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Apparently they(smci) have a plan to announce on Monday to avoid delisting, should put a rocket under the sp, especially if they announce something positive to go with it.
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Could have been a good gamble
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I’m sure there will be further volatility but it’s the first positive news in a while. The reaction to signing BDO, a top 5 firm and auditors of much bigger companies, is as expected.
The committee took the view that retaining 3 shares for every 10 held originally was a reasonable and conservative approach given:
- We booked 138% profit
- On balance there was no evidence of accounting manipulation as cited even by EY.
- The rapid appreciation of the stock made them a short/miscreant target.
We don’t feel ‘smart’ and there are many take aways but one thing I can say. This holding was borne from a high degree of research and it received attention constantly. It still does. However this is a case of risk vs reward. This was a case of ‘Hold’ (modest residual balance) vs not a buy or a sell. Simply because there were too many unknowns whilst on balance the business is still very attractive.
Regards
Adam
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Well, having been happy to leave things to the professionals (IM/Cobens) and always firmly in the "investing not trading" camp, I had a sudden rush of blood to the head on Saturday*, downloaded the Trading 212 app and bought some SMCI shares.
It's the first time I've done anything like this and it's a relatively small sum but enough to sting a little bit if it gets completely wiped out.
I must say watching the price change "live" yesterday was quite exciting and I can see how people can get hooked on it and also the risk of chasing losses etc.For me I think this will be a one-off experiment/fun/gamble and certainly not form part of my investing strategy but looking forward to seeing how things go over the next couple of months.
*no alcohol was involved in this decision
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Set in your mind a figure to invest and then place part of that amount on the horse, sorry, company selected. if it rises, buy another share or two, if it falls, leave well alone!
T212 offers 5/24 trading currently on SMCI, I managed to sell a little bit earlyish this morning, then watched the price tumble!
It's just gone back to red for me! -
Set in your mind a figure to invest and then place part of that amount on the horse, sorry, company selected. if it rises, buy another share or two, if it falls, leave well alone!
T212 offers 5/24 trading currently on SMCI, I managed to sell a little bit earlyish this morning, then watched the price tumble!
It's just gone back to red for me!@ferret50 said in SMCI:
Set in your mind a figure to invest and then place part of that amount on the horse, sorry, company selected. if it rises, buy another share or two, if it falls, leave well alone!
T212 offers 5/24 trading currently on SMCI, I managed to sell a little bit earlyish this morning, then watched the price tumble!
It's just gone back to red for me!Thanks, I'm definitely viewing it more as a day at the races at the moment. If I come out with a profit then great, if not then hopefully I feel that the stake paid for an entertaining experience!
How quickly is the money back in your T212 account after hitting the sell button? And does that change if you sell outside of normal trading hours?
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Funds enter upon selling, and are available to return to your linked account.
Remember that cash in T212 earns 5.17% paid daily.
I keep just trying to 'invest' the interest!
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Funds enter upon selling, and are available to return to your linked account.
Remember that cash in T212 earns 5.17% paid daily.
I keep just trying to 'invest' the interest!
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I note that SMCI are now trading at around $33, up from $18 a few days back, who else was brave enough to buy a few in the dip?
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Hi Bogie,
I have little doubt, almost none, that they will file. BDO will be fully aware of the issues-they didn't sign on to waste everyones time. Further, the fact that Charles and David are still present makes me wonder exactly what EY had an issue with. We may never know but as I have said before, large accounting firms don't really want to perform audits, period. They provide the service but are fraught with risk for modest fees, $5M in the case of SMCI (EY) which might sound like a lot but back in the day when I was an auditor, the unilever audit was £20M-this was 25 years ago. I am speculating but the Board could have given them the perfect excuse to walk away, having ignored the internal control weaknesses highlighted in the Management Letter, a key component of mitigating audit risk.
I was sent a slide late last week which highlighted Nvidia largest customers by revenue. MSFT(Nr 1), Meta, (2), SMCI (3), with GOOG, AMZN, DELL and Tesla following. With SMCI being 151% higher than Dell. Clearly they are a critical partner and remain so for the simple reason(and at the core of our investment originally), future chip architectures are getting more powerful and therefore hotter. DLC is going to start dominating the data centre and SM has the very best total solution, and I say total-solution because it is not just about 'racks' which is what Dell would supply, it's about the cooling tower, the unique software to monitor the efficiency at the chip level (SuperCloud Composer). SM can retrofit or build from the ground up, an entire DC.
They now have to get the analysts back on side
Regards
Adam
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I note that SMCI are now trading at around $33, up from $18 a few days back, who else was brave enough to buy a few in the dip?
@ferret50 I bought 11 shares at about $28. In truth, I found a small amount of money in a Schwab trading account which I didn't realise was there, and thought I'd have a punt. It really was gambling (as opposed to investing) but it looks like I'm up thus far.
I guess the question is what will happen to SMCI in the weeks and months to come? Adam is keen to tell us that the company has a great product and it seems to be sound, but the huge drop in share value is due to a drop in confidence. If the company is indeed sound (and I have no reason to doubt Adam - his research always seems to be exemplary) then it's just a matter of waiting until they have their audit completed and they file their necessary paperwork. At that point, is it unreasonable to expect the value of the shares to bounce back to where they were a month ago? Indeed, if NVDA chips are getting hotter then the demand for someone who can build good things to run them in which will keep them cool can only increase?
