Portfolio as of 9/16/2012

My portfolio hasn’t changed much over last few weeks (again MUCH is a relative term;)). But first let’s pledge our allegiance to Mr. Bernanke,the great savior of the markets. Mr Bernanke came out once again to mitigate the impact of bad job numbers. I guess sooner or later Bruce Wayne will have competition.

Four weeks ago I told my colleague that I am seeing very strong buy signals. In last four years I have seen such signal fail only twice. So I went all in! WooHoo!!

I added eight new stocks and two ETFs to the portfolio in last month. I also got rid of EQIX at $199. I am thinking of adding ULTA and getting back into EQIX – Nothing as of now. I will talk about them in details in the next post.

I sold TFM due to the breakdown. I also bought and sold CRUS – bought it at $35.5 and sold it at $40.1. I am surprised by it’s move to $45 – apple effect. I also unloaded STX after a long time. I plan on hanging on with only one high beta disk drive company.

Some people might say that I own a lot of stocks but I have been tracking most of these companies for over 3 years and buy and sell signals are generated by programs. I own a lot of stocks because I dont want to overexpose myself to anyone company. The companies that I own is a mix of fast growers and slow growers (called GARP). There are handful of value stocks as well such as APA, F, HAL, etc.

Please talk to me before jumping in because we are due a 4 to 5% correction before the Santa Claus rally starts. Also being an election year, the market has to end in positive (+16% isn’t too bad either). What I mean is that we might remain flat for rest of the year. Lastly, I plan on taking some profits off the table by selling some ALXN, UA,LNKD, JPM, etc.

You can see my previous portfolio update here.

Cash=2%.

SLV=3% (Entered at $29.5)

GLD=5% (Entered at $160.5)

LNKD=5% (Entered at $101 and some at $113.5)

UTHR=5% (Entered at $53.5)

KORS=4% (Entered at $51.5)

NOV=4% (Entered at$77.5) (Price target is $100 and I plan on adding more after $86)

ARUN=4% (Entered at $19.5) (Price target is $25)

CLR=4% (Entered at$76.5 and added more at $80.2) (Price target is $95)

JPM=4% (Entered at $33.9) (Price target is $45)

DG = 5% (Enetered at $51)

WWWW=3% (Entered at $17.5 AND Will add more after $20)

EMC = 4% (Expect it to reach $29.5) . Reasons for purchase.

AAPL = 4% (Set more buy @ $630)

WDC = 4% (Expect it to reach $49.5) Why Did I buy?

QCOM=5% (Expect it to reach $69, if it stays over $59 for few more days) Why Did I buy?

APA=3% (Sold some at $88) Reasons

HAL =6% (Expect it to reach $40) Reasons

UA=4% (Set additional buys @ $54.9) Reasons for purchase. (I missed the doubling oppurtunity)

SCSS=4% (Set additional buys at $25.9) Reasons for purchase. (This is sleep number mattress which I entered at $26.1)

SWKS=4% (Will add more at $25.9) Reasons for purchase. I am very disappointed with it’s price action. I don’t know what market expects of this company even after Iphone 5 release.

ALXN=6% Reasons

FFIV =3% (In Red) Reasons

F=5% (In Red) – Worst Mistake Ever

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Ready to Fold some – Portfolio as of 08/13/2012

I guess it’s time to take some profits my friends. Cash = 25%. Portfolio as of 08/03/2012

I still see opportunities such as LNKD@$102, MELI @$84, TDC@75.1, ROST@65, DKS@50.5, HIBB@63  and UTHR@52.1. But I would suggest that purchases of ROST, DKS and HIBB should be avoided till the earnings are out.

Earning’s gain. See CRUS below.


Earning’s Pain. See Priceline below.

If you can take a hit please feel free to buy 50% position in ROST and DKS.

JPM=3% (Entered at $33.9)

DG = 5% (Enetered at $51)

TFM=5% (Entered at $59.5)

WWWW=3% (Entered at $17.5 AND Will add more after $20)

STX = 1% (Sold some at $33.1). Why Did I buy?

EMC = 4% (Expect it to reach $29.5) . Reasons of purchase.

AAPL = 4% (Set more buy @ $569)

WDC = 6% (Expect it to reach $49.5) Why Did I buy?

QCOM=5% (Expect it to reach $69, if it stays over $59 for few more days) Why Did I buy?

APA=3% (Sold some at $88) Reasons

HAL =5% (Expect it to reach $40) Reasons

UA=3% (Set additional buys @ $54.9) Reasons of purchase.

SCSS=2% (Set additional buys at $25.9) Reasons of purchase.

SWKS=4% (Will add more at $25.9) Reasons of purchase.

EQIX=5% Reasons of purchase.

