Quantum Trading Strategies

http://www.minyanville.com/articles/index.php?a=14250

As the article states, I prefer GOOG, YHOO & EBAY currently to AMZN on a relative value basis. For internet retailing specifically I think EBAY offers a better blend of valuation and financial engineering opportunity.

As stated, I think YHOO is quite undervalued and the Alibaba IPO could be a prime catalyst to move the shares higher.

While I'm still quite bullish on tech longer term I've reduced exposure this week and will look to reload exposure if we get some early October weakness through the preannouncement period.

Position in GOOG YHOO

ARRS & CCBL commentary: Minyanville Buzz Highlights

2007-09-25T23:17:00.000-07:00

ARRS & CCBL commentary: Minyanville Buzz Highlights

Past Minyan Post on YHOO

2007-09-25T22:47:00.000-07:00

Throwing this slightly older post as I believe it's as the Alibaba chatter is heating up.

http://www.minyanville.com/articles/YHOO-IRF-CTXS-Alibaba-AAPL/index/a/13656

Position in YHOO AAPL

Link to GLW article on Minyanville.com

2007-09-24T20:58:00.000-07:00

Bendable Fiber May Lead To Corning's Breakout

GLW has reaffirmed numbers to the high end of guidance for the qtr. With multiple catalysts coming in 2008 the current targets by analysts may well prove conservative.

Position in GLW

Link to my most recent article on Minyanville.com -- HLIT CIEN FNSR APKT mentioned

2007-09-23T20:23:00.000-07:00

HLIT and other Bandwidth Stocks

Position in APKT CIEN FNSR HLIT

Link to my BRCM article on Minyanville.com

2007-08-06T03:12:00.000-07:00

Broadcom (BRCM) article on the Ville

Position in BRCM

AVNX & OPLK present compelling value in the optics space.

2007-07-24T23:16:00.000-07:00

AVNX and OPLK have both seen large declines this year. These stocks showed some good momentum last year and have still been producing solid revenue growth. In OPLK's case the EPS results have been solid as well. AVNX is still fighting their way back to free cash flow and positive EPS generation.

Both names have been mired in the multi-year slump along with JDSU. However, CIEN & EXFO have both shown strong runs of late. Primarily due to industry strength and the fact that these stocks have started translating their strong revenue growth into strong EPS growth.

AVNX just purchased assets from the former KEYW (Essex) and I believe this could be a boon for them. I still need to do some digging but if they bought the technology from (Essex), that I think they did, this could help be another growth area for AVNX. Northrop (NOC) bought KEYW for their truly superior fiber security technology and AVNX may have just picked up some assets that was being developed for the non-government market.

Meanwhile, OPLK has purchased OCPI. OCPI had not exactly set the world on fire. But, OPLK bought them out for an approximate net price of about $70mm or about 1 times sales. The total purchase price was around $185mm, less $120mm in cash and investments. OPLK has since declined since this purchase but it looks like a pretty cheap way to increase capacity and sales.

I have felt for some time that this "new" fiber optic build" will be a multi-year fiber build. If this is the case then many names in this space will be viewed as secular growth stories instead of cyclical inventory rebuilding trades. This would translate into a massive difference in the PSR (price to sales) valuation characteristics for many names. CIEN is in the midst of such a transformation currently.

So far the broad investing world has largely ignored much of this renewed spending across many global networks (VZ, BT, China and others). However, the world may be waking up to this. For one thing the iPhone launch could highlight this trend. AT&T's network needs a lot more investment in their core and wireless networks -- as many issues with the iPhone are coming from problems with T's network and activation issues. T now has a very strong incentive to improve their network and materially increase their bandwidth capacity.

So while billions have been spent globally over the last couple years, billions more is on the way. And maybe the iPhone launch will provide the catalyst that draws attention to this trend that I think this investment thesis deserves.

Bottom line, many global builds point to a lot more spending -- and I haven't even mentioning a gigantic government contract that has been partially announced with T, Q, VZ all being announced as bandwidth providers, with more announcements to come.

What if, all the billions put into networks in the last two years is the tip of a multi-year iceberg... In some cases, I do think some large builds (at their core network) are possibly a good deal complete -- VZ being a good example. But how many states is VZ up and running in to full capacity? Not very many.

Further, the cable co's have at least a good 2-3 year upgrade cycle build now in front of them. Qwest has barely started spending money yet on their network. LVLT's is the only network (I'm aware of) not needing a lot of money thrown at it. But they are still investing and buying more assets -- mainly to build out more video bandwidth.

My last purchases of AVNX were at and below the $1.75 level, and I'm considering adding more here under $1.90. OPLK sitting on $180mm plus in cash and investments -- or more than half their market cap also looks compelling after the recent sell-off.

