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IBM - International Business Machines


ItsAValueTrap

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I bought a small 7% starter position at 188 recently. What not to like buybacks cheaper on an shares outstanding then when Warren bought etc.  Plus owning a great business fell's good after 30% of the portfolio was SD and SHLD :D 

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Well I just copied David Swensen who says anything less the 6% does not have an impact on your portfolio. Of curse he was talking about index investing but hey that's part I am trying to beat :D

 

Fair enough. My target allocation is 10% for IBM but trying to be disciplined on price.

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Anyone else also getting excited around these prices these days (in the 170s)?

 

Not sure if excited is the right word but I am buying in the $180 range.

 

I am also buying....although a little bit disappointed that we didn't get another -400 point intraday drop today like yesterday.    Always amusing to me...if you read seeking alpha, you'd think Netflix and Tesla are more appropriate places to park your money than IBM.  Apparently generating juicy headlines is more important/valuable than generating cash.  My only regret is not doing a pair trade with long IBM and short Netflix...c'est la vie.   

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IBM's balance sheet and free cash flow generation are still worsening. Turnarounds, as can be seen with HPQ, typically take longer than a few quarters to implement, so I would expect the stock to fall back to $150 over that interval as more institutional investors throw in the towel. I do believe that IBM is taking the right long term strategy right now by focusing more on cloud computing and big data, so longer term investors should be richly rewarded by improving FCF trends and continuous share repurchases. There is simply no reason to buy it today, as the opportunity cost will be high.

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IBM's balance sheet and free cash flow generation are still worsening. Turnarounds, as can be seen with HPQ, typically take longer than a few quarters to implement, so I would expect the stock to fall back to $150 over that interval as more institutional investors throw in the towel. I do believe that IBM is taking the right long term strategy right now by focusing more on cloud computing and big data, so longer term investors should be richly rewarded by improving FCF trends and continuous share repurchases. There is simply no reason to buy it today, as the opportunity cost will be high.

 

Sounds like a classic opportunity for Time Arbitrage. I will be very excited if IBM falls back to $150 especially at the rate IBM is buying back stock.

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IBM's balance sheet and free cash flow generation are still worsening. Turnarounds, as can be seen with HPQ, typically take longer than a few quarters to implement, so I would expect the stock to fall back to $150 over that interval as more institutional investors throw in the towel. I do believe that IBM is taking the right long term strategy right now by focusing more on cloud computing and big data, so longer term investors should be richly rewarded by improving FCF trends and continuous share repurchases. There is simply no reason to buy it today, as the opportunity cost will be high.

 

Sounds like a classic opportunity for Time Arbitrage. I will be very excited if IBM falls back to $150 especially at the rate IBM is buying back stock.

 

If you believe the $20 operating earnings/share story for next year (which they are still sticking to) this is trading at 9x operating earnings with a healthy dividend and massive share buyback.  Tough to see much of a downside on that.  If it hit $150 that would be a 7.5x multiple in a zero interest rate environment.  Buy of the century!!!  As WEB says, the first rule is don't lose money.  IBM certainly isn't a double but it's got very limited downside too

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Has Buffett lost his touch? Is he going senile? Should we all avoid his holdings and sell Berkshire?!

 

Don't think so...maybe a bit lazy...COP, KFT, JNJ, IBM, TSCO...other than the banks and the preferreds his picks have been pretty mediocre over the last decade or so.

 

Ya, BNSF was not one of the greatest investments in history...no, no.

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Has Buffett lost his touch? Is he going senile? Should we all avoid his holdings and sell Berkshire?!

 

Don't think so...maybe a bit lazy...COP, KFT, JNJ, IBM, TSCO...other than the banks and the preferreds his picks have been pretty mediocre over the last decade or so.

 

Ya, BNSF was not one of the greatest investments in history...no, no.

 

Don't forget the Bank of America deal...

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