Qualcomm Inc (QCOM)

[delmarjogger]

Jim,

Can you or anyone comment on this article today in Forbes? Loopks like it explains the poor performance the pst few days, but the question is "why?"

http://www.forbes.com/investmentnewsletters/2005/03/29/cz_mr_0329gurupicks_inl.html?partner=yahoo&am...

Gurus Guzzle Oil And Dump Qualcomm
Matt Rand; data provided by Marketocracy, 03.29.05, 10:45 AM ET


NEW YORK - Oil and gas giant Exxon Mobil is up nearly 16% in 2005, to $58.89, though it's down from highs earlier this month near $65. The company, with a whopping market capitalization of $377 billion, is in the top 3% of the holdings of the best 100 investors at Marketocracy, thanks to aggressive buying over the last two weeks. The gurus added 17% to their holdings of the stock in the $62 range. Despite its February surge of nearly 30% in price, it's hard to make a case for an Exxon bubble when the company still trades at 15 times trailing earnings.

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Houston, Tex.-based Mission Resources (nasdaq: MSSN - news - people ) is less than one-thousandth the size of Exxon Mobil (nyse: XOM - news - people ), with a market cap of about $295 million. Net income for 2004 was up 24.6%, to $2.9 million. But the company is highly leveraged with a debt-to-equity ratio of 1.51, and it has just under $6 million in cash on hand. At the end of 2003, the company had $27.1 million in cash. With oil prices high or rising, that leverage has been working in Mission's favor, though a pullback in crude would no doubt be a blow to this independent exploration-and-production outfit.

Frequently creatures of momentum, the M100 added 510% to their holdings of Mission, buying near $7 on March 15 and March 16. A year ago, the stock was at $3. While the stock price has outpaced the company's performance, analysts are expecting 48 cents per share of earnings for 2005 (compared with 11 cents per share in 2004), which gives the stock a forward price-to-earnings ratio of 14.6.


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They also bought Puerto Rican regional bank Doral Financial (nyse: DRL - news - people ) on March 17 and March 22. The company fell into a three-day tailspin on March 16, following a downgrade from a Wachovia Capital Markets analyst, who pointed out "aggressive assumptions" in the company's annual report, released the day before. The stock closed at $38.29 on March 15, falling 43.8% to $21.50 by the end of the week. On Monday, March 21, following the nosedive, Wachovia's analyst reversed his opinion and upgraded Doral back to "market perform." Gurus, who added 142% to their holdings of the stock in their recent buying spree, started to buy on the way down, and then bought more at the bottom. It's now in the top 11% of M100 portfolios. The stock, which closed at $22.14 on Monday, March 28, trades for 5.5 times earnings and 1.7 times book value.

The gurus, however, didn't view the recent downturn in San Diego, Calif. wireless titan Qualcomm (nasdaq: QCOM - news - people ) as a buying opportunity. The M100 was most heavily invested in the company in the first half of December, as Qualcomm was approaching its 52-week high of nearly $45. But they've been selling since then. The stock is 19.6% off that high now, trading at $36.19, and gurus sold out of their holdings entirely last week. While the company has no debt, it trades at about 10 times its cash level and 33.4 times its last 12 months of earnings.


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The M100 also dumped shares of City of Industry, Calif.-based teen clothing retailer Hot Topic (nasdaq: HOTT - news - people ). But they sold Hot Topic shares at a healthy short-term gain of nearly 40%, after buying in early December. Gurus sold ahead of the company's fourth-quarter earnings announcement on March 16. That turned out to be a smart time to get out, as the stock now trades at $21.10, which is 6.5% lower than it closed on March 16.


Guru Buys:
Exxon Mobile (nyse: XOM - news - people )
Mission Resources (nasdaq: MSSN - news - people )
Doral Financial (nyse: DRL - news - people )
Guru Sells:
Qualcomm (nasdaq: QCOM - news - people )
Hot Topic (nasdaq: HOTT - news - people )