From what I can tell this was picked out of an older report. If my sleuthing is accurate, Dan Benton was a top-ranked PC analyst at GS from 1988 to 1993. From there he went to work at Dawson Samberg Capital Management which eventually became Pequot Capital Management. I recall representatives of Pequot showing up on a few panel discussions I moderated when I was active with SEMI. After Pequot, Mr. Benton founded Andor Capital Management. Andor operates a long/short hedge fund.
Suffice to say the history of Andor is interesting - it appears as though they shutdown in '08 and then reopened in '11. This year it looks like the sailing has been rough. Here's a link to a story from the WSJ: Andor Capital Management fell 18% in March A quick perusal of the news shows that Andor likes Tesla and Twitter.... FWIW
One thing about hedge funds seems overwhelmingly clear, they never seem to die - they open and close just like window shades (unless they are busted for violating the rules).
So, about those Rules. The first six deal with Momentum. Rules 7 and 8 address Valuation. 9, 10 and 11 speak to Seasonality. 12 through 15 addresses Management.
- SELL TECHNOLOGY STOCKS WHEN ESTIMATES ARE BEING REDUCED
- Buy technology stocks ONLY FOR POSITIVE EARNINGS SURPRISES
- Positive earnings surprises occur when revenue and earnings growth are accelerating, when AVERAGE SELLING PRICES ARE RISING, and when gross margin and operating margin are rising.
- Most technology stock ideas are product-cycle stories.
- New product cycles often lead to earnings surprises; product cycle transitions usually lead earnings disappointments.
- Technology stocks also do well when COMPANIES REBOUND FROM POOR EXECUTION.
- Value investors don't make money in technology. There are few "cheap" technology stocks.
- Don't buy on relative P/E, P/B, P/R, particularly when estimates are falling (see Rules 1 & 2).
- Technology stocks perform poorly in the summer.
- Seasonal slowdowns cause secular concerns.
- SECOND-TIER COMPANIES DO POOREST IN THE WEAKEST SEASONAL PERIOD AND PROVIDE ANECTDOTAL EVIDENCE OF A SECULAR SLOWDOWN.
- Reorganizations without restructuring charges usually lead to earnings disappointments within two quarters.
- One quarter problems exist (but only if caused by supply constraints).
- Management usually appears weakest at the bottom of a product cycle.
- Insider selling doesn't matter; management gets new stock options every year.
Discussion is welcome and expected.