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Mark Gomes

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  • Should King's Sour Candy Be Crushing Shares Of Glu? [View article]
    Actually, my contacts intimate that GLUU did quite well in Q1, but I generally don't try to make quarterly predictions, nor do I care. The only thing I care about is a company's progress toward creating a sustainable organization and set of processes that can deliver long-term growth and profitability. GLUU's focus in 2013 are what finally got me to get behind the stock (after watching from the sidelines for 5 years).

    It wasn't Deer Hunter. I don't care about DH. I care about what management has done to create a sustainably growing company. For proof, just look at its revenue for the last 8 years. Growth, growth, growth.

    To be clear, I believe that KING, ZNGA, and GLUU have ALL done this. Say what you want about their stocks, but the underlying companies are all among the best positioned to survive this initial mobile gaming land grab and be rewarded with longer-term growth and profitability, once the barriers to entry are sufficiently high enough to lock out the multitude of competitors. This is economics at work. Most people don't understand how that works in a young industry like this (and why it's ok to be unprofitable early-on).
    Apr 7 09:07 AM | Likes Like |Link to Comment
  • Should King's Sour Candy Be Crushing Shares Of Glu? [View article]
    Littup,

    Thanks for the more-intellectual response. I concur with your assessment to a large degree. However, let's assume that you were made the CEO of GLUU for a year. What would you do?

    If that scenario happened to me, I would strongly consider developing a Candy Crush clone. While it's true that I couldn't match KING's number of levels, I could create more than enough to offer a viable clone. Then, as the game started generating profits, I could add to the game.

    In fact, that is what KING did. Remember, KING was smaller than GLUU a couple years ago, but still has enough resources to make Candy Crush.

    Regarding your other points, YES, Candy Crush is very sticky and probably has more time in the sun ahead. However, Farmville and Angry Birds were also sticky...and both eventually petered out.

    I LOVE Candy Crush. I'm hooked! But that won't last forever. KING needs to show its ability to develop new successful games. Until Candy Crush came along, GLUU proved to be better than KING at that. In fact, if we exclude Candy Crush, GLUU has generated far more revenue since inception than KING.

    Finally, I 100% agree with your final statement. KING, like ZNGA before it, now holds the driver's seat in the mobile gaming arena. It has the top game, it knows what makes the game successful, and it has the cash to replicate its success. KING has more cash than GLUU has market cap.

    So, the key question is, can they avoid the same fate that befell ZNGA? As stock investors, the goal isn't to own the biggest company, it's to own the best-performing stock. To illustrate this, take note of the fact that ZNGA's market cap is STILL 10x that of GLUU. However, ZNGA's STOCK has fallen 50% since its IPO, while GLUU's has RISEN by the same amount (50%).

    So, while ZNGA is the bigger (and perhaps better) company, GLUU has been the better choice for investors...and it's not even close. I'm making the same case for GLUU versus KING (whose market cap is nearly 20x GLUUs).

    Now, this is the most important point -- here, I am credibly comparing KING to GLUU. However, GLUU's market cap is $300 million and KING's is $6 billion. Think about the potential growth that each can provide from those respective levels. Then, think about how far each one might decline when their top game peters out (as ALL games eventually do). Now, tell me, which company provides the better risk/reward ratio?

    If you considered the question carefully/honestly and still say KING, I can respect that opinion, though it will differ from mine.

    Again, thanks for the intellectual debate. You have demonstrated that your intellect can supersede your emotional response to my opinions. Regardless of how KING and GLUU wind up, that's the sure mark of a winning investor.

    Cheers,

    Mark G.
    Apr 7 08:59 AM | 10 Likes Like |Link to Comment
  • Should King's Sour Candy Be Crushing Shares Of Glu? [View article]
    Some might be surprised to hear that I agree with this, but it's actually quite obvious that Candy Crush is the far superior game. However, companies are not valued on the basis of one game, but rather their capability to deliver long term growth.

    From that perspective, Candy Crush actually presents a much more significant risk to KING than DH14 presents to GLUU, since Candy Crush (and its derivatives) represent about $5 billion of KING's market cap, while GLUU's entire market cap is only $300 million.

