3SOF

Trading Plan:

1. Take profits at $54.9;
2. Take a small loss if the stock is set to close below $28.

SD's results were out:

• SandRidge Energy, Inc. Reports First Quarter 2008 Financial and Operational Results
PR Newswire (Thu 4:11pm)

The stock is up in the pre-market due to higher than expected adjusted EPS of $0.19 (remember, that was Goldman Sachs estimate). However, due to losses in derivatives of $NATGAS and $WTIC, the company reported a loss of $66.2 M.

This tells me SD is short $NATGAS and $WTIC futures and I sure don't like that.

Trading Plan:

SELL.

CROX didn't make the island patter I was expecting. But I remain confident that the stock is a bargain at current levels and will keep holding.

(not much time for deeper updates today)

Something came up and I don't have much time.

SIX's results were out yesterday after the close:

• Six Flags Announces First Quarter Results
PR Newswire (Thu 3:00pm)

Of course, this is SIX's seasonally weakest quarter, but it shows a strong start to 2008. I expect this momentum to carry on to the summer months.

I've attached the conference call transcript.

My latest update says it all for TSYS. I'll just let the profits run.

UTVG.OB closing at the high of the day, recovering from a steep early decline, with people selling on the bad news.

My bet is banks will feel sorry for not wanting UTVG's shares at $2.90.

Someday UTVG will be able to move to the AMEX and then it will be a whole new different ball game. At least this is my long term expectation.

I think most people here knows SILC reasonably well.

It's obvious that the stock is bearish from a technical standpoint, as one can see in the following chart:



Down 71% in about 8 months. What happened?

Well, fundamentally, nothing very dramatic happened. The company just didn't keep growing very fast on a quarterly basis, as it reached a plateau in EPS, between $0.25 and $0.28 a quarter.

So, the p/e multiple came down from 28 or so to the current 8 or so.

This last fall, from $13 to $8, was due to the downgrade la-onda posted above (and I've attached the complete analysis). The analyst didn't have much to complain about, he was just fearful that SILC's major costumers, Cisco and Riverbed, were slowing down orders. ARUN is also another company which is probably SILC's costumer, at least it is in the same area as RVBD.

Well, I was bearish in ARUN and RVBD because those stocks seem so way overvalued using the usual metrics. But it seems I was wrong, as you can see in the following two charts, these stocks are making bullish technical signals:





Now, I don't understand very well why they're turning bullish, but the fact is that they are, and this should put a more positive spin on SILC. This still didn't happen, as SILC has been going down every day, but I guess it will happen sooner rather than later.

SILC is now a $56 M market cap company, with revenue of $28.4 M over the last 12 months. The company also earned $1.04 per share in the same period, so its trailing p/e multiple is 7.9. I believe it doesn't make much sense to value SILC's costumers at 100 times earnings (RVBD), or negative p/e (ARUN) and at the same time, value SILC, the company providing them products for them to do what they do, at just 7.9 times earnings.

If the costumers grow, SILC will also grow. So, why the differences in valuation? It isn't because of recent numbers, because if SILC experienced a slowdown, others saw an even more meaningful decline in revenue and EPS in Q1 08.

I've missed several stocks which at some point were very attractive because I was fearful. I'm going to get more confident and recommend bargain hunting SILC at this point. The balance sheet also provides safety, with $26 M in working capital and $19 M in cash (good for a $56 M market cap company).

The plan is:

Add SILC to the Main at today's opening price, 6.66% of capital as usual.

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One of the main concerns I always had on DIVX (back when Ramsburg loved the stock) was the possibility of dilution after the IPO. Well, that never happened, in fact, the company has been buying back its own shares aggressively in the open market (1.4 million shares bought back in Q1 08 alone).

The cause for the 81% top to bottom drop was simply and mainly due to ... an earnings multiple contraction. Really, more than the change in fundamentals, what seems to move stocks over the medium term are changes in the valuation investors are willing to attach to a certain company, which depend heavily on their animal spirits, or confidence to invest. Now, the level of "confidence to invest" and its changes are hard to measure.

Buffet has a curious line on this subject, which is: "Be fearful when others are confident and confident when others are fearful". He usually buys low p/e stocks, giving him what he calls a margin of safety. I guess that if stocks have a low p/e, it is because investors are fearful of the future, and therefore one should be confident.

