phyllostachys seven: Springing...down, in '05

Springtime 2005 is upon us - in the northern end of the Western Hemisphere, this means chirping birds, crocuses and daffodills, spring cleaning of the gardens, screens on the windows (for the moister part of the continent), screaming motorcycles on all the roadways...and listening to your neighbors scream at the local sports teams in the comfort of their living rooms (but now, of course, with the windows wide open). :-)

I had one tub of Phyllostachys Vivax sort of wintering over...but not really well protected, so it's now fried. I love having a sampling of those big, dark green waxy leaves close to our patio...so, I'll have to dig up another tub candidate. My two stands of bamboo (one the Vivax, the other a smaller member of the Phyllo. species) are now rustling more and showing signs of both winter burn and spring-time life. I'll have to begin culling out the culms and digging at the rhizomes soon, while the soil is moist, to curb the vivaciousness of this unusual garden plant (hence the name "vivax" for the larger specimen).

My investing has been in the doldrums lately. Traditionally, the wind is supposed to die down in mid-August, when most families are thinking of that last-hurrah vacation before Labor Day. But the wind has died down right now. I'm adrift (or, rather, in the case of some SEC-inquiry stocks, looking over the edge of a potential whirlpool). I rode part of the oil-lust wave, via a goodly amount of BPT (Prudhoe Bay Royalty Trust). I sold recently near it's high, having been spooked by chatter on Yahoo!'s message board for BPT, as well as a growing feeling that, while I think the price of crude will stay high for awhile, we might have run into the high end of the spectrum. When everyone else realizes this, the rising tide of oil stocks will come back down a bit. BPT, of course, is a two-edged investment. As the price rises...your equity investment appreciates...but lots of small investers are also seeking the high dividend yield that BPT traditionally provides...and this yield falls away as the security appreciates.

Tech stocks are my usual refuge in times of fear...I fear being out of them for too long, and I fear diving back into them. :-) SSTI is a very attractive company in the Flash RAM industry at this point - they're at their 52-week low, with strong sales and tons of cash (though reporting slightly weaker earnings), but the rash of downgrades attracts contrarian investors such as LongBow Research (out of Independence, Ohio). LongBow Research recently upgraded SSTI (from neutral to buy) and I assume that they did this out of contrarian interest (their website says that they watch for "critical trends" in various industries so as to provide their "institutional" clients with info on buying and selling). I e-mailed one of the tech researchers at Longbow, but have not heard anything back.

Another interesting Flash industry participant, which is at the top of its game in the same way that AAPL is, is SNDK. SNDK has $1.5B in sales, $1.3B in cash, no debt (well, $150M in long-term debt...but that's more of an asset, even though its on the lower side of the balance sheet), a respectable TTM p/e of 19.8 and a forward p/e of 17.5, and a very profitable stable of products and patents (being the creator of CompactFLASH, etc.). One of SNDK's downsides was that $100M in stock was stolen by a trusted law firm's employee on the Pacific Rim (Singapore or Taiwan, not sure which)...but that is slowly be paid back by a very chagrined (and short of cash) law firm - SNDK bounced back very handsomely from that loss with barely a glance backward, as it blows past its fabless competition (ahem, LEXR).

So why the doldrums, you say? Well my perennial favourite since the go-go days of the NASDAQ bubble has been Blue Coat Systems. I've been following and putting my money where my mouth is with BCSI ever since it was CFLO (CacheFlow). As CacheFlow, they marketed web caching servers. With the collapse of telecomm and the popping of the aforementioned bubble, CFLO re-created themselves into BCSI and altered their product (through internal work and acquisitions) to provide web-filtering, traffic control, WinProxy, AntiVirus and AntiSpam solutions, all in addition to a caching component -- all during the past 3 years. They were way up during the CFLO days, then way down before becoming BCSI, then way up for no apparent reason [other than following insider buying, that is], then down again (this latter downturn is now sparking class-action suits) and up again. We are now in the course of the last "up again"...but SEC news of investigations is interrupting the flow here....so despite strong fundamentals, it's anybody's guess as to whether buying now makes awesome sense...or not. :-)

Happy sailing!

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Phyllostachys.


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