Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : WDC/Sandisk Corporation -- Ignore unavailable to you. Want to Upgrade?

To: Paul Senior who wrote (10551)	4/20/2000 9:27:00 PM
From: Ausdauer	Read Replies (1) \| Respond to of 60323

Paul, I guess I am not sure where you are heading with this... My whine is about people who buy just one stock and believe that that is rational investing. The guy who bought AOL and did exceptionally well because he had an MBA and believed he could rationally analyze AOL. Well, what happened to studying investment principles at school - like portfolio management and diversification? I believe in diversification to a point. I also believe in concentrating my investments in stocks I am confident in. Last year during a hypomanic period of my life I wrote an investment treatise for the Gorilla Game thread. I read the book twice in one week and the only logical conclusion I could draw was that Eli had actually written the book some time in 1994 and then published it under an assumed name several years later. The parallels are uncanny. The SanDisk investment piece was written to intentionally entice investors by presenting factual information in the framework of the G.G. philosophy. At that time SNDK was selling at a heady $16/share adjusted for splits and I was fearful that the stock would crash and leave people in the lurch. I had been left in a pretty bad lurch in 1998 and it was a very painful experience for me. Someone happening upon SanDisk and drinking from the poisoned SanDisk well was one thing, but working up a thirst and then leading unsuspecting people to this unpotable source is entirely different. In many ways I felt like I was feeding these guys saltines. Several regulars on the thread wouldn't even consider nibbling on the bait. A company with a market cap of $900 million a gorilla? Give me a break. But despite my worst fears at the time, SanDisk is now up some 6 fold since it was presented it to the G.G. investors less than one year ago. The funny thing is I feel more confident in SNDK now at the current price levels than I did 10 months ago. When SanDisk broke the $90 level last Summer I was surprised. I did not believe that price target would be attainable for at least another year, or possible two, and was content to wait that long. That price correlates currently to a forward PE of about 30 based on the post-split adjustment, a deduction of current cash (net of debt) and 2000 EPS estimates of $1.20/share. In retrospect, SanDisk was a steal at those prices. When SanDisk closed just below $100.00 before the 1999 Q4 earnings after the comeback from the Taiwan earthquake (and a trip down memory lane back to the pre-split $30 level) many were skeptical about SanDisk's traction. I listened to the c.c. that day. I was amazed. I felt that we may see a $20 single day rise after the earnings report and split announcement. I only missed by about $25 additional dollars. The only possible interpretation of Q4 1999 is that it indeed was a "monster" quarter for SanDisk. Looking back on the stock price that day SanDisk was very cheap indeed. During the most recent past quarter we not only defeated "The Q4 Monster", we exceeded the results by some 40% quarter-over-quarter. That is an astounding feat. Additionally, IMHO, the most influential event in the recent history of the company was realized during Q1...a legal victory in the 2 year battle with Lexar. This was greated with a prompt $50.00 drop in SanDisk's share price to $70.00/share. Those $70.00 shares now equate to a forward PE of 55. But SanDisk's growth on a quarterly basis projected over the next 3 quarters will easily outpace the 55% annual growth demanded by this PE ratio. At $70.00 per share SanDisk was a steal even without knowing the Q1 results. Today I feel somewhat emotionally exhausted from the anticipation of earnings, my exitement about the Lexar decision and the Microsoft launch. The market reaction to the earnings and CNBC interview is understandable in the aftermath of the recent shakedown of the NASDAQ and the fact that many investors were taken by surprise just a few days before tax day. That has to shake investor confidence to the core. And the funny thing about investor confidence is that it takes so long to build it up, but only a day or so to totally destroy it. Also, it is totally within the character of this stock to swoon with good news. After today we will all have a 3-day respite to reevaluate our positions in SNDK. I still believe that we are just getting a small taste of things to come. We are barely through the first round of appetizers here. As Eli put it, "We are walking down Main Street, but were just on the first block." The lesson I have learned over the last several months is one of market over-exuberance and market over-reaction. I fully anticipate volatility in the stock price until we have completed a few more stock splits and until SanDisk is understood by the investment community at large. Ausdauer "My favorite holding period is forever."