We are off to a decent start in 2015. Unless something(s) happens in the macro environment, I believe this year will be strong, mostly on the backs of low energy prices and certain technological trends. GCM is involved in a few significant trends such as mobile handsets, outsourcing, automation, and cost saving techniques and software.
As stated in my last newsletter, GCM’s approach is fundamentally focused — we don’t fit into any box very easily. As you well know, GCM often invests where few managers dare to go. The goal, of course, is that this philosophy will provide the alpha (and patience of course may be required). Furthermore, there are times to be concentrated for the purpose of financial gain. Obviously, with concentration also comes risk, but the risk must be carefully calculated. Factors to be considered with our current investment strategy are the easy monetary conditions and lackluster growth. Why? Because stocks such as Qorvo (QRVO) and Tower Semiconductor (TSEM) – with their ability to deliver future growth – makes them all the more desirable.
We had a terrific year in 2014 with Qorvo (up 3.5x), and my intention was to begin selling shares and lowering clients’ exposure in the first quarter. However, after meeting with the management team in mid-January, I came away with the following salient points:
The 2015 forecast (Gartner) for PC sales is expected to decline 2.4%. Why? Smartphones and tablets are taking over. This fact positively influences our investment with Qorvo (previously RFMD). The stock ended the year at $66.36 and closed at $79.70 on March 31. How can I keep such a large position and still sleep at night? Smartphone sales will continue to rise over the foreseeable future. The dollar content of Qorvo’s devices in the Apple and Samsung phones may increase 4-8X over the next few years as many handsets around the world go from 2G to 4G and LTE!! In addition, other markets for their technology (internet of things) might just explode. The moral – we can always remain equally diversified and be average or, on occasion, we can have a concentrated position and hopefully perform better than average! The fact is that there might not be a better place to keep our money. As I write this, Brean Capital just upped their estimate for Qorvo from $85 to $95/share.
Remember, if you are ever uncomfortable with an investment and/or its position in your account, just say the word! I understand.
Watch Out Below….
Amazon recently received clearance from the FAA to test drones, although only during daylight, at less than 400 feet of altitude, and within sight of the operator. The test will be part of the online retailer’s efforts to make unmanned deliveries within 10 miles of a warehouse. Is beer delivery included?
Do you love Paris in the springtime? Then you’ll love the plunging Euro, too. Your dollar will go 25% further today than it did last May. In theory, that makes European travel to the City of Lights that much more affordable.
If the Great Recession was good for anything, it seems to have helped the U.S. consumers get their financial houses in order. The number of personal bankruptcy filings fell below 1 million for the first time since 2007 and are now lower than any time they’ve been since the 1990s. Hooray!
Your Parents Always Told You To Think Positively…. (From Men’s Health)
Positive thinking may push a body beyond what we once thought were its physical limits. When physically fit men and women gave themselves repeated motivational talks on stationary bikes, they road 18% longer before hitting the point of total exhaustion. Those who are motivated to achieve a goal can push past the discomfort.
Change of Scenery….
When I’m stressed, I think of what I can and cannot control. One way I gain perspective is to change my environment. I’ll take a walk, bike ride, exercise while watching old episodes of Mad Men through my Amazon account. I find getting away from the computer and the piles of research re-energizes me for more of the same. Throw in a homemade smoothie, and I’m in heaven!
Go To The Mat For Your Heart….
Many of you may know that I have done yoga religiously for at least 10 years. It’s the best exercise I have ever done and so much harder than most people realize. Most guys think it’s for women, but that’s far from true. Hold that pose because… Yoga may protect you from heart disease. Harvard researchers discovered that people who did yoga had a similar reduction in heart disease as joggers and cyclists. The reason is not clear, but it may have something to do with the combination of strength-building exercise and stress-reducing relation. Ooooohhhmmmm
Here’s to steady gains in 2015,
Goldberg Capital Management is an investment adviser registered with the State of CT Department of Banking. This Newsletter and its contents are for informational and educational purposes only. You alone will need to evaluate the merits and risks associated with the use of the information provided herein. Although this Newsletter may provide information relating to approaches to investing or types of securities and other investments you might wish to buy or sell, no information provided in this Newsletter is intended or should be construed as an investment recommendation or endorsement from Goldberg Capital Management. Please remember that past performance is no guarantee of future results.