3SOF

Quote from: yukiii on April 25, 2007, 07:33:23 PM

Quote from: ravenquork on April 25, 2007, 06:51:05 PM

Quote from: David Randolph on April 25, 2007, 05:38:58 PM

Quote from: yukiii on April 25, 2007, 05:01:44 PM
DAVID
I was in SILC back when it was $4 sold at 9 went back in at 7 then $15. But that how I trade.
I learned along time ago to book your profits in small caps as they always correct when they get ahead of there value.

I think you are fooling yourself if you think that you can keep a portfolio of 10 small caps and keep them over time.

I would set reasonable values then sell and buy other stock ready to rise, and keep the cycle going.
Sure you can keep some of your over valued stock if you want, but you just can't sit on these profits or they will go down.
Why not compound your profits?  Just some advise, I've been doing this for 40 years. I am not knocking you or your research, I just think ther is room for improvement.

yukiii, I'm compounding my profits, are you?

40 years is a very long time. If you had started with the paltry sum of $1,000 and had an average annual return of 30% with your swing trading, you would now have $36,118,864 in your trading account. That would make swing trading now nearly impossible or not worth the effort.

Most big caps started by being small caps.

I have 40 years of investment ahead of me (barring health problems) and I want to achieve a 30 - 40% average annual return on my investment, and the only way to do that in a consistent manner is by applying and respecting a long term investment strategy.

Honestly, I bet you wish you had my strategy 30 or 40 years ago. I'm sure you would be so rich now you wouldn't care about short term movements in stocks, you would be too big to take advantage of them.

Thanks for the nice talk and advice yukiii, I want to know and learn from your experience.

Just to put a perspective here, SILC is just about where it was three days ago.  The data does not seem fundamentally changed at this point.  One quarter doesn't make a trend, unless there is a substantial change in the Company. SILC is still growing into new markets and has invested in the personnel and marketing to continue growth.

yukiii - what do you see as fundamentally different?

Many of these stock get way ahead of there value, in my opinion SILC growth will slow down and PE will go lower, so get out on the big run up or before.
SILC .49 2006 2007 .88 est  don't think 2008 will be more then 1.00 so as you see growth will slow.
But what do i know? the story is already out...........

Can you also say why do you think 2008 won't be more than 1.00? Like David said, SILC is still growing into new markets, so please enlighten us why your view is so pessimistic??
This isn't a yahoo board so please explain your theory/reasoning, you almost never do this! 

I agree with Se7: we all share knowledge and learn from each other here. We should accept blatant facts, but provide arguments to speculations.

It is very interesting to hear the position of Yukiii and buddjas1, but since we are not mind readers it would be very helpful to see the reasoning behind their decisions and claims.

Thank you folks.

Quote from: berloga on April 26, 2007, 09:30:40 AM

I agree with Se7: we all share knowledge and learn from each other here. We should accept blatant facts, but provide arguments to speculations.

It is very interesting to hear the position of Yukiii and buddjas1, but since we are not mind readers it would be very helpful to see the reasoning behind their decisions and claims.

Thank you folks.

I already gave my reasons.  But, here it is again:

"$.22*4*25=$22

I'm not sure SILC deserves a higher PE multiplier than 25, at least not based on Q1 results.  I would think about buying again perhaps under $20. 
I think SILC is just an example of a stock that got a little to ahead of itself.  I'm sure there will be a nice run up before Q2 release, but I don't have the patience to wait until then."

Note that the stock is now trading just under 22, exactly where i think it should be.

Quote from: buddjas1 on April 26, 2007, 09:47:15 AM

Quote from: berloga on April 26, 2007, 09:30:40 AM

I agree with Se7: we all share knowledge and learn from each other here. We should accept blatant facts, but provide arguments to speculations.

It is very interesting to hear the position of Yukiii and buddjas1, but since we are not mind readers it would be very helpful to see the reasoning behind their decisions and claims.

Thank you folks.

I already gave my reasons.  But, here it is again:

"$.22*4*25=$22

I'm not sure SILC deserves a higher PE multiplier than 25, at least not based on Q1 results.  I would think about buying again perhaps under $20. 
I think SILC is just an example of a stock that got a little to ahead of itself.  I'm sure there will be a nice run up before Q2 release, but I don't have the patience to wait until then."

Note that the stock is now trading just under 22, exactly where i think it should be.

The problem with that reasoning buddjas1 is you're not considering growth. You're considering SILC EPS will be flat throughout the year, and that has not been the trend. From what I heard on the conference call I expect strong revenue and EPS growth going forward.

Anyway, with the stock down 8% today I feel the pain of not taking profits yesterday, even though I knew the stock would go down. It's so hard to be a long term investor, it has to be right

If you, buddjas1, will buy SILC at or slightly below $20, say even $19, your expectation for its growth this quarter will be to reach $22 and you collect ~15% profit on the trade. Well, too cheap.

