Bryan Kautzman

Top Cable TV Picks: Discovery, TBS, and ESPN

I personally think that all of these companies are in trouble long term unless they can create a product that can compete on the internet. Even so, internet advertising simply does not bring in the revenue that television advertising does.

Home entertainment has a murky future, and there is a lot to be sorted out. However, I'll be frank. If the NFL had live streaming content available over the internet, I would cancel my cable and sell my television.

Who's Kidding Whom on Gas Prices?

I love it when people attack the parts of the industry that have the smallest profit margins and blame them for the high prices we pay at the pump. Of course, I'm talking about the refiners and the retailers.

Is Netflix the Next Apple?

I have to imagine that the laggy streaming content you are experiencing is a result of a sub-par internet service provider. Of course, such evidence is anecdotal at best, so I can counter it quite easily by saying I watch at least a half dozen movies/shows per week via Netflix's streaming module. I've yet to see it lag once.

The evolution of the internet may stagnate due to the stubborn nature of the broadband providers unwilling to upgrade their networks to allow for continued progress in the industry. That is unfortunate.

On Jan 20 04:03 AM waf76 wrote:

> Right now I have an Xbox 360 and a Netflix account but the streaming
> content is laggy and won't play correctly. As a result I'm stuck
> with using the postal service to get my dvds. I live in Long Island
> so its not like I live in the middle of the woods. I know many others
> that have experienced the same issue. Bandwidth will be problem for
> years to come. With that being said Netflix's business model has
> proven to be very effective and profitable. If and when bandwidth
> is expanded the real winners will be the cable companies and verizon
> who offer the bundle packages (i.e. cable, internet, phone)
>

Is Netflix the Next Apple?

One thing that has been mentioned here, and is a huge deal, is the fact that the cable companies are the ones who primarily control the bandwidth. This is an important factor especially in this era of bandwidth caps. One must note that these bandwidth caps could possibly even be an effort by broadband companies to protect their VOD products against Netflix. There is a good chance that this entire scenario will be challenged in court at some point in the future.

However, many of the objections against Netflix can be refuted in at least an acceptable manner. The reason why I like Netflix better than, say, Apple, Amazon, or even the cable companies at this point is simply because of the structure of Netflix's business model. I don't want to pay for movies on a one-at-a-time basis. The traditional VOD service, at $4 to $5 per flick, is a ripoff compared to Netflix's service. If I watch 4 movies per month, I'm getting my money's worth. Furthermore, I don't want to own movies. With the exception of perhaps one out of a hundred titles, all of the movies I watch are watched only once. This is the common market sentiment, and it is the reason why Apple and Amazon will have to change their market plans in order to compete. Finally, at this point, it's all about market share. Netflix has a huge head start, and in my eyes, their product is still the best one on the market. That may change in the future, but until it does, I like their chances.

Is Netflix the Next Apple?

For what it's worth, the editors at seekingalpha can be noted as being responsible for that one.


On Jan 19 08:41 PM KevinH wrote:

> I won't touch your EBAY comments with a 10 foot pole (their margins
> will not keep them in business with their current business trajectory).
> Too much has been said on this topic elsewhere.
>
> But come on man, if you want to be taken seriousely don't misspell
> names of common technologies like "Blue Ray". FOMCL. (hint: Blu-ray).

Four of My Favorite Stocks

I'm watching BNI at the moment with bated breath. Yes, I like the stock at its current price. It might take a couple of years for the price of gas to go up, but when it does, the rails will be overpopulated once again.

Last summer, I took a drive through Gillette, WY, and the sheer number of loaded trains waiting for open tracks to transport coal was absolutely astounding. This was in June. I wanted to buy BNI then, but I knew that the price of gas couldn't go up forever...and once it did hit some resistance, the price of BNI would come down with it.

Never in my wildest dreams did I expect it to drop this far. With an earnings report due on Wednesday, though, I am waiting to dip my ladle into the pot. If they miss earnings expectations, which is extremely likely, they very well could end up being the value play of the year.

Is Netflix the Next Apple?

You make an outstanding point, one that I completely overlooked. The television stalwarts will have their advantage because they also sell broadband, but Apple will have an advantage because most of their subscribers are already broadband users. Plus, Apple will have an additional advantage in that they have been one of the most innovative companies of the last ten years. The possibility of them getting into the foray of using a business model like the one that Netflix offers completely escaped me at the time of the writing of this article.

