Seeking Alpha
View as an RSS Feed

Mark Williams  

View Mark Williams' Comments BY TICKER:
Latest  |  Highest rated
  • Rhetoric Eases, Troubles Remain In Alibaba Piracy Spat [View article]
    Yeah. Lots of grey market all over the place. If you are a consumer it's not a bad thing. But the key point is that grey market is legal in most places and even encouraged in some, but illegal in China for imported goods. Hence the grief Taobao is getting from the SAIC.
    Feb 3, 2015. 03:01 AM | Likes Like |Link to Comment
  • Rhetoric Eases, Troubles Remain In Alibaba Piracy Spat [View article]
    Indeed. There is no evidence that anything like that amount of fakes was found. Grey market goods where the vendor does not have the "right to sell" from the manufacturer that is legally required to market/sell any imported goods also falls under this banner. It surprises me a bit that even 1/3 of the goods on the Tabao (as opposed to Tmall) site would be anything other than grey market. Taobao *is* grey market and would be nearly 100% technically illegal.

    I'd be surprised if the incidence of fakes on Taobao was significantly different from the incidence on Ebay, the business from which it was, after all, copied.
    Feb 2, 2015. 11:09 PM | 1 Like Like |Link to Comment
  • New Reason Appears For Yahoo Investors To Fear Alibaba's Business Structure [View article]
    The article is certainly one take, and the optimistic one. Still, a few things worry me:

    1. Whether or not a company is actually foreign-controlled is now officially a matter of opinion and not a matter of law.

    2. There is as yet no precedent of the VIE structure contracts being enforced by Chinese courts.

    3. There is precedent for the Chinese entity to unilaterally move assets out of the supposedly controlled entity into a separate entity whose profits are not shared by the external entity.

    Maybe it will all end up being hunky-dory, but I smell the frog being boiled.

    Other than that, I think BABA is a great business that will do well, as is JD.
    Jan 27, 2015. 07:57 AM | Likes Like |Link to Comment
  • Chinese VIEs - Winners And Losers [View article]
    Thanks for the illuminating analysis.
    Jan 23, 2015. 01:48 AM | Likes Like |Link to Comment
  • New Reason Appears For Yahoo Investors To Fear Alibaba's Business Structure [View article]
    Thanks for that. Interesting. I take that as the non-harsh interpretation. I remain skeptical.
    Jan 22, 2015. 07:21 AM | 1 Like Like |Link to Comment
  • New Reason Appears For Yahoo Investors To Fear Alibaba's Business Structure [View article]
    (for some reason I cannot reply to a comment at the moment)
    In the past, once a draft law comes out it is pretty certain to become law. It's not as if there is a hostile congress to get through. There will no doubt be a few tweaks as people point out problems with the law but that will be it.

    The big fat question is how it will be applied to existing VIE structure companies like SINA, BIDU, BABA, JD etc. The harsh interpretation is that either the Chinese entity is not controlled (contracts unenforceable) or that it is operating illegally and must divest its assets (biggest heist in history.)
    Jan 21, 2015. 10:02 PM | 1 Like Like |Link to Comment
  • New Reason Appears For Yahoo Investors To Fear Alibaba's Business Structure [View article]
    I have always been very wary of Chinese stocks because of the VIE structure, mainly because it is not clear that the structure that I can own actually can legally control the companies that own the actual assets. It is entirely untested in law, and it has been stated many times that the whole VIE structure is designed to circumvent the spirit of Chinese law while complying with the letter. I find BABA especially scary because even the companies that own the assets own nothing except intellectual property which could obviously be "stolen" in a hot minute as long as Jack Ma and Simon Xie who own all the shares decide not to sue.

    Things got a whole lot more scary on the 19th Jan when MOFCOM published its draft new foreign investment law that states pretty clearly that foreign-controlled enterprises with VIE structures will be interpreted as foreign enterprises under Chinese law, and that such enterprises must file and seek approval from relevant State Council bodies. Does this mean that the Chinese company is now no longer eligible to run an internet business in China? I am not sure and I am not strong enough in the trouser department to test it the hard way.

