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Glenn Abrett

 
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  • Alibaba Exploded: Should Other Chinese Stocks Follow? [View article]
    Have been long baba since the start,but trimming my position as the stock has risen. Also have owned bidu on and off for several years. One thing I should make everyone aware of is that the chances that China decides to make the shell company arrangement illegal and declare foreign investments in bidu and baba and other companies worthless, is exactly zero. Why? Think of it this way. If China invaded Taiwan tomorrow the pacific fleet would sail to the strait between the two countries. The security council would meet and much name-calling and hand wringing would ensue. In the end, it is likely that nothing much would be done -- sanctions, maybe -- but military force unlikely.

    On the other hand, if China dared to declare foreign investments in its major companies worthless, Beijing would be reduced to nuclear cinders in a week. These companies are owned, partially,by the rulers of the world (neither the chinese govt nor even the american govt) and you simply don't mess with these folks. So, basically, stop worrying and buy baba and bidu and any other Chinese companies you think represent good value on the merits.
    Nov 26, 2014. 03:28 PM | 2 Likes Like |Link to Comment
  • ModernGraham Quarterly Valuation Of Facebook Inc. [View article]
    Simplistic analysis like the above will never uncover significant market opportunities which require knowledge and understanding of the actual business, its strengths vis-a-vis its competition. Its opportunities. Its weaknesses. Its addressable market size. The potential length/duration f the up-ramp the company is on.

    Also using a very simple implied growth metric would make pretty much every sp 500 company (except gilead) overvalued. Think of it this way. If fb grows 26% a year for 6 years -- fairly high probability -- its earnings would quadruple to around 7/share. If stock price never budged from the present 74/share -- the trailing multiple would be 10.5 while the forward growth might still very well be > 20% -- making the stock absurdly undervalued.

    The point is that you must consider the size of the addressable market and the length of the upward ramp that a company is on. The present price does NOT imply a forward growth of 44% -- if folks thought the company was going to grow that fast for a significant period of time the price would be 300/share or greater -- rather the present price implies a 15-20% growth for > 5 years. Realistic, possibly conservative -- very possibly an underestimate of the vast marketing/monopolistic power that Facebook controls.
    Nov 22, 2014. 12:41 PM | 4 Likes Like |Link to Comment
  • The end of China's economic miracle? [View news story]
    China is certainly not a demand economy. It is an interesting hybrid. As is the US and Europe, just to note. As computer models improve, controlling certain things from a central source makes more sense -- the models have better predictive value than older models, though are still nowhere near detailed enough to allow a total central command. The Chinese certainly have a ways to go to catch up to Europe and a longer ways to go to catch up to US -- in my opinion any notion that China catches US in productivity is way over my time horizon -- not likely for a hundred or more years.

    The basic problem with China is not their awful government structure -- even more awful than US -- but their education system which discourages creativity and innovation. But, obviously there are exceptions and there seems to be a strong entrepreneurial streak, second only to US.

    So. Who knows. 7% growth still leads the other major economies by a long, long margin.
    Nov 22, 2014. 12:25 PM | Likes Like |Link to Comment
  • Apple Peak? Why I Completely Disagree [View article]
    Mr. Blairs analysis have always been superficial at best. To understand what makes apple so strong one must understand technology, innovation and networking effects. One must also understand the sheer power that apple's cash hoard entails. Apple has brought the present consumer computing device market into existence . First by pioneering the personal computer in the 1980's, although poor business decisions by both apple and IBM created the monster monopoly known as microsoft which stifled apple for almost two decades. Second by creating the iPod and the amazingly brilliant iTunes store. Third, of course, by creating the most powerful and lucrative physical device of our time the iPhone and its brilliant marketing companion the app store, and fourth the iPad. This is apple's world. They control it to a degree that few understand. They are becoming more vertically integrated and powerful every day -- now they have taken the lead (who would have anticipated this) in mobile processors -- where was Intel?. It is likely that larger phones will eat into existing tablet markets and it is possible that most consumers will settle on two devices -- a portable computer and a phone, squeezing out the tablets all together. It is also possible that tablets will merge with laptops in some way and that many consumers will still have three devices, a phone, a tablet/mini-laptop and a desktop. But however it plays out, expect apple to be driving the leading edge of the technology and gradually growing market share among affluent and middle-class consumers. And gradually growing the amount of money that each member of its growing ecosystem spends yearly on apple products and services.

