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I used to run a limited partnership, boutique hedge fund in the 90s. Retired in 2000 and moved from New York City to Toronto, Canada, got married, raised a family and basically settled down. After a few years in Toronto, my wife got tired of the city’s 8 months of cold weather and insisted that... More
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  • Silence Is Golden...

    Let me start by stating the obvious...

    I have egg on my face.

    Am guilty as charged for straying from my original investment thesis and getting carried away in the wild-eyed spectacle surrounding Apple's iPhone 6 launch...And amid all the cacophonous "leaks" of "sapphire in" and "sapphire out" I threw my weight with the "in" crowd...and landed flat on my face...

    Am bruised...but intact...

    But there is a silver lining...I believe...

    Actually, I am pretty certain!

    So why all the brouhaha?

    When Apple earlier this week (September 9th, 2014) announced their new iPhones, sans sapphire, GTAT's stock price took a tumble...The market, impulsively, and without bothering to make even a modicum of an effort to connect the dots, took the stock to the woodshed...Lost in this Stampede out of Dodge was the very high probability that the company may have snagged (at least for now) the consolation prize of supplying screens for the upcoming Apple Watch...But last Tuesday and then especially on Wednesday, Mr. Market was in no mood to give a listen to the suffering longs' whining(s) and instead bellowed, "let's just shoot the darn stock first...there will be plenty of time for forensics later..."

    Unlike Mr. Market, I will try and analyze the matter calmly and rationally...

    Could it really be possible that GTAT's management got blindsided by Apple's September 9th announcement that their new iPhone 6s won't include the much ballyhooed, "indestructible sapphire?"

    Like, the day before I found out?

    Naw...

    Can't be possible, can it?

    Of course not!

    They had to know, heck, at least, a few months before Apple's September 9th launch...and knowing the meticulous care and painstaking thoroughness that Apple invests, especially time, in product development before lifting the curtain of secrecy, the more likely answer is: at least 1 year...On the extremely unlikely and logic defying chance that GTAT's management, for some inexplicable reason, did get blindsided, then, to avoid any potential legal jeopardy, they must file Form 8-A and divulge this new and material reality. The law dictates that they have only 4 business days to inform the SEC...

    www.sec.gov/rules/final/33-8400.htm

    The fact that the management has not filed this form tells me that they are quite sanguine about the company's prospects in delivering on those pretty lofty revenue projections...very bullish indeed! And hence the title of this post: Silence is Golden

    So what if their sapphires don't adorn the latest reincarnation of the iconic iPhones...The fact that they haven't announced a material change in their guidance tells me that Apple continues to buy their production...For what? I don't know...and honestly, I don't give a rat's ass...lots of speculations being bandied about on various chat boards...but all that is just noise, and therefore, to me, immaterial...The parking lots at the company's Mesa, Arizona plant continue to be packed, and the worker bees coming in those cars are clearly producing sapphire that Apple needs for something and continues to purchase from GTAT...This in turn should result in pretty impressive revenue numbers over the next 6-12 months. And of course, most of the above should also get confirmed in their next earnings report, due out in early November...

    Here is a quote lifted directly from GTAT's First Quarter Earnings Conference Call on May 8th, 2014...In response to an analyst's question, the company's CFO, Raja Singh Bal said:

    "...the Sapphire Materials business is a book and ship business, okay. And there's no linkage to -- there's got to be an end product in the marketplace or anything else like that. We're selling sapphire. And so as we ship it, we recognize it. In the early phase of the program here, there's some things that hang-up revenue on the balance sheet, which will then release throughout the balance of the year. So you should not link, okay, that deferred revenue into any assumption as to how revenue will actually clock out once we get into the back half of the year. And again, it's not linked to any particular product launch or anything else like that. And as you know, we can't speak to whether or not there will be one or there won't."

    seekingalpha.com/article/2203333-gt-adva...

    Regular readers of my blog know that I am basically a chartist / technical analyst...Only when a chart points me to an interesting prospect, do I bother to kick the proverbial tires (fundamental analysis). And in my checklist of fundamental analysis, the item at the very top is: rate of acceleration in revenue growth. Absolutely the first set of numbers I look for...Period.