Secondly, you assign a PE ratio of 25 to SILC saying it does not deserve to match its peers' 36. Why? Well, based on the earnings. Sorry, they only expect 80% growth, not 100% as expected. Please compare SILC to its competitors and put the numbers down for their respective growth scenarios and then see which one is a more promising stock:
                                                           SILC        company A         company B
1) revenue and profit growth               x%              y%                      z%
2) PE ratio                                            a                 b                         c
3) dilution factor                                   1.1              n                         m

You can add more rows here. But once you compare you should see a reason to sell or buy and hold. I still do not understand your logic,

1*2*3=6 is not a good proof to me! Sorry, I am an engineer.

Quote from: David Randolph on April 26, 2007, 10:37:10 AM
The problem with that reasoning buddjas1 is you're not considering growth. You're considering SILC EPS will be flat throughout the year, and that has not been the trend. From what I heard on the conference call I expect strong revenue and EPS growth going forward.

Anyway, with the stock down 8% today I feel the pain of not taking profits yesterday, even though I knew the stock would go down. It's so hard to be a long term investor, it has to be right

No, I am considering growth.  Thus, the PE of 25.  That PE is much higher than the S&P average.  If I thought no growth, I would assign a PE of 10-15, maybe less. 

Quote from: berloga on April 26, 2007, 10:46:51 AM
1*2*3=6 is not a good proof to me! Sorry, I am an engineer.

You forget that the market is not made up of millions of engineers.  I prefer to think like the market, think simple. 

I used to be an engineer, by the way, so I appreciate your statement.  However, the ends justify the means and, today, the market agrees with my "not a good proof."

Thanks David for commenting on the situation of SILC today. I am holding SILC. And I will continue to hold SILC. I just can not look at my streamer anymore. 

By the way, I think dnickers and I are related. 
Have a great day David and may the Force be with you!

Quote from: berloga on April 26, 2007, 09:30:40 AM

I agree with Se7: we all share knowledge and learn from each other here. We should accept blatant facts, but provide arguments to speculations.

It is very interesting to hear the position of Yukiii and buddjas1, but since we are not mind readers it would be very helpful to see the reasoning behind their decisions and claims.

Thank you folks.

I don't provide detailed explanations because it very obvious what the value is. Just read the 10K or press release. I know you don't like the truth but SILC will have to do alot better , and I don't think they will from my experience. The money was made when they hit $4 and made there run to $25.
There is a flaw in the way you put values on stocks, you assume there growth will keep increasings
and that is not true for most of them they will slow. Its nice to be positive but we need some real world figures. I can't prove that SILC  won't grow 40% a year but the hints are there that they will not.

QuoteI don't provide detailed explanations because it very obvious what the value is. Just read the 10K or press release. I know you don't like the truth but SILC will have to do alot better , and I don't think they will from my experience. The money was made when they hit $4 and made there run to $25.
There is a flaw in the way you put values on stocks, you assume there growth will keep increasings
and that is not true for most of them they will slow. Its nice to be positive but we need some real world figures. I can't prove that SILC  won't grow 40% a year but the hints are there that they will not.

You think growth will slow because you're bearish on the general market and the world economy for that matter. But the market has been showing bulls are right. Of course, there will be setbacks and corrections, but no doubt we're in a bull market.

Quote from: Houlahan on April 26, 2007, 10:54:05 AM
Thanks David for commenting on the situation of SILC today. I am holding SILC. And I will continue to hold SILC. I just can not look at my streamer anymore. 

By the way, I think dnickers and I are related. 
Have a great day David and may the Force be with you!

Hi Houlahan, it's funny that you and dnickers are related. Do as Warren Buffet does, he doesn't have a quotation system in his office and never looks at intraday quotes (not even daily quotes). And he's the most successful investor ever, isn't that strange?

QuoteNo, I am considering growth.  Thus, the PE of 25.  That PE is much higher than the S&P average.  If I thought no growth, I would assign a PE of 10-15, maybe less.

SILC's growth is also much higher than the S&P 500 average. In fact, it is about 10 times higher.

It seems Broadcom, a $16.5 B company, is one of SILC's clients: http://www.silicom.co.il/pgx.php?p2=410

Technically SILC can dance all it wants, as people take profits/losses, but over time, fundamental trends will probably persist and the stock represents great value in my view.

After listening to the Q1 2007 conference call, specifically the comments on operating margin going forward, I made some revisions to my valuation model:



1) I inserted a dilution factor of 1.0834, which was the share count growth over the last 12 months on a fully diluted basis, from 5,218,000 to 5,653,000 (8.34% increase).

