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Jeremy Johnson, CFA

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  • 3 Issues With Senior Housing Properties Trust Worth Considering [View article]
    Changes in accounts receivable is not material for REITs.
    Jul 16 09:28 PM | Likes Like |Link to Comment
  • 3 Issues With Senior Housing Properties Trust Worth Considering [View article]
    A REIT does not have to report FFO which seems to be what you are suggesting and it has no bearing on its tax status. REITs are only required to distribute 90% of cash net income. FFO is not even a GAAP measure. The only substansive difference between FFO and EPS is the inclusion of depreciation in the former. Because buildings have long asset lives FFO has some value to look at.
    Jun 19 10:32 PM | Likes Like |Link to Comment
  • A Tale Of 2 Giant Telecoms With Giant Yields [View article]
    I don't think an investor has a reasonable claim to all of CHL's cash flow. For example, during the downturn the company was tapped on the shoulder to recapitalize a regional lender Shangai Pudong Development Bank (USD 6 bn), although it was done under the supposed auspices of a mobile payment partnership, I suspect this is political investment and not a financial one.

    Another poster brought up the obtuse structure of the SOE called CMCC which holds spectrum assets; in relation to the holding company. The SOE has a number of rather awkward agreements with the holding company that give it favorable economics.

    On the bright side, I think the dividend is extremely safe and it will grow at a nominal rate in the future, but the benefit to an investor is not like buying a 10x PE stock or in reality with all the cash CHL has (USD 65 bn equivalent), a 7x PE stock. CHL is not going to launch a $20 billion buyback like Verizon would in a similar situation.

    I own some CHL, but I don't expect much out of it.
    Jun 18 02:19 AM | Likes Like |Link to Comment
  • J.C. Penney (JCP) confirms Ron Johnson is "stepping down and leaving the company." Mike Ullman, who was J.C. Penney's CEO until Nov. 2011, is replacing Johnson as CEO, and has also been elected to the company's board. Investors don't seem crazy about the choice, JCP now just +0.5% AH. (previous) Update (5:33): Shares are now down 4.4% AH. [View news story]
    42k an hour is way too high. That's not even a sensible estimate.
    Apr 8 11:10 PM | 1 Like Like |Link to Comment
  • 3 Issues With Senior Housing Properties Trust Worth Considering [View article]
    Ventas and HCP have done much better than SNH the last 1, 2, 5 years.
    Apr 5 05:26 PM | 1 Like Like |Link to Comment
  • Making Sense Of Amazon's Market Value [View article]
    It doesn't matter how the investment is financed.

    The biggest issue by far with Amazon is determining how profitable the investments of the last 3 or so years will be over the coming few years in terms of boosting gross cash flow. You can look at how I defined gross cash flow and add it up based on TTM. Chart that across a few years and it will give you a good idea.

    By the way, there was recently an article in WSJ showing the results of a study that showed focusing on gross income predicted stock prices better than net income.

    I am not long Amazon because I think they are overinvesting. I don't think they will make good returns on capital on AWS (I don't even think it's a good business to be in). If they were just the best online retailer in the world, and that was all they aspired to be, I might be able to get comfortable with the valuation.
    Apr 5 01:12 PM | Likes Like |Link to Comment
  • The Fed Is Not Pushing Stock Prices Higher [View article]
    The interest rate markets are so heavily controlled by the authorities it is really hard to say what the price of credit would be without them. If indeed the private markets would set the rate at 2% on the 10yr without the Fed, then why do they feel compelled to purchase $1 trillion of securities per year?
    Apr 3 01:46 PM | 5 Likes Like |Link to Comment
  • "The market appears too sanguine in its view that a solution will inevitably be found," writes Morgan Stanley of Cyprus. Even if the government, Troika, and Kremlin (Kremlin?) somehow reach agreement, the faith between bank depositors and policymakers will have been breached. "There are significant problems behind the curtain." [View news story]
    Cyprus is a banking hub for Russian corporates and super high net worth's.
    Mar 18 03:08 PM | Likes Like |Link to Comment
  • Crocs: Growing Brand At A Fair Price [View article]
    Kohls is just a cheap stock. Maybe it catches a bid with how tight the overall market is.
    Mar 10 08:16 PM | Likes Like |Link to Comment
  • Bakken: The Downspacing Bounty And Birth Of 'Array Fracking' [View article]
    Moreover, the sophisticated land owners.
    Mar 6 12:26 PM | 1 Like Like |Link to Comment
  • Micron Seems Likely To Beat Estimates [View article]
    Stock is up quite a bit from where it was late last year.
    Mar 6 11:45 AM | Likes Like |Link to Comment
  • Some money managers are getting excited by the latest holy grail for investors - using gross profitability as a basis for picking stocks. Research from University of Rochester's Robert Novy-Marx shows that cheap "quality" plays outperformed the overall market by over four percentage points a year from 1963-2011. "You get much more informative signals about the health of firms" this way, says Novy-Marx. [View news story]
    GAAP net earnings are a poor metric of future cash generation. There are lots of improvements you can make to it to add value. Four percent over 10 years is 50% more return -- would fix the pension problems plus some for any large American industrial company and is very significant.
    Mar 3 08:43 PM | Likes Like |Link to Comment
  • Valuing The Yen [View article]
    I wrote a very long section on the balance of payments, but it made the article unwieldy. I may publish it separately. The trade deficit is mostly caused by the shock of the nuclear industry shutdown. Even assuming it stays shut forever, Japan can rebalance if it chooses but it will take some time. Meanwhile, the Japanese have one of the biggest stocks of foreign capital assets in the world, so they are not compelled to fix their deficit overnight. The nuclear industry will however restart and it will more or less fix the issue.
    Mar 3 08:18 PM | 1 Like Like |Link to Comment
  • Footwear Stocks Are Appealing, Crocs Is A Definite Buy With Strong Potential In 2013 [View article]
    Arguing this isn't a cheap stock is a bit silly. 10x earnings in today's market, in fact most day's markets is cheap. I don't see major problems with the company's earnings either, they seem pretty clean. Something else has investor's worried about this.

    1) 2008-09 performance, both profit and stock price (this stock was $1.25 in 2009 and company lost money 08-09). How will Crocs do during the next downturn? My guess is much better because of lower reliance on clogs, but not everyone will jump in with two feet. There probably needs to be a "normalized" earnings concept applied to this company.

    2) Tax reform. This company has a very low tax rate due to the quirky international tax laws of the U.S. If there is any tax reform in the U.S., their effective rate will probably increase to ~25%. Also, nearly all the cash on the balance sheet right now is legally off shore.
    Mar 1 05:08 PM | Likes Like |Link to Comment
  • Valuing The Yen [View article]
    Thanks, I could have written a lot about the Plaza Accord, but wanted to keep the article at its present length.
    Mar 1 04:40 PM | Likes Like |Link to Comment