Week 3 LiveRocket Turbo Performance - Down 2%
Turbo is intended to be the more volatile, high risk investments. We include options, for example. Options are in fact why this portfolio is hurting right now.
I am also going to add one more feature - margin trading.
AMX Up 6%
BMHC Puts (Dec $25) n/a
DO Up 3%
GRP Up 4.4%
NUAN Up 11%
RFMD Down 4%
STX Down 3%
TIE Calls (Dec 50) n/a
TTI Up 8.2%
ZOLT Up 11%
ZRAN Up 1.3%
TRID Calls (Jan 22.50) n/a
ZOLT is an interesting stock. They, like TIE, make a product that is in high demand for airplanes. In this case, a special composite fiber. Planes are ~57% composite. However, the main reason that I bought ZOLT when I did was the recent issue with a different area of their business: wind farms. Their product is perfect for windfarms. Sen Kennedy had taken unusual steps recently to block a massive windfarm project in Massachussetts using ZOLT components. This is incredibly stupid - block cheap, renewable energy at a time of energy concerns - but that's Kennedy. And politics. And political moves like this are always short lived. So we took advantage of the short term drop.
Notice that I am also heavy on some tech stocks (AMX, STX, ZRAN, TRID, NUAN, RFMD) and oil (GRP, DO, TTI). That is where the growth is. And this is a high growth portfolio.
Weighing the portfolio down is the Call options for TIE and TRID. We are down (-57%) on the TIE options and (-46.3%) on TRID. Why am I still in them?
TIE - I think the stock goes back to $40 after this quarter. The volatility associated with the stock as well as the 6 month window make me comfortable.
TRID - I can't believe where this stock has fallen. Why am I still hot on a stock that is down so much? Well, because every bit of evidence coming out supports the notion that TRID is sitting pretty in a very hot market.
* Flat Panel Sales are screaming hot. Circuit City just said so.
* Tier 1 manufacturers (Sony, Samsung, etc) are gaining market share. As they grow, so does TRID sales.
* TRID is gaining market share at the majors. They just got a major win at China's #1 manufacturer. A multi-vendor solution is actively pursued to reduce dependence on TRID, but currently the competition's quality is weak. At thi stime, holiday sales will be incredible for TRID.
Dragging the stock price down is
1. GNSS blowback - Most people don't distinguish between vendors. They don't see a loss for GNSS as a win for TRID. And GNSS is naturally pointing to lower sales and highe rinventory to back up their defense that weak sales is not their problem. However, they play in the low-end of the market which is losing ground to the high-end: that's the cause of any inventory problems for GNSS
2. Market slowdown fears. This comes from 2 areas: housing slowdown affecting consumer spending and slower than expected sales. There is a higher-than expected glut of flat panels because World Cup fans didn't buy TVs. Prices on screens are coming down fast. This is an incredibly price sensitive market and prices are finally approaching what the masses can afford. And volume is what counts for TRID. Drops in prices drive volume of units. From Q4 2004 to Q4 2005, prices for a 42" Flat panel TV dropped from $4200 to $2500. TRID sales doubled during that period.
Just as the iPod was THE product last Xmas, Flat Panel TVs will be THE product this Xmas.
3. Option pricing fears. Any impact is now baked in.
Put it this way - can TRID rise $4 in 7 months? That's a 20% rise for a company delivering 100%+ growth. If they hit targets, that's $0.90 in earnings - making a 20 P/E. Within 7 months, I would expect complete clarity on the unknowns as well.
I am also going to add one more feature - margin trading.
AMX Up 6%
BMHC Puts (Dec $25) n/a
DO Up 3%
GRP Up 4.4%
NUAN Up 11%
RFMD Down 4%
STX Down 3%
TIE Calls (Dec 50) n/a
TTI Up 8.2%
ZOLT Up 11%
ZRAN Up 1.3%
TRID Calls (Jan 22.50) n/a
ZOLT is an interesting stock. They, like TIE, make a product that is in high demand for airplanes. In this case, a special composite fiber. Planes are ~57% composite. However, the main reason that I bought ZOLT when I did was the recent issue with a different area of their business: wind farms. Their product is perfect for windfarms. Sen Kennedy had taken unusual steps recently to block a massive windfarm project in Massachussetts using ZOLT components. This is incredibly stupid - block cheap, renewable energy at a time of energy concerns - but that's Kennedy. And politics. And political moves like this are always short lived. So we took advantage of the short term drop.
Notice that I am also heavy on some tech stocks (AMX, STX, ZRAN, TRID, NUAN, RFMD) and oil (GRP, DO, TTI). That is where the growth is. And this is a high growth portfolio.
Weighing the portfolio down is the Call options for TIE and TRID. We are down (-57%) on the TIE options and (-46.3%) on TRID. Why am I still in them?
TIE - I think the stock goes back to $40 after this quarter. The volatility associated with the stock as well as the 6 month window make me comfortable.
TRID - I can't believe where this stock has fallen. Why am I still hot on a stock that is down so much? Well, because every bit of evidence coming out supports the notion that TRID is sitting pretty in a very hot market.
* Flat Panel Sales are screaming hot. Circuit City just said so.
* Tier 1 manufacturers (Sony, Samsung, etc) are gaining market share. As they grow, so does TRID sales.
* TRID is gaining market share at the majors. They just got a major win at China's #1 manufacturer. A multi-vendor solution is actively pursued to reduce dependence on TRID, but currently the competition's quality is weak. At thi stime, holiday sales will be incredible for TRID.
Dragging the stock price down is
1. GNSS blowback - Most people don't distinguish between vendors. They don't see a loss for GNSS as a win for TRID. And GNSS is naturally pointing to lower sales and highe rinventory to back up their defense that weak sales is not their problem. However, they play in the low-end of the market which is losing ground to the high-end: that's the cause of any inventory problems for GNSS
2. Market slowdown fears. This comes from 2 areas: housing slowdown affecting consumer spending and slower than expected sales. There is a higher-than expected glut of flat panels because World Cup fans didn't buy TVs. Prices on screens are coming down fast. This is an incredibly price sensitive market and prices are finally approaching what the masses can afford. And volume is what counts for TRID. Drops in prices drive volume of units. From Q4 2004 to Q4 2005, prices for a 42" Flat panel TV dropped from $4200 to $2500. TRID sales doubled during that period.
Just as the iPod was THE product last Xmas, Flat Panel TVs will be THE product this Xmas.
3. Option pricing fears. Any impact is now baked in.
Put it this way - can TRID rise $4 in 7 months? That's a 20% rise for a company delivering 100%+ growth. If they hit targets, that's $0.90 in earnings - making a 20 P/E. Within 7 months, I would expect complete clarity on the unknowns as well.
posted by Andrew at
8:05 PM
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