Monday, July 26, 2010

Bookkeeping: Closing Netflix (NFLX) Temporarily, Replacing with Spreadtrum Communications (SPRD)

I like the business model of Netflix (NFLX) more than before the last earnings report, but like the chart much less.  I cut back sharply ahead of earnings and mentioned post earnings I'd like to see the stock regain some key moving averages quickly... it has not.  Therefore, I am going to sell out the small remainder of the position (0.4%) exposure with a 7% loss and look for a new entry point down the road.  I'd rather be a buyer at $115+ in fact since it would signify strength.  The stock is currently in no man's land so I am not sure where it goes next.  If it falls to $90 I'd consider a new purchase if the overall market is in good condition.

Chinese small caps are showing the first signs of life in many months.  I was very frustrated with the cheap Chinese semi Spreadtrum Communications (SPRD) which we held for many months to no avail, despite being "crazy cheap".  I sold out of it July 16th, so we've only been away a short period of time. The stock seems to be waking up today, so I'll move the Netflix money plus a few more sheckles in that direction and give it another chance.  Due to volatility I'll start slow and just go with a 1% allocation.

Spreadtrum Communications, Inc., a fabless semiconductor company, designs, develops, and markets baseband processor solutions for the mobile wireless communications market. It sells products directly to brand manufacturers, independent design houses, and original design manufacturers primarily in the People's Republic of China, Hong Kong, and Macau.

[May 27, 2010: Bookkeeping - Beginning Spreadtrum Communications]

Long Spreadtrum Communications in fund; no personal position


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