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Brendan O'Boyle

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  • Telefonica Worth At Least $26 A Share [View article]
    If you bought MS in October 2008 you are very brave. You are really telling me you bought perfectly at the bottom and sold perfectly at the top? Anyway, I don't really care about two trades, what is your average annualized return over the past 5 years? If it is better than the SnP with dividends reinvested fine, if not I would say you took greater than average concentration risk to achieve an average return.

    I will say the same for Tilson. His TILFX has underperformed the SnP by about 10% in the last 5 years. Must be nice to underperform the market and get paid handsomely to do it.
    Apr 22 12:32 PM | 1 Like Like |Link to Comment
  • Signs Of A Stock Market Top? [View article]
    People have been talking about the Japanese black swan for 10 years. During the 16th and 17th century England had debt/GDP of 250%, for two hundred years. The pound never disintegrated into dust that entire time.

    Japan's central bank can print as much as it likes, the debt is held domestically and a 10 year is 98 basis points. This year will be just like last year, nothing will happen.
    Apr 22 12:02 PM | 1 Like Like |Link to Comment
  • Signs Of A Stock Market Top? [View article]
    IBM is the perfect example of what? That a stock can go down 5% from an all time high?

    I will say the opposite, the level of alarmism among investors is incredible. The more alarmed they get, the higher the market goes. Funny how that works.
    Apr 22 11:58 AM | 1 Like Like |Link to Comment
  • Signs Of A Stock Market Top? [View article]
    $55-100T is crazy. It is extrapolation of trends that clearly cannot continue. If something grows at 10% per year for a few years does that mean it will grow 10% per year until 2050?

    Clearly this is impossible, $100T is 7x GDP and is 2x larger than 2050 GDP even assuming 3% annual growth.

    Things that cannot continue don't, your government is just lying to you about how much they can pay when you get older. Eventually the politicians will have to bite the bullet and come clean about what can be afforded. Much like what Europe is facing now, they are just reaching the cliff sooner.
    Apr 22 11:53 AM | 1 Like Like |Link to Comment
  • Is The Stock Rally Over? [View article]
    Yes, but remember the end of QE1 and QE2 did not happen in a vacuum. Respectively, it was the Greek crisis and the US debt downgrade that really set off the selling.

    Will Europe provide us with another selling panic? Again I would point out that the market tends to become more resilient to factors that everyone already knows about. It tends to be new scary things that blindside the market. The debt downgrade last year was a perfect example - no one saw it coming. And by the time you knew it was too late, it was announced Friday after the market had closed and by opening Monday morning the SnP was already at 1100.

    That isn't to say that fundamentals aren't important. If Europe has a liquidity crisis it will drag everything down regardless of investor expectations. But I tend to look at the glass as being half-full right now, the economy seems to be improving. Here's hoping investors focus on that rather than an endless demand for more easing.

    I will go with another Yogi Berra quote: "It's tough to make predictions, especially about the future."
    Apr 22 11:28 AM | 2 Likes Like |Link to Comment
  • Telefonica Worth At Least $26 A Share [View article]
    When you say 3x you mean book value?

    I don't think buying a company like AAPL is pure speculation. Book value is only relavent in liquidation, by discounted cash flow AAPL is more undervalued than TEF. Now if you buy PCLN or CMG that is speculation.
    Apr 22 11:00 AM | Likes Like |Link to Comment
  • Telefonica Worth At Least $26 A Share [View article]
    Ok, well it's easy to say opportunity 6 months later once the bottom is clearly in the rearview mirror. Plenty of stocks (FTE and TEF included) have dropped a lot and not yet hit a bottom. NFLX is too speculative for me, JEF would have been the same. Remember this was the same time MF Global blew up and there was a lot of controversy about JEFs exposure to Euro debt. There were accusations they weren't reporting exposure appropriately, I don't like to speculate on such things.

    Tilson's own track record with NFLX says he isn't that good at making money on them either, his hedge fund did not beat the market last year. Of course if you know where the bottom is you could make a lot of money, but this is all hindsight bias.

    I can't argue that TEF/FTE look good on paper, but I would like to see an upward trend before I buy in. I would wait until you know Spain and France are in a recession. Usually once that is clear the bear market has run its course.
    Apr 22 10:54 AM | 1 Like Like |Link to Comment
  • Is The Stock Rally Over? [View article]
    "In recent years, the market has reacted violently once Fed stimulus is removed, and this is a fact that is no longer lost on investors this third time around."

    And that is the silver lining. Once everyone expects the market to do something it tends to do the opposite. The fact is once twist is over bond yields will still be ridiculously low, what would you buy if you sold?

    There was an article in the WSJ about the end of twist and repercussions for the market. I don't remember reading the same at the end of QE2 (I could have missed it).

