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Somsanith Donesing
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I'm an independent investor and has been trading stocks for the past 10 years. I also like to write and express my opinion. Hopefully people will find my articles enjoyable and informative.
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  • The Stagnation Of Facebook

    At the beginning of the year, you heard nothing but Facebook. Either it was the company making a big announcement for its new secret product that kept everyone guessing, or it was a whole bunch of analysts expounding bullish theses about why they thought Facebook Inc. (Nasdaq: FB) would be the stock to own for 2013. Well, guess what? Yes, they got me. I bought into the hype of FB's stock early in the year: it was supposed to be the famous and prosperous stock of the year. I went and opened an account on Facebook and bought its stock too. And let's just say it's a good thing I've read Mr. William J. O'Neil's book -How to Make Money in Stocks- and applied one of his strict rules to my trading plan: it's to keep the loss small.

    Maybe it's still a popular stock, but it's not a prosperous one for this year. Maybe it will be for 2014. We just have to wait and see what the analysts have to say, but I'd suggest listen with your ears virtually closed. Do your own research. For now and until the rest of this year, I see only a downward trend for FB. I believe FB will see its lowest before it will come back up again. And that's only if they have another hyped-up conference and keep us guessing about what their secret new product might be.

    What do I think of Facebook as a user? Well, after my first week of signing up, I was be able to add over a hundred friends. And everyone seems to accept you as a friend. Almost makes you feel kind of special. Then I come to realize that most of them-more so for the attractive ones-have over 2,000 friends in their accounts. It's like they accept anyone who sends them a friend request so they have a big audience when they post anything from motivational quotes, or where they eat, sleep, sit, and even when they're in the toilet, daily. They want you to see every move they make, every emotion they experience, how clever they are at the time, or how silly they can be. That they can easily do behind the computer screen. And they can express all these on FB, the world's most-used social network, where people can stay connected with strangers.

    Do I want to add close friends and family members to my Facebook page? No, not really. I don't see that it's important. Not that I don't want them to see how ingenious or how sensitive I can be sometimes-I don't post anyway. It's because I can connect with my close friends and family in many different ways. Honestly, I can live without Facebook. But I'm going to keep my account open so FB can make their money (even though I don't pay attention to the advertisements on my computer or my mobile phone). But I have to admit that occasionally I click on the ads by accident only because I was trying to X it out and missed. I see a lot of cool stuff on TV that I'd like to buy, though maybe it's the same ads online, I just never notice. In fact, I find that ads on my computer and mobile phone are quite annoying.

    OK, enough rambling, let me give you my insight on the technical aspect for FB. FB's stock is trading under its 50, 100, and on May 27 it just pierced under the 200 simple moving average line (NYSE:SMA). And if you look at the daily or weekly charts, you can see that it's now trading under its recent support price of $25. Now all the SMA lines and the support prices became FB resistance levels. The next support is at $20 and I do think FB will reach its lowest of $17.55 before it can see the light of the day again.

    At its IPO on May 18, 2012, FB was priced at $38. Its price has declined 36 percent since then. It's going to need more than graph search for it to see $38 again. It has been over a year, and the stock is going in the wrong direction. And to me, that's a bad indicator. In the near term, I don't see a major product line that will help push up its stock price. Unless more analysts come out and make some bullish upgrade, and increase their PT from $32 to $33. But improvements like graph search, verified pages, improving its timeline, and adding a new look to the Facebook news feed aren't enough.

    Looking at its first quarter results, revenue totaled $1.6 billion, an increase of 38 percent from the first quarter of 2012. That's quite impressive. But despite good revenue, higher costs and expenses led to first quarter net income of $219 million, up only 7 percent from $205 million in first-quarter 2012.

    Can FB sustain growth going forward? With $9.5 billion in cash, I think it has to make some major acquisitions and expand its business to more than just upgrading the appearance of Facebook pages. It might see some growth increase from advertising going forward, but I don't think it'll be sufficient. As of right now, I recommend avoiding this stock, until FB can innovate new products or acquire other businesses that will supplement its advertisement business.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

    Tags: short-ideas
    Jun 05 11:06 AM | Link | Comment!
  • Need Diversification? Add Gilead Sciences Inc. To Your Portfolio.

