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David Addison

 
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  • Valero Energy: 20% Annual Dividend Growth Remains Very Possible [View article]
    What's your opinion on expectations of the 25% revenue decline? Why is that likely to happen? How would it affect your base case if revenue declines were not as bad as Wall Street thinks?
    Dec 4, 2014. 05:27 PM | Likes Like |Link to Comment
  • Sears Layoffs Top 6,000, Closing Over 110 Outlets [View article]
    What cash is that? Operations burned over $1.1 Billion in cash in 2014. That's Billion, by the way, and does not include capital spending. That cash burn rate is greater than the gross cash on hand. That's gross cash which does not include all the toxic debt on the B/S. So, again, I plead with you all, "what cash is that?"
    Oct 23, 2014. 10:17 PM | 1 Like Like |Link to Comment
  • Sears Layoffs Top 6,000, Closing Over 110 Outlets [View article]
    The real tragedy of it all is the death of an American Legacy. Sears has appeared to me to be in a death spiral for some time. If Eddie had the capacity to create shareholder value from Sears' assets, I think you would've seen the fruits by now. How many years has it been since the $190 high water mark?

    The reality is that Sears is burning cash faster than it can sell off its assets. I have to believe that at some point there was some hope of salvaging the Sears Legacy. I express my deepest sympathies for Sears employees, investors, and all others who had believed in the Lampert thesis.
    Oct 23, 2014. 05:08 PM | 7 Likes Like |Link to Comment
  • Discounted Cash Flow: What Discount Rate To Use? [View article]
    I utilize a slightly different approach to calculating WACC as a discount rate. Would love feedback! http://bit.ly/1pBR7XS
    Oct 22, 2014. 05:02 PM | Likes Like |Link to Comment
  • China Green Agriculture - The Rodney Dangerfield Of Fertilizer? [View article]
    I was a YONG bull only because the management was committed to buying back its stock. If CGA's accounting was solid, CGA stock would be the STEAL OF THE MILLENNIUM. And if CGA's economic book value even as much as resembled its accounting book value, management would be buying back stock instead of paying a dividend.
    Oct 2, 2014. 02:55 PM | Likes Like |Link to Comment
  • Why the S&P 500's EPS Calculation Method Is Wrong [View article]
    @Thomas Kennedy,

    Sum(Corporate Earnings) / (Index Shares)
    OR
    Sum( MktCap(Stock)/MktCap(T... Market) * Earnings(Stock) )

    It's really that easy.
    Oct 2, 2014. 01:24 PM | Likes Like |Link to Comment
  • Why the S&P 500's EPS Calculation Method Is Wrong [View article]
    Holy moly! Is this for real? I can't believe that S&P would even fathom such a thing. Whatever, I will continue to calculate EPS the *RIGHT* way.
    Sep 9, 2014. 01:57 AM | Likes Like |Link to Comment
  • Definition: Price-To-EBV, Or Price To Economic Book Value Ratio [View instapost]
    Why does you use WACC for a discount rate? Shouldn't a discount rate reflect the expected rate of return of an equally as risky investment? When evaluating capital budgeting scenarios, you discount at the opportunity cost. How does WACC, the cost of raising maintaining debt and equity, reflect opportunity cost?

    Aug 14, 2014. 02:57 AM | Likes Like |Link to Comment
  • Why You Should Be Buying The 5 Largest Dividend Aristocrats [View article]
    Yeah, but show me how the 5 largest dividend aristocrats in 1995 have done since 1995. Picking the 5 currently most valuable companies and telling me that they grew in value is a tautology. Forward looking analysis is key.

    Otherwise, enjoyed the read.
    Jul 30, 2014. 07:02 PM | 1 Like Like |Link to Comment
  • Why Yahoo Is Going To $50 Per Share [View article]
    This isn't rocket science, folks.

