Seeking Alpha

Bachar Samawi

 
View as an RSS Feed
View Bachar Samawi's Comments BY TICKER:
Latest  |  Highest rated
  • Is The Greek Bailout Good News For Google? [View article]
    Megan it would probably be wiser to wait for a pull-back, or possibly a confirmation that their previous earnings miss will not repeat. Although in the immediate short term it does seem that the Greek bailout is good news, there are still a lot of issues in Europe, and as the article suggested, Europe has merely swept its problems below the carpet for now... What would matter more for Google is product diversification, mitigation techniques for their currency exposure, and a pickup in advertising budgets; we still have not seen confirmation of these....
    Feb 21 11:52 AM | Likes Like |Link to Comment
  • A Second Look At Long-Term Favorite Stocks As The Market Spikes [View article]
    Great returns since 8/19/11 and current high RSI certainly should make many of us pause and ponder... This is where it makes sense to be very selective in deciding which long positions to maintain; it is not a bad idea to take profits on stocks that have overextended themselves on momentum, and that have noticeably expanded their forward P/E ratios....
    Feb 21 09:58 AM | 1 Like Like |Link to Comment
  • My New 'Moronic' Downside For Apple [View article]
    At the end of the day, as Apple has not distributed any of its profits, its cash is a proxy for its profitability (earnings) to date. Looking forward, Apple is expected to earn about $42 in 2012.

    In 2011, earning expectations were about 20% below actual earnings. If apple beats expectations by 10% instead of 20% for 2012, its earnings would be about $46.20 . If we use 11 x P/E multiple, plus its cash at end of 2012, that would provide a price of over $620/share.

    Add A- momentum, B- low interest rates, C- possible dividend to attract value investors, D- possible stock split, the stock can easily tag on an additional 20% to $750/share.

    It is for this reason that Apple can accelerate very quickly to at least $600/share (in a matter of days or weeks), as it would still have potential for another 25% appreciation from that level onward.
    Feb 16 02:59 PM | 1 Like Like |Link to Comment
  • LinkedIn Climbs Back Up To $90: Why It's Time To Short Again [View article]
    Sorry I skipped a lot of the steps:

    during next 3 years, lnkd can possibly add 50+40+30 Million users =120Million in addition to the current 150, that nets 270Million

    I stated they can achieve in excess of $10 in revenue per member due to the nature of their business. Assuming $20 (and it can actually be even higher...) x 270MM members, that provides about $5.4Billion in revenues. Assuming 30% margin, that provides $1.8Billion in net revenues (where I said "over $1.5 Billion)

    The key is for them to run their business effciently in order to do 3 things: increase subscribers, generate required revenues per member, and maintain a good margin.

    Although there are a lot of "ifs", this is actually quite achievable, as any shortcoming in any of the 3 metrics can also possibly be made-up for in the other 2. In addition, 10P/E I used is also conservative...The bottom line is that it is too dangerous to short lnkd....
    Feb 13 02:54 PM | Likes Like |Link to Comment
  • LinkedIn Climbs Back Up To $90: Why It's Time To Short Again [View article]
    The most important factor at this time is the number of Linked In members and the potential revenues that can derived from each one. They now have over 150 Million members, and are adding around 1 Million new member per week.

    If Linked In manages its business well, they should be able to derrive no less than $5 to $10 in revenues per member. As they network "professionals", such revenue per member can be even higher. Taking potential future growth in members into consideration, It does not take much math to realize that they can easily reach total net revenues per year in excess of $1.5 Billion, which at 10 P/E would provide a market cap of over $15 Billion, which means a stock price in excessof 150.

    Given such growth potential, as well as room for margin improvements, as well as the already large short interest out there, it is extremely dangerous to short Linked in at these levels. I would not start to think shorting it until it reaches about $200 per share....

    I am long calls on Linked In.
    Feb 13 03:37 AM | 1 Like Like |Link to Comment
  • Starbucks: More Risk Than Reward Following Q1 Earnings [View article]
    Going into the earning report, a straddle position was preferrable in case SBUX delivered an unexpected upside surprise. As it turned out, following the results, I did convert the position into a naked put position at the open and at the close.

