While QQQ is a bit worrisome, I couldn’t help but notice the super-sized institutional buying on weakness of household technology names. Roughly $1.7 billion in money flow entered 4 companies on Friday, 9/20: Apple (AAPL), Microsoft (MSFT), Intel (INTC) and Cisco (CSCO). “Old tech” may be gathering interest from the asset management community now that Microsoft committed to a dividend hike and a share buyback.
What is more intriguing to me is the reality that “old tech” is fairly valued or even undervalued on a trailing 12-month basis. Consider First Trust NASDAQ Technology Dividend (TDIV). Whereas the S&P 500 has slower earnings growth, a trailing P/E of 18 and a dividend yield of approximately 2%, TDIV has a trailing P/E of 14, reasonable earnings growth potential as well as a 2.9% SEC 30-day dividend yield. The top four holdings? They are the very same above-mentioned companies that institutional buyers scooped up on Friday via block trade.
Gary Gordon is president of Pacific Park Financial, Inc.
