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Akram's Razor

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  • Stay Away From ATP Oil And Gas [View article]
    headache stock....bought some after bp spill....then took a closer look and decided it was a fantastic short....shorted it....and then it took off again....looks like this is no place for equity holders....could be a zero
    Dec 30 04:24 PM | 2 Likes Like |Link to Comment
  • Why Investments In China Will Eventually Be Worthless [View article]
    interesting little convo between you two.....foreigners definitely not bringing the capital out here......labor needs to be imported....expats milk it...but they are not calling the shots
    Dec 30 04:14 PM | 1 Like Like |Link to Comment
  • Go With The Crowd And Short Netflix [View article]
    I don't argue with crazy netflix bulls anymore. You guys won a few battles, but you lost the war. Your general had a chance to do a massive equity offering and improve your position, instead he was too busy buying back stock and celebrating his greatness while lying publicaly to shareholders about just about everything he had in store to deal with rising content costs. If you can explain to me how a netflix with a disappointing sub growth and sky rocketing content costs can make money when one with a rapidly growing sub base couldnt make money off pure streaming even with content costs under control; we can resume the conversation.
    Dec 30 11:11 AM | 1 Like Like |Link to Comment
  • Go With The Crowd And Short Netflix [View article]
    the stock has gone sideways for two months....what year end sell off?
    Dec 30 10:53 AM | Likes Like |Link to Comment
  • Copper Producers Could Still Have Long Way To Fall [View article]
    High temperature superconductors
    Dec 30 10:48 AM | Likes Like |Link to Comment
  • Copper Producers Could Still Have Long Way To Fall [View article]
    Short copper is far more appealing than either of these two producers down here for a multitude of reasons. But I think even the producers will continue to work if copper unravels as I think it might. Of course, why bother with that risk. Short the physical and wait. Or at least go after some levered explorers if you want the equity bang for the buck.
    Dec 30 10:11 AM | Likes Like |Link to Comment
  • Go With The Crowd And Short Netflix [View article]
    When you are shorting business models you feel are broken the only concern you should have is that someone else might be willing to buy the company and integrate them into a broader strategy. So, understanding who can buy something and why they might be willing to overpay is very important. When i was shorting netflix at double and triple and quadruple this price I had what i felt was near zero takeover risk. Here it is much higher though I probably would want to do a deal for no more than 4billion if i was msft or amazon. So maybe once it hits 2billion you can start to stress.
    Dec 30 09:50 AM | Likes Like |Link to Comment
  • Jerry Jordan Positions For 2012: A Surprising Bet On Renewed Consumer Spending [View article]
    Nice, I like this topdown view. Not so sure about the bottom up picks, but your reasoning has me willing to take a look. My concern is US equity valuations on the consumer end are for the most part not very compelling unless its a broken company.
    Dec 30 09:38 AM | Likes Like |Link to Comment
  • Go With The Crowd And Short Netflix [View article]
    Some advice: Try to make a case when you are going to write something like this. Just telling me to short because well it seems to be broken and redbox offers $1 rentals doesn't really cut it. The company has told you they won't be profitable next year. So, if you are going to short here you better be of the view that they will disappoint on that guidance, and show signs that their international expansion was a bad idea at this point. Tell me why they will disappoint internationally, give me some thoughts on how the core dvd business will fair...will it erode faster than expected now that the post office is limiting next day delivery?....will they renew the starz deal for 1 yr? will they be forced to reexamine their pricing one more time? and at what price is netflix worth it for a suitor like msft that has global media ambitions and an xbox platform to integrate into?

    We are long past the point where a note like this cuts it on netflix. I suggest you challenge yourself and give us something more. I know it is a tempting stock to write about, but if you can't add to the debate here maybe you a better of spending your time finding a stock where you can.

