Zeev, I'm not sure I understand totally. If the stock is at $20, and the probability is strong for an upward movement in the share price, one should close a short position, regardless of whether it's a hedge for the convertible or not, shouldn't one? I mean, if you knew for certain that the share price was going to be $10 higher in a month, you should definitely liquidate any short position, correct? It simply means going from a hedged position to one that isn't hedged. Thereafter, one could reinstate the short position at the higher price and return to being hedged. Of course the argument hinges critically on the strength of conviction of the upward movement, but a lot of favorable sentiment seems to be moving into the sector. I think the last of the flowing blood flowed 2-3 weeks ago. If that was the absolute bottom, there's a lot of upside yet to come.
1) Earnings improvements will propel prices upward.
2) There will be a slew of upgrades coming soon that should add upward price momentum
If we get some big momentum players jumping on too, these stocks could regain their ridiculous PEs with much higher earnings and that will move the share prices of companies like Asyst, Cymer, Etec, Kulicke & Sofa, (all holdings of mine) to those stratospheric levels where they sport PEs of 60, 70, and 80.
Jess. |
