Tuesday, November 15, 2011

Fusion-IO (and the ucoming FIO secondary)

Nuances of an upcoming secondary offer for a successful IPO
Screencast in two parts:

Part I - A fundamental look at FIO and preparing for the secondary
Part II - How the secondary helps to define a winning or losing position


6 comments:

Anonymous said...

Thanks for the post. Much appreciate the insight. A question.
How do you know when to exit on stock like FIO? Besides from sharp slice in the opening hour or during low volumen hour, how do you know it is a panic sell off and not a fundamental breakdown?
Thanks
Alpi

Michael Davey said...

Now I know. For me, the secondary (priced now at $33, is the bench-mark but on a closing basis). Down the road it will change, but for now I can make it easy.

Anonymous said...

I thought it was odd that it traded below $33 but given that it just couldn't rally at all from $32ish, I guess it wasn't a surprise.

But, in a few calls you made, it eventually came true (eg. shorting SINA). So if the fundamentally is sound (say people should want FIO now, and last month, people should be burning SINA) - why do you think it takes few weeks to play out? Do you think the preponderance of trading programs may have something to do with this?
Alpi

Anonymous said...

Btw, I didn't mean to say only few of your calls come true; I meant to say that few of investments that turned out ugly in the short-term but was the correct move in the medium term.
Alpi

Michael Davey said...

Good points/questions.

I suspect the stock is going to come back, but I don't live in faith as far as investing. There was a failure at this 2ndary price (33) and if the reasons it failed there were less to do with the company and true health/growth, etc., then I'll play it again higher.

Very important though is to avoid the disasters, and for all I know it made a new alltime high before this event. My strategy will not allow such draw-downs, so I cannot position myself for such a risk.

DMND made a new all-time high before going into absolute hell. If you let the stock's failure take you out and onto the sidelines, then you avoid the complete disaster (and you can always return if it was a false alarm).

Fundamentals commonly reveal themselves only after the horse is out of the barn. Pretty clear now that DMND has a real problem. I can't risk such a potential disaster, even though FIO is likely just fine.

Hope that helps. i'm preoccupied right now

Anonymous said...

Got you. Thanks Michael. With cases like these, a small option play for a potential come back or destruction sounds interesting to me.
Cheers,
Alpi