LUCKY BREAK

NSTC

I add some NSTC @ 10.33 (market cap $355 mil) this morning. The company is traded at a very low multiple compared to its peers (14X05, 10.7X06) and growing at about 20% annually. Strong growth through acquisitions and partnerships, blue-chip customer base, niche player, clean balance sheet, very limited analyst coverage, valuation compelling. There are a lot of integration risks for this company and it has to deliver consistently. But I am having a hard time to found any compelling valuations here, particularly in the tech area. I also continue to concern a bit about the yield curve. Cyclicals, including techs, have not performed well in periods of flat or inverted yield curves. I am also not very confident about the coming earnings reports. While Q2 results will likely be decent, it is the outlook causing concerns. Better to wait, pick those that have pre-announced (to avoid earning surprises), or pick those with relatively low multiples.

DII

DII warned this morning and I sold as soon as market opens. Lucky for me as it fell by more than 10%. Lessens leant.