My biggest position, SWKS, was also my biggest position last month … It now is at a position size of 21.3%, a price of $82, and a PE of 15.5, and a rate of growth of earnings of 63%. Note the huge disconnect between the PE and the rate of growth! There has been NO company specific bad news. I’m trying to keep my position size under 22%… snip…
AMBA, my next stock, is the exception. AMBA was fifth last month at 7.6%. and is now ninth at 5.5% … I wrote last month that I’m not tech savvy enough to be able to judge AMBA’s growth prospects going forward, in spite of all the recs and re-recs from various MF services, and it was because of this that I somewhat reduced the size of my position. If it does well from here, I have enough to profit nicely.
I always appreciate your posts. Just curious about your comment on AMBA and not being tech savvy enough to judge it’s growth prospects as it might relate to your SWKS position. Could you talk a little bit about what it is that allows you to be so confident with SWKS whereas with AMBA you’re a little less sure? Thanks! Appreciate your insights.
This is a good question, and I was tempted at first to say that it was just the emotional way I felt about the stocks, but I realized that there was more to it than that, lots more.
AMBA was growing very fast but was reliant for 30% of its business on GoPro, a company already exhibiting weakness, and perhaps in a business (sports cameras) about to go into a total nosedive.
SWKS had Apple for a major customer, but Apple is very successful, smart phones aren’t going to go away, and SWKS is in every other smart phone manufacturer as well.
Some of AMBA’s other businesses are a bit unsure: television sets only benefit up to a certain amount of discrimination, after which the eye doesn’t see it, meaning “good enough” cheaper competitors could provide competition. Drones: what kinds of restrictions will be on them? Policemen: How many policemen are there in the country? and how many will end up wearing cameras. This causes a certain amount of uncertainty. On the other hand I haven’t sold any of my remaining AMBA, and my current belief is that AMBA will come out the other side of this valley that they are going through, growing well again.
SWKS provides a money-saving, and time-saving, and expense-saving, solution for every smart phone manufacturer, but also for internet of things manufacturers, so they seem to me to have a lot more security, which is why my position is four times as big in SWKS than in AMBA.
Hope this helps, and please remember that I have been wrong before, and I may be wrong about all of this, but it’s my current opinion.
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