FOHC Resources

Long/short equity
FOHC Resources
Long/short equity
Contributor since: 2012
Thanks for that Ted, that's a great analogy. Good luck!
Nice article. One other point of reference: the average price to book ratio for the S&P500 is 2.86, the avg p/b for internet stocks is about 5, this includes unprofitable companies. Yahoo's p/b is about 1, so if it were trading only at the S&P average, that would put it at about $143 a share. In other words, Yahoo is pretty undervalued by this measure.
Nice article. One thing I would add that helps put things in perspective in terms of Yahoo's value...the average price to book ratio for internet stocks is 5, even unprofitable tech stocks often trade at above 3. Yahoo is currently at about 1. So even if they were to only trade at 2, it would still equate to an $80 stock price assuming Baba shares are relatively stable. http://bit.lyw4jRpw~ADAMODAR/New_Ho...
According to Yahoo's balance sheet they have about 16B in assets, but it is plainly evident that their remaining stake in Alibaba alone is worth more than that. Even if you grossly overestimate the taxes Yahoo could pay on the Alibaba stake, Yahoo is still trading at less that 2x book value at $40. Considering that it is almost unheard of for a profitable tech company to trade at a price to book ratio that low, Yahoo isn't expensive, it's a value proposition.
It seems like there is a nearly ubiquitous misunderstanding of valuation for Yahoo's Alibaba stake. According to Yahoo's balance sheet they have about 16B in assets, but it is plainly evident that their remaining stake in Alibaba alone is worth more than that. Even if you grossly overestimate the taxes Yahoo could pay on the Alibaba stake, Yahoo is still trading at less that 2x book value at $40. Considering that it is almost unheard of for a profitable tech company to trade at a price to book ratio that low, Yahoo isn't expensive, it's a value proposition.
Even if you grossly overestimate the taxes Yahoo could pay on the Alibaba stake, Yahoo is still trading at less that 2x book value at $40. Considering that it is almost unheard of for a profitable tech company to trade at a price to book ratio that low, Yahoo isn't expensive, it's a value proposition.
Yesterday at the shareholder's meeting: "So I think we are making some really good progress on the autopilot side, and I am confident that in less than a year you will be able to go from highway on ramp to highway exists without touching any controls." Seems to coincide nicely with Model X ramp up next spring. On ramp to exit ramp is a pretty huge step forward.
Interesting article, nice to see a bear perspective fleshed out by more than simply saying TSLA is overvalued, you definitely bring up some valid points. One point that might be useful if you think the Qualcomm/Tesla comparison is worthwhile is to take a look at the price to book of Qualcomm over time and compare it to Teslas, I would venture a guess ( I haven't looked at it) that QCOM's p/b was quite high around 99', much higher than TSLA now, and I would also guess that TSLA's growth potential is much faster and robust, so that might be worth taking a look at and seeing how it adds to the comparison.
Is there an estimate for when Phase 2 will be completed?
Thanks, I hope they find a way to speed through phase II or publish interim data to the FDA, this therapy really ought to be in broader use by now.
Have they ever mentioned when the Phase II is planned to conclude or if there will be an interim update?
That was a good report, glad to see them getting Autologel on the market and to medical providers. Seems like they have a full plate for now but is there any talk of applications outside of wound care like burns or cosmetic? Seems like it could serve as a useful supplement or even a replacement for a pretty wide swath of treatments.
P.S. When I wrote "Or often you get halfway through an article ..." I should have said every once in a while, not often, didn't mean to sound overly critical, just constructive.
Eli,
Thanks for that well thought out policy explanation, the use of pseudonyms is tricky but hopefully most who do so do it for good reasons. Glad to know you guys are thinking about things like that. One other thing that concerns me with SA sometimes is that in some sense SA is a place where people come to be educated in finance, business, economics etc. A reader or contributor could be a seasoned hedge fund manager or a novice with almost zero investing experience. Both can probably have worthwhile contributions as long as they are clear about where they are coming from, but with the growth of SA, one of the things I've noticed is that more and more of the contributors aren't really qualified to be "educators" in those subjects in the sense that they often do not actually know the definitions of the terms or concepts that they are using, and yet they have a platform to "teach". Or often you get halfway through an article only to realize that the author doesn't actually understand what they are talking about in spite of their bio suggesting that they are experts. Moreover, I know of at least one pretty prolific contributor who has written over 20 articles about one company/industry and been wrong in pretty much every sense every time. Disagreement and contrarian ideas are important, but 20+ wrong articles in a row doesn't really seem like it should happen, it's a disservice if SA is incorrectly educating people for clicks. If SA wants to keep growing I'm not really sure there is an easy fix for the issue, it may just come down to quantity vs quality and of course being clear about their qualifications. But one thing I was thinking might help is to loosen the idea that every article has to be an actionable suggestion that is written authoritatively, that way someone who isn't qualified to write authoritatively but still wants to contribute and maybe start an insightful discussion can write an article without feeling like they have to misrepresent themselves and sound like a professional. Of course that doesn't solve the problem when well qualified authors write authoritatively and are just wrong. Anyway I'm sure that's stuff you already consider, just my 2c, hope it's constructive.
So maybe to steer the conversation towards what seems like the most relevant thing: how good is Neuvax? I've only loosely been following GALE, so maybe some of these questions are already answered, but is it looking like Neuvax is best suited as a treatment, as a vaccine? What kind of efficacy is it looking like? Does it offer something better than the current standard?
