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  • Is Amazon A $500 Stock? [View article]
    This article is straight out of bubble days. The stock will go up because it's been going up and I know what the future will look like in 10-20 years!

    If you used the same logic in 1999, you'd predict that in 2013 Yahoo would dominate Internet, AOL would control 80% of internet access, Apple would be bought for pennies by Oracle, and Palm would dominate the smart-phone market.

    It's simple. We can't predict future in 5 years. There is just no way to tell. I would be happy to be right about what will happen in 2014.

    By the way, how does one come up with $500 price target without running any actual numbers? How did you calculate that AWS is worth exactly 50 billion? Why not 48 billion or 56 billion?

    This article is more suited as a post Yahoo message board not SeekingAlpha (i.e. "OMG....this stock is gonna rocket to 500!!!").
    Oct 24, 2013. 10:51 AM | 24 Likes Like |Link to Comment
  • Eric Sprott: I Think We Are In For A Shortage Of Physical Gold [View article]
    >> Some of the people I rely on suggest there is about a 40% chance >> of hyper-inflation starting in 2013 and about a 90% of it starting in >> 2014, so that's what I would imagine happens.

    90%, really? Probably the same people who forecasted hyperinflation this year. All I can say, don't ask a barber if you need a haircut and don't ask Eric Sprott whether you should buy gold or silver.
    Dec 24, 2012. 10:34 PM | 20 Likes Like |Link to Comment
  • Jim Cramer Goes Cautious On The Market [View article]
    Bret, I am surprised you hold Jim Cramer show in such a high regard. While I have a grudging admiration for Jim for building a popular show by connecting with an average Joe with a few thousands to invest, Cramer is definitely not a leading indicator.

    Today, he is explaining why he became cautious on momentum stocks after they have already been falling for quite some time. I would be more impressed if he was cautioning investors in December, but of course no such thing...

    All in all, I agree that the markets are frothy, but only certain sectors: biotech, discretionaries, and new tech are in the bubble territory.

    I believe the cause of the current correction is the the tax deadline. A lot of investors and traders made money in tech last year and need to sell to pay taxes.
    Apr 4, 2014. 02:10 PM | 14 Likes Like |Link to Comment
  • Straightening Out Auxilium Pharma's Value [View article]
    Nice touch with Clinton photo. Per Paula Jones testimony: "It was rather small and crooked to the left..."
    Feb 17, 2014. 06:39 PM | 10 Likes Like |Link to Comment
  • VIX Suggests Investors Don't Believe Today's Rally Is Sustainable [View article]

    I'd have to disagree with your conclusion. What you observe is a typical "volatility clustering." Look up GARCH model, the current day realized volatility is a function of the prior day volatility and the market lagged volatility.

    There are two implications here: 1) once volatility spikes, it will take several days for it to come down, no matter what the market does, 2) VIX does not not necessarily come down at all during a strong market rally (look at VIX chart in 1996-1999). Just think of it, why would expect to pay less for option calls when the market in a strong rally mode?

    Metaphor of VIX as a "fear gauge" is very far from perfect.
    Aug 11, 2011. 03:58 PM | 10 Likes Like |Link to Comment
  • Creates 5,000 Jobs, Destroys 25,000 In The Process? [View article]
    Comparing Amazon's revenue to Walmart, TJX, etc. per employee is very misleading. Amazon spends a lot of money paying FedEx and UPS to deliver products to its "prime" customers, which is very inefficient compared to Walmart driving a single truck from a warehouse to a store location to fulfill multiple sales. You would have to somehow add UPS and FedEx workers to the Amazon workforce and to get to "apples to apples" comparison (I don't think it's realistically doable).

    On way to see if Amazon is "efficient", you'd have to break down Return on Equity according to DuPont model: ROE = Profit Margin * Sales Turnover * Leverage. While Amazon has low leverage and a high asset turnover, its profit margins stink and ROE is negative.

    So quite simply Amazon is so far burning shareholders money, unlike all its competitors above, which are solidly profitable. We'll have to wait and see if it can actually become an efficient profitable company.
    Aug 4, 2013. 10:53 PM | 8 Likes Like |Link to Comment
  • An Epic Australian Bust [View article]
    I was considering Canada, but Australia is much worse off. There are three important differences: Canada has decent amount of manufacturing (currency devaluation would help), Canadian banks don't depend on "kindness of strangers"(selling their bonds to foreigners), and Canada exports a lot of its commodities to US. Many commodity prices are somehwhat "local" (just compare WTI crude vs. Brent).
    Feb 27, 2012. 02:41 PM | 8 Likes Like |Link to Comment
  • "It's fun to be able, for once, to place yourself on the cheerleaders' side of the U.S. markets," writes Richard Russell, advising his readers to buy the DJIA ETF (DIA). "It makes sense to be on the side of the (Fed)." Russell last week: I've never seen anything like this. [View news story]
    The worst investment ever: paying for Richard Russell's newsletter.
    Mar 12, 2013. 06:08 PM | 6 Likes Like |Link to Comment
  • Cash Hoards On The Sidelines And The Great Rotation: Old Myths Meet A New Reality [View article]
    The author seems to lack a basic grasp of what money supply is. He doesn't seem to know that money in circulation is only one measure of money supply: money velocity and credit are the other two.

