To ALL: here are my devil's advocate rebuttals, FWIW:
1) I completely agree that IF the projected earnings for the next year or two come through, then KLIC is very attractive at these levels. But what if those numbers are too optimistic? Analysts screw up all the time. Insiders know the industry better than analysts, and they don't seem to be as optimistic (details below).
I agree that most insider sells are not significant. Insiders at Microsoft and Cisco sold steadily throughout the 90s, and it certainly did not portend doom. However, the amount they sold was typically a small percentage of their holdings. In my experience, whenever I see several insiders selling more than half their holdings, it's bad. See below.
2) The main lesson from Gottfried's charts is that stock prices peak well before the business does. It confirms very graphically what is already well known among investors. The charts don't predict how long this cycle will last.
I've made a lot of money over the years playing my two favorite cycles: semiconductors and the Christmas/retailing cycle. The critical lesson to learn is you MUST get out several months before the actual peak of the business.
Check out this chart of eToys. Did the stock push higher in December when orders were pouring in at record numbers? Was there a runup in January, prior to their earnings announcement for their spectacular winter quarter? Nope, the stock had peaked well before then.
quote.yahoo.com
(Incidentally, I think eToys will be a nice short term trade this season once again, as it has plunged to about $6 a share. I would suggest to you all to pick up some shares this summer at $4-$6, and you are likely to see a nice pop as the Christmas season approaches, probably 100% or so as it pushes to at least $10-$12. Once again, you MUST get out by November at the latest!!)
Thus, in summary, I think everyone who is still long KLIC must ask themselves these two questions:
1) If you believe the premise that stock prices peak well before the business does (perhaps 6-9 months for semiconductors) - then do you believe the actual peak of the semiconductor market is still many months away? Please take into account the presumed global slowdown as interest rates head higher in the US/Europe/Asia, all the fab capacity added last year and this year, the fact that Microsoft and others are warning of sluggish PC sales, and the fact that current semiconductor sales are an absolute record blowout. Can it get even better 6-9 months from now?
2) You must also ask yourself why:
Chairman and CEO Kulicke sold half his holdings at $70
CFO Sprague sold 96% of his holdings April 24-25 at ~ $71
Senior VP Leonhardt sold 95% of his holdings April 26 at $76
Senior VP Salmons sold 93% of his holdings April 24 ~$71
Executive VP Perchick sold 33% of holdings on April 26~$76
Director Page sold 98% of her holdings April 25 at $75
Director Osteen sold 100% of his shares May 1
Director Kulicke (different person) sold 100% on May 1
Insider Shareholder Zadel sold 93% of his holdings April 25
Insider Shareholder Striplin sold 100% on April 27
SI Investor "Red Dragon" sold 100% on May 3 :-)
These are not just a "few" insiders - it's a Who's Who of the executive staff! Everyone who is still long KLIC must ask themselves if they should still hold the stock, when these insiders aren't anymore.
Once again, here is the link to the gory details:
biz.yahoo.com
Conclusion: If the general market improves, KLIC will move higher, just like most stocks. However, IMHO, I don't think we will see another new high of $87. These insiders seemed to be very happy with prices in the $70 range. Don't get emotionally attached to any stock. Don't stick around too long with cyclical stocks.
Once again, I'm in the medical field, and have no particular insight as to what will happen with the semiconductor cycle or stock price. I'm just using the chart data and insider data to draw my conclusions.
It will be fascinating to revisit this in 6-9 months. If I'm wrong, then at least I'll have good company (all the KLIC insiders). KLIC will eventually drop to the teens during the bottom of the cycle, and I'll be back diving in with both feet.
Folks, don't forget to consider the eToys play! |
