Monday, July 14, 2014


Well, all I can say is that was a good thing I had a substantial lead on the indices heading into the second half. July has not exactly been fireworks and celebration so far.

So far for July I am down 3%. It is worse in the past six days, down 4.2%. The R3K is basically flat for July and down 80 basis points in past week.

I was hurt today by GTAT dropping another 5%. That is 22% over six days, seems clear that is the cause of a lot of my pain. I clearly should not have added 28% to my position at 16.52, could have gotten more than a buck cheaper with patience. Today's drop was caused by another 2014 earnings warning. The suggestion was that GTAT was having some quality issues as a supplier. I have to admit that the claim does appear to have the potential to make some sense as AAPL last payment to GTAT has apparently not been made yet, which does suggest some sort of target/hurdle has not been achieved.

I do not think it is time to go chicken little, the basic thesis should still be true. Sapphire is/will be used in AAPL products and when that gets going full bore, GTAT stock price and earnings should pop. The basic thesis still being true, doesn't really make me feel better.  If I was not overweight (stock that is), I would have to seriously consider buying more GTAT at these prices. It does make you wonder if CEO sales were based upon his internal knowledge that they might struggle. I have not seen any d&o suits filed yet, but if GTAT does come out with some sort of reduced guidance and the stock drops more - I can see the lawyers racing to chase the ambulance.


AndrewsDad said...

Do you see greater reward or risk right now with GTAT?

Marsh_Gerda said...

I see greater reward, my main thesis is unchanged. At worst it is pushed back a quarter. That being said, the two things that worry me (am I missing something) are the massive sales by the CEO and a 32% short interest.