Position in AVNX OPLK CIEN JDSU LVLT

GOOG broke the $475 level. Now longer term support comes into play.

2006-12-18T14:16:00.000-08:00

One reason I thought the $475 area would hold better was the fact that the 50 day MA was sitting at $472.50. However, trading & technical analysis is not a science even though at times it seems to work that way. So instead of the 50 day serving to hold GOOG up, it almost seemed to pull the shares down beneath the line. Once the $470 level gave way, the flood gates opened bids were driven down very quickly. Welcome to GOOG 101 on a bad day.

All this of course, was stirred up the the WSJ piece talking about GOOG facing EPS pressure from ... interest income. Yes that's correct, the WSJ article seems to place more importance on interest income off of GOOG's large cash balance to be more critical to hit EPS numbers(for next qtr.) than the growth of core search, record online shopping stats, full qtr. of MySpace partnership, the GMail usage explosion, the growth of the Google Homepage etc...

End of year trading can be tricky and fickle, as large Hedge/Mutual fund dynamics come into play. This creates greater dispersion of stock movements. However, the relative level of many key technical levels are still relevant, but you have to broaden the ranges.

In my prior post I pointed out that the $475 level could fail to hold and better support exists in the $445-455 area. Just one day later, that looks eerily correct.

At this point ($462), GOOG has given up all of it's gains since the day after their earnings pop. Given that the last qtr. was so strong, YouTube has been completed and we are the midst of record online shopping season, as well as the seasonally best qtr. of the year -- the selling seems to be getting somewhat overdone.

My plan is still to add in the $445-455 area should it occur, in the meantime I increased my GOOG exposure modestly by adding some long-side option exposure to the portfolio.

Long GOOG, short puts.

Google (GOOG) - a good buy and stealth online shopping play.

2006-12-17T16:28:00.000-08:00

GOOG -- Currently consolidating big recent move after last EPS report. I have recently added some GOOG back that I sold between $496-506. Stock could still fall farther but for those with no position, the recent sell-off is an opportunity to buy an initial position. The prior all time high around $475 should serve as fairly solid support, while $445-455 would be an area of even stronger support. I will add more at this lower level, should the stock trade there.

If the Hedge/Mutual Fund community undergoes a bout of performance anxiety through year-end, then I would expect GOOG to be a primary stock for those wanting more NASDAQ exposure. Additionally, the next time GOOG moves through $500, I firmly believe that number to serve more as support level than resistance.

Most talking heads mention names like EBAY, AMZN & AAPL, along with the big box retailers as the way to play this year's strongest online Christmas season ever. However, the best/easiest way to play this explosive year for online shopping may just be Google. GOOG is getting a lot of search action, combined with solid keyword pricing -- all this bodes well for the Christmas season.

Bottom line, the GOOG will benefit from the biggest online shopping season in history and all this only serves to strengthen the numbers for the upcoming quarterly report in mid-late January.

Many price targets are out there for GOOG, as analysts like to play the -- I've got the highest price target game. For a more useful trading target(weeks to months), a realistic range given a strong Jan. EPS report and continued strength in deal flow would be the $560-580 range. This would represent a 12-16% move above $500, after re-taking that level. At this higher range, I would be more apt to use a trailing stop, sell a partial position or use some covered calls to protect downside in the name.

Long GOOG

3Com (COMS) -- update, earnings coming. Stuck in show me mode again.

2006-12-17T15:39:00.000-08:00

3Com continues to be mired in deep value stock -- or better yet, show me stock purgatory.

EPS report is coming on the 20th this week, Wednesday after close. While I am disappointed that COMS has traded 15-20% lower since their announcement of buying the remaining stake of H3C -- I am not surprised.

Mr. Market was clearly hoping for a liquidity event for COMS, as a couple private equity shops were bidding for the JV.

However, I still hold shares of COMS as I feel that the upcoming 1-3 qtr's will show impressive growth out of the H3C. Core COMS may also contribute improved performance and near term the details of the financing for the H3C's purchase could contain positive news.

I do view COMS as more of a trading stock than a stock to invest for the long term. However, current valuation, combined with some near term potential catalysts makes the shares appealing under $4.15 -- as a run to the $5.10-5.50 level seems probable within a 3-6 months.

I may add to my position ahead of the call, and would certainly increase my stake if COMS were to sell off to the $3.85 level after the call. Though I am not expecting a material sell-off from current levels.

Long COMS

JDS Uniphase (JDSU) -- I like the current setup.

2006-12-17T15:01:00.000-08:00

For a current investment in JDSU (short-intermediate term) -- here are some key
points that stand out currently.

