We are at an interesting place in the markets today. Let's try to evaluate.
Two most influential factors in my opinion:
1. Katrina: This is a truly unfortunate disaster but I must say that what doesn't kill the market only makes it stronger just as in this case. Disasters equate to federal spending and donations. A lot of federal spending is done in the initial 1 or 2 months and then it pans out over the next few years. This spending really helps the economy. Walmart after closing a 100+ stores is reporting same store sales are up 3.8% (high end of expectations). Consumer confidence came in really low. After early October earnings season, if earnings aren't affected by Katrina, consumer confidence numbers will spring right back up in time for the holiday season. Point in case 9/11 bombings and the subsequent fall in September and bounce back in October / November. This unfortunate disaster has a positive short term effect on the market in my opinion and I must take the contrarian view to CNBC.
2. Technical levels: We attained 4 year highs a couple of months back and inspite of Katrina and it's immediate effect on the markets, we have maintained the technical levels quite well. We just crossed the 20 DMA and could cross 50 DMA and re-establish the upward trend. Believe it or not, we have eked out gains in the September month which is usually the weakest month of the year. October on the contrary is the strongest month of the year with an average of 2.8% growth in the index.
Some other positives:
- Corporate profits and cash positions at an all time high. Not necessarily displaying growth but companies are healthy and their operations are fairly streamlined.
- Worldwide markets are taking off: Nikkei, Germany, India and some other Asian countries are at 4 year highs and that bodes well for investor sentiment.
- Inflation in control and fed monitoring the markets tightly. No liquidity concerns yet
Summary: We all need confirmation of earnings not being affected by Katrina. Wait for the first few days of October and watch out for any warnings and then buy into sectors or companies you believe in.
p.s. Please contain you excitement on India. There is such a thing as too much too fast and BSE needs to show support at these levels in my opinion.
Sunday, October 02, 2005
Saturday, October 01, 2005
David Rockers Short positions
http://www.sec.gov/Archives/edgar/data/898373/000089837305000006/0000898373-05-000006.txt
DavidRocker's short positions and how strange that TASR, OVTI, OSTK are all listed othe same set of exchanges as in the link given below. I got this off the messae board on Yahoo.
DavidRocker's short positions and how strange that TASR, OVTI, OSTK are all listed othe same set of exchanges as in the link given below. I got this off the messae board on Yahoo.
Thursday, September 29, 2005
High call volume for Oct 21st $20 strike price
Check out this link and see the volume for the $20 strike price for October 21st.
It is the second highest call activity and very weird considering $20 is far off.http://finance.yahoo.com/q/op?s=OVTI
It is the second highest call activity and very weird considering $20 is far off.http://finance.yahoo.com/q/op?s=OVTI
Wednesday, September 28, 2005
Attended the OVTI Shareholder meeting in person
I attended the OVTI shareholder meeting in person. This is definitely a first for me. Went to a shareholder meeting for the first time. About 50 attendees.
1. I like Hong. He looks like a straight up guy and more of an engineer. His presentation was excellent. I am convinced about this company's potential.
2. They did not reiterate their guidance but mentioned that they might do it soon.
3. One guy created a lot of noise about the conspiracy theory of shorts. For the record, I believe it's all true. Management listened but as usual promised nothing except that they are working on it. I sensed the folks were genuine throughout.
4. Raymond Wu can't seem to cancel whatever he has filed and so every Monday there is a sell.
5. Management should buy stock but no commitment there.
6. They were made aware of all the conspiracy theories. I used the NFLX example wrt Herb Greensberg and how he downgraded the stock at 10 and gave it a target of 4. Also, of how OSTK CEO came out with a lawsuit against the short attackers as he and family owned most of the company's shares. I spoke to CFO Peter in person about the shares shorted of 20.7 Mil on a company that has 58 Mil outstanding. He himself was surprised about how they could get so many shares to short considering institutions own 80+%. Peter looks like the Field Marshall of the Indian army, Sam Maneckshaw - no kidding :)
7. XBOX will have a camera. They didn't say they were supplying the chip for it but said that they are aggressively pursuing all opportunities (with a large smile).
8. Automotive Industry can have chips installed for
- Rain sensor
- Lane departure warning
- Rear view camera systems
- Smart air bags.
Projected 20 Mil chips for 2008.
