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  • In Defense Of Apple: Battling The Mounting Hysteria [View article]
    AAPL closed today with a market capitalization of around $423 billion, and is still holds the world's largest market cap. Will it be $4 trillion in 10 years? Probably not, that would imply an almost 10-fold increase over a decade. But Apple will likely be worth much more than $450 per share in 10 years.
    Jan 24 07:10 PM | 7 Likes Like |Link to Comment
  • In Defense Of Herbalife: Arguments Against Ackman's Short Thesis [View article]
    Enron's financial statements (10-Q's and 10-K's) were extremely difficult to read because the company made every effort to hide the fraud that was going on. Enron was an accounting fraud, and as such, a very close reading of its financial statements could have discovered that something was wrong. Herbalife is not being accused of running an accounting fraud, which can, with enough time, be uncovered via a company's financials.
    Dec 22 03:24 PM | 6 Likes Like |Link to Comment
  • In Defense Of Apple: Battling The Mounting Hysteria [View article]
    At $700, Apple traded at around 15-16x earnings, hardly hysterical levels. Microsoft trades at 15x, Cisco trades at under 14, and IBM trades at around 14 as well. Google trades at over 23x, so even at $700, Apple was not that expensive relative to other Tier 1 tech companies.
    Jan 25 06:08 PM | 5 Likes Like |Link to Comment
  • In Defense Of Herbalife: Arguments Against Ackman's Short Thesis [View article]
    While Ackman has a good track record, he is not infallible (no investor is). Ackman has also been long JC Penney, and at least for the time being, his thesis on JCP has been incorrect. Will he be right years from now? Perhaps. But there is no way to know for sure. A thesis isn't right or wrong based simply on who is delivering it. Warren Buffet has never bought a single share of Apple. Does that mean Apple should be avoided, even if arguably the greatest investor in the world doesn't own it?
    Dec 22 03:31 PM | 5 Likes Like |Link to Comment
  • In Defense Of Herbalife: Arguments Against Ackman's Short Thesis [View article]
    The ruling in Belgium applies only to Belgium. Different countries have different consumer laws, and what is acceptable in one country may not be acceptable in another. The Belgian court system is making a ruling regarding Herbalife's business in Belgium, not its business in other countries. Here in the US, the SEC has already looked into Herbalife twice, and both times closes its investigation without filing any charges or enforcement actions.
    Dec 22 03:26 PM | 5 Likes Like |Link to Comment
  • In Defense Of Herbalife: Arguments Against Ackman's Short Thesis [View article]
    Short-sellers do play a valid role in the market. That being said, what may irk some people is that Ackman's thesis has already achieved its desired effect, even before Herbalife has had a chance to respond properly to his allegations. Some may see it as Bill Ackman's being proven right by virtue of being Bill Ackman, and not by virtue of being Bill Ackman. This article is not about attacking Bill Ackman, because attacking the messenger does little to blunt the message.
    Dec 22 03:12 PM | 5 Likes Like |Link to Comment
  • Why Apple's Cash Hoard Is Not A Problem [View article]
    as an Apple shareholder, we have no problems with the stocks performance year to date, and over a 1 year period. over the past year, AAPL has climbed 18.51% while the NASDAQ has lost 3.04%

    http://bit.ly/u8od1J
    Nov 25 02:01 PM | 5 Likes Like |Link to Comment
  • Why Apple's Cash Hoard Is Not A Problem [View article]
    AAPL's recent stock slide is due to the overall market, not a problem with Apple specifically, in our opinion. do you think the stock is falling due to fundamental weakness?
    Nov 25 01:54 PM | 5 Likes Like |Link to Comment
  • Herbalife: Examining FTC Data And Potential Action [View article]
    This article's focus was on FTC complaint data, and the possibility of FTC action, not HLF's core business. It was a response to a specific event (the New York Post's article about the data it received from the FTC), and Herbalife's scope to buy back stock.

    That being said, there are other factors to consider. On retention, HLF is steadily working to improve that, and recorded a retention rate of 52% for its sales leaders in Q3 2012 versus 48.9% in Q3 2011 (total active sales leaders rose by 22.1% on a global basis, including 15.2% growth in North America) (http://1.usa.gov/12qmZHl). As we've noted in prior articles on HLF, the SEC has already investigated the company twice, and both times closed its investigation without filing any complaints or charges against the company. As for the FTC, we have steadily maintained that it should not take 3 decades for the agency to uncover a pyramid scheme of this size. And if all it has is 192 complaints over 7 years, that is a solid track record for a company of HLF's size.

    Regarding new markets, Ackman himself has argued that HLF is simply entering new markets to cover up the collapse of business in mature markets. But then how can US sales be growing at almost 16% last quarter (http://1.usa.gov/12qmZHl)? As we noted in a prior piece on HLF, sales have been growing in the US by an average of around 15% over the last 8 year. In addition, volume points in North America, HLF's oldest division, grew by 13.6% in Q3 2012. The company is entering new markets so that it can continue to grow its revenues and profits, not to cover up a collapse in the United States or other mature markets.

