Derastone

Investment advisor
Derastone
Investment advisor
Contributor since: 2010
Company: Derastone LLC
Do you have any views on the Q4 Earnings?
But do you think it was overvalued?
What about now?
Thanks for your comment, next time I will have to specify what kind of earnings we are talking about.
For the quarter ended March 31, 2013:
Allergan reported $0.89 diluted earnings per share attributable to stockholders compared to $0.74 diluted earnings per share attributable to stockholders for the first quarter of 2012.
Diluted earnings per share for the first quarter of 2013 include the full year 2012 impact of the U.S. Research and Development tax credit, which was signed into law on January 2, 2013 and retroactively reinstated to January 1, 2012.
The estimated impact of the retroactive Research and Development tax credit for 2012 is approximately $17.3 million, or $0.06 diluted earnings per share attributable to stockholders for the first quarter of 2013.
Allergan reported $0.98 non-GAAP diluted earnings per share attributable to stockholders compared to $0.83 non-GAAP diluted earnings per share attributable to stockholders for the first quarter of 2012, an 18.1 percent increase.
Non-GAAP diluted earnings per share attributable to stockholders exclude the full year 2012 impact of the U.S. Research and Development tax credit.
Source: http://bit.ly/16OEenX
That is why you should own/run a hedge fund but never invest in one. I recommend my clients never to invest in HFs but for other reasons. (Risk of a HF blowing up, liquidity, etc.)
However, just to give you an 20,000 ft comparison. If you sit down and compare XOM vs. any other HF that focuses on energy you will realize how much better an investment in XOM is rather than a HF.
a) Liquidity - XOM wins
b) Capacity and Resources to Invest - XOM wins
c) Oversight & Business Risk - XOM wins (you have multiple "agencies" trying to cover your back, board of directors, SEC, other investors, a government protecting its oil interests, and the list can goes on...)
It just doesn't make sense to give your money to some guy, pay 2% annually, get locked up for a year and pray for the best.
On the other hand, if you purchase XOM, the company will pay you ~2.5% annually (in dividends) and you can unload the stock whenever you want.
Just doesn't make sense to invest in HFs.
It is what I call a free lunch:
a) Sell fixed income securities to all the foreigners. (Better if they are long-term bonds at low yields)
b) Then, devalue the US Dollar by 20-25%, inflation eventually picks up at a moderately high pace. Interest rates rise, economy is by then doing better.
c) Fed buys back the long-dated bonds (30 yr bonds) at a discount.
d) Return to part (a) when another financial crisis hits
Result: US earns a free lunch.
Dorky, how would you define risk?
and how do you calculate (express it in numbers) it?
You can check this in their last 10-Q / 10-K
Shares Outstanding March 31st. - 693,872,048
Shares Outstanding January 31st. - 694,543,763
We are long all three with Diageo and ABV (current distributor of Pepsi in Brazil)
That is animal cruelty. That dog probably thought of pooping on your lawn all day and then you just come and extract it to feed your energy needs.
It has been brought to our attention that our sources for this article were not included. They include the following:
CapitalIQ, Google Finance, company fillings, Morningstar, J.P Morgan and Morgan Stanley company research.
It has been brought to our attention that our sources for this article were not included. They include the following:
CapitalIQ, Google Finance, company fillings, Morningstar, Macquarie Securities and Goldman Sachs company research.
You are confusing investments with solvency.
CalPERS has $110.7 billion in public equities (11/11/2011)
CalSTRS has $73.5 billion in public equities (10/31/2011)
These are only two pension systems. Each state has a few and most of their assets are invested in public equities.
The increase in consumer spending is coming from the personal income savings. Savings rate is down significantly, the consumer is bound by its limits. If the labor situation doesn't improve and we don't renew the payroll tax cut, then I will be very worried.
Exxon Mobil and a big portion of Corporate America is owned by the pensions (Main Street). In the long run Main Street makes money off Exxon Mobil, especially from their dividends. It helps the elderly who saved up money and invested it stocks to compensate for what social security has become. The long term interest of Corporate America is tied to Main Street. On the other hand, bankers mainly work off commissions, they don't take long-term interests in any company, not even their own.
