Dirk McCoy

Dirk McCoy
Contributor since: 2008
Company: Spendbot, Inc.
KNDI still has to show end user adoption, wide scale reliability, customer loyalty, JV pricing model transparency, response to styling challenges... this stock will not suit the tastes of everyone....
sort of like my wife's signature lasagna that I tell everyone else at the table "sucks so just leave it to me, I'll take care of it".
When KNDI gets everything above in line, this stock will be a 20 bagger (on top of the 5 bagger it already is) and anyone who's been short will look at those who gave them that idea as the know-littles they were.
I suggest you and others also consider the context of BIDU, CEA, YONG, SVA, BABA... other American-traded stocks in real Chinese companies, like KNDI. This stock is setting up for the mother of all short squeezes.
The same people who decry HFT as taking from the poor support government Lottos that take from the poor. They decry HFT as enriching insiders but support schemes where sons and cronies get enriched by OHare WiFi contracts or Chinese solar installations or American solar companies. They decry HFT (and our Finance Industry) as producing no value for society while HFT and our Finance Industry generate significant tax revenues while making financing more efficient, and offset our massive trade deficits for over three decades.
What these Socialist Elites really don't like is that a rich person will end up with control of the money. But in America, private property rights and profit motive has long put money in the hands of aggressive, forward-thinking minds instead of I-wasn't-smart-enough to-come-up-with my-own-idea bureaucrats. Our tradition of wealthy people who decide to spend their money on "extravagances" like hospital wings with MRIs and portable phones and indoor plumbing ("wait, Mr. Vanderbilt, you want to go bathroom INSIDE your house?) led to a country with 5% of global population producing/consuming almost a quarter of global output. HFT is just another opportunity for technology, infrastructure, and culture to be furthered, and you don't need to value the three milliseconds won by fiber through a mountain to value the impact of people investing in their own families, communities, and causes instead of sending it off to Washington (or, more likely, London, Hong Kong, Moscow, and Dubai).
But there are different ways to raise money, such as secured debt or selling assets or junk bonds or issuing new shares, that don't reward PE for shorting into their warrants.
If I was a shareholder, I'd expect every one of the people in management, save the guy who's in the process of closing some sales, to be living on raman. If the $1M insider note effectively clawed back some of their pay, then OK.
The pieces of BBRY could still be worth $15 to the right buyer(s), so the biggest challenge is to make sure they're not burning cash at billions a year. Foxconn helps with this in that they have high vertical integration, low cost production, and powerful sourcing. In fact... it's possible Foxconn could use this as leverage with Apple to threaten to get into the device business... though I suspect Chen will show some improved numbers the next couple quarters and then Amazon or Facebook or someone of that ilk will finally step in.
The mobile device business is not a financial player's game, nor a decent business itself. Google/Motorola just dropped their pricing, all kinds of players selling cheap phones, margins will crash. Only a premium brand with a complete offering to enterprises (including schools, where Apple shines) will be able to make money and survive.
As for security... most of the hacks occur out of the mobile network, BBRY won't help with that.
It's all about globalization, debt monetization, and growth. As long as there are no hard resource constraints- food, energy, water, peaceful real estate- then general good times will continue, not just for the US but for the rest of the world. It shouldn't take billions for think tanks to figure this out. But beware those out of power who would try to impede globalization, monetization, or growth with scare tactics in an attempt to gain power, as they'll only bring more hardship.
Always next quarter. Their space photovoltaics should be a gold mine. Need to execute. Looks like someone in management paid the price this quarter, hope they adequately take competitive forces into account going forward.
The phone market can be disrupted- witness Motorola, Nokia, Apple, Samsung swings in market share- IF you have something disruptive.
I propose BBRY come out with an innovative new product called Ballz. It's a golf-ball sized device, fits in your pocket, intuitive tap and vibration answering, messaging, and notifications while still in your pocket so you don't interrupt meetings, opens up to convert into google-glass-like device for a flexibly immersive experience that can take advantage of BBRY's superior messaging and security capabilities.
The extra volume can be used for more battery and memory, will help you know it's in your pocket or purse, and the small bulge will let everyone know you have Ballz (TM).
This is a much better plan than anything I've heard and I expect a job offer to execute this plan for BBRY- or whoever else calls first- very soon. Otherwise, they should do what I said they should do six weeks ago and just liquidate...
Excellent article and video.
Now let me take a contrarian position and thank Mukticat for his participation. I love this stock because of the fact-based discussions around the future of EV in China, a future that KNDI undoubtedly has a strong position in deciding. Just as with the climate change debate, there are uncertainties, and every good debate needs skeptics. While I wrote very bullish article on KNDI a few months ago, I consider myself a skeptic, and when I read of additional production facilities I think in terms of subsidies and unsustainable investments for uncertain feet in the door positioning more than sales, revenues, profits, and share price increases. So I'm still in the "show me" category and only recommend this stock to friends I know who are looking for potential mega-baggers - but have money to lose.
