Harm Diaconescu

Harm Diaconescu
Contributor since: 2011
Because of the high volatility associated with MU, it's also an ideal vehicle for defensive option plays--I sold a significant amount of covered calls with a $35 strike with a October 24th expiration right after the equity peaked at the end of September, and as many $28.5 strike puts with an expiration of November 14th after Microchip's warning caused a large (and completely irrational) pullback in all semis.
I can buy out both of these & free up the capital with a net return of about 65% or simply wait both out to expire--all those with margin account should look closely at MU-based trades.
Good to have a counterpoint, thanks for linking.
Historically (please don't ask me to provide specifics, details are widely available) Intel tends to punch downward after earnings. Given the recent run-up & high expectations, there appears to be a relatively high chance of a corrective move this time around as well. Long-term bulls as well as bears would do well to position for it.
The longer term picture may be convincing, but the short-term technical outlook is dreadful. Ignoring macro concerns, HPQ charts are firing off all the wrong momentum signals. Even deep value investors need to consider what spiking RSI, MFI & collapsing 50-day SMA tell.
Thanks for answer; makes sense.
Today's RAZRi announcement, Motorola's global handset powered by a 2GHz Intel Atom chip, came as no surprise to those closely following Intel's efforts in the mobile & ultra-mobile space, and should serve as confirmation that Intel's manufacturing & R&D edge are likely to bring long-term results in the competition with ARM designs.
Thanks for the article, Nick.
While I believe INTC option strategies are a fantastic opportunity for investors to reap the benefits from a deeply irrational market wildly undervaluing a tremendous company, I favor 90-120 day time frames for two major reasons:
#1. Higher proportional premiums, especially if employing a dual covered call/cash-covered put strategy which I favor, and
#2. The ability to close out positions with next to no penalty, which in turn opens the ability to "roll forward" options, essentially doubling the yield potential.
Could you please address the specifics as to why you prefer shorter term strategies? Thank you in advance.
While opinion pieces can sometimes be entertaining, this kind of article is big on conjecture & light on data. Using virtually any valuation metrics, BBY is cheaper than its historical baselines & outperforms virtually every other player in the retail space, & nothing here even attempts to address the potential upside, including the explosion in mobility devices & the success of Best Buy Mobile & Geek Squad brand.
Thank you for the article, Mr. Mintzmyer.
You've covered the high-level financials but not the tacticals which seem to favor BBY: its highly diversified portfolio of offerings & involvement in the BBY Mobile & Geek Squad brands, both of which are extremely profitable & have shown consistent growth through the last two years.
Smaller footprint concept stores and services-centered sales strategies hold strong potential, and BBY's international plays should not be ignored at all. Short-term weakness in domestic demand may cause further opportunities in terms of immediate price action, but I agree that any and all sub $24 entry points represent a great opportunity for investors with intermediate to long-term outlooks.
NOK has seen a strong rebound this last week after seeing sub $5 price action, but I'm not entirely sure it's time to call a bottom quite yet. What's clear is that MSFT's decline to the $25 range represents an even more opportunity to back the truck up.
Dominic: Thanks for reading. Through the whirlwind turmoil abroad & domestically, Power One has shown remarkable resilience, up 6% through the most recent week while NASDAQ ended up down 1%. My bottoming-out thesis appears to play out, at least for the time being. I reiterate that being able to either purchase or place 2-3 month long cash-covered puts in the sub $8 range is a very attractive proposition.
Retail valuations are low and could get lower before higher. RSH is undervalued, BBY has recently crashed 52 week lows, HHgregg has been beaten down as well. While I agree with the fundamental points of the article, one ought to be cautious in terms of establishing long positions in this environment. Perhaps very cautious put-selling on large drops may be a good idea to lock in a potential further discount, or else just add the capital to a future purchase.
Either way, the extreme volatility is not likely to go away until the end of summer.
The stock continues to show extreme volatility, with significant opportunities. Today's over 4% bounce represented another fantastic window to take advantage of short-term call-trading.
Thanks for reading. I believe tight integration without Apple's severe lockdown is Microsoft's true competitive advantages, as Windows8 looks to embed X-Box gaming, Skype and PC-oriented functionality in a single hand-held device, a true all-in-one mobility toolset which may be truly overtake even Android's flexibility.
The possibility and asset list is there, it comes down to execution. The signs so far, judging on the progress shown from the WP7 release to Mango, are encouraging.
Thanks for reading.
Ignoring the argument that Apple's products are "better" by any number of yardsticks, I don't see any information that is pertinent to what I presented in the article. I welcome contrarian perspective, but it ought to be fact-based.
Microsoft makes a marginal amount of money on every Android device sold but holds next to no market-share in the mobile space. WP7.5 is at worst competitive, at best compelling, and Windows8 looks to be a true departure for the better. ANY improvement in market-share, topline and income would reflect positively on the equity.
I guess you're implying Microsoft's efforts in the mobility space will impact the company as a net negative? That could be the case, but I'd like to be exposed to the facts which indicate so.
Thanks for reading.
The stock is certainly volatile, there's no question about it, and for buy-hold investors with a 2-3 year outlook, the fear permeating the solar sector & renewable energy in general represents an opportunity to back the truck up at a bargain. I believe with well-placed option strategies, one can reduce cost basis even further, especially puts in this particular PE multiple range, where there really just doesn't seem to be any more room for depreciation.
