GTAT - GT Advanced Technologies

[BargainValueHunter]

Has anyone done any research on the GTAT capital structure? I saw the bonds have traded down to 30-40 cents on the dolla, and plan to look into it. Curious if anyone knows if there's any sell side coverage on GTATs debt

Anyone know how to buy non-investment grade corporate bonds on TD Ameritrade?

[turar]

Wow that's an old thread. :o I actually made decent money on this one, but sold a while ago and kinda forgot about it.

[constructive]

Was nobody slapping some sense in him at any given time?

 

Ironically, the Contrarian Investor board appears to be completely dedicated to herd mentality. They are all the same type of idiot.

[KCLarkin]

Ironically, the Contrarian Investor board appears to be completely dedicated to herd mentality. They are all the same type of idiot.

 

Well, they did everything contrary to all of Buffett's teachings, so I guess "Contrarian fits". Not sure about the "Investor" part though.

[NeverLoseMoney]

Ironically, the Contrarian Investor board appears to be completely dedicated to herd mentality. They are all the same type of idiot.

 

Well, they did everything contrary to all of Buffett's teachings, so I guess "Contrarian fits". Not sure about the "Investor" part though.

They did concentrate though, I have to give them that. But it's pretty sad to see people lose everything, even though they were reckless.

 

I browsed that thread and I wonder how big the destructive effect of that board was. It seems that people became more convinced and committed as a result of those discussions and lost a lot more. They acted like cult members. That dynamic is something that no investor is immune to. There are disadvantages to joining online communities, blogging and using social media.

[ASTA]

I think this is great education for me and others better then my MBA maybe :D A question I ask myself all the time am I smarter, harder working and patient and have time to commit then 95% of the population. Clearly some people on that board did not. I can not even convince my wife to index so its hard for people too accept.

[KCLarkin]

Yeah, I read a bit of the thread last night and I felt ill. Especially with all the leveraged strategies discussed here.

 

It reminds me of all those people who lost everything with risky AAPL options strategies last year. That might be even worse since AAPL has since recovered.

[Picasso]

Yeah, I read a bit of the thread last night and I felt ill. Especially with all the leveraged strategies discussed here.

 

It reminds me of all those people who lost everything with risky AAPL options strategies last year. That might be even worse since AAPL has since recovered.

 

The Andy Zaky debacle? Yeah now if I ever see a "hedge fund" focus a strategy on a single stock I run for the hills.

 

I think there was a similar amount of capital lost in GTAT versus AAPL.

 

Speaking of which I wanted to post something on concentration regarding Apple. 

 

Edit: And by run for the hills I mean looks for deep out of the money puts on that stock. 

 

Here is the link: http://i1.wp.com/blog.sigfig.com/wp-content/uploads/2014/10/Devotion-index-005_2000.jpg

 

I just don't understand the devotion behind stocks like FB or AAPL.  There are so many freaking eyeballs on it how are you supposed to be smarter than 95% of the population about the buy/sell decision.  I mean earnings might keep growing but the concentration on these kinds of tech stocks are really quite telling.

[Ross812]

The Contrarian investor board discussions centered on: Solar companies and Technology...

 

I think their is a lesson about herd mentality here in that a message board of over 500 people convinced themselves that this particular company was a sure thing, but I'm not sure how rational these individuals were in the first place given the breadth of their discussions.

 

I think the only true advantage a rational individual investor has over another is being able to rule out truly terrible ideas and time horizon. I.e. there were people here buying Bac in 2011 with a 8 year time horizon; that doesn't happen in the majority of the crowd playing the market. You don't have to be smarter than the guy making 500 trades a year; you just have to obey the 1st rule of investing: Don't lose capital; and sit on your hands.

 

 

[portfolio14]

That's odd. I remember a couple of months ago there was an article saying AAPL was underweighted in big accounts (mutual funds?).

 

Here is the link: http://i1.wp.com/blog.sigfig.com/wp-content/uploads/2014/10/Devotion-index-005_2000.jpg

 

I just don't understand the devotion behind stocks like FB or AAPL.  There are so many freaking eyeballs on it how are you supposed to be smarter than 95% of the population about the buy/sell decision.  I mean earnings might keep growing but the concentration on these kinds of tech stocks are really quite telling.

[Liberty]

I just don't understand the devotion behind stocks like FB or AAPL.  There are so many freaking eyeballs on it how are you supposed to be smarter than 95% of the population about the buy/sell decision.  I mean earnings might keep growing but the concentration on these kinds of tech stocks are really quite telling.