    Every situation is different, but remember, Farmville was a game, NOT A COMPANY. It eventually petered out, leaving its company's valuation to plummet. Similarly, Candy Crush is a game, NOT A COMPANY.

    Remember, until Candy Crush came along, KING was a smaller company than GLUU, despite having been around since 2003.
    Apr 7 08:39 AM | 3 Likes Like |Link to Comment
  • Should King's Sour Candy Be Crushing Shares Of Glu? [View article]
    Good post. I agree with this.
    Apr 7 08:33 AM | 2 Likes Like |Link to Comment
  • Should King's Sour Candy Be Crushing Shares Of Glu? [View article]
    Littup,

    If you know KING well, then obviously you know that Candy Crush 1) can't last forever and 2) is not a hard game to replicate.

    What they did was GENIUS (basically taking Bejeweled and putting it on steroids, with absolutely BRILLIANT monetization characteristics). I LOVE the game and play it daily. However, I won't be surprised to see wannabes sprout up, forcing KING to find other avenues for continued growth.

    I think the company will continue to thrive, but can they thrive enough to justify a $6 billion valuation? Much more of a challenge than GLUU has to justify its $300 million market cap. Keep in mind that both companies spent their first 8 years on a similar growth path. In other words, KING didn't become bigger or faster growing until Candy Crush.

    Also, just to correct you on one thing, GLUU made a profit last quarter and I suspect that continued in Q1. Every company begins as an unprofitable entity in one way shape or form. KING was founded in 2003, but didn't turn a profit until two years ago, when they developed Candy Crush.

    I respect your opinions, but your abrasive style isn't necessary. Just because we disagree on KING vs GLUU's valuation, doesn't make us enemies. Tis better for investors to work together, because in the stock game it is possible for everyone to win.

    As you can see from the other readers' responses, your form of rhetoric is discrediting you, which thus discredits your thesis. I'm always happy to be shown the error of my ways, because my goal is not to be right -- it's to make money. If you provide info that convinces me that I'm wrong about KING and/or GLUU, you're not "winning"...you're doing me a favor.

    That's how everyone can win.

    Best Wishes and Kindest Regards,

    Mark G.
    Apr 6 08:13 PM | 11 Likes Like |Link to Comment
  • Should King's Sour Candy Be Crushing Shares Of Glu? [View article]
    Hi Everyone,

    A lot of stock market volatility would be solved if the market was only open one day per month. Too many people call themselves "investors", but never received a college education on how to value equities (never mind post-graduate work, which is necessary to truly gain equity-valuation expertise).

    As a result, most people get shaken by short-term moves because they have no concept of whether their stock is under- or over-valued. My first step is always to calculate what I think the stock is worth (which takes me SEVERAL WEEKS to do properly).

    SEVERAL WEEKS.

    After 25 years of education and experience, I require WEEKS to calculate what I think a stock is worth.

    So, what are the chances that most investors REALLY know (and have conviction in) what any stock is worth? Now, the REAL question is...how can investors react properly to any given stock price (or stock price movement) if they don't know what the stock is worth?

    Charts don't tell you what a stock is worth or where it's going. The valuation does. The charts are merely the map...but you have to know the destination (valuation / target price) for the map to be of any use.

    My calculated value of GLUU hasn't changed in the past two weeks because the long-term prospects of GLUU have not changed in the past two weeks. In fact, even when Deer Hunter inevitably peters out, GLUU will still be a company that knows how to create and monetize mobile video games. Some games will be a hit (like Deer Hunter) and some will not (like Robocop)...but the average game will do well, driving the company's long-term growth.

    All they have to do is 1) learn from their winning games 2) learn from their losing games and 3) keep making more games, using what they've learned from their prior games.

    Everything else is just background noise, which can only serve to confuse short-term minded investors. I don't play that game. I seek companies that have the ability to execute over a long period of time. Once I invest in them, I let them work their magic (over time), while I set my sights on finding the next investment.

