MORGAN STANLEY REFUTES ELAD ASBAHI’S $AMBA PIPE DREAMS

This just out. Morgan Stanley cites Seeking Alpha article induced panic sell off as buying opportunity, maintains $18 price target.

This will be my favorite asshat award ever.

When you sit down and concoct an investment plan, everything seems so perfect, until you actually put said plan into action. Such is the case with my current predicament, regarding AMBA.

I’ve concluded that I was going to ‘try’ to hold 3 core positions for  “awhile”, financed through my depravity of short term trading opportunities. In other words, I planned to own 12 stocks, trading around just 3–that would remain, no matter what. This way, price fluctuations for my core would be rendered immaterial, as I’d be building up my asset base through timely trades. As of late, I’ve closed out multiple winning trades. Just today I booked a very large gain by selling half of my DDD position. It was, in fact, my 2nd largest position this morning. With some of my proceeds, I started a position in TRLA and averaged down in AMBA.

Here is my conundrum.

I’ve been averaging down in AMBA since $16.66 (god damn omen) and the price is following the path of another large position of mine, IMMR. Both have grossly underperformed. My asset performance has been buoyed by YELP, gains in ONVO, DDD, CXO, OPEN and WIT. And, I also sold 30% of my IMMR position north of $14.30, which helped.

But here I am, chasing down a non-core position down the drain into earnings. Am I mad, or onto something big?

There hasn’t been any news, just rumours and innuendo. Of course one must be mindful of the old saying “where there’s smoke, there’s fire.” However, aside from the Seeking Alpha drivel, every analyst covering the stock, namely the guy from Deutsch Bank (Ross Seymore), who happens to be a very good analyst, loves the stock and feels it’s worth $20. I’ve made up my mind, have you, and I am riding this sucker through earnings, like an olde fashioned automobile made from dynamite sticks heading for the sun.

The curious case of IMMR is equally vexing, if not infuriating. I’ve determined that I am going to stick with certain names, come hell or high water, regardless of imminent peril and financial hazard. The audible here, of course, is AMBA, an unplanned 4th core position, which was thrusted upon me like the north thrusted themselves upon the peace loving confederates.

My year to date gains still stand in the high 30% range, and I didn’t just humiliate myself by selling out of 39 million shares of JCP at the lows.

So, life isn’t that bad. I’ll manage through it.

I was taken down a notch today, thanks to the compression in the shares of AMBA. Also, following John Kerry’s war against Syria speech, stocks declined, further depressing my intra-day profit and loss statement.

No worries. Today was the lightest volume day of the year and Seeking Alpha is an online magazine run by social misfits.

If it weren’t for my huge DDD win, I would’ve been scalped today.

I am going to end up down a little less than 1%, vexed like a bull being teased by a clown dressed in a red mini-skirt.

The good news is, however, war is on the horizon, yet again.

Top picks: IMMR, POWI, YELP

Today’s Seeking Alpha hit piece was time perfectly. AMBA is in a quiet period and cannot refute the bullet points given in the article. The author, ELAD ASBAHI, knew this before posting his drivel this morning.

As far as I know, this is the second credible company he’s gone after, the first being AVG on 1/31/13.

Here’s what he said about AVG then:

• AVG Technologies’ (AVG) Platform business (i.e. the internet search product), including its browser toolbar, has been its most successful program to monetize its user base and has been AVG’s primary growth engine, having grown from 8% of sales in 2008 to 45% of sales in 2012. We believe this revenue stream is in jeopardy.
• Google (GOOG), AVG’s primary search partner and currently the source of substantially all of AVG’s Platform-derived revenue, is on the verge of announcing an update to its toolbar policy, something that has not been widely followed or discussed by market participants. Furthermore, few, if any, analysts on the street appear to be aware of the upcoming changes; if they are, they have decided not to publish or update their models accordingly. We believe that current consensus revenue and profit projections for AVG are severely inflated.
• Imminent changes to Google’s policies could dramatically lower the rate at which users install the AVG toolbar and consent to its default search option, at least slowing, but more likely severely reversing growth in AVG’s Platform business.
• The market appears to have misunderstood the significance of AVG’s recent partnership with Yahoo (YHOO), with the stock rallying close to 50% on the news. We believe this partnership was formed in desperation and anticipation of imminent Google toolbar policy updates. While AVG has added Yahoo as a backup monetization partner, Yahoo’s ability to generate revenue for its partners is far below Google’s, and if the day comes that it has to flex its reliance on Yahoo search, AVG’s revenue will likely contract in a major way.

We believe the equity is highly overvalued at current levels, with an intrinsic value of $8.50-$10/share, 30-40% below current trading levels.

 

How’d that work out for him?

The stock went straight up, now almost 60% higher from his last report.

