01/14/2005 12:00 am EST
Fred Hager came in first place in the annual portfolio rankings compiled by the Hulbert Financial Digest, with a 150% gain. Notably, the tech advisor came in second in 2003, when his model portfolio rose 119%. Here's his latest on SanDisk, a player in flash memory.
"SanDisk (SNDK NASDAQ) designs and markets flash memory storage products, used in a wide array of electronic devices such as digital cameras, personal digital assistants, portable digital music players, digital video recorders, and mobile phones. And unlike firms that simply license their patents, SanDisk mak es flash memory, entering into licensing and cross-licensing patent agreements with other companies. The strength of its patent portfolio provides licensing leverage that is paying off with win-win relationships in a rapidly growing market for flash memory.
"In recent news, there was a lot of entertainment on display at the annual consumer electronics show, known as CES. Perhaps visitors to CES would not be surprised to see an appearance by U2. But U3? Backed by SanDisk, the aim of U3 is to provide a platform that vastly expands the market for USB flash storage. Instead of simply storing data on the USB device, a wide variety of applications will be enabled that can be stored and launched from a U3 flash device. The goal is to have entire computer applications in mobile form that can be launched from any PC using a USB ‘key chain’ memory device.
"Several other companies endorse this project. Corel, maker of word processing and graphics products announced support. Software security provider McAfee will support anti-virus and firewall protection for the U3 platform. Instant messaging service provider ICQ, (owned by America Online) joined the parade, and MedicAlert views the U3 as a way for people to carry secure health information at all times.
"In our view, SanDisk thinks and acts like a product company not a commodity provider. We like the way the company is pushing the envelope for its flash products and believe they will be rewarded for their proactive product and platform initiatives. In addition to the U3 announcements, SanDisk also announced a few new products, such as a new pair of MP3 players dubbed Sansa. Notably, the product ‘looks’ a lot more like a little iPod than before. Taking another cue from the iPod perhaps, SNDK also announced some ‘flashy’ memory stick products for use with SONY’s new portable PlayStation video game product. The translucent, candy-colored devices are designed to appeal to young consumers. More importantly, it’s yet another product in a growing market.
"Clearly, SanDisk is following the mantra flash, flash, and more flash. It’s also interesting that none of the initiatives are actually directly related to the digital camera boom that, up to now, has been the key for its flash sales. It’s encouraging to see a technology byte supplier have such a keen focus on product, marketplace leadership, and the consumer. Many technology companies have faltered by failing to recognize that consumers buy products, not technologies. We remain quite bullish on the stock and are encouraged by the strategy and execution of the company."