ALLT=4% – Will it miss next quarter’s earnings?

ALXN=6% Reasons

FFIV =3% (In Red) Reasons

F=5% (In Red) – Worst Mistake Ever

TLT=2% (Sold most TLT last week)

Lastly, I got this in the email today morning –

Portfolio as of 7/28/2012

I have been expanding my foot print slowly but steadily. Portfolio as of 7/16/2012.
Cash = 30%

STX = 3% (Might add more depending on OCZ acquisition and today’s results). Why Did I buy?

EMC = 4% (Expect it to reach $29.5) . Reasons of purchase.

AAPL = 4% (Set more buy @ $569)

WDC = 6% (Expect it to reach $49.5) Why Did I buy?

QCOM=5% (Expect it to reach $69, if it stays over $59 for few more days) Why Did I buy?

APA=6% (Expect it to reach $119) Reasons

HAL =5% (Expect it to reach $40) Reasons

UA=3% (Set additional buys @ $54.9) Reasons of purchase.

SCSS=2% (Set additional buys at $25.9) Reasons of purchase.

SWKS=4% (Will add more at $25.9) Reasons of purchase.

EQIX=5% Reasons of purchase.

ALLT=4%

ALXN=6% Reasons

FFIV =3% (In Red) Reasons

F=5% (In Red)

TLT=5%

Earnings – UA, EMC, VMW and BIDU

VMW

VMW, VM Ware, reported second-quarter results and in sum, the end-market demand for VMware’s solutions appear s strong aside understandable weakness in Europe.

  • Total revenue was $1.12 billion, up 22% on strong growth in maintenance revenue. The company has seen double-digit year-over-year percentage revenue growth for the past five quarters.
  • Net income for the computer software fell to $191.7 million (44 cents per share) vs. $220.2 million (51 cents per share) a year earlier. This is a decline of 12.9% from the year-earlier quarter. Last quarter’s profit decrease ends a four-quarter streak of profit increases.
  • VMware’s operating margin fell 140 basis points year over year.
  • There was a marked deceleration in annual license revenue growth to 11% this quarter, down from the 31% averaged during all of 2011. VMware expects typical seasonality will drop this growth rate even lower during the third quarter, before a strong rebound in the fourth quarter, with full-year license revenue growth between 11% and 15%.
  • The great news is the VMware’s announcement that it acquired Nicira, a start-up focused on software defined networking. At more than $1.2 billion Nicira represents an aggressive acquisition for VMware. Nicira is a player in network virtualization, analogous to what VMware has done for server virtualization. This follows the trend of network related acquisitions – DynamicOps, Zimba & Spring – that the company has embarked upon in recent past. Cisco is down on the news.

UA

Under Armour Inc reported better-than-expected earnings and raised its full-year sales forecast.

  • Second-quarter earnings rose to $7 million, or 6 cents per share, from $6 million, or 6 cents per share, a year earlier. Analysts on average had expected earnings of 5 cents on revenue of $358 million.
  • The revenue rose 27 percent to $369 million.
  • Under Armour also raised its 2012 operating income outlook to $205 million-$207 million.
  • The apparel and footwear maker, raised its full-year revenue forecast to $1.80-$1.82 billion from $1.78-$1.80 billion.
  • Inventory growth trailed revenue growth for the first time in eight quarters. Inventory at quarter end increased 22 percent to $381 million.
  • However, gross margin for the quarter fell to 45.9 percent from 46.3 percent reflecting lower apparel and accessories product margins in North America.

The UA numbers are exciting considering the soft landing that NIKE had projected. The orders for shoes are up and its apparel section is going great guns. Another great take away is that the revenue growth has exceeded the inventory growth, which had been bother few analysts for last few quarters.

EMC

I have been eyeing EMC for three reasons –

  1. EMC is a storage behemoth, and with data from social media showing no signs of slowdown, I expect that the demand of storage will not reduce in foreseeable future.
  2. The company owns 80% of VMWare which has seen double digit growth for last 5 quarters.
  3. Lastly, the phenomenal revenue growth of Mellanox Technologies confirms the uptick in storage demand. Mellanox Technologies creates fast connectors for storage devices.

Back to EMC –

  • EMC reiterated its previous full-year profit forecast of $1.70 per share, 3 cents below analysts’ average forecast. It repeated its revenue outlook of $22 billion, compared with an average estimate of $22.10 billion.
  • It said it expected free cash flow of $4.9 billion this year and it expects to buy back $700 million of its shares.
  • Profit, excluding one-time items, was 39 cents per share, below the average analyst forecast of 40 cents, according to Thomson Reuters I/B/E/S. Revenue rose 10 percent to $5.31 billion, beating the average forecast of $5.29 billion.

