Short Blackberry (After It Doubles) [View article]
The liquidity comes from day trading, not institutional buying/selling. The stock turns over its entire float every 3 days. Institutions (including fast-money minded hedge funds) hold their positions (long and short) much longer than that.
If the stock breaks out, as it appears to be doing right now (also see how GME turned out), agnostic day traders will act by focusing on the long side of the trade (ala one of our other picks, HIMX).
At that point, the liquidity will only be there for longs who wish to take profits. This is how/why many squeezes have been so violent of late. NFLX is another that comes to mind, but neither NFLX, nor GME had as much pent-up power s BBRY -- those stocks take 12 and 40 days for their floats to turn over, respectively.
Seriously, I don't recall seeing a stock with such a high combination of short interest and share-turnover. I'm not the type to tell shot-sellers that they're in a position to get their "faces ripped off", but I would strongly suggest taking the aforementioned facts into consideration.
BlackBerry Bear Case Is Flawed - Shares Should Double [View article]
Yasch22,
Those are EXCELLENT points and illustrate the homework you've done on your own. Our research led us to the same conclusions, but we didn't want to include such depth in this particular article.
Also, we were trying to be balanced, letting the shorts know that we understand their case. In fact, before doing the research, my personal hypothesis was bearish. Our research changed my mind completely.
Kindest Regards,
Mark G.
p.s. FYI, this weekend's BlackBerry-at-Selfridges article was characteristic of the survey work we did regarding the Q10. http://seekingalpha.co...
I've enjoyed reading the comments in response to this article, especially the more colorful ones. To those of you who feel that the article was overly simplistic and general, I say...
You're 100% correct.
There are obviously a lot of smart and experienced people here. If you are one of them, you realize that SeekingAlpha is also frequented by a number of intelligent novices. Thinking back to my early days of investing (the mid-80s), there was a relative dearth of educational source. Even college courses proved ineffective (and in many cases, detrimental).
This article was designed to provide budding investors with a very basic and general framework through which they can start to understand some of the interconnections between the economy and the stock market.
We can debate the efficacy of my framework relative to others, but this one has served me very well over the years. In hindsight, I would only have added a caution to resist the urge to move in and out of the market on a frequent basis (unless you are a technical guru -- I am not). For a fundamentalist, the probability of profits are optimized when the disconnect between risk, reward, and reality are at their greatest (i.e. 2000 and 2007).
That being said, between now and the mid-term elections, I believe there is window during which the Fed and the government are less able (or willing) to enact accommodative policies. If the recovery pauses during this time (most indicators I track suggest this is already the case), the stock market is likely to follow suit until there is greater clarity on election results and policy response. Considering this disconnect between risk, reward, and reality, I feel that a less bullish stance provides the greatest probability of a profitable outcome.
In closing, many of you who have commented here appear very well-qualified to author advanced and in-depth articles. I encourage you to do so. We can all benefit from the resultant dialog, debates, and collective wisdom. Clearly, our economy would be much better off if the average citizen possessed great financial wisdom.
BlackBerry Bear Case Is Flawed - Shares Should Double [View article]
Our basis was 1) primary and secondary research and 2) our desire to hand bearish investors every debatable argument. Our thinking -- we wanted to value the company under the assumption that we should cede every debatable argument. If it still seemed undervalued under those conditions, we'd know we have a winner...
BlackBerry Week In Review: Bears Take An Unsuccessful Swipe [View article]
Piston,
I believe most institutions are taking a wait and see attitude. The Z-10 is losing steam and the Q-10 is unproven. Most institutions don't have access to the pre-release demand data that has given us confidence in BBRY prospects for the remainder of 2013.
BlackBerry Bear Case Is Flawed - Shares Should Double [View article]
Marcap,
Your points are spot-on...and exactly why I believe the shares will double. Let's address them one by one.
Point #1
"Blackberry will need to show at least 1 or 2 quarters of actual sales growth AND profit."