    That being said you are probably right....netflix's problems will continue and the stock will fall from here...
    Dec 30 08:50 AM | 10 Likes Like |Link to Comment
  • Copper Producers Could Still Have Long Way To Fall [View article]
    Yes, it is all rhetoric. What you are not acknowledging is that price has moved to reflect that, and short term demand is now at serious risk, enough so to throw the long-term picture out of balance once again. What was the perception of long-term demand versus supply for nat gas after katrina? High temperature superconductors and more smart grids could really seriously upset your current demand assumptions to the point that the world is awash scrap copper. But thats not my focus for now. For now all i care about is how far price can fall once china demand slows and a giant stockpiling shadow financing ponzi scheme ends. When i feel that has run its course and everyone is talking about how copper demand is way below current supply and the price is at $2 or $1 i will reevaluate the long term picture. Till then I am happy to be short copper and anyone who needs current prices to hold to make money. And please get off the quality deposits are hard to find nonsense. Prices go up because of these bottlenecks. That leads to investment to find more copper or better technologies to extract it. Also, at the same time this leads to more scrapping and more stockpiling in anticipation of even higher prices. Eventually what was a shortage turns into an oversupply. That causes prices to fall and hoarders to sell, especially if they are using the hoarded copper as collateral for loans or even worse loans for more copper. This leads to less investment and less appetitie for hoarding and eventually when prices are low enough a natural stimulation of demand. Why people think this nonsense which has gone on forever will shift into some sort of indefinite deficit and permanent bull market is beyond me. There are always cycles. If you want to disregard the bust end of one because you think you will ride it out till the next boom begins thats fine. But i'm content analyzing the cycles, and my analysis tells me we are facing a nasty one especially if there are more people like you quoting long term demand stats as the worlds basically entire driver of marginal demand for copper experiences a slowdown. The market will test your pain threshold. When that is done I will be more than happy to step in again and take a look
    Dec 30 08:02 AM | 1 Like Like |Link to Comment
  • Copper Producers Could Still Have Long Way To Fall [View article]
    where to even begin with this........

    They are using copper because the trade finance is readily available, and then pledging it as collateral. They can do this because of the financialization. What banks are willing or not willing to finance is obviously very important for investors because that's what usually leads to wild price swings.

    To argue that it has indefinite limited supply relative to industrial demand is hogwash. Supply and Demand are always moving in and out of balance, and that is what causes price swings. What you are focused on is recent supply chain constraints which have boosted price. But these constraints are often alleviated by more investment and periods in which demand experiences temporary shocks as we are likely witnessing now in China. Then there is the element of technological innovation. HTS cables are 150 times more electrically conducive, don't lose energy, and are lighter. They will without a doubt replace copper cables. It is just a question of when. Now factor in that much like gold all copper ever mined still exists above ground. What will happen to the demand for mined copper when all these copper cables used for electrical grids flood the scrap market? You don't need to be a genius to figure that out.

    As for your comment on gold being a good investment or not, again this is about price and cycles and not static. Booms go Bust. It is inevitable. I was bullish on gold, silver, henry hub, and copper for several years. Doesn't mean i can't change my mind based on new developments. Henry hub was broken by a new technological innovation boosting short-term supply. Gold will eventually succumb to the effects of having too many financial speculators hoarding the metal in anticipation of financial armageddon. Copper had the China boom behind it which then attracted a lot more financial speculators. Now that the china boom is hitting a bump it faces major risk, and odds are right about the time that it is set to boom again it will have structural challenges due to a technological transition to HTS cables. The more things change, the more they stay the same. There will always be cycles and there will always be innovation.

    You're NOT thinking at all on this one.
    Dec 30 03:48 AM | 1 Like Like |Link to Comment
  • Copper Producers Could Still Have Long Way To Fall [View article]
    "Current estimates show projected copper supply for 2012 will be well short of expected demand"

    If you make statements like that you are an in the box investor. In 2008, I could have handed you 25 reports that projected Dubai's real estate market would remain under supplied until at least 2012. Reality was it was already wildly oversupplied because demand was being driven by financial players, and inventory was being held back based on expected further price increases. In shipping, we were inundated with reports that the market would be undersupplied for the next 5 years in 2007 when in fact it became wildly oversupplied and has only gotten worse. And dont get me started on natural gas which was supposed to be imported via LNG tankers into the US but now is more likely to be exported. Or how about solar panel cells another classic example of something with an expected shortages turning into drastic oversupply.