But the CEO, Joe Tucci, warned that on the macro front, pretty much everywhere in the world, they are seeing more caution and more scrutiny before any decisions to procure any IT product or service is made.

 

BIDU

BIDU, the darling of 2009 rally is trying to make a comeback.

  • The company posted a 70 percent increase in quarterly profit as net income was up at $436 million ($1.24 per share), on revenue of $858.8 million.
  • Revenue increased nearly 60 percent over its previous year quarter.
  • Analysts had expected the company to report earnings of $1.12 per share on revenue of $850.78 million.
  • Baidu forecast third-quarter sales will grow as much as 54 percent to 6.41 billion yuan. That compares with a 6.39 billion- yuan average of analysts’ estimates.

Short SCSS and long EMC but with a grain of salt.

Why Grain of Salt – Market turns around at a flip of coin, so be ware. Moreover we have earnings for both stocks coming up in next few days and earnings can be detrimental;)

First let’s look at SCSS –

Even though the fundamentals look strong, so did the fundamentals of TPX before it went from 85 to 25. It’s not about sleep number or Temparapedic (can’t even spell it). This stock has bumper resistance till it crosses 25.5, so set a stop at 25.7.

12 Hours after the post – “what a miss”

Now let’s look at EMC. –

This is a company that is in midst of social media revolution. It owns VMW and is leader in Cloud. You can’t discount it’s role in data storage.

So in short if you can buy now and double at 20.5 with stop at 19.1 then you are looking at atleast 7:1 profit to loss ratio.


24 Hour after the post – Entered at $22.9

Names to follow on Thrusday Morning – FFIV, VMW, QCOM, SCSS, EMC.

The market seemed to be tepid with leaders hanging in there. The leading stocks, stocks that have led from the font in last 3 to 6 months, are still outperforming the S & P 500 index. In a typical correction the leaders tend decline by at least 1.5 to 2.5 times the market. Even if the correction starts, keep an eye out for future leaders. The young leaders will go sideways, form a flat base and will be the one to break out first. As of now URI, ISRG, etc seem to tread those waters.

Once again be defensive dont open big positions now. Just buy 50% of final positions size and wait for market to give the green flag. If needed open BLV and TLT.

Looking at the earnings

FFIV, Force Five solutions, a network hardware and software gear maker, beat on both revenue and earnings. The company has been slowing eating CISCO’s share. The beat wasnt a blowout though.

For its fiscal second quarter ended March 30, F5 said profit rose 24% to $1.09 per share. It said revenue rose 22% from the year-earlier quarter to $339.6 million. Analysts polled by Thomson Reuters had expected $1.07 EPS on sales of $335.3 million.

But analysts had hoped for a bump up in June quarter guidance. Seattle-based F5 Networks said it expects fiscal Q3 revenue of $350 million to $355 million, and per-share profit of $1.12 to $1.14. Analysts had been expecting $1.14 on sales of $353 million.

As the data load over the network grows be it internet or wireless, I feel FFIV is well positioned to take advantage of this technology macro trend by providing network solutions. Following is a quick peek at FFIV’s solution chest.

  1. F5’s network controllers speed up application and Web servers in data centers. F5’s biggest customers are financial service companies, telecom service providers, tech firms with big Web portals such as Facebook and federal government agencies.
  2. F5’s network controllers speed up application and Web servers in data centers. F5 Networks holds 47% of the ADC market but faces stiff competition from Citrix Systems, startup A10 Networks and Riverbed Technology. As companies build bigger data centers and move to cloud computing, F5 Networks aims to sell more powerful network controllers that handle more computer servers and larger amounts of Internet traffic.
  3. F5 is making a big push in security products that defend data centers from Web-based threats. Internet firewall software runs on F5’s network controllers.
  4. Wireless phone companies use F5’s network controllers to route text messages and email, as well as to manage customer access to data services. F5 in February acquired Israel-based startup Traffix Systems, which sells software for 4G wireless data networks.
  5. In 2013, F5 is expected to release “deep packet inspection” software that enables wireless firms to analyze data traffic flowing over 4G LTE networks.

The market isn’t in the best shape so if you are interested, buy 50% of your usual position size at $129.1. I think it will stick around 50 DMA till market finds some direction.

QCOM, Qualcomm, saddens me. Why? It’s unable to meet the demand.

Qualcomm cannot get enough supply from its existing manufacturer and is seeking additional output, said its chief executive, Paul E. Jacobs.

The company is spending to get its latest chips made by new suppliers, Mr. Jacobs said. The shortfall reflects heavy demand and was not caused by manufacturing problems, he said, adding that the discrepancy should be made up by the end of the year.

“It’s painful not to be able to supply all of the chips your customers ask for,” Mr. Jacobs said.

