RMBS

Some very good questions, and subsequent discussion of the current situation with RMBS’s price was raised by one of our Members today…

[Coach BD]  The short answer to your questions is yes, I believe we can achieve those goals.  The real question is, when…?  That’s the big unknown.  I too thought that if Samsung settled we would see the stock price move much more strongly than has been the case.

However, in the past two days it has been discussed on the Investors Village Discussion Board that the probable reason for the big institutions holding the price back is the situation with RMBS’s convertible bonds that expire this Friday.  As I recall, if the stock price is not above $26-and-change then a couple Hundred-Million worth of these convertible bonds will NOT be converted to shares.

RMBS… BOOM #2…!!!

Finally…!!!

RMBS bags the Gorilla…!!!  The settlement we have all been waiting for… Samsung. 

Regardless of what you hear, or read on the message boards, this settlement is HUGE…!!!  Samsung pays $900 Million to settle all past damages and licenses ”certain” memory products.  This is key to the settlement… in the CC RMBS made clear that the settlement does NOT include new memory products like XDR and other “new” generation products.  They reported that they have a MOU on licensing these new products and that they would be partnering with Samsung on many other products.

Exactly what RMBS needed to turn up the heat on everybody else left unlicensed.  Samsung gets the best deal because they “were” a paying customer and because they settled first.  We believe other deals and settlements will be forthcoming… simply because no other MM’s can afford to let the Gorilla get too far ahead with their technology.

This is very very good… at long last RMBS will be paid for their revolutionary products and designs.

This morning we cut all of our hedges in half and added Short and Mid-Term Call Spreads…

BOUGHT - FEB 25/30 Call Spreads @ $1.10

BOUGHT - MAY 30/40 Call Spreads @ $1.17

BOUGHT - AUG 40/45 Call Spreads @ $.38

No changes to our LT Core positions just yet…

Coach BD

BOOM……!!!

Something very significant has happened that has caused MICRON to ask for an emergency continuance of the At Trial.

THE PROBLEM… We don’t yet know what the hell it is.  Rereading many posts that are being reviewed at Investor’s Village RMBS Message Board… most seem to think that either Samsung & Hynix have settled… OR, MICRON wants to settle first…

Everybody up early tomorrow… The BIG show starts tonight or tomorrow morning.

YIKES……!!!

Coach BD

RMBS

We are covering ALL of our Short Puts that were part of Credit Spreads.  That includes Short 22.50’s and 21’s…

We are also replacing those Shorts @ 21 with an equal number of LONG 21 Puts.  So we now have a 100% hedge @ 21, and a 100% hedge @ 20.

Coach BD

RMBS

AT (Anti-Trust) Trial is scheduled to begin tomorrow with jury selection.  There has been much speculation as what may or may not happen before tomorrow.  We also are expecting a decision from the ITC (Intl Trade Commission) Administrative Law Judge (ALJ) on whether or not NVDA infringes newer RMBS patents.

At the ITC, the legal staff conclusion in their report to the ALJ was that NVDA DID, indeed, infringe a number of RMBS patents, and these are the newer, Barth & Ware patents we are talking about, not those in question in the AT trial, or those decided in RMBS’s favor in the Hynix trial.

Today’s action looks like RMBS is trading along with the other semi stocks and not in response to any potentially unknown (insider) news.  We would guess that RMBS runs back up into the close from these lows, but that’s not a prediction.  ;-)

We are evaluating some significant protection given the potential for a very serious haircut if anything negative should happen between today and Friday… i.e. last minute delay in AT Trial start, contrary decision by ITC ALJ on NVDA infringement, etc…

Will post our intended action within the hour…

Coach BD  

Well………………….

I am happy to finally be able to report…

The Trade Coach is back at work full-time for the first time since October.  For those of you who use our Private Trade Execution Services, you all know that Coach BD has been busy taking good care of all of your portfolios and we can report that RMBS, SNDK, AAPL, ESRX & The VIX were all MONSTER trades for 2009, with SNDK, AAPL & ESRX needing close to no adjustments or action for most of the year.

That was simply because these trades were carried over from 2008 and all were either already profitable or close to zero carry trades, through very effective hedging in 2008.  This gave us the luxury of simply holding them through this past year, risk free.  The ultimate, and perfect trade scenario.

For some of you who got in early w/us on TSRA, that was another very good result, though if you waited for either of the add-ons to open your initial position, you are probably near breakeven (BE) or even down 10 - 20% on that trade… BUT fear not, for those of you who are holding TSRA we will be trading this position for Income over the next few months waiting for the HUGE potential move in RMBS to drag TSRA along.

Finally, we made very big returns on the VIX early in the year and then SOLD ATM premium against our Long OCT Calls through JULY, when we exited, leaving us with another year of very big gains using the VIX, though unlike 2008, when high volatility reigned, 2009 was a hedge against our hedge trade as we sold 5 straight months of ATM Premium, collected it ALL, and then sold our core OCT Calls for just $1.00 under our Cost Basis @ JULY Expiration.

So, where does that leave us…

We will be exiting AAPL & ESRX @ JAN Expiration.  We SOLD ATM & near OTM Premium against these for JAN because we thought these runs may be coming to an end, and we wanted to hold these into this year so we won’t have any tax reporting, or tax paying, until next year (2011)…  SWEET…!!!  SNDK will fall into that same boat though we intend to roll out our JAN Expiring Calls that we have held since 2008, and we will be trading those out for JAN 2012’s.

For those who remember our past discussions, SNDK has been one of our favorite LT Trades almost every year because of the huge runs this stock routinely makes in both directions.  We feel that this upside run in SNDK may continue through this whole year as SNDK has reestablished itself as the Gorilla in its market.  Since JAN 2006, SNDK has been making a nice LT cup formation from its highs near $80, and now that we have a new, strong uptrend building the right side of the LT Cup, $80 may be in play once again over the next year or two (thru 2011).

We’ll address our outlook for RMBS and TSRA in a separate post because there is just so much to talk about with RMBS… (so what else is new)… BOTTOM LINE… Hang onto RMBS, and TSRA, for now cuz the storm is comin.  This strong move we’ve made from the NOV 2008 lows near $5 to where we are now, near $23.50 will seem like a blip on the chart if Samsung rolls over and settles with RMBS prior to the AT Trial scheduled to start next week.  If that happens, or if anyone else jumps in to settle ahead of Samsung, we could easily see $60, perhaps even $80 - $100 before the year is out.

YEEEEEEEEEEEHAAAAAAAAAAAAA…………….!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

It really could be the MONSTER GORILLA trade of the decade, if not the Century, should the dominos start to fall.  Once they start falling there’s no telling how high RMBS may go.  We believe that RMBS is perhaps a $10 - $25 BILLION dollar company in market cap, especially if settlements and licenses start rolling in this year, as we expect they will… so that’s anywhere from 5 - 10x its current price.  YIKES…!!!  The estimates are truly mind-boggling.  We’ll be happy with $60, but $80 - $125 is certainly in the ballpark, just for this year…!!!

BUT, then again… its still RMBS… So anything can, AND WILL, happen.  We’ll talk more about the outlook tomorrow along with our strategy.

Everyone have a great evening.  It is so very good to be writing once again.

Coach BD