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Brian Abbott  

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  • Why Amazon Has No Profits (And Why It Works) [View article]
    Bruce-Alan- agreed. When the future gets so easy to extrapolate by extending exponential graphs to the ceiling, then maybe things seem as good as it can get.... hard to see further upside, and easy for me to see a lot of risk at that point.
    Sep 6, 2014. 12:11 PM | 1 Like Like |Link to Comment
  • Wal-Mart Too [View article]
    great article. It seemed like WMT's results got brushed aside by the markets. I guess it was already priced in - but the people who would say that are also the people who say that the economy is good or great.
    Feb 20, 2014. 06:31 PM | 1 Like Like |Link to Comment
  • The Fairy Tale Of [View article]
    Great article. Love the company, hate the stock.Lots of money has been lost by a lot of people shorting this stock. Every time it manages to sell off 10-15% it comes back with a vengeance, as happened the past couple of weeks. Great analysis on a puzzling stock valuation.
    Oct 22, 2013. 06:00 PM | 1 Like Like |Link to Comment
  • Reinsurance Update: Looking Ahead To Q1 2013 Results [View article]
    Thanks for the in-depth industry update. Obviously I am an amateur in this space and very glad to have your insight. This industry fascinates me, just the way they are able to price risk and spread the risk around, which is ultimately good for capitalism. From an investment standpoint, I like the non-correlation to other asset classes.
    Apr 4, 2013. 10:17 AM | 1 Like Like |Link to Comment
  • Reinsurance Update: Looking Ahead To Q1 2013 Results [View article]
    thanks for the additional long ideas. I omitted mention of why certain companies were excluded: ACGL because it trades too high over book (same for RNR), GLRE because it is run a little more like a hedge fund (lots of equity exposure) and is small with little disclosure, and MHLD because it is so small.

    I like your ideas about reinsurers should trade lower P/B than primary insurers - makes sense because it is the reinsurers backing up the primaries against tail risk.

    Another interesting idea that you made me think of is the Winner's Curse - because the pricing of underwriting is a bidding process, the one who bids lowest by definition gets the lowest return on capital. I'll have to figure out how to write an article about that sometime.
    Apr 4, 2013. 10:14 AM | 1 Like Like |Link to Comment
  • Just How Slow Are Kindle Sales? [View article]
    while I agree with your premise and I am short AMZN, just because Garmin's sales were temporarily higher due to promotion does not necessarily mean that Kindle unit sales dropped. It could have been steady, and simply was exceeded temporarily by a promotion. I don't think you can extrapolate total revenue of AMZN from a loss leader-type promotion campaign. But I like the rest of your line of reasoning. AMZN has terrible margins and somehow gets heavily rewarded by the markets.
    Feb 18, 2013. 02:11 PM | 1 Like Like |Link to Comment
  • Using Free Cash Flow To Compare Company Valuations [View article]
    yes, good comments. The repurchase price did indeed get reset to 1.2. Also that is good to point out the equity holdings don't factor into BRK's free cash flow- although one could make a counterargument that those companies' FCF is not available to Berkshire so rightfully isn't included in BRK's FCF. It just might help understand the ratios a little better when comparing to different kinds of companies, and why BRK's P/FCF looks a little higher in these comparisons.
    Feb 17, 2013. 06:19 PM | 1 Like Like |Link to Comment
  • Using Free Cash Flow To Compare Company Valuations [View article]
    Of course it's possible, it just runs counter to the history of most acquisitions. Very few acqusitions live up to the touted benefits. But unless they are saving up to buy Microsoft or ExxonMobil someday, the fact that they HAVEN'T made such acquisitions recently suggests the opportunities aren't out there or that they don't wish to pursue them. plus they are in a bit of a growth quandary, because they've had such a great growth rate it is hard to find other companies actually growing even faster and also large enough able to impact AAPL's EPS. AAPL has become like a mega-cap mutual fund that can't even fool with small companies because of the size factor.
    Feb 17, 2013. 05:47 PM | 1 Like Like |Link to Comment
  • Using Free Cash Flow To Compare Company Valuations [View article]
    Great comments. I think the market is already telling us what you suggest - namely, that BRK.B deserves a premium valuation because of superior demonstrated skill at allocating its FCF. The problem for the new investor is that it's already factored into the share price now - in other words that premium benefited the prior investors as the shares got bid up. Plus, there is now execution risk because if BRK fails to continue in its tradition, the valuation could come down.

