Looks to me that JBL is part of a shorting strategy.
Over the last 18 months, I have noticed an interesting pattern in JBL trading. Whenever bad news comes out about the PC sector (yesterday's report of slowing PC sales), JBL sells off. It appears the stock is part of a shorting program. If we look at the posts by Fenton, and more recently by Skeeter Bug, we can see the logic this is presumably based on. They have concluded that soon as a pileup in PC inventory becomes apparent, that the ECM sector will soon feel the impact.
I think this logic is fundamentally flawed. First, the ECM sector is getting so much new outsourcing that the companies will grow even in the face of a slowdown for electronics goods (a large part of which is PC related sales). Second, they have selected the wrong target; Jabil gets almost no revenues from PCs directly (only Gateway at the present), gets a lot of revenues from HP laserjets (which seem to have less swing in demand, and which is still showing good growth), and is getting a huge new PC order starting to ramp seriously late summer and fall (Dell notebooks).
These short sellers made a lot of money from JBL last winter, spring,and June, as the slowdown in the PC sector coincided with a slowdown and loss of a major 3Com program. But they were essentially temporarily "right, but for the wrong reason". As the real growth story at Jabil became clearly apparent last fall, the stock zoomed past the levels these guys had shorted at earlier in the year.
But now Jabil is at a level where the old games can begin again. Its hard for me to believe that we are back at this again, given the incredible growth scenario laid out by Jabil at the analyst's trip to Florida last Thursday. But it seems we are.
I think these swings are predictable enough that they could be traded.
Anyway, I bought JBL at 36 this morning.
This is all just my opinion.
Paul |