2) My revenue growth estimate is 84% going forward. Revenue grew 84% in Q1 2007 when compared to Q1 2006. I don't see any reason for growth to slow, quarterly revenue is still relatively small at $6.049 M in Q1 2007.

3) I increased my net profit margin estimate back to 25%. This is because the CEO specifically said there's a lot of leverage in SILC's business model, and as revenue grows, costs will never grow at the same pace, hence operating margin (and net profit margin) will continue to expand.

4) The earnings multiple I have for SILC is 36.95, which is the current Networking & Communication Devices industry average. SILC is growing a lot more than its industry peers, since the industry's revenue grew 14.9% from the year ago levels and SILC's revenue grew 84%.

Given all this, SILC will be a $128.88 stock by the end of 2009. And this means the optimal selling price today is $82.57 (that would be the price where the return would start being less than 16% a year for the next 3 years).

So, as I said previously, the stock may dance, try to scare or bore me, that I'm not even here. I'll keep holding SILC with strong hands.

Do as Warren Buffet does, he doesn't have a quotation system in his office and never looks at intraday quotes (not even daily quotes). And he's the most successful investor ever, isn't that strange?  (The color pink did not show very well-so I changed it)

Ok David. Not sure how Mr. Buffet can do that. I guess his picks are slow and conservative.
I feel the need to check my stocks. Maybe I need to keep the Newbie title. lol
Well, with SILC, just call me Ms. Warren.

Support $17

QuoteOk David. Not sure how Mr. Buffet can do that. I guess his picks are slow and conservative.
I feel the need to check my stocks. Maybe I need to keep the Newbie title. lol
Well, with SILC, just call me Ms. Warren.

Ok Ms. Warren, he does that because he only cares about fundamental information. He doesn't change his opinion about a business or the attractiveness of a stock by looking at its chart. When he buys a stock he's concerned about it years from now, not the next few days, weeks or months.  So he's interested only in information that may affect or confirm his long term outlook, not daily fluctuations in share prices.

Quote from: yukiii on April 27, 2007, 02:05:33 PM
Support $17

Why not $15, so you can buy back the stock just a bit lower than your selling price?

I don't see $17 as a possibility, and will use a PEG Ratio analysis to demonstrate it:

PEG = (Price/Earnings Ratio)/Annual EPS growth

Let's consider the following EPS growth rates for SILC going forward, which I believe are quite reasonable:



These estimates give me a 2011 EPS of $4.74 and an Annual EPS growth rate of 57.44%. This means the PEG (5 yrs expected) is:

21.89/57.44 = 0.38

The Networking & Communication Devices industry average PEG Ratio is 1.52. If SILC trades at an average valuation in terms of PEG Ratio, it would then be a (1.52/0.38)*$21.45 = $85.8 stock.

My take is SILC, because of its growth rate (for example, in Q1 EPS grew 100% from 2006 levels), should be warranted a much higher than the industry average earnings multiple. And from what I've listened at the company's conference call, its revenues are recurring, since a design win gives revenues for about 3-5 years, and the possibility of the company winning the next design win with its existing clients is very high, because it would cost a lot (to the clients) to change their supplier.

The company currently has 45 design wins, but it is talking with 100 more companies. In terms of the WAN optimization market, the CEO said there are 12 - 15 players in that sector now, and 6 of them are SILC's clients already. So SILC is very well positioned to take advantage of this sector's growth.

A company's director knows this quite well, since he has been buying shares in the open market all the way up, and only took profits in 10,000 of his 255,000 shares when results came out. At current prices he'll probably restart buying again.

I'll keep holding SILC.

I was reassured over the latest conference call, when SILC's CEO explained the recurrence of the company's revenues. Every design win means recurring revenues going forward, and this makes me a believer in the long term future of this small Israeli company, with 78% of its sales in the USA.

I expect SILC to easily earn $1 per share in 2007. Given this estimate, if SILC trades at the Networking & Communication Devices industry average earnings multiple of 33.39, it will close 2007 around $33.39. But just compare SILC's growth rate with its industry peers, and its profitability in terms of operating margins. SILC should clearly trade at an above average multiple.

My opinion is a multiple expansion will take SILC beyond $30 over the next 6 months or so.

Considering the valuation model applied to SILC, which I believe is estimated conservatively at this point, tells me the optimal selling price given by an extrapolation of current fundamental trends is $74.61. I'll continue holding SILC.

It seems Robert Sussman, a SILC director, is making short term trades on SILC shares, but increasing his position on balance, since he bought 2,000 shares on Friday and sold 600 yesterday:

SEC form 4 filed today

By his actions this director is showing SILC's future in financial terms will probably be better than the recent past.

I have nothing to change to my long term valuation model. I'll keep holding SILC.