How to Enter and Maintain a Stock Position Wisely

Chris Versace

Chris Versace is a financial columnist and equity analyst with more than 20 years of experience in the investment industry.

Several weeks ago, I shared what has become a very popular set of PowerTrend Bulletin articles with my college and graduate students at New Jersey City University, including those that participate in the Student Investment Management (SIM) Group that I have the good fortune of advising. Students in the SIM Group run an active portfolio of several hundred thousand dollars, and they are responsible for choosing and monitoring the stocks in the portfolio. There is real money on the line and the students take it seriously, so seriously in fact that we are organizing a stock pitch competition that will bring together similar groups from various universities across New York, New Jersey, Pennsylvania and Connecticut on April 2. As the date approaches, I will share more details with you.

Advertisement.

Getting back to my main point, what was that set of PowerTrend Bulletin articles my students found so helpful as they rolled up their sleeves, read up on their companies and ran through their valuation metrics? “The 10 Questions You Have to Answer Before You Buy Any Stock,” of course. If you missed that series, you can find all six parts of it here.

Of course, once you’ve started a holding in a particular stock, there is more work to be done. That includes reading press releases and articles for the company in which you own shares and, in a perfect world, its customers, suppliers and competitors. Triangulating that information really helps you get a bead on what’s going on. For example, one of the companies that shareholders to my Growth & Dividend Report newsletter have been advised to own is Skyworks Solutions (SWKS), an RF semiconductor company that, in my view, is well positioned to see its business grow as mobile connectivity moves past “just” smartphones to the Connected Car, Connected Home, eHealth and the intersection of the industrial economy with technology, better known as the Internet of Things. Regular readers will be well aware how Skyworks fits into my Always On, Always Connected PowerTrend.

Exclusive  Ask Me Anything, Bridge and Bitcoin Edition

Keeping tabs on Skyworks means being in touch with the tone of the smartphone market, and that means monitoring Apple (AAPL), Samsung, HTC, LG, Huawei, Lenovo and other device manufacturers. It also means watching competitors such as Qorvo (QRVO), Avago Technologies (AVGO), Broadcom (BRCM) and others, as well as key suppliers, such as Tower Semiconductor (TSEM). As you can imagine, there is quite a bit of legwork involved, but, in my experience, blindly buying a company without understanding the business and the levers that move it often leads to problems.

Advertisement.

As you look to understand the business, there are a variety of free resources at your disposal that range from the Investor Relations section of a company’s website to its filings with the Securities Exchange Commission (SEC). If you looked up a company you were considering at the SEC’s website (http://www.Sec.Gov), you’d find a number of filings, but the ones to watch tend to be the 10-K, 10-Q, 8-K, Form 4 and the 13F filings. The 10-K is the annual update of the company’s business, complete with management commentary and financial statements. The 10-Q is a similar filing that focuses on the quarterly and financial performance of the business, while 8-K filings tend to reflect press releases that are usually found on the company’s website.

That leaves the Form 4 and the 13F filings. The Form 4 filings are great to examine, because they show insider buying and selling activity, while 13F filings show changes in large institutional ownership positions. For example, in a recent 13F filing for PayPal (PYPL), we learned that activist investor Carl Icahn swapped all of his 42.6 million shares of eBay (EBAY) for 42.6 million shares of PayPal during the September 2015 quarter. That’s a rather significant move that can be read as Icahn seeing PayPal as a far better horse to ride than eBay. Given my Cashless Consumption PowerTrend, I’m inclined to agree. Other 13F filings showed investment advisory firm Baupost Group began a new position in PayPal with 10.9 million shares during the September quarter, while Conatus Capital did the same with a position of 3.9 million PayPal shares. While insider buying and funds adding shares of a particular company are not reasons to buy a stock in and of themselves, when viewed in conjunction with improving fundamentals and an attractive valuation on the shares, they can be rather confirming data points.

