| |  | | Lynn Carpenter | You’ve heard it before. Wall Street is full of idiots. But you won’t hear it from me. In fact, I think the whole notion of idiots on Wall Street is a dangerous idea for people to assume. It makes you vulnerable to silliness. Like this bit from one of my favorite personalities, Jim Cramer. I don’t worry about picking on Cramer this time. He’s a big guy and he can take it. Anyway, here’s the mal mot straight from the Mad Money Recap website: “One of the best ways to make money in a stock is to buy it right before the company undergoes dramatic change. That’s what’s going on in Applied Materials, Cramer said on Tuesday's show, and Wall Street hasn’t realized it yet.” Whooo! My stomach is sore from laughing, and my head hurts from the bump I got when I tried to get off the floor from under my desk where I rolled in helpless glee. Excuse me… gotta wipe the tears out of my eyes. Now listen, I am going to reveal one and only one stock in the
Rising Tide portfolio—Applied Materials. I recommended it in October 2006. And I have this to say about it. Wall Street knew. Yes it did. And so did I. Performers and entertainers in the investment business need attention. It’s easy to get it by saying “Wall Street doesn’t know” or that they are recommending a stock “before Wall Street finds out.” That’s pure bunkum. On occasion, a person working at the company or a local newsletter will catch some small new development that may seem too minor to a faraway New York analyst. But it’s not commonplace that this kind of news even goes beyond the company cafeteria. And unless the secret comes from someone in the business who understands what it means or the local paper, believe me, Wall Street already got it That’s not to say that everyone on Wall Street will do the right thing. Nor will they always understand its implications. But before you figure someone has tipped you a hot secret, at least check the company website. Let me show you something. This was tucked into the very short “Management Discussion” section of Applied’s quarterly report for May 2006: “Subsequent to the second fiscal quarter of 2006, Applied entered into certain agreements in connection with the Company’s long-term growth strategy. Management believes that these pending transactions will enhance Applied’s ability to extend its nanomanufacturing capabilities into adjacent and new markets, including: color filters for flat panel displays, solar energy, flexible electronics, energy-efficient glass, track solutions for semiconductor manufacturing, and advanced parts cleaning services. These transactions, when completed, will involve the acquisition of Applied Films Corporation, formation of a joint venture with Dainippon Screen Mfg. Co., Ltd. and purchase of certain assets of UMS Solutions.” Note the “new markets” include energy efficient glass and solar. I guarantee you that everybody on Wall Street with any interest in the semiconductor industry read the quarterly report on the industry’s largest player. What’s more, I double-guarantee you they read the management discussion. That’s always a section you read if you’re serious. And in this case, it was only six paragraphs long. And if all of Wall Street in some incredible case of blue brain fog missed that, there was the annual report, published Dec. 14, 2006: “Subsequent to the second fiscal quarter of 2006, Applied entered into certain agreements in connection with the Company’s long-term growth strategy. Management believes that these pending transactions will enhance Applied’s ability to extend its nanomanufacturing capabilities into adjacent and new markets, including: color filters for flat panel displays, solar energy, flexible electronics, energy-efficient glass, track solutions for semiconductor manufacturing, and advanced parts cleaning services. These transactions, when completed, will involve the acquisition of Applied Films Corporation, formation of a joint venture with Dainippon Screen Mfg. Co., Ltd. and purchase of certain assets of UMS Solutions. (See Note 15 of the Notes to Consolidated Condensed Financial Statements.)” In fact, Applied Material’s solar play has been so well known that just this Monday (April 7) Credit Suisse downgraded Applied Materials to neutral because it thought that it was getting too much of its income from its solar panel business. Wall Street doesn’t miss much. It spends billions on research; each investment house and major bank spends millions, hundreds of millions, even, every year. The advantage is not having the information. We can get that as well. I certainly found out about Applied Materials’ solar plans from the early days, just by sitting at my computer reading the same kind of material anyone can get if they try. Our advantage is never in discovering something Wall Street doesn’t know yet. It is in understanding what it means. But don’t believe Cramer just discovered Applied Materials’ plans and you’re coming early on this play. Very often, falling for that old “special secret” line will only net you a company Wall Street wouldn’t touch and you shouldn’t either. At least with Applied Materials, you are getting a good company with a good dividend. Sincerely, Lynn Carpenter P.S. To let me know what you thought of today's article, send an e-mail to: feedback@investorsdailyedge.com. INTERNAL ENDORSEMENT Winners Cherry Pick!
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