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Brendan Wagner

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  • Heinz May Be A Buffett Stock, But This Isn't A Buffett Price [View article]
    Buffett is happy to pay a fair price for a great brand. The flaw in your valuation is the discount rate. Heinz bonds (cusip 423074AN3) due March2017 have a coupon of 1.5% and yielded about 1.3% before the deal was announced. And yet you use a 7.5%-9% discount rate, which is far, far too high.
    Feb 14 11:55 AM | 1 Like Like |Link to Comment
  • Market Valuation Indicators: Overvaluation Relatively Unchanged [View article]
    I agree with Armistead. The Shiller 10year PE for the March 09 lows was not low enough for certain bears in the market. Thus they KILLED their investors' performance and missed the entire rally. One example of the Shiller PE is Apple. It's 10year average EPS right now is about $6.70, versus the $43 they will actually make this year. The reliance on backward-looking models while ignoring changes in the underlying business is inexcusable, especially for professionals with $Billions entrusted to them.
    May 2 08:13 AM | 2 Likes Like |Link to Comment
  • The Crowd Is Wrong About Best Buy [View article]
    I agree that BBY is undervalued but the $2.5billion in FCF for the year just ended will not be repeated - it was a one-time working capital reversal. This year FCF will be closer to $1.5-1.6billion, still a lush yield that should afford some upside for the stock.
    Apr 4 05:06 PM | 1 Like Like |Link to Comment
  • Why Apple Will Never Trade At $1,000 [View article]
    Some numbers disagree with you. Apple's eps grew 86% in 2011, 75% in 2010, and will grow about 55% this year. If you slow that down to 20% in 2013 and 2014, price the stock at 15x earnings and add back cash&investments per share of $173(by then), you have a $1,077 stock. It may or may not happen that way, but it's no stretch for it to get there.
    Mar 6 11:35 AM | 5 Likes Like |Link to Comment
  • 7 U.S. Technology Companies Trading Under 10 Times Free Cash Flow [View article]
    I agree that FCF is extremely important and useful as a valuation measure. But plenty of great companies (and great investments) can be overlooked by FCF investors, as they might be in a growth/investment phase.
    Jun 17 10:44 AM | Likes Like |Link to Comment
  • Best Buy: Great Cash Flow, Solid Earnings, Inexplicably Low Valuation [View article]
    The company is forecasting $2-2.5billion in Free Cash Flow this year, which makes that free cash flow yield north of 20% if you net out the cash.
    Jun 15 09:01 AM | 1 Like Like |Link to Comment
  • REIT IPOs: The Wave Before the Surge [View article]
    no, the recent ones aren't all internally managed. but anyway, these blind pools (well not so blind now that they've invested proceeds) are a great buy on the dips, buying a dollar for 70cents.
    Jan 13 12:05 PM | Likes Like |Link to Comment
  • REIT IPOs: The Wave Before the Surge [View article]
    I'd point out that these blind pool IPO's can have some complicated operating agreements with related parties, as REIT rules require a 3rd party manager of assets in many cases. One nice sign is management that invests alongside the rest of us by buying shares in the IPO or soon after. Among the blind pool REITS, Jeff Fisher at CLDT put in the largest slug of his own $$$$. (no position)
    Jan 12 09:48 AM | 1 Like Like |Link to Comment
  • Apartment REITs May Be the Only Sure Way to Play Real Estate [View article]
    a little more research is called for. and watch out if you're buying the common shares of some of these REITS - you'll forever be abused and diluted in order to raise $$$ to pay off those higher than you in the capital structure:

    Oct 14 02:24 PM | 2 Likes Like |Link to Comment
  • So how to boost the economy? Harvard professor Jeffrey Miron says legalizing drugs - all drugs - would help, saving an estimated $41.3B/year on total government enforcement and producing tax revenue of $46.7B/year, assuming drugs were taxed at rates comparable to those on alcohol and tobacco.  [View news story]
    Only to a Harvard prof does more tax revenue mean "boosting the economy."
    Oct 6 02:08 PM | 6 Likes Like |Link to Comment
  • Don't Let Talk of a Bubble Scare You Out of Bonds [View article]
    You wrote "The term “bubble” implies a grossly mispriced asset that is susceptible to substantial losses."

    You can define "bubble" however you like, but it is perfectly valid to say that receiving .44% to lend to the US Govt for two years is a "bubble," especially considering that the USA's finances are magnitudes worse than they were decades ago when you could lend to the govt for over 10%. Saying that there's no bubble simply b/c you get principal back ignores the point that a bubble can also mean being paid too little to lend.
    Sep 29 08:34 AM | 9 Likes Like |Link to Comment
  • Dividends vs. Stock Buybacks: Exxon [View article]
    Good article Tim. As a fan of dividends/acquisitions over buybacks, XOM has always been the thorn in my argument.

    One thing I'd note is the idea that when companies buy back stock, then the investor "owns more of the company." Well sure you do, but you "own more" of a company that has a smaller cash balance than the day before. And the market might give the company a smaller PE multiple due to reduced cash, so you've gained nothing.

    Overlooked is the conflict of stock options. Management that is heavy on stock options does not benefit from dividend payouts, so they might be more inclined to use a buyback to push the shares up temporarily.

    As for the company argument that their industry might be to volatile for them to commit to a dividend, I say nonsense. Look at Cal-Maine in the shell egg business - hugely volatile, so they don't commit to a fixed dividend, but rather a fixed % of net income.
    Sep 15 09:10 AM | 3 Likes Like |Link to Comment
  • Three Deep Value Stocks With Major Upside [View article]
    Well done!
    Aug 30 07:41 AM | 1 Like Like |Link to Comment
  • Is Western Digital a Value Play? [View article]
    The hard drive stocks will never get a "market" multiple, due to their violent cyclicality. That said, buying WDC at sub-7 PE's has usually proven timely. Net of cash, this stock is trading at six times this year's eps estimates if you were to cut them by half...

    As for the buybacks though, I think it's a horrible strategy, especially in this dangerous industry. So the company used your money to buy back shares? Great, now you own a larger % of a company with a smaller cash balance.
    Aug 16 08:57 AM | 1 Like Like |Link to Comment
  • A Small Cap Retailer With Large Growth Potential [View article]
    I like the company, but you're a bit aggressive on the 200 hours of annual training. It's about half that. Still, great company here.

    "New sales associates are required to complete 80 hours of initial in-house training focused on product knowledge and functionality, customer service and general store operations. Sales associates also participate in on-going training for an average of 10 hours per month in order to stay current with new product offerings and customer service initiatives. "
    Aug 10 09:56 AM | 1 Like Like |Link to Comment