 

Most of the time size is a disadvantage, but there were plenty of eyeballs on Bank of America and AIG too. Heck, Berkshire was selling barely above book value not that long ago and Google was pretty undervalued a little before that.

 

Saying that people can't be wrong about Apple reminds me of the efficient market theory joke; "Is that a 20 dollar bill on the ground over there?" "It can't be, if it was, someone would've picked it up."

 

Edit: For a while a lot of people here were looking at GM. JPM, WFC, etc...

[hardincap]

I just don't understand the devotion behind stocks like FB or AAPL.  There are so many freaking eyeballs on it how are you supposed to be smarter than 95% of the population about the buy/sell decision.  I mean earnings might keep growing but the concentration on these kinds of tech stocks are really quite telling.

 

Most of the time size is a disadvantage, but there were plenty of eyeballs on Bank of America and AIG too. Heck, Berkshire was selling barely above book value not that long ago and Google was pretty undervalued a little before that.

 

Saying that people can't be wrong about Apple reminds me of the efficient market theory joke; "Is that a 20 dollar bill on the ground over there?" "It can't be, if it was, someone would've picked it up."

 

+1. There are so many instances of severe undervaluation of big cap that this tired argument deserves no attention at all

[Picasso]

I don't know if I neccesarily agree that severe undervaluation of large caps implies the market is just as inefficent on large caps. 

 

You always have a wide range of outcomes with any particular stock.  When AIG and BAC were dropping in 2011 there was a possible outcome of severe dilution or a bank run, etc.  That outcome did not happen (at least in our universe, maybe some poor schmuck in another universe had his warrants expire worthless and Buffett never came up with a capital infusion offer in his bath tub).  But no one had much extra insight into a company like BAC or AIG that the rest of the market did not have.  The shares went up as the situation got better but it was a pretty efficient move for the stocks to drop that way.

 

Apple's drop in 2012 was based on very real fears.  80% of their profit comes from 2 products which no company in history could maintain Apple's level of margins forever.  They also sucked at capital allocation since the buybacks basically offset previous years stock options.  Book value on the stock was much less than the $700 billion market cap so it rerated based on market fears of competition and lower margins.  Well it turned out in our universe that Apple maintained pretty high margins and people still buy a lot of their phones.  But I honestly do not believe that many of those "eyeballs" had extra insight that others did not have.  The stock has just responded to one of the many potential outcomes. 

 

Stocks with lots of attention will obviously get cheap or expensive, but they very rarely get extremely cheap to where you have some kind of edge.  And most of the time the stocks with lots of attention that do well have extended periods of earnings growth that justifies the rise in price.

 

On the other hand you can find securities with little to no attention that have high margins of safety even based on what we know today (not some rise in earnings or event in the future) that provide incredible returns.  Anyone ever notice how much better performance a lot of these threads that have less than 5 pages of comments have?  Between all the threads that have over 100 pages of comments, the results have generally been pitiful.

[portfolio14]

Well, I dispute that as I believe I had (and have) unpopular insights with the odds tilted in my favour. But I'm comfortable we agree to disagree.  ::)

 

I think we are talking this in the wrong thread.  ;)

 

But I honestly do not believe that many of those "eyeballs" had extra insight that others did not have.  The stock has just responded to one of the many potential outcomes. 

 

 

[Liberty]

I don't know if I neccesarily agree that severe undervaluation of large caps implies the market is just as inefficent on large caps. 

 

You always have a wide range of outcomes with any particular stock.  When AIG and BAC were dropping in 2011 there was a possible outcome of severe dilution or a bank run, etc.  That outcome did not happen (at least in our universe, maybe some poor schmuck in another universe had his warrants expire worthless and Buffett never came up with a capital infusion offer in his bath tub).  But no one had much extra insight into a company like BAC or AIG that the rest of the market did not have.  The shares went up as the situation got better but it was a pretty efficient move for the stocks to drop that way.

 

Apple's drop in 2012 was based on very real fears.  80% of their profit comes from 2 products which no company in history could maintain Apple's level of margins forever.  They also sucked at capital allocation since the buybacks basically offset previous years stock options.  Book value on the stock was much less than the $700 billion market cap so it rerated based on market fears of competition and lower margins.  Well it turned out in our universe that Apple maintained pretty high margins and people still buy a lot of their phones.  But I honestly do not believe that many of those "eyeballs" had extra insight that others did not have.  The stock has just responded to one of the many potential outcomes. 

