Anyone interested in gaming RED-related stocks?

[Meryem Ersoz]

The Nvidia chart (NVDA) is getting ready to explode. Classic set-up, and it is up on a hard day.

I was thinking that I would set up a model portfolio of stocks that stand to gain a few peripheral points from the RED revolution and do a periodic analysis, if anyone else is interested. We could all watch it and learn from it. Just for fun, since RED is privately held...

Before anyone lectures me on how little RED will contribute to any publicly traded entity's market cap, let me just say that I already know that. This is just for fun and to see if, as the RED revolution spreads its tentacles over time, it has any measurable impact. And just because I like to make money, it helps me buy more expensive lenses.

If there's any interest, I'll put it on Stockpickr and we can analyze it together and take potshots at my analysis here.

Companies that I'd include to start with: Nvidia, Apple, Adobe, Imax

And we can start a short index with Sony. Just kidding. I like Sony, I'd like 'em even more if they moved a little faster...they may actually belong on the long list, not for their cameras but because they're undoubtedly selling a few more high-end delivery systems these days.

Any other ideas that we could add?

 

[donatello b]

how about Avid ...
and perhaps a few digital projector manufacturers , Barco ?
Christie digital projectors ( just looked them up and they are not a public company)

 

[Mark L. Pederson]

The Nvidia chart (NVDA) is getting ready to explode. Classic set-up, and it is up on a hard day.

I was thinking that I would set up a model portfolio of stocks that stand to gain a few peripheral points from the RED revolution and do a periodic analysis, if anyone else is interested. We could all watch it and learn from it. Just for fun, since RED is privately held...

Before anyone lectures me on how little RED will contribute to any publicly traded entity's market cap, let me just say that I already know that. This is just for fun and to see if, as the RED revolution spreads its tentacles over time, it has any measurable impact. And just because I like to make money, it helps me buy more expensive lenses.

If there's any interest, I'll put it on Stockpickr and we can analyze it together and take potshots at my analysis here.

Companies that I'd include to start with: Nvidia, Apple, Adobe, Imax

And we can start a short index with Sony. Just kidding. I like Sony, I'd like 'em even more if they moved a little faster...they may actually belong on the long list, not for their cameras but because they're undoubtedly selling a few more high-end delivery systems these days.

Any other ideas that we could add?

I have -

SYNA
MU
IMN
QTM
JAVA
DLB
XRTX

 

[Meryem Ersoz]

I have -

SYNA
MU
IMN
QTM
JAVA
DLB
XRTX

Avid riiight, I forgot about Avid. Good one. Dolby and Quantum, also good. Micron is the parent company of Lexar, but is there another reason that I should like it, something less apparent, or is it their CF technology?--just curious. Those four are definitely in...excellent additions.

Man, these flash companies have been taken out to the woodshed lately...poor Micron, poor Sandisk....

I might need a little bit of educatin' about Synaptics, Imation, Sun, and Xyratex and how their products might relate to RED...a sound bite to get me started. Sun, once a great company, seems to be more in the business of engineering their stock rather than making anything.

 

[Mark L. Pederson]

I might need a little bit of educatin' about Synaptics, Imation, Sun, and Xyratex and how their products might relate to RED...a sound bite to get me started. Sun, once a great company, seems to be more in the business of engineering their stock rather than making anything.

well .. these are just some companies I like.

They are related to trends in post and production and/or have technologies or leaders I think are strong. I dunno if I would say that ANY are "directly" related to RED.

I would NOT count Sun out of the game just yet.

 

[Jeff Kilgroe]

Meryem, we have one of Sun Microsystems' largest facilities (and HQ for many of their operations) right in our back yard. It's easy for me to keep a pulse on them just because I know tons of people employed there.

Your comment about them in the business of engineering their stock isn't too far off the mark. They are a very slow-moving company these days and much of what they do is for the sole purpose of perpetuating their stock value. However, it doesn't seem to be working... Their net worth is half of what it was two years ago. Sun's greatest assets are their intellectual property holdings, primarily JAVA, but there are many others. I used to think of Sun as a company you could bank on. Through the '90s and up to about 4 years ago, they were a blue chip stock like IBM, UPS, Xcel, etc.. I own shares in Sun and I keep hoping that they will hit another ball out of the park like they did with Solaris and JAVA. But I just keep watching the value slide and I fear that if they slip much more, then they will be a prime buy-out target. I have a hunch that Microsoft has been eyeing them for a while... I'm sure MS would love to get a stranglehold on JAVA and Solaris. The FTC may have something to say about such buy-out though.

 

[Meryem Ersoz]

I have neighbors that work at Sun as well, and it seems like years since they have reported good news about the company. But they do have some very valuable properties, that is true.

I'll have to put the sniff test to the other companies that Mark suggested, some of them look pretty interesting as charts, a couple of decent-looking set-ups, but I don't have my arms around what they actually do...

...assuming that anyone is actually interested in this little exercise...

 

[GlennChan]

I don't think Red will make a huge impact on how the other companies do unless they are direct competitors (e.g. Dalsa DSA ). And I personally believe that you gotta look at the big picture and how the company is doing in general.

Avid: When it comes to technology, high volume should mean big, hue profits. Technology products tend to be very high margin... once you overcome the initial R&D costs, anything beyond that is a lot of profit.

So you have Avid, a company with very large marketshare, and somehow they manage to lose money. Somehow, it's turned from a very profitable company into an unprofitable company. Doing that takes some real skill. In my opinion, it's terrible management. They should've done the responsible thing for their shareholders and paid out their profits in dividends. Instead, they've managed to use that money to turn Avid into an unprofitable company.