    If you read what I just said, you'll understand why I believe that fretting over short-term moves is a waste of time and emotion. ;)

    Cheers,

    Mark G.
    Apr 6 04:01 PM | 18 Likes Like |Link to Comment
  • Ignore The Downgrade - Glu Is Still Poised To Triple [View article]
    Great feedback, everyone.

    A lot of these problems would be solved if the stock market was only open one day per month. Too many people call themselves "investors", but never received a college education on how to value equity (never mind post-graduate work, which is necessary to truly gain equity-valuation expertise).

    As a result, most people get shaken by short-term moves because they have no concept of whether their stock is under- or over-valued. My first step is always to calculate what I think the stock is worth (which takes SEVERAL WEEKS to do properly).

    SEVERAL WEEKS.

    After 25 years of education and experience, I require WEEKS to calculate what I think a stock is worth.

    So, what are the chances that most investors REALLY know (and have conviction in) what any stock is worth? Now, the REAL question is...how can investors react properly to any given stock price (or stock price movement) if they don't know what the stocks is worth?

    Charts don't tell you what a stock is worth or where it's going. The valuation does. The charts are merely the map...but you have to know the destination (valuation / target price) for the map to be of any use.

    Cheers,

    Mark G.
    Apr 6 03:46 PM | 4 Likes Like |Link to Comment
  • Ignore The Downgrade - Glu Is Still Poised To Triple [View article]
    Another great post, Aaron.

    Setting investment goals based on company fundamentals is VERY smart (assuming the stock price doesn't get ahead of the fundamentals). In the case of GLUU, the stock has been correcting due to market-related fears, as opposed to company's fundamentals.

    In such cases, I generally view the dip as a buying opportunity. In the long-run, fundamentals always win. Most investors suffer from being too myopic.

    The long-term prospects of GLUU have not changed in the past two weeks. In fact, even when Deer Hunter inevitably peters out, GLUU will still be a company that knows how to create and monetize mobile video games. Some games will be a hit and some will not, but the average game will do well, driving the company's long-term growth.

    Everything else is just background noise, which can only serve to confuse short-term minded investors. I don't play that game. I seek companies that have the ability to execute over a long period of time. Once I invest in them, I let them work their magic (over time), while I set my sights on finding the next investment.

    In you read what I just said, you'll understand why I believe that fretting over short-term moves is a waste of time and emotion. ;)

    Cheers,

    Mark G.
    Apr 6 02:53 PM | 1 Like Like |Link to Comment
  • Ignore The Downgrade - Glu Is Still Poised To Triple [View article]
    I agree with this.
    Apr 6 02:42 PM | Likes Like |Link to Comment
  • Ignore The Downgrade - Glu Is Still Poised To Triple [View article]
    Bingo. Well said.
    Apr 6 02:42 PM | Likes Like |Link to Comment
  • Pixelworks Discloses Relationship With Apple [View article]
    Well found, Scott. There are few things I love more than an investor who does their homework. Interesting indeed. Kudos and cheers!
    Apr 5 07:59 PM | Likes Like |Link to Comment
  • Riding High On AeroGrow [View article]
    I find it humorous when people toss stock prices around without valuation-based backing. I'd like to see the earnings and valuation model that supports this.
    Apr 5 07:56 PM | 1 Like Like |Link to Comment
  • Ignore The Downgrade - Glu Is Still Poised To Triple [View article]
    Ladies and Gentlemen,

    Lots of emotion here...and as I've said before, emotion is an investor's biggest enemy. If Mr. Spock existed, he'd be richer than Buffett.

    For the record, GLUU is a Core pick and a "Gold Mine"...and I stand by those classifications. NOTHING has changed since its last earnings report. If I remember correctly, it was a massive beat and raise (from a management team with a reputation for conservatism). Someone correct me if I'm wrong. :)-

    In my opinion, the stock is down because:

    1) KING's IPO was a dud. KING and GLUU are two completely different companies, but most investors haven't done the homework to understand that.

