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Although not a value decision and not appropriate really for this Value board but I do listen to LARRY PESAVENTO "TRADE WHAT YOU SEE" on the TFNN Youtube channel now Live each morning (6:00AM to 6:30 AM PST) He has more experience than me over 50 years technical trading (a chart guy).
My morning starts at 5:00AM as I study stocks and the markets and am NOT a Day trader but do study the companies I invest in and make bets based on value and 'potential' assets/technology that are under development and/or emerging (in the case of IBM).
I do respect Larry's observations (usually good w/ Gold & commodities) and after watching daily for more than 10 months, he actually commented on INTC today. He typically NEVER comments on individual stocks.
For those interested his INTC observations start at 2:35
I like BOTH companies (INTC & IBM) but for different reasons. I see my IBM position as a long term Bond w/ 10%-15% upside. Maybe more if/when they spin off their cloud division (including their semiconductor product to be manufactured by Samsung that works in their cloud platform).
According to Larry and his chart reading, he mentioned the stock reached it's retracement (price) target and has a 50% chance to test previous lows. So I planned to sell my high cost shares in INTC and did so today.
I do think INTC is an excellent value hold but I prefer the IBM dividend (5.4%) and 10%-15% upside. I believe it's a 3 year hold at least vs INTC maybe a 18-24 month hold based on a typical chip development cycle. That is why I own BOTH companies. IBM a 2.5% portfolio position and INTC a 0.7% portfolio position.
I have orders to Buy more INTC at/below $48/share and IBM at/below $112/share
There was this news on INTC today:
Intel sells storage unit to SK Hynix in $9B deal, confirming reports
The acquisition includes Intel's solid-state drive, Nand flash and wafer businesses as well as a production facility in the Chinese city of Dalian.
Shedding another non-core business could help Intel focus on fixing its chip technology woes.
I actually saw it as a Net Positive since it was a plant located in China and I try to not invest in any company located in China (I am an America First investor) and like American jobs. So my move to IBM may not be weeds but fruit (takes 3 years to get 1st crop) since their 'cloud' platform may/could turn into a very large recurring revenue stream but takes time for the fruit to mature.
I really had no intentions to sell my high cost INTC shares today but Larry put the bug in my ear and that was the eventual plan.
Another reason why I like IBM is there is so much negative news from 'so called' experts . It's an old Dinosaur and too much legacy baggage. Here is a case of a new CEO 4/6/2020 coming into a company w/ legacy assets but an excellent balance sheet that 'must' make change.
The new CEO ( Arvind Krishna) is a technologist with business chops. He both led the company’s renowned research division and was a driving force behind its $34 billion acquisition of Red Hat in 2018. He’s been at IBM for 30 years.
It will be up to Jim Whitehurst, Bridget van Kralingen & Howard Boville to implement. I also suspect there may/could be another large acquisition (as large as $10Bln maybe more).
His inaugural message did suggest that change is afoot in the executive ranks. As the company had previously announced, Jim Whitehurst, previously the CEO of Red Hat, will become IBM president. Bridget van Kralingen, a dynamic executive who had led IBM’s blockchain efforts, will become senior vice president of global markets, touching IBM’s most important sales relationships around the world. Howard Boville, a longtime finance and telecom executive, will join IBM next month to lead the cloud business.
I will give him 3 years and there s/d be a better than 50% chance they achieve they goal of top line revenue growth in the teens.
I will never buy any of these cloud service companies that burn cash, book losses but want to make it on future subscriber growth. You pay based on some metric based on Price to Sales, there is no mention of earnings and cross you fingers they have the capital (and secondaries) to grow their platform.
So will see if I get some fruit in 3 years and then nice crops Y/Y after that. My orange tree took 5 years but I now get a nice crop every year.
I have been wrong in the past and will be wrong in the future.
