Portfolio down? At least it isn’t down $205 million in 30 days

As I look at my portfolio over the past few months, I see its down.  Down a bit more than I’d like it to be for sure but nothing compared to some of the folks out there.  As a small-fry investor, I assume I’ll make bad decision on a specific stock now and then, I consider it part of the game.   When huge investors make giant investment mistakes it always surprises me.  In today’s global economy and huge private equity buyouts, I just assume that the buyers often have a pretty high degree of confidence in the investments that they are making.  For Mubadala Development Co who just a month ago purchased an 8.1% stake in Advanced Micro Devices (AMD), it seems as though they didn’t have as much info as I would have expected.

Mubadala Development Company is owned by the United Arab Emirates.  They’ve been making several large investments in US companies lately.  On November 15th, they purchased 49 million shares of AMD at the market price of $12.70 a share.  Today, AMD is trading for $8.46 a share.  Folks have been skeptical of AMDs future and profitability (or lack thereof) for a long time, but recent announcements regarding the slip of their Barcelona processor and ambiguity regarding what they are going to change to stop the financial bleeding have really turned up the negativity on the company.

Doing some quick math, 49 million shares suffering a $4.24 price drop in 30 days equates to $205,310,000 or 33% of their initial investment.  Just another argument for diversification.  Don’t put all your $622 million dollars in one basket.