On Second Thought (Big Trade Redux)

I’m using my time wisely today, taking advantage of this non-market-but-still-work-to-become-better day to dig into the LED players I mentioned last night.  It is one thing to trade these stocks, but it’s another entirely to invest.  I went through the most recent earnings announcements and news stories from the stocks listed in my last post.  What an uninspiring heap of dung these companies are.

Besides CREE, the other names I mentioned seem marred with mismanagement and poor decision making.  $1.3M this quarter in R&D bro, really?  Who got a new Hummer out of that deal?  I’ve seen these types of operations before.  It’s like adding a biotech cock measuring contest to your business model.  No thank you.

If I have to hold my nose and buy one of these ancillary plays it will be either OESX or GTAT.  GTAT has earnings at the end of this month so I’ll be on the sideline with them for now.  Good chart pattern nonetheless.  OESX has new management in place and is curtailing their R&D foolishness.  Considering their leverage and precarious cash flow situation, if they can go ANDRE THE GIANT this quarter and “get it while it’s here boy” their stock could triple.

On the topic of ALB, they are very virgin to the LED game.  They are a huge chemical company and are kind of awesome.  They’re making the high purity metal organic products needed in LED general lighting application.  This could work out really well for them.  Whether or not it drives top-line growth over-and-above the rest of their business seems less likely but certainly possible.  It’s not as pure of a play on LED lighting.

Finally, I want to add PHG to the LED pool.  Philips is a huge patent holder.  They really bother me though.   A big part of what they’re doing is litigious hostility.  They are going to be on everyone’s ass making sure no patent infringements occur.  Obviously they’re doing this because they sell light bulbs, all kinds, to us and there is a huge margin built in.  It feels like they’re protecting their legacy margins by throwing a wet blanket on LED up and comers.  However, they are a big, “safe” play on LED expansion. I would only pay $24.00 for the stock if I was considering an investment.