Universal Display Corp Board less than impressive. $OLED

Much controversy about Universal Display Corporation. Huge shouting match of the loud and rude variety is underway.

The company offers the promise of exciting breakthroughs in lighting technology. Apologies to scientists for a pedestrian explanation but if it pans out its a big thing.

When companies go into warp speed and reach the next level they typically beef up the board and load in excellent talent with experience and gravitas.

The current board composition is unimpressive. The independent directors do not bring a wealth of experience to the table. A snap shot of a few independent leads to these comments:

Leonard Becker age 89 is a real estate wheeler-dealer. Other than buying lighting for his real estate projects what is he bringing to the table.

Elizabeth Gemmill age 67 has a history of non-profit boards. Very noble but this is a business. I want to see the money.

C Keith Hartley age 70 is a Wall Street wheeler-dealer. But there is no history of connections that can be leveraged. Sort of looks good to have a Wall Streeter on the board. But not enough catalyst to propel the company forward.

Lawrence Lacerte age 60 who has a background as a wheeler-dealer in tech and internet ventures.

None of the four independent directors has ever played at the level Universal Display is at or claims its going to. Time for a governance rethink. If you do not see this board changing soon you will know that management is comfortable with a captures board who does not ask tough questions.

In short they will not be able to go to the next level.

George Gutowski writes from a caveat emptor perspective.

Universal Display Needs New Catalyst or the Fat Lady is Going to Sing $OLED

Universal Display Corp is the subject of a rather loud and rude shouting match between Bulls and Bears. Much commentary is emotional and I mean emotional. Lots of traders are locked in deep; very deep. The emotional attachment is too strong and will only acerbate volatility in the near future.

The Bears claim the emperor wears no clothes and this will all collapse sooner rather than later. They point to an SEC investigation of accounting for payments from Samsung. We’ll see.

The Bulls claim the technology is fantastic and we are going to the moon.

The forward PE is astronomical at around 31. So what’s left. A huge takeover offer at a big premium should have already happened if the technology is so great.

The short interest has dropped by about 4.46%. The overall short level is a snick over 8 million shares. The ratio of short to public float sits at 23.96%. The nascent bullishness of a big short position is dropping but still not out of the danger range for the shorts.

While the company is making positive announcements nothing has succeeded in moving the stock north of $40. If the company cannot serve up some event-driven circumstance the stock will have a hard time justifying higher valuations. Excitement will wither and the stock will drift then drop down.

RSI looks like a car driving over a cliff.

Looks like the shorts and bears will prevail unless management can sting them somehow. Given the scrutiny management needs to come up with something very very good.

George Gutowski writes from a caveat emptor perspective.

Universal Display Corp $OLED Short Raid Underway? Asensio Not a believer.

Universal Display Corporation UDC (Nasdaq:OLED) has caught the ire of Asensio. Asensio is known as the King of the Shorts who does his homework before he takes the kill shot. Trigger has been pulled.

Universal Display is engaged in research of Organic Light Emitting Diodes or OLED and has major contracts/relationships with Samsung and Philips.

Asensio has called the arrangements into question and by way of executive summary has concluded the emperor wears no clothes.

Just take a look at the short position history. Several months ago there were approximately 10 million shares short. The position has been covered down to about 8 million. Days to cover fluctuates widely because the underlying trading volume fluctuates wildly.

Q3 results are a surprise loss and management does seem to be tap dancing around some of the issues. Oh while you’re thinking about things it has a 76 PE ratio. so pardon the short community for acting like sharks with blood on the water.

Management could clear this up very easily with an analyst call and or and analyst day and just explain everything. But somehow they do not see the need for clearer communication.

Canaccord Capital who have a pretty savvy reputation have issued a research report calling UDC into question.

Oh and the SEC is investigating UDC’s treatment of Samsung revenues. Always comforting to see the SEC poking around because the story is not believable.

The set  up seems to be cataclysmic in the making. when this resolves it will result in a major move. If its nothing a 75 PE ratio will be called into question at best. If the emperor has no clothes the shorts win and the stock crashes and crashes.

Sort of like watching a heavy weight bout for about eight rounds. Then one fighter starts to buckle and goes down. All 15 rounds never get fought.

George Gutowski writes from a caveat emptor perspective.

Apple Behaviourial Investing Conundrum Growth vs Dividend $AAPL

How many articles and blog posts about Apple (Nasdaq:AAPL). The conversations in the investor marketplace come down to two solitudes which have yet to resolve.

There are those who focus on Apple as a growth company. constant product innovations. Constant increases in revenues and profits. It’s all so damn sexy. New iPad. New iPhone. Apple is the one to beat. Samsung has a compelling offering and may take share so load up on the market place news.

Then there are articles on the dividend. The tone is how boring that Apple pays a dividend and therefore supports price because of yield. Boo Hoo how sad but that is what a dividend is supposed to do.

Apple investors are in a transitional frame of mind. Is this a sexy growth company or do the dividend investors start to pile in. The dividend investor buys because they believe in the financial metrics. The growth investor buys because they believe in the next generation of product offerings. Two very different orientations.

So what of it?

The growth investors have the greatest psychological risks. They are anchored in their perspective of Apple being exciting and growing in leaps and bounds. They will seek and receive confirmation with product announcements. When the news cycle lessens in intensity they will become discouraged and find less reason to hold or increase positions. Sell buttons get punched.