    2) The Russell has been whacked. When the Russell falls, GLUU falls (because it is a member of the Russell and ETF managers are FORCED to sell all Russell members when investors sell their Russell ETFs). Note that this has NO bearing on GLUU's value as a company. It's forced selling (i.e. no choice).

    A 25% correction is not fun, but not shocking either. I've seen my share. In fact, my biggest winner ever started with a 25% loss (before rising 10x). Accordingly, my ownership in GLUU is as big as ever (it represents 15% of my net worth and remains my largest holding). I don't like "losing money", but it's not my job (nor within my capability) to convince the entire world of what I know about this company.

    Just remember, 3 months ago, GLUU dropped 18% and hit 3.61 just one week before its beat and raise. Until the announcement, everyone was badmouthing the stock and talking about insider selling. Six weeks later it was up 56.5%...and people are complaining about a 25% pullback? Sigh. In the face of a massive tech correction, the stock is still up 16% in six weeks. That's 256% annualized.

    Bottom Line -- The problem here is human nature. Perceived losses bring mistrust and fear. I can't change that. It has always existed and always will.

    If GLUU is worth $9, it will get there whether or not I provide reassuring words. My specialty is analyzing valuations and making 12-36 month calls...not pumping a stock or provided reassurance during corrections. Seeking and researching the next pick to triple is a much better use of my time and skills, no?

    Right. So, my original thesis is STILL my thesis. The company hasn't changed a bit in the past few months. Everything I have said still holds true. If you disagree, please enlighten me. Otherwise, you must LOGICALLY overrule emotion and conclude that the recent selloff has been driven by something other than the company's fundamentals...

    ...and I think we can all agree that fundamentals is the primary determinant of a company's TRUE value, whether the stock reflects it or not.

    Word to the wise -- on Wall Street, the biggest rewards go to those who work hard to find value while the world fearfully hits their "sell" buttons in the face of a red screen. It is HUMAN to think, "Someone must know something". I feel that EVERY time. But inevitably, nobody "knows something". The stock is only falling because everyone is selling...because everyone is selling...because everyone is selling. Until all the fearful investors have sold all they have. Professionals call that "shaking out weak hands". I've written about this before.

    As most of you have witnessed over the past 5 years (and many more have seen over the past 20+ years), I've made a very successful career of taking advantage of this human condition (calling the bottoms on FB and GLUU to within a month comes to mind). It's a "scary" method to follow, but it's really not scary at all -- not if you do your homework...

    ...and that's ALL I do.

    In fact, my only fear is being wrong in front of the 30,000 people who follow my work. #pressure

    Thus, my performance record speaks volumes.

    If my Methodology and track record aren't enough for you to have trust in my picks, them my style is just not right for you...and there's nothing wrong with that. Nobody's style is right for everyone.

    Now please, try to enjoy your weekends. Lord knows we've all earned it.

    Kindest Regards,

    Mark G.
    Apr 5 07:54 PM | 1 Like Like |Link to Comment
  • Riding High On AeroGrow [View article]
    That's not a question -- it's an entire discussion (and possible an entire college course).

    A good subject for PTT University. Stay tuned...
    Apr 4 08:49 PM | 1 Like Like |Link to Comment
  • Riding High On AeroGrow [View article]
    I just made the following comments above. Just adding here for easy access...

    As I've said, I like my AeroGrow (much more than my SodaStream). Do the math on that. If even 1 in 5 people agree with me, AERO's sales will continue growing...and THAT is what to watch.

    It's not about where they are now or where they were yesterday. It's about where they are going. From that perspective, showing 65%+ growth and sold-out products on their website speaks volumes.

    If you think the company will fail because you don't like the product (via first-hand experience), I can't fault a man for his opinion. However, comments regarding earnings demonstrate low knowledge of "operating model leverage".

    If you don't understand what that is, you've just made my point ; )

    Suffice it to say that OML is the single most important determinant of a company's ability to make a crummy-looking income statement into an amazing one. It's also a key thing I look for in picks to triple (a crummy income statement that has the OML to become a great one -- HIMX, FB, and STX come to mind as past examples, among others).
    Apr 4 07:59 PM | Likes Like |Link to Comment
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