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Working the phones and working on three new trading ideas

December 10, 2012 by Cody Willard 2 Comments

In my old age, I’ve gotten to where I just hate talking on the phone. Texting, emailing, writing and face-to-face are my preferred media of communication. But work, analyzing stocks and researching companies, managing people from San Diego to NYC to Las Cruces require working the phones. And today that’s all I’ve done so far — work the phone.

I’m deep in research on a couple new ideas, including:

A new potential play on 3-D printing — making decisions on it today.

IBM short? I just don’t think IBM’s going to keep this multiple premium that it’s still got. HPQ, Apple, MSFT, INTC — most every other mega cap tech stock trades at half the enterprise value (market cap + net cash) to earnings multiple. And like HPQ, IBM’s got a bunch of debt on the balance sheet already ($22 billon!), although they do have nearly $26 billion in cash. IBM might be an ideal paired trade hedge to our mega cap tech longs. More to come on this analysis.

More MSFT puts? I’m thinking that the new Windows 8 reception is so cold that it’s actually helping to drive people to pay up for anything Apple-related. Need a non-Windows 8 PC? Go buy an Mac. And Google’s Android doesn’t have desktop technology (yet?) does it? Maybe a Chrome/Android PC is in the future, but it ain’t here for the iPad/iPhone xMas selling season. Which brings us to tablets. Want a tablet? You pay up for the simplicity of the iPad or the iPad Mini or you go cheap with an Android. Windows 8 tablets? Windows Surface? My homework continues to point that the Windows 8 roll-out is a disaster for the Windows 8 PC/tablet vendors. Windows 8 phones are enjoying serious growth as part of the overall smartphone market is (estimates are for 40% or so growth next year for the smartphone market as more of the human population around the globe upgrade) and it might DOUBLE it’s market share this quarter. Which would mean it still wouldn’t be accounting for even 1 out of every 20 smartphones sold. MSFT is a lot cheaper than IBM, so maybe a lot of this is priced in for the near-term at least.

No trades for me yet today, as I settle back into the saddle here. I’ve done my scaling into both longs and shorts according to the playbook I’ve outlined at these levels and patience is one of the most important keys to long-term market success. So be long patience.

One other note, I’m going to send in more cash, adding just a little more to my ammo for my next batch of trades and/or the next time I want to get aggressive.

 

 

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Filed Under: Trading

Disclosure: At the time of publication, the firm in which Willard is a partner and/or Mr. Willard had positions in some of the stocks mentioned above although positions can change at any time and without notice.

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Comments

  1. Daniele Lo Bue says

    December 11, 2012 at 6:52 pm

    Old Age Cody LOL? So from now on You are asking us to address You with Mr. Willard? I think Your thoughts are quite correct on Apple so with the current way things are going for tablet sales with the absence of any better alternative Apple most likely will surprise the investment community and Apple may inch back up in the aftermath of the holiday to USD 650.00 – 700.00. I went back long at around 535.00 and am also long Feb 12 650.00 calls. I am further long MCP (Molycorp) from when it went down to below USD 6.00 and also FSLR (First Solar) from when it went below USD 20.00 in September. I start to likening Zynga a whole lot more but haven’t bought any yet. And yes I missed GMCR to get in on Monday after Thanksgiving because I was busy with Family stuff; what a bummer.

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  2. Daniele Lo Bue says

    December 11, 2012 at 7:15 pm

    One more thing I do understand Your rationale on MSFT but given a PE between 14-15 (Historical still over 16 average) I think the stock has not that much momentum to go lower by 30-40% but maybe 10-15% and with Windows 8 not only being a platform for consumer computer products I don’t think that the far larger commercial segment of the PC spectrum really has a chance to switch to anything else as cost per unit drives the bus for businesses. And with Windows Tablet Software only having a 2.9% market share disappointing Windows tablet sales will be a minor glitch in the MSFT total revenue. If 65-70% of the US economy is still driven by Small Businesses than they will most certainly not upgrade to anything else but if they have a PC that is still adequate they will go for a Windows 8 upgrade as the price is only between USD 69.00 – 139.00 for the Pro package. In portable devices Apple will win the race hands down but for the rest of the world (commercial) still needing to rely on peripheral software that will only run on PC and that at a low cost I think MSFT’s chance is still intact as it still controls more than 90% of the total market share for desktop and laptop market. And the mobile phone software is getting really good reviews and seems to be the least glitchy of any mobile phone software out there today and with only 0.9% market share they might just do better in that segment as expected as the new HTC phones seems to get quite a bit of traction. So I think the downside is limited and if they should do just slightly better for Q4 than it will become an expensive short trade in a hurry.

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