IBM and Wells Fargo

I have had some IBM shares throughout 2015 and 2016, but I have sold them in 2016 to realize a decent profit. It wasn't caused by bearish view, rather I saw better opportunities elsewhere. Q4 numbers were released, and from a quick view they did look in line with company plans. But stock dropped after hours so I reentered IBM with a modest position. My simple intrinsic valuation requires it to have 1% real earnings growth, and given the progress in turning around the company and shareholder friendliness of the management, I have confidence that they will be able to exceed that.

I bought into Wells Fargo in 2016 and exited position after Trump rally. This was mostly to take profits and to see how much effect will the scandal have on performance. I did not see much worrying signs, therefore I reentered with average price below 54. It is only modestly lower than my intrinsic valuation of $60, but I think that higher growth and rates will make assumptions in my model conservative. At this price, though, I am not inclined to buy much of WFC.

Going further into the earnings season, I expect AAPL, GILD and VRX to go up earnings. We shall see...

Tesla - continued

I am following Tesla for quite some time and I become more and more convinced that what the progress their imply with self-driving capabilities (and most of other goals) is significantly overstated.

Their switch to "HW2.0", which I think is not enough for fully self-driving car, was perhaps indeed triggered by Mobileye dropping Tesla as a customer when they did not really have and usable self-driving technology except for what Mobileye provided. The delayed and only partial 'launch' is rather unimpressive. It is nice progress if they started in October, but hardly shows a 'lead' in self-driving capabilities - perhaps a result of heroic programming and working 7 days a week. At the same time, WayMo is rolling out tests for their Chrysler vehicle in January and plans production in October.

I still admire what Tesla achieved, but the continuous (mis)communication from Musk is distasteful.

Since beginning of the year, I opened a small short position in Tesla through Jan'18 & Jan'19 puts. I am not sure Tesla stock price will indeed drop significantly by then, but I see progress from others (in both EVs and self-driving) and Tesla significantly under-delivering (with Model 3, total car deliveries and lack of meaningful solar/storage sales) as likely catalysts.