Alex Filonov's  Instablog

Alex Filonov
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I was born in 1956 in USSR. After graduation from college in 1979 I worked full-time as an IT specialist. Until 1990 I worked for different companies in the Soviet military industrial complex. I created a small software business in 1991, which failed in 1993. I worked for Oracle Corp in 1995 in... More
My blog:
Muddling Investor
  • Time To Part With Intuitive Surgical 2 comments
    Aug 1, 2013 11:20 PM | about stocks: ISRG, GOOG

    Love this company. It made me a lot of money, one of my best picks. Intuitive Surgical (NASDAQ:ISRG) created a new industry: medical robotics. Everything was great until last quarter. Then things started going South.

    I would ignore one missed quarter. I ignored a lot of quarters missed by Google (NASDAQ:GOOG). If stock is growing fast, who cares about ups and downs? Which sometimes could be traded (and were). But... Here comes a huge BUT.

    Company didn't just miss last quarter. It almost said that quick growth in US is over. And, by all indicators, it's over. The problem for company: FDA certifies it's main product, Da Vinci medical robot, for every kind of surgery separately. Prostatetomy was the first growth area. Next was hysterectomy, much bigger field. But so far, there is no new big area, approved by FDA. Company still makes a lot of money, but for P/E 23 (current) or 29 (when stock was at 500), we need growth. International growth is fast, but total numbers are small compared to US. With no growth here, total growth is weak.

    I already sold part right before the earnings report. Was thinking what to do. Last straw: company declared (and then increased) stock buyback. I'm sorry, growth company doesn't do buy backs, it has better things to do with money. Even dividend would look better.

    Here comes decision: close position. I sold part today and will continue selling at good price points.

    Disclosure: I am long ISRG, GOOG.

    Additional disclosure: I am planning to close my long ISRG position. Positions can change any time.

    Stocks: ISRG, GOOG
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