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Afam Edozie

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  • Roadrunner Transportation Systems: Further Upside Ahead [View article]
    I've been looking at Road Runner this evening as a possible long. But have my doubts.

    Technically it looks good, but

    fundamentally i) it is a roll up and most of its balance sheet is goodwill, ii) debt is high once you consider that all of the shareholder equity is goodwill, iii) organic growth is just 8% and slowing, iv) value is not compelling (I value it at about $30 based on 12% discount rate, 15% top line growth per annum over next 5 years, and an expansion of margins by about 4% from 31% current to 35% over the next five years. And operational costs growing at around the same level as over the past few quarters).

    Though animal instincts might take it higher, it does not appear to be fundamentally attractive at his price.
    Jun 9 04:21 PM | Likes Like |Link to Comment
  • Workday: Resist The Urge To Short This Stock [View article]
    Most investors have difficulty valuing extreme high growth/pre profit companies. The critical factor is not the growth, but how long is the growth runway.

    Add to that the recency bias and momentum effect it becomes even more difficult to forecast the future price.

    Most successful short sellers succeed by using technical analysis to support their fundamental theories about value and prices.

    WDAY is now showing technical weakness but is far from dead.
    Jun 3 12:13 PM | Likes Like |Link to Comment
  • Jim Chanos Is Shorting Seagate, Should You? [View article]
    At the end of the day you can look too closely at the detail. The 20% that drives 80% of its valuation is the direction of PC sales going forward.

    If your right or wrong on that then everything else is irrelevant. And fact is for now, no one knows, whether we are seeing a lengthening of the upgrade cycle as a result of competing form factors or a permanent reversal in the absolute usage of PCs. Steve Balmer doesn't know, Michael Dell doesn't know (though of course they are preparing for every likely scenario).

    Call me when STX breaks below $38 and then shows weakness, then it will be time to short. In this business it is better to be late than to be early. Even thought they can both kill you.
    May 30 12:02 PM | Likes Like |Link to Comment
  • iRobot: Good Prospects For The Price To Double [View article]
    Difficult to value the military business (not really sure it has a competitive advantage their, can't tell how demand will grow, though the Brazil order is great).

    Consumer business did not do as well as expected over past couple of quarters and i reduced my valuation of that to about $32 to $34.

    Price is at fair value + military business. I've had a good double. Taking the easy profits off the table is the way for me.

    There are a lot of other beauties trading below value. I love low risk high reward opportunities. BIDU is my new darling
    May 25 01:42 PM | Likes Like |Link to Comment
  • iRobot: Good Prospects For The Price To Double [View article]
    Sold half my IRBT at $34 last week. Lets see how it goes from here.
    May 21 07:14 PM | Likes Like |Link to Comment
  • TTM Technologies Will Benefit As Global Electronics Industry Recovers [View article]
    I think this bottomed around $6.50. At $8.00 seems to now represent excellent value. Should be trading at 1 x sales or 2 x book ($12 to $14) within 3 to 4 months. Will go long today or tomorrow.
    May 16 08:09 AM | Likes Like |Link to Comment
  • Audience Trading At Cash Value [View article]
    Sold half of my double position at 15 (half bought at 18 and half bought at 6), I still see the value closer to 30, but for some reason ADNC has always sold at a hefty discount.

    These results were good (particularly given the loss of Apple) but revenue growth is decelerating

    Q2 (Jun) 2012 $33m
    Q3 (sep) 2012 $41m (+$21m) (+105%)
    Q4 (dec) 2012 $39m (+$21m) (+117%)
    Q1 (Mar) 2013 $47m (+$16m) (+52%)
    Q2 (Jun) 2013 $44.5m (+12m) (+30%) (guidance)
    May 3 08:52 AM | Likes Like |Link to Comment
  • Beaten Down Logitech Has Significant Upside Potential [View article]
    Trading at EV/EBITDA of 8.7, forward PE 40.

    Given uncertainty around its future price is fair. I would wait for a turnaround. Time is the enemy when you own a bad business (market outlook: poor; competitive advantage weak, growth: weak; earnings quality: poor).
    May 1 04:13 PM | 1 Like Like |Link to Comment
  • Baidu: Disturbing Growth Slowdown [View article]
    Sorry revenue growth is slowing

    Q2 2012 - CNY +3,020 (124%),
    Q3 2012 - CNY +2,836 (83%)
    Q4 2012 - CNY +2,160 (52%)
    Q1 2013 - CNY +1,705 (40%)

    It is not just decelerating on a percentage basis, but also on a quantum basis.

    Stone Fox has made a lot of good calls, but on this O'Neil trader is right.
    Apr 28 04:03 PM | 2 Likes Like |Link to Comment
  • Apple $395: Time To Give Up And Abandon Ship? [View article]
    All depends on your investment system. People who bought when it was 10% or 20% undervalued, were too early. Depending on quality, once a company is 30% to 50% undervalued it is normally a great bet. And downside volatility becomes minimal.