    Since the beginning of 2012, the biotech sector has been on the rise and Gilead Sciences Inc. ( GILD ) is no exception. GILD has seen a big jump in its prices and already has gained over 50 percent year-to-date. Every time I turn around, it seems GILD's stock price has ticked up higher. Right now, I still see GILD as an attractive buy, especially if you're a long-term investor.

    As the world population increases and a growing number of people are living longer, there will be a need for more and better medicines. People are striving to live longer and healthier lives; therefore I believe GILD will continue to benefit for many years to come. So I recommend adding GILD to your portfolio. Because of its vast products pipeline and the diseases they're targeting, I expect Gilead Sciences will continue to do well in the long term and will benefit investors going forward.

    Gilead is a research-based biopharmaceutical company aiming to treat life-threatening illnesses around the world. Gilead's products pipeline treats viral infections such as HIV/AIDS, hepatitis B and C, severe chronic conditions such as respiratory and cardiovascular conditions, and cancer. To date, there are no cures for these conditions. Gilead knows how important it is for those who are affected by these diseases to find effective treatments, and the company makes it a priority to assist those patients. Gilead is also working with federal and state patient-assistance programs to ensure all patients have access to their medications. From their beliefs I infer that GILD is a company with the right philosophy to help people who need proper care. That alone almost gives me enough reason to want to invest in the company. Because of its research and development, and its determination to find the cure for these life-threatening diseases, I believe Gilead is a good investment in the long term.

    In January 2012, Gilead acquired Pharmasset for $11 billion. With that acquisition, GILD has been able to develop the first all-oral Hepatitis C virus (HCV) regimen (Sofosbuvir), which will benefit approximately 3.2 million people worldwide. On April 8, 2013, Gild submitted a New Drug Application to the U.S. Food and Drug Administration (FDA) for Sofosbuvir to treat HCV infection. In phase 3 clinical trials, Sofosbuvir has shown a significant efficacy rate for genotypes 2 and 3. For genotypes 1, 4, 5, and 6, patients who are on a 12-week, all-oral treatment in combination with Ribavirin and Pegylated Interferon are considered cured of their HCV infection. That's essential for GILD, considering that there isn't any drug out there to treat HCV that has such a proven significant result as Sofosbuvir. Now if the FDA approves Sofosbuvir, which I think they will soon due to its positive clinical trial results, Sofosbuvir will be a very important milestone for GILD. Sofosbuvir will be a significant addition to their products pipeline and will help extensively increase their revenue growth in 2014 and beyond.

    In the field of cancer, GILD has developed another important drug, Idelalisib, to treat Chronic Lymphocytic Leukemia. It works by blocking the production of P13-K delta proteins that are overactive in B-Cell Lymphoma. Already Idelalisib's phase 2 study has shown some promising response rates for previously untreated Chronic Lymphocytic Leukemia (CLL), which is the second most common form of leukemia in the U.S. Currently CLL is being treated with Rituximab and combined with chemotherapy (Rituximab was developed by Idec Pharmaceutical and co-marketed with Genetech). With the positive data results in phase 2, I believe GILD can perfect Idelalisib in phase 3 of their clinical trial and should receive FDA approval soon. Idelalisib will help Gilead's revenue significantly once the medication is approved and commercialized.

    What I also like about Gilead, in addition to its pipeline, is that it's a profitable biopharmaceutical company with a strong balance sheet. It has enough cash flow to support its research and drug development and can bring new products to the market. Currently, Gilead has a portfolio of 15 marketed products, not including Sofosbuvir and Idelalisib, which they sell on their own or through various partnerships. As of March 31, 2013, the end of the first quarter, GILD has $2.63 billion in cash, an increase of $50 million from its $2.58 billion at the close of the fourth quarter of 2012. Before it acquired Pharmasset for $11 billion, GILD had $9.96 billion as of Dec. 31, 2011. Gilead has a 5-year annual revenue growth rate of 18 percent. The point behind all these numbers is that GILD has the capability to make money from quarter to quarter and year to year. Because it has a positive cash flow and pursues varied research in different fields of medicine, I believe Gilead Sciences will continue to grow. With over $2.63 billion in cash, plus the acquisition of Pharmasset and two exciting drugs awaiting FDA approval (Sofosbuvir and Idelalisib), Gilead is likely to make many more acquisitions and produce many new drugs in the future.

