This actually has nothing to do with earnings, the earnings are just a bad timing part of it.
Yesterday I was listening to the radio and a local guy who is very smart mentioned that he is taking 50% of his investments to cash. Now, I’m not doing that, but it made me reconsider whether I want more cash in my port.
Also, I have heard Cramer say that when you have a stock go up a lot, you should take some profit. No one ever got hurt taking a profit.
And when I consider everything I own, I think AMBA is the riskiest stock in the mix. It is not a large percent of portfolio, but it’s about 10k. And I decided, hm, I’d rather have 10k in my pocket than 115 shares of AMBA. That’s a fair trade.
So if the limit order makes it through I will be out of AMBA. I can goof off writing puts for it.
This is like trading talk. I know. I think the best part of AMBA is the possibility of police cams, and drones. Honestly I think GoPros are kind of stupid. I have one sitting on my husband’s dresser drawer and I have zero desire to make videos with it. His parents got it in some sort of raffle and they never use it either.
I can look at Skechers and Bofi and although I don’t know those companies extremely well, shoes are very practical, and it seems that BOFI writes a lot of large mortgages in on the west coast and those two things seem more durable and a lot less sexy than drones and Go Pros.
The timing sucks. I could have done better. I don’t know if I will be out of AMBA or not with the market today (always use limit orders) but I still will have made a lot of money on it because I started with it back when it was a paid service recommendation, a long time ago, when the stock was in the 20s.
I’m feeling a want for more stability and less sexy.
If selling AMBA takes you to a more comfortable place and lets you hang onto more of your portfolio in a down market, it is probably what you need to do. I’m sure others will tell you to write down your feelings, keep a record of why you sold. I sold BOFI on Friday in order to think about it more calmly. I bought 1/3 back on Monday and have another limit order in.
As to AMBA, I did my part for you, bought it twice after hours yesterday ($81.00 and $80.60). Buyers and sellers make a market I’m still cash heavy so that made it easier.
Please note that I may be completely wrong about this, but I added to my AMBA position at $79.80 today. It’s actually fallen two dollars more subsequently. The fall in price of $17 or $18 in two days in response to earnings that were up 138% year over year, and up 24% sequentially, and revenue that was up 79%… that’s revenue(!)… up 79%! seems like hysteria to me rather than any reasonable response. At the current price they have a PE of 26.3! And growing that fast!
Please take into account that this is just my opinion.
I did the same. In addition to after hours yesterday, I added a bunch more today at $77.40. I thought about a larger order which would take me to 18%, but settled on raising it to 13%. AMBA is my highest conviction company so it deserves that much at this price, IMO.
Added at 75.50 after readings UtahChris’s explanation of the combined quarterly results, using this quarter and guidance for next quarter.
A 15 percent drop seems over the top to me, however one of my little quirks, that Neil talked about in his great post on personality is that I always make the assumption that Mr. Market knows something I don’t.
So thanks to all for the great ideas and support that come from this board.
Between last night AH and this morning (mostly this morning), I doubled my position in AMBA. I had to sell some BOFI to do that, but I think BOFI is roughly fairly-valued right now and it was my second-largest position (now it’s my 4th), whereas AMBA looks very under-valued to me. Could be wrong, of course.
I think the point here is that there is no ‘slowdown’ in growth. Some growth has temporarily been shifted from Q3 to Q2. A hiccup rather than a slowdown.
I would agree that a shift to getting revenue sooner is not a hiccup but a benefit. Just imagine if they had said that the product launches would be a quarter late!
A shift from Q3 to Q2 is better for several reasons:
Confirmed that AMBA chips are in the new GoPro camera. Without the product launch there is always a chance that GoPro could switch vendors.
Same as #1 for Xiaomi.
Receiving orders, cash, sales, etc earlier is always better that receiving it later. Orders/sales in the future are just possible orders/sales. Recall that Q2 was higher than expected. Now that’s already in the bag. For Q3 things could still go better than expected. I wonder how many people are going to buy drones and home security cameras this holiday season. The US economy continues to recover, gas prices are lower, more people have jobs. wages could still increase; all these things might lead people to be more of a spending mood and they just might choose to buy someone a drone or home security camera system.
Too many Chris’s. In my early post on this thread I said “after reading UtahChris’s post on the combined quarter and next quarter guidance” and I should have credited GauchoChris, but hey all you Chris’s look alike to me.
AMBA had already fallen from mid $120’s to mid/high $80’s yesterday and end of last week. I KNEW they were going to report a strong quarter. I WAS right. So, knowing they were going to report a strong quarter, and prove that they are a more valuable company, I bought some additional shares in various accounts over the past couple weeks between $87 & $95. Of course, I THOUGHT, “AMBA shareholders will be rewarded with increased share price based on this stellar growth in revenue and EPS.” NOT! However, AMBA has PROVEN that it is growing well and I am CONVINCED that with longer term and patience I and fellow shareholders will be the beneficiaries of a more valuable company with share price appreciation to VALIDATE it. Therefore, I bought a fair bit more today at $78.48.
I have heard Cramer say that when you have a stock go up a lot, you should take some profit. No one ever got hurt taking a profit.
Or did they?
You don’t really define what “a lot” means in that statement, but let’s say it’s a 20% gain. Given Cramer’s hyper style, that wouldn’t surprise me at all. What happens to your investment over time if you decide to take profits every time the stock price goes up by 20%?
For a real-world example, let’s say you bought 1000 shares of Apple ten years ago for $6.19 split-adjusted. Today, as I write, it’s at $110.93, which still looks dirt cheap over 1700% later. What would be the difference in your returns if you decided to take profits after every 20% rise, trimming it back? Someone can double-check my math (I certainly make no claims to having math skills), but here’s what I get:
Total value of profit-taking portfolio today: $59,007.21 (with 448 shares remaining)
Total value of held portfolio today: $110,930.00 (with 1000 shares remaining)
That’s a massive difference! Almost double. And I’m completely ignoring taxes and commissions, which of course would just widen the gap even further. Think about the practical implications of that: if you’re saving for retirement, you’d have to wait twice as long simply because you decided to take profits along the way!
Hi Neil, I’ve heard him say it a couple ways – 1) take off your money when you get a double, so you play with the house’s money, and 2) trim when you’ve got a 50% increase. So it doesn’t sound like a hard and fast rule.
Does the 50% vs 20% change what you said? It should close the gap a bit.