What I did during this tumultuous week?

What I did during this tumultuous week?

First, What was I thinking? I didn’t think the Greece crisis and the Chinese stock market running up ridiculously and then retracing half the rise was going to be the end of the world. To put it into perspective, just Apple’s yearly earnings would be a very substantial chunk of Greece’s debt. That’s not their market cap I’m talking about, just their earnings. And the US markets were certainly not frothy. The S&P was up maybe 1% since the start of the year at the start of the week. That wasn’t a lot of froth to sell off.

So, how did I do on the week? I started the week at +35.0% on the year. At the bottom, when my big position in SWKS was way down, and my small position in SEDG was way, waaay, down, I was down 3.6% to +30.1%. (The calculation for that is 130.1 divided by 135.0 = 0.964 = down 3.6%. The key is that, figuring results for the week your starting point is 135). At that point the S&P had slipped into negative territory for the year at about down a half percent.

I finished the week at +34.5% on the year, down 0.4% on the week.

What did I do during the week? I started the week taking a little position in ABMD. I sold my little position in FB for that, figuring that FB was slowing (for 2015 anyway) down while ABMD was accelerating. I like FB, which is why I had a little position in the first place, but I figured they weren’t going far up or down anytime in the near future. (I sold FB at roughly $86.7 and bought ABMD at roughly $65.5. If you are interested, they finished the week at $87.9 and $68.0).

Later in the week I sold my small position in SYNA at about $82.3, and mostly added to my SWKS at $95.6 (staying in chips, but in SWKS, which was down, and in which I had lots of confidence), and I bought a little more ABMD. (SYNA closed at $84.3 and SWKS at $100.2).

Then I sold a little of my small position in CELG, which hadn’t fallen much (at $116.6), and added more SWKS.

SEDG had fallen 24% during the week from $36.1 to $27.5 (and probably more intraday), but as far as I could tell it wasn’t company specific. All the news was good, they signed another big company, etc. It was falling because oil prices were falling and this made all solar stocks fall. I thought this was nonsense. I decided to hold, and it finished at $31.9, up 16% from the bottom, but not back to where it had started the week.

On the other hand, SWIR just seems to be relentlessly falling. I like it for all the reasons that Andy pointed out in post #10139, but it seems to be falling for some reason that I just don’t understand. It’s down from $48 in December to $23 now. I started buying it six weeks ago at $30.5 and bought down to $26.5. I really don’t understand why it’s falling, but I decided to switch some of the funds I had in this small position to some other stocks with a more positive direction. I didn’t sell all of it, maybe slightly more than half. I used the funds to buy a little more ABMD, and added to my small position in ANET. It turns out that SWIR was my only company that had fallen all week that didn’t rebound on Friday, in fact, it fell another 2.5%, on the day that SEDG bounced back 15%, SWKS bounced 6%, etc.

Reflections on what I did during the week? First of all keep in mind that these were small changes, not portfolio-altering changes. The positions I sold out of were small, try-out positions. I didn’t sell anything from my top eight positions that make up probably 85% of my portfolio. In fact I added a little to SWKS.

I had to reflect on how I knew to stay with SEDG which had dropped a lot before rebounding 15% on Friday, but sold over half my SWIR, which kept falling on Friday. The only reason I could come up with is that all the solar stocks had taken a hit (not as big as SEDG, of course), while SWIR seemed to be doing it’s own thing.

I personally still see no reason for SWIR’s continued extreme weakness, and will probably hold my remaining 1.4% position and see what happens (I currently have 15 positions, so an “average position” is 6.7%, and my position in SWIR is just a fifth of an average position).

I can’t remember whether I mentioned it previously, but as you see, I’ve finally taken a small position in ANET.

Hope you’ve found this rambling interesting.

Saul

For Knowledgebase for this board
please go to Post #9939.

A link to the Knowledgebase is also at the top of the Announcements column
on the right side of every page on this board

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I personally want to thank you for sharing this with us. I really helps me to see what other people are thinking and reacting during a week like this. You put a lot of detail in that post so “Thank You”.