Also like the climate change debate, there are people with data on both sides and there are hacks. I'll say this about Mukticat- his data seems reasonable. Unlike Pearson and Sharesleuth, whose data and use of it strike me as irresponsible at best, Mukticat brings up some good points.
So, too, do Art and Daryush and Aaron. And the last similarity to the climate change debate is that the truth is likely somewhere in the middle and quite complex.
What does this mean to me? I doubt KNDI goes to $100 next year, just as I doubt NYC is covered by 20 feet (or even 1, although Sandy did a nice short term approximation) of seawater in the next 100 years. But just as I think there are good reasons to embrace some clean technologies without relying on the CO2 mythology, I think KNDI's sales will increase because hundreds of millions of Chinese want to drive cars, and am still as comfortable with 2015 target of $35 as I was in June.
So please keep playing Mukticat, because sharing your reasoning and source data- as well as others'- is the only way we can collectively arrive at the truth a bit earlier than those not paying attention.
John, I wanted to thank you for pointing me to Kandi (KNDI) when I brought up the idea of replaceable batteries a couple years ago. I invested at about $3, today it's above $7 and I think it could go to $35 within a couple years because they are focused on short range BEV,and public car sharing in China, but also have ATV and go-kart product lines that have allowed them to get into the game without massive losses.
Question: What is the possibility that Tesla acquires them? I know KNDI has a JV with Geely in China, but what about the US? Bike sharing has taken off in some US cities, could car sharing (in addition to Zipcar) drive development of short range EVs?
And... is Axion working with Kandi?
And I'll reply to myself here: perhaps the talk of the brand is part of the negotiating strategy to get the most for the pieces. Fair enough.
But consumers and companies (with BYOD strategies in fool bloom, and Apple, Google, and Samsung will make growing that job one) don't want a professional looking device, they want a beautiful, cool one.
Wang was an iconic brand. Zenith was an iconic brand. Blackberry was an iconic brand.
Blackberry has a ton of contacts and relationships with enterprise customers, cash, patents, and real estate. Anyone who tries to extract value from the "brand" instead of these real assets is a fool.
How about the "don't give a shit" model of failure, where a complex system works 90% but because the designers and purveyors of the system don't have to use it, critical weaknesses are allowed to not only occur but continue. It was a predominant feature of Soviet life, and to avoid it with ACA, every politician (including Mr. Obama) needs to get their health plan through the exchange.
The talk of cash and patents and real estate only matters if they're liquidated. Their greatest asset is an established enterprise sales force with tens of millions of active paying users, now. I don't see Watsa having a great vision for the company, rather, he was hoping to draw out other bidders.
Has anyone announced they're not interested?
Asking any manager of currency to consider inflation and economic activity is like asking a boat captain to move it along but stay off the rocks. Perfectly normal.
The bigger issue is why do we need currency managers? Because there aren't enough chickens and backrubs to fund houses and cars, let alone wars and dams. And while London condominiums and collector art are experiencing ridiculous amounts of inflation, food and midwest homes are still cheap. I do think Yellen will take some action to slow bank profits, though.
The lense through which all of this must be viewed is globalization. The greatest asset the vast majority of Americans (and Westerners) have held is their income-earning ability, and it has deflated tremendously as five billion people have entered the global labor pool. The arbitrage of this labor has produced significant profits for many large corporations (and their banks and their lawyers) and has brought both cheaper goods here and better living standards around the world (so the news isn't all bad). QE was just another step in the necessary adjustments to bring US labor pricing closer to global average. Vietnam is still under $1/hour, so there's a long way to go and a lot of "softening" yet to be done until an engineer in China and and engineer in the US are compensated on a more equal basis than in the past. Clearly, China's access to lower cost labor has created a lot of production engineering jobs that aren't being created in the US like they used to be.
The real debate in my mind is how much we tax and spend on protectionism and entitlements vs. private investment and charity to drive at least some incentives for people to behave in a productive manner. The answer will of course be "a mixture of the two" but I think it's important that we not lose site of the tension between giving people enough to live on that they don't turn to a life of crime vs. giving people enough to live on so they do nothing at all.
Forced, perhaps, but there is inflation showing up at the very high end, which is the end that Arab Sheiks care about and the economy doesn't need higher oil prices. Reagan and Nixon, once put in the driver seat, left their off-center views, and I just think it's likely Yellen does the same thing here. I guess we'll see.
