Caution for AMD investors

[SerpentRoyal]

Originally posted by: Yoxxy
GE IS THE DEFINITION OF VALUE STOCK, WHY POST IT. OF COURSE THE SHORT RATIO IS LOW. SHORT RATIO IN VALUE STOCKS ESPECIALLY MEGA-CAP VALUE IS GOING TO BE LOWER THAN THAT OF A SMALL-MID CAP GROWTH STOCK.

YOU ARE NOT STUPID. DON'T ACT STUPID.

GE is value? By whose standard? Why don't you post links to educate others about what constitutes a value stock. What about BA @ 1% short, one of the best DOW/S&P stock over the last 20 years? It went from $30 to $100 in five years. Need another shovel for that grave?

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

http://finance.yahoo.com/q/bc?s=BA&t=5y&l=on&z=m&q=l&c=

 

[trajan2050]

Going long AMD now is extremely high risk. Much better places to invest! We could easily see 5 dollars a share in the near future.

 

[The-Noid]

Where do Boeing and AMD share any kind of similarities. I am lost?

AMD
Beta 3.02
Dividend & Yield NA
Earnings/Share -4.00
Forward P/E -3.00
Market Cap. 4.30 Bil
P/E NA
Return on Equity -47.73
Total Shares Out. 554.57 Mil

BA
Beta 1.17
fyi Dividend & Yield 1.60 (1.81%)
Earnings/Share 5.21
Forward P/E 16.80
Market Cap. 67.55 Bil
P/E 17.10
Return on Equity 46.02
Total Shares Out. 775.06 Mil

You are comparing 2 companies that share absolutely nothing in common.

Generally speaking, wouldn't there be less short interest in a profitable company that is paying a dividend?

Boeing's sales are also incredibly predictable as they have delivery contracts into 2016.

AMD has no contracts.

Both are in different industries as well.

Take this the right way, your a fucking idiot. I can't argue with someone that has the moral compass and logic of a 3-year old.

ADMIT YOU ARE WRONG SOMETIMES, OK?

 

[brencat]

Okay I'll bite. There's another dynamic no one has mentioned yet, and that is the $3.5 bln face of convertible bonds AMD has outstanding. Keep in mind that hedge fund investors sell stock to offset long convertible positions -- I'd bet that those shorts represent over 50% of the current 80 mil shares of current AMD short interest. Assuming AMD's credit eventually improves, the volatility assumption used to value the embedded option components of those two convertibles will come down, forcing hedge funds to buy back some stock to get their hedges re-aligned. That's option theory.

Net net, the stock MAY get a pop assuming some good news or an improving credit profile, and it will be driven in part by re-hedging activity of these investors. Of course if the credit deteriorates further, selling pressure will be compounded by these same investors.

Just my 2 cents.

 

[The-Noid]

I had forgotten they were convertible.

Thanks for the insight.

 

[SerpentRoyal]

Originally posted by: Yoxxy
Where do Boeing and AMD share any kind of similarities. I am lost?

AMD
Beta 3.02
Dividend & Yield NA
Earnings/Share -4.00
Forward P/E -3.00
Market Cap. 4.30 Bil
P/E NA
Return on Equity -47.73
Total Shares Out. 554.57 Mil

BA
Beta 1.17
fyi Dividend & Yield 1.60 (1.81%)
Earnings/Share 5.21
Forward P/E 16.80
Market Cap. 67.55 Bil
P/E 17.10
Return on Equity 46.02
Total Shares Out. 775.06 Mil

You are comparing 2 companies that share absolutely nothing in common.

Generally speaking, wouldn't there be less short interest in a profitable company that is paying a dividend?

Boeing's sales are also incredibly predictable as they have delivery contracts into 2016.

AMD has no contracts.

Both are in different industries as well.

Take this the right way, your a fucking idiot. I can't argue with someone that has the moral compass and logic of a 3-year old.

ADMIT YOU ARE WRONG SOMETIMES, OK?

So what happened to your claims of value, and % short interest? You're the clown beating around the bush. No need to waste more time with this TROLL.

 

[The-Noid]

Blah blah, market capitalization, blah blah.

Compare small growth and small value, blah blah.

Again when arguing with you, you need to explain things out to a t, otherwise you will pull one small point out.

In every post I will now list the logical fallacy you commit. It should take very little time for you to correct your logical abilities.

Denying the antecedent is a formal fallacy, committed by reasoning in the form:

If P, then Q.
Not P.
Therefore, not Q.

Arguments of this form are invalid (except in the rare cases where such an argument also instantiates some other, valid, form). Informally, this means that arguments of this form do not give good reason to establish their conclusions, even if their premises are true.