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I personally want to thank you for sharing this with us. I really helps me to see what other people are thinking and reacting during a week like this. You put a lot of detail in that post so “Thank You”.

You are very welcome!

The knowledgebase is such a fantastic tool that lays out your investing framework. But then posts like these round out understanding the actual decision making process and are very valuable to me. Every day I learn so much on this board. Thank you, Saul!

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Just to share:
During this week I increased my SWKS from 3% to 4% of my total portfolio. I also increased my SWIR from 1% to 1.5% of my total portfolio buying more at 23.25. I had previously bought in around 19. I hope increasing SWIR pays off, it seems to be the right move but time will tell. When AMBA had fallen I bought more around 95 increasing from 4% to 6% of my total portfolio.

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I can’t remember whether I mentioned it previously, but as you see, I’ve finally taken a small position in ANET.

I bought a position in Anet about a month ago Saul. I like the way they look too. As far as Swir goes I do not understand why they are falling either. Next quarter should be an easy beat but it could be somebody knows something and we don’t. They have bought two companies in the last year and maybe they are worried about integrating them?

Andy

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Next quarter should be an easy beat but it could be somebody knows something and we don’t.

Andy, That’s exactly what I’m worried about.
Saul

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But maybe they don’t know anything. Que sara, sara

https://www.youtube.com/watch?v=azxoVRTwlNg

I have watched Arcam stock continue to fall as fundamentals continue to improve . Perception is everything , as in the case of AMAVF where the industry outlook over-rides the company outlook. But as small stakeholders we can’t own any significant part of the company so all that counts is the stock price,

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Saul,

I thought about doing something, but I didn’t.

Cheers
Qazulight

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Saul,

Next quarter should be an easy beat but it could be somebody knows something and we don’t.

Andy, That’s exactly what I’m worried about.
Saul

I have been thinking about this Saul and I wonder if it isn’t all the people who piled in, thinking they were going to make a big win, without actually knowing what they were investing in. After looking at the Swir Stock Advisor board it seems there is a lot of fear with people asking for MF direction. I think we might just be seeing the last gasp from all the people that have finally given up.

But who knows I have been wrong before.

Andy

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Andy,

I am reluctant to disagree with you but if SA board messages like this were a good indicator, DDD would have stopped going down months ago.

  • Matt
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On the other hand, SWIR just seems to be relentlessly falling. I like it for all the reasons that Andy pointed out in post #10139, but it seems to be falling for some reason that I just don’t understand. <i>

This is why I sold out around 30 on a “gut” decision. I haven’t yet decided weather it’s Foolish or foolish but, my actions are sometimes more visceral than cerebral. I had bought in at 18 and change then, when it dropped from the mid 40’s to 30 on a steady slide down with no bad news and good numbers I felt like I was waiting for a bomb to drop. If I remember correctly that money went to buy more CRTO when it gave us that nice dip. I still like SWIR but just on the sidelines for now.

Ray

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I am reluctant to disagree with you but if SA board messages like this were a good indicator, DDD would have stopped going down months ago.

Good point Matt, and do not be reluctant to disagree, the more ideas the better.

The one difference between what happened with DDD and Swir is that DDD’s earnings are going down while Swir’s went down and are now starting to go back up. DDD’s earnings growth YOY is negative now. Also Swir has Revenue growing in the mid 20’s while DDD is growing their Revenue in the mid single digits.

One thing they might have in common is acquisitions. I hope Swir doesn’t keep acquiring companies like DDD does but this is something we will need to watch.

I think if the next earnings report Swir does beat earnings again, this could be a catalyst to get them to start rising again. DDD in a year maybe in the same spot as Swir is now. I could see DDD starting to do better because the last earnings were only $.05 so that should be easy to beat.

Andy

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The one difference between what happened with DDD and Swir is that DDD’s earnings are going down while Swir’s went down and are now starting to go back up. DDD’s earnings growth YOY is negative now. Also Swir has Revenue growing in the mid 20’s while DDD is growing their Revenue in the mid single digits.

