Selling NFLX, Buying AAPL, INTC
Big day for me today buying and selling but I am not able to log the changes in CAPS so I'm sharing here for those interested.
This morning I sold the majority of my Netflix stock at a 50% gain!!! Gotta love that. This is the second time I have made a killing on Netflix. I still believe stongly in the future of NFLX but I think now is the time to lock in some gains. I fully expect the stock to gyrate a lot over the next couple years so I'll be keeping an eye on getting back in at some point. I read an interesting insight about NFLX a few days ago and it was that if the video streaming market plays out similar to how cable evolved in its early years then there will be multiple winners. I interpret that as: 1) yes competition is heating up a lot for NFLX but with their subscriber base and growth tragectory they will be one of the ultimate winners 2) it is very unlikely they will be the only winner (e.g. it may be a miserable, low-margin business) 3) rapid growth and build-out will take years
So after selling NFLX I had some cash and I immediately put it to work by increasing positions in AAPL and INTC.
Why Apple? It is cheap! I certainly understand that the iPhone 5 is not selling that well, margins are decreasing, competitors are catching up with their products, and some of their primary markets are reaching saturation. However, they are not going anywhere. People still love their products, the brand and do not underestimate the stickiness of their ecosystem. Also, there are tremendous opportunities to broaden their offerings in existing categories plus upside in a potential new category (e.g. TV).
Why Intel? Their stock has been a big stinker for the past year or two and the PC market has degraded suprisingly. They clearly missed the boat on smartphone and tablet chips. However, they have been investing in mobility and they now have compelling offerings. I think it is just a matter of time before they announce a major win with a chip in a smartphone or tablet. Other things to love are the high dividend and the fact that they actually make stuff (they have factories, they are not just a design firm or marketing operation).
Let me know what you think. Am I nuts? Time will tell...