I couldn't agree with you more!
The problem if you are short is that your statement is about to become a reality. According to our proprietary research, the Z-10 outlook has increased, not decreased, since Feb. But the real story is the Q-10. If you were still using the BB, the question I would ask is "Why?".
We asked that question, directly and indirectly by conducting and consolidating several surveys. We found the answer to be threefold (in no particular order):
1) My employer mandates it.
2) It's a business-focused phone, unlike most of the phones out there.
3) I LOVE the keyboard.
Looking at 1 & 2, employer mandates exist because Blackberries are business-oriented phones. Also, the company is a market leader in terms of security and management domain expertise. BBRY's software platform, (BES) will only strengthen that lead. As for #3, the keyboard elicited the most powerful response according to our research. Indeed, an enormous proportion of BBRY's 76M customers have been dying for a modern OS (like IOS, Android, or Windows 8...or BB10), but want it combined with a tactile keyboard.
The answer to that desire is the Q-10. the research (and initial sales) show that the Q-10 is set to be adopted by much of BB's small base of customers. That's right...small. 76M is nothing compared to the 1B+ smart phone users (and billions of feature phone users) worldwide. In other words, BBRY is a niche vendor.
A loser. A has been. Tertiary.
However, another word for BBRY is cash cow...and cash cows have great value (assuming they actually produce cash). In this case, BBRY regained profitability before launching its new line-up, despite the heavy investment required to develop and market the new line-up. That demonstrates BBRY's cash cow earnings power. The company currently has a grip on 76M customers. If only a third of them buys a new phone, we calulate that BBRY will blow out Wall Street's revenue and EPS estimates for fiscal 2014.
As an FYI, people tend to buy a new phone every 2-3 years, so 33-50% of any installed base is typically buying a new phone in any given year. This hasn't been the case for BBRY lately, because customers have been waiting for new products with a modern operating system.
And here they are. The BB10 OS launched with the Z-10 for the May quarter. The Q-10 will drive the August quarter, and at least 1 or 2 new models will power the November quarter. Then, the entire line-up will come together for the Febrary (holiday) quarter. After that, things could either keep rolling or fall apart...but do you really think the shorts are going to stick around through 4 massive quarters to find out?
You said it yourself..."Blackberry will need to show at least 1 or 2 quarters of actual sales growth AND profit". Our research says that 4 are on the way.
Point #2 -- With so many shares short, the shorts are likely loaded to the gills. If that assumption is correct, then their control over the stock can only have an upward bias. An end the downward pressure of increasing short interest = an end to the stock being held down. Meanwhile, four quarters of beat-n-raise performance will squeeze the shorts, which will put them in complete control...of sending the stock much higher.
Perhaps higher than it deserves to go. After all, that is the power of control, no?
BlackBerry Bear Case Is Flawed - Shares Should Double [View article]
AlphaNeria,
Thanks for the great question. FYI, you also provided a great answer -- "I suspect many people are unconvinced that the turnaround story will hold."
Bingo. This is the issue. We believe that the shorts didn't flinch last quarter because they felt they only needed to ride out the initial-sales storm. Based on our research, that storm was only the calm before the real storm.
Having done this for 25-years, we've been on the wrong side of that storm enough times. If our research and forecast are accurate, the shorts are about to experience a multi-quarter storm. First, institutions will buy. Then, weak shorts will cover. The demand will drive the stock up and eventually force the strong hands out. That being said, our prediction that shares will double is purely fundamental. A large short interest will simply accelerate (and possibly exaggerate) the velocity of the move.
Google Glass Coming Early - Shares Of Himax Are Poised To Triple [View article]
Lumia,
That's a smart attitude to take. It's important to know who you're dealing with and equally important to do your own homework. Personally, I pride myself on the reputation I've built here, starting with my first pick (LIOX) in 2009: http://bit.ly/Z4Umwp
That stock became a five-bagger over the next 15-months with no promotion or additional articles from yours truly. That inspired the "Poised to Triple" concept -- identifying stocks with a great risk/reward profile and the potential to triple. As you can see here -- http://bit.ly/I2XgJ1 -- not every pick will triple, but my track record has been pretty good.