    We saw a rare divergence between the Dollar and the Dow, which I believe was due to shorts covering short Euro positions ahead of the weekend. However, I believe that no matter what the Greece update is, the Euro will resume its decline next week, and firms with international exposure, such as SBUX, may come under pressure again.
    Jan 28 09:11 AM | Likes Like |Link to Comment
  • Starbucks: More Risk Than Reward Following Q1 Earnings [View article]
    There are three additional real risk factors: margins are declining, the dollar is rising and the world economy is slowing.

    The majority of new store openings for SBUX took place in Asia, where in the last few weeks we saw substantial signs of economic slowdown. Today, Japan even announced that deflation continues, along with a declining economy.

    In addition, European economies are also struggling. U.S. economy also seems to be taking a break; the latest housing number is weak, and the past employment data may be overstating economic strength due to seasonal adjustment factors. The fed agrees,otherwise it would not say it is holding rates at extremely low levels through 2014 (another 3 years).

    It usually does not happen immediately, but sooner or later, consumers will ease on discretionary gourmet coffee. SBUX most likely already knows that, and that is why they are expanding into alcohol; some would even argue that when jobs are scarce, people are more likely to drink alcohol than coffee....

    However, as Starbucks main current business is coffee, given SBUX high current P/E ratio, declining margins, slowing economies, rising dollar (hence lower international dollar denominated sales) and commodity risks, there is definitely risk to the downside.

    I am long SBUX straddles.
    Jan 27 04:17 AM | 2 Likes Like |Link to Comment
  • Netflix Report Not As Rosy As It Seems [View article]
    This is a very good in-depth article.

    However, its basis for the non-rosy picture is the loss of DVD business. At the end of the day, such loss was inevitable; there will come one day where not a single DVD will be sold, and all will be downloaded. Blockbuster did not brace innovation, tried desperately to stick to its core business and defend it, and at the end of the day, it went out of business

    Great stats and great article, but I do not share your conclusion; it is much more important to grow the download business, as opposed to concentrate on DVDs. Hence, NFLX did the right thing by making sure it is lowering the download fees by segragating the two services. As for their customer base, they now have more customers than ever, despite the drop during last quarter. Room for international growth is absolutely phenomenal.

    When NFLX was trading over $200 in August, I wrote an article in favor of buying January straddles in expectations of a move in excess of $30 (to cover the cost of the straddles) in either direction. That move came, and amounted to over $150.... Now, I feel NFLX's potential for growth in the download arena is huge, and does not justify selling NFLX. It is much morelikely that NFLX will see $180 again ($70 up from 110) before seeing $40 ($70 down from 110)
    Jan 26 03:37 AM | 2 Likes Like |Link to Comment
  • Google's Miss May Present An Opportunity For Investors [View article]
    If it walks like a duck, sounds like a duck, then it is a duck....

    Google missed its earnings by $1. That is huge. Its earnings for the 4th quarter ($9.5) turned out to be even less than market expectations for Q1 2012 ($10), let alone Q4 2011 ($10.5).

    Furthermore, unlike Apple, there is no new major product being released in Q1 2012.

    As for FX changes, given the dire state of Euro economies, then there is even more reason to be concerned, as the Euro can certainly drop further, and European demand can certainly slump further as even Germany seems to be heading to a possible recession.

    Analysts will soon start revising their earning estimates for Q1 2012. The bottom line is as follows: Q4 2011 vs. Q4 2010 growth was under 9% ($9.5 vs $8.75). Obviously, Goog PE ratio of about 20 is overdone. Such PE ratio should drop by over 10% to under 18, translating to no less than 58 points drop in Goog price. In addition, the earnings miss should translate to no less than 50 points drop. That's a total of 108 points, which from Thursday close, will mean a price of under $530. As momentum builds on the way down, it would not be surprising for it to overshoot on the downside to under $450.