9. Wavefront coding based chips will come out mid-2006 and will have auto focus.
I came away with a good feeling over all. Vicky got it bad because of her poor communication with the invesotor community I am even more convinced on the short conspiracy theory. There was another guy there who made a lot of comments about how he knew about the shorts conspiracy theory.
Not sure if this helps anyone but I thought it's fun to see and speak to the management of the company that I have followed for more than three years.
1. I like Hong. He looks like a straight up guy and more of an engineer. His presentation was excellent. I am convinced about this company's potential.
2. They did not reiterate their guidance but mentioned that they might do it soon.
3. One guy created a lot of noise about the conspiracy theory of shorts. For the record, I believe it's all true. Management listened but as usual promised nothing except that they are working on it. I sensed the folks were genuine throughout.
4. Raymond Wu can't seem to cancel whatever he has filed and so every Monday there is a sell.
5. Management should buy stock but no commitment there.
6. They were made aware of all the conspiracy theories. I used the NFLX example wrt Herb Greensberg and how he downgraded the stock at 10 and gave it a target of 4. Also, of how OSTK CEO came out with a lawsuit against the short attackers as he and family owned most of the company's shares. I spoke to CFO Peter in person about the shares shorted of 20.7 Mil on a company that has 58 Mil outstanding. He himself was surprised about how they could get so many shares to short considering institutions own 80+%. Peter looks like the Field Marshall of the Indian army, Sam Maneckshaw - no kidding :)
7. XBOX will have a camera. They didn't say they were supplying the chip for it but said that they are aggressively pursuing all opportunities (with a large smile).
8. Automotive Industry can have chips installed for
- Rain sensor
- Lane departure warning
- Rear view camera systems
- Smart air bags.
Projected 20 Mil chips for 2008.
9. Wavefront coding based chips will come out mid-2006 and will have auto focus.
I came away with a good feeling over all. Vicky got it bad because of her poor communication with the invesotor community I am even more convinced on the short conspiracy theory. There was another guy there who made a lot of comments about how he knew about the shorts conspiracy theory.
Not sure if this helps anyone but I thought it's fun to see and speak to the management of the company that I have followed for more than three years.
Friday, September 23, 2005
Riverstone Networks financials discussed
Riverstone Networks, rstn.pk, financials discussed. It's a pinksheet company. No recommendation on the stock. A friend suggested the company. Take a look at their recent filings.
http://ir.riverstonenet.com/phoenix.zhtml?c=123844&p=irol-sec
Summary:
6 months earnings until Feb 2005 is 34.1 Mil up 22% from the previous 6 month period. Revenue split up is 19.6 (nov 2004 quarter end) and 14.5 (feb 2005 quarter end).
Aug 2004: Cash position: 256.4 Mil
Feb 2005: Cash position: 223.3 Mil. Changes include one time insurance reimbursement and so +14.1 Mil and a one time Class action loss: -18.5 Mil - 2 Mil Interasys lawsuit. So actual operating losses for the 6 months = 26.5 Mil approximately. Convertible Debt = 131.8 Mil May 2005: Riverstone: Redeems half of outstanding notes. Meaning removes 65.875 Mil debt. Debt remaining 65.875 Mil.
No reports of earnings after Feb 26, 2005. Bottomline is that company made an operating loss of 26.5 Mil in the 6 months prior to Feb 26. If we assume that company did not lose more in the next 6 months in operations (big assumption but considering company is getting back on track, it's a fair assumption to make). Current cash position = 223.3 Mil - 27 Mil = 195 Mil. Subtract from this one time charges which we are not yet aware of such as Toshiba lawsuit, which as per their statements "not materially impacted", should hopefully not be much. Also, subtract entire debt. Therefore 195 Mil - 131.8 Mil = 63.2 Mil. Not looking that hot any more :-) We need to know what are their revenues now, any lawsuits remaining and what are their losses to make any judgement.
What we haven't considered here is any long term assets which really have value. Long term asset value is usually quite inflated by companies. The other important piece is what do you think of the future of the business. They might be in a hot area but the networking guys on this list need to confirm that if possible. Profile on the 8K says:
"Riverstone Networks, Inc. (RSTN.PK) is a leading provider of carrier Ethernet infrastructure solutions for business and residential communications services. Riverstone’s Ethernet router portfolio uniquely delivers the reliability that allows carriers to meet the triple play - voice, video and data - service requirements of their customers in a cost-effective and scalable way. Riverstone allows carriers to offer new services over existing revenue-generating networks permitting them to evolve to a next generation Ethernet infrastructure."
