Jim Cramer Get's it Right!! (and) Why I Held ATVI @ 13.00
A few trading days ago I came out with my "HOLD" Recommendation on my own invested stock (ATVI) saying that there is no way in God's Green Earth that I'd want to pay $13.00 a share for ATVI without knowing how things are really going in Q2.
Given the weakness in the Video Games sector over last year's results, there's every reason for caution.
And guess what? Jim Cramer on Mad Money Nails it dead on! He is absolutely right about the market as a whole and my emotional outburst in disgust at paying $13.00 a share for ATVI is just 1 example.
Another example is how Fast Money was cautious when APPLE was at or near $145 a share.
A lot of stocks got ahead of themselves.... They shot well past their Fair Value....
Being in the market for at least 1 year ( I have 1 year and 4 months) gives me plenty of experience and knowledge to find where the price SHOULD be trading prior to an Earnings Report.
Regardless of expecting gigantic earnings beats from my Stocks... I will always place a Pricing Ceiling behind each Catalyst....
Let's take a look at ATVI.
Q2: Wolverine + Prototype + Map Pack #2 for Call of Duty + Guitar Hero Expansion Packs are the main headliners for the quarter....well unless you throw in Transformers which I think releases before the end of this month.
Those are the Catalysts we have to look at folks... We all want to DROOOOOL over Diablo III and Starcraft II.... But you have to hold yourself back from getting too GREEDY and TOO OPTIMSTIC and TOO INSANE over sales of a Video Game that may not release this year much less make any difference on earnings THIS Quarter!
Q3: Catalysts??? Ho Hum...Yawn....
Q4: Tony Hawk, Starcraft II, Call of Duty World at War II, Blur, etc. etc. etc. etc. etc.
So... You want to see $14.00 a share before we see the earnings for Q2??? All you'll end up achieving is a Stock Price that goes SO HIGH...SO FAST....We basically see it go sideways during ATVI's best Q4 in company history!!
That just makes ZERO sense.... ATVI is not like WHIRLPOOL... or a COSTCO.... or WALMART.... or SKECHERS..... or whatever... It's not a stock that is as good as it's best Video Game Title each and every waking moment.. every single Trading Day....
Rather.. it is Catalyst driven... And because it is catalyst driven.. you have to realize that Catalysts do not get priced in until around 2-3 months behind their release dates.
Starcraft II will start to get priced in 1 month after the Q2 earnings report... in Late August, early September (give or take). Then you have to keep track of the momentum and the Purple Crayon to try and put up a CEILING. Look at the Historic fact that David Gardner said he would pay over $16.00 for the Stock because of Diablo III.
Guess what? $16.00 looks like an excellent Ceiling to use for determining how to build up your ATVI stake in preparation for Starcraft II sales. I.E. Do not pay $16.00 what Gardner did.. Pay $15.00 or so....wait for some press release material to motivate you to be bullish on Starcraft II sales BEFORE pulling the trigger at any price.... Patience is KING! Not BLIND GREED!
Until then... Short Term Traders can feel confident in selling ATVI @ 13.00+ and buying back in at under $12.50 over and over..add Nauseum and VARCHILD certainly won't mind one bit that they do so... Because they should!