    I'm behind Gilead as a long-term buy. At this price level, because of its rich pipeline and considering that it's a profitable biopharmaceutical company, I think GILD has more upside momentum. I wouldn't worry about timing when to get in on Gilead. I look at Gilead as a good, classic example of a stock that you'd like to dollar average in and hold for a few years. I would view any pullback as a good opportunity to buy more. I recommend buying it now and adding more when the opportunity arises.

    Disclosure: I am long GILD. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

    Tags: GILD, long-ideas
    May 21 3:44 PM | Link | Comment!
  • Tract Homes: Are They Worth The Investment?

    As I was walking to my neighborhood park today, I came across a new tract housing development that's being built in my area. Are we in the early beginnings of a housing recovery? Recently, I've seen many homebuilders start developing in Las Vegas again. They must have seen improvement in their business after years of distress. Are we coming out of the recession in the real estate market? Should people start buying tract homes again? I personally dislike tract homes. I've bought and lived in a tract home community before. What I've experienced is that tract homes can be boring and uninspiring to look at over time. It seems that my neighborhood was growing outdated as the builders continue to develop newer and better model homes. Tract homes, in my opinion, aren't built to last for 100 years and it's not something the homeowners would keep and pass on to their children and grandchildren. When your tract homes is outdated, you can't make improvements to the exterior of the house or additions to the home, especially if it's in a community that being managed by HOA's and their CC&R's (covenants, conditions and restrictions).

    Tract homes, in my opinion, are cheap and ugly looking houses. Some look like monopoly houses with tiny windows and are like cardboard boxes, especially the ones in Las Vegas. They all look the same with similar style and color, with no special characteristics or individuality about them. The floor plans are fairly identical with about the same square footage. The appliances (if included) are as cheap as they come. Carpets and countertops are of basic qualities. Tract homes are mass produced and builders have foregone quality over quantity. Builders tended to use low-grade materials in their construction (i.e. vinyl sidings, asphalt shingles). Over time, the materials will deteriorate at a faster rate, leading to costly repairs. Many homeowners who can't afford the repairs and/or upgrades will skip the unnecessary upkeep, thus leading to overall neighborhood bleakness.

    In North America tract homes were first mass produced in Levittown, NY. in 1947 by a building firm called Levitt & Sons., and that's how Levittown got its name. They targeted lower income and middle class people, who wish to invest in the real estate market. Many are first time home buyers, wishing to buy their very own piece of the American dream. But when there are signs of housing trouble, tract homes can depreciate at a faster rate than other types of homes and they tend to fall out of favor quickly. I don't think tract homes will have a great resale value in the long run. I don't think it's the right kind of home that you would want to buy and pass down to your children and grandchildren. People's preferences in housing styles differ every generation, people's tastes and ideas gradually change over time. Due to strict HOA regulations and covenant restrictions, you can't reconstruct your tract home to suit your ever-changing tastes. And when you need to sell your home, it is more difficult to find a buyer. New buyers are also looking for better, up-to-date, newer models. And that can lead to a housing recession. And this cycle tends to happen over and over again.

    Because of their poor building design and the quality of the materials that are used on tract home, I can't imagine the homes will outlast the life of the loan without undergoing some major repairs and upgrades. Some tract home communities that were built over 10-20 years old ago can start to see some structural damage (cracks in the stucco, peeling paint, water damage in walls due to leaking pipes, broken roof shingles, etc) Stucco is a great building material for in warm and dry areas, but they crack easily even with the slightest stress. Another important issue of living in a community of tract homes is that not everyone has the same standard as far as cleanliness and basic upkeep of their property. Not everyone has the same financial flexibility to address their home repairs. Some might fix the problem right away while others may let the problems persist. And that will eventually cause property values in the neighborhood to drop over time.

    I believe tract homes are bad investments because their quality and appearance can deteriorate faster than custom homes. And that would lead to less demand from buyer in case you need to sell your home. If you still want to purchase tract home then I think you need to be more selective of who the builder is. Cause some tract home are poorly designed, even their appearance look like oversized cardboard boxes with cut out windows. In the future I hope home builders would make tract homes more appealing by having better architectural design and using top of the line products. As of now, tract homes lack the character and charisma as it get older. And it'll get outdated quick. So I would rather rent if I can't buy a nice custom home for myself. And I don't want to have to go through trying to sell another tract home to someone else again.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

    Tags: real-estate
    Apr 22 2:47 AM | Link | 2 Comments
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