1. Stock removed from Q's resulting in large volume day on Friday.
Stock traded almost 4 times normal volume and obviously most of the
volume was driven by sellers readjusting the Q's. Even with that, the
stock held up fairly well closing down only about 40 cents. That says
to me that there were plenty of folks willing to soak up all that
selling -- this is not retail folks buying. I thought JDSU could fall
by as much as a buck on the Naz rebalance. Now that JDSU is out of Q's
that has other implications that I'll address in a bit.

2. Even with recent pressure after EPS spike the stock held the 50 day
MA. MACD stayed on slightly bullish territory and RSI is neutral, but
any improvement will put in solidly bullish territory. Again, all good
signs -- esp. considering that JDSU is still barely above $2 on a
pre-split level and I imagine some tax loss selling has been occurring
in the name.

3. Recent action in OPTM & CIEN should bode well for JDSU. CIEN &
JDSU have been sister co's for quite some time and it's fairly unusual
for one to really do well without the other participating.

4. While I don't think we will have a huge Classic Jan. effect this
year, that doesn't mean some co's will not act exhibit a good Jan
effect bounce. JDSU is one of those names.

5. Negativity still very high even while stock is Technically good at
a minimum. That is a classic divergence pattern I look for.

6. Fundies are improving but maybe more slowly than names like CIEN.
I still think the T&M business will continue to show solid progress
with the continued global build out. And that part of the business is
probably very undervalued within the stock -- in a very similar manner
that I think the networking biz within MRVC is undervalued.

7. Back to being out of the Q's. While some may think of this as a
negative, I think it could help much more than hurt in the future.
JDSU has been a name long loved by the shorts to hit hard on any big
day's of NAZ weakness. Yet on big up days, few folks target JDSU for
trading for upside moves. Names like GOOG AAPL QCOM BRCM etc... tend
to get the nod for that type of action. Now that they are out of the
Q's we could dramatically less short sided targeting manipulation.
That could serve to strengthen the longer term TA picture as the stock
could exhibit a more stable trading pattern which many institutions
like to see.

Sometimes trading dynamics like this are way more important to stock
performance than many other factors.

8. Another note of Q's. Many times stocks removed from the Q's end up
doing very well just due to sector and valuation dynamics. In other
words, Index rebalancing is all about putting in new names based on
increased market cap & visa versa. I.E., the index is basically buying
the high & selling low. The Q's don't have a lot of changes every year
but the Russell and S&P have many more names and there are trading
systems based on buying the rejects of those indices and results are
quite good.

9. Short interest. While not super high it's still plenty high with
11mm out of 200+mm shares outstanding or 5.6% of float at last report.
Not sure this helps much this month, as the shorts will figure to ride
it through tax loss selling. But late this month and into next year I
expect to see more short covering. Moreover, a good EPS report next
qtr. could nearly put the nail in the shorts coffin.

10. With T/BLS issue I am not confident of big beats out of JDSU for
the next 1-2 qtr's but I still think they will be solid vs. the co's
conservative guidance. Once T/BLS issues are resolved I would expect a
return to some qtr's of strong results and guidance.

11. Lastly, any little bit of positive EPS & cash flow in the next
couple qtr's could send the shares higher.

Bottom line. I continue to like the setup.

Long JDSU

Ciena (CIEN) crushes the qtr!!

2006-12-17T15:00:00.000-08:00

CIEN call is so solid. There is no way I'm selling CIEN shares
until the stock is at least 10-15 points higher. Stock still well off
year highs, with much of damage still being felt from the post R/S (reverse split)
sell-off. Stock was selling between $27-31 ahead of last qtr's call
and before R/S announcement. The R/S muted how strong last qtr's
result and call actually were.

They beat and guided higher but the R/S stole all that thunder -- baring the R/S the stock probably would have traded 5-10% higher on last qtr's strength to the $32-35 range assuming post split pricing. This also assumes zero lift from the strong general market. CIEN has produced results in line with other top tech performers like AAPL, yet their stock has fallen huge since R/S. Now profitability is solid and while each qtr. could still be lumpy I
would look for CIEN to post stunning YOY EPS growth for at least 2 years.

If I was NT CSCO TLAB or ALA there is no way I would let CIEN remain
independent. If I was a short, there is no way I would stay short this name.

I added shares ahead of the call and during the call -- moreover, CIEN was
already a substantial core holding. The 200 day MA is at $28.36 and if
CIEN breaks that level, I may add trading shares in and around that level.

Technically, the stock is passing through the 90 day MA currently and
historically that has had a very high correlation with continuing performance for CIEN.

Lastly, analyst cov. is still hugely negative with 19 of the 24
analysts rating the shares a hold or lower. Only 1 strong buy on CIEN
currently, which is simply amazing after 4-5 qtr's in a row showing improvement. At this point, that analyst negativity should change for the positive in the coming weeks. IMO, CIEN should trade substantially higher during 2007.

