Jason Asks What He is Missing With Garmin?
In a blog posting Jason asks what he is missing regarding Garmin. My answer is that he is missing nothing! This is one those stocks where I was burnt because I jumped in too earlier (still long and will wait this storm out). BUT my basic premise of GPS which I have commented on many times stays.
So why is Garmin down? Because they missed by a bit! The real problem with Garmin is their short interest. Garmin has been on the RegSHO list for 60 days and is naked shorted to the hilt! (Hey SEC you are doing fine, but wake up and start handing out fines!) Garmin has 10 days of volume in short interest. It is absolutely insane!
Is Garmin in trouble? Are GPS devices in trouble? Well if you followed the freaks from the iPhone world you would think that the iPhone could make your coffee as well. Well, folks the iPhone is not allowed to do turn by turn navigation. Part of this has to do with how the maps are licensed and part of it software. Navigation turn by turn software is hard to do right. This is the domain for companies like TomTom and Garmin.
Until last Friday I was fairly pessimistic on how I seemed to be the lone voice in the GPS jungle. But something changed my tune. One of my tactics is to cruise the stores and talk to shoppers. On Friday I headed over towards Media Markt (European Best Buy equivalent). What I saw amazed me. Garmin has been buying their distributors and many questioned why. On Friday I saw why. Garmin is now negotiating directly with Media Market and negotiating for prime access. The result is that people are buying up 4.3 inch devices from Garmin! It seems that the sales staff has been trained towards selling and explaining Garmin devices here in Europe. Its working as the clients are buying the new 4.3 devices that are very portable. Want to know what is a desired feature with your GPS device? MP3 player! How is TomTom faring? I think fine. I also saw that the GPS inventories have finally been brought down to fairly low levels as the inventory in Media Markt has been at one of the lowest points in a couple of years.
Are cell phones a threat to GPS devices? No, not a chance because I see consumers who want 4.3 inch screens and small cell phones. The two do not go together. What I do see is the need for a pedestrian GPS device and there cell phones will rule. Nokia will be the dominate force with their new Nokia Map 2.0 release. The new generation of GPS devices have the ability to be a pedestrian device, but I am doubtful that they can evolve into anything beyond a niche.
So Jason you are not missing anything. You are just smarter than me waiting till now!
Hello There Mr Roboto!
(the song and era says it all... http://www.devspace.com)
4 Comments Add your ownSubscribe
1. Jason Coleman | August 18th, 2008 at 10:50 am
On that note, I just bought 50 shares with my IRA. As things develop, I may rotate a few of my other holdings into GRMN.
Phil Town’s take:
http://www.philtown.com/phil_towns_blog/2008/08/garmin-update-i.html
Town’s analysis prices GRMN at $100. But he admits that the “big guys” may know something he doesn, and his more conservative analysis prices the stock at the current level.
So he suggests the risk/reward is there if you think things could get better for Garmin. He suggests trading it more “nimbly” (using tighter MAs).
And then he oddly suggests “consuming” it, which sounds like averaging down. Averaging down isn’t really the Rule #1 style, but I think what Town does with his bigger pile of cash.
2. Christian | August 18th, 2008 at 11:33 am
>But he admits that the “big guys” may know something he doesn
This is the biggest pile of do-do…
What is going on is group think… People pile on the bandwagon and keep doing what is working.
Right now the market is saying, “Garmin prove me wrong, and until then I will pound you into the ground.”
Want to see something very interesting? Go to Google and do a search for “short sale database interactive brokers” Then look up GRMN. GRMN will appear on the SHO list and then disappear. What you want to see is the availability of shares to short.
If there are shares to short for GRMN, GRMN will go down. If there are no shares to short most likely GRMN will go up. I have been watching this for the past 3 months and it never fails…
This means people are pounding the heck out GRMN and with every chance they just keep piling on…
Though watch out once things turn… And that means GRMN needs to pull out some good numbers! I could easily see GRMN popping 30%+ in a week…
3. Jason Coleman | August 18th, 2008 at 11:41 am
Short stuff noted. I’ll take a look.
To be fair, I think Town includes “lots of short sellers” or “people are selling for no reason” as something that the big guys know that others might not. He also says that it doesn’t matter if the big guys are correct, because they are bigger than us, and we might get run over by them as they push around their big accounts.
I don’t think Town is infallible, but he does an okay job of finding good values out there… and offers one way to trade/invest in those values. I reference him here because I was partially tipped off to Garmin by his blog.
Town has a habit of trying a little to hard to simplify things. He gives a “formula” in his book to make it easier for people to follow without thinking too hard (cause investing books that say “this is hard and never the same” don’t sell well), and so he will often contradict his formula and have to explain why “it’s different this time”.
4. Christian | August 18th, 2008 at 11:59 am
Ok, here is where I differ…
I write trading systems and I talked to some traders and asked them why they short or long. I asked why they would keep shorting a stock…
Answer; valuation is not part of their equation. What they do is a form of pile on. Thus there is no knowledge of anything. Why do they pile on? Because the others are piling on and hence you pile on as well. It is a classical case of lemmings…
That’s why the comment that the “big guys” know something is actually very overrated… Of course they can push and they know this and use it… That’s why I reference the short sale database. You know what the big guys are going to do when you see the available shares in the short sale database.
I am a bit annoyed because for this year my initial positions are hurting and it bugs the heck out of me.
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