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Afam Edozie  

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  • Qihoo Resignations: Trouble Brewing? [View article]
    Outsiders know very little about any company, particularly when a majority of the outside investors are from a different country and are not in the social and business network of the company.

    I would agree with the author's comments that the resignation of two directors is an event worthy of caution and closer scrutiny. Particularly given that it was the independent directors.
    Feb 16, 2014. 10:51 AM | Likes Like |Link to Comment
  • Buy The Rip: Valeant Pharmaceuticals [View article]
    You may be right. I confess that I haven't spent much more time than was required to go through its last annual and quarterly reports before moving on.

    My mind goes back to Hanson Trust and other acquisition related vehicles that achieve high growth through acquisition, the market mistakes the high growth and gives it a higher multiple, which enables it to continue acquiring with its over valued paper.

    The problem is that in order to keep the growth and multiple, it needs to make bigger and bigger acquisitions (to be meaningful to the enlarging P&L), of course this tends to petter out after 7 to 10 years, because there are no bigger fish to catch (along with a +60% drop in the share price or even bankruptcy in the case of excessive leverage).

    In the 80s and 90s Hanson was also a darling of both growth and value investors and Lord Hanson (well depicted in the movie Wall Street) was perceived to be a genius (who knows he probably was).

    The bottom line is that every serial acquirer needs to have a higher multiple in order to keep growing, and their PR is always out to spin something to say that this time its different and that when our company A trading at a multiple of 16 acquires company B at a multiple of 12, the combined entity should have a multiple of 16 or more. Because of the value being created by our brilliant management (in this case side stepping R&D expenditure).

    And because it is so difficult and time consuming to properly analyse serial acquirers (if at all possible) most investors accept the story once they are sufficiently titillated by the growth.
    Feb 14, 2014. 09:25 AM | 1 Like Like |Link to Comment
  • Buy The Rip: Valeant Pharmaceuticals [View article]
    1. Great top line growth (though almost all acquisition related)
    2. Declining gross margins
    3. High Debt: $17 billion of debt on best case $2.1 bn of proforma earnings (actual earnings is negative).
    4. Weak balance sheet: $28bn total assets of which $23 billion is intangible or goodwill.
    5. High valuation: 16.5 times proforma earnings (actual earnings are negative); 9.5 times book (and a book that is very leveraged and very dependent on goodwill and intangibles who's value is very difficult to know, at that), 9.5 times revenue

    His strategy is brilliant: Focus on acquiring? Please! I'm not saying it can't work for awhile, but I would hardly call it brilliant.

    I'm not saying that Valeant won't go higher, I am saying that its current pricing totally ignores the balance sheet risk and deteriorating competitive position.
    Feb 14, 2014. 08:26 AM | 1 Like Like |Link to Comment
  • Google Missed: Where's The Outrage? [View article]
    I would agree that creating a further class of shares without voting rights smacks of bad corporate governance and increases the cultural risk around the company.

    In addition it very much exposes the mentality of the owners - this is our company because we founded it and even though we want to cash out (eat it) we still want to have it.

    That said Berkshire shareholders have not done badly in a similar type of structure - though in all fairness Buffet set up the structure for different reasons.
    Feb 5, 2014. 02:59 AM | Likes Like |Link to Comment
  • Google Missed: Where's The Outrage? [View article]
    The problem is not that Google is not trading on its fundamentals. The problem is that many investors don't understand the fundamentals. An earnings miss or beat is not the fundamentals.

    The fundamentals are that Google is the leader in Internet search, it is also the leader in smartphone operating systems. Both markets are still growing fast, and Google itself is growing with those markets at over 30% per annum and has many more years of double digit growth to look ahead to. And at least for now it is retaining its leadership position.

    The fundamentals are also that it is delivering 13% return on assets, whereas over half of those assets are idle cash.

    In summary it is posed to double its business within 3 years with no additional capital required from its owners or lenders.

    What is that worth? 30 times current earnings / 20 times forward earnings? I think the valuation is very reasonable.

    Where is the outrage? Give me a break!
    Feb 3, 2014. 09:15 AM | 2 Likes Like |Link to Comment
  • YY: Future Growth Underestimated [View article]
    Good article, YY has been acting great since it broke out in the new year. I also think it is still undervalued.

    It does remain very volatile (as today's action demonstrates) and is still a target of short and distort artists.
    Jan 21, 2014. 12:17 PM | Likes Like |Link to Comment
  • Kenya, Ivory Coast, Nigeria, And Ghana: The African KINGs [View article]
    You would struggle to avoid companies doing business in Africa. P&G, Unilever, Coca Cola, ExxonMobil, Citibank, Samsung, HP, etc., etc.,

    There are countries with high levels of HIV in Africa and also countries with low levels (though on average HIV levels have been dropping over the past 10 years), there are countries with famine and countries with plenty (though on average African agricultural output is up more than 60% over the past decade), as for hate, stealing, and unfair people you might as well migrate to the moon.

