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  • Is The New Wal-Mart? [View article]
    Paulo, thanks for a very good article. While the facts are well-known to anyone who did any DD on Amazon, it's nice to be reminded why "Amazon is the New Wal-Mart" story line is false.

    There's one critical difference between Amazon and Wal-Mart not pointed out in your article. Amazon service is readily available to anyone in US today. There is not a person with Internet access who hasn't heard of Amazon. On the other hand, Wal-Mart had to move to a nearby physical location near a consumer to get his services. Even today, if you live in NYC, there is no Wal-Mart to go to. If Wal-Mart thought like Amazon, it would probably build a store at Time Square :)

    This is why you see Wal-Mart revenue growth rate accelerating in 1990-1993 and Amazon decelerating now. Wal-Mart cash flow was reinvested to open more locations and acquire more customers, so the growth was mildly exponential due to compounding of re-invested capital with good return. Amazon can't simply acquire significantly more customers in the US, it can only try to sell them more services. With Amazon international expansion floundering and all low-hanging fruits have been picked, Amazon is getting into more and more marginal businesses (grocery delivery?!) in US in order to keep the revenue growth.
    Jul 14, 2013. 01:14 PM | 3 Likes Like |Link to Comment
  • Dollar Bills On Sale For 15 Cents: Ram Power Corp. [View article]
    At first glance, this does look very cheap indeed and it's nice to see that Deloitte was an auditor. I also appreciate very thorough analysis. You clearly spent a lot of time on this.

    However, some further due diligence is in order: is this equity investable (i.e. has enough volume), do insiders still have a significant equity stake, does the new management look reasonable? Did you have a chance to talk with their new management?

    What are your thoughts?
    Jul 8, 2013. 11:21 AM | 3 Likes Like |Link to Comment
  • Rick's Cabaret Is A Cheap 'Sin' Stock Worth More Than Double [View article]

    I have met their management. Seemed like reasonable people to me. I don't see anything in their financials that would raise red flags, especially related party transaction which are common for micro-caps.

    If you read Yelp/Zagat reviews they seemed to go out of the way to keep their business "clean" with the confines of the nature of the business.
    Jul 2, 2013. 12:05 PM | 3 Likes Like |Link to Comment
  • (AMZN): Q1 EPS of $0.18 beats by $0.09. Revenue of $16.07B (+22% Y/Y) misses by $90M. Expects Q2 revenue of $14.5B-$16.2B vs. $15.9B consensus. Expects Q2 operating income of -$340M to +$10M; EPS consensus is at $0.22. Shares +1.4% AH. CC at 5PM ET (webcast). (PR[View news story]
    Old story. The revenue and guidance missed, the stock is up. I don't read much in "earnings beat" (let's see how they arrive at it), the guidance is now for a loss in Q2 vs. expected profit (-$0.36 vs. $0.22 a share!), which means further revisions down in yearly EPS. They may end losing money again in 2013.

    Shouldn't they just declare bankruptcy so the stock can skyrocket to $1,000 a share?
    Apr 25, 2013. 04:27 PM | 3 Likes Like |Link to Comment
  • Are Australian Cyclical Stocks Cheap Now? [View article]
    Why would you think that Australian banks are "cheap"? As a matter of fact they are the highest priced on P/E (around 15), Book Value (near 2), Tangible Book Value (over 2) and any other reasonable measure compared to banks anywhere else in the world. Look at their loan/deposit ratios - they are all above 100%. They don't have enough deposits to cover their loans and have to borrow wholesale,.

    The only metrics you look is a dividend payout. The banks foolishly payout almost all their earning as dividends while issuing bonds to borrow money to pay for it. By the same dividend metric, Citi, WaMu, and GM were "cheap" in 2007 (they all paid high dividends while borrowing money).

    Take a look at Australian real estate prices. Australia and China the only remaining countries where the real estate prices didn't really adjust post 2007 real estate bubble. What do you think will happen to the banks when the s* hit the fan?
    Mar 1, 2013. 01:01 PM | 3 Likes Like |Link to Comment
  • Is there a double-inverse ETF I can buy on Goldman best ideas list?

    Just look at their last list (if you followed, you'd be one of few people to lose money in 2012):
    Jan 8, 2013. 07:37 PM | 3 Likes Like |Link to Comment
  • France is downgraded to Aa1 from Aaa at Moody's, which also maintains its negative outlook. "The predictability of France's resilience to future euro area shocks is diminishing in view of the risks to economic growth." [View news story]
    "a strong commitment to structural reforms and fiscal consolidation, as reflected in recent governmental announcements"

    Which one?

