Seeking Alpha

Adam Levine-Weinberg

View as an RSS Feed
View Adam Levine-Weinberg's Comments BY TICKER:
Latest  |  Highest rated
  • US Airways Investors Hoping For Merger Bailout May Be Disappointed [View article]
    I'm not sure there's any point in discussing this further. My airline investments as a whole (HA and DAL) outperformed LCC since July 13, and since this article was published in early December. But there's nothing wrong with us both making money!

    Obviously, HA took a beating in January/early February, but I had actually taken profits on half of my position when it was closing in on 7. I'm looking to expand that position again, and I do think it's a much better long-term investment than LCC/American, for reasons that I've elaborated elsewhere.
    Mar 23 11:53 AM | Likes Like |Link to Comment
  • US Airways Investors Hoping For Merger Bailout May Be Disappointed [View article]
    Thanks for the comments. LCC is up about 35% since I wrote this post, but I would still argue that my thesis was correct. LCC dropped after the initial merger announcement, and indeed since Dec. 2 (when this piece was published) DAL is up about 75% and UAL is up 65%. So what's happened is simply that the valuation of the entire industry has gone up.

    I've been bullish on airlines for two years, and have been long at least one airline stock for that entire period of time (and I went long LCC back when it was sub $5, but took profits too early; don't see how I could have an "inherent bias" against the stock). I am surprised at how fast sentiment has changed on airlines; I think some of the lower performing airlines (United and possibly also the new American) are due for a correction. On the other hand, I think Delta may have a little more room to go.

    P.S. As mitchad1 said, I'm writing for Motley Fool now, but I still do check comments here from time to time.
    Mar 22 07:39 PM | Likes Like |Link to Comment
  • The Effect Of A Netflix Price Hike [View article]
    Interesting article. There are two bigger picture issues that I think you are missing. First: what would be the effect on growth of raising the price to $9.99. There are plenty of people who expect the NFLX domestic subscriber base to increase at a CAGR of 15%-20% over the next five years. If raising the prices reduces that to 10% or less, then you are boosting today's profit at the expense of tomorrow.

    Second, while content costs are not related to subscriber numbers in the short term, I don't think that's the case in the long term. This whole internet VOD market is new, and so nobody really knows how much content is really worth. With Amazon Prime growing at an astronomical rate and other competitors entering the market, I think we will naturally see an upward bias on content prices. If NFLX is earning hefty streaming margins in a year or two because of a price hike, content owners will raise their ask when the rights come up for renewal.
    Mar 3 11:11 AM | 1 Like Like |Link to Comment
  • J.C. Penney Store Leaders Give Positive Feedback On Q4 Sales [View article]
    Are you serious? Every quarter, Ron Johnson has talked about "learnings", positive momentum, sales trends improving, and it's been one horrible result after another.

    Just to break even, J.C. Penney needs sales growth off almost 30% (holding gross margin constant), or gross margin growth of 870 basis points (holding revenue constant). Thus, there will be another big loss this year, and J.C. Penney is running out of tricks to boost its cash (and cash is really $850 million because the company deferred payment to some of its vendors until after the quarter ended).

    Bottom line: we will probably see some sort of mezzanine financing or new stock issuance this year, because the cash will be gone and you can't realistically make long term investments by borrowing against a revolving credit line.
    Feb 27 08:48 PM | 2 Likes Like |Link to Comment
  • J.C. Penney Store Leaders Give Positive Feedback On Q4 Sales [View article]
    And today we see the problem with relying on anecdotal data for estimates: particularly when it comes from people who are probably trying to save their own jobs. Same store sales down more than 30%, gross margin of 23.8%, and a bigger adjusted loss than in the first three quarters combined.

    I think it's finally time to break out the B word (bankruptcy).
    Feb 27 04:47 PM | 2 Likes Like |Link to Comment
  • Nvidia's Apple Win May Disrupt Traditional Seasonality [View article]
    It's obviously good for NVDA if Apple buys higher-end GPUs, as it will have a higher profit per unit. The mix will depend on customer preference; the 21.5" iMac starts with the 640M and the 27" iMac starts with the 660M.

    However, my point was more geared to the gross margin as a percentage of sales. While the high-end products would normally be high margin, OEMs always get favorable pricing. I think Apple could get VERY favorable pricing based on the volumes it will order. We'll see where gross margin goes this quarter and next, and that should provide a good sense of whether Apple is getting a big discount.
    Feb 5 04:48 PM | 1 Like Like |Link to Comment
  • Nvidia's Apple Win May Disrupt Traditional Seasonality [View article]
    Thanks for the article. I wonder just how high margin the Apple sales are. Apple will certainly pay for quality, but I don't think it would overpay. With Apple buying more than 5 million GPUs, I wouldn't be very surprised if the gross margin gets pushed down to something like 30%.