I wasn't as active in 2012, due to training for a Track & Field world record and authoring a book for charity (see http://bit.ly/107hDk6 for the details). As you can see, I'm a modestly public person with a lot to lose if I squander my reputation (sponsorships, book sales, public humiliation, and my company Pipeline Data).
With the athletic and charitable pursuits behind me, I'm looking forward to reestablishing myself and proving my mettle, especially to justifiably skeptical investors such as yourself.
Hope I measure up...and hope you follow me long enough to find out. ;^)
Good comments, everyone. In my opinion this is what "social network investing" is all about. Everyone contributes the data points they can, both bullish and bearish. Then, we can all weigh all the data and all make money...
...and if I'm not mistaken, making money is why we all do this!
It's not about pump-n-dump or the childish Yahoo chat board battles. It's about finding the most likely truth and profiting from it. I don't know what happened to Ian, but he seemed to have real and legitimate data points. We can argue whether he used those data points in a promotional fashion, but that time can be better utilized.
In any case, I'll continue to do my part and contribute all I can. As for now, I'm working hard to finish the due diligence my next "Set to Triple" pick. I'll have it ready for your reading pleasure (and scrutiny) within days.
Quepasa Is Young, Not Overvalued: Pullback Presents Buy Opportunity [View article]
Tim, my track record is easy to see, as I post quite regularly. You'll that I'm quite good with small cap stock picks and absolutely horrible at timing the stock market...thus, I'm now sticking with the former.
I don't always get it right, but most of the time I do. We'll see how this plays out. One thing I'm not is a pumper, paid or otherwise.
Frankly, I like the pushback. It challenges me to redouble my due diligence. To that end, I've opened a dialog with the CEO of one of the country's largest digital marketing firms to re-confirm how real QPSA is. If anyone can truly uncover the reality, he's among them.
Regardless of the findings, I will report them. Stay tuned...
Google Glass Coming Early - Shares Of Himax Are Poised To Triple [View article]
Tim,
I would consider your idea if not for 1) your passive aggressive style of labeling me a pumper if I don't comply with your request and 2) the fact that you have a vested interest in profit.ly, which calls into question your true motivations, even as you question mine.
Speaking of my motivations, see today's news on HIMX and tell me if I'm a pumper or a just an analyst doing his job. I'm not always right, but I always try my best to be so.
Thus, I offer this advice. Think twice before posting borderline-libelous comments. I happen to be a fan of your work (we agreed on the likely outcome of the pumped BVSN, if you don't recall), but your words felt like an attack on my integrity, making it difficult to ally myself with your causes.
In other words, honey attracts bees better than vinegar.
Still, I applaud your enviable success and wish you well in your continued endeavors.
Lions Gate: Hunger Hype Wanes, But The Games Have Just Begun [View article]
Insiders have a long history with this company and history has taught the that selling in the double digits has been prudent. They don't know if they've truly cornered the market on Harry Potter-like franchises. However, they do know that they have a lot of stock, and a lot more wealth, than they did a few months ago.
Diversification of that wealth is prudent. I would do the same thing. In fact, I personally sold half of my position around $16 (close to my $16.33 price target) due to the decreasing potential reward (16.33 - 16.00 = $0.33) and therefore, increasing risk. I also felt that Hunger Hype would fade, negatively impacting supply/demand for the stock.
That has been playing out, so I'm looking to reestablish the second half of my position. Pay special attention to my writing tone. The focus is on LGF's positioning. Positioning doesn't make a stock go from 12 to 20 overnight, but rather over time. Supply and demand will fill the gaps in the interim.
