Seeking Alpha by Adding Beta

While I definitely believe that markets have bottomed out, I suspect that tech stars of past 3-4 years Apple and Google are in for a rough ride for next few months. Both are excellent companies and I love what they are doing in their fields. However as it happens to any momentum stocks, once growth slows down, these momentum stocks get punished on the down-side - same way they get benefited on upside when growth is good. With no major catalyst of new products from Apple and paid-search clicks slowing down (along with overall economy slowing down), Apr would be interesting month for both companies. Stocks of both companies are already down by close to 40% and there are quite a few headwinds facing these companies. My prediction is that investors would get an opportunity to buy Apple at $99 and Google at $399 sometime this year and when that happens, keep your "dry-powder (aka cash)" ready since it would be an excellent buying opportunity for long-term. /Shyam

Finally Oscars are over and as expected "No Country For Old Men" won best picture and directing Oscars. I had not seen the movie yet - would see when it comes on DVD. Democratic elections are heading into final phase and I think Mar 4 would more or less decide who will be candidate. Obama has the momentum and would be very likely Democratic candidate and eventually President of USA. Now that Ambac and MBIA is coming out of ratings penalty box, banks and markets can start their recovery. I predict that Dow 11500 on Jan 23 was bottom and Fed interest rate cuts, tax-rebates would help markets to start heading higher and by summer it would be near 13500. So what are the plays here: Asyt: Looks liks its ex-CEO is working with PE to take it private at $6. So at current price of $4, it provides good play for 50% return Aruba: At $5 it is steal considering it is #2 play in wi-fi networks and was trading over $20 not long ago Solar stocks like SOLF, CSIQ: These stocks are down by ne...

As expected Yahoo rejected Microsoft offer. I think it is typical negotiation tactic and will play out similar to BEA/Oracle and both companies will split the difference and settle the deal at about $35-36 (just right at the magic number of $50B). Yahoo does not any way out - they had last 2-3 years which they wasted in adding any shareholder value. It would be fun to watch all the drama along the way. In last few months, I was not tracking many tech stocks for active investments. But this year, techs are getting killed and once high-flying stocks are trading in single-digits. For example, SIRF which is leader in GPS chips is at $7 (used to be over $30). Aruba Networks which is only other player in wi-fi gear is trading below $5 (it used to be above $20). Granted that both these companies gave some serious revenue warnings but I think markets over-reacted to news and both these stocks would be up by 50% in next 12 months (and by the way, they are as attractive takeover targets as Yahoo...

What an exciting start of new month with one of the biggest deal announced with Microsoft bidding for Yahoo for $31. I think it's right move for Yahoo investors even though it will not work in long term (if you just count returns for Microsoft). I am doing M&A course with Prof Peter Goodson in my last semester at Haas. Mr Goodson does not believe in Synergy at all and he has challenged all students to show one major deal where synergy worked out for such deals. I agree with him. My prediction about this deal is that Yahoo will try to put some blockers to the deal but finally will agree to slightly higher price of $34 (aka Oracle-BEA saga). Disclaimer: I own some Yahoo stock just before earnings and now I am happy camper:-) Looking at similarly beaten down companies, I think following deal will make lot of sense. Bearing Point is one of the well known brands in IT and strategy consulting. I started following this stock few months back when it was trading at 5. Due to missed ear...