO) is moving on to the golf course and the board room. That adds some risk because it means he won't be around to handle day to day issues any more. After listening to his latest conference presentation I realized the difference -- he doesn't want to be big but profitable. He doesn't want to be in production because that is a commodity. He only wants to create new reserves out of what is currently nothing. Most every other E&P company that I have read about says some stuff about their "manufacturing" reserves but most of the time is spent on growth in production -- the commodity parts of the business. Growth in production means they care more about being bigger and less about profitability -- key is to focus on value per share not how big the production number is.
I have been trying to find another MCF to replace this one and now I realize I might as well stick with MCF's successor firm.
CLB -- this could be the other main play on the nat gas -- did some reading of their annual report, which lays out their shale play in the US using the Super HERO stuff. interesting article too in the WSJ today about saudi arabia's attempts to get their latest huge field into production -- some of the stuff they talked about are the kind of services that CLB performs.
that's it for tonight -- sleepy.
Thursday, April 17, 2008
latest thoughts
Thanks Dr John again for your insightful comments. I plan on covering my big money positions this weekend -- hopefully. This is a busy time for me -- got presentation deadlines at work that are taking too long to meet plus my son's birthday party (2 years old) next week so I have family invading soon.
I should just be able to adjust my positions to the right size -- the one I feel comfortable with -- and not worry about it. Unfortunately there are times when this analyst only cares about being right -- not the dollar impact of those decisions. So I have beaten myself up in the past because a trade I have done may have cost me a few hundred dollars -- relatively insignificant compared to the total. Ironically there are other times when I should be concerned -- like DFR -- I throw money down the drain without any agonizing. ILMN is one of those situations where regardless of the actual dollars involved I want to be right -- that's not the way to manage money -- it speaks of a lack of control of my emotions but none of us are perfect.
I'm sure one of things going through my mind is my experience with AFFX -- thankfully a round trip instead of a big loss for me but I bought in the low to mid 30's a few years ago and watched with glee as the stock rose to $60. Never sold a share until it got back down to my cost. I sold because I realized ILMN was kicking their butt. Waiting patiently for ILMN to sell off good enough to feel the risks were low enough and bought in. happy ending so far. Will ILMN head back down to the $30's? anything is possible in such a high change industry but the rational part of me says no way. the irrational part of me? well..........
Anyway, one other topic for the weekend is Pall -- I am going to cover what interests me and why I'm wary of the stock.
Made some comments about the market going to new lows in the last note and then I subsequently read Ken Fisher (Forbes) latest thoughts. He has a great track record of calling the major turning points in the market -- he considers the August to now period as just a correction so he gives himself a pass for not predicting it. So that's the issue for me and him -- he has a great record -- calling the 2000 top and the 2002 bottom (he claims to have called for a bear market in july of 1987 too) but he missed this turn and so far he continues to dismiss any actual decline or fear of decline as no big deal -- just a correction. If you missed the turn this time, you are likely to either keep missing the declines or turn bearish near the end. I doubt he will turn bearish near the end but missing the declines - yep that's possible.
Its really just an exercise for fun -- the goal is to focus on individual stocks and their future potential -- the overall market environment is obviously very interesting but probably too distracting. Time horizon -- if FLIR pulls back on a fall in demand due to the economy should I sell or buy more? I am in for the long term secular march of infrared technology. That is not impacted by the economy but rather only by potential alternative technologies or FLIR's competitive position deteriorating. No evidence of either. At this point though, I don't anticipate too much of a slowdown in FLIR's business -- 50% is government and the rest is in the midst of strong product cycles.
Speaking of the long term position, one hedge fund manager on RealMoney is short ILMN based on valuation and the potential for a slowing in momentum. He also seems to suggest if the stock gets hit that a good buying opportunity is likely to unfold -- its all about time horizon. ILMN should benefit from the genetic revolution for some time to come but that doesn't mean hiccups won't occur along the way (this is me trying to convince myself).
have fun!
I should just be able to adjust my positions to the right size -- the one I feel comfortable with -- and not worry about it. Unfortunately there are times when this analyst only cares about being right -- not the dollar impact of those decisions. So I have beaten myself up in the past because a trade I have done may have cost me a few hundred dollars -- relatively insignificant compared to the total. Ironically there are other times when I should be concerned -- like DFR -- I throw money down the drain without any agonizing. ILMN is one of those situations where regardless of the actual dollars involved I want to be right -- that's not the way to manage money -- it speaks of a lack of control of my emotions but none of us are perfect.
I'm sure one of things going through my mind is my experience with AFFX -- thankfully a round trip instead of a big loss for me but I bought in the low to mid 30's a few years ago and watched with glee as the stock rose to $60. Never sold a share until it got back down to my cost. I sold because I realized ILMN was kicking their butt. Waiting patiently for ILMN to sell off good enough to feel the risks were low enough and bought in. happy ending so far. Will ILMN head back down to the $30's? anything is possible in such a high change industry but the rational part of me says no way. the irrational part of me? well..........
Anyway, one other topic for the weekend is Pall -- I am going to cover what interests me and why I'm wary of the stock.