    The original thesis that sold me onto GTAT was the rapid acceleration in the company's revenue growth, not just year over year, but even more impressively, sequential quarter over quarter...those who know me personally have seen and heard me stand up on the bully pulpit and wax superlatives about GTAT's projected rapid revenue growth...We already know that in the first half, the company reported total revenue of $81 million ($23 million in the first quarter and $58 million in the second, which btw @ 152 % sequential growth is pretty impressive in itself). Management has guided full year's revenue to be between $600 million and $700 million. I should emphasize, that management has repeated this guidance not once but twice in the last 5 weeks. Taking the low end of their guided range, I am looking at some serious acceleration in revenue growth...From $81 million in the first half to at least $519 million in the second! In percentage terms, that works out to a growth of 640%...I don't know about you guys, but in my book, that is blistering acceleration in velocity...and it is precisely the kind of escape velocity needed before a stock can leave the earth's gravity for the ride to the moon...In other words, GTAT is on the launch pad...last week, upon ignition, the engines sputtered a little, so the mission to the moon had to be aborted...but only temporarily...But thanks to the aborted mission, the true believers got to salivate Mr. Market's unexpected gift of a 30% SALE on the price of its stock...WoW! But the current sale price does not mean that Mr. Market can't become even more generous...and if so, then Praise the Lord...However, going forward, I have no doubt that we shall soon hear the magic words:

    Houston, we have ignition!

    And the longs should be on their way, hopefully for the ride of a lifetime...

    Again, all of the above is imho...

    :)

    Another reason I am a believer is because the company continues to hire...Should they have lost any Apple business, they would be retrenching for God's sake...not hiring, ...Here's a link to the current job openings at GTAT...Note the more recent listings...

    gtadvancedtechnologies-openhire.silkroad...

    There is no escaping the fact that GTAT is the dominant company in the industrial sapphire space and the future of sapphire is very bright and getting brighter with each passing day...This link to an article in the MIT Technology Review points to a future where sapphire screens will dominate smartphone displays and the article talks extensively about GTAT and its budding partnership with Apple...

    www.technologyreview.com/photoessay/5306.../

    And bear in mind that GTAT is more than just a sapphire company and the next few months will reveal the company's other, very promising technologies...

    In light of the above I believe that my original investment thesis on the company continues to be valid...and therefore the current weakness in the company's share price, is, imho, a gift...

    :)

    Again, in the absence of any intimation from the company about a reversal in its fortunes, I continue to believe that GTAT is chugging along just fine, thank you.

    I have no reason to doubt management...they have forged a partnership, with one of the most admired companies on the planet, retrofitted a massive factory shell into a state of the art plant for the production of industrial sapphire, hired, trained and deployed, more than 1,000 workers, working round the clock, 24x7 and projected to generate revenue of more than a billion dollars for the company in 2015...and they have been able to deliver all this in less than a year...They obviously have done a good enough job so far to secure from Apple 3 of the 4 milestone payments with the last remaining, management expects to receive by the end of next month... This is a very credible and efficient management team and I have no reason to doubt their guidance...

    When the short sellers wake up from their drunken stupor - having earned the right to party, and party hard - they'll realize that the next path of least resistance is up...They made a terrific bet on the short side, and won...more power to them! But if they intend to hold on to their shorts because they believe that GTAT is nothing but a house of cards, then they will wake up to a rude awakening...

    The shorts are clearly pretty smart...they certainly got the best of me on this last bet...GTAT may, in the short term continue to act weak...may even break the Double Bottom support @ $13.00 on its PnF daily chart...But I don't expect it to pierce the more important, Bullish Support Line, currently @ $12.50...For the benefit of the uninitiated, GTAT stock price will need to "print" $11.50 intraday, for it to violate this very critical technical support line...

    Here is the daily PnF chart of GTAT:

    (click to enlarge)

    And here is the weekly PnF chart of GTAT...as you can see, on the weekly chart, the support lines are further down...However, I don't expect the stock price to break the daily supports and come down to test the weekly support...we shall see...

    (click to enlarge)

    Technically, being that the stock has taken a severe beating, it needs to consolidate here......Hopefully the above mentioned supports will hold as the stock goes through the normal, and healthy, process of back testing...Once the consolidation phase is complete, GTAT will start its inevitable climb up... and soon! Of that I pretty certain...