However, the biggest advantage that Netflix has, along with it's track record in innovation, is its current market share. And you're right, the only thing holding Netflix back is people's access to broadband internet connections. However, this may be yet another Obama infrastructure play, albeit indirectly. I envision a future where the internet surpasses television as the preferred mode of entertainment for Americans, and the ability to watch streaming episodes of one's favorite television shows is only the beginning.

One must also not forget about the potential of google in this market through a venue such as youtube.

Sure, the waters are murky at the moment, but with Netflix's current market share combined with their innovative edge, I do believe that their stock in this bear market has nothing but positive potential. In the long term, they could very well end up being an acquisition target.

Thank you for your response.

Watch for Yourself: 60 Minutes Oil Story Was Spot On

Would you care to expand upon this?


On Jan 14 12:26 PM Geoff Considine wrote:

> This article and the following discussion shows how much misinformation
> is floating around about what drives commodity prices. Perhaps the
> saddest thing is how many people weight in on commodities markets
> without really understanding them--including politicians. As is so
> often the case, the dialog/comments are even more interesting than
> the article.

Watch for Yourself: 60 Minutes Oil Story Was Spot On

What most people don't understand is that when oil hit $147, bailout checks were being mailed and the conomy was still, on a day to day basis, fundamentally sound. If the market hadn't crashed, the price might still be rising. However, it might also be noted that the rising price contributed to the crash. It was one of those perpetual circles where something had to give.

The price of oil will recover with the economy. The bigger problem, as I see it, is that the entire energy sector collapsed with oil.

Bear Trap Has Been Set; Now It's Time for Short Sellers to Enter

I think the lows we saw in November were not only the result of a lot of panic, but they also took into account a lot of scenarios that are now playing out. The markets anticipated a vastly shrinking economy. They anticipated a vastly rising unemployment.

However, the market also anticipated that things weren't going to get any better any time soon. In fact, back in November, smart minds were saying that there was a strong likelihood that the markets would fluctuate between those November lows and the resistance that has seemed to form around the mid 900's over the months since for at least a year.

I don't see anything to contradict this, so my strategy has been simple. Buy long when the S&P drops below 800, go short when the S&P goes above 900. Anywhere in between is something of a "no-man's land".

10 Most Interesting Stocks for 2009

Forgot to add my disclosure: I am short on DOW.


On Jan 12 05:36 AM bjohn13 wrote:

> Well, the author DID say these were the most interesting stocks of
> the year...not necessarily the best buys.
>
> DOW currently has an unsustainable dividend. I'm anxiously awaiting
> their Q4 earnings report as I don't believe they will be able to
> continue paying the dividend without dipping into their cash. Four
> cents profit per share last quarter. If profit slips any more, they'll
> have to cut the dividend. That's when we'll see DOW bottom.
>
> S is a company that appears to me to be in trouble. They could be
> next asking for a bailout. Seriously, anyone look at their profit
> margin for Q3? -83%, and you want to know why? Because they have
> lagged way behind their competition. I have to believe that a company's
> product has some semblence of an ability to compete before I'll invest.
> Right now, Verizon is the far superior product. That said, I'm not
> about to invest in Verizon either. They have a debt load that is
> staggering, but at least they are turning a profit.
>

10 Most Interesting Stocks for 2009

Well, the author DID say these were the most interesting stocks of the year...not necessarily the best buys.

DOW currently has an unsustainable dividend. I'm anxiously awaiting their Q4 earnings report as I don't believe they will be able to continue paying the dividend without dipping into their cash. Four cents profit per share last quarter. If profit slips any more, they'll have to cut the dividend. That's when we'll see DOW bottom.

S is a company that appears to me to be in trouble. They could be next asking for a bailout. Seriously, anyone look at their profit margin for Q3? -83%, and you want to know why? Because they have lagged way behind their competition. I have to believe that a company's product has some semblence of an ability to compete before I'll invest. Right now, Verizon is the far superior product. That said, I'm not about to invest in Verizon either. They have a debt load that is staggering, but at least they are turning a profit.

Oil Price Economics the 60 Minutes Way

Of course, everyone is mad that gas was selling for $4 a gallon last summer. Americans believe that they have been endowed by their Creator with the unalienable right to drive, and that the oil they use to fill their tanks should be cheap. Of course, as the price of oil went up, up, and up, smart investors were taking advantage of it. And when the price started getting close to $150 a barrel, smart investors started to take their gains. So, from the sounds of it, that Sixty Minutes quote, unquote "expose" was stopping just short of calling me a criminal.

