Tag Archives: earnings

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Beat on Earnings / Miss on Revenues - CLF will reverse itself

Posted by Jeremy F. - CEO on February 17, 2011 8:56am

Beat on Earnings, Miss on Revenues

Cliffs Natural Resources will reverse itself.

I was short a small position going into earnings and have turned it into a large position at an average price of 99.65. It is trading at 102.5 pre market. I am shorting more. I am not concerned. This is another example of the market’s delusional behavior. The stock is up 10% premarket. Here is the bottom line. They crushed it on earnings. They missed on revenues. This is the pattern we have seen this earnings season. Same as Dell. But I strongly believe that companies have stretched their margins to the maximum extent. It is the demand that they cannot create. Beware of buying stocks on earnings multiples in a rising interest rate environment. I have seen this kind of bubble build before in the 2 previous decades I have been a trader. These are the bubbles that lead to 10% corrections. This problem may take some time to grow, but I actually think we are already in it. It will be most apparent in the banks next quarter. I predict they will miss on Revenues and perhaps meet expectations on earnings. Analysts should start to see this trend start to develop over the upcoming month. Channel checks and manufacturers will show a pause in advance sales. As this leaks out the correction will begin.

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Posted in Stock Market | Tagged cliffs natural resources, DELL, premarket, revenues | Leave a Comment (RSS)

CREE: Swing and a Miss

Posted by Jeff T. - Equities Trader on January 18, 2011 7:46pm

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CREE came out today after the bell with another disappointing earnings release:

Cree reports Q2 EPS $0.55 ex-items vs Reuters $0.58 (62.90)

Reports Q2:
- Revenues $257.0M vs Reuters $277.0M

Q3 guidance:
- revenues $245-265M vs. Reuters $288.3M
  - cites seasonality and on-going inventory correction in Asia
- non-GAAP EPS $0.38-0.45 vs. Reuters $0.57; First Call $0.58
- non-GAAP gross margin +/- 46%
- tax rate 21%

Overall, another pretty ugly quarter for the leader in LED technology but should you be dumping your CREE on this disaster?

Tough decision for those who are holding CREE into earnings but for those that are not I think the next few months will be a great buying opportunity as CREE consolidates. There is support between $52 and $48, the level CREE bottomed following last quarters minor debacle, but, considering CREE declined 4% q/q I think the stock could sneak down through $48 and trend down towards $42, so scale in slowly.

CREE is probably dead money for the next quarter but I like buying weakness as I believe in the longer term story in LED’s and weakness in the stock price will bring back takeout chatter which should help support the stock. Also, once the stock stabilizes all the analysts that take there numbers down over the next few day’s will be looking for any strength to upgrade CREE, very similar to last quarter.

There is also a rumor that there is a bid at $40 for VECO so keep that in mind.

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Posted in Technology | Tagged cree, LED, rbcn, VECO | Leave a Comment (RSS)

BBY, Stick In My Eye

Posted by Marc S. - COO on December 16, 2010 12:22pm

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I took Best Buy (BBY) long into earnings earlier this week. I looked at the recent weakness in the name and thought other traders/portfolio managers were scared and sold early. My opinion was that a meet or even slight miss might bring buying; the weak hands were out and would flood back in. I was wrong.

But that was not my mistake. I have and will make many other losing trades in my career. The mistake was in the construction of my portfolio. I am meticulous about my overnight position sizing, and diversification. BBY was my largest position. But even though it wasn’t outsized in relation to the other positions, it was the name with the most risk.

Approximate cost 1 year tuition at Cornell University: $48,000.

Exact cost 1 trade without proper risk adjusted size for earnings: $48,861.

Aprox MTD P&L: $91,780

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Posted in Portfolio Management, Trading | Tagged BBY, Position Sizing, Trading | 1 Comment (RSS)

Equity Trading - JPM if you’re technical…

Posted by Eric K. - Student/Trader on December 14, 2010 8:01pm

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HedgeFundLIVE.com — Range trading + major resistance bounce + evening doji star = Bearish Reversal.

Range trading, looks like a line of ants

I don’t know about the fundamentals or when earnings are, but there are a few ways to play this: Sell calls, long straddle, short the stock, or buy puts. I’m going to open a straddle at strike 41 with exp in jan-11 in hopes I can catch the bounce down on the puts and a quick pop from support/earnings report with the calls. The options are priced fairly according to the CBOE’s Volatility Optimizer. I think there will be some big jumps in either direction over the next month, so I’m trying to take advantage of that and keep my risk to a minimum with the straddle.

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