    Poor governance remains a real problem, but the investment thesis for Africa is the improvements in governance achieved over the past 10 years and the expectation that the trend will not reverse. And certainly that is one of the contributors to strong growth over the decade.

    Jim O'Neil (Retiring Chair of Goldman Sachs Asset Management), who was one of the first people to point out the emergence of China and India (and invent the acronym BRICs), has recently pointed to Nigeria as a likely power house economy by the 2020s (along with the other MINTs he has coined - Mexico, Indonesia, Nigeria, Turkey), given the direction of policy reform, GDP growth and population growth. In investing you win by going to where the puck is going to be.
    Jan 21, 2014. 11:16 AM | 3 Likes Like |Link to Comment
  • Kenya, Ivory Coast, Nigeria, And Ghana: The African KINGs [View article]
    Stock market data table. Top 5 stocks table under Nigeria. NB is described as a bank. Anyway small point in a great article.

    Hope to read more from you in the future.
    Jan 20, 2014. 04:33 PM | Likes Like |Link to Comment
  • ModernGraham Valuation Of Electronic Arts Inc. [View article]
    Zacks uses number of earnings surprises to rate stocks. It is only for the wise;-)
    Jan 20, 2014. 04:01 PM | Likes Like |Link to Comment
  • Kenya, Ivory Coast, Nigeria, And Ghana: The African KINGs [View article]
    Great article, well researched well done for shining light on an under exposed part of the investment universe.

    Two minor corrections. NB (formerly Nigerian Breweries) is a brewery with controlling equity owned by Heineken out of Germany and not a bank.

    Nigeria did not have a banking crisis in 2004, but in 2008. In 2004 the policy makers took the view that Nigeria had too many small banks (about 96 at the time) and forced most of them to merge or shut down, by increasing the capitalisation required to keep their banking licenses.

    It is also worth commenting that Nigeria accounts for over 70% of the GDP of the KINGs.

    The real killer as you mentioned on African exchanges is liquidity and transaction costs. We have long term positions in Nigeria, Kenya and Ghana.

    You can get coverage of individual African stocks on
    Jan 20, 2014. 03:46 PM | 2 Likes Like |Link to Comment
  • Apple Screwed Up Big Time [View article]
    Writing here from your third world, I don't see the second hand Apple's you are talking about. Android is King over here by a wide margin
    Jan 20, 2014. 08:43 AM | Likes Like |Link to Comment
  • NQ Mobile: App Stores Download Data & Evidence Of Partnerships [View instapost]
    Good article and thorough research.

    Given the controversy around MW's report on NQ and the allegations that their market share numbers are fictitious and that their products are malware, I must say shame on Seeking Alpha for not publishing this article.

    The research is not available elsewhere and in my opinion offers a more objective view than the MW report which they did find fit to publish. It is of a much higher standard than the two subsequent articles on NQ from MW published by SA.
    Jan 15, 2014. 12:26 PM | 2 Likes Like |Link to Comment
  • Apple's A8 -- What It Will Be And Why It Matters [View article]
    Well said. And the Google model in my opinion will ultimately triumph.

    To a large extent Microsoft/Intel distorted the hardware/software evolution over the past ten to twenty years. As the monopoly has been broken along with the cycle of bloated software eating up increased performance, we are back on the curve of falling prices.

    Android phones are already at the $60 price points (at least in emerging markets) and those points will be closer to $20 within the next five to six years.

    Trying to make money selling hardware and OS software will become increasingly challenging. After all is said and done devices and OSes are commodities. Increased competition with html 5 and subsequent versions (vs. the OS), and faster internet connections, will only make this more so.

    Better to try to monetise the user than monetise the device or its software.
    Jan 11, 2014. 02:26 AM | 3 Likes Like |Link to Comment
  • How To Save The Euro [View article]
    Housing prices and rents have dropped in Spain and in Greece (and I'm sure in other periphery countries) I see no reason that wages will not follow over time (though admittedly it does take longer for labour prices to adjust compared to asset prices) and the periphery will gradually recover its competitiveness.

    Reform of tax collection, education and work attitudes will also go some way to improve competitiveness. And I think over the long term can have a much greater impact than any financial engineering.
    Jan 8, 2014. 09:19 AM | 1 Like Like |Link to Comment
  • YY: Do You Know What You Own? [View article]
    The SEC did not look into Bernie Madoff after having received several credible warnings with evidence. Why would you think they would look into YY.
    Jan 6, 2014. 03:51 PM | Likes Like |Link to Comment