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Tom Armistead
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I'm a well-informed retail investor and post on SA in order to expose my thought process to critical examination and comment from readers. It makes me a better investor. I'm particularly proud of bullish macro articles posted in 2009 and later, in which I presented ideas that encouraged me to... More
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  • Adding To IBM Position 2 comments
    Oct 17, 2013 9:58 AM | about stocks: IBM

    Following the revenue miss, International Business Machines (NYSE:IBM) traded down below $175. In my article on the company, I mentioned a strategy of patient accumulation, "feeling for the bottom," on this situation. These large cap tech stocks, when under concerted attack, can decline markedly.

    I rolled my LEAPS position, from Jan 2015 155 down to 145, at a cost of $7.50. I also added another Jan 2015 145 call, against which I sold an April 2014 185 call.

    Usually whatever direction the pre-market takes the move is extended during regular hours. But in this case with the stock so well known I figure the price will stabilize in the $175 area. Hoping to maximize volatility premiums, I traded early.

    The thinking is, EPS beat and guidance out to 2015 is intact. If the stock trades low, buybacks will create more value. I still think its worth $225.

    Disclosure: I am long IBM.

    Stocks: IBM
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Comments (2)
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  • Klaus Müller
    , contributor
    Comments (7) | Send Message
     
    I don't know what to do with IBM, i hold plenty already! I feel like to buy or not to buy more.
    17 Oct 2013, 10:16 PM Reply Like
  • Tom Armistead
    , contributor
    Comments (5502) | Send Message
     
    Author’s reply » After reading the conference call, very early in the presentation they explain the revenue decrease very clearly. On a constant currency basis it all comes down to China.

     

    The Chinese government which is very active managing the economy is working on something that won't come out until November. Everything is on hold until then. Possibly decisions will be reflected in the 1st quarter 2014.

     

    There is talk the Chinese are moving away from US technology out of concern for the "back door" built into the software. The Chinese are big on spying and stealing technology. There is some degree of paranoia in the mindset. How it plays out I don't have a clue.

     

    My best guess is the business comes back next year.
    18 Oct 2013, 06:08 AM Reply Like
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