    My sense is investors perception of the current stimulas program is high. If that is the case you can stop worrying about the end of twist, by the time it ends it will already be priced in.
    Apr 22 09:51 AM | 2 Likes Like |Link to Comment
  • Are U.S. Stocks Cheap Based On 12-Month Forward PE For The S&P 500? Part I [View article]
    What metric do you use to define slack in the economy? Just curious, is there somewhere this data is available?
    Apr 22 09:23 AM | 1 Like Like |Link to Comment
  • Are U.S. Stocks Cheap Based On 12-Month Forward PE For The S&P 500? Part I [View article]
    At market bottoms 1 year trailing P/Es are usually at extreme highs (i.e. the E drops even more than the P). 1 year P/E was not low at the bottom in 2009 nor in 2003, this is why trailing one year P/E should be ignored entirely. It has no predictive power at all, analysts who have a bullish bias push low P/E even though they know it has no predictive power. It's a cheerleading gimmick.
    Apr 22 09:20 AM | 1 Like Like |Link to Comment
  • Stocks Worth Buying Prior To Earnings: Week 2 [View article]
    I think the market really has lost it's mind sometimes. When a stock can gap 20% lower on no news? But look on the bright side TPX is now a pretty compelling valuation, still 20x earnings, but they have been putting up very strong growth for several years. I bet this will be a road bump in a years time.
    Apr 22 09:16 AM | Likes Like |Link to Comment
  • Telefonica Worth At Least $26 A Share [View article]
    Tilson did not buy NFLX at an average cost of 62. He talked about being long well before they fell below 100 a share. Don't look at a downward trend and assume he bought the lowest point.

    Also I don't know how someone of the Grahm school would buy NFLX at any price, they may blow up yet.

    I would say the same advice is warranted for TEF, stop averaging down into a declining trend. Wait for the next batch of LTRO or some turning point in the Spainish market. In the kind of bear Spain is experiencing valuations don't matter, it has been 20 months, but from the look of it we are entering the capitulation stage. I would watch for a bit longer.
    Apr 22 08:56 AM | Likes Like |Link to Comment
  • Telefonica Worth At Least $26 A Share [View article]
    Yahoo never accounted for a 3:1 stock split
    Apr 22 08:32 AM | Likes Like |Link to Comment
  • Don't Surrender The CAPE [View article]
    I think the problem with buybacks is not that firms don't know their shares are overvalued. It's that shares are by definition more highly valued when a firm has money to repurchase shares. Thus there can be a certain catch-22 to buybacks. But there are companies that use buybacks appropriately. If you don't think a firm is undervalued, or at least fairly valued, why buy the shares in the first place?

    The CAPE concept is sound, but it's important to remember that the market trades according to positive and negative surprises, not an arbitrary ratio. I think the only way US equities will revert to a below average CAPE ratio is if we go into a recession. Because I don't think this will happen in the next 12 months I'm pretty much fully invested. If last year taught me anything it's that timing the market is very difficult. So it's probably better to find stocks that have a good chance of outperforming the market rather than to only buy in if the CAPE goes below 17 or some arbitrary number.

    So far it seems to me that outperformance is likely if:
    1) Price is below fair value (stock reports often have a calculated fair value, I have found it's quite useful)
    2) buybacks reduce share count and price is below fair value
    3) beta is low (see Baker's paper on this - Benchmarks as Limits to Arbitrage: Understanding the Low Volatility Anomaly)
    4) Pay attention to analysts - it will keep you out of value traps

    These seem as correlated with positive returns as a 10 year CAPE and it's easier to find stocks that fit these criteria rather than wait around for the next bear market. Picking stocks based on this gave me a theoretical portfolio that returned 20% last quarter, and it's working so far this quarter as well. I'm almost back to my Q1 high in my brokerage account even though the SnP is still 40 points off. Here's hoping the the trend continues...
    Apr 22 12:02 AM | 1 Like Like |Link to Comment
  • Nokia: Right Phone, Wrong Partnership [View article]
    Where are you getting $50B USD from? The total shareholder equity of NOK is about 11B Euros. They posted a Q1 loss of 1B Euros. I'm just saying averaging down is not generally a good strategy. If the investment looks sound then hold and wait for a turning point before buying more. Don't throw money into a declining asset.

    As to your past exploits: GE wouldn't have turned out so well (the current share price is 20 vs. 40 5 years ago), and you could easily have chosen GM over Ford. MSFT and INTC are not comparable, they have never had the cashflow problems that NOK is facing. Averaging down on AAPL would have been an incredible stroke of luck, which is what NOK will be if it works.

    I will be watching, so far all I see is good money thrown after bad.
    Apr 21 09:50 PM | Likes Like |Link to Comment