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Mark Gomes
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Disclaimer: This biography is required reading for anyone considering an investment in any of Mark Gomes' selections. It contains critical information about his research and trading methodologies. Mr. Gomes is currently the CEO of Pipeline Data, LLC and a contributing analyst to PTT Research.... More
My company:
PTT Research & Pipeline Data, LLC
My blog:
Poised To Triple
My book:
Faster Than Forty
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  • For Reference Regarding GTAT

    The following was written by Matt Margolis in October 2014 (in the wake of the GTAT bankruptcy). I'm posting it here for easy access. Many people have been led to believe that I was involved with the GTAT pick (or had supervisory responsibility over Matt).

    I did not.

    Matt will verify for anyone interested. In fact, very few people know the facts about how PTT is managed. I'm an analyst and don't even have access to PTT's bank accounts (and never have).

    That being said, I DID articulate my belief in Matt as an analyst (especially his journalistic capabilities). Further, Matt isn't the only one who has made bad picks.

    I make many bad picks.

    It comes with the territory when picking triples. Remember, Babe Ruth held the record for home runs... AND strikeouts.

    It works.

    If half of your picks triple and half go bankrupt, you're still up 50% overall (one dollar goes to $3 and another goes to $0, giving you a total of three dollars -- 50% more than the two dollars you started with).

    Because of this, I don't hide my losers. I embrace them. My winners AND LOSERS are always on display.

    At least one of them has gone bankrupt... but GTAT wasn't one of them.

    Here's Matt, setting the record straight.


    Lessons I Have Learned From Mark Gomes And The GTAT Fallout
    by Matt Margolis

    As I acknowledged in my apology last week, I was 100% wrong on GTAT-not wrong about whatcould have happened (we can give Tim Cook at least that much credit), but wrong to predict so confidently whatwould happen. It's true that much of the analysis and coverage of GTAT was more or less in line with my own, but a false opinion shared by educated and qualified people is no less false. Though Mark Gomes gave a heartfelt apologyto PTT Research subscribers after GTAT declared bankruptcy last week, the responsibility for missing important clues prior to September 9 is mine, not his. I learn valuable lessons every day through Mark's experience and leadership. None of you know the discussions I have had with him about GTAT during the past several months. The bankruptcy fallout makes me appreciate even more his expertise and prudence. I intend for the Forensics newsletter to bear a deeper mark of his influence in the future.

    Mark and all of the PTT leaders have been tremendously supportive of me since the GTAT fiasco. I have also received supportive emails from subscribers and non-subscribers as well, and for that I want to say to thank you.

    Over the last seven months I have stayed in close touch with various sapphire experts around the world and people who could inform me of the progress being made inside the Mesa facility. These contacts provided a multitude of facts, including the furnace count, power supply capacity, and employee turnover. Facts are a wonderful thing, but interpreting facts correctly is challenging to say the least.

    Every time I came into possession of a new fact, it led to an interpretation decision point. As Mark asked pointedly during our discussions, "Is this bullish or bearish?" Even if he was not knee-deep in the data, Mark was quick to discern whether news was bullish or bearish. I will be transparent about the bullish or bearish value of information and data points as they arrive on the scene.

    My former way of thinking was make a priority of figuring out how an issue could be fixed, how long it would take, and whether it would impact the Mesa facility's ability to stay on schedule for the iPhone 6 launch.

    My new way of thinking will be to take key information and determine whether the news or event is POSITIVE (bullish) or NEGATIVE (bearish). If the trend of the value of the data is bearish, it may be time to take some money off the table. I am very focused on the long-term, but we can expect volatility and periods of "bullish" and "bearish" activity in all of our investments.

    To give you an example: I told Mark that yields at Mesa and at the screen finishers were insufficient in July. He told me it was to be expected, since the technology was new to GTAT and there would be a learning curve. Mark believed the problems would eventually be worked out, but based on his experience he suspected sapphire screens might be pushed out past September.

    GTAT was moving back to exclusivity with a Tier 1 alumina supplier. Industry experts indicated that low yield in sapphire growth, fabrication and finishing was part of the technological learning curve. Yield would improve over time and would not impact the release of at least one sapphire covered iPhone 6 model. I adjusted my model accordingly to reflect lower sapphire production and lower finishing yields.

    I would have a different response to this news today. My key message to Forensics subscribers would be that the yield issues are a NEGATIVE. They represent an increase in risk. Our thesis may play out, but it may be time to take some money off the table until we have more reason for confidence.

    What is the difference? Before my interpretation of the data was informed by a conviction that Apple was dedicated to sapphire screens. This was far from an unreasonable conclusion, but I did not question it often enough.

    Retail Investors Are The Last To Know

    In late June, GTAT was flirting with its all-time high. Mark told me the market was fully pricing in sapphire screens. Just a week later, the sell-side banks started downgrading the stock… not because they didn't believe Apple would use sapphire, but rather because they believed the sapphire was already priced in. This is the strange way the market sometimes works. Let's assume everyone expects a company to beat on earnings and guide higher by a large margin. The stock will probably increase in price prior to earnings, but even if the company delivers, the stock may well go down. Why would a stock go down after delivering an earnings beat and raising guidance? Because everyone already priced this in. There was no one left to surprise.

    Another example is when Invensense showed up on the iPhone 6 and 6 Plus tears down. When I recommended the stock in June based on my expectation that INVN would be in the iPhone 6, I was early to the party. Over the next 3 months, every analyst joined me in my predictions. They upped their price targets. Notice that both September 9 (the iPhone launch date) and September 19 (the date of the teardown reports) have two things in common. In each case, INVN shares shot up for a days prior, and they fell in the days that followed the good news.

    If I could turn back the clock and follow the lessons I've learned from Mark, I would advise everyone to take some GTAT and INVN shares off the table and pocket some profits. Better to kick a field goal than be forced to punt."

    Oct 02 3:17 PM | Link | 1 Comment
  • 2015 Performance Update... And A New Pick?


    Here's a quick update on our performance to date. There's some subscriber-only information that we're not supplying here (like updated position-sizing and our latest picks), but the bottom line performance number is 100% accurate. It was a rough July, but we're still having a GREAT year (see below).

    Also, we're introducing our latest Pick To Triple to the public, here on Seeking Alpha, this weekend!! To get the pick early, just sign up for our free Newsletter at Cheers!

    Aug 14 12:08 PM | Link | 3 Comments
  • My 2014 & 2015 Performance Metrics

    As many of you know, the final four months of 2014 were tough (for reasons discussed in my prior articles), but four months is a blip in the long-term scheme of things. For the full year, my selections still produced market-beating gains.

    In fact, my official portfolio finished 2014 with a 12% profit versus a 4% gain for the Russell 2000 (which is the closest comp, due to my focus on small-cap stocks).

    2015 is off to a similar start. The portfolio is up 5% (versus 0% or the Russell). This has been driven by 20%+ gains for GLUU and AERO, both of which have had great news to start the year. In fact, all of my picks have been enjoying positive news flow, but their stocks have yet to reflect that. With GLUU and AERO getting off the mat, we'll see if my other picks follow suit.

    As always, I'm confident that they will in due time.

    As always, patience pays…

    (click to enlarge)

    Feb 06 3:12 PM | Link | 7 Comments
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