Cheers,
Mark G
p.s. I wouldn't worry about HG getting a new director. It may actually be a good thing. The movie was good, but not great. That's enough for the sequel to be successful, but the final chapters will require the sequel to improve upon the original, in my opinion. I think LGF sees this as a convenient opportunity.
Short Blackberry (After It Doubles) [View article]
If the stock breaks out, as it appears to be doing right now (also see how GME turned out), agnostic day traders will act by focusing on the long side of the trade (ala one of our other picks, HIMX).
At that point, the liquidity will only be there for longs who wish to take profits. This is how/why many squeezes have been so violent of late. NFLX is another that comes to mind, but neither NFLX, nor GME had as much pent-up power s BBRY -- those stocks take 12 and 40 days for their floats to turn over, respectively.
Seriously, I don't recall seeing a stock with such a high combination of short interest and share-turnover. I'm not the type to tell shot-sellers that they're in a position to get their "faces ripped off", but I would strongly suggest taking the aforementioned facts into consideration.
Kindest Regards,
Mark G.
BlackBerry Bear Case Is Flawed - Shares Should Double [View article]
Those are EXCELLENT points and illustrate the homework you've done on your own. Our research led us to the same conclusions, but we didn't want to include such depth in this particular article.
Also, we were trying to be balanced, letting the shorts know that we understand their case. In fact, before doing the research, my personal hypothesis was bearish. Our research changed my mind completely.
Kindest Regards,
Mark G.
p.s. FYI, this weekend's BlackBerry-at-Selfridges article was characteristic of the survey work we did regarding the Q10. http://seekingalpha.co...
Why the Market Will Keep Falling [View article]
You're 100% correct.
There are obviously a lot of smart and experienced people here. If you are one of them, you realize that SeekingAlpha is also frequented by a number of intelligent novices. Thinking back to my early days of investing (the mid-80s), there was a relative dearth of educational source. Even college courses proved ineffective (and in many cases, detrimental).
This article was designed to provide budding investors with a very basic and general framework through which they can start to understand some of the interconnections between the economy and the stock market.
We can debate the efficacy of my framework relative to others, but this one has served me very well over the years. In hindsight, I would only have added a caution to resist the urge to move in and out of the market on a frequent basis (unless you are a technical guru -- I am not). For a fundamentalist, the probability of profits are optimized when the disconnect between risk, reward, and reality are at their greatest (i.e. 2000 and 2007).
That being said, between now and the mid-term elections, I believe there is window during which the Fed and the government are less able (or willing) to enact accommodative policies. If the recovery pauses during this time (most indicators I track suggest this is already the case), the stock market is likely to follow suit until there is greater clarity on election results and policy response. Considering this disconnect between risk, reward, and reality, I feel that a less bullish stance provides the greatest probability of a profitable outcome.
In closing, many of you who have commented here appear very well-qualified to author advanced and in-depth articles. I encourage you to do so. We can all benefit from the resultant dialog, debates, and collective wisdom. Clearly, our economy would be much better off if the average citizen possessed great financial wisdom.
Short Blackberry (After It Doubles) [View article]
BTW, I've read your work. Kudos on your innovative approach to primary research. It's been additive to our data points and short thesis.
Cheers,
Mark G.
BlackBerry Bear Case Is Flawed - Shares Should Double [View article]
...and we believe we do.
BlackBerry Week In Review: Bears Take An Unsuccessful Swipe [View article]
I believe most institutions are taking a wait and see attitude. The Z-10 is losing steam and the Q-10 is unproven. Most institutions don't have access to the pre-release demand data that has given us confidence in BBRY prospects for the remainder of 2013.
Kindest Regards,
Mark G.
BlackBerry Bear Case Is Flawed - Shares Should Double [View article]
Your points are spot-on...and exactly why I believe the shares will double. Let's address them one by one.
Point #1
"Blackberry will need to show at least 1 or 2 quarters of actual sales growth AND profit."
I couldn't agree with you more!