 

[Meryem Ersoz]

<<Before anyone lectures me on how little RED will contribute to any publicly traded entity's market cap, let me just say that I already know that.>>

see above. This is a "for fun" exercise, not underpinned by a belief that RED is going to have a quantifiable impact on much larger companies (at least not yet, time will tell...)

Avid may not make money, but you can. The chart is showing a declining volume pattern as the price touches the upper Bollinger band. And if you look at the stock's 3-year chart, you can see that every single instance in which the price point has touched the upper band, since 2006, has reliably resulted in a significant price drop.

A nice short set-up, there's a high probability that you can pull 4 points out of this stock's misery over the next week or so for a 16% gain by shorting Avid. Another fish in a barrel.

Maybe I'm too far off-topic here....

 

[Dominic Cochran]

I don't believe any of this TA mumbo-jumbo. I believe in Graham and Buffett.

Do any of these companies have high insider/institutional buying or depressed prices based on bad news but good fundamentals?

That's also why it's not a good idea to short Sony. Yet.

 

[Meryem Ersoz]

I don't believe any of this TA mumbo-jumbo. I believe in Graham and Buffett.

Do any of these companies have high insider/institutional buying or depressed prices based on bad news but good fundamentals?

That's also why it's not a good idea to short Sony. Yet.

Buffett has an edge that no individual investor will ever share, so it's a little bit of a well-worn myth that he is a strict value investor and that his investment philosophy can be imitated. Also, I'd point out that his buy-and-hold-for-life holdings actually represent a very small percentage of what he owns or has owned. The vast majority of his purchases come with a well thought-out exit strategy.

But I get what you're saying. Everybody has a style that resonates with them. That's cool. But this has been a terrible market for investors and a great market for traders. I tend follow the money, not so much a style. All styles work at one point or another, but no single style works in all environments. But TA is working right now, while investing -- not so much. Value investors have been getting hosed and getting round-tripped on their investments left and right.

Of the stocks mentioned, Nvidia has the criteria you're suggesting. It's under accumulation and has a strong buyback plan in place, which they have actually implemented, not just announced...as a value-oriented turnaround play, they look pretty good. Perhaps the best of the lot.

Sony has just been an impossible trade or purchase since about the year 2000...not much trending, and very little fundamental change.

 

[Dominic Cochran]

Buffett has an edge that no individual investor will ever share, so it's a little bit of a well-worn myth that he is a strict value investor and that his investment philosophy can be imitated. Also, I'd point out that his buy-and-hold-for-life holdings actually represent a very small percentage of what he owns or has owned. The vast majority of his purchases come with a well thought-out exit strategy.

Note that I mentioned Buffett AFTER Graham

Also, you're right about him not being a STRICT value investor, and such is the beauty of BRK.A and BRK.B (thanks warren!). Other than BRK, I personally am a strict value investor, hence my appreciation of Graham.

Value investors have been getting hosed and getting round-tripped on their investments left and right.

No way I'm some weird anomaly, I'm not THAT good, lol... good fundamentals will always outlast emotion-based depressed stock prices. Obviously you just have to have a long term window.

Of the stocks mentioned, Nvidia has the criteria you're suggesting. It's under accumulation and has a strong buyback plan in place, which they have actually implemented, not just announced...as a value-oriented turnaround play, they look pretty good. Perhaps the best of the lot.

I'll look into them more, sounds like my kind of company...

This is a cool idea, could be very interesting, thanks for doing it!

 

[Jeff Coatney]

You should put Kodak, Fuji, Agfa, 3M and Texas Instruments on that list as well.

 

[Meryem Ersoz]

You should put Kodak, Fuji, Agfa, 3M and Texas Instruments on that list as well.

Hi Jeff: Is the idea behind Kodak, Fuji, and Agfa (and 3M?) that RED will create more film opportunities and film processing?

It raises an interesting question. Will there actually be more films -- or just, generally speaking, the same amount of film, only originated on RED?

I'm not quite sure what the concept is behind the stock selection.

To update:

Avid short is up (meaning down, since it is a short...) 4.9%
Nvidia long is up 14.86%

So far, they are both following the playbook.

And by the way, Dominic, I did buy a few shares long-term of Nvidia for a long-term portfolio. I don't really follow a single style, I'm more interested in looking for dislocations that can make a few bucks, and charts notwithstanding, this still looks cheap, although I'd look for a pullback before entry, since it's up 14%

 

[Meryem Ersoz]

interesting tidbit and a sign of the times:

GM has pulled its advertising from Oscar night --

http://online.wsj.com/article/SB121901450793948103.html?mod=googlenews_wsj

 

[Meryem Ersoz]

Avid short is not really working, so I'm shutting it down for a modest 3% gain, but oh my that Nvidia has been off to the races...

I'm kinda speakin into a void here, so I'm shutting myself down as well.

 

[GlennChan]

Hmm so how do people feel about Imax? They have good technology, but I don't think their business will be profitable in the future. They are in a very tough business.

Imax is in the business of higher quality projection, which isn't that profitable a business. And I think the current situation is as good as it will get for them. Before they didn't really have competition for higher quality projection. But now there are competing technologies that will cut into their market... there's digital projection (and 4K), though most people don't notice that some theatres have switched over to digital. And there's also 3-D projection... realD looks like the winner at this point (good quality, cheaper glasses, most theatres going with it).

2- Their current market cap is above their assets, and their equity is in the negative. For this market cap to be justified, Imax would have to turn itself around and make a *killing*. That doesn't seem likely to me.

3- I don't think Red/Epic would have too much of an impact on Imax, though perhaps it somewhat favours shooting for 3d or digital projection. They could give slight problems for Imax if Red enters the 4k display market (or somebody else does following Redray). But I doubt it will be a big effect on Imax.

*I could be wrong about Imax, don't take my opinion too seriously. (Have I really looked closely at their business? No, no I haven't.)