I saw what I thought was a price anomaly a little while ago with the price down about $4.50 to $98.30, and I sold what i could of other stocks to add to my already large SWKS position at mostly $98.30 but also some at $98.70, $99.00 and $99.10. Now to see how it plays out?
I don’t usually announce my trades but thought it might be useful to others. Remember that that is just what I did. You have to make your own decision, based on your own analysis.
I’ve been tempted by that same price action but haven’t acted even though my fairly large position, for me (only 4.4%), isn’t nearly as I know your “already large” position is. Do you have the before/after percentage of holdings in SWKS that you would be willing to share?
I saw the drop as well and entered a limit order to buy some more shares in case the price kept dropping. The order did not fill but the day is not over.
My guess, and this is purely speculation, is that some big investment house sent out a negative note on SWKS to its private clients which caused the anolous price drop.
I am with you Saul; I have added another 1% earlier this morning before you posted. However, I would like to add there is a slowdown in 2015 with revenue and earnings. Revenue increased 22% and 22.4% in Q3 and Q4-2014 and now it’s only 6.3% & 8%. Similarly, EPS increased 33.9% and 34.9% in 2014, but now it’s 16.5% and 12.7%. The P/E and 1YPEG are very low, which I like, hence my purchase.
2014-Q1 505.20 5.9
2014-Q2 481.00 (4.8)
2014-Q3 587.00 22.0
2014-Q4 718.20 22.4
2015-Q1 805.50 12.2
2015-Q2 762.00 (5.4)
2015-Q3 810.00 6.3
2015-Q4 875.00 8.0
2014-Q1 0.670 4.7
2014-Q2 0.620 (7.5)
2014-Q3 0.830 33.9
2014-Q4 1.120 34.9
2015-Q1 1.260 12.5
2015-Q2 1.150 (8.7)
2015-Q3 1.340 16.5
2015-Q4 1.510 12.7
I think if you look at that Seeking Alpha article regarding other chip companies forward PE, SWKS appears appropriately priced at this level (as the article suggested).
I did also assume they meant $7 EPS on an annual basis by 2016 which based on their past performance, would seem quite reasonable to expect.
That would put their PE at 14 based on the present stock price of $101…a bit low but not a screaming value play IMO.
Even so, it is reasonable to conclude that should that growth and positive vibes persist into 2016 and beyond, there is every likelihood that a floor has been put in on the stock price.
From a technical perspective:
the stock isn’t flagging us one way or the other but it is still well above its 200 d MA so not a lot of concern here.
No sure how this becomes a 10 multi-bagger at a market cap of $19 Billion but it should produce reasonable returns along with its dividend.
Do you have the before/after percentage of holdings in SWKS that you would be willing to share?
Hi Steve, I now have about 9.6% more shares than I had this morning. I added probably more than I should have, but there it is.
I now have about 9.6% more shares than I had this morning. I added probably more than I should have, but there it is.
Thanks for sharing, that and the original post of your trades on this move (that seems to defy logic; the drop, not your trades).
I did buy a little after the initial drop on Apple’s earnings report a couple of days ago. We’re probably getting a second chance here, but I’m still pondering. I tend to be more reserved on portion size than you are, but I’m working on it.
It feels like after joining S&P 500 with 20B market cap, SWKS starts to capture ‘more noises’ from macroeconomics and market sentiment. (i.e. China, Apple, and the list goes on) I have no intention to change my biggest holding (~10%) in a foreseeable future, but that’s my take for today’s price anomaly.
I doubled-down on SWKS today on the dip as well… bought another batch (doubled my share count) at 98.85-ish, bringing SWKS to a 3.5% position for me. Still not a very big holding, and I am happy to add to it.
Another question or two on your SWKS trades this morning. Share as much or little (or none) as you like.
No doubt people would be interested to know what you sold, but I’m really more interested in your thinking with the buys and sells. Were the sells something you no longer cared to own, something that you expect to buy back soon after a reasonably quick gain on SWKS (since your over-sized position will likely/hopefully get even more over-sized), or something else?
I don’t usually announce my trades but thought it might be useful to others
It was. Thank you Saul.
I saw the action when the market opened and couldn’t believe it so added to my position as well. Glad you had the same opinion Saul!
It’s a lot easier for me though, since I’m just adding from new funds that were waiting. A lot harder/tougher to decide what to sell to generate available funds.
I have made two sales of SWKS but still have a large holding as a result of the astonishing gain. The company came through my screens and still does. But the reason is neither anomalous or illogical. I believe China is two-thirds of sales. My big remaining holding reflects the fact that I do not think there will be a problem (relatively low-cost, highly aspirational end-product etc.). But it is worth remembering that T. Cook and others in similar positions have to polish diplomacy and the kow-tow as a way of life. It is possible his ‘speed bumps’ may turn out to be potholes big enough to drown an ox. Thus I am one of the losers who has trimmed their position recently.
In these high-growth tech. companies, I make moves based on continuing assessment. That is not everyone’s way and of course returns are dramatically adversely affected by tax but it makes me comfortable.
I believe China is two-thirds of sales.
strelna, this is straight from the SWKs annual report on page 138:
The Company’s revenues by geography do not necessarily correlate to end market demand by region. For example, if the Company sells a product to a distributor in Taiwan, the sale is reflected within the Taiwan line item above; however, that distributor, in turn, may sell the product to an end customer in a different geography.
So while you’re right that the company’s financials show two-thirds of sales going to China, that’s because many devices sold globally are assembled in China and then exported. It’s not necessarily because they’re being sold to consumers in China.
No doubt people would be interested to know what you sold, but I’m really more interested in your thinking with the buys and sells.
I sold some of a stock with a very high PE which I thought more risky, and some of another with an average PE but which was very low beta and I felt wasn’t going anywhere in a hurry (and was up on the day, while SWKS was so down).
Thanks Saul. Just before market close I decided to sell some UA, which just moved up recently after reporting to buy a little more SWKS.