I think the company has disclosed very little. If management knows of a rebound, it will take place almost only after company gives management some options and so there is dilution.
http://stocksharks.blogspot.com/
http://ir.riverstonenet.com/phoenix.zhtml?c=123844&p=irol-sec
Summary:
6 months earnings until Feb 2005 is 34.1 Mil up 22% from the previous 6 month period. Revenue split up is 19.6 (nov 2004 quarter end) and 14.5 (feb 2005 quarter end).
Aug 2004: Cash position: 256.4 Mil
Feb 2005: Cash position: 223.3 Mil. Changes include one time insurance reimbursement and so +14.1 Mil and a one time Class action loss: -18.5 Mil - 2 Mil Interasys lawsuit. So actual operating losses for the 6 months = 26.5 Mil approximately. Convertible Debt = 131.8 Mil May 2005: Riverstone: Redeems half of outstanding notes. Meaning removes 65.875 Mil debt. Debt remaining 65.875 Mil.
No reports of earnings after Feb 26, 2005. Bottomline is that company made an operating loss of 26.5 Mil in the 6 months prior to Feb 26. If we assume that company did not lose more in the next 6 months in operations (big assumption but considering company is getting back on track, it's a fair assumption to make). Current cash position = 223.3 Mil - 27 Mil = 195 Mil. Subtract from this one time charges which we are not yet aware of such as Toshiba lawsuit, which as per their statements "not materially impacted", should hopefully not be much. Also, subtract entire debt. Therefore 195 Mil - 131.8 Mil = 63.2 Mil. Not looking that hot any more :-) We need to know what are their revenues now, any lawsuits remaining and what are their losses to make any judgement.
What we haven't considered here is any long term assets which really have value. Long term asset value is usually quite inflated by companies. The other important piece is what do you think of the future of the business. They might be in a hot area but the networking guys on this list need to confirm that if possible. Profile on the 8K says:
"Riverstone Networks, Inc. (RSTN.PK) is a leading provider of carrier Ethernet infrastructure solutions for business and residential communications services. Riverstone’s Ethernet router portfolio uniquely delivers the reliability that allows carriers to meet the triple play - voice, video and data - service requirements of their customers in a cost-effective and scalable way. Riverstone allows carriers to offer new services over existing revenue-generating networks permitting them to evolve to a next generation Ethernet infrastructure."
I think the company has disclosed very little. If management knows of a rebound, it will take place almost only after company gives management some options and so there is dilution.
http://stocksharks.blogspot.com/
OVTI earnings guidance record
The latest analyst note on OVTI says that they doubt OVTI can meet guidance for the next quarter.
Due to length of product cycles, OVTI always knows where they stand approximately 3 months in advance. I caught a post on yahoo finance. You can also cross check it on Yahoo finance at least for the last 4 quarters. For seven quarters they have met or exceeded their guidance. Will they do it again is anyone's call.
Here is a summary of guidance vs. actual performance for the past 7 quarters. G=Guidance A=Actual.
1/31/04
G REV 74-78 EPS .40-.42
A REV 94.5 EPS .57
4/30/04
G REV 96-100 EPS .30-.31
A REV 99.7 EPS .34
7/31/04
G REV 95-100 EPS .29-.31
A REV 98.8 EPS .32
10/31/04
G REV 80-90 EPS .20-.25
A REV 84.4 EPS .28
1/31/05
G REV 90-100 EPS .24-.29
A REV 101.8 EPS .33
4/30/05
G REV 93-103 EPS .29-.34
A REV 103 EPS .30
7/31/05
G REV 90-100 EPS .22-.27
A REV 96 EPS .25
Due to length of product cycles, OVTI always knows where they stand approximately 3 months in advance. I caught a post on yahoo finance. You can also cross check it on Yahoo finance at least for the last 4 quarters. For seven quarters they have met or exceeded their guidance. Will they do it again is anyone's call.
Here is a summary of guidance vs. actual performance for the past 7 quarters. G=Guidance A=Actual.