Of course, this doesn't work all the time (I still didn't learn the distinctions there are to make, in order to know how to differentiate good low p/e stocks and bad low p/e stocks). Well, I feel I still don't know what is a good stock and what isn't. This game is a lot more complex than I initially thought. Maybe someday I'll learn enough, and the game will be as easy as I thought when I made my first trade in 1996.

Well, but this is about DIVX.

According to analysts estimates, and I agree with them, DIVX will earn $0.74 per share in 2009. It is therefore valued at 12 times forward earnings. This compares to a p/e of 50 around the company's IPO and an historical average of 24.5:



And the company continues to grow its global market share:



I'm not going to explain much further why I like DIVX, because it is explained much better in the three analysis I'll attach. If you're interested in these analysis, download and read them.

If you're not interested, there's no problem at all.

The plan is:

Buy DIVX around the open, 6.66% of capital, as usual.

de

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Quote from: soxguy on May 08, 2008, 12:15:30 PM
Anyone still in? I am. Up today.

Good to know, but why?

Are you holding because:

1 - You're still losing and don't want to sell at a loss
2 - Volume has remained high and the stock didn't react all that bad to the revenue and earnings miss reported in Q1 2008
3 - You're expecting news of an AAPL/IMMR licensing deal before selling
4 - You're a long term investor and still see lots of upside in IMMR's value, despite the company selling its mobile licenses for $0.05 per mobile phone (instead of the $1 per phone I initially thought)
5 - All of the above
6 - None of the above

Thanks for your help soxguy, after seeing what you've done with SYX and TBSI I just want to learn.

By the way, after the earnings release, one of the analysts following the stock published a comprehensive report which I'll attach. He explains why an AAPL/IMMR licensing deal would probably be worth about $2 per IMMR share over the long term. He also gives some highlights on the conference call (for example, there was a new design win in the automotive sector - and IMMR is about to collect $3 - $5 for each car sold using its technology, which can be bigger than the mobile market - maybe this is part of your reasoning?)

Just leaving the report and updated chart, good luck

QuoteNice numbers! 49.00AH!

Yep, awesome results, 36% better than what the one analyst following the company was expecting:



If TBSI just does as well in the upcoming three quarters as it did in Q1 2008, it will report $1.62*4 = $6.48 EPS for the full year. The analyst following the company is expecting just $5.02. I guess he'll have to raise his full year estimate, after this significant positive surprise in Q1.

I'll post the report on this thread when/if it comes out.

This one is another for my wall of shame, which is starting to get pretty extensive.

Congrats to anyone still holding

de

QuoteWe're not out of the woods yet, but I think this is just the bottoming process running its course. 6 months down the road we'll be at all time highs and sellers at this point will be scratching their heads, thinking "how did I sell that stock for 6 times earnings?"

Not just scratching, banging my head on the wall.

QuoteI have a big book here, which is this:

Contrarian Investment Strategies: The Next Generation, by David Dreman

The author shares an extensive study covering thousands of stocks for several decades which concludes that low p/e stocks are the best long term category of stocks. He defends this happens because analysts and investors are many times wrong in their predictions of the future and positive surprises is what propels stocks to move higher.

I guess I'm going to have to read this book again. Pages and pages of work down the tube due to weak hands.

Anyway, mistakes don't exist, they just point the way.

QuoteNice numbers!19.00 AH!

• InPlay: Systemax reports Q1 EPS of $0.52 vs $0.37 last year; revs rose 7% YoY to $725 mln - no ests
Briefing.com (Thu 4:05pm)

Congrats on this one soxguy It looks like SYX is really going to make $2 EPS or more in 2008 like I always expected ... but I was thrown out of board due to weak hands. I wonder if this has happened also due to the pressure of writing about stocks everyday, not having the ability to just turn off the computer and walk away. There's a reason why Buffet doesn't look at stock prices everyday ...

Still no analysts following SYX, a $600 M market cap with $2.8 B in revenue in 2007, it's weird. Maybe analysts just don't trust SYX's accounting practices and they're afraid of putting their feet in the water.

Again, congrats soxguy!