    1) Rolling back retirement age
    2) Raising taxes to 75%
    3) Hiring more teachers
    4) Raising a minimum wage
    Nov 19, 2012. 05:24 PM | 3 Likes Like |Link to Comment
  • Amazon (AMZN +0.3%) acknowledges it received a claim from France's taxing authority for $252M to cover what it calls "the allocation of income between foreign jurisdictions" for the years 2006 through 2010. The move follows efforts by counterparts in the U.K. to question the company along with U.S.-based firms Starbucks and Google over similar issues. [View news story]
    I agree with Amazon here. They are non-profit, charitable organization that supplies its customers goods below cost. They should not be taxed at all.
    Nov 12, 2012. 02:36 PM | 3 Likes Like |Link to Comment
  • Telefonica: Cheap For A Reason (Equity) [View article]
    The article makes mostly good points about TEF challenges. However, it says nothing about its valuation, as dreadlordnaf pointed out.

    Quite simply, there's been little changed between now and last October in terms of leverage, European debt issues, economic slowdown, etc. TEF is not doing any substantially worse now than it did 3 quarters ago. Yet, the market somehow judged that its equity is worth 50% of what was it was in October. My guess that its recent valuation has more to do with its Spanish association than its business fundamentals. Other European telecoms, FTE and VOD, have a large exposure to Spain and, even larger to other PIIGS, yet they didn't suffer as much as TEF as they are deemed to belong to "safe countries".

    Telecom is a very tough market to establish a toe-hold in a new country as it requires a large initial CapEx and local know-how. Therefore, TEF assets LatAm assets are extremely valuable. By the way, low ARPU there is a good thing. It simply shows that there is room to sell more as customers become more affluent.

    Why would you want to buy a slow-growth oversaturated European and US market which has a high ARPU but cut-throat competition.

    Again, the article is very good in many respects but feels incomplete when you fail to look at TEF valuation vs. other telecoms. Cheap for a reason, but is the reason good enough to be so cheap?
    Aug 3, 2012. 02:38 PM | 3 Likes Like |Link to Comment
  • Canada Vs. Australia: No Bust In Canada, But A Recession Is Probable [View article]
    I wish I shared your optimism but when I was in Vancouver last month, the number of "open houses" truly stood out while driving from Whistler to the airport. This reminded me of Los Angeles around 2007 when home buyers were making the same demand/supply argument ("they don't make any more land!").
    Mar 27, 2012. 02:51 PM | 3 Likes Like |Link to Comment
  • Hewlett-Packard beats by $0.01, misses on revenue [View news story]
    HP just became 1000 times overpriced based on new revenue multiple....
    Feb 24, 2015. 04:12 PM | 2 Likes Like |Link to Comment
  • The Most Consistent Risk/Reward Speculation That I Have Ever Found [View article]
    Dkostek, this is unnecessary harsh and not entirely accurate. The borrow rate now for EDC and EDZ is about 4.5% on IB. IB and other professional brokers charge around 2% on margin balance. So this is not such a high watermark to beat.

    The real life strategy would have to take into account the factors you mentioned but it can be successful in principal if you spend the time to conduct daily analysis. It's just not as cut and dry as one might believe.
    Dec 20, 2014. 07:52 PM | 2 Likes Like |Link to Comment
  • Joe's Jeans: No Need To Go Bankrupt, Just Throw The Bums Out [View article]
    Companies don't voluntarily file if they can pay because it means two things: 1) zero to shareholders and 2) management is replaced. Now, the management are the biggest shareholders or junior creditors who will likely get next to nothing in Chapter 11 (Grossman, Dahan, Kim) so obviously they will do their utmost not to file.

    Involuntary bankruptcy is a possibility, but probably only if it's clear this quarter is bad and the lenders want out any cost (possible but probably too early for that).
    Dec 3, 2014. 01:51 PM | 2 Likes Like |Link to Comment
  • RCI Holdings: Destroying Shareholder Value One Deal At A Time [View article]
    Agree with Keubiko. The deal with the energy drink company is a head-scratcher but the amount invested is too trivial to qualify as the "destruction of shareholders' value". I wouldn't be shocked if some details will come out in 10Q/10K in "related party transactions". I would much prefer that the company put all its energy in cash reducing its high cost of mortgage debt by transferring to REIT or refinancing instead of stock buy-backs or acquisitions. RICk's is still paying over 10% on some its secured debt which is obscene in our ZIRP environment.
    Nov 5, 2014. 11:34 AM | 2 Likes Like |Link to Comment
  • Versar Is The Least Relevant Hazmat Suit Player [View article]
    Probio Invest, I believe you reference my numbers in last two paragraphs about hazmat representing only 2% of revenue. Please be courteous and provide a citation link.
    Oct 16, 2014. 06:35 PM | 2 Likes Like |Link to Comment