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  • Commtouch: An Obvious Acquisition Target [View article]
    I believe email encryption is well covered by open source software which is, of course, free: http://bit.ly/19v9JAX.

    So this may be a tough sell.
    Dec 29 10:35 AM | 2 Likes Like |Link to Comment
  • Medallion Financial Trouble Brewing Quickly [View article]
    Very good article Paulo. I live in downtown Manhattan and just started using Uber. It's a bit more expensive but it arrives fast, has nice cars, and you don't need to tip. All in all, I can see 50% of my rides going to Uber.

    I am not a lawyer but I doubt the city can just shut Uber down (you can't just shut business down because you don't like it last I checked). Fundamentally, Uber is the same service as calling a livery car which has been perfectly legal for decades.

    If you invest in TAXI, you eat like a chicken, but you will crap like an elephant when more people discover Uber,
    Dec 22 11:54 PM | 2 Likes Like |Link to Comment
  • Why India And Russia Will Outperform Next Year [View article]
    Thanks for commenting. I specifically investigated in this artcile small cap ETFs where investing in a country is roughly the same as investing in these companies.

    What you said does hold true for large caps in both Russia and especially India. Large companies like Infosys or Tata are much more dependent on world economy and the divergence could be quite wide. They also get only limited benefit from cheaper currency as much of their workforce may not even be in the home country.

    For example, compare large cap Indian ETF such as INDA with SCIF. INDA has an almost 30 P/E and trades at over 5 times book value while the small cap is incredibly cheap.

    So think small cap ETFs only when investing in a country.
    Dec 18 12:58 PM | 2 Likes Like |Link to Comment
  • RICK's Risky Business Of Corporate Waste [View article]
    Almost all long term debt is non-recourse to the company (it's secured by individual mortgages).

    The only reason RICK buys new location vs. leasing them is that no one wants to rent out to a strip club. Traditional lenders don't want to lend to strip club operator either and RICK is too small to issue bonds so it has to borrow expensively from private equity or individuals. So "high-leverage" and "distressed rates" are a mirage - other companies call this "operating lease" and keep it off-balance sheet.

    It would behoove you to read 10K in full to understand capital structure or you could have read my earlier article explaining it (http://bit.ly/1d6G96Z).

    l have hard time crediting your for a "great call", as you conveniently forgot to mention that RICK had a huge run-up before September. The stock has slightly outperformed S&P this year and in one year period.
    Dec 10 10:17 AM | 2 Likes Like |Link to Comment
  • It's Not Just Gold That's Troubling EZCORP [View article]
    I think EZPW replicated FCFS model by getting into Mexico. It's all perception at this point. FCFS is growing top line at only about 12%. EZPW is growing actually faster on the historical basis (never mind incredibly lousy 2013).

    FCFS managed very well investor expectations (no major screw-ups and surprises thus far) and they in turn paid higher and higher multiples for its shares. This story has seldom a happy end unless you have a magic touch to sell at the top (now?). I just can't see why, if you like this sector, you'd put money on FCFS.
    Dec 9 03:46 PM | 2 Likes Like |Link to Comment
  • WWWW: The Greatest Stock Promotion Story Ever Told [View article]
    I stopped short of calling company a fraud. I am not sure if they did anything illegal but they are clearly misleading investors.

    Amortization of intangibles is important in this case because intangibles are mostly "customer relationships" not just "goodwill", for which WWWW spend sales and marketing money (30% of revenue). Yet when it calculates cash flow, it only subtracts CapEx which is tiny, but not the customer acquisitions costs which would match amortization.

    So there is NO CASH FLOW from operations in the economics sense. WWWW uses an accounting gimmick to claim it generates cash when from tangible book value change it's obvious it loses cash. I value company based on EV/EBITDA and EV/FCFE (not "adjusted to make it look good" EBITDA values fancied by WWWW).

    Note their ARPU values are also "adjusted" with deferred revenue add-back so it can't be trusted.
    Oct 7 07:52 PM | 2 Likes Like |Link to Comment
  • WWWW: The Greatest Stock Promotion Story Ever Told [View article]
    Amortization has zero impact on tangible book value. The company claims to have generated over $130 million in "free cash flow" in a year. Why the tangible book value keeps going down? (the answer is that there is no real cash flow). Adding back deferred revenue at 100% at once is absolutely wrong because it ignores the costs and churn associated with this liability.
    Oct 7 06:38 PM | 2 Likes Like |Link to Comment
  • WWWW: The Greatest Stock Promotion Story Ever Told [View article]
    >> In an asset purchase, the above is true...but these were not asset >> purchases, they bought the whole company, which included the
    >> balance sheet.