Perhaps I am being naive here. Perhaps I don't understand the risk. Perhaps my view of risk isn't the same as everyone else's. Perhaps I'm about to lose a chunk of money.
Perhaps, perhaps, perhaps ....
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Ah!
My mate Fat Derek calls me a 'nickle and dime' investor, now I have found a soulmate in yourself.
Another person suggested this to me this morning.....
Tell Fat Derek you have just executed a perfect example of pound cost averaging!
TBO, I held just ten SMCI shares that I paid about £300 for a while back, I sat and watched them rise to about £1250, then watched in horror as they fell over the last couple of months.
But as they fell, I bought single shares, each time thinking that the bottom had been reached, so I ended up with 18 shares, I sold one on Friday at profit and have set myself clear targets to sell seven more....
' This time next year, Rodders.....'
But I do enjoy T212 and fiddling with my pocket money!
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Ah!
My mate Fat Derek calls me a 'nickle and dime' investor, now I have found a soulmate in yourself.
Another person suggested this to me this morning.....
Tell Fat Derek you have just executed a perfect example of pound cost averaging!
TBO, I held just ten SMCI shares that I paid about £300 for a while back, I sat and watched them rise to about £1250, then watched in horror as they fell over the last couple of months.
But as they fell, I bought single shares, each time thinking that the bottom had been reached, so I ended up with 18 shares, I sold one on Friday at profit and have set myself clear targets to sell seven more....
' This time next year, Rodders.....'
But I do enjoy T212 and fiddling with my pocket money!
@ferret50 Ahhhhh - we can be friends!
I'm not entirely sure that I am an example of pound cost averaging; more that I took a punt on a (small) lump of shares hoping that they will go up. If I was to steadily buy more in small numbers then Id be pound cost averaging (I think).
Either way, glad to hear that you have made a profit on one of yours and I hope that the rest do similarly well!
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You're welcome SZ. In this case we don't know exactly what the issues are but our opinions are based on the collection of evidence we can find. We actually read and digest the information (daily). We don't parrot other pundits opinions. This as opposed to the vast majority of speculation and rumour which is passed off as fact. So we can have more confidence in what the issues aren't. Delisting is very low risk. I think SM, being part of the SP500 and widely held is too big to delist unless there are serious issues and we know what EY and the Board have said about this...they have found nothing which will give rise to a material restatement. Liang and Weigand are still present too. The company must now restore confidence with their key customers and suppliers along with the banks and Wallstreet Analysts. The stock will remain range bound until further clear updates are announced.
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It's been interesting reading articles on how Dell and HPE will take SM customers. There's a fundamental reason why that is highly unlikely. Neither have their own DLC offering. They sell limited DLC but it's not their product. It's a Foxconn server with a Dell logo on it. Why does that matter? Margin. Dell DLC will have Foxconn margin plus Dell margin. They are just too expensive. And further, US Big Tech customers want locally made solutions due to security, customisation, service and time to market. So we go full circle and look at what SM have. The best solution, a competitive price, made in USA, the total solution (a deep portfolio of solutions spanning Nvidia to Intel). This is what they have going for them. Great business, terrible management.
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It's been interesting reading articles on how Dell and HPE will take SM customers. There's a fundamental reason why that is highly unlikely. Neither have their own DLC offering. They sell limited DLC but it's not their product. It's a Foxconn server with a Dell logo on it. Why does that matter? Margin. Dell DLC will have Foxconn margin plus Dell margin. They are just too expensive. And further, US Big Tech customers want locally made solutions due to security, customisation, service and time to market. So we go full circle and look at what SM have. The best solution, a competitive price, made in USA, the total solution (a deep portfolio of solutions spanning Nvidia to Intel). This is what they have going for them. Great business, terrible management.
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Hi Ex IM, yes, saw that. I wouldn't see this as a positive but something to watch. They need all the liquidity they can get. Originally the plan was to take out a new revolving credit facility(RCF) (in Q1) and repay the combined $500M they owed Cathay Bank and Bank of America. The RCF never materialised due to the non filing. They've repayed the Term Loan anyway. Said banks had agreed to a variation/waiver in respect of the 10-k filing requirement deadline to 31 Dec. Clearly the company was not going to meet this revised timeline. We would think the earliest possible filing date to be 'Feb 2025'. We don't know whether the banks indicated they would not agree another waiver or whether the costs to renegotiate were just too punitive, making repayment the sensible solution. The company ended the quarter with $2.1B cash on hand . It will be interesting to see how they navigate their cash requirements. With Blackwell not arriving in volume(for them) until March they may be in luck-get compliant and regain access to capital markets. Their existing cash and inventory can support $6-7B quarters at best. When Blackwell is in full swing they will have the capacity to generate 3X that. They will need significant additional capital to take advantage of it and ideally going to shareholders would be less attractive than debt at these levels. Watch this space.
