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Gabriele Grego

 
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  • Is Molycorp Bottoming? [View article]
    Nice article Fabrizio, well researched
    Jul 21 08:51 AM | 1 Like Like |Link to Comment
  • IBM: An Island Of Value In A Sea Of Overpriced Stocks [View article]
    Using book value to value a technology company makes absolutely no sense to me. As a matter of fact, book value should only be considered when valuing a business without a competitive advantage and economic goodwill.

    Even Coca Cola is trading a 5x book value, and that's not even technology.

    Buffett himself, has stated several times (e.g. in 1983 annual letter) that businesses generating high level of economic goodwill (and that sell at multiples of book value) tend to be superior to asset heavy ones (that sell around book value).
    Mar 12 07:15 AM | Likes Like |Link to Comment
  • IBM: An Island Of Value In A Sea Of Overpriced Stocks [View article]
    I think your comment is totally off the mark. Many of the people interested in this stock have solid foundation of technology and this is good because the qualitative side of a company is important.

    That being said, if you limit your analysis on quality and ignore "EPS targets and financial metrics", you are eventually bound to buy overpriced stocks. Google is indeed a great company, but at 30x earnings you are buying essentially three times more for each dollar of earnings compared to IBM. Cheap valuation can make up for a lot of mistakes in analysis.
    Mar 12 07:00 AM | 3 Likes Like |Link to Comment
  • IBM: An Island Of Value In A Sea Of Overpriced Stocks [View article]
    In investing of course nobody has a crystal ball.

    That being said, it can be of tremendous benefit differentiating between three main types of factors when guessing the long term impacts on a company.

    Factors 1: Transient issues - these tend to self correct automatically with the passage of time. Examples:
    - lawsuits
    - cyclical downturns
    - negative press
    - regulatory threats

    Factors 2: Dangerous issues - these factors do not self correct, but financially sound companies, with good managements and competitive advantages tend to overcome. Examples:
    - new competition
    - liquidity crisis
    - extreme recession
    - slow shift in customer preferences
    - slow technological shift

    Factors 3: Mortal threats - these factors may permanently cripple even a solid company. Examples:
    - Fast, technological paradigm change (e.g. Polaroid, Yellow Pages)
    - Stubborn, management-led resistance to change and adapt (Nokia)
    - Excessive leverage (e.g. Lehman Brothers).

    I believe IBM's current issues belong to categories 1 and 2, not three. Emerging markets slowdown is a combination of cyclical and reputation issues i.e. temporary. The cloud represents a paradigm change, but IBM seems to be on top of it.
    Mar 12 05:36 AM | 2 Likes Like |Link to Comment
  • IBM: An Island Of Value In A Sea Of Overpriced Stocks [View article]
    Hi Whitney, I regularly attend your value events and respect your opinion. Asa matter of fact, I was surprised when I learned you were short IBM. I agree with earnings being supported (partly) by accounting gimmicks, although the cheap valuation remains even if you consider a normalized figure.

    As far as the sustainability of the business, if I were looking at it in an exclusively static way, I would agree that some business units are indeed problematic. However, if you look at it dynamically, the picture may well be different. Products, services and business models change as the market evolves and IBM seems to have the resources to make a successful transition i.e. a management that understands the challenges ahead, a trusted brand and a sticky set of captive customers.

    Also, keep in mind that a great deal of revenue contraction is due to 1) emerging markets; 2) hardware; 3) business cycle lags for heavy IT spending.

    Emerging markets demand slump is likely to revert to its mean, at least partially. Fallout from the Snowden revelations will probably die out at some point; growth rates will eventually stabilize somewhere.

    Hardware is becoming a less important part of IBM value proposition and profit, accounting for a small portion of bottom line. As software & services continue to grow on a relative basis any future hardware drops will hurt far less.

    Despite the economy slowly being back on its feet, my feeling is that many businesses have still been reluctant to engage in massive IT spending. This is bound to change at some point and IBM will likely benefit more than other companies with more modest offerings.

    So, if your short is meant as a short term trade, you may well have a point. However, if you are looking long term, I respectfully disagree. Good luck.
    Mar 12 05:20 AM | 2 Likes Like |Link to Comment
  • IBM: An Island Of Value In A Sea Of Overpriced Stocks [View article]
    Buying good companies during times of underperformance usually has good results if you are patient.
    Mar 11 07:01 PM | 2 Likes Like |Link to Comment
  • IBM: An Island Of Value In A Sea Of Overpriced Stocks [View article]
    As sad as this is for workers, I want companies in my portfolio to be willing to cut costs when needed. This is usually one of the surest sources of future profits and it is often overlooked.

    Check out how well American Express did after cutting a good portion of the workforce during the financial crisis (stock went up ninefold).
    Mar 11 06:58 PM | 1 Like Like |Link to Comment
  • IBM: An Island Of Value In A Sea Of Overpriced Stocks [View article]
    Thank you for your knowledgeable comment with which I fully agree.
    Mar 11 06:56 PM | Likes Like |Link to Comment
  • IBM: An Island Of Value In A Sea Of Overpriced Stocks [View article]
    I agree with you on comparative valuation. That said, IBM looks cheap on an absolute basis as well (unless you assume earnings are going to fall). Earnings yield is 8% with earnings growing at double digit growth.

    Stocks don't get much cheaper than that ever, unless they are in serious distress (this is not IBM case).
    Mar 11 06:55 PM | 3 Likes Like |Link to Comment
  • IBM: An Island Of Value In A Sea Of Overpriced Stocks [View article]
    Well, I took a position at $175, just took me a while to write the article. That said, the price difference isn't so great and the stock is still cheap at current prices.
    Mar 11 06:49 PM | 4 Likes Like |Link to Comment
  • Ackman's Short Of Herbalife Highlights Lack Of Adequate Information From Federal Agencies [View article]
    Great piece thank you!

    What is your personal opinion regarding the Ackman short? Given all the publicity currently surrounding Herbalife, do you think the FTC will eventually give a closer look? Do they have a chance to come up with a compelling case to shut the company down?
    Jan 2 11:03 AM | Likes Like |Link to Comment
  • Annaly's Dividend Cut Is Confusing [View article]
    They can probably raise significant amounts of cash selling MBS that significantly increased in price as yields got squeezed. They can also increase leverage which is low by historical standards.
    Dec 19 11:07 AM | 3 Likes Like |Link to Comment
  • Moving Money Into Western Union [View article]
    Nice article thank you very much
    Nov 21 04:37 AM | Likes Like |Link to Comment
  • Teva: Copaxone And Management Uncertainty May Be Hiding One Of The Last Bargains Around [View article]
    Hi sleepdoc and thank you very much for your very valuable comment. We have limited resources and our "surveys" cannot cover dozens of doctors. The neurologists we did approach, however, were both senior and highly experienced with MS.

    In any case, overall your impressions seem to confirm our thesis that Copaxone sales are likely to drop gradually, rather than abruptly (as the market seems to be implying).
    Nov 6 08:08 AM | Likes Like |Link to Comment
  • Teva Pharmaceuticals: Valuation Is Too Depressed On Worries About Copaxone [View article]
    Thanks very much for the well-thought and well-articulated article Robert. I appreciated your endorsement also.
    Nov 5 05:26 AM | 1 Like Like |Link to Comment
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