    Copper consumption is not the same thing as copper demand. This market is dominated by financial players, and thus financial demand. And it has been even worse of late with chinese using copper as cash collateral to get around bank tightening. When copper is stockpiled in warehouses simply to obtain credit that is not good news. When production is ramped to meet that demand that is even worse news. And when the consumers of actual copper start to adjust to these price increases by optimizing copper usage or entirely substituting copper out wherever they can that my friend is major problem if you are simply another price bull buying into producer reports about how the market is wildly undersupplied. How much 'real' copper demand has been lost in the last five years due to industrial substitution? Some put the estimate as high as 2-3mm tonnes. How much will be lost going forward due to technological innovations? Commercial introduction of High temperature superconductors in China?

    Copper actually is facing a perfect storm. Real copper demand at the margin is about to take a hit because of the real estate mess in china. Which means that copper demand from bonded warehouses is going to literally disappear. Most of the copper in warehouses was being stockpiled by developers seeking access to more real estate market related credit. If the value of this collateral falls they will be under pressure to dump copper. When this starts happening speculators who have been hoarding copper based on this demand start dumping too. All this dumping occurring at once leads to a massive decline in price. In fact, it could be worse than 2008 when it unravels because of the financing scheme going on and most likely pyramiding of copper that was taking place.

    So, please spare me the price wont fall because 'current estimates' forecast demand to exceed supply. You can write all you want about copper, but if that one faulty assumption is underpinning your entire argument then its the only thing that matters. In reality, the question you should be asking yourself is how oversupplied the market is at this point. See this is the problem with financial players getting involved....they really distort the picture for everyone on the ground.
    Dec 30 01:59 AM | 2 Likes Like |Link to Comment
  • Copper Producers Could Still Have Long Way To Fall [View article]
    Think outside the box just a little. Copper prices will fall significantly from here.
    Dec 29 03:59 PM | Likes Like |Link to Comment
  • Copper Producers Could Still Have Long Way To Fall [View article]
    Nice work!
    Dec 29 09:09 AM | 3 Likes Like |Link to Comment
  • Edward Maran And Connor Browne Position For 2012: The Value Proposition For Equities Is The Best It's Been In Decades [View article]
    What a weak interview. These guys are not rigorous thinkers. They give you the same boilerplate responses every other generic manager gives. Financials undervalued, equities underowned, volatility weighing us down, europe will get resolved because things get resolved, equity yield spread to treasury yield spread extremely appealing, and dont worry about deflation.

    First, I will be clear that for the first time in six years I actually see some potential in being long financials, but that is more about relative value than genuine excitement about their future business prospects. The risk that rates will not only stay low, but actually head lower is still my base case. Another duo who looks at japan and 20 years of misery for financial stock owners and just assumes its impossible even though the data would seem to indicate it is precisely what is happening.

    2."Numerous countries have proven that economic weakness will not prevent inflation in the face of large budget deficits that are financed by expanding the money supply." Seems you are quoting a textbook, plenty of evidence to the contrary.

    3. The value proposition argument on equities versus treasuries is crap. When treasuries where the most attractive and offering 20% return was precisely the time you were supposed to dump them and go buy far lower yielding stocks. That trade continued for 20 years. Looking at yields now all I see is clear evidence that with each passing day investors realize that growth is not what it used to be and that income and capital preservation for most in the savings demographic is now much more important.

    4) US steel is exactly the type of company I have been short or avoiding for the past six months. I expect the waters for a company like this to remain very rough over the next year.

    5)Europe- Offer some insight into what will happen and why instead of just saying now that things will work out in the next year or two so buy. Getting tired of this laziness.
    Dec 29 02:13 AM | 4 Likes Like |Link to Comment
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