1/31/04
G REV 74-78 EPS .40-.42
A REV 94.5 EPS .57
4/30/04
G REV 96-100 EPS .30-.31
A REV 99.7 EPS .34
7/31/04
G REV 95-100 EPS .29-.31
A REV 98.8 EPS .32
10/31/04
G REV 80-90 EPS .20-.25
A REV 84.4 EPS .28
1/31/05
G REV 90-100 EPS .24-.29
A REV 101.8 EPS .33
4/30/05
G REV 93-103 EPS .29-.34
A REV 103 EPS .30
7/31/05
G REV 90-100 EPS .22-.27
A REV 96 EPS .25
Wednesday, September 21, 2005
OVTI October $15 calls at 10 cents
Alright, so a stock moved way lower after you bought it when you thought it was cheap in the first place. You smell some over the board manipulation as in the case of OVTI. Is there a chance you can profit quickly and with low risk?
Enter options - Limited risk and unlimited profits: Buying Calls e.g. 1 contract call for October options with a strike price of $15 means that you are buying an option to buy 100 stocks at $15 on Oct 21st (3rd Friday of the month). In effect you are betting on a stock to go up. Works perfectly well when a stock has had a recent drop such as OVTI and you think current levels are a good buy but you want to maximize profits and so buy options instead of stock.
Price of OVTI call is 10 cents today for the Oct 21st $15 strike price. Buying one contract means buying an option for a 100 stocks. This means that if you buy a 200 contracts = 200 * (100 * 0.10) = $2000.
Worst situation - You made a terrible decision and come Oct 21 these options expire worthless as stock never crossed 15 and never even made a jump to higher prices from existing 12.6 levels. You lose your 2000 dollar investment.
Good situation - Some buying kicks in and stocks move to say 13.5 in the next 1 or 2 weeks. The same $15 call option is now worth much more than 10 cents because it's probability of hitting 15 has increased dramatically (earler the gap was 15 - 12.6 = 2.4, now it's 15 - 13.5 = 1.5). With such a small increase in price, the option price for the $15 Oct 21st Call could easily double of triple (20 or 30 cents) and you could take your profits, meaning $2000 to $4000 profit on a $2000 investment. Okay so in the "Good situation" you are betting that the stock hits 13.5 to 14 atleast once in the next 15 - 21 days. Remember the closer it is to the Oct 21st date the riskier your investment becomes, so it's not a bad idea to cash out.
Excellent situation: Stock does live upto it's potential and goes to 16 - 17 bucks over the next 3 weeks. Option value in this case can easily be 0.8 to 1.5. Meaning your 10 cents buy has gone up to anywhere between 0.8 to 1.5, a 800% to 1500% return on investment.
Consider buying options. It has excellent potential. Worst case you lost that $2000 and the best case - well, benefits are unlimited.
Enter options - Limited risk and unlimited profits: Buying Calls e.g. 1 contract call for October options with a strike price of $15 means that you are buying an option to buy 100 stocks at $15 on Oct 21st (3rd Friday of the month). In effect you are betting on a stock to go up. Works perfectly well when a stock has had a recent drop such as OVTI and you think current levels are a good buy but you want to maximize profits and so buy options instead of stock.
Price of OVTI call is 10 cents today for the Oct 21st $15 strike price. Buying one contract means buying an option for a 100 stocks. This means that if you buy a 200 contracts = 200 * (100 * 0.10) = $2000.
Worst situation - You made a terrible decision and come Oct 21 these options expire worthless as stock never crossed 15 and never even made a jump to higher prices from existing 12.6 levels. You lose your 2000 dollar investment.
Good situation - Some buying kicks in and stocks move to say 13.5 in the next 1 or 2 weeks. The same $15 call option is now worth much more than 10 cents because it's probability of hitting 15 has increased dramatically (earler the gap was 15 - 12.6 = 2.4, now it's 15 - 13.5 = 1.5). With such a small increase in price, the option price for the $15 Oct 21st Call could easily double of triple (20 or 30 cents) and you could take your profits, meaning $2000 to $4000 profit on a $2000 investment. Okay so in the "Good situation" you are betting that the stock hits 13.5 to 14 atleast once in the next 15 - 21 days. Remember the closer it is to the Oct 21st date the riskier your investment becomes, so it's not a bad idea to cash out.
