Monday, March 22, 2010

Bookkeeping: Proud Owner of NetLogic MicroSystems (NETL) via Tracking Error

I've had a few outstanding limit purchase orders standing for weeks upon weeks, and I noticed one disappeared this morning.  Most of these - after the huge run in the market - are 20-35% lower than the current price, so I was very excited to see one of the limit orders disappear this morning.  Finally something must of came into my price point.  Err... well technically yes.  NetLogic MicroSystems (NETL) split 2:1 and (where my portfolio is tracked) did not adjust the limit order so my $44 limit order did hit - woo hoo.  That's what it takes for stocks to come into my target area nowadays.

Obviously $44 is now $22, so in the real world there would have been no order but it's only a 0.4% stake since I put the order out there simply to notify me that the stock had come in.   There is an obvious massive gap that one day most likely will fill, but with individual stocks in can be quarters or years before it happens - and sometimes never.  I doubt that will be the case here, but until the market can selloff for more than 18 minutes this is not a name that will be filling a gap anytime soon.

NetLogic has been an incredibly strong stock and adds another weapon to our semiconductor arsenal which is now coming to dominate a wing of our long portfolio.  Recent earnings results have been very impressive, but the stock is very expensive - but that hasn't stopped any stock from running of late.
  • Revenue for the fourth quarter of 2009 was $69.5 million, a 64.3% sequential increase from $42.3 million for the third quarter of 2009 and a 125% increase from $30.9 million for the fourth quarter of 2008.
  • Non-GAAP net income for the fourth quarter of 2009 was $17.5 million or $0.59 per diluted share, compared with $0.31 per diluted share for the fourth quarter of 2008.
With such a small allocation in the fund even if the stock doubles from here it won't have much affect on portfolio value but - by hook or crook - we now have a position.

NetLogic Microsystems, Inc., a fabless semiconductor company, engages in the design, development, and sale of processors and integrated circuits. The company offers multi-core processors, knowledge-based processors, 10/40/100 Gigabit Ethernet physical layer devices, network search engines, and embedded processors to develop systems used in the Internet infrastructure, including the enterprise, datacenter, metro, edge, access, and core networking markets

Long NetLogic Microsystems in fund; no personal position


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