In short, AMBA can’t defend itself today and the shareholder base is weak, which is leading to an Exodus in the shares. Is this bozo right about a potential earnings miss? Only time will tell. His only solid report was regarding ABAT, which turned out to be a chinese fraud stock, instead of a real company. Please, throw a dart at a wall filled with chinese stocks and odds are it is a fraud.

I like to buy into the blood, especially when the ‘news’ event is based upon conjecture and rumors–pumped out by the very worst financial website online, Seeking Alpha.

Earnings are scheduled for 9/5/13. For Elad’s sake, they better miss.

This is going to be a very quick post, targeted towards the suckers out there, mucking up their net worth.

Stop making predictions. Anyone worth his salt knows predictions are for fortune tellers and Bill Ackman.

Stop asking me for opinions on your stocks and why XYZ is down today and what that might mean.

Who cares?

Your time frame is short term because your pockets are shallow.

My advice to you is very simple: focus on your portfolio less and work more. Earn more money, so that you can afford to be patient.

With that being said, the markets are going higher, because that’s what they do, generally speaking. Any opinions to the contrary are not based on facts, but hyperbole.

Get back to work!

I don’t believe the Seeking Alpha hit piece on AMBA. The companies HQ isn’t even open yet and people are selling the stock like they missed earnings. I’ve made too much money betting against the clowns at SA than to sell here and realize a loss.

I added to AMBA under $14.20.

I started a position in TRLA.

I sold half of my DDD north of $52.

Maybe they have an edge?

Once again, Seeking Alpha disseminates information from a short biased research group, eagerly declaring AMBA will miss earnings, which will, in part, send shares plummeting to new lows. Ironically, the name of this group is Prescience.

How convenient.

Shares of AMBA are weak this morning due to this note:

We believe Ambarella Inc (NASDAQ:AMBA) (“AMBA” or “the company”) will miss the Street’s FQ3’14 consensus estimates, resulting in downward revisions to FY’14 and FY’15 estimates. Our channel checks with Ambarella’s largest customer Chicony (TSEC: 2385), checks within AMBA’s supply chain, and conversations with various analysts indicate that AMBA’s fastest growing business segment, selling SoCs to be embedded in GoPro wearable cameras, has significantly weakened.

Based on conversations with the sell-side, current Street estimates for 20% QoQ revenue growth in FQ3’14 are based on extrapolation of FQ3’13 results; FQ3’13 was a boom time for AMBA on the back of a successful GoPro Hero3 product launch. Revenue from GoPro wearable camera SoCs have grown from 4% to 42% of AMBA’s consolidated sales in the year spanning FQ1’13 to FQ1’14. Our research, however, indicates that growth in Hero3 sales is currently dwindling and that a GoPro Hero3 refresh cycle will not take place in 2H’2013. While we do expect AMBA’s non-GoPro revenue to grow, it is unlikely to provide the kind of growth needed to offset the potential revenue shortfall from the GoPro-related business. Against the backdrop of Ambarella Inc (NASDAQ:AMBA)’s non-GoPro revenue having grown between -25% and +19% QoQ (and actually declining sequentially in three out of the four quarters), current Street estimates appear unachievable.

In a world filled with smoke and mirrors, my initial reaction is to discard this invaluable piece of research as pure biased rubbish. I suppose they already have their short position in place and would like to see AMBA tank, ahead of earnings.

This much is certain: should AMBA exceed earnings expectations this quarter, someone will need to head over to Prescience and punch their analyst in the collar bone.

This is going to be the easiest trade of my career. You fatalist bozos out there are convinced because the Fed said they might stop plopping $85 billion per month into the bond market, that means they will begin selling their bonds. You are entirely retarded, full bananas.

By purposefully sending rates higher, the  entire country will be destroyed (awkward pause).

————————————————————————————————————————-

I wish this blog was still a rated X venue, so that I could properly lecture you about how stupid you are for believing TBT is a long term investment.

Over the past 6 months, REITs and a slew of closed end funds have been dismantled. These are, traditionally, the safest investments for a long term oriented investor.

This is what is going to happen.

Rates will remain low, for infinity. Whoever sold short bonds this month, eagerly awaiting to be rewarded via Armageddon, will be ramrodded into a ‘fag box.’ All of the REITs and bonds that traded lower will rally, alongside stocks. A great giant reflation of bond prices awaits, because the fix has always been in and the United States of America is about to finance another war.

Closed End funds down more than 15%, over the past 6 months

GHI

BBF

EIM

NMO

PTY

MVF

MNE

REITs down more than 20%, over the past 6 months

ARR

JMI

CYS

ACRE

ANH

UHT

MITT

AGNC

ACC

I am sure many of you pole grabbers will take the other side of this trade. I am so convinced about the prospects of REITs, I’ve begun buying calls on IYR and have plans to accumulate a handful of these stocks, into weakness.