Mobile Stocks That Got Game

Written by on February 21, 2011 in Stock Talk with 2 Comments

According to the Urban Dictionary, a “baller” is one whose status in society has been earned by one’s possession of “game.”  Back in the day, with the game on the line everyone knew Michael Jordan was going to take the last shot – but there was nothing anyone could do about it. That’s a baller.  On Sundays, donning a red shirt, with a lead, B.F.H.I. (before fire hydrant incident), Tiger Woods was a lock to win the trophy. Undoubtedly a baller.  Moving to the world of business Silicon Valley Titans like Steve Jobs, Eric Schmidt and Mark Zuckerburg are certainly ballers – as they “usher in” a new wave in computing.  Finally moving to my world, the world of stocks, there are some stocks that clearly have game.

In the late nineties, contrary to Wall Street’s diversification or asset allocation messages, I learned that you can make a lot of money by owning stocks in the right sectors at the right time.  There is no need for an individual to own 25-30 stocks with representation in each sector.  As an individual investor, money is made by making concentrated “bets” in a few companies.  This has become a core principal of my investing strategy.

Currently I am making a concentrated play in Mobile.  For the record, commodities and emerging markets are my two other areas of focus.  In December, I wrote an article “Move Over FADS CAN – Introducing QOFAR” describing why Qualcomm, Open Table, F5 Networks, Apple and Riverbed Networks (QOFAR) are my chosen ways to invest in mobile.  The portfolio has performed extremely well.  Year to date, QOFAR as an equal-weighted basket,  is up 13.3% vs. 6.8% for the S&P 500.

Today I am dropping the QOFAR acronym.  The intention is not to hold these five stocks through thick and thin. There will be times when these stocks under-perform and will be replaced by others.  After F5′s most recent Quarterly report, it is walking on thin ice.

Going forward, I will refer to this portfolio as the “8 Ballers of Mobile.”  There are many great stocks in this sector, but I want to be concentrated in the best.  Eight represents the maximum number of stocks that will be held.  Having an upper limit also forces the replacement of the under-performers, as “up and comers” are discovered.  Ultimately, the market will dictate the number of stocks held.  When the market is not trending well there may be fewer than 8 stocks.  At times there may be zero.

The Newest Baller

If you have been following my writing (here and here) the newest “baller” is no surprise – it’s NXP Semiconductor (NXPI).  NXPI is one of a handful of companies in the middle of the hottest new technology in mobile – Near Field Communications (NFC).  NFC took center stage last week at Mobile World Congress in Barcelona. This video gives some insight into the hoopla.

[youtube]http://www.youtube.com/watch?v=uCnAfYzCThU&feature=youtube_gdata_player[/youtube]

Most importantly NXPI’s stock is on fire.  This past week alone it was up nearly 16% and year to date it is up 40%.

The market has been on a tear all year, but it appears that a pull-back is in the makings.  As I finish writing this, on Monday night, after a 3 day weekend with chaos in the Middle East growing worst; the Futures are bright red.  I would like to add the final two “ballers” on a dip.  My opportunity may be near.  High on my watch list are Acme Packet Networks, Aruba Networks, Sina Corporation and Arm Holdings.

8 Ballers of Mobile

Semiconductors - underly the entire mobile ecosystem powering the devices and networks.

  • Qualcomm
  • NXP Semiconductors

Networks – provide the basic infrastructure to enable anytime, anywhere computing.

  • F5 Networks
  • Riverbed Technology

Apps – software ranging from office productivity to games and social networking.

  • Open Table

Platforms – framework that enables developers to create apps.

  • Apple

Disclosure:  Currently long:  Qualcomm, Open Table, F5 Networks, Apple, Riverbed Networks and NXP Semiconductor.  Positions may be sold at any time.

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