I just wish I had been smart enough to short oil when I took most of my money out in July.

Ten Stock Picks for 2009

Of the stocks you mention:

IMAX would need to show it can turn a profit before I'd be willing to invest. Sure, the future looks promising, but the current fundamental analysis tells me to stay away.

JNJ: Yes, I am long on JNJ. They are a predictable company. As far as pharmaceuticals go, I also like PFE (and am long in PFE). To the best of my knowledge, PFE is the only large cap pharmaceutical company that is currently investing in stem cell research.

HANS: I have been long on HANS for some time, but I have to say....it's somewhat of a coward's choice to take Wall Street's best performing stock of the last ten years and put it on your list. I sold 10% of my holding last week to recoup my initial investment.

ATVI: P/E ratio of 165. I could not recommend this stock with a clear conscience.

MO: I can't argue against this one except for my belief that the cigarette industry is evil. Moral obligations keep me from dumping money into a company that had me hooked for decades. You'll probably make a nice profit here, but I'd rather go elsewhere.

DNDN: Definitely a speculative stock, and I'm not much interested in speculation. I like to invest in companies that have shown some penchant for making a profit. The way I look at it is that picking growth companies is like playing the lottery. The odds are against you, and it takes some luck, but it pays off big if you hit.

GLW: I took a quick 50% profit in GLW from December to January, and that is normally not my method of investing. I just needed to recoup some losses in a hurry, and GLW was my method. That said, the fundamentals on this company are solid right now, and I'm looking for a spot to get back in. They have almost $2 per share in cash on hand, and substantially more cash than long term debt. With a stellar P/E ratio, this is one that I'm also recommending for 2009. My target price is about $9.50 per share.

DE: I think there is some risk involved here, but I must also say that our local John Deere dealerships are being over-inundated with orders right now. 2008 was a good year for farmers who locked in futures at all time highs in the spring, and they are spending their money on equipment in time for the growing season. However, I also think that DE, along with similar companies like CAT, will peak before the growing season starts. I am long in CAT, but looking for a place to sell.

MPEL: Another speculative stock that needs to prove that it can turn a profit before I'll recommend it.

RIG: This play tries to combine to badly beaten down sectors into a single stock. While dividend darling FRO was my number one stock of 2008, being I had the sense to get out while the price was still over $45 per share, both of the sectors these companies play into have been eaten alive. Namely, we're talking the shipping sector and the oil sector. Meanwhile, I am preferring to vest my interests in these two industries on mutual funds since almost all of the companies involved are bound to outperform in 2009. For oil, I have a position in DIG as well as a lesser position in the heavily leveraged DXO. For the shipping industry, I am watching the ETF SEA, though have yet to make a purchase (anyone know of any other shipping ETF's?).

As far as my recommendations for 2009 go, take a look at the following:

KHD: Chinese construction company that specializes in concrete and coal. While not directly impacted by Obama's infrastructurial stimulus package, they will likely see an impact on demand worldwide. Plus, they are currently trading lower than cash value.

NTE: This is another Chinese stock that is trading lower than cash value. Plus, I can envision a future where Apple's iPhone has competition that sells for half the price.

AKS: The steel industry was hit particularly hard, and they should also see a nice recovery as a result of Obama's stilumulus package. I like AKS the best not only because of their stellar balance sheet, but also because they have a pseduo-monopoly on United States core steel.

OTTR: Cramer can't seem to make up his mind, but OTTR is one of the biggest wind energy players in the United States. Plus, they are a utility company, so they tend to be relatively stable.

WFC: If there is one financial that is going to survive this mess, WFC will be the one. Personally, I think they are a stellar business because back in 2005/2006, they were steering people away from sub-prime loans and directing them to more stable alternatives.

WMI: An increasing dividend plus a service that people need equals a stock that doesn't involve much risk.

TRN: Play the rails, play wind, and play Obama's infrstructure plans all at the same time. TRN has a stake in the construction of railway cars, road and railway parts, concrete, and the construction of wind towers.

GLW and HANS would be mutual picks. Please be advised that I hold long positions in each of these companie except GLW and KHD.

New Nuclear Plants Not Viable Without Government Support

I would be willing to spend money to actively support new nuclear facilities from being built. Sure, nuclear energy is a non-carbon producing energy source, but is it green? I hardly think so. In the new terror-laden world, does our nation need more targets? Pundits claim that there have been no major nuclear catastrophes in almost two decades, but all it takes is one.