Comparing EMC and NTAP, EMC stock is more volatile. It went up more in the bull market, and it's going down more in a bear market. To the extent that any tech benefits from "flight to quality", EMC is a better-known, bigger company, with a longer track record, and a bigger installed base.
On a day when LU has to deny rumours of impending Chapter 11, CSCO goes below 100B market cap, and CNBC is talking about margin calls, a stock like NTAP is exactly what a mutual fund manager does not want to be holding.
EMC has already warned (and then, oddly, took back their warning). NTAP hasn't warned yet, but the analysts are starting to downgrade and cut forward EPS estimates anyway. It may be, that by the time NTAP gets around to warning, everyone has already figured it out, and it's already in the stock.
NTAP today seems a lot like Cymer in 1998. Cymer is a little semi-equip, which owns its niche. A well-run small-cap hi-margin hi tech. When the big caps of its sector went down, Cymer fell to ridiculous levels. I kept on wondering what was wrong with the company, that investors had sold it off so badly. There was nothing wrong with it, it was just a small company in a out-of-favor sector.
I think all the risk in this stock is sector and market risk, not company risk.
At this point, I'll be taking a LT position in NTAP, whenever it looks like some of that 2 Trillion in sideline money is going back into stocks, and whenever the stock looks like it might be forming a base. But I am in no hurry. Watching and doing nothing is what I've been doing for the last 12 months with NTAP, and that's been the right thing to do. |