Excellent situation: Stock does live upto it's potential and goes to 16 - 17 bucks over the next 3 weeks. Option value in this case can easily be 0.8 to 1.5. Meaning your 10 cents buy has gone up to anywhere between 0.8 to 1.5, a 800% to 1500% return on investment.
Consider buying options. It has excellent potential. Worst case you lost that $2000 and the best case - well, benefits are unlimited.
Robert Baird note on OVTI
You might know of the negative note by Robert Baird (analyst) yesterday on OVTI saying they've lost Motorola as their customer. True as that might be in my opinion management would have considered that while giving out guidance on earnings call. This kind of news is always in the making and companies don't get up one morning to find out that they lost a big customer. Their biggest new customer win is Lenovo and they supplied chips to the top 6 cell phone manufacturers anyway (remove motorola now and so 5). I am just surprised at how expensive stocks like Micron are when they are making such huge losses where as OVTI which has 6 bucks in cash and some 80 - 90 Mil in profit last year is trading at such discounts.
33% short ratio at these levels could very well result in a squeeze specially since management never cares to respond to any negative press releases and so it's a free hand for the big guys.
How do you counter the free for all manipulation from the big guys? Hmmm... buy some really cheap calls may be?
33% short ratio at these levels could very well result in a squeeze specially since management never cares to respond to any negative press releases and so it's a free hand for the big guys.
How do you counter the free for all manipulation from the big guys? Hmmm... buy some really cheap calls may be?
Tuesday, September 20, 2005
Robert Baird note on OVTI
"OmniVision: Believe OVTI has lost Motorola as a customer - Baird (OVTI) 13.00 : Baird's latest checks indicate that OVTI has lost all of MOT's new mobile phones. Firm believes MOT is now using Micron (MU) and, in a lesser extent, STMicroelectronics (STM) in all new camera phone launches. Excluding the sale of previously written off inventory and the integration of SOI, the firm estimates July-quarter revenues and EPS were $81 mln and $0.15, below the reported $96 mln and $0.25 and a significant miss versus the guidance. Off that revenue base, they say OVTI would need to grow revenues 36%-48% sequentially to meet its October-quarter forecast. Given firm's belief of OVTI's current dynamics, they believe this guidance could be difficult to achieve. Reits Neutral, cuts tgt to $12 from $15."
This is certainly bad news but I don't think the company didn't know of this when they gave guidance. OVTI has been quite good at meeting their near term guidance in the past. Why? Cause in their business they chip manufacturing are quite long and so they need to know requirements 3 months in advance always.
$15 options for Oct 21st are fluctuating at 5 - 10 cents. It will double or go even higher if the stock moves up a dollar.
This is certainly bad news but I don't think the company didn't know of this when they gave guidance. OVTI has been quite good at meeting their near term guidance in the past. Why? Cause in their business they chip manufacturing are quite long and so they need to know requirements 3 months in advance always.
$15 options for Oct 21st are fluctuating at 5 - 10 cents. It will double or go even higher if the stock moves up a dollar.
Robert Baird note on OVTI
"OmniVision: Believe OVTI has lost Motorola as a customer - Baird (OVTI) 13.00 : Baird's latest checks indicate that OVTI has lost all of MOT's new mobile phones. Firm believes MOT is now using Micron (MU) and, in a lesser extent, STMicroelectronics (STM) in all new camera phone launches. Excluding the sale of previously written off inventory and the integration of SOI, the firm estimates July-quarter revenues and EPS were $81 mln and $0.15, below the reported $96 mln and $0.25 and a significant miss versus the guidance. Off that revenue base, they say OVTI would need to grow revenues 36%-48% sequentially to meet its October-quarter forecast. Given firm's belief of OVTI's current dynamics, they believe this guidance could be difficult to achieve. Reits Neutral, cuts tgt to $12 from $15 "
I think the stock will not go much lower. Chances are very small that OVTI gets this news overnight. It has to be in the making and so if the conference calls from a few days back is to be believed, it implies OVTI mostly likely knew about this. Lenovo business is huge and they will be supplying chips to Lenovo for laptops as well. Lenovo laptop sales will beat dell shortly.
A good strategy is to buy $15 calls for Oct 15 at 5 - 10 cents and sell it at double the price or more if the stock moves up by a dollar.
