Friday, October 16, 2020

I Traded 3 Companies Recently.

I am going to start a new series on the US companies that I am holding. Every company will have a YouTube Video followed by a post (Do find my YouTube Channel here).

But since this is first post, being the start, I will just be controversial a bit.

I will be talking about some companies that I no longer hold. Or rather I traded them within a very short time span with the help of my TA guru friend and my Fundamental Scorecard's Combined Scorecard - Check out the revamped website now!


Having called myself "TUBInvesting", but ironically I traded some companies recently. It was actually quite an experiment for me. 

There were 4 companies provided by the TA guru friend. 1 of them made it to become a longer term holding of 3 months to 6 months (which I will make a video on it). Therefore, I will be talking about the reminder 3 companies in this post.

In addition, I like to add that since quantitatively I was able to depend totally on the combined scorecard results, I had more time to research on the qualitative stuff. These research came out 1 or 2 days of free night time I had (after my daughter go to sleep and then I finish doing the chores like cleaning her bottles, toys, etc...So generally very little time per night).

Without Further a Do, lets take a look at these 3 companies...

1. My Short Analysis on Intel Corporation (Ticker: INTC (NASDAQ))


The Positives:
- Great as a company in terms of value.
- Investing heavily into mobility as a service but when will it be mass used.
- Google and Microsoft are still using Intel for its latest product.
- Combined Scorecard shows that it is at fair value but its intrinsic value is still slightly higher than the share price at that point in time.

The Negatives:
- Future looks bleak as ARM and AMD eating its lunch. That is their biggest piece of pie.
- Had a good Q2 not because of gaining market share but probably because there was a bigger pie for everyone. 

Conclusion:
- Investing in this company is like investing with a cigar butt mentality.
- It will still have a good year generally as PC/laptop sales increases due to the shutdown.
- Nevertheless, the Share price will be very volatile with AMD and ARM continuing eating up its market share.

Holding Period:
A Short term call till the next 10K is out.

What I did:
I bought on 2 Oct 2020 at US$51.77 and sold 9 Oct 2020 at US$53.180. At the back of my mind, I just cannot get my mind off the fact ARM and AMD is coming to get Intel.

2. My Short Analysis on ABB Ltd (Ticker: ABB (NYSE))



The Positives:
- Changing business model with a new CEO in place this year.
- Diversified customer base.

The Negatives:
- Revenue downtrend and order downtrend 
- Net Profit is better NOW due to diversification of Powerplant business to Hitachi and changing it to JV. In addition, sold solar business.
- A HUGE Share buyback scheme also created more hype on the company.

Conclusion:
- The business is in a transition and I will be expecting the financials to be volatile. 
- Furthermore, I suspect manufacturers will try to NOT order more equipment at this point in time.
- I suspect next quarter financials may not be as good but supported by service revenue.
- In my opinion, current Share price is significantly hype.

Holding Period:
Fast in, Fast Out. 

What I did:
Since it was experimental, I bought before I did any basic analysis. I bought on 7 Oct 2020 at US$26.20 and sold 9 Oct 2020 at US$26.51. 

3. My Short Analysis on Dell Technologies (Ticker: DELL (NYSE))


The Positives:
- Market value stands only around US$51bn , which is lower than their ownership of 80% of VMware that is valued at US$63bn plus their 86% of Secureworks (Cyber security firm) valued at US$968m. Dell's business itself is deem at zero. This includes the PC/laptops and Data center hardware.
- VMware is only of the Top 6 cloud service companies as per article.
- Dell also contemplating to buy the remaining stake of Secureworks as per article. Do note that Secureworks is growing with revenue and has high FCF currently.
- Synergy in their business, especially with the cloud business.
- PC sales are increasing in the 3rd quarter as per article. Dell and HP contributes more than 60% of it.

The Negatives:
- A value investing theory based company. May take a long time to fulfill potential.
- Dell has over US$50bn of debt.
- As per article, any VMware sales will not happen before Sep 2021.

Conclusion:
- If Dell is intending to sell VMware stake and buy Secureworks stake, it will definitely unlock value for the shareholders.
- Even if it does not, the way it is involved in all forms of computer services and enterprises services, we should be expecting even better sales in this pandemic.
- Now that interest rate will remain low, their high debt does not seem so important. Delays to sale of VMware may continue.
- Dell is currently valued at 0 dollars.
- Nevertheless, the only uncertainty is if DELL can still operate so well after the pandemic as competition is tough in the spaces that it is in.

Holding Period:
3 months to 1 year. 

What I did:
I bought on 13 Oct 2020 at US$68.65 and sold on 14 Oct 2020 at US$71.00. I place a GTC sale price on 14 Oct 2020 and it got hit after I have gone to bed. Nevertheless, there is some form of uncertainty in this company that I will only continue to place it in my watchlist.

In short

When I started this experiment, I had wanted to try trading and trading these position. This means with a short term holding period in my mind when I purchase these companies.

At times, I felt the helplessness when I was waiting for answers from my TA guru friend. In addition, the anxiety of knowing that I don't know what will be the price tomorrow make me have "a harder time falling asleep".  This is especially so when I bought into some of the companies that I do not have enough confident when it comes to their FA.

Thus, this make me even more convinced of my theory of having certainty, being comfortable and having conviction when it comes to purchasing companies. Furthermore, it also reassured me that my view of having a long term mentality in purchasing companies is very important, even if you may end up selling them in the short term.

Investing is after all also about not making rash decision and the mentality will help you have a better sleep at night.

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