Hmmm, so tell me... if you're running a business do you perceive more risk from:
A. Temporary Government shutdowns;
B. A massive cut in government spending;
C. Your competitors in other countries having lower labor and tax costs;
D. A requirement that you now pay for health insurance (at appx. $1/hour extra) for all your employees;
E. The Fed raising interest rates.
I understand that government and Fed action affect the job market, but if put in perspective, the point spread from what nearly everyone agrees is never going to happen (US government default on T-bills) is quite minor. So if they determined 900K jobs have been lost, I can see how other estimates of many millions of jobs lost due to other factors could be right as well.
Isn't that what was said 80 years ago? And yet, the dollar is still THE global reserve currency. Will it remain so over the next 100 years? As I wrote, it's a competitive world, so security at home and agricultural productivity and everything that goes with creating trust will determine that, but I think Yellen has enough experience to know that idle talk of taper and giving bankers massive windfall profits (not that I have anything against rich people, God bless the first ones who wanted to go bathroom in their house and fly in airplanes and take a phone to lunch as they paid for the developments that almost every American enjoys now) won't help.
I think the long term trend from working 80 hours a week tending crops and chasing away bears and cutting firewood and cooking in the fireplace 100 years ago to working 50 hours a week creating print pieces and running factories 50 years ago to 30 hours a week building web pages and selling insurance today will continue.
And government will continue to take on more redistribution of food and healthcare and housing and transportation and entertainment. I'm just not sure that the value add in manufacturing above raw materials cost will justify the expense of any manufacturing process let alone 3D printing. The good news is that there are some fascinating processes combining 3D printing and biomaterials that could create some very high margin products like replacement heart valves, especially if animal rights activists succeed in outlawing use of pigs, et. al.
There is one additional dynamic to consider: technology is obviating the need for human labor and even creativity, depreciating human capital. At $8/hour minimum wage, many Americans go unemployed due to Chinese at $1.50/hour, many of whom go unemployed due to Vietnamese at $.15/hour. Your vision of the future is Marx's predicted outcome, where wealth accrues to the owners of the means of production (these printers and robots) and not to labor. But commodities, handling risk, financing risk, etc. will still require incentives which will mean there will still be private ownership while labor suffers (tax and welfare policy TBD) so I think it's quite possible that rather than build new items, refurbishment and re-use will be the order of the day. Perhaps this just means that 3D printers in 2030 will be used to make replacement car parts for our 2015 Hondas.
Thanks for starting a model. To complete it, could you calculate and list your assumptions that tie to 3D Systems' stock price?
For example... what do you see as their likely market share, profitability, and IRR over 80 years? Does it justify a price 10X their current price?
The nature of margins and discounted cashflow is such that the value of any company can vary wildly when calculated on an NPV basis, which is why most valuation models include metrics like sales, patents, footprint, customers, engaged customers, etc. BlackBerry's NPV looks terrible because of their losses, but when you look at some of the other metrics, it's a brighter picture. It would take a lot of creativity and execution to make the most of BBRY's assets, but I think there are some very smart, visionary people looking at this. At least, there should be.
How about this as a flyer? McKesson.
BlackBerry + HIPAA + healthcare reform + globalization. McKesson doesn't have as much cash as most, but an integrated secure healthcare information solution could be a very compelling story.
There are some large automotive entertainment companies paying for QNX.
Well the cash and real estate is certainly worth something, add that to the $4/share patent value you guesstimate and we're above $9.
And when you say "remember insert-overpaying-acqu... don't forget they were overpaying acquirers- and there are a lot of companies who consider themselves to be smarter than HP.
Well, today wasn't a good day to put $8 into the broader market, and certainly not the momentum stocks, ouch!
"well received" could mean a few CIOs saying "yeah, this is what we asked for", "performing" could mean shipping and setting up sales calls- bottom line is this was a new product in a very competitive marketplace ("we all know what we're up for here."). This will be Ka-Ching for some lawyers, but I (am not a lawyer) don't see shareholders winning a dime.
Being from Chicago, I know Motorola employees who've moved to RIM (and now Motorola is repaying the favor in Waterloo) but have stayed clear of the stock as it's tough to catch a falling knife. The Fairfax offer and potential synergies between BlackBerry and companies looking to strengthen their enterprise position (I've heard most of their pitches) intrigued me, and all I did in the article was give my reasons for going long. I figure you should eat your own cooking if you're going to suggest where others put their hard earned cash.
Yours is the most aggressive patent valuation case I've seen so far.
I've negotiated to buy distressed assets in the past, successfully and unsuccessfully, and recall one instance where four companies were going after the same deal, three of us came up with essentially the same number independently, and the fourth came in 60% higher.
I like YOUR optimism. $13 within 3 months would be a nice return.
Actually, $9 within 3 months would be a nice return, $13 would be fantastic.
And 70M customers with working systems... you'd think with last week's healthcare exchange experience more people would recognize the value in that.