Category Archives: Quick Take

"...a shifty eyed guy with a cheap suit and scoffed shoes may commit a lot of crimes but a Ponzi scheme is never going to be one of them.  Ponzi schemers are by definition done by people who seem trustworthy, if they’re not they can’t even start.  The can’t pull it off.  So, people who think they would instantly recognize a crook like Bernie Madoff, are deluding themselves.  That’s one of the dangerous lies we tell ourselves.  They’re going to look like responsible respectable people.”

Brinker, Bob. Money Talk; Diana Henriques author of Wizard of Lies. July 17, 2011. partial transcript

NetApp (NTAP)

The last time that we did a write-up on NTAP, as the price was in the declining phase, was January 20, 2012 (found here).  At the time, we said the following:

“After a 39% decline in price, NetApp (NTAP) is a prime candidate for a two transaction  purchase.  The first purchase should take place starting at $30.  The second purchase should take place around $23.47.”

NTAP was trading at $36.85 and ultimately fell as low as $26.33, which was a total decline of –55% from the prior peak set on February 7, 2011.  After NetApp fell below $30 on May 24, 2012, a purchase at or below $30 would have resulted in gains of +53% by September 2013 or +57% by January 2014.  The gains mentioned were 25% and 16%  greater than that of the Nasdaq 100 Index from the May 24, 2012 closing price, respectively.

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“I put heavy weight on certainty…if you do that, the whole idea of a risk factor doesn’t make any sense to me. You don’t do it where you take a significant risk.  But it’s not risky to buy securities at a fraction of what they’re worth.” –Warren Buffett

source:

• Jim Rasmussen, “Buffett Talks Strategy with Students,” Omaha World-Herald, January 2, 1994, p. 17s.
• Lowe, Janet. Warren Buffett Speaks. John Wiley & Sons, New York. 1997. p. 105.

Bed Bath and Beyond (BBBY)

In our opinion, this stock could be a tale of two charts.  The first chart compares the performance of the stock price from 2000-2008 and 2008 to the present.  If the period from 2000 to 2008 is any guide, the price of BBBY may have more room on the downside.

Interestingly, the two periods are almost to scale and the period when the stock price peaked (so far) has been within days of each other.  If BBBY were to decline by the same percentage of –63.30%  from the previous peak, the stock price would decline to $29.78.

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