Adding to Garmin (GRMN) on Continued Weakness

I am adding to the Garmin (GRMN) position I re-established yesterday. As I stated yesterday "The 50 day moving average is $100 so I see the stock certainly getting to this level." So as it hits my target of $100, I am adding more.

The worries are in the very long run for Garmin. Truth be told I never liked this name for a 5 year run - commoditization of its product was sure to hit. But for the next 6-12 months? I don't see the major issues hitting - yes they won't get the same price reductions from Navteq (NVT) as they have had in the past, and will need to pay up. It's still going to be a huge Christmas for Garmin (GRMN). I think consumer electronics is just "THE" place to be - this is our changing world - golf clubs, ties out, iPods, cell phones, GPS devices, video games, HDTVs in. The last thing the strapped consumer is going to give up is going to be his/her gadgets. GPS is still going to be going into more and more cars - that did not change yesterday. Etc.

Catching a falling knife? Certainly. Bad to do? Usually. But downside right now from the chart looks to be $90. Garmin (GRMN) has a lot of momentum type traders in it who can't look out past 2 hours, not to mention 2 weeks or 2 months. It will take some time to clear them up, and yes the chart is now technically not so nice as it was last week when I sold the name. But the company reports on Halloween and I still think we are in for treats not tricks for the next few quarters at least. I certainly could be wrong as this is a high risk name, and the market hates uncertainty more than bad news, but at 30x 2007 estimates I like it a lot more than the 36x it was trading not even a week ago.

I've moved Garmin up from 1.65% to 2.1% of the fund and will assess from there. If it breaks support I will add more around $90. If it bounces smartly I will probably add a bit more. It is now in the 'test' spot on the chart, so I'd like to see how it does before making any moves.

Long Garmin in fund