    Also, I agree that AAPL loses points for its massive cash hoard, but partially redeems itself by at least not making stupid, overpriced acquisitions. But just what does it need all that cash for? The fact that they don't return it to shareholders should warn people that they either think they'll need it to fuel future growth (R&D, etc) or that they WILL need to make a stupid, overpriced acquisition in the future. I'd argue that their valuation looks like it is discounting that possibility rather than rewarding it with a premium.
    Feb 17, 2013. 05:34 PM | 1 Like Like |Link to Comment
  • Discounting Everything By 30% [View instapost]
    Micheal- thanks for commenting.

    Another point of clarification is the the "delta" would be one third where estimates are concerned. Obviously a company like Intel has a lot of momentum and maybe long term contracts so I wouldn't discount all of that. What I would discount are incremental changes that rely to some degree on unverifiable estimates - that is where the cognitive biases creep in. So on something like an overall EPS estimate I wouldn't change by 30%, but if there is a list of speculative guesses for things that add up to 5% or 10% of the incremental growth - perhaps that portion should be discounted by 30% (usually downward).
    Jan 22, 2013. 11:16 AM | 1 Like Like |Link to Comment
  • 2012 Permanent Portfolios Performance Review And Outlook [View article]
    the genius thing this fund manager did is keep one fourth in cash and another fourth in bonds at all times and yet kept charging a typical expense ratio. True, even money market funds have their expenses, but an individual investor even with a small amount of money could invest the minimums in much cheaper options elsewhere. But I guess their value proposition is simplicity so I can understand why people like it.
    Jan 11, 2013. 04:44 PM | 1 Like Like |Link to Comment
  • Selling Covered Calls On Most ETFs Guaranteed To Lose You Money In The Long Run [View article]
    The only way i acquire shares is through exercises in my put-writing program, and the only way I sell them is through selling covered calls that occasionally get exercised. I haven't bothered to calculate returns, but the equity curve of my portfolio is very satisfying to me. I use the strike prices of the puts and calls as functionally the same as limit orders. As long as you are identifying companies that are solidly run with limited leverage and good balance sheets, this can be a fantastic strategy. (energy sector has been the most successful for me). It has worked so well that I simply refuse to just outright buy a stock with a buy order. I will only acquire it through selling an out of the money put. it gives an additional discount to the current price.
    Jan 11, 2013. 01:35 PM | 1 Like Like |Link to Comment
  • The Innovator's Dilemma: Is Apple A Sustainer Or Disrupter? [View article]
    In technology there is a school of thought that with technology always changing, your current customers aren't that important to your future a decade from now. If you fail to move into new areas with new customers, you'll lose your current ones anyway, when they move on to a newer disruptive technology that was brought out by a new entrant to the market that didn't have the overhead of a large dominant company.
    Jan 1, 2013. 10:19 PM | 1 Like Like |Link to Comment
  • A Retirement Income Portfolio [View article]
    I agree about BDC's. I like GLAD and GOOD personally. But got really burned by this sector in 2008.
    Jan 1, 2013. 09:47 PM | 1 Like Like |Link to Comment
  • The Innovator's Dilemma: Is Apple A Sustainer Or Disrupter? [View article]
    Even if AAPL has proven to be the rare exception to the rule about dominant companies rarely being successful disrupters, the examples you cite are all in the past, and with the company's higher market cap and expectations, it will be even harder to repeat. It doesn't mean they can't -- just that they have a headwind facing them. Maybe there's another iTunes up their sleeve. But eventually technology companies fall into the "trap" of pleasing their current customers rather than their future customers in potential new markets. Furthermore, it's all baked seemingly into expectations at this point. Thanks for commenting.
    Jan 1, 2013. 09:09 PM | 1 Like Like |Link to Comment