Tuesday, October 21, 2008

Robert Hsu and WFR

Original post date: August 23rd 2008
Removed copyright content and reposted

Mr. Hsu added WFR to his $3.000/year Asia Pacific Edge portfolio on March 21st 2007 at $60.99.

After his usual blah blah Mr. Hsu made his usual (wrong) prediction:
The stock is in a nice upward trend. It consolidated around $55 for the last week or so, and after strong days yesterday and today, it now looks to be beginning its next leg up. Buy WFR under $65. Given the strength in the market and the growth in this stock, I expect it to move to $80 or higher in the next three to six months.

WFR did not move to $80 in the following 3 to 6 months, but it did later. In fact, in December 2007 it went above $90.

Mr. Hsu was so happy that he increased the buy below price to $90 on January 2nd 2008.

Did any of his subscribers buy at $90?

That was the first opportunity Mr. Hsu had to cash a 50% gain. And he missed it.

After January 2008 WFR started to move erratically, but it went over $80 once more in March.

At that time Mr. Hsu missed his second opportunity to cash in a good 30% profit.

Finally on April 30th 2008 Mr. Hsu wrote:
The stock has done fairly well for us, as it went from $60 to over $90 by the end of last year (but you did not sell at that time), and we are now sitting on a 10% gain. However, MEMC's recent disappointing quarterly earnings report and declining profit margins have led me to worry about the company's ability to efficiently execute its business.

and again

So I want you to SELL WFR for a 10% profit.

Now the big question is: how does Mr. Hsu calculate profits: in his website there was written that he bought WFR at $60.99. On April 30th WFR closed at $62.97. For me this is a little more than 3%. In 13 months!

The second question is: why didn't Mr. Hsu sell when WFR reached his $80 target?

The third question is: what do those subscribers that bought WFR at $90 think of him?

1 comment:

Stock Gumshoe said...

Interesting note, thanks. I loved MEMC a few years ago when they were coming out of a financial disaster and priced at a single-digit PE, and held them for quite a while -- sold some early in the $40s and the rest in the $60s, I didn't foresee this incredible collapse, but the signs were in place for a long time that rapidly increasing worldwide polysilicon supply was starting to come online, particularly from their big asian competitors.

This is a refreshing return to thinking about a "commodity" product as a "bad investment" in the long term, even if they can do well in temporary market imbalances -- if prices go high enough, they'll make more and flood the market.