by Travis Johnson, Stock Gumshoe | May 17, 2019 4:39 pm
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Source URL: https://www.stockgumshoe.com/2019/05/friday-file-china-data-center-and-5g-shakeup-plus-a-couple-boring-buys/
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Wow, we really got our money’s worth this week. Thank you!
You aren’t alone in the sold-SAFE-too-soon canoe, but a win is a win.
I still wish you’d look into Poet Technologies. Planar optical interposer chip, using fiber optics instead of copper on a silicone chip that runs 100 times cooler so the chip never overheats when fully loaded up with high speed information.
Great post Travis. As a former HP employee I accumulated shares of A and ultimately KEYS. I never thought of their association with 5G before, but I can certainly see the connection now.
Regards,
Frank
What’s the Thinkolator’s verdict on Matt McCall’s “Quantum Glass” battery hype?
Wrote about that one here: https://www.google.com/amp/s/www.stockgumshoe.com/reviews/nexgen-investor/thinkolating-on-the-breakthrough-quantum-glass-battery/%3famp
Hi Travis,
I’ve begun researching stocks that are uncorrelated with market moves and/or do best in a recession (very interesting!) to be able to create my own “what would I buy if the world really turned upside down?”/”recession-proof stocks” list and would be very interested in your thoughts on this. Would you consider a dedicated post on your favourite pics with your ‘reasonable’ and ‘compelling’ buy prices? I’m sure there are a lot of other Irregulars who would be interested.
Hoping for the best but planning for the worst. ;))) And thank you for all the great work you do. Your analyses are always thoughtful and insightful.
Gotta say, from all the memberships I need to pay for (think; Netflix, Spotify, Apple News+, Hulu, Barron’s…) the one that I am the happiest to pay for is StockGumshoe!!! Travis you are amazing!
With Tencent, how do you get comfortable with the China ADR structure, where you don’t really own an enforceable interest in a company, rather you own an interest in an offshore vehicle which owns an interest in a China based company that depends on the munificence on the government to remain in business?
I’d love to own this if it was based in North America or Europe, but have been very hesitant to own China given it’s not clear you’re really an owner entitled to a pro rata share of profit in any enforceable economic sense. Big picture seems like all these China ADRs are a bet on China evolving over time into more of a market economy with enforceable shareholder and property rights. Is that partly the bet you’re making, and is it a bet you have some confidence in? In recent years it would appear China is moving in the opposite direction, or giving mixed signals at best.
On UPS – aren’t their economics somewhat worse on ecommerce than on traditional drop off / delivery? Won’t that mix shift be a long term burden on growth? Any particularly reason UPS over Fed Ex? Valuations are similar. PS – sorry for all the editorial today – quiet day.
Travis what is your take on the Spirent/T-Mobile deal approval. I’m wondering how it affects CCI & AMT (one less customer) or do you think the drop is a good opportunity to add? Also do you think it will reduce the overall demand for 5G equipment now as there will be one less major company deploying it?
Hoping that there will be a knee-jerk reaction driving CCI shares lower. I would expect it to be mildly negative in the short term but positive long term if the merger goes through.
But that’s what I was expecting when it was $20 lower, too.
Trade Note: QCOM
Qualcomm lost its battle with the Federal Trade Commission, and my initial reaction is that they lost it pretty badly. They are required to be under supervision for seven years, to renegotiate all their patent license/royalty deals, and to license their technology on reasonable terms to other chipmakers… which the court seems to interpret as “much cheaper terms”.
They will appeal the decision, and they are seeking an immediate stay by the U.S. Court of Appeals, but this is at least bad news and, if they lose on appeal or don’t get a stay, possibly very bad news if the interpretation continues to be that they have to renegotiate down most of their royalty deals (I have no idea how to game out the probabilities of these legal outcomes). The stock could fall back to the $40s if news continues to be bad, and it hit my stop loss of $71 on the news, so I sold my shares at about $69.40. Still a profit on the position, but not, of course, what I was expecting. I may get back in as the story evolves, we’ll see, but the uncertainty over their high-margin licensing revenue now means we’re betting on the Appeals Court and/or the Trump Administration trying to intervene in the court on Qualcomm’s behalf (which might backfire) — and betting on legal outcomes is not my area of expertise.
It’s not going to zero, and I’m pretty sure that it’s also not going to $20 per the Kerrisdale short thesis of earlier this year (Kerrisdale was right about them losing the FTC case, it turns out, but they also made that short argument when the stock was at $55 — so even this drop below $70 can’t be counted as a “win” just yet), Qualcomm’s business will remain important and viable even if the margins shrink and earnings drop over the next few years because of legal pressure on their royalty agreements… but it could certainly go down substantially more — and, of course, protecting your portfolio from situations like that is exactly what stop losses are for. Ignoring stop losses is fine when you know the company well and have a high degree of certainty in how things will work out in the longer run, and enough cash or intestinal fortitude to accept the ugliness in the interim, but I can’t claim that level of confidence with Qualcomm. I mentioned a couple weeks ago that I was still worried about the FTC outcome, and disappointed in Qualcomm’s decision to stop growing the dividend (maybe they saw bad news coming, who knows), so I can’t claim this news or stock reaction as a “shock,” but it’s still a bit surprising. I’ll continue to keep an eye on Qualcomm, but for now I’m on the sidelines.
As a long term investor in Kerrisdale (since 2012) I can tell you that they took most of their money and ran not long after they published their short Qualcomm report on 23rd Jan as is their usual modus operandi
Thanks for the feedback… I did wonder if they had managed to hold on to that short position through the incredible Apple surge.