Does anyone else wonder what the investors were thinking about two months ago, when the price of AFOP dropped to a low of $11.50 (from $23 where it had been six months before). And now, it’s up 70% from the bottom to $19.60 when everything else is cratering.
This is an insane market. The same information that has pushed up the price to $19.60 was available when the price was $11.50. The company said what their revenues and earnings would be, and came pretty darn close to hitting it, underestimating just a little bit. The outline was all there. Why did anyone sell at a price of $11.50?
I imagine in several months we’ll be asking why anyone was selling other stocks at the prices we are seeing now.
I imagine in several months we’ll be asking why anyone was selling other stocks at the prices we are seeing now.
Yes, Saul. I didn’t understand the drop in AFOP either. When a company with no debt, fast growth, and pretty good prospects trades to a P/E of 11 you need to take advantage. Thanks again for bringing it to our attention. I now have a 4.6% position in AFOP and if you include the money I’ve made on trading the shares and options, my cost basis is effectively below $10. Wow! That’s a 100% return in 2.5 months. Thanks Saul!
Now, the shares that currently don’t make sense are SYNA (which just reported great earnings and forecasted good growth) and UBNT. SYNA traded as high as $71 in after hours trading on the day they reported earnings. I expect the stock will be much higher not too long from now. In fact, I bought some more today so my stake in SYNA is now 6.9%.
Regarding UNBT, once I learned that their exposure to Russia and Ukraine is minimal, I bought some more today. A good reason for adding is that their customers love them so much. I expect that they will report good earnings on May 8th.
Both of these companies are in the tech sector which is getting battered. But I believe that the market will soon realize that because these two companies continue to show great revenue and earnings growth that the stock is mispriced. For now, we can take advantage.
Yes, I have only 4.25% in AFOP, but that’s not bad. I also added today small amounts to my positions in SYNA and UBNT in spite of them being my 1st and 3rd biggest positions. Probably not smart, but none of my positions is 10%, or even 9%, so I’m not really breaking my rules.
Thanks again for the information on UBNT, which helped me decide to add some.
I also added to JCOM, PFIE, Pandora, and AMBA when the prices were real down.
Does anyone else wonder what the investors were thinking about two months ago, when the price of AFOP dropped to a low of $11.50 (from $23 where it had been six months before). And now, it’s up 70% from the bottom to $19.60 when everything else is cratering.
This is tough to figure out. But let me make an attempt. I think most investors are more comfortable to buy a stock when its price is moving up. This is because when a stock price is going up, it often is accompanied with some sort of euphoria and irrational exuberance. Everything seems to be rosy and pundits are everywhere singing praises of the stock, the segment, or the market. A lot of exaggerations, a lot of bold estimates or predictions, a lot secular trends, a lot of this-time-things-are-different analysis as if the tree is going to grow to the sky. The strength is magnified and the weakness is overlooked. Everyone and his brother are talking about stock and people are afraid of missing the boat. So people become greedy.
On the opposite side, when a stock is going down, often time it is accompanied with reduced estimates, slower growth, and all pundits are there throwing mud to the stock, the segment or the market. This time the weakness is magnified and the strength is overlooked. It feels as if the population have decided collectively that they are going to stop using social network sites or stop buying from Amazon or they are going to quit using the internet or stop eating out… Fear sets in.
It sounds simple but it is difficult to actually be greedy when others are fearful and be fearful when others are greedy. Myself included.
This is why, I think, there are few truly successful investors.
By the way, technical analysis maybe is based on the understanding of this type of investor psychology. It predicts that when a stock is going down, more people will be selling and when a stock starts to move up, more people will pie on.
I also added to JCOM, PFIE, Pandora, and AMBA when the prices were real down.
Saul,
I’ve been buying too. I’ve hesitated adding to my already large AMBA position because I think they may have a large exposure to Russia. An invasion of Ukraine which seems like a real possibility will surely lead to increased sanctions which may block sales into Russia by American companies. AMBA’s 10-K calls out Video Capture Devices and specifically mentions the Russian market. I’ve sent a message to their IR department asking them their estimated exposure, but have yet to hear back. However, given that AMBA sells to OEMs will likely make it much more difficult to determine AMBA’s exposure to the Russian market.
Saul you said it. I feel very out of touch with this market. Mr. Market is swinging between depression and euphoria more quickly than I can ever remember.
I think you have the right idea, it really does not matter why it happened. When Mr. Market gives you a gift, take it.
A strange world indeed. Though, I just had 2 family members call me to tell me they were finally selling their APPLE stock when it went up last week to $560 or so. I successfully pleaded that they not do that now.
I think it’s easy for many people to make decisions from price movements alone on a stock . Big mistake but easy to do unless you have some training like what we are getting here.
And Saul is the guy that spotted this AFOP anomaly and aren’t we glad we spotted Saul?
I was reading the annual report for AFOP tonight. I like the compensation structure. The top people are paid mostly with RSU, very little cash. I think that will make them aligned with shareholders, as long as the amounts are reasonable.
I also did not know that Foxconn owns more than 17% of the company and the Chairman owns over 10% himself.
Ps mykie happy ballon. I don’t remember seeing a single ballon before, I am guessing you have been with TMF for one year today.
Ps mykie happy ballon. I don’t remember seeing a single ballon before, I am guessing you have been with TMF for one year today.
Thank you Flygal…I think that’s a high 5 after your name.
Mykie
PS I’m not sure if it’s been a year or not as I started with one service, dropped it, came back for another and then morphed into One for the whole enchilada…but I like the purple baloon.
After the massive increase in share price, what are your thoughts going forward? The guidance for next quarter revs is slightly higher sequentially, but comps are going to get very difficult in a few more quarters. I am considering taking some off the table.
We have house guests and I have had hardly any time to look at the market for the past several days, so I can’t really answer your question adequately, but I have to say do what you feel is best. If you are uncomfortable with the current price and want to sell a little, that’s your decision. I haven’t sold any, but that doesn’t mean it’s the correct thing to do.
Thanks for your take. I am holding for now as I believe that even a drop in rev growth to 20-25% would be plenty to justify appreciation from here. However, we need to monitor the fiber business, which I believe to be very cylical.