I think the stock will not go much lower. Chances are very small that OVTI gets this news overnight. It has to be in the making and so if the conference calls from a few days back is to be believed, it implies OVTI mostly likely knew about this. Lenovo business is huge and they will be supplying chips to Lenovo for laptops as well. Lenovo laptop sales will beat dell shortly.
A good strategy is to buy $15 calls for Oct 15 at 5 - 10 cents and sell it at double the price or more if the stock moves up by a dollar.
Monday, September 19, 2005
ANF: Hold
ANF: Abercrombie and Fitch
Looks like a pretty good company with growth and good expansionplans. It has had quite a run though over the last year or so. May beI am thinking from a short term perspective but when a stock is on adownward spiral and very quickly too, I am scared of touching it. Let it go down and consolidate. If it's a good growth company then you willhave plenty of chances to dip in when it settles.
One point to make of retailers is that they are very dependent on branding. Teenagers which comprise of ANF's biggest market havedifferent fads every year. Another dangerously scary piece ofinformation is that 90.3% of insider shares have been sold over thelast one year and that is excessively high.
I think you have a good chance of seeing the early forties and if you really believe in the brand then it's a good idea to buy it there asit has some technical support in that region.
There could be a dead cat bounce in the near future since it has gonedown very quickly but as a long term investor that's not what you arelooking for I presume.
Looks like a pretty good company with growth and good expansionplans. It has had quite a run though over the last year or so. May beI am thinking from a short term perspective but when a stock is on adownward spiral and very quickly too, I am scared of touching it. Let it go down and consolidate. If it's a good growth company then you willhave plenty of chances to dip in when it settles.
One point to make of retailers is that they are very dependent on branding. Teenagers which comprise of ANF's biggest market havedifferent fads every year. Another dangerously scary piece ofinformation is that 90.3% of insider shares have been sold over thelast one year and that is excessively high.
I think you have a good chance of seeing the early forties and if you really believe in the brand then it's a good idea to buy it there asit has some technical support in that region.
There could be a dead cat bounce in the near future since it has gonedown very quickly but as a long term investor that's not what you arelooking for I presume.
OVTI October $15 calls
October $15 calls are available at 10 cents bid and 15 cents ask. Any small move to the upside will double or quadruple the $15 call price for October.
Thursday, September 15, 2005
Trading bankruptcies is pure speculation
Important Note: Class A shares of companies that go bankrupt are almost always worth NOTHING. So remember that if you are trading NWAC tomorrow, you HAVE to trade with tight stops. The gains are big but this is pure speculation. I wouldn't call it all luck - cause Hedge funds almost always make money on this.
Buying their bonds of course can be valuable when they are rated to junk. Specially airlines.
Buying their bonds of course can be valuable when they are rated to junk. Specially airlines.
Delta, Northwest Bonds Trade Actively: Financial News - Yahoo! Finance
Good article on how to trade bankruptcies. Let's see how NWAC plays tomorrow. I have traded it a few times today.
Wednesday, September 14, 2005
OVTI: Man it's a pain in the ass
This one was due. I am really bummed on OVTI and specially their arrogant management.
My sentiments on this one remain the same BUY. Nothing changes in OVTI but two things.
1. They have been accused of lying on the conference call by Herb Greenberg and the Jefferies analyst. 5.9 million revenue recognized from written off inventory. I clearly remember when asked about revenue contribution from written off inventory, the answer was "nothing substantial". To make things worse, there is no attempt from management to clear their name or come out and say something with regards to how they were misinterpreted. Herb Greenberg is a hedge fund owned scum in my opinion and has made some unbelievably bad calls such as shorting NFLX at 10 to cover at 4. I think they were all waiting for something to latch onto after earnings (short ratio is very high) and the 10Q gave them the chance and a good one to that.
2. Since management is too arrogant and never responds to Herb and the Jefferies guy, Herb takes a chance and adds the 5.9 million straight to the profits and cuts 10 cents off the earnings.
Sure they made a mistake and stock was punished. The stock has been kept down really well after all this trashing.
One interesting observation is that the Oct Puts volume is 10,404. Compare that with the 12.50 put volume 1077 or infact even the Sept calls / puts that expire on Friday. Traders often protect their positions by trading options. If they expect the stock price to be over 15 they would buy puts to protect themselves and ofcourse buy a lot of stock or begin covering. The option prices are the best today for these guys due to the low price.