    And don't underestimate the potential for some hugely profitable move that comes completely out of left field like the iPhone did 8 years ago.
    Nov 20, 2014. 06:47 PM | 1 Like Like |Link to Comment
  • Weighing The Week Ahead: Time To Buy Commodities? [View article]
    Yep.No doubt. 20% of previously middle class people would be living in cardboard boxes on the streets of whatever city they inhabit. 30% of existing businesses would be bankrupt. The dow would be around 3000 and the nasdaq would be around 1000. The euro would be dead and at least three countries in the euro zone would be ruled by brutal military dictatorships. The US would be controlled by the tea party. Mexico would be warlord country with drug cartels and weird religious fanatic thugs diving up the land. South America would have ceased to exist in the modern world as no one in North America would have had any contact for five years. The entire middle east would have been reduced to nuclear cinders by Israeli doomsday bombs. And China would have replaced USA as the worlds most powerful country, the only pocket of prosperity in a decaying world. Damn the fed. They screwed all this up with their crazy policies.
    Nov 20, 2014. 04:17 PM | Likes Like |Link to Comment
  • Overstock.com: 10x Upside Potential [View article]
    Wow -- impressive presentation. Am a big fan of scenario based valuation. No time to ever go into the depth you have gone into. Shame you can't simply buy the company -- or round-up a group of rich investors to buy the company.
    Nov 20, 2014. 04:01 PM | Likes Like |Link to Comment
  • The Trouble With Porosity And Prosperity [View article]
    The modern economy is so complex that no one really understands it. Exactly like no one understands how a single cell, much less a mind-bendingly complicated aggregation of cells known as a body works. Some say that one cell is more complicated and powerful than all the machines the human race has built to date.

    We live in an age of both byzantine financial engineering and mind-blowing productivity and technical creativity. The real powers in the economy and in the world at large are the monster tech companies -- apple, google, facebook, microsoft, samsung, intel, amazon, gilead, celgene, tesla. Among others. As well as the hybrid tech/retail companies alibaba and amazon. The productivity of these companies (and other smaller brethren) is so great that it more than makes up for the non-productive 'financial' part of the economy. Even better, these companies (and other productive companies) are very likely to squash many financial companies with technological advances. The credit card parasite companies (they make nothing and extract a tax on majority of retail transactions) are likely to be the first to fall. But banks of all sorts are very vulnerable to tech innovations (like crowd sourced loans).

    As to inflation/deflation? I, personally, like the stable price, slow growth situation in USA -- may it continue on into the indefinite future.
    Nov 20, 2014. 03:57 PM | 4 Likes Like |Link to Comment
  • Buy Gilead Sciences Now At A Historic Low Valuation [View article]
    Aussiecam,

    An utterly simple approach is to look at the existing competition -- the large and medium size pharm.'s and biotech's. Average their peg (around 1.7). Assume gild was the average. see what the stock price would be if the peg was that average.

    OK thats like 330/share. Then ask. Why is gild not 330/share. Lots of simplistic reasons bandied about but none of them hold water.
    Nov 19, 2014. 06:24 PM | Likes Like |Link to Comment
  • Buy Gilead Sciences Now At A Historic Low Valuation [View article]
    The case that I do understand made sense. When apple stopped growing it was not that difficult to imagine that the death of Steve Jobs had left a company that was going downhill. The decline from 700 was a bit radical but it made some sense. As people gained confidence in Cook and came to understand that the greatest thing Job built was the company that survived him the stock price came back. Microsoft with Balmar in charge seemed to make mistake after mistake and seemed to be right in the crosshairs of the the emerging monster, apple. In early 2013 I wrote an SA article explaining that a reasonable value for tsla was 220 when the stock was 34. But it was easy to understand why the stock was so low. Tesla had not yet demonstrated the ability to build cars in volume. It could easily have crashed and burned.

    What am saying is that although all three stocks where undervalued, you had to really understand what was going on to see it. With GILD you simply have to look at 2 numbers on yahoo finance, read a bit about HCV and maybe compare forward p/e and peg with other companies in the space to see how absurdly undervalued gild. Major stocks with obvious sources of revenue going forward simply do not trade at a peg of .5.

    And of course there are many much smaller companies
    Nov 19, 2014. 06:21 PM | 1 Like Like |Link to Comment
  • Buy Gilead Sciences Now At A Historic Low Valuation [View article]
    Would be nice to see a bearish article. Where are all the bears who have been crushing gild lately? What is their justification? My numbers say gild should be 250-300 -- that is a peg of around 1.5 which is still low compared to its peers. The lawsuits are real and troubling but (I think) the worst that could happen would be Gilead paying a few percent royalties. No judge on earth is going to issue a cease and desist order for a drug that actually saves many, many lives.

