Greetings all! Today I decided it was time to dump the CYMI common, although I still maintain an options position. Why? Opportunity costs, my friends.
When I scan the horizon and see something like CPQ coming off a bottom, essentially the same PE as CYMI and a core holding in every fund portfolio from tech to growth to value to everything but speculative, indeed an institutional darling, I realize that CPQ is going to go back up to forty with much more force than CYMI. A Fortune 100 company, CPQ will not surrender its position as a dominant maker, marketer, seller and servicer of total solutions .With a full range of products and services, we're no longer talking about a box maker. It reminds me very much of when I started picking up BA 40 leaps when it was trading at 33 (presplit). The same opportunity beckons now.
There is no doubt that CYMI is the force to reckon with in its niche. Therein lies the problem. It is in a niche market. It may make $millions per pop and more on service and parts, but the R&D is massive and CYMI will never enjoy significantly increased margins per unit sold because, once the R&D and fab is charged off, the unit is still very expensive to manufacture. Moreover, we're not talking about selling massive numbers of these things, regardless of the rosiest prognostications.
- Stoli |
