Anyone still believe in the bad fairy?

Does anyone still believe in the bad insider-selling fairy, after AMBA was up $6.50 two weeks ago, $11 last week, and up $13 this week?

The other source of worry, INFN has not been as spectacular, but is up from $19.68 to $21.51 in the same three weeks.




Nope - not here, but of course I didn’t pay any attention to the insider selling nonsense in the first place. I never do.

But there’s the “Hot stock of the moment” detractors. Here’s a Seeking Alpha article of this ilk,…

The gist is that it’s great party, but like all good things it will end soon and everyone at the party will feel bad. This particular argument is built on a very fancy graph entitled “The Adoption Curve” (which makes absolutely no sense to me).

This is the same story as the one we hear about the end of the bull market. Say it often enough, long enough and eventually you will be right and most people will not realize how many times you got it wrong.

It amazes me how people can make such strong arguments in order to make sure they miss out on good investments.

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No - I paid no attention to it. The stock price though I am watching. This could be a bubble and even if the investment thesis remains valid (a profitable business growing strongly). If the valuation becomes so high that it is divorced from current AND future growth reality then it has to be a candidate for selling. I don’t think we are there yet with Ambarella but I am worried we might be getting there soon with Skyworks.


Hi ant, I think it’s more likely a short squeeze than a bubble. I suspect that the price will back off somewhere along the line, but I certainly don’t know when. I’m sure lots of people thought it was the top after the first $6 rise three weeks ago.



Investors should focus on the basics: like company performance of time (i.e. quarterly), first mover status, innovation in products and services, market share and future potential growth…

The rest is noise…

The other bogie man,of course, was “customer concentration,” in Wintech and Chicony. That issue was completely over-blown as I noted in this post:…

These claims showed a basic lack of understanding of how AMBA operates in Asia. Neither Wintech, as a logistics provider, nor Chicony, as an ODM, have pricing power over AMBA as was claimed by a short and by a TMF analyst when making a sell case.

This case was completely supported by CMFFrankDip’s interview with AMBA CFO LaPlante (as posted on this board above):

He [LaPlante] said that WT Micro is simply a logistics partner that is paid on commission and the higher percentage of business from them in a quarter compared with Chicony causes DSO to go down. Fermi then explained that AMBA owns all AMBA’s inventory at WT Micro and AMBA has direct relationships with all the customers. WT Micro handles the logistics and takes the credit risk and handles the customer payments - for this they receive a commission from AMBA. Fermi explained that it can be hard to do business in China and WT Micro helps facilitate this for AMBA by handling the customer payments. AMBA is the one who negotiates the contracts and the product design with the customers.

When I think about this it makes sense in that WT Micro is selling a lot more than AMBA products to the same customers - so if a customer becomes a credit problem WT Micro has a lot of leverage because they sell that customer many different electronic components.

As in all things in life, it is important to separate the signals from the noise…

Best, Swift…


I am surprised by the vigor and piety with which people profess to disregard insider dealings. It is strange.

It is always a question of percentages. When a director, or more than one director (especially the top ones) sell a very high percentage of their holdings, it is extremely ‘basic’ and it is not ‘noise’. It is clearly relevant. It is rational to look for the motive.

It is equally irrational to aver that is quite definitely of no interest, or of interest only to a moron. Of course it is of interest!

In the present situation of course, directors may be - rightly or wrongly - taking a view on the overall market rather than their company and simply removing their chips from the table. And that would be perfectly rational. Certainly I am seeing quite a lot of it, for example CTSH and VDSI (in which I have holdings). Or there may be another reason, equally ‘innocent’. But is the reason of interest? Of course it is!