    Final Thoughts: The markets from time to time, suffer from bouts of "irrational exuberance." That's of course when it is going up...On the way down, the markets tend to suffer from a different malady...I call it irrational depression...I believe that the current malaise in GTAT's stock price is due to irrational depression and all it needs is a dose of Xanax and it will turn around in a hurry...and I expect it to receive that dose sooner rather than later...In their last earnings conference call, the CEO stated that this Fall the company will be hosting a webcast to "to provide more detail on our Hyperion and Merlin strategic initiatives and the potential we see as these reach maturity over the next several years." Last I checked, Fall starts in a week...with the current state of depression pervading over GTAT longs, I believe that Management will throw a few needed morsels by announcing this webcast soon...and that should provide the needed shot in the arm and help lift the current heavy cloud of doom and gloom...

    seekingalpha.com/article/2382785-gt-adva...

    Again, all imho...

    Best~

    karim

    DISCLAIMER: All postings made here are strictly for my personal record keeping and in no way, shape or form, am I even remotely suggesting others to follow my Buy and Sell moves. Trading options is definitely not for the faint of heart as one's portfolio can move up, or down, anywhere between 10%-30% during a single trading day. Feel free to follow my progress here, but PLEASE do not follow my moves. However, if, in spite of all my exhortations, should you decide to do so, be advised that you, and ONLY YOU will be responsible for any losses that you may suffer...In other words, the onus is strictly on you. On the other hand, if the move(s) result in a profit for you, I am open to discussing a split. ;-)

    Disclosure: The author is long GTAT.

    Sep 14 10:52 PM | Link | 1 Comment
  • Scoop: Apple's IPhone 6 Will Have Sapphire Screen!

    About 13 months ago, on July 26, 2013, in a post titled The Impending Move in Apple, and with Apple's stock trading around $440 (pre-split), I called the end of its long slide from over $700 to the low of around $385 and predicted that having broken through its Bearish Resistance line on its PnF chart, Apple was going to make a new all-time high:

    "My humble prediction is that Apple has made its lows and has just started the inevitable march..Upward...in pursuit of its recent $700+ peak...in other words, a $260+ move in Apple's stock price could be in the offing and it may happen sooner than many believe...after all, only with Apple's help can NASDAQ achieve Nirvana...and achieve it will...you can count on it...

    This impending move in Apple should be explosive, and the ride, pure doozy...I am counting on it!"

    seekingalpha.com/instablog/6566781-optio...

    For the record, my Apple prediction came almost 3 weeks before billionaire investor, Carl Icahn disclosed in a Twitter post on August 13, 2013, that he had taken a substantial position in Apple.

    Better late than never...it took Apple a little over 13 months to finally make a new all-time high @ $103.74 (which works out to a split-adjusted price of $726.18)...

    Of course, in that same post, my other prediction that the NASDAQ would make a new all-time high in "6-9 months" unfortunately turned out to be a dud! However, in my defense, since that post, the NASDAQ nonetheless has made a pretty impressive move, up over 1,000 points, or 28%.

    Today, with Apple now back as Wall Street's darling, and 2 days before the launch of its iconic iPhone's latest re-incarnation, scheduled for September 9th, 2014, the most pressing question in the publics' mind is whether or not the new iPhone 6 will come with an indestructible sapphire screen?

    Most of the analysts who cover Apple have come out and said that the new iPhone 6 will come with the same old Gorilla Glass..Even the most reliable Apple sleuth, KGI Securities' Ming-Chi Kuo, in a research report that came out 3 days ago, has also predicted that the new iPhones will not have sapphire screens.

    I have been doing some sleuthing of my own and have come to the opposite conclusion...So here is my scoop...

    I believe that the iPhone 6 will indeed have sapphire cover.

    In this post, I will share a couple of pieces of circumstantial evidence:

    Yesterday, I asked a friend in Arizona to take a trip down to GTAT's massive plant in Mesa to ascertain how busy the place is on a weekend...Here are a couple of photos from his reconnaissance:

    (click to enlarge)

    (click to enlarge)

    (click to enlarge)

    What the above pictures prove to me is that even on a hot Saturday afternoon in Mesa, there were a boatload of people working at the GTAT sapphire plant rather than enjoying the weekend with friends and family..Even though this piece of evidence is very circumstantial, I believe it bodes well for all those clamoring for a sapphire screen...

