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David Trainer

 
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  • Cutting Through Valeant's Story [View article]
    porthos:

    Great comment. Buying up companies is a less efficient strategy than developing new products yourself. Bristol-Myers Squibb at an ROIC of 10% and Perrigo Company at an ROIC of 13% also create significantly more value than VRX. In fact, the only pharma with a market cap over $10 billion with a lower ROIC than VRX that I could find was Actavis.
    Jul 2, 2014. 09:59 AM | 2 Likes Like |Link to Comment
  • Danger Zone: DreamWorks Animation [View article]
    rgonsal:

    I don't know where you're getting your data on STQAX's holdings from, but the data I get from Lipper showed that the fund had a position in DWA at the time.
    Jun 30, 2014. 05:56 PM | Likes Like |Link to Comment
  • An ETF Pair Trade For The Health Care Sector: XLV Vs. PTH [View article]
    bud4704:

    My ratings are forward looking and based off of holdings and costs. Past performance does not factor into my ETF ratings at all, as it is not a reliable indicator of future results.
    Jun 20, 2014. 02:04 PM | 1 Like Like |Link to Comment
  • 10 Wonderful Companies That Are Bad Stocks [View article]
    horowitzcpa:

    CA still earns my Attractive rating. The stock is cheap at a PEBV of 0.9 and the company's ROIC of 13% is strong. That being said, the continued revenue decline is troubling and it's unclear when the business is going to level out. For that reason I'm only tentatively optimistic about CA rather than full on enthusiastic.
    Jun 19, 2014. 03:18 PM | Likes Like |Link to Comment
  • Danger Zone: United States Cellular [View article]
    Telecom_Newby,

    Thanks for reading and commenting. The table is mainly illustrative of the fact that the sector is highly competitive and of the headwinds USM faces should it choose to enter new markets, as well as in its current ones. USM's margins, which have declined for several years, leave little room for the company to compete on price with the 4 national carriers, which are in virtually every market at this point.

    As far as the Airadigm analysis goes: It is true that USM already operates in Wisconsin and Iowa, but the purchase also has USM entering the Minnesota and Michigan markets, where it currently has little to no coverage. Furthermore, I am curious how these rural customers will be taking advantage of the company's planned focus on higher ARPU smartphone and data plans.

    Lastly, I do see an acquisition as likely at some point in the future, as the practice is common in this sector — though I think the stock is trading at a premium because of the 2013 earnings issue. But we have not heard anything of an acquisition yet and I suggest steering clear of the stock until we see some news of this (which an uptick in insider buying might indicate).

    Again, thanks for commenting.
    Jun 19, 2014. 11:37 AM | Likes Like |Link to Comment
  • 10 Wonderful Companies That Are Bad Stocks [View article]
    monfrere:

    That's the thing about momentum stocks. It doesn't matter... right up until the point that it matters a great deal.
    Jun 19, 2014. 11:34 AM | 4 Likes Like |Link to Comment
  • 3 Warnings For Those Seeking Demand Growth Stories [View article]
    Great article. Too often investors focus on the growth and demand for a product without analyzing the competitive landscape on the supply side. A great example currently is the SaaS space, where investors are discounting the risks that CRM, N, and WDAY face both from smaller companies and larger companies like SAP and ORCL moving in on their turf.

    It's economics 101 that any industry experiencing above average profits without significant barriers to entry will face an influx of new firms. I called Ventas as a short here on Seeking Alpha last March for just that reason.

    What's your thesis behind holding VTR long now?
    Jun 17, 2014. 05:38 PM | Likes Like |Link to Comment
  • PetSmart: Your Portfolio's Best Friend [View article]
    Lobo74: Great comment. Veterinary services is another big value added service that enhances PetSmart's moat. As far as online goes, this has been an area where PETM has struggled in the past. They're making the right noises about improving their online presence now, but it remains to be seen how effective they can be on that front.

    I hadn't considered the possibility of an acquisition to bolster their online presence. Assuming it would cost roughly $300 million to acquire PETS, PETM would earn about a 6% ROIC on that deal based on current NOPAT. Given the opportunity for PETM to leverage its brand and exclusive products on the acquired sites, as well as the increased scale, there would probably be some significant synergies, which would push the ROIC on the deal higher.

    That being said, I think PETM has the capability to develop their own successful online presence without resorting to an acquisition, but if that fails PETS could be an interesting option.
    Jun 17, 2014. 04:08 PM | Likes Like |Link to Comment
  • PetSmart: Your Portfolio's Best Friend [View article]
    farhan0179: The company's pet grooming services should continue to grow roughly in line with the overall pet care market. Pet grooming is an important service for PETM because it's something online vendors can't replicate and it gets customers into the stores.
    Jun 17, 2014. 03:52 PM | 1 Like Like |Link to Comment
  • ROIC: Definition And Formulae For Return On Invested Capital [View instapost]
    rhorn az: It depends on what the company does with this retained earnings. If they are held as cash or cash equivalents then we exclude them from invested capital as the company is not actively using that money to generate revenue. Retained earnings would only be factored into our invested capital calculation once the company actually invests them into its business.
    Jun 17, 2014. 12:36 PM | Likes Like |Link to Comment
  • PetSmart: Your Portfolio's Best Friend [View article]
    Zenzile: I'm glad you found it informative. Thanks for reading and commenting.
    Jun 17, 2014. 11:17 AM | Likes Like |Link to Comment
  • PetSmart: Your Portfolio's Best Friend [View article]
    Mitch Zeitz: I'm not necessarily putting an $88 price target on PETM. In general I don't like specific price targets as they imply a degree of precision that's really not possible. $88/share is just what PETM is worth if it can achieve that 5.5% growth rate. PETM could grow significantly slower than that, in which case the fair value would be lower, but I used 5.5% as my example since that's the expected growth rate of the industry.
    Jun 17, 2014. 10:13 AM | 1 Like Like |Link to Comment
  • Danger Zone: MercadoLibre [View article]
    Long-Short Value:

    That does present a risk, but if eBay was planning to buy Mercadolibre, why would it be rolling out its own sites to target the Latin American market. An eBay acquisition of MELI does make some sense, but the rollout of these sites makes me think eBay is more likely to compete with MELI rather than buy it.
    Jun 10, 2014. 10:52 AM | Likes Like |Link to Comment
  • The Bidding War For Hillshire Is Bad For Investors [View article]
    It's good to see some rationality from the market here. I'm not sure how one could realistically make the case that Hillshire is worth $63/share. Hopefully this reaction will make executives think twice about overpaying this significantly for a company in the future.
    Jun 9, 2014. 05:11 PM | Likes Like |Link to Comment
  • Amazon's New Smartphone Spells Trouble For Apple [View article]
    appl believer:

    I'm actually bearish on Amazon as well due to the company's razor thin margins, which is part of why I think an Amazon smartphone could be dangerous to Apple. Amazon can spend as much on production as Apple and sell for much cheaper because it's willing to accept lower margins.
    Jun 9, 2014. 12:22 PM | 4 Likes Like |Link to Comment
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