Tuesday, January 19, 2010

Bookkeeping: Cutting Half Skyworks Solutions (SWKS) Ahead of Earnings

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It's earning season again and you know what that means... speculators moving the value of an entire corporation (yes folks, there are real businesses behind these 3-4 letter symbols!) up or down 10-20% based on 8 seconds of headline reading of a 90 day period of business.  While I enjoy getting updates on business I simply hate the student (lemming) body left reactions, although I understand so many of the retail crowd love the rush of the big gamble.  I'll leave that activity for Vegas.

Skyworks Solutions (SWKS) is our largest individual position and while in a decent uptrend it has not broken out like I had hoped.  It looked very promising last Thursday but the market selloff stymied the stock Friday.  This is a very slow motion movement, but it's been doing far better than its laggard peers.  I usually reduce exposure of everything going into earnings because the last thing I need is a 25% haircut on a large position based on hair trigger reactions to a headline by people who don't even bother to read the earnings report itself.  It limits the gains from such lemming movements (beat by 7 cents? buy buy buy!), but 50/50 outcomes have nothing to do with investing - it's simply gambling.




We are selling 55% of our stake at $15.00 and as long as nothing out of the ordinary happens tomorrow evening, will return back to the full position in 48 hours.  If something "bad" happens and the stock gaps down or breaks the shiny red line, we'll sell the other 45%.  We have very modest gains of under 5% on this batch of sales.

Long Skyworks Solutions in fund; no personal position

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