Monday, May 20, 2013

Cisco: Let Me See That LONG

Cisco has a dominant market share in an industry where scale is advantage. Considering this, its market price a couple of years ago was laughable. But it only looks laughable in retrospect. When I brought up the stock as a potential investment at that time, though commenters on this site generally agreed that the company was undervalued, commenters throughout the rest of the web (e.g. through Seeking Alpha) saw the company through Mr. Market's eyes. Here are some of the bewildering comments I received after arguing the stock is undervalued:
  • The stock price has fallen over the last decade
  • The company is run only for the benefit of its executives
  • Management always lowers guidance, punishing the stock
  • It's too hard for value investors to make money in large caps
  • The company is being run into the ground

And my personal favourite, because it somehow blends two separate concepts that both ignore price vs value, and manages to do so in the same sentence:
  • There is no catalyst for growth

Finally, one investor was certain enough to be able to predict the following (at least, I think this came from certainty, and not as some sort of threat):
  • If you invest, you will be sorry!

Having almost doubled from its price in the low teens in mid-2011, Cisco is now ready to graduate from the Stock Ideas page to the Value In Action page; I have taken my profits. Congrats to all the value guys (I know there are a lot of us!) that bought it back then.

Disclosure: No position


juan said...

Well done, Saj, and thanks for the original post.

Sidekick said...

hehe, some funny comments there. I remember looking at Cisco myself but passed on it. Couldn't really get my head around it to be comfortable in investing.

There are plenty on my 'passed' list that have done really well though. Ah well.

Anonymous said...


I can't thank you enough for all the investment ideas that you have given that have made me money. Cisco being one of them. Thanks and please keep posting. One day I might send you a check.