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Technology Stocks : IDTI - an IC Play on Growth Markets -- Ignore unavailable to you. Want to Upgrade?

To: Toni Wheeler who wrote (9966)	1/9/1999 12:43:00 PM
From: OldAIMGuy	Respond to of 11555

Hi TW, 45% Gain in about 18 months doesn't seem that great, but it sure beats selling for a loss a month or so ago. I'm really going to have to do some serious studying of where IDTI is and how it plans to get to the future from here. When I bought it 2-1/2 years ago, it looked like they would easily double their sales and book value in 3-5 years. I'm not so sure that still applies. I don't mind a company falling behind my "goals curve" for a short while, but want to see a plan for how they will get back on top of it again. IDTI came to my attention after the price had collapsed in '95 and into '96. If you look at my graphs, there were lots of "inventory adjustments" made the first year I owned IDTI. Cycling between the mid-teens and back to $9ish several times, it seemed like a good candidate for AIM. It also seemed like if I could collect some trading rent for a while, eventually IDTI's efforts would again be rewarded with a fat P/E multiple. Well, they have to show they can earn before anyone will support a fat P/E!! Generally I focus on revenue and book value growth and let earnings come and go. Eventually companies seem to figure out how to make money on their increased sales. IDTI stopped growing and started shrinking a year ago. They now have to show they can reverse the trend. IDTI is in an interesting spot here. It's about 1/2 its recent highs and about 2X its recent lows. Seems to me that profit takers and people with loss carry-forwards in IDTI will offer a very constant resistance to the stock price rising. With just a bit of good news, the price should be able to overcome that resistance. I guess because I'm "selling into the rally", I should be classified as part of the "resistance" just as I was part of the "support" during the drop. My small stake doesn't even show up in the daily volume, however. I treat each investment of mine as a separate inventory item in my "equity warehouse." First I make sure that the item meets my basic goals and other measures (such as volatility). Then I add to inventory when prices are low (like last fall) and then reduce inventory when demand is higher along with prices. Each round trip from a buy to a sell nets me 20% to 30% LIFO gains. The more frequently it happens the better off I am. In IDTI's case, I guess I didn't fully understand the gross over-capacity that had been built up in the SRAM business and how severely it was going to hit them. My background is in metals foundry capital equipment which is a business cycle "follower" not a leader. I should have realized that with the semi cap. equip. companies showing glowing results at the time that their customers should have been well past their cyclical peaks. So much for hindsight!! It's AIM that saves me from my own folly in these cases. It fits somewhere between short term trading and Buy & Hold. ST trading offers potential for quick profits and great "annualized" gains. It also means "realized" gains and taxes. B&H offers potential for massive capital gain and no current taxes, but means being "at risk" all of the time. Most investors fit one extreme or the other. AIM is in the middle. Please stop by our AIM thread here on SI if you'd like. Subject 12596 Best regards, Tom