    Sorry but I am quite certain that I am correct on this point. Look at the cash balance before and after the acquisitions on the balance sheet: it has not materially changed at all.

    >> I believe the bears underestimate the size of the market

    It's not really growing because most businesses who needed a web site have already got one. Google Plus and Facebook business are much good alternative solution to establish internet presence for a small business. If you were right, the user base growth would be higher than 3% a year.

    >> " the integrity / vision of their management team"

    I hope you are being sarcastic.
    Oct 7 04:32 PM | 2 Likes Like |Link to Comment
  • WWWW: The Greatest Stock Promotion Story Ever Told [View article]
    The catalyst is actually quite simple, their "earnings" come from purchase accounting, if they can't keep on acquiring companies with debt (look at their leverage), they will have to issue more stock. If they can't acquire, they will need to come up with another fabricated non-GAAP metric as adding deferred revenue will be exhausted. This is somewhat similar to what happened to WCOM after it couldn't buy Sprint to keep the purchase accounting "Ponzi" alive - they blew up short thereafter.

    Also, Renzo Dancourt in the other article, pointed out to a very serious accounting irregularity (his article in Alpha Rich section but should be public tomorrow) . If he is right (I am looking into it), they will have to restate their financials and SEC may get involved.
    Oct 7 03:05 PM | 2 Likes Like |Link to Comment
  • Why Tesla Is The No. 1 Performing Stock [View article]
    "While I'll never buy an overvalued stock like Tesla or Netflix (NFLX), I love holding on to them when investors pile into these media-hyped growth stories."

    Sorry, but you suffer from a clear endowment bias:

    ‘ People often demand much more to sell an object than they would be willing to pay to buy it.’
    Aug 27 01:35 AM | 2 Likes Like |Link to Comment
  • Hedging Strategy For The Rest Of The Year [View article]
    I am not trying to simply reduce beta. I want to find sectors which I expect will perform worse than their beta would indicate.
    Jul 16 02:52 PM | 2 Likes Like |Link to Comment
  • This just in: Gold had its biggest rally in nearly two years last week, gaining 5.4% to $1,278 per ounce. The move came as large speculators raised bullish bets 4.1%, according to CFTC data. Bernanke's dovish comments were a nice excuse to buy, but about a 30% decline in price this year may have been a better one. "Gold may have gotten oversold and was due for a bounce, but a bounce doesn't a bull market make." says equity trader John Goldsmith. GLD is flat, but the metal is up another 0.5% today to $1,284. [View news story]
    Goldsmith. What an ironic name for a gold trader :)
    Jul 15 01:14 PM | 2 Likes Like |Link to Comment
  • Dollar Bills On Sale For 15 Cents: Ram Power Corp. [View article]
    Not sure if it's tradable. Interactive Brokers says it's not:

    The term 'chill' is a term used by DTC to designate a processing or transfer restriction which the depository places on a particular security oftentimes in the normal course of processing. For example, chills may be placed on securities undergoing a reorganization, redemption or subject to maturity in order to facilitate a closing of the books while the transfer agent stabilizes positions. In other instances, restrictions may be placed on securities which, while DTC eligible, are not eligible for the full range of DTC services or be freely transferable. Other situations which may cause DTC to designate a security as chilled include instances where the issuer no longer has a designated transfer agent or due to legal and regulatory concerns
    Jul 9 03:55 PM | 2 Likes Like |Link to Comment
  • Rick's Cabaret Is A Cheap 'Sin' Stock Worth More Than Double [View article]
    I'd be afraid to go out on a limb here as I'd need to go down to Texas and see the properties. My best guess the market value diverges from its book value by about 5% a year (2% rent appreciation/inflation, 3% book deprecation) . When the real estate gets acquired, it's re-appraised to its market value.

    So let's guess average club was acquired 5 years ago and should be roughly 25% below its market value. Per 10K, it had $48 million in building and land in 2011 (land doesn't depreciate but buildings do). The real estate could be understated by $12 million - 13% of book value.

    Again, this is just the best guess.
    Jul 3 11:04 AM | 2 Likes Like |Link to Comment
  • Rick's Cabaret Is A Cheap 'Sin' Stock Worth More Than Double [View article]
    I met them at a small cap investor conference. You can email them directly, they are quite investor-friendly and available to talk.
    Jul 2 02:29 PM | 2 Likes Like |Link to Comment
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