    Trend following strategies like yours can also be a successful, though the issue remains that the beginning and ending of a trend are easy to spot only in hindsight, hence you tend to lose most on your entries and exits (false breakouts and retracements).

    Overall value investors have done better than trend followers with much lower volatility. This is because trendies enter on highs (such as breakouts) and exit on lows (breakdowns). Value investors generally enter on lows (though on a percentage of investments those lows get lower) and exit on highs.

    On a personal note, I combine a value approach with some technical analysis and I will be buying Apple (which in my mind is more than 30% undervalued) once the technicals confirm a bottom. There is no hurry, a bottom will take 3 to 7 weeks to form (and will most probably retest). Apple has been under distribution since February.
    Apr 24 06:23 AM | Likes Like |Link to Comment
  • EZCorp, Inc.: Like All Value Investing, Hidden In Plain Sight [View article]
    Good and comprehensive review.

    I'm long EZPW, but value it more in the $30 to $33 bracket. I guess we differ on discount rates. I wouldn't accept 7%, more like 11%.

    I tried to buy a bottom at $18.80, but got stopped out of much of my position and am now expecting a bottom closer to $16.00. Will try to add to my position if it gets there.

    What do you see as a catalyst for the share price recovery.

    What are your thoughts about the bear thesis - EZCorp's growth is mainly acquisition related and that there are likely impairments to the goodwill on the horizon and a decline in growth as fewer acquisition candidates are available (or they have to pay more to get them).
    Apr 23 01:03 PM | Likes Like |Link to Comment
  • Apple $395: Time To Give Up And Abandon Ship? [View article]
    Truth be told few people (if any) can tell for how long an undervalued security will stay undervalued.

    My experience is that 80% of undervalued securities are revalued within 3 years and 95% within 6 years. However, there are some well known and well respected companies (e.g BRK) that can remain undervalued for over 10 years.

    Whilst it is a fact that Apple is undervalued by any metric anyone can throw, it may well be back in favour before EOY (and it is certainly a bet worth taking) but it may not.
    Apr 23 07:55 AM | Likes Like |Link to Comment
  • Apple $395: Time To Give Up And Abandon Ship? [View article]
    Fortunately or unfortunately seeking alpha brings together a large number of market participants with vastly different investment/trading strategies.

    There are so many different ways to play Apple depending on strategy, skill, portfolio size and time horizon. Many of them will result in profitable calls others will lose money.

    Value investors: Apple in all probability is undervalued. Value investors are taking positions and will continue to buy as long as it remains undervalued (EV/EBTIDA is just 4). Regardless of whether it goes up or down after they buy.

    GARP investors will stay clear since growth is likely to be subdued over the next few years.

    Dividend investors should wait for a dividend increase or a clear dividend policy in which a percentage of its cash will be returned to shareholder in the form of buy backs or dividends. If the company decides to only keep enough cash required to support 25% RoE then their is plenty of cash available to distribute to shareholders.

    Speculators will take positions on anticipation of an increased dividend, or some other insight they have as to what will happen in the near future and how the market will react to it.

    Momentum traders/Trend followers will stay short until the trend has turned or until they have some signal that the current down trend is over. Personally I see many signs (rate of decline has slowed, accumulation has started).

    Chart readers/tape worms will be watching to see what type of consolidation base is being built around the $400 mark, what price range will be stablised over the next couple of weeks and reach a conclusion as to whether the breakout will be on the upside or downside and either buy in anticipation or wait for the breakout (or breakdown).

    Fact is for a stock that has run up from 100 to 700 in 3 years, a 30% to 50% retracement is quite normal and quite usual.
    Apr 21 04:43 AM | Likes Like |Link to Comment
  • Apple $395: Time To Give Up And Abandon Ship? [View article]
    Apples EV/EBITDA is just 4. Most people would gladly pay 7 for a company with half its prospects.

    Even if its margins decline 35% it will be selling at a cheap price of 6.

    I don't know how far down Apple will go, but I'm more than certain that it will go back an EV/EBITDA above 7.

    In the short run the market is a voting machine, in the long run a weighing machine.
    Apr 19 11:35 AM | 15 Likes Like |Link to Comment
  • Velti: A High-Growth, Low-Priced Winner? [View article]
    Today's news of a share issue is good news. Though it is unfortunate that management did not do this 3 months ago at a better price.

    The going concern issue is now removed.

    Theoretically (and a big theoretical here) shares should now be worth $1.66 (i.e. $1.70 closing for the existing shares plus $24 million of new money and 16.5 million new shares).

    In practice on one side a $1.50 'value' has been established and on the other side confidence will have been increased.

    The other good news is that needed management changes have made.

    It will be interesting to see how it trades for the rest of the week. And of course to see its results mid May (though I'm holding my breath for mid August results).
    Apr 19 08:50 AM | 1 Like Like |Link to Comment