If you believe the above conspiracy theory then the stock should be over 15 in less than a month :)
I am holding on for now and have infact closed some other positions to support this one.
Good luck!
http://stocksharks.blogspot.com/
My sentiments on this one remain the same BUY. Nothing changes in OVTI but two things.
1. They have been accused of lying on the conference call by Herb Greenberg and the Jefferies analyst. 5.9 million revenue recognized from written off inventory. I clearly remember when asked about revenue contribution from written off inventory, the answer was "nothing substantial". To make things worse, there is no attempt from management to clear their name or come out and say something with regards to how they were misinterpreted. Herb Greenberg is a hedge fund owned scum in my opinion and has made some unbelievably bad calls such as shorting NFLX at 10 to cover at 4. I think they were all waiting for something to latch onto after earnings (short ratio is very high) and the 10Q gave them the chance and a good one to that.
2. Since management is too arrogant and never responds to Herb and the Jefferies guy, Herb takes a chance and adds the 5.9 million straight to the profits and cuts 10 cents off the earnings.
Sure they made a mistake and stock was punished. The stock has been kept down really well after all this trashing.
One interesting observation is that the Oct Puts volume is 10,404. Compare that with the 12.50 put volume 1077 or infact even the Sept calls / puts that expire on Friday. Traders often protect their positions by trading options. If they expect the stock price to be over 15 they would buy puts to protect themselves and ofcourse buy a lot of stock or begin covering. The option prices are the best today for these guys due to the low price.
If you believe the above conspiracy theory then the stock should be over 15 in less than a month :)
I am holding on for now and have infact closed some other positions to support this one.
Good luck!
http://stocksharks.blogspot.com/
How does one determine the value of a stock?
A good friend asked me the eternal question of the stock markets "How does one determine the value of the stock?". Took me a day to think about the answer and since it's been qualified as the eternal question every investor asks, it doesn't have the perfect answer. Ofcourse, you can comment and add to this. I've split it up into points in order of priorities.
1.
1.1 Price to Earning: Valuation of the company. If it's a growth company then future P/E as well.
1.2 Growth: Over the last 1- 2 years (if it's a new technology company). Over the last 5 years for other groups.
2.
2.1 Balance sheet: Debt? Possible future dilution? Cash position? One time charges or benefits on balance sheet? Of course all these points need in depth analysis.
2.2 Insider holding. If insiders believe in the company, they will own more equity in the company.
2.3 Gross and Net margins. Are they increasing or decreasing?
2.4 Revenue distribution.
2.5 Price / Sales: Some companies turning the corner after years of poor performance can look expensive from every angle except this one and are sometimes the biggest gainers.
2.6 Personal experiences with the company's product. Don't discount your own instincts :)
3.
3.1 Revenue type: Diversity? Recurring revenue? How high is the risk of revenue being hit if one buyer or one product fails?
3.2 Old vs New age business sectors.
I think that's all for now. Ha!
1.
1.1 Price to Earning: Valuation of the company. If it's a growth company then future P/E as well.
1.2 Growth: Over the last 1- 2 years (if it's a new technology company). Over the last 5 years for other groups.
2.
2.1 Balance sheet: Debt? Possible future dilution? Cash position? One time charges or benefits on balance sheet? Of course all these points need in depth analysis.
2.2 Insider holding. If insiders believe in the company, they will own more equity in the company.
2.3 Gross and Net margins. Are they increasing or decreasing?
2.4 Revenue distribution.
2.5 Price / Sales: Some companies turning the corner after years of poor performance can look expensive from every angle except this one and are sometimes the biggest gainers.
2.6 Personal experiences with the company's product. Don't discount your own instincts :)
3.
3.1 Revenue type: Diversity? Recurring revenue? How high is the risk of revenue being hit if one buyer or one product fails?
3.2 Old vs New age business sectors.
I think that's all for now. Ha!
CKCM breaks out of technical levels
CKCM breaks out of the 17.2 - 18.65 range it has been trading for the last 5 weeks on strong volume to around 19.4. Upward trend will most likely be resumed. What a great accumulation time that was for everyone after market makers dropped it from 28 to 18 post earnings.
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