Sir Solid - You have joined the most lyrical investment thread on the planet. Thank you for honoring us all with your very timely efforts.
It is true that my relationship with Neo has lost some of it's innocent blush as I have alluded to in prior posts. Please allow me to list my grievances unfettered by rhyme:
1. Float - At IPO 40% of the stock was held by four insider venture capital firms: KPCB Associates - 3,517,543 shares, Sequoia Partners - 3,517,543 shares, U.S. Venture Partners - 2,087,719, and Japan Ass. Finance - 1,350,877 shares. They have subsequently been released from all selling restrictions and can sell their holdings without notification under rule 144.
2. Selling Supply at $19 - I suspect that the large overhang of stock selling at $19+ originates from the above sources. Knowledgeable insiders selling into strength makes me nervous for some reason - particularly since they have such great wads of it.
3. Intel Mobil Pentium Two Roll Out - Intel PR's sophomoric intentions were not lost on me when they preannounced their new graphics chip the same day as Neo's last blowout earnings report. They will use the April 2 mobile Pentium 2 roll out to inflict maximum pain. Including announcing works in progress for stuff they don't have yet.
4. Pentium 2 Solution - Not helping matters is Neo's lack of a Pentium 2 solution. The compatibility of Neo's solution with the new Pentium 2 AGP bus is unclear. Neo is the undisputed leader in mobile graphics for the existing Pentium chip. Intel's very existence depends on obsoleting the Pentium as quickly as possible and moving the market to the Pentium II.
5. First Sequential Earnings Decline - My calculations show that the next earnings release will show the first sequential decline in earnings for Neo since it became profitable. By my estimates earnings will be .28/share down from .31 last quarter.
6. General Market Overbought - Topping it all off, the market is overextended at this point and is due for a pull back.
In light of the above factors I have adopted a defensive and nonconventional strategy. I sold my entire Neo stake. If Neo breaks through $19 1/2, this will relieve my concerns about the avowed insiders and I will jump back in without a thought and give up less than a point as insurance.
However, if significant selling pressure develops here as I suspect, then I will assume that the big knowledgeable holders are running to the exits with a sense of urgency ahead of the upcoming announcements. Caution is advised in this case until their motivations are clear.
Please forgive me:
Wenn lanzenstechen mit logik
Scheint ein bisschen zu pervers.
dann ordre dein denken
mit grund und mit vers.
vincenzo
(If jousting with logic
Seems a bit too perverse.
Order your thinking
With reason and verse.) |