    HLF's margins, which reflect the pricing of its goods and the cost of doing business, are not out of line with its MLM peers. In Q3, its operating margin was 15.82%. NuSkin's was 15.65%, Avon's was 4.16% (reflecting the internal issues Avon is facing), Usana's was 13.08%, and Tupperware's was 15.75% (they've already posted Q4 earnings). HLF's margins are not outrageously higher than those of its peers. As for the company's financials, the assessment of $2 billion in debt as manageable was provided by B. Riley & Co. The company's existing debt is not due until 2016, and as operating cash flow and EBITDA continue to grow, the company will have more room to take on new debt to fund any potential buybacks.
    Feb 5 12:41 PM | 4 Likes Like |Link to Comment
  • In Defense Of Herbalife: Arguments Against Ackman's Short Thesis [View article]
    Several analysts took issue with that framing of the argument as well. At his conference presentation, Ackman asked how many of the people in the audience have ever bought an Herbalife product, and almost no one raised their hands (http://on.barrons.com/...). But that is the expected response. The audience at his HLF presentation was likely other fund managers, analysts, and Wall Street professionals. It is highly unlikely that any of them would ever actually buy Herbalife products in the first place.
    Dec 22 03:17 PM | 4 Likes Like |Link to Comment
  • In Defense Of Herbalife: Arguments Against Ackman's Short Thesis [View article]
    There is a difference between Bernie Madoff and Herbalife. Madoff's scheme targeted a small subsection of the population, and few, if anyone outside of the finance world and his investors knew who he was. Madoff's Ponzi scheme was not something that was right in front of regulators. Herbalife is different. This is a public company that has a wide reach, and surely regulators (outside the SEC) know what the company is.
    Dec 22 03:05 PM | 4 Likes Like |Link to Comment
  • Why Apple's Cash Hoard Is Not A Problem [View article]
    thank you for the compliment. Apple has gotten where it is not only with the magic of Steve Jobs, but the ruthless execution of Tim Cook as COO. now that he is CEO, execution will remain just as strong as ever. lets hope the magic remains too.
    Nov 25 01:57 PM | 4 Likes Like |Link to Comment
  • Commerzbank: Substantial Value In Germany's 2nd Bank [View article]
    Our upside scenario already takes into account a reduction to book value of Commerzbank's expected losses over the lifetime of its portfolio, as well as a sizable reduction to account for its non-core segment. In total, these two reductions trim Commerzbank's book value by over 28% relative to its stated book value, but even that leave room for meaningful upside. A degree of conservatism is certainly important, but there comes a point where conservatism no longer becomes prudent. We went through Commerzbank's interim report for H1 2013 to quantify an appropriate discount to book value, but we don't believe that simply discarding book value by virtue of the fact that it is provided by management. Furthermore, not all book values are the same. National Bank of Greece, for example, may trade at a P/B ratio of around 0.2x, but would we recommend buying shares? Probably not, given that their book value is based on a myriad of Greek assets. Commerzbank's book value, however, is based on primarily German assets, and even its central & eastern Europe portfolio is performing relatively well. Our point is that Commerzbank's P/B multiple is valuing it at levels assigned to PIIGS banks, despite our view that its assets are, on the whole, of far higher quality.

    Though the shipping loan portfolio is something to watch, Commerzbank is making progress. The portfolio was trimmed by 7.1% in Q2 2013 (http://bloom.bg/1cwCIuF), and with Q3 results due November 7, we expect further reductions in the portfolio, as well as the rest of their non-core assets. While there is certainly more work to be done in winding down these non-core assets, we believe so far, the bank has shwon good progress in doing so, with around €10 billion in further assets to be shed during the last 2 quarters of the year.
    Nov 2 06:07 PM | 3 Likes Like |Link to Comment
  • Herbalife: Examining FTC Data And Potential Action [View article]
    American Express reports in its latest 10-Q for Q3 2012 (its 10-K has not yet been filed) 51.8 million total "cards in force" as of the end of Q3 2012 Capital One does not disclose the explicit size of its card base in its SEC filings, but rather discloses the total amount of credit card loans. For American Express, 870 complaints in 10 months works out to 1,044 complaints per year on an annualized basis. Herbalfie has around 500,000 distributors in the US, and 192 complaints over 7 years equates to 27.43 (let's round up to 28) complaints per year. For Herbalife, that works out to 0.056 complaints per thousand distributors per year (it the number falls to 0.0274 if unrounded). For American Express, 1,044 complaints spread over 51.8 million customers is equivalent to around 0.02 complaints per 1,000 customers. On a relative basis, it is true that American Express receives fewer complaints. But, that section of the article was not meant to argue that legitimacy of Herbalife based solely on a low number of claims. Rather, it was meant to show that the mere receiving of claims does not serve to deligitamize a company, as some critics of HLF have claimed. We included Capital One and American Express not to argue that they treat customers poorly, but because statistics on the number of consumer complaints they received were readily available due to Consumer Financial Protection Bureau statistics.

    It should also be noted that FTC complaints can often be directed not at Herbalife, but at its distributors, who, while dependent on Herbalife for their own business, may or may not adhere to the company's standards at all times, and therefore give third parties reason to file a complaint with the FTC
    Feb 5 06:05 PM | 3 Likes Like |Link to Comment
  • In Defense Of Apple: Battling The Mounting Hysteria [View article]
    On the call, CFO Peter Oppenheimer stated that Apple's operating expenses will be between $3.8-$3.9 billion for Q2 2013
    Jan 24 09:31 PM | 3 Likes Like |Link to Comment
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