Qualcomm (QCOM)

One of the pioneers in wireless and smart phones. The issue in the last few years has been all about growth which has been stalled. They also had issues in China and of not getting paid. It really comes down to a stalling smart phone growth and what do they do. They are sitting on a hoard of cash and they need to buy somebody in order to jumpstart their growth again. There are rumours they are going to get displaced out of some iPhones and Samsung phones.

Sold his holdings in Q1 of 2015 because of concerns of the Chinese claiming that the company was monopolistic as well as some issues of patent infringement. The stock has been flat to down since then, and those concerns really haven’t gone away. Apple (AAPL-Q) has been a fairly large customer, but there are rumours that Apple will be using Intel (INTC-Q) chips, for the iPhone 7, at least in part.

From 2013, the chart shows a massive head and shoulder formation, and it is quite normal for prices to recover back to the neck line, and then the next move is probably lower. All the people that got caught in the overhead supply are waiting to Sell. He would not recommend holding this.

This has fallen on hard times recently, and has not been able to grow. They have always had issues in China in terms of being able to collect some of their royalties. There are rumours they may be completely displaced out of the iPhone 7 by Intel (INTC-Q). Has a huge cash hoard and people are suggesting they should make acquisitions to diversify from being in the central processor part of the phone area.

It has recently come off its bottom. They have been a leader for so many years in the chipset in the phone. You can buy it now. You will be happy over the next year or two.

Trading at about 13.5X earnings this year, and about 11X next year. Trading at a discount and is starting to grow again. It really stumbled about a year ago when it had troubles in China. Doing a little bit better now. His view is that a 15% grower trading at 13 or 14 times is not so bad. Not a bad stock here.

Semiconductors for the long term. It is a good place, but it is a broad space. The PC space is struggling. He likes QCOM-Q. They are well positioned with a multiple of 10-11 times. An ETF would give you too much baggage.

This company patented the device that lets a cell phone communicate with a cell phone tower, and over 50% of what they get paid is from that. Have not been receiving payments from most of the Chinese manufacturers of cell phones. It looks like that is going to change. To the extent that they are successful, the company is going to do well. The free cash flow yield is incredibly high. Big dividend. He likes this company.

(Top Pick Mar 18/15, Down 25.13%) He left because of regulatory issues in China. Now South Korea is voicing concerns about the issue.

During a correction the market stress tests all the securities. When the tide goes out you can see where the strength is and where the weakness is. One of the strong sectors is semiconductor. QCOM-O has been declining for well over a year, underperforming the market. He prefers the ones that hold up better than the sector during a correction.

Sold his holdings about a year ago when they were having issues with the Chinese government. Their major product was the LTE chip where they had 97% market share, so where do you go from there. There are better opportunities in the Tech space.

(A Top Pick Jan 29/15. Down 30.36%.) Fundamentally, this is a very cheap stock. Great balance sheet with cash on it. Trading at a very low multiple. Sold his holdings because of how they handled the China issue. They kept having little hiccups all the time.

(Top Pick Feb 4/2015, Down 23.49%) In Canadian dollars we almost broke even. They depend on royalties, but China suddenly decided they were not going to pay. They eventually made a deal, although not the greatest deal. It was a terrific business, but it depended ultimately in the honesty of their customers, so he exited.

It is worth a look again. They had a few issues. ADMA chips were sold into China, but China decided not to pay QCOM-Q. That appears to be getting settled. Then there were shareholders wanting to break up the company. Then they lost a major contract. It looks good now. It is off 40-50% from the peak. He is close to adding it.

(A Top Pick Nov 27/14. Down 20.65%.) A tough story for him because he liked the company and the roadmap they had on the technology side, and it wasn’t expensive. Had lots of cash and paid almost a 3% dividend yield. However, they never seem to be able to solve their problems with China, etc. and he sold his holdings a couple of months ago.