Full analysis on Sandisk and more
My latest full analysis on Sandisk and lots of great insights below. Do you guys like these kinds of blog posts when I edit down the discussion we’ve having on the Side Bar Chat on TradingWithCody.com?
davidoosnk
April 16, 2012 – 12:02 pm
I think some of the people who seek constant near term affirmation on stocks here are overtrading. I’ve made the mistake myself. What is the point of making money on an earnings trade to throw it away on the next one? For instance, I would much rather know if Cody thinks SNDK is still on track to hit triple digits in the coming few years, then whether it will be at $43 or $39 two weeks from now. Call me crazy…
dca1
April 16, 2012 – 12:10 pm
davidoosnk: some pplp may not have positions and are looking at the right time to enter the mkt.. its abt mkt timing i guess
eryba1
April 16, 2012 – 12:11 pm
I have a full position in SNDk ex few thousand common shares at hi 40’s les say 48 and it falls to 41 = U r down nealry 20% on your invetment and lts say 20,000 loss on paper and now have $$ in an underperforming asset that may not come back anytime soon = dead money- U make it sound like everything cody says will come to fruition
davidoosnk
April 16, 2012 – 12:13 pm
@eryba Absolutely not infallible. Your conclusion about my thoughts illustrates the deficiency of chat and email as aconversational medium Not infallible at all but probably more likely to be right about long term stock prices than near term ones To me he’s a scarce resource that I pay good money for. All else aside, I would rather have the resource tackle things I think are somewhat quantifiable like long term outcomes rather than near term moves. BTW I’m down on SNDK too from a $44.20 buy price…
eryba1
April 16, 2012 – 12:15 pm
Cody thinks SNDK will be triple digits thats your assumptions along with his line of thinking correct?
eryba1
April 16, 2012 – 12:16 pm
How do we know this it just preannounced terrible #’s and got hammered 20% when cody had it as an * rating jist before and the downgrade cody said he liked others HATING SNDk according to his contrarian thinking
calmdaw1
April 16, 2012 – 12:17 pm
@david – i agree. more interested in his long-term outlook. short-term we all have approximately a 50/50 shot of guessing which way a stock will go
eryba1
April 16, 2012 – 12:17 pm
SNDK sells to the lowers supposedly = NON apple products NOK RIMM MSFT ETC so how does the stock get triple digits? I want it to get there myself but now it seems wrong.
davidoosnk
April 16, 2012 – 12:19 pm
I don’t know. I’m waiting for Cody to provide more info, backup on this. If he does, I might rest a little easier waiting for SNDK to go back up irregardless of the near term moves. I’ve been investing since I was 16 and trading since the age of 18, just noticed that in the last two years as I have focused less on the short term, and stuck out the “shaking of weak hands” that hedge funds and market makers love to partake in, my returns have increased tremendously. Hopefully it is not just a blip!
davidoosnk
April 16, 2012 – 12:20 pm
@eryba, calm, yes this contradiction is what we all unanimously seek clarification on.
Cody
April 16, 2012 – 12:31 pm
Sandisk is trading at a 6 P/E to next year’s earnings when you subtract the cash on the balance sheet. It’s cheap on any metric like that you can come up with. The company makes Flash and is a pureplay on Flash storage and Flash storage is a secularly growing business — meaning it will grow regardless of what happens to the broader economy. The flash market will be ten times bigger in ten years than it is today. Sandisk will be a big part of that. Unfortunately, and this is where I was wrong, Sandisk’s customer base of Nokia, RIMM and Motorola were even worse performers over the last few months than even I, a loud Nokia/RIMM/Motorola critic, expected. That said, in three years Sandisk is going to have a totally different top 3 customer list who will all be using 5-10x more flash in each device than any of the devices out there today. The upshot then is that I think Sandisk’s near-term “problems” are more than priced in with the stock as cheap as it is and I think that Sandisk in five to ten years will be much bigger and much different than it is today, so I was buying before the call and I plan to make sure I’ll continue to have lots of upside exposure to this name over the next few years.
eryba1
April 16, 2012 – 12:35 pm
@cody: but if these customers are losing market share and flash gets cheaper and becomes a commodity each device will have more memory but the flash gets cheaper to put in and the growth is at leats not from APPLE not SNDK customers. if PE is 6 why is the stock down so much after eanrings when PE was 8?
Cody
April 16, 2012 – 12:36 pm
And I also think that you guys need to listen to Davidoonsk when he says that he thinks a lot of you are overtrading. I definitely agree with that assessment and have written here in the sidebar chat repeatedly that a lot of you guys need to slow it down and not be so aggressive about the near-term market moves and swings. There’s nothing wrong with playing with a small amount of your capital on short-term swings and earnings gambles, but it’s very risky to be trying to game the near-term with any meaningful amount of capital. And this part from David underscores the whole discussion: “I don’t know. I’m waiting for Cody to provide more info, backup on this. If he does, I might rest a little easier waiting for SNDK to go back up irregardless of the near term moves. I’ve been investing since I was 16 and trading since the age of 18, just noticed that in the last two years as I have focused less on the short term, and stuck out the “shaking of weak hands” that hedge funds and market makers love to partake in, my returns have increased tremendously. Hopefully it is not just a blip!”
Cody
April 16, 2012 – 12:37 pm
@eryba, I addressed that part about Sandisk’s customer base. Look out three years into the future and it will be very different, and I’m willing to bet that Sandisk’s management continues to figure out ways to crank out the crash and long-term steady growth.
davidoosnk
April 16, 2012 – 12:37 pm
@cody ditto eryba, in other words, who do you think will replace RIMM and so on as the top three clients of SDNK
dca1
April 16, 2012 – 12:38 pm
cody: appreciate the insights.. if u could engage us in discussions like this more often (besides the weekly chats) will be greatly appreciated
eryba1
April 16, 2012 – 12:39 pm
not overtrading more like over thinking as stocks decline- thats natural to relook at a stock and its future based on more recent relative news
calmdaw1
April 16, 2012 – 12:40 pm
@cody – I like the fact that you don’t jump in here every time the market swings. To me it sends the message “relax, don’t get too excited about the short-term”
eryba1
April 16, 2012 – 12:40 pm
@Cody: Its great to look 3 years out- Yes flash will be HUGE I agree with that 100% but whose flash, whose customers are growing at that rate, who is losing market share whose P/E is low and worth a look.
Cody
April 16, 2012 – 12:40 pm
@davidoonsk and @eryba Ah, see, that’s anybody’s guess. How many times have we seen Motorola and Nokia go from 5% to 35% market share in the cell phone business and then back again to 5% in just the last twenty years? HTC, Samsung dominate right now but what’s their differentiator again? Oh yeah, NOTHING but a trendy design for the shell of the phone. The Android phone is the pure commodity. The chips in it, including Flash, are where there’s intellectual property and moats for the businesses.
