Tuesday, May 12, 2009

Bookkeeping: Beginning Skyworks Solutions (SWKS)

I've had a major hole in the portfolio in the technology space since I prefer to stick with growth names rather than the more typical cyclical names. I did not jump back in Apple (AAPL) and Research in Motion (RIMM) once it reported a great quarter never looked back. I do hate to chase, but it was right to chase these names ever upward. Google (GOOG) solid like always but I have not been in that, instead going with Baidu.com (BIDU).

I recently added Starent Networks (STAR) to the portfolio which is more of a growth name, and today I am going to add a more cyclical name along the same theme (3G, smart phones, et al) - Skyworks Solutions (SWKS). The stock has had a tremendous run off the bottom but if I excluded any stock that has not had a huge run, I'd have nothing to buy. At this point (and this can change in the future) we have a chart still in uptrend but that has had a pullback - so I prefer to buy these charts rather than buying stocks that are pure momentum trades. Pullbacks to the 50 day moving average are a solid place to attempt a purchase, so we'll see if this can hold. I don't see much upside past $10 anytime soon. Again this is more cyclical exposure - so there is little that will be surprising with this type of name; it will be more a matter of if institutions funds want to increase their exposure here or not.

Skyworks Solutions, Inc. engages in the design, manufacture, and marketing of analog and mixed signal semiconductors enabling wireless connectivity. It offers mobile platform solutions, including power amplifiers, front-end modules, and integrated radio frequency solutions for cellular handsets.

I've never owned Skyworks Solutions before but in the late 90s I traded all 3 of its major competitiors - ANAD, TQNT, RFMD. If you ever want a laugh just pull up a 10 year chart on any of those 3 to see how "everyone was a genius" back around 1999. SWKS is more of a cylical play than what I normally prefer but it is best of breed of this group of 4, and gives me another way to have exposure to smart phones taking market share from regular cell phones; it also has some good China exposure. Now the risk with any small to medium sized chip company, and I've been burnt by this many times over the years, is a sudden design loss or contract snatched away and given to a competitor. I've woken up many a day to be down 30% after such a thing; which is why I traditionally don't play in these waters. But as stated the past few weeks I want some more technology exposure and I don't want to rely on just 1-2 companies; so I'll push Skyworks into a mini basket.

I began today with about a 1.5% stake just under $8.50

I will edit this post later with some detail on last earnings, but below is a recent CEO interview on "Mad Money" (as an aside I am beginning to worry because a lot of stocks I am interested in are now appearing on Cramer's show)

Long Skyworks Solutions, Starent Networks, Baidu.com in fund; no personal positions

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