I mean come on. You are not a school going kid who has run out of capacitor or resistance in a science project. You are a the epi-center of tsunami of smartphones.

For its second quarter, which ended on March 25, Qualcomm reported net income of $2.23 billion, or $1.28 a share, compared with $999 million, or 59 cents, a year earlier. Sales rose 28 percent to $4.94 billion. Analysts on average had predicted earnings of $1.10 a share and sales of $4.84 billion. Mobile phone shipments are estimated to reach 1.7 billion in 2012, a gain of 8.2 percent from 2011, according to IDC. Smartphone shipments, a subset of the mobile phone market, will surge 33.5 percent, the market researcher predicts.

But it got beat up when it guided for Q3. The San Diego-based company estimated that sales for its third fiscal quarter, ending in June, would be $4.45 billion to $4.85 billion. Analysts on average had estimated $4.81 billion, according to data compiled by Bloomberg. Qualcomm forecast net income of 67 cents to 73 cents a share, compared with the average prediction of 77 cents.

So this means opportunity of people such as me to get in. I would get in around $64 with stop at $57.

VMW, VMWare, king of virtualization continues to deliver outstanding results. The growth is organic and among the better seasonally weak quarter.

The leading maker of virtualization software said earnings per share rose 37.5% vs. a year earlier to 66 cents excluding various items. Wall Street had expected 60 cents. That ended two quarters of decelerating growth.Revenue rose 25% to $1.06 billion. That was VMware’s third straight quarter of decelerating sales gains and the smallest advance in more than two years.

Analysts expected $1.028 billion, though VMware last week said it would “meet or slightly exceed” its guidance for $1.02 billion to $1.04 billion.

“Customers are investing in IT for the longer term and we are certainly primary beneficiaries,” said CEO Paul Maritz on the post-earnings conference call.

The company sees Q2 revenue of $1.10 billion to $1.12 billion. Analysts have forecast $1.105 billion and a per-share profit of 63 cents. A year ago, VMware reported revenue of $921.2 million and a per-share profit of 55 cents.

This is another company that is leader in the macro trend of cloud computing and data handling.

Cloud computing equipment revenue rose 15% in 2011 to $39.4 billion, with Hewlett-Packard, (HPQ) IBM (IBM) and Cisco Systems (CSCO) the leaders, but VMware (VMW) and EMC (EMC) the biggest gainers, says Synergy Research Group.

SCSS, Select Comfort, had another stellar quarter but it seems that the 50% run up in last 3 months wanted more. Select Comfort (SCSS) posted strong first-quarter profit and sales gains that were well above analyst expectations.

The mattress store chain, which operates 382 stores that sell adjustable firmness beds and bedroom accessories, reported after Wednesday’s market close that earnings per share jumped 50% vs. the same quarter a year earlier, to 45 cents a share. Analysts expected 40 cents.Sales climbed 36% to $262.4 million, easily topping estimates of $233.7 million.

The company guided 2012 EPS to $1.38-$1.46, a 19%-36% increase vs. the prior year. The midpoint tops consensus of nine analysts polled by Thomson Reuters by 4 cents.

I would wait till this name consolidates. The exisiting owners please stick around it slides below 50 DMA on heavy volume.

Let’s see what TPX and EMC has in store for us tomorrow. If EMC deliver solid number and goes past 30.7$ with fan fare, I would add some.

Portfolio As of 4/12/2012

Cash 40%.

Portfolio –

AAPL – 3%

PCLN- 4%

STX – 6%

WDC – 6%

HLF – 3%

SCSS – 4%

SXCI – 4%

QCOM – 6%

BLV – 3%

TLT – 3%

RWM – 3%

FFIV – 3%

F – 6%

APA – 6%

Sold last week –

CLR, WLL, ALLT, GNC, LNKD (I know!)

Reasons for the sale –

  1. Market broke 2 critical supports last week – 4 month old trendline and 50 DMA. Let’s wait till the market moves above 50 MA and makes new high, convincingly  (no double tops please:().
  2. The earnings season is underway. It’s better to reduce the high fliers by 50% to avoid losing profits.
  3. Quite a few breakouts in last couple of weeks have stalled, failed and occurred at below average volume – such as SWI, WDC, LVS, etc.
  4. Old adage – Sell in summer and go somewhere ( dont ask me where!.)

Lastly I added small positions of defensive stocks as mentioned earlier – BLV, TLT and RWM.

Week ahead –

  1. Stay defensive, preserve capital below the prior trading range. Above the range, expect a move back to and above the prior highs.
  2. Do not trade intraday, but rather focus on setups and keep an eye on earnings
  3. U.S. week ahead (Reuters)
  4. Next week’s trading radar (Minyanville)

Good Reads –