Check out the new header! and Welcome Dan! Here's an article from SI's page that most of us will want to read...Forever Falling Tech Drop--he attributes much of the carnage in the tech area to tax loss selling. Certainly would help explain things here...
In early September, Wall Street introduced its latest roller coaster ride, called the Forever
Falling Tech Drop. Those who decided to test-drive this new ride wanted off as soon as it
started. Like the Titanic, this roller coaster ran into a few problems and sank faster than
anyone had anticipated. Riders wished they had brought ulcer pills and a portfolio shield
of armor before boarding the ride.
Some people think roller coaster rides are all the same. Others say the Forever Falling
Tech Drop is the same roller coaster as previous ones -- it simply got a new name. Scott
Schuppie of Grace Equity Management attributes much of the carnage in the tech
area to tax loss selling. Even though the tech area has been beaten down, he is still
bullish on the longer-term prospects of the sector.
Schuppie notes that from a macro point of view, the old tech leaders, including
Microsoft, Intel, Cisco, Oracle and Dell, are shifting their focus, causing a transition
within the industry. He says Intel, which dominates the PC semiconductor industry, is
transitioning itself into a telecommunications-based chip company. "All of those
companies are going through that type of evolution," states Schuppie. Many of the larger
tech firms are going through some sort of transition, which has created some uncertainty
for the dominant large-caps.
Schuppie is upbeat on the broadband theme
Schuppie's theme-focused investment style concentrates primarily on four sectors:
technology, oil services, biotech/healthcare and financial services.
In the technology realm, two of his largest holdings are EMC (EMC 86), the data storage
giant, and Siebel Systems (SEBL 107), which provides e-business applications.
One favorite at the top of his list is Intel (INTC 44 3/4). Shares of the company have
stumbled, now offering long-term investors an excellent entry point.
"With that washout institutional managers will step up and add to their positions"
Schuppie is upbeat on the broadband theme, focusing mainly on semiconductor
supplies. A couple of names he favors in that space include PMC-Sierra (PMCS 171
3/4) and Broadcom (BRCM 214 1/8).
Optical networking is one idea Schuppie likes an "awful lot." Favorites in that domain
include Corning (GLW 70), JDS Uniphase (JDSU 74 1/2), Nortel (NT 45 3/8) and
Cisco (CSCO 53 1/2). He views the weakness in the optical area as a buying
opportunity. "It looks like many momentum players are jumping out of the optical stocks.
. . With that washout institutional managers will step up and add to their positions."
Juniper Networks (JNPR 190 1/8) makes Internet backbone routers and Schuppie
believes the company also offers great potential.
Schuppie strongly leans toward the oil services sector, saying, "I don't think the price of
oil will stay in the $35 range, more $27-28 is where the happy medium is. Even if oil
moves into the high $20s, I believe companies like Halliburton (HAL 37 1/8), which we
have been focusing on, should do very well over the next 24 months."
"He notes that shares of the company trade at a significant discount..."
Like the technology sector, the stocks of many biotechnology companies have been
beaten down. Schuppie gives the biotechnology sector "two thumbs up" and has an
interest in PE-Celera Genomics (CRA 69) and Protein Design Labs (PDLI 129 1/2).
"We still like Sepracor (SEPR 71 7/8). The Lilly news is disapointing but the company
has a pipeline full of new products coming out across the next 18 months and should do
very well from that perspective," he says.
Schuppie explains that at one time financial services accounted for 10 percent of his
firm's assets, but they now account for only 2 percent of its holdings. Even though he has
reduced his firm's weighting in that area, he is high on Citigroup (C 49) simply because
it is a "really great global franchise."
Another name Schuppie likes in financial services is the E*TRADE Group (EGRP 13
7/8). He notes that shares of the company trade at a significant discount when compared
to other online players such as Charles Schwab. "E*TRADE should do some base
building and looks like it should produce a nice return within the next couple of years," he
adds.
"Buy low and sell high" |