Long CIEN

To listen to conf. call see link:

http://biz.yahoo.com/cc/1/75611.html

Redback (RBAK) -- serving up a short fry!

2006-12-07T11:01:00.000-08:00

Stock serving up a major short fry today on announcement of significant Chinese Broadband contract. Not sure I would chase RBAK today but I do think the stock will trade into the $20's over the next couple qtr's.

One by one, stocks in this group are getting walked up and all the while T/BLS merger is still on hold and thus large spending being held back -- also contributing to overly negative analyst sentiment.

I see the finalization of T/BLS as a potentially major positive catalyst for stocks in this group. RBAK included.

Long RBAK -- though I did trim some today. Will buy the shares back on a 5-10% pullback from sale price in the $17.40's.

CREE selling too much... Stock respresent good value under $18.50.

2006-12-07T06:55:00.000-08:00

CREE down almost 14% on lower guidance. CREE tends to exhibit lumpy performance from qtr. to qtr. This tends to present opportunities a couple times a year to both buy it on negative news.

CREE has a very good balance sheet and longer term growth should remain solid yet somewhat unspectactular. However, even at $20-21 CREE was not priced for high current expectations.

Do a quick look at the stats link on YHOO finance shows CREE with $208mm in cash or $2.70 per share. This seems great, but a closer look at the balance sheet shows a total cash combined s/t & l/t investments of over $400mm -- or over $5 in cash and investments.

Long CREE

SEAC -- Another good qtr. telco/cable infrastructure.

2006-12-06T14:42:00.000-08:00

SEAC -- nice qtr., very strong growth. VOD(video on deamand) is in a stunning growth phase currently. Like OPTM, SEAC is another unique player that sells into both the Telco & Cable equipment space.

While SEAC doesn't have the most peerless balance sheet in the space, it's still pretty darn good. I would encourage a good view of the actual balance sheet as SEAC has solid cash, short term investments as well as long term investments -- with no debt. At less than 2 times both P/B and PSR the stock is still quite cheap as long as growth continues -- as mgmt has indicated on the conf. call. Plus there is just enough of the shares currently short to make future price action interesting.

http://finance.yahoo.com/q/ks?s=SEAC

I think SEAC is poised to benefit from still emerging growth of VOD programming, new revenue streams and a softening of overly negative sentiment in their industry group.

Long SEAC

OPTM follow-up...

2006-12-05T14:13:00.000-08:00

Very solid call with lots of analyst interest. Growth will continue to be very strong as guided for the next qtr. This company is in a somewhat unique position to be selling into both the telecom & cable market place.

While it's always hard to judge a recently IPO'd stock, this company could be a solid investment (though high risk) -- for the next few qtr's. Though I would look to buy on days of market related weakness.

Long OPTM

OPTM's first qtr... So far so good.

2006-12-05T10:40:00.000-08:00

Great rev. numbers from OPTM (114% growth YOY), solid profits and guidance as well. Going to listen to call. This could be an exciting stock over the next few weeks/months.

OPTM has recently IPO'd and competes in the JDSU/CIEN fiber optics group. While looking expensive currently at around 7 times sales, on a run rate basis off of next couple qtr's the stock is selling at approx. 4 times sales which is fairly closely aligned with other comp's in group.

Great group dynamics currently. This is one of my favorites sectors currently.

Stock spiking nicely AH's.

Long OPTM

SNDK selling looks overdone.

2006-11-19T20:22:00.000-08:00

Added SNDK last week. Stock was priced fo r a big qtr. going into recent earnings. Had a good qtr., but was not good enough to retain momentum. At this point the stock looks like it has sold off more than enough to reflect results. Quite a few catalysts here and I view concerns of Zune competion are largely overdone.

The gadget Xmas season will be strong, Zune will have little to no effect on SNDK prdts and the benefits of merged FLSH will show up in 2007 results.

Long SNDK

Internet Video Ramp...

2006-11-19T19:57:00.000-08:00

Video over internet is on the rise everywhere and the Goog/YouTube combo will be one of the big 3 for internet distribution. Hard to say if they'll be numero uno, but they have a chance. Just guessing that they will be number 1 in turning their content into real Rev's for themselves and distribution partners. YHOO is in this game pretty well(good position in news feeds). AAPL in the game as well. If we can get some kind of AAPL/GOOG deal down the road then GOOG and their distr. partners should get a firm number 1 position. This would be in the form of a tie-in to podcasting from GOOG properties and a direct feed from a GOOG search to Ipod/Itunes linkup. The new ITV product could be a huge for this as well and allow GOOG/YouTube video search feeds to be readily streamed or moved for viewing on TV's. I would be surprised if something like this isn't in the works already.

Long GOOG YHOO and wanting some kind of 10%+ pullback to put reload some AAPL again.