Seeking Alpha
View as an RSS Feed

Envoy Global Research  

View Envoy Global Research's Comments BY TICKER:
Latest  |  Highest rated
  • TowerJazz: Restructuring Charge Masks Huge Margin Improvement And Earnings Beat [View article]
    Thanks, I've followed this company for quite some time and did well on the recent run, but I wouldn't put much faith in projections for 2017 in evaluating the company at this point. With 90 million shares or so fully diluted (just looked at the financial footnotes), the market cap is around $1.4 billion, so the multiple to base FCF already bakes in some of the improving margins you project. I'm not saying the stock can't go up more, or will go down alot, just that this is now not a very attractive bet anymore given the appreciation in the last 18 months. Also, there are some things that could go wrong now, even if almost everything has gone right now for a year.
    May 16, 2015. 01:31 PM | 2 Likes Like |Link to Comment
  • TowerJazz: Restructuring Charge Masks Huge Margin Improvement And Earnings Beat [View article]
    TSEM was a great call alot lower, but at current prices the risk/reward is simply no longer attractive; basically it's a 50/50 bet. The financial improvements will likely level here going forward and comps will be difficult, plus the valuation is certainly not cheap any longer when you look at free cash flow, which accounts for the cap-ex needs of the company. Basically, this quarter the company had cash flow of around $20 million, or $80 million on annualized basis. With a market cap of around $1.2 billion (I'm actually not sure exactly what the market cap is because it's not clear how many shares they have out now, but it looks to be over 80 million), I think the valuation already reflects the company's substantial financial improvements over the last year.
    May 16, 2015. 08:30 AM | 1 Like Like |Link to Comment
  • Beating The Market Is Simple, But Not Easy [View article]
    Great article. The world is way too complex nowadays and changes happen far too quickly for anyone, most of all outside third-party investors, to have even the slightest clue as to how to value individual stocks. The best strategy is clearly a quant strategy, as the author states, even if it saying that does not really help, as the devil is in the details and it's not really clear what quant strategy will work. Interestingly, VC's employ a similar approach by investing in tons of start ups in the hope that one big winner will make up for all the losers. It's clear, based on the natures of the businesses and the silly valuations, that VC's do very little research on what they are investing in. They just employ a statistical approach.

    Incidentally, alot of what works in the stock market is simply based on being in the right sector. This year I experimented with real money and basically randomly chose 10 biotech stocks. Unsurprisingly, my novice biotech stocks far outpaced the returns of the stocks I picked using classic DCF etc., and most of the companies I analyzed traditionally, and thought I understood, have been big losers. One of my best investments ever, was in a company I never even bothered to read the SEC filings for. So much for research.

    After having played this game for 15 years, I've learned that the best investment strategy is just to keep it simple and automated. Have a few basic criteria you look at to make a decision and then just diversify. The less research the better, as most of the information out there is meaningless.
    May 6, 2015. 05:34 AM | 2 Likes Like |Link to Comment
  • Accuray On Its Way To Being A 'Why Bother?' Stock [View article]
    I don't think orders can be called disappointing just because they didn't meet sell-side expectations (don't even get me started on the uselessness of sell side research, in general). The gross order growth was 15%, which is fantastic for this industry. The only problem this quarter really was the currency. The company is making alot of progress financially and the products are excellent. The issue with ARAY is and wil always be the same, they are a tiny player going up against a goliath called VAR. This is what makes ARAY a difficult and risky proposition for investors. ARAY's sales process is incredibly difficult. Even the best salesman will have a very hard time selling a hospital when the competitor is VAR.