The name denying the antecedent derives from the premise "not P", which denies the "if" clause of the conditional premise.

 

[taltamir]

amd stock is getting low cause the company is sucking hardcore and people think its going to collapse... yea you can buy it from 4$ a pop and sell for 11$ each when it stabilizes... or. more likely, you can buy it for 4$ a pop and use it as toilet paper when the company finally goes under...

Betting on a dying dog is a BAD thing...

The buy low idea in stock is that when you have a stock market collapse and all stocks are undervalued, you buy stock in stable companys that are making real profits with their products. healthy companies perform well regardless of their stock condition. A healthy company with low stock value is a find. An unhealthy company with low stock company is a red flag.

 

[LosSkin]

This company needs a whammy and needs it quick. Before Intel decides to 'take over'

 

[SickBeast]

I don't think AMD needs anything more than a re-structuing.

With the price their stock is at, one of those investment firms should snap them up and make them profitable.

Their engineering staff is enormously talented, probably more so than that of intel, and maybe even nVidia, especially if you consider what they have produced with the resources they've had over the years.

Their products overall are quite good, within an earshot of the best. If they stop wasting $12 million a year on people like Ruiz they will be much better off.

 

[v8envy]

What would an investment firm do to make AMD profitable that AMD is not doing? AMD has had an almost unbelievable string of bad luck and not so great direction. Not sure how new investors swimming in the soup and micromanaging things would help.

Is it the company (brand, image, leadership, relationships) that is the major value here, or the assets? If it's the assets then there's no need to take on the baggage of overhead and liabilities with a purchase. Simply wait until things look dire and buy just the assets at liquidation prices and leave the debt-ridden husk of the company behind. You can even buy the name -- it's an asset.

Intel doesn't need to buy AMD. They have cross-licensing agreements. They can hire the tech staff once layoffs and pay freezes start to take their toll. If AMD's string of bad news continue they'll wind up competing with Via in CPU sales and S3 with GPU sales. That's a 5% market share Intel is more than happy to leave to the competitors.

Edit: as far as stock price -- I see AMD down 3.4% on heavier than average volume (40M vs 25M average). Still below a 13 day moving average, still trending lower on all cylinders, moving averages a straight downward slope as well.

I can see how people might have seen the start of a possible trading range between the 5th and 7th of Dec, but what prompts you to call a bottom here? Seriously, what am I not seeing? I'd love to learn something new.

"[we admit to a] lack of profits in all businesses, appallingly negative cash flow, poor distribution management and large market share declines." is not something to inspire confidence in fundamentals either. Management calls for 18 to 24% operating margins -- I'd love to see how they can pull that off competing in the value segment where margins are traditionally slimmer than 10%.

 

[SickBeast]

Originally posted by: v8envy
What would an investment firm do to make AMD profitable that AMD is not doing? AMD has had an almost unbelievable string of bad luck and not so great direction. Not sure how new investors swimming in the soup and micromanaging things would help.

Right now AMD is controlled primarily by individual shareholders, along with several large investors. Decisions generally would have to go through the board of governors and pass by a majority.

With an investment firm, they instantly ARE the majority. It would be much, much easier for them to make sweeping changes, such as firing the entire management and marketing departments.

 

[v8envy]

Originally posted by: SickBeast

Right now AMD is controlled primarily by individual shareholders, along with several large investors. Decisions generally would have to go through the board of governors and pass by a majority.

Just because a company trades publicly doesn't mean it's a democracy. The end goal of the leadership, board of directors and EVERYONE at the company starting at the receptionist level and going all the way to the CEO is to increase value. The only thing that would change if they were private is they'd not have as much of a quarterly focus -- but AMD doesn't have a quarterly focus right now anyway. They've pretty much written off the next 2-3 quarters.

I would not keep my $ in any investment group in the business of micromanaging their acquisitions. Would you?

 

[SerpentRoyal]

Time will tell if those who are long on AMD below $10 will get a 30% return in 2008. That's what makes the market.

 

[Thund3rb1rd]

ZOMG!!EL3V1N

SR and Yoxxy need to kiss and make up

 

[taltamir]

Originally posted by: v8envy
What would an investment firm do to make AMD profitable that AMD is not doing? AMD has had an almost unbelievable string of bad luck and not so great direction. Not sure how new investors swimming in the soup and micromanaging things would help.

Is it the company (brand, image, leadership, relationships) that is the major value here, or the assets? If it's the assets then there's no need to take on the baggage of overhead and liabilities with a purchase. Simply wait until things look dire and buy just the assets at liquidation prices and leave the debt-ridden husk of the company behind. You can even buy the name -- it's an asset.

