Lou Gray

Lou Gray
Contributor since: 2013
Company: SEC Live
Thanks all for the comments. You may have noticed that Netflix's Chief Content Officer had a long interview at a conference - http://seekingalpha.co...
A very relevant bit:
"So I think there is a great scientific basis for how we license content and what we target and how much we pay, but there is also a -- it's coded in the art of saying, if we had that one, that would drive -- it doesn’t quite beat the model. So one of the things I look for in my licensing executives all the time is someone who can figure out the balance of analytics intuition. So they know when to question the data and say I know what the data says about it. It's wrong and the show is going to explode and it takes us certain kind of executive to do that. So for that reason, a lot of this season, I don’t believe that you can reverse engineer content, right. So I think some things have all the parts and still don’t work, or sometimes they have none of the parts, you know somehow they still work. So I think it's a mix of arts and science in that way."
DIgitalMediaView, great comment. Thank you. All points well taken but let me say why I see things differently.
1) Amount and quality of data vs competitors
- GOOG, if you are referring to Youtube, they mostly have data on different kind of content (very short format) for now.
- AMZN, knowing whether a customer has bought a DVD set is not the same as knowing whether he has watched 1, 2 or all episodes in a season.
It would be interesting to discuss further how useful the different kinds of data (netflix vs amazon vs hollywood data) are in this context. It seems to me that hours watched online is the most relevant data. Netflix is ahead on this metric, especially against its most direct competitors, Hulu and HBO.
In any event, I think that Netflix has an advantage at the moment but I do not claim that it is impossible for others to catch up. However, their head start is a substantial competitive buffer.
2) Algorithms vs experts
I said "The main advantage of the recommendation systems (sic) is that on average it works better than guesswork across the many, many investment decisions that Netflix has to make."
The emphasis here should be on "on average". I agree that algorithms cannot fully (100% accuracy) predict people's preferences. However, recommendation systems need just to be able to beat or augment experts' opinion to be useful and provide an advantage.
That's why I do not find it productive to discuss individual shows as arguments against or for a content strategy that manages thousands of content products (note the difference with Hollywood studios, which have much fewer investments). Still, I find AD a useful example (case study, if you will) of how content strategy decisions are made.
Benjamin, thank you. The company seems to have been growing revenue briskly. Is this just because of acquisitions or there is actually a chance earnings could grow to justify the market or the "intended tender offer" valuations?
Daniel, great analysis once again. Plenty of wells still to be drilled but track record here has been very weak. I think the comparison with the plans at the time of IPO is now just painful..
Richard, thank you for the article and especially the stocks list at the end. Buy them all to bet on Bakken and diversify company-specific risk. The majors give you very little exposure but are still useful to follow for the results of their drilling in the formation.
Yes, we should use a wider peer group. Otherwise, what if KO is mispriced?
Stock Gamer, I generally don't rely too much on margin comparison across companies. Different margin might reflect different product portfolios or different levels of vertical integration. Besides the margin, PEP and KO have remarkably similar ratios. Thanks for this table.
I think coal prices remain the critical factor here, cost-cutting notwithstanding. I would need to be very convinced about coal price increasing before thinking about investing. Good luck.
Solid company but richly priced hence the small pop.
I have been trying to find a reasonable bullish case for CZR's equity to help me understand what I am missing. I don't understand the valuation but I don't think the problem is with me.
Thanks, Vince. I agree - nothing to be excited about in the business and the valuation is hefty. Not much happening beyond the lack of negative revision in the numbers.
"Six of the twelve states have unemployment rates... " - I think you meant "six of the eight states" but your point is clear.
Great article, Kevin.
The roster of partners is impressive. However, do other companies at similar stage of development of technology/product have similar partnerships? From the point of view of the big company, why not try working with all startups like Solazyme even if the individual probability of success is low?
Great comment! Thank you.
"The proven value of Carrizo's assets, discounted at a rate of ten percent (PV10) is already $1.6 billion. Contrast that with the current market cap of $950 million."
Also, don't forget the $968 million debt...
Thanks, Pendulum. Helps put individual results into perspective.
Can I download to excel the P/E by company table from somewhere?
Philip, thanks - good argument. Do you know who operates the rest of the methanol capacity in the US?
Interesting business but rather niche and thus hard to analyze. The unrelated businesses add further complexity. If you want exposure to the housing recovery, I think there are more straightforward ways to invest.
Thanks for introducing me to this company, Intangible Valuation.
Karl, agree - smartphones are close and getting closer to being commodities for the mass-market user who does want to pay high prices for gimmicks.
Thanks for these charts! I hadn't seen such data. Could you share the median value over as long a period as possible?
Thanks, Bret. BRCM has good record of beating expectations now. I think technology/competition risk helps explains the low P/E.
Thanks. Yahoo Finance have them at 1.8.
Canadian Investor, may ask what source you use for the 1.9 beta for CAT? I agree that it is cyclical company but that is a very high beta.
Wouldn't be fair to say that Alcoa trades at high multiples only in anticipation of recovery after its EBITDA crashes?
Stone Fox, do you think they can really "easily" close the refinery? Admitting failure is never easy and even less so for such unusual high-profile moves.
Agree. I don't want to name sites but the extra dividends at the end of 2012 showed you should check it all yourself.
Chris, what would say about the valuation? 27x P/E (2013 estimated earnings) and only 10-13% revenue growth.
Thanks. Good call despite the higher pricing!
Great overview, IPOdesktop.
"Safeway is also one of HAWK's largest distribution partners".
Do we know what Safeway's strategy on HAWK is over the medium run? If Safeway plans to sell the remaining c. 80% of shares shortly, could Safeway negotiate more vigorously and make the distribution terms worse for HAWK? In other words, is the current deal between HAWK and Safeway arm's length?
Thanks for the peer comparison, Michael. TEV/EBITDA would have been useful too. Do you think that a successful HTC means bigger Android pie or the Android market is more or less fixed and the two company are just competing for market share? I don't see the HTC phone bringing much new to the Android system...
Matt, I don't see Now and Glass as such distinct projects. One of Google's strength is the complementarity between most of its products - as you say, mostly to support search. I think that if Google Glass has a killer app, it would be Google Now. Conversely, if Google Now works very well one day (i.e. addresses comments such as that by Dale Napier above), it would be most useful on Google Glass, where you do not need to do anything proactively such as looking at your phone. Thanks for the article!
Thanks for the heads up, Profit Fan. Healthy debt issuance (underwriting revenue) in the quarter should help them. We will find out on Tuesday.
Valuentum, I don't read the management comment the same way. I think they are just saying that others will drive themselves out by cutting prices and that will happen independent of what First Solar does.
In any event, the presence of the Chinese companies, which do not care about profits apparently, means that it will be a long time until low profitability leads to sufficient capacity reduction in this industry.
Ali, thanks for this note. Although I am not interested in these particular stocks, your thoughts on how to properly think about trials have been very valuable. Looking forward to your next articles.