NoNameProf

well, it is important that I test out my hypotheses (this is not meant as investment advice for anybody). so I put $2100 in a trading account, and spent a few hours reading through material in GPS industry.

overall, I feel quite comfortable that this industry will provide abnormal return in the near future for two reasons

the market potential is much larger than what have been realized by an average investor

GPS (location based service) has NOT become mainstream (if it is mainstream, then it will be too late to get abnormal return)

after convincing myself, I started to look through the various stocks in the entire value chain, from map maker, chip maker, to device maker, … finally, I decided to purchase two stocks that interface with users, it appears to me the rest are either targets of consolidations or could be relatively replaced by new entrants. those interface with users will benefit from their brand names, among others. I thus picked Garmin (GRMN) that is the dominant player in consumer market, and Trimble (TRMB) that is the dominant player in business market.

it also appears to me that NVT (Navteq) is a prime target of acquisition of its customers, and the potential buyers are rich with cash and will likely to pay a premium, especially since they will be competing for the acquisition. as a result, the valuation will not be that rational, and it will be more driven by “I have to get it before others get it” mentality. It thus fits my definition of abnormal return as well. personally, I think NVT is overvalued, and GRMN and TRMB are undervalued, but when it comes to inefficient market, what I think is irrelevant, it is about what others think.

so I placed order in the evening of july 30, 2007, for market order to be executed tomorrow (I have more important things to do tomorrow)

GRMN (Garmin) — 10 shares

TRMB (Trimble) — 30 shares

NVT (Navteq) — 4 shares

note I never bothered to mention the financials of these firms,  I did look at them, but only use them to see whether there are any red flags (none in my view).