They forget what a dividend investor is anchored to which is yield. So if Apple is on your watch list as a dividend investor watch the frenzy cycle. There will be buying  opportunities disguised a growth investor sell offs.

This battle will go back and forth several times before the growth investors lose their anchor when they have lost enough of their money.

George Gutowski writes from a caveat emptor perspective.

Apple Investors and Heroin Addicts. Whats the Difference? $AAPL

Investors interested in Apple (Nasdaq:AAPL) are seeing a behavioural economic clash. Traditionally Apple has titillated the markets with stunning announcements. New and very sexy products. Increasing market share. Wildly increasing cash balances. Apple mentions in media were at orgasmically high rates. Frenzy frenzy frenzy. Normally associated with smaller names but this was Apple. Safety oriented pension plans were big investors.

Investors were hooked on the frenetic energy of constantly improving news which made the metrics look damn fine. Investors became anchored: emotionally, psychologically, addictively to the feed back loop. Buy more because more good news is coming. You’ll see.

Apple is a highly successful business not a perpetual money-making machine. Competition found its feet. Unsustainable metrics collapsed. The huge cash position is now being used to woo back the investor with dividends, huge share buy backs sometimes financed by debt (which currently is cheap)

But when you analyze the media and investment commentary there is one common unifying theme. It is the lament of a heavy drug user who is finding the drug losing its potency. Traders relying on a long Apple short something else now have to think for a living. Some seem to be incapable of thinking.

Apple has dropped obviously. They still have enormous cash positions and enormous abilities to raise debt at very cheap levels. The products while facing more competition are still in high demand. The applications eco-system is still enormously tilted in favour of Apple.

Apple is considered the new Sony. Sony never had the enormous cash position that Apple enjoys. Apple has not lost its ability to innovate. It does have more effective competition.

Apple does have one enormous advantage over Google and Android driven offerings. They have not pissed off the Chinese with search engine politics. The Chinese market is huge. Even if it does slow down it will still be huge. Samsung will always be treated with suspicion in China. Apple is the only entity which can bridge the cultural divide and create shareholders wealth.

Apple is relying on financial engineering for now. Investors are being enticed with dividend yield and share buy backs. Hard core Apple investors   traders do not understand how to deal with a dividend stock. The dividend stabilizes and allows you to become patient. Get paid while you wait.

Heroin addicts looking for the next rush are not anchored in the same fashion. Therefore we will have a rotation within the shareholder base.

George Gutowski writes from a caveat emptor perspective.

Best Buy Best Suited to Best Takeover $BBY $GOOG $MSFT $AAPL

Image representing Best Buy as depicted in Cru...

Image via CrunchBase

Best Buy (NYSE:BBY) continues to lurch forward and attempt to revitalize itself. New C level officers are in place. They have decided to ramp up on-line activities. (Hey that sounds fresh) They have dwindling cash resources which is disturbing.

Do we smell a take-over. Because we do smell something.

Best Buy leading retail problem is consumers doing physical browsing and then placing on-line orders somewhere else. OK so they have a tremendous strength that they cannot leverage. In the mean time Google, Apple, Samsung and Microsoft (think games and maybe phones) all have a vested interest in selling hardware and devices. Best Buy still generates huge foot traffic and satisfies any tactile pre-purchase needs.

As a mass market retailer Best Buy has its faults which are well documented in the market place. But to someone wishing to dominate distribution channels Best Buy offers some near monopolistic advantages.

So like someone should buy them, feature their own products and kick competitors in the groin area.

Market cap of around $5 Billion and dropping. An expensive dividend yield of 4.45% and an approximately short interest position of around 10% of public float, the under 5 trailing PE ratio has got to make an acquisition look good.

Maybe go the private equity route and disguise any anti-trust issues through the chop-house process but the bits and pieces will give strategic advantage to key players. Given the huge cash balances of some tech players this is entirely doable.

Remember its a double play gambit. Enhance your own product line and torpedo some or all your competitors.

Count down?

George Gutowski writes from a caveat emptor perspective. Follow him on twitter@financialskepti

Apple Not Today Skip Hype & Fury $AAPL $T $V $GOOG $MSFT

Apple Inc.

Apple Inc. (Photo credit: marcopako )

OK Today Apple (Nasdaq:AAPL) will make the big announcement that everyone knows is coming. The 5 will come out. We all expect something very cool. We all know they probably have something more in reserve but this should be very compelling. Traders want to take positions based on this announcement. How many times do you think you can make money on major news when Apple is a master of new product enhancements and announcements.

Everyone is suddenly discovering that the new device will drive profits for many years to come. What you did not know that? So any stock price activity will be very frothy and if you like that black box high frequency approach go ahead. There is an off-chance the stock will disappoint; after all how often can a super juiced announcement work. Statistically we know they will stumble somewhere.

Apple needs huge drivers to maintain earnings. So if the 5 is huge that’s what they need. If the PE is pushed out it will be hard to justify on more than just hype about the future. So the bottom line for the skeptics is to watch the announcement; closely. But it is not enough to make a fundamental buy or sell decision.

George Gutowski writes from a caveat emptor perspective. Follow him on twitter @financialskepti