 

Stocks with lots of attention will obviously get cheap or expensive, but they very rarely get extremely cheap to where you have some kind of edge.  And most of the time the stocks with lots of attention that do well have extended periods of earnings growth that justifies the rise in price.

 

On the other hand you can find securities with little to no attention that have high margins of safety even based on what we know today (not some rise in earnings or event in the future) that provide incredible returns.  Anyone ever notice how much better performance a lot of these threads that have less than 5 pages of comments have?  Between all the threads that have over 100 pages of comments, the results have generally been pitiful.

 

There are two things here. One, we'll have to disagree on this, because I think the reason why I made 50% in a year in Apple is because most people genuinely don't understand the company. You can have a zillion people looking at something and still have most of them not get it (especially common if the media doesn't get it and everybody just unthinkingly swallows the media narrative). It's fine. It happens all the time. As for BAC and AIG, the reason people stayed away for so long is because their reputations were so tainted and yucky because of the GFC that most people were blinded to their restored (or in the process of being restored) franchises.

 

The second thing is that yes, small companies are routinely more mispriced. I own at least 4 companies that are under 500m (3 of them under 100m). It's great hunting ground.

 

But if there's something big that I understand and that I think the market is mispricing, I won't pass it up just because it's big. That's just as bad as overlooking businesses because they are small. It was a great idea to buy Mastercard at the IPO even if a zillion eyes were on it...

[Picasso]

Fair enough. I agree that markets are not efficient but they tend to be more efficient on the one with more visibility. Not always the case.

 

The funny thing with Apple is net income has been flat for 3 years but the stock went from 700 to 390 back up over 700. Nothing has changed so I think the sentiment was simply skewed one way or the other.

 

My original comment towards eyeballs on widely helds was the devotion and attention people give those stocks. There are so many other opportunities that no one needs to go 50% Apple because they think have some extra insight. But that can be continued in another thread although it tangentially relates to GTAT.

 

 

[oddballstocks]

I don't know if I neccesarily agree that severe undervaluation of large caps implies the market is just as inefficent on large caps. 

 

You always have a wide range of outcomes with any particular stock.  When AIG and BAC were dropping in 2011 there was a possible outcome of severe dilution or a bank run, etc.  That outcome did not happen (at least in our universe, maybe some poor schmuck in another universe had his warrants expire worthless and Buffett never came up with a capital infusion offer in his bath tub).  But no one had much extra insight into a company like BAC or AIG that the rest of the market did not have.  The shares went up as the situation got better but it was a pretty efficient move for the stocks to drop that way.

 

Apple's drop in 2012 was based on very real fears.  80% of their profit comes from 2 products which no company in history could maintain Apple's level of margins forever.  They also sucked at capital allocation since the buybacks basically offset previous years stock options.  Book value on the stock was much less than the $700 billion market cap so it rerated based on market fears of competition and lower margins.  Well it turned out in our universe that Apple maintained pretty high margins and people still buy a lot of their phones.  But I honestly do not believe that many of those "eyeballs" had extra insight that others did not have.  The stock has just responded to one of the many potential outcomes. 

 

Stocks with lots of attention will obviously get cheap or expensive, but they very rarely get extremely cheap to where you have some kind of edge.  And most of the time the stocks with lots of attention that do well have extended periods of earnings growth that justifies the rise in price.

 

On the other hand you can find securities with little to no attention that have high margins of safety even based on what we know today (not some rise in earnings or event in the future) that provide incredible returns.  Anyone ever notice how much better performance a lot of these threads that have less than 5 pages of comments have?  Between all the threads that have over 100 pages of comments, the results have generally been pitiful.

 

There are two things here. One, we'll have to disagree on this, because I think the reason why I made 50% in a year in Apple is because most people genuinely don't understand the company. You can have a zillion people looking at something and still have most of them not get it (especially common if the media doesn't get it and everybody just unthinkingly swallows the media narrative). It's fine. It happens all the time. As for BAC and AIG, the reason people stayed away for so long is because their reputations were so tainted and yucky because of the GFC that most people were blinded to their restored (or in the process of being restored) franchises.

 

The second thing is that yes, small companies are routinely more mispriced. I own at least 4 companies that are under 500m (3 of them under 100m). It's great hunting ground.

 

But if there's something big that I understand and that I think the market is mispricing, I won't pass it up just because it's big. That's just as bad as overlooking businesses because they are small. It was a great idea to buy Mastercard at the IPO even if a zillion eyes were on it...

 

I've heard that for most stocks the distance between the 52 week high and low is about 50%, this is large stocks.  So if you simply buy at a point of pessimism you will often have a chance to sell again and make a nice gain. 

