On July 25th, 2012 Western Digital Corp. (WDC) announced their FY2012 results - and beat consensus EPS estimates of $2.47. In after hours trading on July 24th as well as today, the shares moved up slightly, so it seemed like a good time to take a look back at some of the Amvona analysis of the company.
On May 17th around 2 p.m. a call came in from a friend, he said he had just received a call from his broker, who asked him “what he wanted to do about Facebook’s IPO”. The response was intricate and subtle;
“wouldn't touch it with a hundred foot pole”
The advice was to consider buying Western Digital (WDC) instead if he had to buy something. Sensing that the answer may have been a bit curt, the following email was sent shortly after the phone call:
According to a research report published last Friday, Bank of America has downgraded Western Digital from Buy to Neutral, and lowered their target from $54 to $46. In the report, Bank of America said:
"WD reported significantly better than expected F3Q12 EPS at $2.52 vs. our/Street $1.60/1.55, driven by revenue and margin. WD guidance was disappointing (EPS of $2.35-2.55 vs. our/Street prior $2.67/2.30) and commentary pointed to softer demand than expected going forward, at current/elevated ASPs levels, and some pricing concessions (certain HGST customers, pre-acquisition). It appears the HDD industry can't have it both ways for much longer – pricing/margins at high levels, and expected strong demand, with assumed channel inventory refill. We step to the sidelines for now, despite attractive valuation."
On December 19th, 2011 we began purchasing shares of Corning Inc. for investor accounts – these purchases were made at an average price of $12.73 per share. Unfortunately we didn't have time to write an article explaining all of the reasons why we felt Corning represented a good value for investors, we did however mention the purchases in our February 1st, 2012 article The Prime Ministers "One Dollar" bets when we published our correspondence saying:
“haven’t always been able to publish all ideas (but always execute for friends and family) – for e.g. haven’t had time to write an article on it yet, but have also been buying GLW (mostly below 13).”
Probably because of some yet-to-be-diagnosed neurosis our idea of a “good time” is listening to replays of company conference calls - the company’s that we own for investor accounts are a lot of fun, but our real interest is their competitors.
We were waiting for at least a 7% price jump when we published our article Hard Drives, Floods, Monasteries and Investment Returns on Dec. 2nd , 2011 – good thing we weren’t holding our breath. We thought the article looked pretty smart, not only because the WDC investment had already returned 30.2% to investors by the time we were able to publish, but also because we had this really crazy $67 dollar price target on the stock (way higher than any other analyst at the time) – we thought people would listen.
We went on to make impressive sounding arguments about sociology like this artifice:
The following is a copy of email correspondence we recently had with a friend and in the same spirit as our post "Correspondence with a friend on Investing".
Help was offered after learning of tremendous losses he had suffered in a bad investment. We decided to publish the correspondence because it reflects the usual questions and fears often heard from investors as well as the answers provided - and because we think it's more efficient to provide representative correspondence once than continue to provide the same answers on an ongoing basis.
Persons names, the origin of the prime minister, and various and sundry details referenced have been either changed or omitted in order to protect their privacy - despite this, we still could not publish all of the related correspondence without revealing identities.
On December 22nd, 2011 we began purchasing shares of American Greetings Corp. at $12.91 per share for investors. To our surprise we were able to get several more large blocks of the shares in extended hours trade yesterday evening (Jan. 4th, 2012) for the same accounts.
On December 22nd, 2010 we published our article “SKX and the markets strange reaction to Sterne Agee”.
We were going to title this article “We’re so smart”, but we thought that there was at least a small possibility that readers would fail to appreciate the depth of our humility if we did that, so we went with the second most obvious title we could think of. Besides after SeekingAlpha’s editors picked up our article “Houston, we've got a problem - Bevilacqua” a few weeks ago and exposed it to their 50 million visitors a month by featuring it on “Market Currents”, then selecting it as an “editors pick” once we did finally submit it to on our own, we began to think that our humility may actually not be as secure as we once thought.
Exactly one year ago, on September 28th, 2010 we purchased shares of Sanderson Farms for investors. Two days later we published our opinion on Amvona in our article "Can you say 'Chicken Feet' in Russian? The case of SAFM and PPC". Three days later SeekingAlpha published the article Here.
We thought we would take a look back at the thesis in that article, now that the period for short term capital gains tax has passed and examine how the issues performed against one another, but also against the benchmark S & P 500 (Alpha).
The following is provided as related material the article "Update: Sanderson Farms and Pilgrim's Pride one year later". It is a copy of email correspondence (with responses inserted into the text) with a friend who had asked for "actionable advice" on a stock. The date was Oct. 21st, 2010. We hope that the correspondence reveals more of the thought that went into the purchase of shares of SAFM for readers of the article above.
In the spirit of updating past articles as we did on August 10th, 2011 we thought we would do another update, albeit this time only for a bit of levity.
On January 28th, 2010 we published one of our first articles. We're pretty sure we may have been one of the few, if not the only bloggers in the world (on that day) to pose the curious question “Would the Pope buy an iPad?”. At the time Amvona had not yet become a dedicated blog (it was still a commerce site with a blog as an afterthought) and the categories were not yet focused on the topics they are today.