Another difference is that DDD was like at $10B market cap during it’s share price height - it was going to be tough for DDD to meet that valuation. Currently SWIR is only at $750M market cap, $650M enterprise value (MCap - cash + debt) - far from being overvalued (arguably well undervalued as Andy and many other’s have stated) given its balance sheet (cash from wireless card business sale), revenue and profit growth (again after resetting their business after the wireless card biz sale) . Being that it is a smaller cap, its share price is more prone to volatility.

I am also confident in management just by the forward looking move they made divesting the profitable, but slowing business of wireless cards. Conversely, DDD growth was done inorganically with acquisitions. Also the premise that 3D printing would move to consumer spaces was always puzzling to me.

Currently, I believe SWIR to be a good investment. Being a small cap/tech company I would caution over-weighting on them. If they fulfill their full potential it would probably 5-10X over the next 5-10 years. However the probability of permanent loss of your investment here is much higher than other businesses.

The price action doesn’t look good right now and like Saul said hopefully someone doesn’t “know something” we don’t. I would tend to believe it is just negative momentum/weak hands (only 23% institutional ownership). We’ll need to keep a close eye on this upcoming earnings to verify the business prospects are still good.

Sincerely,
Charlie

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Saul, Next quarter should be an easy beat but it could be somebody knows something and we don’t.

Andy, That’s exactly what I’m worried about.
Saul

I have been thinking about this Saul and I wonder if it isn’t all the people who piled in, thinking they were going to make a big win, without actually knowing what they were investing in. After looking at the Swir Stock Advisor board it seems there is a lot of fear with people asking for MF direction. I think we might just be seeing the last gasp from all the people that have finally given up. But who knows I have been wrong before. Andy

There could be nothing wrong at all, just that it had gotten way ahead of itself (like what happened with BOFI), which is why I still have a small position. I really don’t know. It worried me that it fell another two percent on Friday when the whole world gave a sigh of relief and everything else rose. That took some determined selling. I’ll wait and see what earnings look like and the conference call to make sure there are no major problems. (I doubt it, actually, although there may be new competition). We’ll see.)

Saul

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Dear Saul,
Thanks for posting what you did during the tumult last week.
I bought INFN, SWKS, SWIR, AMBA in last week of JUne. Talk about timing.
so I was trying to figure out if I should add. I was looking at China exposure.
Ultimately did not add to my position because I could not be certain where things will go- chinese stock market may not stabilize and stocks with exposure to China may take a long time to recover.

You added to SWKS , I think before it came up. How did you figure out SWKS is safer than SWIR or AMBA. what was your thinking, if I may ask?

Thanks once again
usha

You added to SWKS … How did you figure out SWKS is safer than SWIR or AMBA. what was your thinking, if I may ask? Thanks usha

Hi usha, here’s a link to my review of SWKS from May 9th. It’s two months ago but not much as changed except that they doubled their dividend.
Saul

http://discussion.fool.com/swks-may-2015-portfolio-review-317389…

Thanks Saul, I appreciate your insight.

Andy

Hi Saul, This was a very helpful post in my opinion. I was wondering how you look differently at newer small positions. That definitely seems to be something that you do much better than I do.

Do you have a process for watching these new/small positions more closely until they really prove themselves as a high conviction?

Thanks much (again), Brian

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Hi Saul, This was a very helpful post in my opinion. I was wondering how you look differently at newer small positions… Do you have a process for watching these new/small positions more closely until they really prove themselves as a high conviction?

I don’t think so. I watch for news, for earnings releases and read whatever I can find on them, to make sure the thesis is intact, but I don’t have a set method specially for them. I do sometimes drop one or two trial basis small positions if something that I think is better comes along. (As you’ve probably noticed, I rarely drop my high conviction stocks, although I might trim them if they get too big, or too high priced).

Hope this helps,

Saul

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