Super-Sizing Skyworks (NASDAQ:SWKS), Selling IBM

I took advantage of the latest market swoon to triple the size of my position in SWKS, buying in at $50.17. The stock is currently up, trading at $53.93, and I expect it to continue to rise. Some might hesitate to purchase more of a stock which has risen 100% in value since the initial purchase, but tripling my position size is an extension of the original thesis.

What caused the dip in price? Microchip, a microcontroller vendor, issued an earnings warning and an opinion that the semiconductor industry had peaked. Semiconductor industry woes were once again, punishing a great company unfairly. I bought in, and will buy more if the price drops back below $50.

Four days later, SWKS raised it’s earnings guidance for the quarter upwards from $1.01 per share to $1.08. Shares rose, and have been trending upward since. Average analyst price targets are around $60.

I left my internship this summer covering the tech space with some trepidation around my IBM position. The latest earnings report has finalized my feelings on the stock. I exited my position with a 15% loss over the past 2 years. I’m definitely not thrilled about it, but IBM represents one of the last value traps which I had invested in prior to coming to school. For now, I intend to watch and wait from the sidelines on IBM. A turnaround is possible, but it’s going to take a new management team with a new strategy.

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Author: secondhandstocks

The genesis for this blog stems from a Marine buddy and I came back from Afghanistan with more money than knowledge, and heedlessly tossed our hats into the stock market ring. A few months later, I remember discovering the classic book The Intelligent Investor by Graham and Dodd, and ravenously devouring my first introduction to value investing. That framework - with some generous additions by Seth Klarman, and Joel Greenblatt among others - guides my investment philosophy. I spent five years working in the intelligence field, both in the Marine Corps and then for a government agency after that. I speak Arabic and Pashto, have programming and analysis experience, and enjoy investing in technology companies as a hobby. I also spent a year on Wall Street working on a #1 Ranked Institutional Investor team, before deciding that that the Sell-Side was not for me.

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