    You can have greatly expanded money supply by simply extending credit without putting a single new penny in a stock market. For example, "additional money" can be created out of thin air by simply lowering margin requirements if investors start actively buying on margin. In this case, the market capitalization can greatly exceed the actual money all investors put in.

    So why "money on the sidelines" is a hyperbole, the concept itself is very, very real.
    Feb 16, 2013. 11:18 PM | 6 Likes Like |Link to Comment
  • Telefonica: Cheap For A Reason (Equity) - A Comparative Valuation [View article]
    Caiman, I would caution that your analysis is missing several key points:

    1. Book Value is seldom relevant to telecoms. When you check their B/S statements, you will realize that a lot of book value is "good will". For example, if you look at FTE "tangible equity", it is near 0 and it's negative for TEF. This is a purely accounting issue: if a company creates an intangible asset "in house", it usually doesn't show up in the B/S at all. Once a company is bought, the intangible assets recognized as "good will" on the acquirer B/S. So there is little insight to be gained from the Price/Book Value as you would need to normalize everything for acquisition accounting (good luck with that even if you are a CPA!)

    2. FTE and IT are very exposed to Europe which is over-saturated and shrinking revenue area. These companies are in a mild secular decline (look at Europe demographics trends) and should be valued as such (could still be a good value). This is not the case for TEF, which is, at worst, in a cyclical decline (LatAm), but the prospects look brighter (selling to poor countries which will eventually get richer)

    3. VOD is a special case as it holds 45% minority-stake of Verizon wireless (about 25-30% of its overall business) which is not consolidated on its financial statements. Using ratios for valuation is too simplistic here (hint: look at Verizion dividends paid to VOD)

    4. Finally, it doesn't look like you normalized earnings for one time right offs and asset sales. All TTM P/E ratios are all over the place for these companies because of various one-offs. EBITDA also needs to be normalized to remove non-operating items to match OIBDA.

    All in all, you should probably build a good financial model before trying to arrive at any conclusions
    Aug 8, 2012. 01:46 PM | 6 Likes Like |Link to Comment
  • No Alpha In Omega Protein [View article]
    I would have complemented your article if it came out a couple of days earlier but now it's old news with a 20/20 hindsight. Many investors don't understand an extremely volatile nature of OME main business with many moving parts and get overenthusiastic over a good earning report and bearish with a bad one. In reality, this is a very mean-reverting business where buying cheap and selling high, while paying less attention to last Q earnings, is the best strategy.

    I actually think that now OME presents a decently value after a huge sell-off. I am with you that one shouldn't be very comfortable with their last purchase of Bioriginal for that high a multiple (that's why I am not an owner of the stock at this moment). But overall one should start looking into getting back as the stock price will probably mean-revert just like it has always done.
    Nov 19, 2014. 01:17 PM | 5 Likes Like |Link to Comment
  • Salesforce +2.5% AH on FQ1 beat, solid revenue guidance [View news story]
    On cash flow basis Madoff investments were also profitable until 2008 for this very reason. He got money upfront and never paid anything back.

    Economically speaking, CRM is probably marginally profitable, after one normalized their FCF for negative working capital, stock compensation, and maintenance capex but the company should be trading at 4-5x its sales at most as its software peers, not current 8x.
    May 20, 2014. 09:58 PM | 5 Likes Like |Link to Comment
  • LinkedIn breaks $150 even as analysts defend, upgrade [View news story]
    UBS' Eric Sheridan asserts LinkedIn now offers "one of the best risk/rewards in our coverage universe,"

    Love it! He is probably right since his coverage universe is something like P, TWTR, and 3D printing companies.
    May 2, 2014. 03:50 PM | 5 Likes Like |Link to Comment
  • The Day Of Amazon Is Here [View article]

    Investing is not about absolute numbers, it is about ratios. You should look at EV/EBITDA and EV/Revenue, not EBITDA and Revnue by themselves. These ratios have gone up dramatically in last 3 years, while the revenue growth YOY has steadily decelerated, the margins have shrunk, and the debt has increased. This expanding multiples with slowing growth just don't make any sense. You can slice and dice it any way you want, but you'd have to argue that AMZN revenue (not just earnings) growth will have to mysteriously re-accelerate to justify holding the stock.

    I can see two scenarios: AMZN launches delivery drones and puts UPS and FedEx out of business or AMZN investors eventually losing their shirts.

    Of course, the market can stay irrational longer than the short sellers can stay solvent so I can only guess the time frame.
    Jan 20, 2014. 11:39 AM | 5 Likes Like |Link to Comment
  • Versar: Buy This Boring Stock For Superior Return [View article]
    Actually, it's the other way around. If you an institutional investor, you want a liquid stock. If you an individual investor with a small amount of money, you want less liquid stock because you get much better opportunities to buy cheap and sell dear.
    Dec 31, 2013. 02:12 PM | 5 Likes Like |Link to Comment