OVTI - Ripping Today

Discussion in 'Stocks' started by abc3, Dec 2, 2005.

  1. abc3


    Any thoughts on fundamentals or how to play it in short term. They gave pretty strong earnigs and ext QTR guidance. Stock looks cheap here.
    Also heavily shorted stock with 40% of float shorted.
  2. ES335


    Things seem to be turning regarding their yield problems, which explains why they grew margins q/q despite declining prices q/q for their sensors. The cam phone market is hot for at least another quarter so some momentum there, but let me ask you, would you invest in a company seeing declines in its margins in 06' and 24% top line growth in the face of ferocious price competition?

    Ex their $5 in cash, they trade at 13-15x, so not egregious, at most i see a push to $24. Would rather buy at $20 with a tight stop, looking for $22.
  3. abc3


    Own 4500 (Avg. 14.32) before earings until yesterday. Sold 1/3 just before close at 18.24.
    Added another 4000 (Avg. 20.5) AH yesterday.

    I have some leverage to let it ride. Why cut the golden goose early.
    This was pretty beaten down stock for last year. Just wan't to see how it pans out for next couple of weeks before i get out and move on to next pic.

    This is best of breed company (ot necessarily the best of breed stock until oow) in image sensor business. Concerns over last year about big players entering this market ad killing it. But all that turned out to be false. It still leads in innovation and is one step ahead of its competitors.

    This pattern can be compared to pattern with SNDK. That was also depressed for a year about same concerns. But it held its own ad broke out big.

    My plan to to get rid of 2/3 of it between 24-26 which would be fair value right now.
    Leave the rest if this goes crazy next couple of months like what SNDK did.
  4. ES335


    Good for you.

    SNDK has over 300 patents protecting its MLC technology. Does OVTI have similar protection around its sensors? It doesnt seem like it to me, but I'm not sure. What I'm getting at is that to expect OVTI to react similarly vs SNDK on pure chart comparisons alone does not seem all that likely to me, unless there is a real fundamental reason for that to happen.

    Big players have been killing it, but they won a motorola razr contract last quarter, this is a volatile business. The fact that it breaks out does not necessarily mean it continues, although I agree with you that $24 seems like a logical target over next quarter or so.
  5. abc3


    All you said is True.
    I compared with SNDK only based on similar concerns the street had about their product becoming commodities and big players eating their lunch etc....
    They dont have similar chart patterns. So no comparison end there. It may not be that big like SNDK.

    In short term, Stocks/Markets always move irrationally in either direction before they settle down to more sane levels. Just wan't to ride that irrational exuberance and take advantage of it.

    The reason I created this post is that somebody who knows better about this stock will post some good thougts like you did in your previous posts so that I can evaluate my position and determine when to exit.
  6. ES335


    I think that you've done well with your averaging in and that $24 is in the cards, with a 50% chance of $20-21 in near term, but a 70% chance of $24 by end of Q1 06'.

    Re the irrational movement, absolutely right on that, witness CRM for example.

    Are there any themes/sectors of interest you are looking at right now other than OVTI?
  7. abc3


    I don't daytrade much.

    Bought 2000 DECK (at 18 & 19) after it was beaten down pretty badly.

    Own 1000 'KOMG' at 28 after last earnings. Sell off wasn't warranted after last earnings.

    DECK got a little ahead of itself too soon because Oprah and Cramer pumped it this week. Couldn't buy much because of these pumpers. LOL.

    Planned to sell DECK after this holiday season. But got close to my target too soon. Will sell DECK today or Monday.

    Going to stay with KOMG (exit price hopefully at 40).

    My strategy is to buy Ex-IBD 100 stocks which have been beaten down hard for 3 consecutive Qtrs and slowly buy it n small amounts.
    usually IBD stocks are good companies but they go to irrational levels with IBD pumping and can't sustain the levels thay reach.

    I'll often scroll through past issues (1 to 2 year back list) and see stocks that have been beaten down for hard since then. IBD listed stocks are good stocks basically until IBD lists them. They go insane after that.

    Companies however good they are cannot match street expectations every QTR and with kind of pumping IBD does.
    when things are going good they are good short targets in future when things start turning down and people heavily short them to death.

    I don't short but will wait patiently until they are shorted to absymal levels. usually takes Avg 3 Qtrs for highflying stocks to settle down and base which is when I will start buying.

    Good companies often come back because they had good fundamentals even before IBD pumping started. Also they come back fast due to high short interests. That is when I'll take advantage of it by selling them after they rise.

    May be it's a stupid strategy but it worked for me more often than not.

    Currenty have an eye on FORD, SNDA. Will buy next year.
  8. ES335


    That sounds like a very logical and interesting approach. If I could sum it up as follows:
    1) Winners don't become losers overnight
    2) Once IBD generated interest dies off and previous winners are left for dead, their stocks can make a comeback.

    I find that very intuitive, especially if you buy in at support levels, such as KOMG which hit $25, a major support level recently in October. That affords you excellent risk reward.

    As you have noticed, it has just been me posting. There are very few fundamental traders on this board. The majority of into technicals only, which I have nothing against.
  9. abc3


    True. Good companies do have 1 or 2 bad Qtr's. But they are punished heavily because of their popularity and growing retail interest. But as long as the fundamentals don't break down completely, it should be fine.

    I recently discovered this site. There are hell of a lot of good traders and intelligent people. Though i don't undertsand much what they talk. Slowly getting used to the hi-funda terms here.

    May be I can pick up a lot from this forum and it will help me in future when I have some time to daytrade.

    'GGC' is also on my watch list. This is a conservative play. It was also beaten down hard due to Katrina/Rita effect. Will be adding soon if at there is another dip to low 20's or if i see a double dip.
    Right now Tech is getting hot. So there might be a sector rotation into TECH from these kind of conservative stocks. So will buy these kind of stock when the rotation out is occuring.

    Everybody is predicting 2006 is going to be bad and all. But my feeling is 2006 will be a good year (not great but good enough) and market might peak in second half of 2006 followed by a major correction starting 2007.

    Too many traders in the market penny pinching. This market needs to squeeze hedgies and daytraders who predict gloom and doom everytime there is an increase of 2 to 3% point increase in indexes.

    Market needs to and will go up and shake them before going down for good. It always happen to so called intelligent people who keep predicting the tops and shorting. Disciplined traders like the one's here in this will survive.

    Also need more retail interest for big guys to get out. I guess 2006 is set up for above 2 factors to occur. Just my opinion.
  10. abc3


    Still Holding. Added 1000 at 19.5 and 1000 more at 20.21.
    #10     Jan 4, 2006