The problem if you are short is that your statement is about to become a reality. According to our proprietary research, the Z-10 outlook has increased, not decreased, since Feb. But the real story is the Q-10. If you were still using the BB, the question I would ask is "Why?".
We asked that question, directly and indirectly by conducting and consolidating several surveys. We found the answer to be threefold (in no particular order):
1) My employer mandates it.
2) It's a business-focused phone, unlike most of the phones out there.
3) I LOVE the keyboard.
Looking at 1 & 2, employer mandates exist because Blackberries are business-oriented phones. Also, the company is a market leader in terms of security and management domain expertise. BBRY's software platform, (BES) will only strengthen that lead. As for #3, the keyboard elicited the most powerful response according to our research. Indeed, an enormous proportion of BBRY's 76M customers have been dying for a modern OS (like IOS, Android, or Windows 8...or BB10), but want it combined with a tactile keyboard.
The answer to that desire is the Q-10. the research (and initial sales) show that the Q-10 is set to be adopted by much of BB's small base of customers. That's right...small. 76M is nothing compared to the 1B+ smart phone users (and billions of feature phone users) worldwide. In other words, BBRY is a niche vendor.
A loser. A has been. Tertiary.
However, another word for BBRY is cash cow...and cash cows have great value (assuming they actually produce cash). In this case, BBRY regained profitability before launching its new line-up, despite the heavy investment required to develop and market the new line-up. That demonstrates BBRY's cash cow earnings power. The company currently has a grip on 76M customers. If only a third of them buys a new phone, we calulate that BBRY will blow out Wall Street's revenue and EPS estimates for fiscal 2014.
As an FYI, people tend to buy a new phone every 2-3 years, so 33-50% of any installed base is typically buying a new phone in any given year. This hasn't been the case for BBRY lately, because customers have been waiting for new products with a modern operating system.
And here they are. The BB10 OS launched with the Z-10 for the May quarter. The Q-10 will drive the August quarter, and at least 1 or 2 new models will power the November quarter. Then, the entire line-up will come together for the Febrary (holiday) quarter. After that, things could either keep rolling or fall apart...but do you really think the shorts are going to stick around through 4 massive quarters to find out?
You said it yourself..."Blackberry will need to show at least 1 or 2 quarters of actual sales growth AND profit". Our research says that 4 are on the way.
Point #2 -- With so many shares short, the shorts are likely loaded to the gills. If that assumption is correct, then their control over the stock can only have an upward bias. An end the downward pressure of increasing short interest = an end to the stock being held down. Meanwhile, four quarters of beat-n-raise performance will squeeze the shorts, which will put them in complete control...of sending the stock much higher.
Perhaps higher than it deserves to go. After all, that is the power of control, no?
Kindest Regards,
Mark G.
BlackBerry Bear Case Is Flawed - Shares Should Double [View article]
Thanks for the great question. FYI, you also provided a great answer -- "I suspect many people are unconvinced that the turnaround story will hold."
Bingo. This is the issue. We believe that the shorts didn't flinch last quarter because they felt they only needed to ride out the initial-sales storm. Based on our research, that storm was only the calm before the real storm.
Having done this for 25-years, we've been on the wrong side of that storm enough times. If our research and forecast are accurate, the shorts are about to experience a multi-quarter storm. First, institutions will buy. Then, weak shorts will cover. The demand will drive the stock up and eventually force the strong hands out. That being said, our prediction that shares will double is purely fundamental. A large short interest will simply accelerate (and possibly exaggerate) the velocity of the move.
Kindest Regards,
Mark G.
Google Glass Coming Early - Shares Of Himax Are Poised To Triple [View article]
That's a smart attitude to take. It's important to know who you're dealing with and equally important to do your own homework. Personally, I pride myself on the reputation I've built here, starting with my first pick (LIOX) in 2009: http://bit.ly/Z4Umwp
That stock became a five-bagger over the next 15-months with no promotion or additional articles from yours truly. That inspired the "Poised to Triple" concept -- identifying stocks with a great risk/reward profile and the potential to triple. As you can see here -- http://bit.ly/I2XgJ1 -- not every pick will triple, but my track record has been pretty good.