    My next piece of circumstantial evidence is very intriguing..Earlier today I was tipped off to an article in MacRumors that mentioned a former GTAT employee, Paul Matthews, who apparently played an important role in selling GTAT's sapphire technology to Apple...I located his Linkedin profile in which, this former GTAT employee made the following statements:

    "Closed $966M in new bookings in the first year of the products launch; achieved more bookings than all of competition combined.

    Drove internal programs that increased customers yield by 50% while reducing their cost by 40%; this program led to an additional $100M in sales"

    "After marketing and selling the ASF into the LED market targeted mobile screen covers as a market for growth, conducted a focused marketing campaign and developed a cost model across the supply chain that has brought sapphire to Apple's mobile display"

    Note the use of present tense above when he states that : "has brought sapphire to Apple's mobile display."

    In other words, Paul Matthews, who claims to have played a major role in selling GTAT's sapphire technology to Apple, openly states that sapphire is Apple's new mobile display!

    What makes it even more intriguing is that a couple of hours after I read his above claim, he took his profile down, only to repost it a little later but sans the word "Apple" from the above statement...

    Unfortunately for him and Apple, I had saved his original Linkedin page...

    (click to enlarge)

    And here is a close up of it:

    (click to enlarge)

    Based on the above, admittedly circumstantial pieces of evidence, I believe that Apple's new iPhone 6 will indeed come with GTAT's indestructible, sapphire screen.

    You heard it here first!

    Now I will keep my fingers crossed hoping that I don't have egg on my face come Tuesday...

    :-)

    karim

    DISCLAIMER: All postings made here are strictly for my personal record keeping and in no way, shape or form, am I even remotely suggesting others to follow my Buy and Sell moves. Trading options is definitely not for the faint of heart as one's portfolio can move up, or down, anywhere between 10%-30% during a single trading day. Feel free to follow my progress here, but PLEASE do not follow my moves. However, if, in spite of all my exhortations, should you decide to do so, be advised that you, and ONLY YOU will be responsible for any losses that you may suffer...In other words, the onus is strictly on you. On the other hand, if the move(s) result in a profit for you, I am open to discussing a split. ;-)

    Disclosure: The author is long GTAT.

    Sep 08 12:28 AM | Link | 16 Comments
  • David Tepper Couldn't Be Reading Options2Wealth...Could He?

    Exactly 2 weeks ago, on May 26th, 2014, in the post titled The Nasdaq Correction Is Over...imho, I predicted the start of a new bull run by the NASDAQ and one of the reasons for my bullish pronouncement was the bearish sentiments pervading over the markets...In that post, I stated:

    About 2 weeks ago, a friend asked for my thoughts on the Nasdaq's health and my comment to him was that there is way too much fear in the markets, which, to me, serves as the contrarian indicator...The markets love to climb the wall of fear...more fear, the better...And when I read headlines like David Tepper, the top hedge-fund manager who 2 years in a row was the nation's highest earning market prognosticator, and one of its biggest bulls, was getting nervous, to me, that was yet another signal that the Nasdaq has established a bottom and is heading higher...

    goo.gl/iMNhWo

    Well, since my 2 week old bullish pronouncement, the NASDAQ has gone from 4,185.81 to this past Friday's close of 4321.40, up 3.24% and, as per my prediction, is now only 50 points away from eclipsing its near-term high established this past March of 4,371.71.

    Now here's the fun part: This past Thursday, on June 6th, exactly 10 days after my NASDAQ prediction, a chagrined David Tepper, returned to CNBC to confess that he indeed has seen the light, gotten religion and is back to being a bull again: www.valuewalk.com/2014/06/david-tepper-t.../

    Of course I am under no illusion that Mr. Tepper, who takes home multi-billion dollar paychecks, has even heard of me, let alone bothers to read my obscure blog, but nevertheless, it is fun to imagine and play along...

    :-)

    One of the reason's I started my blog is to keep a running record of all my market bets, good, bad or ugly...One unfinished business is to bring together, under the Options2Wealth umbrella, my previous market pronouncements as well...Therefore, if you will allow me the indulgence, I would, for the record, note my previous market predictions here as well:

    About 3 years ago, on June 6th, 2010 to be exact, well before I started Options2Wealth, I stumbled upon a blog on Seeking Alpha where the writer was all doom and gloom about the then health, or lack thereof, of the US stock market...The Dow had just rolled over and closed below 10,000...9,931.91 to be exact, and this blogger wrote a post titled: Friday's Controlled Descent in Equities: A Perfect Storm Is Brewing...to which I made the following comment:

    I disagree...

