Douglas Ehrman

Long/short equity, hedge fund manager, tech, gold & precious metals
Douglas Ehrman
Long/short equity, hedge fund manager, tech, gold & precious metals
Contributor since: 2012
We are all entitled to our opinions, but with a trailing P/E over 300 and a forward P/E over 100, it is more of a factual statement than an opinion. The opinion involves what to do with the information available. I think the new release bodes well for Amazon growing into a more reasonable valuation on the earnings side, but unless you are trading it on the Kindle pop alone, understanding that it is expensive is prudent.
If I were rating the launch alone, A+. The high valuation and slightly overbought conditions led me to give the stock an A-.
It seems it may be worthwhile to clear up a few things at this point. I humbly stand corrected on the Verizon numbers - the year-end estimate is a total of 260 million, not an additional 260 million. I do not think this changes the point that the coverage offered by Verizon is significantly larger than the that offered by AT&T. But I appreciate accuracy, so my apologies and thanks.
As for Apple being highly priced - there is not a single mention in the article of Apple having a "high price". I refer to the stock as trading "near all-time highs" and as being "priced for perfection." The first characterization is factual. I'm sorry, but there's not much to say beyond that. As far as it being priced for perfection, I believe that the stock has had a run that is begging for a correction. This is not a commentary on whether the stock represents a good value in terms of P/E or any other metric. For example, Apple stock CORRECTED from $636 on April 9 to $530 on May 17. The company survived. Investors survived. It was a correction. I believe another one is due.
I am glad that we have all taken the opportunity to consider the difference between a stock's price and what that price represents, but the thrust of my point seems to have degenerated into personal attacks that are baseless. One of the most vocal above has posted an impressive 746 comments and 1 article. Reading the work of others and attacking it is easy - I would challenge him to put his name on his own opinions rather than responding to the work of others. In either case, while I appreciate spirited debate, name calling is for children and passive aggressive innuendo is for those without the character and moral fortitude to let meaningful disagreement speak for itself. As he discloses he is very long Apple, so perhaps anyone who disagrees with that position is seen as a threat. Perhaps this can all be put to rest. If Apple soars, I am wrong.
This comes to this last point that should be made. Few companies engender the strength of feeling that Apple does. Those who hate it, think it is the next evil empire, and those who adore it, defend it with ignorant loyalty. Apple is, without a doubt, a great company that has done amazing things and made many investors profits. The reality of trading is that traders talk up their own positions. Shareholders think Apple is going to $1000; some who have missed the ride think it is going to implode. Neither of these scenarios was advocated above. I think a correction is due and I think that Apple needs to wow the market with a special device again. Nothing more.
If you follow the link you can see the piece I referred to for the figures on both AT&T and Verizon. I wrote that Verizon will add 260 million people in its coverage area, not that it will add 260 "subscribers." If that were the case, I would sell everything else and just own Verizon. I suspect that it is an aggressive figure and I apologize if it was misleading. The underlying point is that Verizon has a significantly larger and faster growing coverage area. This has the potential to materially impact the performance of each stock.
Value stocks are defined by many features, but share price is not one of them. Any investor shopping for value based on share price, should consult a professional because this is a criteria that will get one in trouble. I have seen this type of discussion surrounding value stocks before, so it is apparently a common mistake.
A back-of-the-envelope calculation looks like the dividend would be around $0.90 depending on multiple moving parts. I think it is unlikely that the company will abandon the buyback program, however, so it is somewhat academic. Hope that helps.
You mentioned that Kinross is a bargain compared to its competitors and then quote share prices. Perhaps I missed a nuance of the article, but a high share price alone does not make a stock expensive and any meaningful way. If I missed a detail, please let me know.
While I never become overly concerned over the one-day performance of a given trade, the fact that on news which decreases the likelihood of QE3, SLW is up and SLV is down is interesting. I believe this highlights the idiosyncratic nature of trading and the need to make choices that reflect one's convictions and stick with them. That being said, I do believe that QE3 will take place at some point in the short-term, which should be bullish. The advantage of SLW is that it does not have general exposure to operating risk. I am bullish on the stock and would buy, not hoping it will go down - I would never target a loss - but with enough dry powder that one can dollar cost average if there are declines.
Without speculating on specifics, I believe that in an election year there is increased pressure to show a stable economy. If one oversimplifies an election to a choice between the status quo and something new, there is a strong impetus for an incumbent to pull out all the stops leading into November. Please do not think that I see this as an overall negative, but stabilization in the economy is typically bearish for precious metals.