 

With large caps they are over analyzed, but the issue is this, most in the market has different motivations compared to value investors.  The 'market' is looking for earnings numbers, growth, targets etc.  If you can just look at something differently there's often a lot of value in that perspective alone.  But the likelihood of finding some hidden asset in a large cap is nil.

 

A lot of value managers are buying these large caps on bad news and selling on good news, they're buying temporarily damaged companies whose reputations and operational abilities will allow them to outlast the setback.  I think if anyone wants to manage billions they eventually need to adopt this strategy.

 

In terms of more or better information I would say a professional clearly has access to that.  I've had reports sent to me that are mind-numbing in their comprehensive-ness.  I also have access to some tools where the level of information is overwhelming.  I'd contend that knowing more doesn't make a difference, it's knowing the key pivot points that a thesis hinges on and getting those right.  If a thesis depends on knowing how many cases of paper a tertiary office orders per month then I think it's time to move onto an easier idea.

[Mephistopheles]

David Einhorn said that you can have a stock with very few eyeballs (like a microcap), but the person selling to you most definitely has his eyeballs on it, and that's the person that matters the most.

 

Incidentally, there can be a million eyeballs on something like BAC in 2011 or BP in 2010, but what really matters is the temperament of the people following a stock. I can know everything about BP and the oil business, but my fear after seeing that oil gushing out 24/7 on CNN might trump all of that.

[Picasso]

David Einhorn said that you can have a stock with very few eyeballs (like a microcap), but the person selling to you most definitely has his eyeballs on it, and that's the person that matters the most.

 

Incidentally, there can be a million eyeballs on something like BAC in 2011 or BP in 2010, but what really matters is the temperament of the people following a stock. I can know everything about BP and the oil business, but my fear after seeing that oil gushing out 24/7 on CNN might trump all of that.

 

Great points.  Some of the areas I invest in have some of the most fickle and nervous investors I have ever seen.

 

There was a muni bond someone dumped at $23 dollars backed by Berkshire Hathway we purchased in August that is now trading at $31.  That is a 35% return on a freaking bond backed by Berkshire because the temperment of the investor caused them to get out during a period of low liquidity.  Nevermind the fact that the yield on the bond also happened to be tax-free.

 

Every market is different but it definitely pays to focus on the ones with a wide range of emotions.

[fishwithwings]

Z score was 2.12 (Likely to go bankrupt within 2 years) and M score was -1.34 (likely to be a manipulator) .

[peter1234]

They are in the business of making furnaces.

 

Then they added huge production facilities to make glass.

 

Many years ago, when Jobs told Corning to make gorilla glass for Apple in huge quantities, Corning was reluctant to make the bet (and this is a glass maker).

 

It was a huge bet on a new line of business.

 

 

[fishwithwings]

"dphan: Thank you Tod. At least for the next 50 years, I'll have a -3K deduction. It will probably outlast me.

 

Todd: I've thought similar thoughts in the past. However, I believe you will have gains to offset this loss in the future :) Maybe not next week, next year, or in the next 5 years, but eventually you will and your loss will disappear :)

 

flatfoot: and you'll never have to pay capital tax gains again!! (at least thats what I keep telling myself)

 

dphan: Sigh.. I wish one day I'll start paying capital gain tax again.."

 

[hardincap]

http://www.businessinsider.com/average-shareholder-in-apple-supplier-gtat-pleads-with-bankruptcy-court-2014-10

[beerbaron]

http://www.businessinsider.com/average-shareholder-in-apple-supplier-gtat-pleads-with-bankruptcy-court-2014-10

 

Sad, but if I invert I don't think the following would have happened in case the opposite occured.

 

Dear judge, I write this as an honest citizen with a 1 year old daugher. I made 10 times my initial investment in this stock, assuring the financial future of my whole family.My family's future is so bright that I decided to give the rest of the money to defend the small guys that lost all their money when they believed in a company these are the one suffering and they need to be helped. Please find proper recipients of this money.

 

BeerBaron

 

[Picasso]

Definitely sad.

 

I will say this about GTAT though.  No one expected a bankruptcy and the stock going from 12 to zero in a single day.  How many of us at one point put the majority of our net worth in one position?  I have done it myself many times.  Whether we like it or not, as concentrated value investors there is a non-zero chance of something like this happening to any of us.  Those who say "it will never happen to XYZ or ABC" do not realize what non-zero means. 

 

It should be a humbling experience for anyone investing for themselves or professionally.