I wasn't as active in 2012, due to training for a Track & Field world record and authoring a book for charity (see http://bit.ly/107hDk6 for the details). As you can see, I'm a modestly public person with a lot to lose if I squander my reputation (sponsorships, book sales, public humiliation, and my company Pipeline Data).
With the athletic and charitable pursuits behind me, I'm looking forward to reestablishing myself and proving my mettle, especially to justifiably skeptical investors such as yourself.
Hope I measure up...and hope you follow me long enough to find out. ;^)
Kindest Regards,
Mark G,
Quepasa Shares Still Set to Triple [View article]
...and if I'm not mistaken, making money is why we all do this!
It's not about pump-n-dump or the childish Yahoo chat board battles. It's about finding the most likely truth and profiting from it. I don't know what happened to Ian, but he seemed to have real and legitimate data points. We can argue whether he used those data points in a promotional fashion, but that time can be better utilized.
In any case, I'll continue to do my part and contribute all I can. As for now, I'm working hard to finish the due diligence my next "Set to Triple" pick. I'll have it ready for your reading pleasure (and scrutiny) within days.
Cheers!
Quepasa Is Young, Not Overvalued: Pullback Presents Buy Opportunity [View article]
I don't always get it right, but most of the time I do. We'll see how this plays out. One thing I'm not is a pumper, paid or otherwise.
Frankly, I like the pushback. It challenges me to redouble my due diligence. To that end, I've opened a dialog with the CEO of one of the country's largest digital marketing firms to re-confirm how real QPSA is. If anyone can truly uncover the reality, he's among them.
Regardless of the findings, I will report them. Stay tuned...
Google Glass Coming Early - Shares Of Himax Are Poised To Triple [View article]
I would consider your idea if not for 1) your passive aggressive style of labeling me a pumper if I don't comply with your request and 2) the fact that you have a vested interest in profit.ly, which calls into question your true motivations, even as you question mine.
Speaking of my motivations, see today's news on HIMX and tell me if I'm a pumper or a just an analyst doing his job. I'm not always right, but I always try my best to be so.
Thus, I offer this advice. Think twice before posting borderline-libelous comments. I happen to be a fan of your work (we agreed on the likely outcome of the pumped BVSN, if you don't recall), but your words felt like an attack on my integrity, making it difficult to ally myself with your causes.
In other words, honey attracts bees better than vinegar.
Still, I applaud your enviable success and wish you well in your continued endeavors.
Kindest Regards,
Mark G.
Lions Gate: Hunger Hype Wanes, But The Games Have Just Begun [View article]
Diversification of that wealth is prudent. I would do the same thing. In fact, I personally sold half of my position around $16 (close to my $16.33 price target) due to the decreasing potential reward (16.33 - 16.00 = $0.33) and therefore, increasing risk. I also felt that Hunger Hype would fade, negatively impacting supply/demand for the stock.
That has been playing out, so I'm looking to reestablish the second half of my position. Pay special attention to my writing tone. The focus is on LGF's positioning. Positioning doesn't make a stock go from 12 to 20 overnight, but rather over time. Supply and demand will fill the gaps in the interim.
Cheers,
Mark G
p.s. I wouldn't worry about HG getting a new director. It may actually be a good thing. The movie was good, but not great. That's enough for the sequel to be successful, but the final chapters will require the sequel to improve upon the original, in my opinion. I think LGF sees this as a convenient opportunity.
Pervasive Software Shares Are Poised to Triple [View article]
1) Findings from my in-depth financial drill-down, which shows that PVSW is already growing faster than its earnings reports suggest.
2) Findings from my product drill-down, which will uncover the industry's reaction to PVSW latest release of DataRush.
Hoping to release the first of these articles this weekend. Stay tuned!
The Fed’s About to Run Into a BRIC Wall [View article]