    Remember, it is only a few weeks ago in November, that Goog was trading at around 560, when Q4 earning expectations were $10.50 . From a Macro perspective, matters got worse for Europe, as Germany slips. Meanwhile, for Goog itself, its earnings have also gotten worse. Yet, despite Friday's sellof, Goog is trading above those Nov. lows..... Goog should be worth a lot less today than it did in November...
    Jan 21 02:45 PM | Likes Like |Link to Comment
  • Research In Motion: Buyers Beware [View article]
    Once again,

    Consider the following:

    RIMM has about $1.5 Billion in cash, cash equivalent, short term & long term investment

    In addition, Account Receivables plus Payables plus other current assets convertible into cash plus other cash defferrals (on the asset & liability side) add up to an additional over $1.1Billion

    Hence, that is a total of $2.6 Billion which translates to about $5.13 per share (excluding inventories, goodwill, property, etc....)

    Given your short price of $13.78, if we subtract the above, it will become $8.65

    Now, after revised lowered earning expectations for the next 5 quarters, assume RIMM earns $3/share only in total for the 5 quarters (an extremely pessimistic scenario)

    Subtract that again, and you are left with a short price of about $5.65

    Now consider 75 Million subscribers that RIMM has. Forget all the other assets, property, equipment, goodwill, brand, inventories, etc.... The above price of $5.65/share translates to about $39.50 per subscriber.

    Do you really want to short a company with 75 Million subscribers for an adjusted price of about $39.5 per subscriber, that is still generating positive cash flow, and still has some additional recoverable value in property, inventory, goodwill, etc...

    Just to give you an idea, many companies trade at a value of $300 to several thousand dollars per subscriber....
    Dec 22 10:03 AM | 3 Likes Like |Link to Comment
  • Short Portfolio Update: Covering Amazon, Shorting Research In Motion [View article]
    Consider the following:

    RIMM has about $1.5 Billion in cash, cash equivalent, short term & long term investment

    In addition, Account Receivables plus Payables plus other current assets convertible into cash plus other cash defferrals (on the asset & liability side) add up to an additional over $1.1Billion

    Hence, that is a total of $2.6 Billion which translates to about $5.13 per share (excluding inventories, goodwill, property, etc....)

    Given your short price of $13.78, if we subtract the above, it will become $8.65

    Now, after revised lowered earning expectations for the next 5 quarters, assume RIMM earns $3/share only in total for the 5 quarters (an extremely pessimistic scenario)

    Subtract that again, and you are left with a short price of about $5.65

    Now consider 75 Million subscribers that RIMM has. Forget all the other assets, property, equipment, goodwill, brand, inventories, etc.... The above price of $5.65/share translates to about $39.50 per subscriber.

    Do you really want to short a company with 75 Million subscribers for an adjusted price of about $39.5 per subscriber, that is still generating positive cash flow, and still has some additional recoverable value in property, inventory, goodwill, etc...

    Just to give you an idea, many companies trade at a value of $300 to several thousand dollars per subscriber....
    Dec 22 09:23 AM | 1 Like Like |Link to Comment
  • 2012 Presidential Election Effect On Tech Stocks [View article]
    Thank you for your kind words Dr. George W. Barclay Jr. Good luck with your technology portfolio.
    Sep 5 01:14 PM | Likes Like |Link to Comment
  • The Quiet Before Friday's Employment Numbers Storm [View article]
    Consumer confidence can be influenced by many factors, one of which is employment. Hence a drop in confidence does not necessarily mean it is primarily due to low employment figures; the drop in confidence could have been caused by the drop in the stock market... On the other hand, if unemployment is high, then consumer confidence will be negatively impacted; a cat is a four legged animal but a four legged animal is not necessarily a cat....

    Corrections are often triggered by a factor. Hence, whether today's drop is a correction or not, the poor employment figures were the catalyst....
    Sep 2 05:51 PM | Likes Like |Link to Comment
  • The Quiet Before Friday's Employment Numbers Storm [View article]
    It is true that the market has shrugged off some data MattHan. However, the most important factor for consumers is the health of the job market. Hence, if the job market shows deterioration, then renewed talk of double dip recession will surface. Otherwise, with substantial cash sitting on the sidelines, an improving job market may encourage stock buying....
    Sep 1 08:01 PM | Likes Like |Link to Comment
  • Whether Gold Is Worth Its Own Weight in Gold [View article]
    Selective technology stocks such as AAPL, GOOG, IBM; you can find an article I have authored on such topic. Some dividend yielding stocks such as Kraft.
    Aug 29 04:41 PM | Likes Like |Link to Comment
COMMENTS STATS
435 Comments
614 Likes