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Geoffrey Rocca  

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  • Dell: Boring Company, Exciting Numbers [View article]
    As I see it, it's simply a matter of adjusting the timing. Instead of recognizing the revenue over three years, recognizing it up front simply reconciles the accrual and cash flow methods of accounting in this category. It would only create an imbalance leading to double counting if the volume of Dell's warranty deals changes significantly over time. Otherwise the accruals over the up-to-three years should match pretty closely the actual volume of warranties issued in a given year.

    I hope this helps. Thank you for reading.
    May 9, 2011. 01:44 PM | Likes Like |Link to Comment
  • Consolidated Communications: A Strong Candidate for Dividend Investors [View article]
    I wish I could tell you. They may be able to pass on some of the costs to their customers, as most of their competition also uses a lot of debt and would be in the same boat. But ultimately debt refinancing is one of the unknowns for many businesses.
    Apr 21, 2011. 04:37 PM | Likes Like |Link to Comment
  • Consolidated Communications: A Strong Candidate for Dividend Investors [View article]
    As I have said, excess depreciation and amortization is a noncash charge against earnings, and is therefore a source of free cash flow. The payout ratio is therefore 81% based on 2010's earnings, so the dividend is covered at least for now. Taking into account the excess cash and my estimated value of future tax benefits, the company offers a free cash flow yield of 12.75%, and about 11.6% taking only one of the two into account.

    There may be better free cash flow yields out there, but hardly any better dividends that are this well-covered and sustainable.
    Apr 19, 2011. 12:28 PM | 1 Like Like |Link to Comment
  • Paul Ryan's Plan for a Debt-Free Nation [View article]
    I forget, which President produced the first balanced budget we had in decades?
    Apr 5, 2011. 05:54 PM | 8 Likes Like |Link to Comment
  • Pres. Obama's budget underestimates federal deficits by $2.3T over the coming decade, according to the Congressional Budget Office. His budgets would produce deficits totaling $9.5T over 10 years rather than his expected $7.2T. Chief reason for the discrepancy: Obama uses rosier economic assumptions.  [View news story]
    Rosier economic Congress is replacing one wild guess with another.
    Mar 18, 2011. 07:30 PM | 4 Likes Like |Link to Comment
  • Egypt bans the export of all gold, including jewelery. "This decision, which comes in light of the exceptional circumstances the country is passing through... is to preserve the country's wealth until the situation stabilizes," official news agency MENA says.  [View news story]
    As Adam Smith and most people since then have pointed out, the wealth of nations doesn't consist of the gold in it; it consists of the labor and capital resources that its people live on.

    Welcome to 1760, Egypt.
    Feb 27, 2011. 04:13 PM | 8 Likes Like |Link to Comment
  • Gold May Not Be a Bubble, But It's Also Not a Good Hedge Against Inflation [View article]
    As he said, you could also acquire land, or commodities, or even art. Gold and dollars are not the only two choices.
    Feb 14, 2011. 02:51 PM | 3 Likes Like |Link to Comment
  • High up on Amazon's bestseller list is the reprint of a once obscure book about the German hyperinflation. It took 20 German marks to buy 1 pound in 1914, it took 320 billion by 1923. "When Money Dies" is a detailed and disturbing account of that time.  [View news story]
    On the whole, when a book on a financial subject hits the bestseller list it's a good idea to take the opposite side of the trade. Remember Dow 36,000?
    Dec 30, 2010. 08:34 PM | 3 Likes Like |Link to Comment
  • Bad Deficit Reduction Ideas [View article]
    Eliminating the mortgage interest deduction would probably have mitigated much of the subprime crisis, as it incentivizes investing money into residential real estate, which is at its core an unproductive asset. I agree with nmelendez that it would be unfair to eliminate the deduction as to existing mortgages, and if it is eliminated it would probably be best to phase in the elimination in steps over a long period, possibly a decade or longer, in order to minimize disruption to housing prices.
    Nov 14, 2010. 01:43 PM | 1 Like Like |Link to Comment
  • Rayonier Offers Steady, Almost Boring Long Term Growth [View article]
    Excellent article. I have always been a fan of Rayonier, and I should also point out that timberland is widely believed to offer some protection from inflation.
    Oct 28, 2010. 03:30 AM | 2 Likes Like |Link to Comment
  • Will We Have Inflation in America? [View article]
    For total tax revenue, state, local, and federal perhaps; state data is hard to come by so the OECD figures are probably as close as anyone knows.

    But you said federal revenue, and that is nowhere near 30%.
    Oct 2, 2010. 12:21 AM | Likes Like |Link to Comment
  • Will We Have Inflation in America? [View article]
    It could but it won't. Total receipts is inclusive of all federal taxes.

    Actually, I found the updated figures. In 2008, total federal receipts came to 17.5% of GDP; in 2009, a mere 14.8% of GDP, and in 2010 the figure is projected to be 14.8% again.
    Oct 1, 2010. 11:43 PM | Likes Like |Link to Comment
  • Will We Have Inflation in America? [View article]
    "10. Federal taxes now take about 30% of our economy."

    How did you work that out? In 2007, the last year we have data for, federal taxes were 18.8% of GDP. 2008 was projected to have 17.6% and 2009, 18%. I don't see how 2010 could produce a 30% ratio; that's an effective tax hike of about 66% from 2009, and I think we all would have noticed Congress passing that one.
    Oct 1, 2010. 10:52 AM | 2 Likes Like |Link to Comment
  • Determining the Intrinsic Value of Gold [View article]

    Isn't that the same as a zero-coupon bond? The investor is banking on the probability of the issuer redeeming/buying back the bond at a higher price, or selling it to someone else in the future at a higher price. The difference is, the zero-coupon bond is expected to go up in price as it reaches maturity, but the principle is still the same. The investor takes a directional view on the bond price increasing. "

    The cash flow from a zero coupon bond is contractually determined; there is no speculation on what the figure might be. Nothing determines the price of gold when you decide to sell except the market levels. That is the difference, in Klarman's eyes and Saj's eyes, between investment and speculation.

    " Also over most horizons, Gold has outperformed every other equity/bond/currency index."

    Only very recently has that been the case, and a lot of that is caused by the current massive leap in the price of gold. If you start counting in 1971, stocks have still beaten gold by almost a full percent despite the recent run-up.

    And if you take an even longer view, in 1776 the price of gold was 3 pounds, 17 shillings, and 10.5 pence according to Adam Smith. The current price of gold in England is 814 pounds and change. That is a return on investment of 2.31%..
    Sep 16, 2010. 01:51 PM | 1 Like Like |Link to Comment
  • Determining the Intrinsic Value of Gold [View article]
    My long-term savings are invested in vehicles where both inflation expectations and a real return are built into the required return of the vehicle. The same is true of pretty much every other prudent long-term investor.

    If you keep all your money in a shoebox under the bed for 100 years, then yes, you'd have to worry about erosion of purchasing power.
    Sep 15, 2010. 09:24 PM | 2 Likes Like |Link to Comment