+1 Tesla might be overvalued but that doesn't mean it's a great short right now. The sooner you exit a bad trade, the sooner you can enter a good one.
Seems like a lot of the confusion over the importance of regional deliveries/orders could be easily remedied by using some common sense and listening to the last conference call. Tesla is a sniper rifle right now, they are just targeting strategic regional markets one by one, at the expense of other less priority markets. The market is expanding and Tesla just doesn't have enough bullets to hit every target at the same time...a good problem to have in business.
George, interesting+well balanced article. On the growth side it makes you wonder how the battery industry will look in ten years.
Nice article, is there any visibility on how well these stem cells treatments' efficacy compares to the autologous treatment from CMXI? The research they have put forward blows away current standards of care, but I haven't seen how well it does compared to stem cell treatments.
Paulo, minor fluctuations in deliveries are very normal if not ubiquitous to growth companies. Imagine yourself running a small lemonade stand, and a big heatwave comes around, suddenly you've sold all your lemonade, have to run to the store to get more, then you can't make it fast enough, then you have a line of people forming, so you start raising prices and selling to whoever looks like they'll pay the most first...that's kind of what is going on with Tesla, only instead of a heat wave and simple lemonade, it's climate change and all the complexities of the auto business.
Paulo, tracking the relatively minor monthly or even quarterly regional fluctuations in Model S sales is interesting but not really not that fruitful for investment discussions at this point, for several reasons. Two of the big reasons are that A) it's an international company that has potential markets on every developed continent and they have only focused on one of the three big markets thus far, and are only just beginning to scratch the surface of the largest market (Asia) right now and B) the model S is now a relatively small part of what investors or analysts should look at now when investing in Tesla, there are other models to consider, battery costs/sales, etc.
Illuminati, I believe the typical lease agreement is for 20 years, it could take decades to build out the residential market, and who knows how long for commercial buildings. If I remember right they are aiming to do their 1 millionth residential lease this year, which sounds like a lot but is only a tiny fraction of the overall "market".
Cmnsense,
Actually I think we probably agree more than you realize. The lease strategy is definitely favorable for the near term future, but I could see them needing to focus on a cash strategy in the future for various reasons. The cost of solar panels is approaching a point where people are asking themselves why sign a 20 year lease when they can just buy it, regardless of subsidies. Either way, I agree that they pretty much are a utility right now or at least of the future (that's their overarching business plan/mission) and that storage is an essential piece of the puzzle...that's kind of what my above article was all about. Between cars being used as storage and actual storage systems installed, that's pretty much where SCTY is trying to go.
Illuminati, obviously all business start small, preferably in markets that are most favorable, and SCTY and the industry in general is just scratching the surface in terms of the American market, and that says nothing about international. For now they seem to be focusing on the leasing business and as subsidies diminish, interest rates go up, technology matures, costs go down, it looks like they might shift focus onto just being a cash installer. Lower subsidies don't help them but lower solar costs helps them a lot, remember SCTY is an installer, not a manufacturer. And yes, people are surely just buying systems, but they still need someone to install them, and the no money down leases are probably still a big demand driver.
Illuminati,
No I meant regardless of subsidies. Solar panels are now being produced in volumes and efficiencies that in many areas make it a worthwhile investment (in the sense that they can lower or even cease their energy bills, and often sell excess energy back to the utilities). Coupled with electric vehicles makes it even more of a value proposition in many cases. And I suspect that by the time the tax credit drops in 2017 the value will be widespread enough that demand for most solar companies will be quite robust.
Wise, my understanding is that if the gigafactory builds batteries for cars at a significantly more cost effective rate than is available today and those car batteries are eventually recycled into home storage systems, the cost of putting li-ion or whatever chemistry the gigafactory ends up using in homes will eventually drop to the point where it becomes a common sense sort of addition for any homeowner. So while today it might not make sense, it might not be that long till it does.
These are some interesting points, I wonder if eventually SolarCity will move away from the lease model and focus more on installations.
Rock that's a good point but in the long term when we're looking 10-20 years out the technology might come far enough and the cost savings will be so significant that most households will be happy sacrifice a tree limb here or there to make it happen.
Pat it sounds like many people have similar issues, in the talk yesterday Rive mentioned how it was taking up to 8 months to get the net metering switch flipped.
Rive on storage: Storage is a game-changing product. Those in the game don’t want to change the game. Utilities are trying to delay the game from changing
To view the CPUC discussion:http://bit.ly/MAro4M
Some quotes from the discussion: http://bit.ly/MArol2
Jason,
What do you think about Tile's above comment?
Most intelligent article I've seen on SA in a while, nice to see an "analyst" who has actually cracked a finance text book. One thing I think worth mentioning is that there is a distinction between overvalued and bubble. If you've got a bubble, we're saying that even the slightest pinprick will make it pop into a thousand pieces (like a lot of dotcoms back in the 2000s). But when we are looking at companies like Amazon (today not 2000) or Tesla, they are unequivocally overvalued, but neither of these companies is going to implode in a recession, in fact both would likely capture increased market share in that event. So while they might be overvalued, it would take a world event much worse than a recession to really make these overvalued companies pop like bubbles.
Ruud,
I suppose everyone has their own definition of good management, and while it has many facets, the main sign of good management is whether they are doing all the right things to accomplishment the company mission and return profits to stakeholders. As an investor and someone who has a degree in business I'd say that there are very few if any public companies today that are being managed as well as Tesla.