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Lollapalooza

 
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  • Big Blue Has Investors Seeing Green [View article]
    Excellent. I just wrote a positive piece about IBM here on Monday... very little downside and potentially big, big upside. This is one of my highest conviction idea starting from today's prices.
    May 12, 2010. 06:58 PM | Likes Like |Link to Comment
  • IBM: A Nugget in Plain Sight [View article]
    outcastsearcher--Thank you so much for your input. I find input from insiders to be especially helpful, especially on points of disagreement with my findings. While I completely understand your point of view, your concerns don't necessarily point to a bad investment.

    Investing is all about what you get versus what you pay. Even if IBM never grows, it currently has about a 9-10% free cash flow yield with a very strong balance sheet, which the company could use to buyback stock, raise dividends, make acquisitions, reinvest in the business, etc.

    While you bring up valid reasons to leave as an employee, from a competitive standpoint investors must also assess how much of that is also happening with the competition. I am in no position to have any insight there, but I would expect a fair amount of poor business practices in such a large organization that is subject to heavy bureaucracy risk.

    Additionally, take even the most respected companies in the world and you will be certain to find plenty of various level employees in different business divisions who are completely dissatisfied with their employer. I have heard plenty of people describe terrible working conditions at best-of-breed businesses.

    Even if IBM is not able to grow its earnings in the long run, I still would not expect to lose much here, if anything. And if I am wrong, that's why you diversify a little bit. You win some, you lose some. Thanks again for you input.
    May 12, 2010. 06:49 PM | Likes Like |Link to Comment
  • IBM: A Nugget in Plain Sight [View article]
    newbietech--You are right about Apple, but it will be an exception only as long as they continue to innovate. If innovation slows, it won't take long for competitors to offer competing products. Competition is brutally destructive in tech. Outside of Apple, the personal computer is largely a commodity.

    Cre8Value--You are also spot on with your comments. I was generalizing about hardware being commodity-type because most readers will relate to PCs and servers. Their "stack" approach is one of their key competitive advantages. Otherwise, they would be just another IT consulting & software firm.

    Thank you for your high-quality input.
    May 11, 2010. 01:17 PM | Likes Like |Link to Comment
  • IBM: A Nugget in Plain Sight [View article]
    desicon--Thank you for your input... I could not have said it better myself. I always appreciate well-thought input with specific support to a thesis. Without the positives you outline, it is still a good opportunity. Assuming the positives play out in IBM's favor, it is an outstanding opportunity.
    May 10, 2010. 04:37 PM | 1 Like Like |Link to Comment
  • IBM: A Nugget in Plain Sight [View article]
    cyclingscholar--I could not agree with you more. A lot of portfolios are underweight U.S. mega cap stocks, presenting very favorable risk-reward profiles compared to other asset classes. It is hard to go wrong over the long run with higher quality at a cheaper price.
    May 10, 2010. 03:00 PM | 1 Like Like |Link to Comment
  • IBM: A Nugget in Plain Sight [View article]
    bk2003--Thank you for your comment. Perhaps you're right and I don't have any real knowledge of the company's operations, but IBM's operating results over the past decade sure don't look symptomatic of a dead-end company. It has consistently earned extremely high returns on capital and grown free cash flows at a high rate for such a large company. I have no problem holding this for years while management continues to use free cash flows to increase dividends and share repurchases.
    May 10, 2010. 12:51 PM | 5 Likes Like |Link to Comment
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