I just read an interesting post on another MF board discussing Skyworks, and this post illustrated a completely different model of investing than the one we use here. It made me realize how lucky we are on this board where we discuss and learn about stocks instead of just buying a percentage allocation as recommended by a service, without necessarily learning about the stock at all. This was written by someone who is apparently already invested in the stock at the service’s recommendation, and is even writing puts on the stock, but doesn’t know anything about the business.
The service wrote their take on the last earnings, and it was very well thought out and well written by the way. It pointed out, as we already know from what the company said on the conference call, from the company’s investor’s presentation, and from our discussions, that even higher margins are not only possible but quite likely, due to increasing complexity which is driving out competitors. The poster wrote: That’s encouraging to hear… implying that he was unaware that the company was forecasting higher margins, or why.
The service’s take noted that SWKS sells to all smartphone makers, but that Apple is a key customer. The poster wrote in response Aha…so it sounds like the big risk is customer concentration. Sounds like AAPL is a major customer of theirs. Any idea what % of revenue AAPL accounts for? Do they also have chips in Android phones?..I would be concerned if they only sell chips into iPhones…I think I still don’t fully get the biz model here…so half the business deals with chips in smartphones, e.g. iPhone, and half the business deals with chips in connected smart devices, aka Internet of Things…am I right there?
I feel like a bit of an investing snob, I guess I must be a bit of an investing snob, but this investor sounds like he or she doesn’t know the most elemental, basic things about the company. It’s hard to imagine one of us buying a 4.5% position in a stock without knowing anything about the company. Yet this poster has invested in Skyworks, and is writing options on it, as he made clear, simply on the service’s recommendation:
Glad to know at least I’m not the only one writing puts The ‘yield’ on them and the underlying valuation seems equally rich… …Those numbers tell me that the price could be a bit rich, especially if this is a very cyclical company, which I think it is…correct me if I’m wrong…it definitely doesn’t look cheap to me at least
I understand that this is a service where you are told “We are buying stock ABC. We recommend you purchase ABC for X percent of your portfolio,” and that this works very well for some people, and that that is what they are paying for. (The post I’m referring to actually got a number of recs from other people). However this is such a different model, and it seems so entirely foreign to me, that it just jumps out at me when I encounter a post like this.
I also know the service often makes excellent picks, and that I would never have learned about SWKS if I hadn’t picked it up there, but I feel we are so fortunate to have the kind of intensive discussion of stocks and investing that we have here. I for one prefer to invest knowing about the company, what it does, and what its business is! I want to thank all of you for all that you contribute to this board. I’m indebted to all of you for helping me to understand what goes on with our companies! There have been so many really special and personal contributions on this board that it’s positively amazing. I’m thinking of simple things like oologah’s reminiscences of what a drone would mean on a farm in helping to evaluate AMBA’s potential, and Karen’s ferreting out that AMBA chips are in the Lily drone, as well as the many sophisticated company write-ups that members have contributed here, that are often at least as informative of those of any paid service. Thank you all again. You are a great bunch of people and I feel very lucky to have you contributing to my board.
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