8/8/17 The first limit order hit, so we now have a position with IBM. Want to really keep an eye on things for the short term to see about adding to the position.
7/23/17 I moved the purchase price down and reduced the amount of shares. New initial purchase is 143.02 which is below the 52 week low. Second tranche is at 140.02. Thesis: I still believe they are a good company, better priced than most of the tech and their strategic initiatives are in the right place. I think the turn around is going to take longer than they had hoped for. The goal remains to make a significant investment of my family's money, but at the right price.
Rather than recount declining quarters YoY, dividends, stock buybacks and free cash flow, here is a great article that summarizes my concerns late July 2017 and why I dialed the purchase back to be more conservative: https://seekingalpha.com/article/4089704-ibm-anatomy-value-trap
But in all the gloom and doom I need to remember something. IBM is a technology company, or at least they used to be and with the purchase, I am betting they still are. Tech companies create products that have value out of seeming thin air - like blockchain. Betting against Watson in my view is a big bet.
7/22/17 IBM continued to drift down slightly through the week, we are approaching the 52 week low. After a lot of thinking, I think holding to the 145.02 plan is the good choice, it is very likely to hit in the next few weeks. Maybe even being more conservative than that makes sense. We have benefitted from a very long bull market. My Vanguard ETFs are heavily loaded towards GOOG, FB, etc. But IBM for all of its issues seems to be the best value buy of the tech stocks large enough in grow iteratively. I realize I should be looking for a diamond in the rough, but I should not turn down a Steady Eddy.
I try to do my own research, but as I am getting close to the trigger point I notice most of the industry research says hold or neutral, (though the e-trade blogger sentiment says bullish); possibly another vote for being even more conservative?
7/19/17 IBM dropped very near my limit on earnings reports. I think I had better do a change order, moved it to 145.02.
6/1/17 Set a limit buy of 145.01 to re-establish a position with IBM, which used to be my largest holding. However, that was in basket Cs and got sold in the Vanguard ETF/Muni change. That turned out to be a blessing, IBM's stock price has dropped over $10.00 since then with a high water mark of 182.79.
Truthfully, the chance of hitting 145.00 seems a bit low based on recent markey performance, but some thoughts that might be downward pressure:
- May 5 Warren Buffet sold 1/3 of his position in IBM dropping it from the 158 zone to the 152 zone
- IBM pension plan is dumping IBM
- Essentially 20 consecutive quarterly expected revenue shortfalls, (we can debate accounting practices later),
- Tech, in general, might be overpriced, macro factor, IBM however, is pricewise one of the better buys in tech,
- They are in transition from services and product to cloud and cognitive AI and the growing as we approach earnings on 7/18/17 analysts will be expecting the new parts of the company to grow.
IBM Thesis, (or at least wild hope). IBM is a company fraught with contradictions. My hope is that my family can establish an initial position on a dip, add to that carefully and then profit as some of the emerging businesses start to establish and prosper. IBM for us has been a long investment so this is not a short term strategy. There is little doubt that there is some financial trickery involved at this point, if they can get their revenue mojo back on, I suspect all will be forgiven.
Watson, I am going to start tracking Watson separately, it could be the major driver
- IBM Watson and Sesame Workshop team
- Watson cancer and Hackensack team
- Watson goes to Wall Street for financial legal compliance
Things to research:
- What if 145 is too high once Wall Street gets more data priced in *falling knife*. Consider splitting the buy L145, L140, L130 or some such, once the supercomputers kick in this could happen in a wink
- Impact of new 5nm chips, will not affect stock in 2017, but surely by 2019
- Stock buybacks propping up the stock price
- IBM debt in general
- Can they really keep upping the dividend
- R&D investment lower than peers incl cloud providers MSFT and AMZN
- Spectra believes IBM will have all the mag tape business
- IBM Cloud, WhatsApp leaving the IBM cloud, Forbes impressed, now includes identify as a service,
- Cisco/IBM teaming
- IBM's glass door ratings, 6/21/17 cutting contractor hours,
- X-Force is expanding to Poland,
- Is Watson their future or a marketing campaign, IBM teams with Hortonworks for analytics, they are having a go at the weather,
- IBM and blockchain, teaming with AIG for smart insurance, working with Euro banks, trucking industry,