    Also, you have to remember that Nvidia's Q4 probably covers Apple's December-February production. That lines up more with Apple's Q2 than Q1. So I'm not sure Apple's seasonality would show up in NVDA's results.
    Feb 5 09:21 AM | Likes Like |Link to Comment
  • Amazon Buyers: Did You Read The Report? [View article]
    I agree that it was a bad earnings report. That said, the EPS miss was due to a heavy tax rate due to some non-deductible losses. Operating income beat expectations/guidance. Wall Street is cheering because this is the first tangible evidence that Amazon can grow its gross and operating margins as it comes out of the current investment cycle.

    Also, it's not quite fair to compare capex to sales or fulfillment to sales, because Amazon is seeing a mix shift towards third-party sales, which are low revenue but 100% gross margin.
    Jan 30 10:46 AM | 1 Like Like |Link to Comment
  • Nvidia's Upcoming Earnings: What You Need To Know [View article]
    The question is: at what price point? It may be that an i7 (or whatever it is called) can replace a discrete GPU for most gamers, but that an i3 + discrete GPU is cheaper and provides better gaming performance. NVDA's management has said as much in the past (referring to the company's success in China).
    Jan 27 03:29 PM | Likes Like |Link to Comment
  • Netflix Rebuilding Its House Of Cards [View article]
    Of course the percentage is not the key. My point is that the absolute growth rate will slow down. It's already dropped from 9.6 million at the peak to 5.5 million. Next year it will probably drop below 5 million, the year after below 4 million.

    Netflix doesn't report churn any more, but it's clearly pretty significant. The larger the subscriber base, the more customers will leave every month, making it harder to generate high growth. With new competitors jumping in, and existing ones (i.e. Amazon) rapidly growing their offerings, I think Netflix's domestic streaming business will reach market saturation in the 40-45 million range.
    Jan 27 02:21 PM | 1 Like Like |Link to Comment
  • Netflix Rebuilding Its House Of Cards [View article]
    I should clarify that statement; I was referring to domestic streaming growth (as I discussed through the rest of the article). NFLX added about 5.5 million domestic streaming subscribers. That's 25% growth. I've seen a couple of estimates for 6 million domestic streaming adds this year, but consensus seems to be for 4-5 million. Next year growth will drop off again; it's not because of anything Netflix is doing wrong, just that there are more competitors and Netflix is getting closer to market saturation.

    If you look back at the four quarters prior to the mid-2011 price increase, Netflix added 9.6 million domestic subscribers. So growth has already dropped off dramatically.

    I think international growth will remain rapid, and is likely to surpass the domestic business eventually. However, I think profitability will be lower because of the additional complexity of operating in many different markets.
    Jan 26 03:12 PM | 1 Like Like |Link to Comment
  • Netflix Rebuilding Its House Of Cards [View article]
    You can't really be sure in real time. In a few weeks, we will find out the short count as of 1/31.

    However, about 45 million shares have traded hands since the earnings report (roughly triple the number of shares short). Many of those will be high frequency traders, but that level of volume has given shorts an opportunity to get out (albeit at a big loss).
    Jan 26 12:29 PM | Likes Like |Link to Comment
  • Netflix Rebuilding Its House Of Cards [View article]
    It's certainly possible. Once the market has gotten foolish about a stock, there's nothing stopping it from becoming even crazier. However, I think the fact that NFLX burned investors less than two years ago will keep it well below those highs.

    Also, I should note that NFLX was much more profitable in 2011 than it is today. In summer 2011, the company seemed to be on pace for EPS of $5. By contrast, most 2013 projections put EPS in the $1-$2 range.
    Jan 26 12:21 PM | Likes Like |Link to Comment
  • Netflix Rebuilding Its House Of Cards [View article]
    Not entirely, but you'd expect high volume regardless on a stock with this kind of momentum.
    Jan 26 08:43 AM | Likes Like |Link to Comment
  • Netflix Rebuilding Its House Of Cards [View article]
    Domestic streaming margin is improving. But it'll never get up to the 40%+ GM we've seen for DVD.

    Today's probably the end of the short squeeze, just because of the sheer volume that's changing hands. More than half of the float has traded today (and that's after 1/3 of the float traded yesterday).
    Jan 25 03:39 PM | Likes Like |Link to Comment
COMMENTS STATS
1,436 Comments
767 Likes