Exclusive  ETF Talk: China A-Shares -- You Can’t Always Get What You Want

In case you missed it, I encourage you to read my e-letter column from last week about the rise of the “Internet of Things” and the changes it will bring to the stock market. I also invite you to comment in the space provided below.

Upcoming Appearances

Advertisement.
  • Each Monday, I join Sonoma County’s Morning News with Melanie Morgan’s “Big Story” of the week to talk about the latest in the economy, stock market and more.
  • Each Friday, I join Matt Ray, the host of America’s Morning News, to talk about the latest on the economy, stock market and more. With the show broadcast in more than 170 markets, be sure to tune in.

share on:

Like This Article?
Now Get Mark's FREE Special Report:
3 Dividend Plays with Sky-High Returns

This newly-released report by a top-20 living economist details three investments that are your best bets for income and appreciation for the rest of the year and beyond.

Get Access to the Report, 100% FREE


img
share on:

PREMIUM SERVICES FOR INVESTORS

Dr. Mark Skousen

Named one of the "Top 20 Living Economists," Dr. Skousen is a professional economist, investment expert, university professor, and author of more than 25 books.

Product Details

  • Forecasts & Strategies
  • Home Run Trader
  • Fast Money Alert
  • Five Star Trader
  • TNT Trader
LEARN MORE HERE

Bryan Perry

A former Wall Street financial advisor with three decades' experience, Bryan Perry focuses his efforts on high-yield income investing and quick-hitting options plays.

Product Details

  • Cash Machine
  • Premium Income PRO (exclusively for subscribers of Cash Machine)
  • Quick Income Trader
  • Breakout Options Alert
  • Hi-Tech Trader
LEARN MORE HERE

Jim Woods

Jim Woods has over 20 years of experience in the markets from working as a stockbroker,
financial journalist, and money manager. As well as a book author and regular contributor to
numerous investment websites, Jim is the editor of:

Product Details

  • Successful Investing
  • High Velocity Options
  • Intelligence Report
  • Bullseye Stock Trader
  • Eagle Eye Opener
LEARN MORE HERE

Bob Carlson

Bob Carlson provides independent, objective research covering all the financial issues of retirement and retirement planning. In addition, Bob serves as Chairman of the Board of Trustees of the Fairfax County (VA) Employees’ Retirement System, which has over $2.8 billion in assets.

Product Details

  • Retirement Watch
  • Retirement Watch Spotlight Series
  • Lifetime Retirement Protection Program
LEARN MORE HERE

Jon Johnson

Jon Johnson's philosophy in investing and trading is to take what the market gives you regardless if that is to the upside or downside. For the past 21 years, Jon has helped thousands of clients gain success in the financial markets through his newsletters and education services:

Product Details

  • Investment House Daily
  • Stock of the Week
  • Technical Traders Alert
  • Rapid Profits Stock Trader
LEARN MORE HERE

DividendInvestor.com

Used by financial advisors and individual investors all over the world, DividendInvestor.com is the premier provider and one-stop shop for dividend information and research.

Product Details

Popular tools include our proprietary Dividend Calendar, Dividend Calculator, Dividend Score Card, and many more.

  • Dividend Investor
LEARN MORE HERE

George Gilder

George Gilder is the most knowledgeable man in America when it comes to the future of technology and its impact on our lives.  He’s an established investor, bestselling author, and economist with an uncanny ability to foresee how new breakthroughs will play out, years in advance.

Product Details

  • Technology Report
  • Technology Report PRO
  • Moonshots
  • Private Reserve
  • Millionaire Circle
LEARN MORE HERE

DayTradeSPY

DayTradeSPY was founded by head trader Hugh Grossman, a retired internal auditor for a Fortune 500 company. After years of first-hand experience trying out one trading strategy after another, Hugh instead developed his own trading system centered around day trading SPY options. That’s it... Nothing else.

Product Details

  • Trading Room
  • Pick of the Day
  • Inner Circle
  • Online Workshops
LEARN MORE HERE