Sold Half $GOGO

I was looking at GOGO spike into the bell, watching it become my largest position, passing IMMR, then decided to sell half. Ahead of next week’s Fed meetings, I believe it to be prudent to raise capital for a rainy day or two.

With the GOGO sales, I am now in a 30% cash position.

What business can you make thousands or millions per day, depending on your status, while hanging out with illegal mexicans, who happen to be digging holes in your backyard.

It was a very nice week, despite the drop in CVV. We’ll get those suckers next week.

Twitter is coming public and euphoria is running high. Although I believe there will be a broad market pullback in October, stock pickers, like you and I, can make money in any tape.

Later on tonight, or tomorrow, I will do a brief seasonality report for October and highlight how ULTA is a dunk shot in September, possibly picking some “dunk shots” for October too.

Top picks: GOGO, IMMR

UPDATE: I sold half of my GOGO position to lock in a +31% one week gain. It was my largest position and became too overweight, so I trimmed it.

I am 80% long. But, I’ve taken a 50% reduction to my equity exposure this week. I don’t want to get too greedy, like Hansel in a chocolate factory.

I will tell you what I want to buy, because you’re not a threat to me, small pikers swimming in an ocean of sharks.

I want to own OWW, MHO and RBCN. I’m hearing the new iPhone will have a sapphire home button and camera. Therefore, this is extremely bullish for RBCN and GTAT.

OWW is down because its largest shareholder has been selling, hardly a reason for a 30% sell off.

And, lastly, I want to own housing into weakness. The market is on and off with the housing sector. I am thinking the sell off is almost done. Once rates normalize, people will come back to the housing sector and these names will be hitting 52 week highs again.

I also have my eyes on Ag chems, like MOS and IPI. But I think it’s a bit early for them.

As of now, I am exactly flat for the day.

Remember the debt ceiling debate? Well, the republicans are mad and they’re not gonna take it anymore. They view the Obama administration as disdainful to the office of the President and are fixin’ to shut this government the hell down, in order to prevent the damned Chinese from lending us anymore of their dirty money.

Gods, guns and grits: that’s what we’re looking forward to in the weeks and months ahead. Mix in a little gold standard request, and we might have ourselves a good olde fashioned government shut down.

Today’s action is decidedly negative and anti-climatic. Like I said yesterday, dark clouds are massing in the not-so-distant future. There are men, behind every corner, trying to castrate you. Do not let them grab a hold you, for you will regret it for as long as you live.

Raise a little cash.

The buzz word is “Twitter” and Wall Street wants to get this IPO right, following the Facebook disaster. These stocks are trading at very rich valuations because, it’s widely believed, this is where the growth is going to be, for the foreseeable future.

To play Twitter ahead of the IPO, GSVC and SVVC are your plays.

Based on price to sales, which is how social media stocks are being assessed, here is the run down.

YELP 23x

LNKD 23x

Z 23x

FB 18x

TRLA 16.5x

YY 13x

BIDU 12x

TRIP 12x

YNDX 10x

YOKU 10x

SINA 10x

OPEN 10x

SALE 10x

CTRP 8x

AWAY 8x

PCLN 8x

P 7x

ANGI 6x

GOOG 5x

GRPN 3x

ZNGA 2x

This is a surprise.

The only way to play the IPO, before it comes public, is via GSVC. GSV’s VC fund owns Twitter and it comprises 15% of their holdings.

However, the CEO of GSV, Michael Moe, HATES his shareholders– literally.  Each and every time the stock goes up, the company files for a secondary, so that greedy bastard can raise more capital and pay himself exorbitant fees. It’s a crime what he is doing. I will NEVER buy GSV again.

Having said that, GSVC might spike off this news. But, I expect it will be sold 100 different ways but loose, upon the pricing of Twitter.

#TwitterIPO

I was up 3.5% earlier in the day. It had the feeling of excess. I knew it was a good time to go to cash, but I’m invested, emotionally, into a belief system. You know what happens when you invest with your heart? You get a heart attack.

I’m barely up now, just +0.2%, as GOGO limps into the bell.

That’s life. I started with a box chevy, so this is nothing.

We’re going higher, but we’re probably going down first.

I don’t think there has ever been a stock, aside from Skymall, that was tethered to the airlines and enjoyed high growth. Airlines are great businesses, if it wasn’t for the damned employees and fuels costs. A customer that is literally a prisoner for at least 2 hours, with nothing to do but surf the web, is a dream come true for an internet service provider, like GOGO.

Wait until they let you text from airplanes. Can you imagine the type of growth his company will undergo?

The only question is, considering it’s a new company and we don’t know much about management: what is it worth?

Typically, in these circumstances, it’s best to compare to peers.

Will GOGO ramp up growth and become a coveted “social media” stock, like YELP, LNKD or TRLA?

If so, the stock needs to trade at about 15X sales or $45 per share.

What if GOGO turns out to be a loser, like GRPN or ZNGA? Well if that’s thew case, the most severe valuation tags GOGO at around $8 per share?

Sounds like a gamble, no?

However, internet service providers, historically, have predictable revenue streams, unlike online coupon and gaming schemes.  In my estimation, based upon the information available to me now, considering new products launches and expansion into international flights, GOGO should be trading 10x sales, or $31 per share. With the stock at $14 and change, you’re laughing at me now. But, mark my words, if GOGO exceeds earnings next quarter, the stock will get there in a heartbeat.

Having said that, this was a bad IPO. It broke syndicate, like FB, on the first day and plenty of people want to sell. Look for some resistance at around $16-17. When it clears $17.50 or so, in my opinion, it’s a straight show for $20.

I’m a big believer in “peaks and valleys” and how people ebb and flow through them. Adversity is dealing with the valleys. How one responds to some hard times defines who that person is, not the bad habits picked up during periods of excess.

We are bound to make mistakes at the top of any tape, because things feel so good. It’s hard being a contrarian all the time. Eventually, we all want to “fit in” and conform to what’s working now. I truly respect those who stick to their disciplines, especially when said disciplines force you to miss out on epic rallies.

Value investors must be dying now, watching people like me bank coin in cartoonish fashion. I am sure they justify their style as being able to “last the test of time.” They assume guys like me “come and go” and will “blow up” on the next down cycle. Maybe if I was an ideologue, that would be true. But I am not. I am malleable, mistrusting, and generally belligerent towards traveling with the herd.

Even though I am banking a criminal amount of coin in GOGO, it was a contrarian play. No one was buying it when I took down a position. Now it’s the hot stock to watch. The same goes with IMMR. Who is buying it? No one–but they will soon.

Who was buying YELP when I bought it? How about my other core position, POWI? Most people haven’t even heard of that stock.

I like to profile stocks and anticipate when they will get hot, in advance of the crowd. That is where I make the bulk of my returns, guessing correctly. Aside from that, I utilize the tools that are available to me to properly screen for these ideas. This is an ongoing process and I don’t want to preach to you now, obnoxiously, just because I am on a bit of a run here. We all know I will eventually blow up, in spectacular fashion, forcing me to fight hard to get back what I lost.

I added to my GOGO position above $14. Am I crazy?

Perhaps.

But I believe the stock is worth more than its current price. Therefore,  my old adage applies here: the best time to buy a winner is anytime.

Due to the run up, GOGO is almost my largest position.