Made some comments about the market going to new lows in the last note and then I subsequently read Ken Fisher (Forbes) latest thoughts. He has a great track record of calling the major turning points in the market -- he considers the August to now period as just a correction so he gives himself a pass for not predicting it. So that's the issue for me and him -- he has a great record -- calling the 2000 top and the 2002 bottom (he claims to have called for a bear market in july of 1987 too) but he missed this turn and so far he continues to dismiss any actual decline or fear of decline as no big deal -- just a correction. If you missed the turn this time, you are likely to either keep missing the declines or turn bearish near the end. I doubt he will turn bearish near the end but missing the declines - yep that's possible.
Its really just an exercise for fun -- the goal is to focus on individual stocks and their future potential -- the overall market environment is obviously very interesting but probably too distracting. Time horizon -- if FLIR pulls back on a fall in demand due to the economy should I sell or buy more? I am in for the long term secular march of infrared technology. That is not impacted by the economy but rather only by potential alternative technologies or FLIR's competitive position deteriorating. No evidence of either. At this point though, I don't anticipate too much of a slowdown in FLIR's business -- 50% is government and the rest is in the midst of strong product cycles.
Speaking of the long term position, one hedge fund manager on RealMoney is short ILMN based on valuation and the potential for a slowing in momentum. He also seems to suggest if the stock gets hit that a good buying opportunity is likely to unfold -- its all about time horizon. ILMN should benefit from the genetic revolution for some time to come but that doesn't mean hiccups won't occur along the way (this is me trying to convince myself).
have fun!
Wednesday, April 16, 2008
ILMN and TSRA
ILMN got smacked today by a few dollars -- after hours it was up I think on Intel's good news but we'll see how long that lasts. Apparently Sequenom also missed last week or so -- now some are arguing that others are missing because IlMN is taking all the money for research dollars into the next gen sequencing. if that is the case then sell ILMN -- it means there isn't any growth overall and even if ILMN shows some growth now through share gains they aren't sustainable. I think downside on ILMN is between $50 and $60 -- if the stock really decides to pull back. That kind of pull back is possible if it turns out that demand for their products is slowing -- not in expectations at all.
I am bummed I didn't have the guts to sell calls when it was almost $80. Might still decide to sell some if it gets above $75. we'll see. heard stories that some consumable companies like SIAL are vulnerable due to inventory corrections -- Yikes but it could make sense -- anything in shortage experiences double ordering until demand catches up.
TSRA -- no new news on the trial front its still wait and see. on the fundamentals side the demand for tech products is slacking off -- quite a few pre-announcements of late suggesting demand is squishy at best. now many are likely pricing related whereas TSRA is driven by unit demand. But still likely some unit issues too. Intel's report suggests demand OK although I haven't read the details. a little less upside potentially but if they win the trials there is still so much revenue at stake that a few less units don't matter.
one that surprises me is LH - -consistent grower that is selling at a cheap valuation. every so often the stock goes flat for a while before jumping 10-15 bucks. we are deep into one of those periods where the stock has ranged from $70 to $80 for over a year. I think there is either a fundamental problem that has not come to light yet or this stock is a great opportunity. bad debt expense is the main issue -- slowing economy means fewer tests and more tests not paid for. That is the risk. seems like its in the stock now.
We are likely heading for new lows -- I know the double bottom but I think that is a head fake -- I think the first low in January was artificially made lower by the societe general trader. Without that the low would have been higher --meaning no double bottom. that's called rationalizing an indicator but reality is too many other indicators are not backing up the double bottom thesis. banks are underperforming on a relative basis -- last 2 times that has happened the market went to new lows. means I should be raising cash again -- hoping for a rally before that happens. The trouble will be that I had a rally to sell into but I kept hoping for more. that's the trouble -- got to know when the rally is out of gas and time to sell.
good luck
I am bummed I didn't have the guts to sell calls when it was almost $80. Might still decide to sell some if it gets above $75. we'll see. heard stories that some consumable companies like SIAL are vulnerable due to inventory corrections -- Yikes but it could make sense -- anything in shortage experiences double ordering until demand catches up.
TSRA -- no new news on the trial front its still wait and see. on the fundamentals side the demand for tech products is slacking off -- quite a few pre-announcements of late suggesting demand is squishy at best. now many are likely pricing related whereas TSRA is driven by unit demand. But still likely some unit issues too. Intel's report suggests demand OK although I haven't read the details. a little less upside potentially but if they win the trials there is still so much revenue at stake that a few less units don't matter.
one that surprises me is LH - -consistent grower that is selling at a cheap valuation. every so often the stock goes flat for a while before jumping 10-15 bucks. we are deep into one of those periods where the stock has ranged from $70 to $80 for over a year. I think there is either a fundamental problem that has not come to light yet or this stock is a great opportunity. bad debt expense is the main issue -- slowing economy means fewer tests and more tests not paid for. That is the risk. seems like its in the stock now.
We are likely heading for new lows -- I know the double bottom but I think that is a head fake -- I think the first low in January was artificially made lower by the societe general trader. Without that the low would have been higher --meaning no double bottom. that's called rationalizing an indicator but reality is too many other indicators are not backing up the double bottom thesis. banks are underperforming on a relative basis -- last 2 times that has happened the market went to new lows. means I should be raising cash again -- hoping for a rally before that happens. The trouble will be that I had a rally to sell into but I kept hoping for more. that's the trouble -- got to know when the rally is out of gas and time to sell.
good luck
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