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Jonathan Verenger  

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  • Autohome: Garage Sale [View article]
    Good article. If I compare BITA and ATHM, I come up with a few things clearly in favor of BITA:

    1.) Valuation:
    EV to TTM Sales is almost absurdly skewed in BITAs favor. $1.8 Billion market cap less $825 Million cash = $975 Million market cap. TTM Sales of $531M means a multiple of 1.8. ATHM is at about 7.6.

    While I agree with the issues you raised about non-GAAP earnings with regards to amort, it does make sense to normalize BITA's earnings as the amort issue will go away down the road and they are clearly currently overspending relative to recent history as they get their partnership with JD/TCEHY off the ground. I don't think it's smart to use current year EPS / free cash flow because of this.

    2.) Entrepreneurial founder with 15% stake vs somewhat flailing corp holder with 50%+ stake. In this scenario I will choose the one with the entrepreneurial founder with a substantial stake every single day of the week. At any moment's notice Telstra may feel compelled to take money off the table and create a major psychological overhang for the company. And the entrepreneur founder is almost always willing to take more risk to see through to his vision. Great example of this is FB vs TWTR.

    On the flip side, ATHM has much higher net margins and has had much steadier income growth. But this also might be a case of them not spending a lot on the used car market and transactions segment, which may indeed become huge parts of their business model going forward. This may again come back to them being run by a corporation looking to maximize near term profits at the expense of longer term survival.

    So perhaps ATHM's investment cycle hasn't kicked into gear and the opposite may be true with them vs BITA: it might make more sense to "normalize" ATHM's earnings downward to reflect increased spending for these two segments.

    In general, with internet businesses, I always am more willing to buy companies whose management team / largest shareholders consist of entrepreneurial founders vs corporations. They tend to have longer term visions of where the future of the business is heading and are willing to sacrifice profits now for potential domination of their segment down the road.

    I'm still researching these two companies, but on paper it also seems to me that ATHM should take advantage of BITA's recent 70% haircut and just buy them out. That would eliminate a helluva lot of duplicate spending in marketing / advertising their current business models as well as duplicate spending in rolling out their used car and transaction based businesses.
    Aug 17, 2015. 01:41 AM | Likes Like |Link to Comment
  • A Closer Look At MakeMyTrip.com [View article]
    Thanks for the idea Yeti. I typically stay away from the energy markets because I have never been able to figure out how to value oil.
    Aug 8, 2015. 12:44 AM | Likes Like |Link to Comment
  • A Closer Look At MakeMyTrip.com [View article]
    "because it could go either way from here. " You said it perfectly. How could I possibly know? What if the Indian economy continues to strengthen and oil stays low...would that not inevitably be good for the rupee?

    Also, consider the flipside to a strong dollar: extra demand for international travel to locations other than the US. What if a low currency is good for travel to Europe? The company mentioned this in the conference call:

    "On the packages business side, our push on the long-haul travel resulted in high growth of Europe outbound bookings."

    And if you look at international travel, the CAGR is actually higher (44% vs 27% for domestic) and accelerating recently (maybe b/c of the strong dollar?). See below:

    YEAR International Transactions Growth
    2008 - 35,644
    2009 - 45,497 +27.64%
    2010 - 93,757 +106.07%
    2011 - 146,033 +55.76%
    2012 - 185,623 +27.11%
    2013 - 241,388 +30.04%
    2014 - 327,392 +35.63%
    2015 - 463,375 +41.54%

    International transactions have grown from 3% of total air travel to 9%. Within a few years this could be a huge boost to their average ticket price, which I didn't include in my projections because international travel means much higher ticket values and higher revenues for MMYT, helping offset currency effects. You can't just look at the currency moves in a vacuum which is why I left it out.
    Aug 7, 2015. 10:43 AM | 1 Like Like |Link to Comment
  • A Closer Look At MakeMyTrip.com [View article]
    True. I have no way of knowing currency exchange rates so I left that analysis out.
    Aug 7, 2015. 05:23 AM | Likes Like |Link to Comment
  • A Closer Look At MakeMyTrip.com [View article]
    Thanks for reading.
    Aug 6, 2015. 02:39 PM | Likes Like |Link to Comment
  • A Closer Look At MakeMyTrip.com [View article]
    Did you read my article above? I believe I highlighted each of these points (ie I included reduced margins as well as falling avg prices per ticket/hotel stay in my projections, talked about how despite competition MMYT is increasing market share, showed the 11% CAGR in the aviation industry since 2000, etc.).

    I like what Jeff Gundlach said about India: "When I mention the Indian equity market, people bring out these negatives. And I say, well, that means there's room for improvement."