    However, I too have added ARAY to my portfolio on this dip, because I believe SBRT will continue to advance with time, and ARAY has an excellent system for various indications. This will eventually be recognized both commercially and by the market.
    May 5, 2015. 07:08 AM | 2 Likes Like |Link to Comment
  • If This Is A True Sell-Off In Biotech... [View article]
    Yes, I agree, but I don't think they will or want to contain costs. Too much money going around. Who do you think has the biggest lobby in Washington? Anyhow, the Republicans are in a real pickle now and I'm sure secretly they are dreading the ramifications of the June ruling should it turn out in their favor.
    Apr 30, 2015. 11:06 PM | Likes Like |Link to Comment
  • If This Is A True Sell-Off In Biotech... [View article]
    Unless you are living in an alternative universe or are brainwashed by silly political rhetoric, the reality is that Obamacare has had zero negative impact on business and employment as a whole. In fact, since Obamacare has been enacted business has improved and so has employment. Of course, I'm not going to suggest that Obamacare helped most non-healthcare businesses, there is no correlation really, business is getting better for a variety of reasons. However, for healthcare businesses, in particular, the fact is that Obamacare is a massive boon as they now have millions upon millions of new customers. That's why you see the insurance companies and everything related to healthcare at multi year highs. If Obamacare subsidies are ruled illegal, you will see a crash in the stock market that will make 2009 look like child's play. I'd wait till the ruling comes thru before making any big bets on biotech.
    Apr 30, 2015. 11:00 PM | Likes Like |Link to Comment
  • If This Is A True Sell-Off In Biotech... [View article]
    The thing that can kill biotechs is a ruling against subsidies for certain states on Obamacare this summer. What few people understand (or want people to understand) is that Obamacare has been a massive cash cow for the entire for-profit healthcare industry, i.e. pharma, insurance, hospitals and by extension biotech. In fact, the entire current biotech bull market, which started in earnest 2011, is basically predicated on Obamacare, and the ramifications of having millions upon millions of new people, with pre-existing conditions, under insurance plans, which in turn supports the obscene prices for many treatments, and high valuations for potential future drugs.

    If the Supreme Court rules to take away subsidies for states relying on the Federal exchange, this would put the entire healthcare industry in a serious tailspin, and the most speculative sector in healthcare, namely biotech, would surely crash. In fact I think the entire economy could subsequently crater if the Supreme Court is silly enough to rule against subsidies, but that's another post.

    The only hope for investors is that most of the businesses that are reaping massive rewards from Obamacare, are not brainwashed by silly politics, and fully understand the benefits of Obamacare for business, and the dangers of a collapse in the current system. So surely they are working overtime wth lobbyists to develop contingencies to avert a disaster in the event the Supreme Court votes to overturn Obamacare. However, one never knows with the crazies in Congress, how this might play out, as there are still plenty of nuts that believe Obamacare is some type of socialist ploy, when in fact it's the exact opposite.

    In sum, pay close attention to the Supreme Court rulings on Obamacare in a couple of months. It's a black swan that nobody mentions (the ramifications are much bigger than Greece), and could really have massive implications for the market, especially healthcare.
    Apr 28, 2015. 08:58 PM | 8 Likes Like |Link to Comment
  • Builders FirstSource - Transformational ProBuild Acquisition Could Drive A Double In The Stock Price [View article]
    The company has interest expense to cover also. You can't value the equity just on EBITDA minus cap-ex, and ignore the debt costs.
    Apr 15, 2015. 08:23 AM | 2 Likes Like |Link to Comment
  • A Net Net Stock With Potential To Become Profitable In The Near Future: STR Holdings [View article]
    I should also add that management is quite shareholder friendly here. In theory, when they were considering the liquidation and were flush with cash, they could have just let the cash sit on the balance sheet and paid themselves enormous salaries, like most other companies in their position do. Instead they executed a buyback and paid out a large one-time dividend post the Zhenfa transaction. So at this point considering their past actions, I'm willing to give management the benefit of the doubt here as to the potential of the new business in China. Though, of course, the stock remains very risky given the many uncertainties of the business.
    Apr 12, 2015. 04:54 PM | Likes Like |Link to Comment
  • A Net Net Stock With Potential To Become Profitable In The Near Future: STR Holdings [View article]
    STRI is quite risky, but the upside in this stock is enormous, especially since very few investors are even aware of the situation or understand what has transpired here over the last few years. You can't look at the current historical financials from the last year and draw any conclusions. I wouldn't necessarily analyze this stock as a balance sheet story, except insofar as their balance sheet assets provide them with enough capital to execute on their business plan and get to profitability. The key is to understand the potential of the encapsulant business in China as well as the value that Zhenfa brings to the table, as well as the history of STRI and their valuable knowledge as it pertains to encapsulants. In terms of the financial potential here, reading the proxy for the Zhenfa transaction is the best investors have right now, a long with the latest conference call. The proxy is available here: http://1.usa.gov/1NvlRdT - My guess is that if they meet their projections over the next 2 years, this stock will be worth a minimum of $5, which is only around $100 million, still a tiny market cap relative to the encapsulant opportunity (as wlel as other solar opportunities that Zhenfa will surely push into STRI as they have already indicated as their intention).