Intel doesn't need to buy AMD. They have cross-licensing agreements. They can hire the tech staff once layoffs and pay freezes start to take their toll. If AMD's string of bad news continue they'll wind up competing with Via in CPU sales and S3 with GPU sales. That's a 5% market share Intel is more than happy to leave to the competitors.

Edit: as far as stock price -- I see AMD down 3.4% on heavier than average volume (40M vs 25M average). Still below a 13 day moving average, still trending lower on all cylinders, moving averages a straight downward slope as well.

I can see how people might have seen the start of a possible trading range between the 5th and 7th of Dec, but what prompts you to call a bottom here? Seriously, what am I not seeing? I'd love to learn something new.

"[we admit to a] lack of profits in all businesses, appallingly negative cash flow, poor distribution management and large market share declines." is not something to inspire confidence in fundamentals either. Management calls for 18 to 24% operating margins -- I'd love to see how they can pull that off competing in the value segment where margins are traditionally slimmer than 10%.

Thats the biggest thing people miss when they discuss buying the company... remember 3dfx? nvidia didn't buy them just before they colapsed.. they gobbled up the pieces they wanted at liquadation prices after they went bankrupt... anyone who wants to make processors is better off buying it after it liquidates rather then just before, they will get a better deal for it.

 

[rchiu]

Originally posted by: brencat
Okay I'll bite. There's another dynamic no one has mentioned yet, and that is the $3.5 bln face of convertible bonds AMD has outstanding. Keep in mind that hedge fund investors sell stock to offset long convertible positions -- I'd bet that those shorts represent over 50% of the current 80 mil shares of current AMD short interest. Assuming AMD's credit eventually improves, the volatility assumption used to value the embedded option components of those two convertibles will come down, forcing hedge funds to buy back some stock to get their hedges re-aligned. That's option theory.

Net net, the stock MAY get a pop assuming some good news or an improving credit profile, and it will be driven in part by re-hedging activity of these investors. Of course if the credit deteriorates further, selling pressure will be compounded by these same investors.

Just my 2 cents.

AMD issued those convertible bond almost 6 month ago if I am not mistaken. So I think if the hedge fund managers wanna sell short to off set the convertible bond position, they would have done it a while ago. I think the recent increase of AMD short interest is due to their product delays and strings of bad news. I believe the short interest increase 10+% each of the last two month.

With the current negative cash flow, I don't think AMD's credit rating is gonna improve anytime soon, so i think hedge fund's short position isn't gonna change soon. But you are right, there is a heavy short interest right now depressing AMD stock price, and if there is good news, those short sellers will have to cover their position and increase the pop on AMD's price increase. So right now, look for AMD price to be very volatile in either direction. Hmm....maybe it's time to do a straddle on AMD.

 

[taltamir]

Good point rchiu... i almost surrendered to temptation and made my first stock gamble as a short on AMD stock... (the stock market is a gambling operation, not an investment one... unless you buy stock to keep for 10 years to get paid dividends).

Although the prohibitive amounts of funds needed put the stopper on that one. (minimum lot sizes and requirement of it being no more then 25% of your current portfolio meaning I would have to go with at least 5000$)

Anyways with so many other people shorting AMD's stock it might be undervalued, and it might result in a short squeeze (everyone trying to buy back the stocks they need to give back at once... at increasingly overpriced amounts) once people start seeing a corrective shift.

 

[v8envy]

Originally posted by: rchiu Hmm....maybe it's time to do a straddle on AMD.

As the stock price declines the implied volatility goes up, as do options premiums. But worst of all, the spread on options is eye-popping.

I mean with this thing's beta would you go long the stock and short calls at this point? Would you sell puts? Obviously not, since you'd want the exact opposite position.

Heck, would you even want to make a market in either the issue or the derivatives when AMD could gap up or down by 50% in one day without an epic premium?

taltamir, if you want to short AMD you may still be able to do so through options. Get your account certified for options trading, pick up an options strategy book and read it over the weekend. You'll be able to risk as little or as much as you want using derivatives rather than the stock itself.

 

[dmcowen674]

Originally posted by: SickBeast
I don't think AMD needs anything more than a re-structuing.

With the price their stock is at, one of those investment firms should snap them up and make them profitable.

Their engineering staff is enormously talented, probably more so than that of intel, and maybe even nVidia, especially if you consider what they have produced with the resources they've had over the years.

Their products overall are quite good, within an earshot of the best.

If they stop wasting $12 million a year on people like Ruiz they will be much better off.

That's cheap. They should be paying him $220 million like the Bear Staerns guy.

 

[Acanthus]

Im quite confident that you couldnt cure AMDs problems without a fire in a locked boardroom.

Stock-wise, the only way you can luck out on that steaming pile of crap before it's delisted is to ride it out in hopes of a samsung buyout.