February 2010 is eventful

If you are a first timer, please read the following pieces first. It will provide you with important background information.
1. Why I created this blog?
2. How am I going to operate this blog?

I sold one stock so far and bought four.

I sold out LTD on February 04, 2010 at $20.24. Since it is in my Welltrade account, I didn't pay a commission. I first bought LTD in Oct 2007. During the holding period, I received $510 in dividends and $581.89 capital gain. It is an acceptable but certainly not brilliant return.

LTD has been consistently paying out a healthy dividend even in the most turbulent times. I believe it has two wonderful businesses although I think its recent discounting at Body and Bath Works is overdone. I believe its Victoria's Secret business has the potential to grow internationally. And I applauded the management's decision not to overextend itself. All that been said, I think LTD is still undervalued. Its intrinsic value is closer to $30 rather than $20.

I still sold it because I believe I find something cheaper.

In his most recent comment, Bill Nygren said,

" AMAT is the largest supplier of capital equipment used to manufacture semiconductors and LCD panels. It has the dominant market share across the vast majority of its product line, a world class service infrastructure, and a pristine balance sheet with over $2 per share in cash. Despite those positives, its business is wildly cyclical, and in the recent downturn, not many new semiconductor factories were built. In the technology frenzy a decade ago, AMAT stock reached a high of $57 which was 10x sales per share (yes, sales per share – it was almost 50x earnings per share). Sales in 2009 were about half the 2000 level, and AMAT lost money. But this is a growing industry, so we believe a strong cyclical recovery will soon produce sales and earnings that exceed the prior peak. On the basis of this business alone, we believe AMAT is undervalued at $14. In addition, AMAT has an emerging business selling equipment used to manufacture solar panels. The future of solar energy is hard to predict, and the value of AMAT’s solar division could range from almost nothing to half the current stock price if it were valued consistently with publically traded competitors. Though we aren’t comfortable valuing it at such a high level, it’s clearly worth something, and we don’t believe we are paying anything for it. "

I bought 500 shares on Feb 4, 2010 at $11.73 about 17% discount from what Bill Nygren's entry price without paying a commission. I think AMAT's fair value is closer to north of $20 rather than north of $10 it is currently trading at.

BTW, my friend, Allen, recently set up a website for shopping deals.

Here is the link:www.dealam.com.