    Anyway, the key here is to ignore the historical financials here from the last year or so, as they are bound to mislead as to the future potential, and just keep track of the progress over the next two quarters.
    Apr 12, 2015. 04:29 PM | 1 Like Like |Link to Comment
  • A Net Net Stock With Potential To Become Profitable In The Near Future: STR Holdings [View article]
    the gross margin will improve dramatically as sales recover and the excess manufacturing capacity is used.
    Apr 12, 2015. 03:38 PM | 1 Like Like |Link to Comment
  • JAKKS Pacific Shareholders Feeling 'Frozen' After Q4 Results Are Actually Missing A Really Good Story [View article]
    The notion that a buyback has any long-term positive impact on a stock price is one of the great myths in the stock market. The myth continues to exist because it's quite profitable for many people to sustain the myth, and quite easy to marshall spurious arguments in its defense that engage an army of ardent believers.

    However, in the vast majority of cases, buying back public stock creates no value in a business long term because the money essentially disappears and it is not invested in the actual business. It should be noted also that buying stock is the secondary market, excluding IPO's and other direct offerings, is not an investment, as you are not investing in anything. You are merely engaging in a money transfer with some other entity. The company gets no money. To suggest that a company "invest" in it's own stock is, as such, a totally nonsensical proposition. If they want to invest, they can hire more people, engage in R&D, spend money on marketing etc. If instead, they buy stock, the company is in reality losing money and just gives it to whoever they are buying the stock from (usually some hedge fund or management itself). The end result is that shareholders are poorer and they have no real investments to speak of in the business, so growth is curtailed.

    I think it's axiomatic, that the way to grow a business is to invest in the business, not in the paper shuffle that stock market represents. There are of course exceptions to this rule, when buybacks are good, but these case are quite rare nowadays, and JAKK is certainly not one of them by any means.

    Anyhow, I'm sure I'll never convince anyone here that buybacks are generally a stupid idea, but in case you are interested, a good article addressing the fallacy of buybacks, for most cases, can be found here:
    http://bit.ly/1A6b6Ue
    Mar 26, 2015. 07:55 PM | Likes Like |Link to Comment
  • The Future Of Seeking Alpha, From One Contributor's Perspective [View article]
    Here is an example of a link that showed up for PERI in my "News and PR" tab for my portfolio (http://bit.ly/1NkkYPS) - this silly type of article is typical of the garbage Zacks publishes and it should not be in the "News and PR" tab, where at least someone like myself is looking for real news from companies themselves - not some nonsensical analysis.
    Mar 26, 2015. 06:36 PM | Likes Like |Link to Comment
  • The Future Of Seeking Alpha, From One Contributor's Perspective [View article]
    Well lately, I've seen a huge amount of releases in my News section of my portfolios from from Zacks, MarketRealist.com, 4-traders.com, to name a view of the resources. These publications are not news whatsoever and most of the articles are just regurgitated nonsense and useless. I understand you need to make revenue and these companies probably pay you per click to direct readers to their websites, but News should be news, and you should only put established News organizations, like BusinessWire, Reuters, and PR Newswire, in the news in the News and PR Section for Portfolios. The other stuff as mentioned above, can be put in another section.
    Mar 26, 2015. 06:34 PM | Likes Like |Link to Comment
  • This Stock Market Bubble Will Burst Like An Overinflated Balloon [View article]
    I should also mention that this article doesn't take the opposing view to try to understand why the stock market has had a multi-year run, and if those conditions will continue to hold. Simply looking at macro indicators and valuations to paint a negative picture, is too one-sided, and bound to mislead, as valuation arguments always do.

    That said, one of the primary reasons for the continued bull run, other than obvious low interest rates, is that the US market is relatively in better shape than any other market worldwide. So money keeps pouring into the US from a multitude of places, because the US is seen as relatively safer. A significant amount of this money flows into the stock market directly and in a circuitous fashion. I honestly don't see how this money flow trend will change any time soon, given how many problems there are in virtually every other economy in the world, e.g. Euro area issues, Russia, Brazil, China etc.
    Mar 26, 2015. 06:27 PM | 3 Likes Like |Link to Comment
COMMENTS STATS
483 Comments
453 Likes