Thursday, August 14, 2008

Waiting for some post-merger clarity

Tonight we get earnings from Oplink (calls 11.8% of portfolio), which has become my largest holding due to the nice gain in my call position in the past two weeks. I trimmed one third of the position recently, but am holding the other two thirds through earnings. Hopefully we will get some clarity regarding the company's profitability and outlook in the post-merger environment. Oplink was progressing nicely last year before EPS took a hit from the OCP merger; hopefully they'll get back on track soon. In other optical news, Avanex (4.9% of portfolio) completed their reverse split, and will trade under the AVNXD symbol for a time until reverting back to AVNX. The stock is actually up post-split, which is nice to see. So perhaps investors are actually paying attention to valuation for a change, instead of the usual (i.e. negative) connotations of reverse splits. I actually think the split is positive in this case, as it will clarify earnings; earnings growth will no longer be masked by rounding off to the same penny.