I can only look at position in historical P/E channel and history of reported earnings--the equity seems to have priced in a large miss on basis of warnings from SatCom, general weakness in the European market and debt jitters, domestic and abroad. A modest miss or a beat is likely to result in a move back toward the middle of the P/E price channel, closer to 8-9x fwd. P/E rather than rock bottom 6-ish.
Of course, the stock is highly volatile, and one doesn't know if channel oversupply has finally caught up with the company. Last quarter, a 1c miss vs. consesus expectations was rewarded with an immediate pop, since street whispers were factoring in significantly lower EPS than forecast. With the volatility premium it commands, and the long-term growth prospects for the company, I'm perfectly ok with accumulating shares under $6.50 even if my puts get exercised.
As for the insider sale, 9000 shares simply don't strike me as a large amount.
Mr. Martin: Suffice to mention that you may be attempting to carry an argument with somebody unwilling to entertain pertinent information--so you may be on the losing side regardless of how right you are. I believe you've conclusively shown the rationality of your argument, which is the best one can do.
Options and margin trading are not for everybody, but they're nothing more than tools. Nobody in their right mind would call a hammer or chainsaw morally inferior: they are objects which can be used in any number of ways. Options, margin and leverage as concepts cannot be morally inferior or superior any more than a pair of scissors can be morally inferior to a spoon simply because a child could run around with it and put his eyes out.
There are extremely risky as well as rather conservative option strategies--some significantly more conservative than buy and hold, as a matter of fact, because they very finely define the amount of risk an investor is willing to take. It's one thing to have a personal PREFERENCE for an investment STYLE but quite another to engage in ad-hominem over such STYLE PREFERENCE and resort to vague claims about moral superiority. I'd agree that participation in SA should be limited to reason-based discourse rather than exhortation of private beliefs which don't necessarily line up with reality.
Worth noting, in terms of momentum & reallocation strategies when there are significant macro risks to consider:
MSFT outperformed the NASDAQ by about 8% over the last 3 months.
INTC outperformed the NASDAQ by about 5% over the last 3 months.
GE underperformed the DJIA by about 5% over the last 3 months.
Thanks, Mr. Murphy, on these comprehensively sourced two articles--I very much appreciate the work. I reached a similar conclusion recently (the case is presented here: seekingalpha.com/artic...) and have established long positions on that basis.
Thank you, Mr. Martin, for a revealing and cautionary article. Downside leverage is not to be trifled with for retail investors, especially in this macro environment and high beta equity such as AMD.
Thanks for reading, rav. I appreciate the note of caution around ARM but note that from a pure performance standpoint, we'rerapidly approaching a level where headroom may become irrelevant in both the retail consumer and low-level enterprise (office PC) segments. One needs only a certain amount of processing power to run basic productivity and online applications.
High-level enterprise needs (server/networking/inf... are, of course, different, but this would not be the arena that AMR designs would be competing in.
Bulldozer has real potential as an architecture gambit, and AMD has put forth better branding efforts, especially with its Vision initiative in the mobile space. But long-term concerns around consumers and OEMs alike focusing on performance per watt and cost are legitimate.
Thanks for reading, Shompa. You're presenting an extremely bearish case against AMD, but it may be overstated. A few remarks:
* There's no question that from a manufacturing standpoint, no foundry comes close to Intel's edge, but both Global Foundries & TSM look on track to deliver 22/20nm nodes by late 2012 (see: www.xbitlabs.com/news/...)
* Figuring out the "reasons" behind the AMD/Global Foundry renegotiation is purely speculative, but the financial benefits to AMD aren't. I'm not sure where you are sourcing your information about a base layer redesign, which would turn AMD from a bullish short-term case into a roaring short, do you have any documentation that shows this is actually happening or likely to happen?
* I agree that the leaked benchmarks are largely irrelevant due to flawed methodology, but basic FP arithmetic and air-overclocking results do point to a design which delivers on the basic premise of achieving rough parity with Sandy Bridge horsepower. Ultimately, official benchmarks will put this argument to rest, but things are not looking bad for AMD's parts as of right now.
* Finally, the worries surrounding ARM's encroachment into x86/x64 territory are similarly speculative. The personal computing market is still growing, and signs of slow-down seem more related to domestic macro factors like consumer confidence and broader income jitters. I wouldn't necessarily dismiss these worries out of hand, since they do pose a risk to both AMD and Intel, but as of right now forecasts are little more than stabs in the dark. For all we now, 22nm parts may deliver the kind of performance and energy savings that would allow the AMD/Intel combo to begin fighting in the smartphone/tablet arena.
Thanks for reading, guitune.
The idea behind most investment forums, including SA, is to share perspectives and information, hopefully in an objective fashion. If you identify mistakes when it comes to sourcing or methodology, please state your case. I welcome contrarian thoughts to my articles as long as they are founded in reality rather than ad hominem.
INTC and AMD both delivered impressive beats, the latter has seen a close to 18% jump as of now after Thursday's earnings estimate. There are signs of real strength in the semiconductor space, and BRCM does appear to be undervalued as well.
I appreciate the in-depth contrarian analysis, Mr. Winkel.
I stand corrected on the reported churn numbers, and take to heart your recommendation to source information better. Thank you. A correction request has been submitted to the SA team.
A couple of quick rejoinders to your other comments.