I find it hard to understand when people associate the top 5% with Exxon Mobil or any of the big corporations. The top 5% have most of their money in Municipal Bonds for tax purposes, so if you want to mess with the top 5%, then don't pay your municipal taxes, let them go bankrupt, like that one in Alabama.
Love the company, just explaining my concerns/fears as well. However, there is always the right price for a stock.
Is the SEC still going forward with its probe in GMCR? Why hasn't PwC (the auditor) signed off on GMCR's internal controls?
I generally do not touch stocks that have accounting issues. You really need a team to dig into those kind of companies and find out the truth.
As you said, individual investors will have a hard time figuring out this one. They are at a disadvantage to those who work full-time to uncover the real numbers.
I wonder what will happen in a month (Earnings release Oct 19, 2011) "60% rise in fees" vs. xyz% turnover rate
It seems unrealistic that Netflix will lose > 30% of subscribers.
In the long run Netflix will continue to gain customers on a global basis.
I agree with ABV (seekingalpha.com/artic...)
Long term thesis is still valid, but pricing estimates have gone up.
Hope this helps
Citigroup: trust, but verify
Good call. I enjoy going back to writers who make the right call at the right time for the right reasons.
I totally agree with shorting the US Treasury Bonds.
The problem with most articles I read about Netflix is that they speak in generalities. I find it difficult to be convinced when I see the words "Netflix is expensive" without any substantial evidence.
So far, the best one you have published is the interview with Len Brecken but other than that, information is limited.
I've read your article and I think it is a good beginning for your thesis. It shows that you can smell something going bad going on but other than that you don't have much fundamental data, if you do, you aren't showing it in your article. You outlined a trading strategy and gave reasons why you prefer puts over shorting the stock.
There are some hard questions still to be answered:
a) What is Netflix going to earn going forward? How do you get to that number? What is their cash flow going to be in the next year? How do you get to that number? think about the scenarios?
b) How is the price for acquiring customers and revenue per customer evolving? --> How are margins going to look? Can you model it out? What are the scenarios?
c) What is the catalyst that will bring the price down? When do you expect it to happen? (given that you will buy leaps, I obviously assume that you expect a re-pricing of the stock for the duration of the LEAP but it isn't clear)
d) What are the risks that your thesis might go wrong?
f) Finally, and the most important question of all, what is the breakeven number of subscribers Netflix needs to have in order to sustain its business. Len talks about bankruptcy in 2012. The problem I have with that is I believe they have paid a large portion of their distribution rights upfront, which makes it hard for a company to not meet their obligations. Maybe I'm wrong, I'm not an expert in this stock.
Going short requires lots of testosterone and I am really happy to see people writing about the companies they believe is worth less than what the market is pricing them at, however, I would encourage you to go deeper and build a stronger case.
I also want to apologize if my previous comment was too brash.
Do you have the guts to short it with real money?
Not worth my time reading. Everyone knows that Portugal is on its way to restructure its sovereign debt.
On an unrelated note. My little sister was asking the other day why the Greek royalty is in so much trouble (confusing "sovereign" with royalty)
Good article.
Key Questions:
a) What assets will they divest?
b) What will be the overall effect on net profit?
figure that out if you can.
Tweedn,
The issue with taking the current P/E is that it is calculated wrongly. The earnings came in significantly lower this year because of a shortened calendar year, a legal settlement, and a pension recalculation.
This is from the CHD's 4Q News Release:
This year's fourth quarter was six days shorter (6% fewer days in the quarter for 90% of the Company's business) than the comparable period in the prior year due to the Company's fiscal calendar. The impact of the fewer days is reflected in, among other factors, lower reported and organic sales. Mr. Craigie commented, "When adjusted for the 6 fewer days in the quarter, the fourth quarter organic sales represents our strongest quarter of the year."
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I should have written that in the analysis but if you take the forward looking P/E you can skip this part and even better, you take into account the company's growth rate.
Hope this helps.
On a side note, I only got 1,200 views on this article so far. Kind of disappointed at that.
=) This one took a lot of time and intellectual effort.
Nice quick pick.
If you want to dig deeper into Fluor, I wrote an introductory article about them very recently.
seekingalpha.com/artic...