    If Yahoo! owns 24% of Alibaba, or 524 shares, how many share of Alibaba are there?
    May 11, 2014. 01:53 PM | Likes Like |Link to Comment
  • Turnaround Or Not, Yahoo Shares A Bargain [View article]
    I actually don't know what the taxes will look like. It appears from my discussion with user 7480151 that a 25% capital gains tax might be too low. It's a "wait and see" scenario. Will gains from the sales be taxed as income at 35%? Will gains be double-taxed at an effective rate of 40%? Or, since the sales will happen domestically, will gains be taxed on a simple 20% US capital gains basis. I simply just don't know.

    In any case, I did not mean to convey that "assuming a 25% corporate income tax" was necessarily a unexpected negative. Sure, it's bad shareholders and Yahoo!, but "death and taxes" seem to be the only certainties in life.
    May 2, 2014. 02:34 AM | 1 Like Like |Link to Comment
  • Why Yahoo Is Going To $50 Per Share [View article]
    Author,

    Your theses could be wrong:
    - Yahoo! is only obligated to sell 208 out of 524 million shares in the shares
    - After tax and underwriters fee, assuming that Alibaba gets valued at $150 B at the IPO, the sale of the 208 M shares would generate $8.11 B, $8.65 per share.

    I am not claiming the direction is wrong, but rather that your numbers are off. And this is totally cool... I may have underestimated tax expense in my first go-through.

    PM me, please, if you would like to run over the numbers.

    - David
    May 2, 2014. 12:15 AM | Likes Like |Link to Comment
  • Turnaround Or Not, Yahoo Shares A Bargain [View article]
    Ok. I accept that you have a good point. It appears as though Yahoo! paid the 35% in Federal Income Taxes in 2012 on its sales of Alibaba shares. Why did Yahoo! paid the income tax rate instead of the capital gains tax? It has held its stake in the Alibaba Group for many years and therefore a sale of the investment should be subject to long-term capital gains.

    Perhaps it was because the 35% tax rate was better than the double-tax if capital gains were double-taxed at the effective rate of 40% due to the 25% taken in China and the 20% taken in the US:
    1 - ( 1 * (1-25%) * (1-20%)) = 40%.

    In that case, if the ABABA IPO were to be conducted in the US, could Yahoo! opt for the simple 20% since that sale would take place in the US?
    May 1, 2014. 11:28 PM | Likes Like |Link to Comment
  • Turnaround Or Not, Yahoo Shares A Bargain [View article]
    I will try to answer your first question on the basis for the spread of the stub value. Answering this is important for understanding why the *market* believes core-Yahoo is deadweight, and why we are able to estimate the value of Yahoo!'s position in YAHOY.

    The spread in stub value as 4/24/2014 is determined by:
    YHOO's Market Cap as 4/24/2014: $35,057.97 M

    YAHOY's shares outstanding: 2,870 M
    YAHOY's Market Cap as of 4/24/2014: $27,690 M
    Yahoo!'s stake in YAHOY (shares): 1,000 M
    Yahoo!'s stake in YAHOY (%): 35%

    ABABA's shares outstanding: 2,181 M
    ABABA's Market Cap (expected): $100,000 to $150,000
    Yahoo!'s stake in ABABA (shares): 524 M
    Yahoo!'s stake in ABABA (%): 24%

    Stub Value = [YHOO's Market Cap] - 35% * [YAHOY's Market Cap] - 24% [ABABA's Market Cap] = -$10,633 M to $1,366 M

    You have to use the market valuations for YAHOY and ABABA because Yahoo! records their values on their balance sheet using the equity (i.e., recognizable assets less liabilities) method. We are simply taking substitution the mark-to-market for the equity method.

    I am not sure I understand your question pertaining to "why a 25% tax rate is considered an (unexpected?) negative".

    With regard to your final question on estimating Yahoo's position in YAHOY "when the the price of the latter has shown no predictable trailing technical ratios to YHOO stock movement or Alibaba estimates", I do not use historical correlation or technical analysis in estimating relative value. These are different methodologies.
    May 1, 2014. 05:52 PM | 1 Like Like |Link to Comment
  • Turnaround Or Not, Yahoo Shares A Bargain [View article]
    I am sorry to have not communicated clearly. Is there something specific I you had questions about? Was there some part that was written clearly?
    May 1, 2014. 11:41 AM | Likes Like |Link to Comment
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