    But there must be something somewhere that is keeping the stock price down. The market is often wrong, but it is almost never this wrong on a major visible company with pretty much every single possible box checked. The last time I saw this was with Apple in 2009 when it had been even more crushed than most stocks even though it was growing like crazy right through the recession. But then the market had suffered a huge shock and everyone was nervous. Now we are in a let the good times roll environment and still gild languishes.

    So please. You bears out there. Tell us your reasoning. What are we all missing?
    Nov 18, 2014. 11:00 AM | 8 Likes Like |Link to Comment
  • Tesla Motors: Tackling The Manufacturing Issue [View article]
    You are right. It is not so much service, but the cost to build. Once (if) battery prices come down significantly, PEV's will be 2/3rds or less the cost of ICE's. Which is what will doom ICE's. Nice side-benefit about the environment, but it is simplicity that will cause PEV's to dominate -- if batteries can be made cheaper and can be given more specific energy.
    Nov 17, 2014. 02:48 PM | Likes Like |Link to Comment
  • Tesla Motors: Tackling The Manufacturing Issue [View article]
    Aussie -- yes. yes. and yes again. From me, someone who once long ago, in another lifetime was something of an anti-america radical fanatical. Someone who has, with every passing year, come to appreciate the 'system' here. Not the political system, but the financial system that can allocate billions to unproven start-ups. That has created the entrepreneurial culture that more and more dominates the business environment. In some very large sense the success of Tesla is exactly and precisely what makes USA such a continuing dominant power.
    Nov 17, 2014. 02:45 PM | 2 Likes Like |Link to Comment
  • Tesla Motors: Tackling The Manufacturing Issue [View article]
    Nice -- Tesla is talking about bringing a 35k car to market in 2017. With subsidies that would be around 30k. Sure they will sell you options to increase the price. BUT. If (big if) they can do that with their battery factory not fully up to speed they can surely bring the price down another 5k as the cost of batteries decline. If. Really, in my mind, there is no other major factor. They will manage to get the money they need. They have already demonstrated ability to build out service and supercharger and sales network. Their margins are going to be incredible if they can significantly reduce battery cost. And if they can increase specific energy materially, they are going to be able to build cars that go more than 300 miles on a single charge.

    And anyone who thinks that they have no advantage over nissan/bmw/chevy has no idea how industry/technology work. No idea of the immense advantage a lean, nimble, 'all edge' silicon valley tech company has over a slow lumbering bureaucracy that has so heavily invested in what we all hope to be dying ICE tech.
    Nov 17, 2014. 02:40 PM | 1 Like Like |Link to Comment
  • Google Is Undervalued And Should Be Bought [View article]
    It has already started to happen. Apple is by far the most powerful industrial company there has been since the early 1900's. And it grows stronger every day. Apple + Google are set to take over the credit card business within three years. Visa and Mastercard are toast. No merchant will ever pay them that 2% transaction fee after 2019 or 2020. Oil is a finite resource. Solar is, for all practical purposes infinite and we get more every day. Solar is close to cost competitive with fossil fuels for stationary power and with the rise of tesla will likely be more than competitive for motive power. And it gets cheaper every year. And the big utilities are starting to build more and more of it. One day (soon) someone is going to start covering the mohave desert in panels. Oil price has nowhere to go but down. Along with all companies associated with it. Do yourself a favor and at least sell some of those dinosaurs and buy some google, apple, Facebook, gilead, tesla, celgene and/or alibaba. I may be wrong, of course, but putting all your eggs in those old companies seems, to me, a bit stubborn and dangerous.
    Nov 17, 2014. 10:56 AM | Likes Like |Link to Comment
  • Elon Musk Appears To Have Misled Investors On Tesla's Most Recent Conference Call [View article]
    Maybe I should write another article. But it seems so silly. Some of SA actually has intelligent articles and commentary. Everything to do with tesla now seems to resolve around the truly sad case of LT and his desperate attempt to somehow influence the price of the stock. A serious case can be made that, like JP before him, he does influence the price of the stock, but in the wrong, for him direction. Or maybe he is long and really smart and writes these absurd straw dog articles to actually make the stock go up? Sometimes I suspected JP did that as it was pretty much clockwork with him. JP wrote an article bashing tesla, the stock rose five points the next day.
    Nov 16, 2014. 10:04 PM | 7 Likes Like |Link to Comment
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