If HWP goes down, it is because the funds have stepped back their purchases during this correction. But then HWP will be part of the first group to rebound. Also I think it will be worthwhile to look at other second tier stocks that have been recently accumulated by the funds like CPQ and GTW. Add TXN to this list which also appears to be accumulated by funds as I thought. When I saw strengthening technicals with this stock, and I saw it was a second tier stock that was a leader of its industry in the past, I did expect to find the funds accumulating this stock.
TXN is in the beaten down semi industry. A benefit of TXN over other semis is that in their strategy they rely on their analog chips for a significant part of their income which is a much less volatile market than the digital chip market like PC memory chips. This is a strategy that they decided to pursue at least one year ago. So this approach should return them more consistent results which will afford them a higher P/E compared to other companies in the more volatile PC memort market, once the market recognizes this.
Since the market is in its dysfunctional way beginning to come to terms with decreasing earnings and revenues, IMO more of a priority will eventually be placed on consistentcy of earnings. This will show up with the companies that have been reporting consistent positive earnings over a long period of time which have been left out of the picture due to other high-flying growth companies garnering the publics attention. Note how despite the broad marked decrease in the earnings prospects of companies, many companies have managed to beat their consensus estimates. They do this through earnings guidance of the analysts and the creative management of their financials. This pattern is showing up strongly this time around because there is more at stake since it is not as easy now to in a genuine fashion beat previous quarter's earnings.
The first tier stocks like INTC and MSFT appear to be getting some fund money on a down day like this, but still is comparatively small. They are seeing a mild increase in fund purchases. The second tier stocks are seeing comparatively light trading by the funds. The trading is mixed with both buying and selling. Here is a breakdown of what I have tracked on tape so far:
Public Money: MSFT , INTC, DELL.
Fund Money: CPQ, HWP, GTW, TXN , IBM.
I cannot consider DELL a "first tier" stock because it is still too new and attracts too much of the speculative public monies even though it can be considered a leader in its industry. IMO it is more of an "up and coming" first tier stock justlike the box makers are still early in their growth curve. I look at this in terms of there the "big money" can go and when it does it is predominantly in control of the price of the stock. There is just too much volatility by speculative monies with DELL which this scares off allot of the more conservative longer term monies. Give DELL a couple years and this can change.
As I stated earlier, I have been noticing the mixed buying and selling of IBM by funds, with selling predominating in the 50K block category. However, the 100K blocks that periodically stepped up to buy this stock has helped keep IBM moving up. Today, there is now a comparitively light mixed buying and selling by the funds. What is worth noting here is the presence of 100K blocks selling this stock on a down day.
HWP had a good amount of very large block (VLB) purchases on the order of 500K blocks. Around 10:30 A.M. the large block activity on the stock became more mixed with buying and selling with 100K to 200K transactions predominating. Now there appears to be a net selling of these 100K to 200K blocks which is helping to keep the price down since there is no comparative buying interest. However, it is interesting to see that the price help very well during what appears to me series of large block selling activity. So either the large block buying and selling interest is more evenly matched despite the number of prints that look to be sales, or there are buying interests stepping in to accumulate shares on a large basis. Also I have to keep in mind this is not NASDAQ. There is no "middle man" where each share usually shows up as a "buy" and a "sell" print in relation to the current quote of the stock. So more of an emphasis needs to be placed on the resulting price action of the stock then specifically where the print is in relationship to what appears to be the bid and ask of the quote. The price action that results from prints ultimately tell the picture of the stock in both cases, NYSE and NASDAQ, anyways. Time will reveal more of this picture. Now the funds are more agressively stepping up to puchase VLBs of 500K size. So the buying strength is still there for this stock.
Any comments?
By the way, there appears to be 500K type of block buying with LU.
Bob Graham |