    To that point, what happens if middle class growth outperforms (as does disposable income), if my assumptions on declining commissions / avg transaction prices don't come true, and if Indian aviation growth outperforms my assumed 11% CAGR? My assumptions above don't include those upsides and you're still looking at a potential home run investment. What the stock does in the short term is anyone's guess, but I really like it as a long term investment down here at $14.
    Aug 6, 2015. 02:06 PM | Likes Like |Link to Comment
  • Opportunities In India: MakeMyTrip Limited [View article]
    Keep in mind economic reforms began in China about 15 years before India, hence the lag. Growth in China began picking up over a decade ago and I believe India is following suit right now. I'm not saying this will occur overnight but the tailwind will get stronger and stronger. It's already beginning with 8-10% GDP growth and a big pickup in domestic air traffic over the past 12 months. Don't ignore the positive impact falling oil will have on the Indian economy. This will (and has if 20% passenger growth is any indication) spill over to more disposable income for traveling.

    Take a look at this chart of Chinese GDP growth:
    http://tinyurl.com/pkm...

    India currently has roughly the same population as China and same China had in 2006.

    Worth repeating Gundlach's comment: "When I mention Indian equity market, people bring out these negatives. And I say, well, that means there's room for improvement".
    Jul 31, 2015. 04:14 PM | Likes Like |Link to Comment
  • Opportunities In India: MakeMyTrip Limited [View article]
    Thanks T's. I looked at your profile and like your investing mantra, although I've always said "Good things tend to happen to cheap stocks". One word of advice I can give to someone that is young is to have your own opinion and never be afraid to voice it. When it comes to the market, if you like an investment thesis and everyone else hates it, you're probably on to something.
    Jul 31, 2015. 02:08 PM | 1 Like Like |Link to Comment
  • Opportunities In India: MakeMyTrip Limited [View article]
    Thanks for reading. Always important to remain skeptical and challenge conventional thinking. As far as high compound top line growth goes, I agree. I have been tracking total combined transaction growth on MMYT's platform for air/H&P and that does show 40% growth last year and 38% growth this year so far. I think this is a better indication of the growth MMYT is experiencing. Currency / margins etc are all noise right now in my opinion.

    As far as India goes, I like what Gundlach says "When I mention Indian equity market, people bring out these negatives. And I say, well, that means there's room for improvement". There's pretty significant momentum building in the Indian infrastructure buildout. The big dog AMZN has committed $5 Billion to India which is a pretty significant sign in my opinion. I can think of a lot worse speculations than investing in a country with 1.3 Billion people growing 8% a year.
    Jul 31, 2015. 02:01 PM | 2 Likes Like |Link to Comment
  • Zillow -3%; Citron predicts shares will fall below $40 [View news story]
    Wow you're still going after zillow after all these years. Persistence
    Jul 24, 2015. 10:47 PM | Likes Like |Link to Comment
  • Are Biotechs In A Bubble? [View article]
    "I think a far better methodology would be the sum of the market caps divided by the sum of the adjusted earnings. "

    I actually did this above but adjusted it by the weighting of each holding.

    The P/E measure is a fairly useful measure in determining extremes for any given security. In this case I'm looking at the biotech ETF. Doesn't mean it applies to all biotechs but it applies to all biotechs within IBB. Remember, back in 2000, which is a pretty good period to compare this current biotech period with (due to the similarities in returns / valuations I mentioned in my article), the Nasdaq was made up of a ton of "highly volatile, hyper growth, smid caps". The P/E was fairly reasonable in the 20ish range in 2007 then it went through a parabolic rise above 100x. Interestingly, when the Nasdaq bottomed out in 2002 it was around the same levels it was at in 1997. I think there's merit to using this as a way to gauge extremes in valuation.
    Jul 7, 2015. 04:12 PM | 1 Like Like |Link to Comment
  • Are Biotechs In A Bubble? [View article]
    Not sure you read my article. I'm looking at valuations of the entire index, just as you quoted me in your post above:

    "Valuations in biotechs as represented by the IBB ETF are on par with the peak valuations in tech stocks in 2000"

    My entire article goes through the calculation of PE for IBB in its entirety (not just GILD AMGN CELG).

    Hope that helps
    Jul 7, 2015. 03:56 PM | 1 Like Like |Link to Comment
  • Are Biotechs In A Bubble? [View article]
    Thanks for the reply. What do you think is a reasonable valuation for the IBB index?
    Jul 7, 2015. 03:21 PM | 1 Like Like |Link to Comment
  • Are Biotechs In A Bubble? [View article]
    What type of stuff are you working on? I love biotech in general, just very mindful of the valuations across the board. I would need to see a very significant correction (at least 50%) to get valuations even close to what I would call interesting.
    Jul 7, 2015. 01:53 PM | Likes Like |Link to Comment
  • Are Biotechs In A Bubble? [View article]
    Thanks for the friendly comment. Like dieuwer says below, I would stick to the cheaper big caps or ones you feel you have an edge on. The overall ibb index is extraordinarily expensive as a whole
    Jul 7, 2015. 12:52 PM | 1 Like Like |Link to Comment
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