First, quite obviously there is a cap to broadband penetration, but 90M represents less than half of the population qualified to have a subscription, and well below estimates of domestic Internet users. I simply do not believe that there is significant dial-up use as of now, but we can beg to differ on these details.
Your points about appropriately sourcing and vetting information apply to your suggestion to research Facebook comments (!) for actionable data.
We're not in significant disagreement about rising COGS, although I take issue with the methodology which indicates that Netflix churned customers are 0% likely to return to the company. That seems like a preposterous assumption to make, so churned customers are not somehow EXCLUDED from future growth potential.


I've made it very clear that I agree with the case Netflix short make but believe it to be irrelevant in light of prevailing sentiment and momentum, and a 6-12mo timeline seems relatively risky. Once again, for those with deep enough pockets, I've stated that "Netflix may be the short of the decade"--but retail investors typically do not possess such resources.
Fundamentally, that is the point of the article--thank you for articulating it succinctly. Broad market turmoil will obviously impact Netflix as it's a very volatile stock, but there really doesn't appear to be any significant catalyst for an immediate correction.
Thanks for reading! I appreciate the cautionary note.
Of course, BRICs investments are liable to additional uncertainty, and there are always trade-offs. China has widespread corruption, bubble fears and an authoritarian regime, Russia ditto (minus the bubble, of course) and India's political climate and demographics are perennially a source of worry. Brazil is no different in that regards, and one must be cognizant of the risk.

But this is not a bet on Brazil as a whole but rather a very specific chunk of it. PBR's position in its historical valuation channel and growth prospects are both appealing--caveats about due diligence apply.
When it rains, it pours.
On a short-term outlook, there is such much weakness and fear behind the equity that valuation notwithstanding, a wait-and-see approach seems prudent.
This is a very good comment, as it brings up how Microsoft has been hedging its bets in the mobility space, see my article on the specifics: seekingalpha.com/artic...
Yumy, while I believe it's always best to keep worst-case scenarios in mind, one must nonetheless stick close to reality.
A $10B judgment against the defendants, and the corresponding aftermath, seems as unlikely as anything else that may render Micron or Hynix' respective businesses worth nothing, such as the instantaneous emergence of a radically disruptive new kind of memory replacing both NAND and RAM. If I were to worry about such low-probability statistical outliers, I may as well start worrying about a meteor hitting me in the forehead as I walk out of my offices to my parked car.
We will see what the trial outcome is. Meanwhile, price action continues to be erratic, with MU seeing large moves along index movements. It's a good time to be both trading as well as accumulating this equity, as the beta is large.
NOK is a solid company with a rather impressive track record of execution, but the company suffered from bad direction from the very top. Recent changes in management outlook, including Mr. Elop's outstanding "burning platform" memo seem to have caused a drastic shift.
I've written previously on NOK and I'm of a mind that the stock is still showing too much weakness to warrant a BUY as of right now, but I'm long-term bullish due to a good balance sheet and the prospects of its partnership with MSFT. It was particularly impressive to see Mr. Elop briefly demo a working Windows 7.5 phone (Mango) which indicates NOK is solidly on track to deliver smart-phones by the holiday season.
Please see my previous 2 articles on NOK for further color.
$5.7 is not a bad entry point, but I see the equity sliding a bit further through summer weakness, then possibly seeing a strong rebound as positive news continue to trickle out of Finland, into the W7 phone release.
Yumy, I appreciate the continued discussion. I included additional disclosure regarding my MU position for the benefit of those who could be following this, not to compare the two companies.
We are in fundamental disagreement about the facts and laws pertinent to Rambus vs. Hynix & Micron case, and are unlikely to convince each other. I advise those concerned about the lawsuit to please do their own diligence and reach their own conclusions.
As for the 150% bond, the company has $2.4B cash on hand. Debt is debt, cash on hand is cash on hand--do not confuse shareholder equity or net balance with these terms (Source: Micron, Yahoo! Finance)

The above notwithstanding, companies are able to establish short or intermediate-term loans, and Micron would certainly be able to do this in order to fulfill the bond requirement.