    First comments on this site...The is a market that is awash in liquidity and for someone who has been around the block a few times, high liquidity means high stock prices...PERIOD! All the doom and gloom is just what the doctor ordered so that all the weak hands let go of their stocks...What you are seeing is a consolidation of the 10,000 floor for the inevitable climb up...And mark my words, this market is going up and the ride is going to be a doozy!

    SafeList.com 6 Jun 2010, 10:37 AM

    (SafeList.com was the name of my then company and it was the moniker I used to use on Seeking Alpha)

    Then 8 months later, on February 1st, 2011, with the DOW up some 20%, I returned, not to thump my chest and take a bow, but instead, to make yet another crazy prediction, commenting on another of this blogger's bearish posts, this one titled, A Turning Point in Gold:

    Bo,

    On June 6th, I posted my very first comment on Seeking Alpha, to one of your posts "Friday's Controlled Descent: A Perfect Storm is Brewing," and for that post, I received 29 Thumbs Down...LOL!

    In disagreeing with your post then, I said the following:

    "The is a market that is awash in liquidity and for someone who has been around the block a few times, high liquidity means high stock prices...PERIOD! All the doom and gloom is just what the doctor ordered so that all the weak hands let go of their stocks...What you are seeing is a consolidation of the 10,000 floor for the inevitable climb up...And mark my words, this market is going up and the ride is going to be a doozy!"

    Today, 6 months later, the DOW has moved up 20% in just 6 months, from 10,000 then to today's 12,000. And just like I predicted, the ride has been a "doozy!"

    Now, 6 months later, unfortunately, I again have to disagree with your fundamental assertion...If the price of gold goes up, it will be because there are 3 billion folks in India and China whose living standards are rising and they are becoming a part of the middle class and they need a way to flaunt their wealth and buying and wearing gold is an age old tradition...nothing more. The US monetary policy has been ABSOLUTELY CORRECT for the last 2 years. Even the gloomiest economist and a perennial Bear, Robert Aliber, has turned into a Bull and is predicting a gangbuster US economy for 2011...

    Even though the Dow is up 20% since my last post, this doozy ride is just getting started...If you are hunkering down and buying gold as a defensive position, with the expectation that this stock market move is a fool's move, then, I am afraid you will find yourself on the sidelines, with this freight train of a Bull market will continue to roar along, without you, for the ride of a lifetime...

    :-)

    kp

    Feb 1 12:23 PM|1 LikeLike|Report Abuse|

    seekingalpha.com/user/665090/comments

    (For those who are still reading this post, you will have accurately surmised that I had to be under the influence of some intoxicant (red wine), because I incorrectly counted my time since my previous post to 6 months instead of the correct 8 months...LOL)

    -------------------------------

    Now, 3 years later, the DOW is up another 40+%, and almost daily, along with the S&P, is making new, all-time highs and only the NASDAQ is behind the curve...Many of my regular readers must be aware that I am on the record, as far back as July 26th, 2013, in a blog post titled The Impending Move In Apple..., predicting the inevitability of the NASDAQ, joining its peers, the S&P, the DOW and the RUSSELL 2000, in making new all-time highs...Has not happened yet, and certainly didn't happen within my predicted time frame of "6-9 months," but new high it shall make...

    ...And it will, this year!

    Hopefully, readers of my blog will not take this post in the wrong context, as an exercise in self-aggrandizement, but will recognize that my recent prediction on the NASDAQ is not an isolated prediction and that there is a method to my madness...

    :-)

    kp

    DISCLAIMER: All postings made here are strictly for my personal record keeping and in no way, shape or form, am I even remotely suggesting others to follow my pronouncements / prognostications. However, if, in spite of all my exhortations, should you decide to do so, be advised that you, and ONLY YOU will be responsible for any losses that you may suffer...In other words, the onus is strictly on you. On the other hand, if the move(s) result in a profit for you, I am open to discussing a split. ;-)

    Disclosure: I am long QQQ.

    Jun 08 8:20 PM | Link | 3 Comments
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