    Disclosure: Long JD but probably not for long.
    Jan 21, 2015. 05:38 AM | 1 Like Like |Link to Comment
  • Microsoft And Windows 10: Release Date, Price And More [View article]
    Yeah. foolish statements like that usually mean you need to read no further. Win7 also had the tailwind that it followed Vista, which at least in the earliest versions was not seen as any improvement on XP. To that extent, Win 7 was a very late update to XP which, while it rocked in its time, was total toast in the face of malware by the time W7 was released and essentially unfixable from a security standpoint. At the time of release of Windows 7, Windows XP was 7 years old. In contrast, when Win8 was released, W7 was a mere 3 years old and still relatively viable as an operating system. From the standpoint of back-end infrastructure and general robustness, Win8 is a major improvement over Win7, but not so much in terms of interface for desktops. I would most certainly not class Windows 8 as a failure.
    Dec 29, 2014. 08:00 AM | 6 Likes Like |Link to Comment
  • Ruckus Wireless - Taking On Ubiquiti Is A Mistake [View article]
    There are successful precedents for this kind of thing like Bay Networks' Netgear product line. The key is keeping the channel absolutely separate. Not allowing your direct salesforce to get commission and maybe even using separate distribution typically does the trick.

    Selena Lo is a serial winner in this space (Centillion, Alteon, Aruba) and I'd say she has a better-than-even chance of getting this one right.
    Nov 10, 2014. 04:26 AM | 1 Like Like |Link to Comment
  • Turning Point [View article]
    I once read an analysis that showed that for the last n years, you could have captured more than the total gain of the S&P simply by buying SPY on the Tuesday morning and selling on the Thursday mornings of FOMC weeks. (Or was it Friday afternoon?) I discarded it as one of those seasonal things that work until they don't, but it was interesting....
    Oct 29, 2014. 01:30 AM | Likes Like |Link to Comment
  • Update: DryShips Sinks Its Battleship With Dilution [View article]
    Whatever dude. Let me repeat - for the case of DRYS:

    Share value dilution < 12.1%
    Voting rights dilution: ~ 36.5%
    Book Value Dilution: ~29%
    250/435 = 57% (Hot damn that's a big number SELL SELL SELL.)

    You choose which one you care about. I care about how much my share value has been diluted in this case, and incidentally I also care that Dryships avoids default on December 1.
    Oct 28, 2014. 02:45 PM | 3 Likes Like |Link to Comment
  • Update: DryShips Sinks Its Battleship With Dilution [View article]
    Fair enough. But in my book, even if you cared about the vote dilution (why would you? No control before, no control after) then 36.5% dilution is a hell of a lot different from 57% dilution.

    I am not trying to say shareholders have not been diluted. They have, any way you look at it. I am just objecting to mathematically illiterate calculations to get eye-popping numbers.

    Other posters have already made the point that for a company at risk of defaulting, dilution can be a good thing and actually raises the value per share, even after dilution.
    Oct 28, 2014. 02:09 PM | 1 Like Like |Link to Comment
  • Update: DryShips Sinks Its Battleship With Dilution [View article]
    Actually, dilution is rarely used in terms of percentage ownership in these cases. It's typically only used if you have effective control and want to see if a share issue will lose you control.

    If I have no control anyhow, I would much rather have 5% of a $3M company than 10% of a $1M company.
    Oct 28, 2014. 01:50 PM | 2 Likes Like |Link to Comment
  • Update: DryShips Sinks Its Battleship With Dilution [View article]
    This, too, is incorrect. If you have 1% of a company with 435M outstanding shares, and another 250M shares are issued, then you now own 1%*435/685 = 0.635% of the company and the voting rights. You have 36.5% less voting rights.
    Oct 28, 2014. 01:45 PM | 2 Likes Like |Link to Comment
  • Update: DryShips Sinks Its Battleship With Dilution [View article]
    No. In the $100 example, the new theoretical diluted price would be:
    (435*2 + 255*100)/685 = $38.49
    Which would be wildly accretive to existing shareholders, because the company would now have $25.5B in extra cash.

    Do you get paid less for astroturfing when you get shown to be incompetent in the comments section?
    Oct 28, 2014. 01:23 PM | 1 Like Like |Link to Comment
COMMENTS STATS
363 Comments
224 Likes