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clearly this analysis was accurate! prescient and well done. was ARM running most non-iphone smartphones in 2006? the iphone launched in 2007, so this analysis

clearly this analysis was accurate! prescient and well done. was ARM running most non-iphone smartphones in 2006? the iphone launched in 2007, so this analysis must have been based on other smartphones (unless you had inside intel on the iphone). 1) which 2006 analyses proved wrong? it would be interesting to see which assumptions made sense in 2006 but were ultimately proven wrong. 2) which companies are you evaluating in 2020, and why? thanks for sharing.

KMag 6y ago
Oops. Must have been 2007 that I bought ARMH. I was working at Google at the time, and I had an iPhone, and Google had announced they were working on a smartphone. Some of my colleagues were internally beta-testing the G1 at the time, but it was before we all got G1s for end-of-year bonuses. I think December 2007 was the first year we got Andraid phones instead of (non-performance-based) cash for the holidays. 1) I thought the case for high-density/low-power ARM in the datacenter was pretty clear-cut, but it was an obvious enough market that within a few multi-year design cycles, Intel would close the gap with Atoms and close that window of opportunity forever, especially considering Intel's long-running fabrication process competitive advantage. In late 2012, one of my friends in the finance industry wanted to be "a fly on the wall" in an email conversation between me and a hedge fund manager he really respected who had posted on SeekingAlpha that his fund was massively short ARMH. A few email back-and-forths shook my confidence enough to convince me that the server market window had closed, and that it was possible (though unlikely) that Atom was about to take over the smartphone market. I reduced my position at that time by just enough to guarantee I'd break even if ARMH dropped to zero. In hindsight, I'm still not sure that was the wrong thing to do given what I knew at the time. I had two initial thesies: the smartphone thesis had played out and was more-or-less believed by everyone in the market, and the server thesis was reaching the end of that design window and I was worried that Intel was not far from releasing an ARM-killer Atom, backed up by the arguments of this hedge fund manager. I'm really glad the hedge fund manager didn't spook me enough to close out my position entirely. 2) I'm not a great stock picker. I've had some great calls and had about as many pretty bad calls. I'm now doing software development, but my degree is in Mechanical Engineering, and I took a CPU design course (MIT's 6.004) back in college. I think my edge over the market is realizing when the market is under-appreciating a really good piece of engineering, though I punch well below my weight in the actual business side analysis. Jim Keller is a superstar engineer, who attracted other superstars, and I don't think the market ever really figured that out. Jim Keller retired now, so there goes about half my investment edge. Though, maybe I'm just deluding myself on the impact really good engineering really has on the business side.
- panabee 6y ago
  thanks for the thoughtful reply. mistakes are expected in any field; you are too humble and should give yourself a little more credit. :) could you share what arguments the hedge fund manager made? do you find any companies interesting now?

KMag 6y ago

Oops. Must have been 2007 that I bought ARMH. I was working at Google at the time, and I had an iPhone, and Google had announced they were working on a smartphone. Some of my colleagues were internally beta-testing the G1 at the time, but it was before we all got G1s for end-of-year bonuses. I think December 2007 was the first year we got Andraid phones instead of (non-performance-based) cash for the holidays. 1) I thought the case for high-density/low-power ARM in the datacenter was pretty clear-cut, but it was an obvious enough market that within a few multi-year design cycles, Intel would close the gap with Atoms and close that window of opportunity forever, especially considering Intel's long-running fabrication process competitive advantage. In late 2012, one of my friends in the finance industry wanted to be "a fly on the wall" in an email conversation between me and a hedge fund manager he really respected who had posted on SeekingAlpha that his fund was massively short ARMH. A few email back-and-forths shook my confidence enough to convince me that the server market window had closed, and that it was possible (though unlikely) that Atom was about to take over the smartphone market. I reduced my position at that time by just enough to guarantee I'd break even if ARMH dropped to zero. In hindsight, I'm still not sure that was the wrong thing to do given what I knew at the time. I had two initial thesies: the smartphone thesis had played out and was more-or-less believed by everyone in the market, and the server thesis was reaching the end of that design window and I was worried that Intel was not far from releasing an ARM-killer Atom, backed up by the arguments of this hedge fund manager. I'm really glad the hedge fund manager didn't spook me enough to close out my position entirely. 2) I'm not a great stock picker. I've had some great calls and had about as many pretty bad calls. I'm now doing software development, but my degree is in Mechanical Engineering, and I took a CPU design course (MIT's 6.004) back in college. I think my edge over the market is realizing when the market is under-appreciating a really good piece of engineering, though I punch well below my weight in the actual business side analysis. Jim Keller is a superstar engineer, who attracted other superstars, and I don't think the market ever really figured that out. Jim Keller retired now, so there goes about half my investment edge. Though, maybe I'm just deluding myself on the impact really good engineering really has on the business side.

panabee 6y ago
thanks for the thoughtful reply. mistakes are expected in any field; you are too humble and should give yourself a little more credit. :) could you share what arguments the hedge fund manager made? do you find any companies interesting now?