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Martin Vlcek  

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  • Useful Investing Links [View instapost]
    You're welcome! I plan to add to this list of great resources or thoughts and concepts.
    Mar 28, 2015. 10:46 AM | Likes Like |Link to Comment
  • Magnum Hunter's Shrinking Asset Base And The Implications For Shareholders [View article]
    Excellent article. I wonder who the buyers of the assets will be? They will probably get a great deal at fire sale prices. I am short MHR since a few days ago.
    Mar 27, 2015. 05:58 PM | 3 Likes Like |Link to Comment
  • Virtusa Should Continue Outgrowing The Industry As It Moves Toward Integrated Projects And Recurring Revenue [View article]
    Warreno,

    Thank you for the comments and the useful site link.
    Mar 25, 2015. 09:45 AM | Likes Like |Link to Comment
  • Why Shake Shack Has A High Valuation #InstaShack [View article]
    I appreciate the analysis, I think it is very important to get a perspective from a very young generation which will be the main consumer of the future. And SHAK is focusing on the right strategy. BUT:

    Why are there no options on this stock? If it is such a hot stock at this price, surely market makers and insiders want more people to buy with call options, right? Wrong. Have you seen another stock with a market cap of 1.5B and so much public interest having no options? Guess why there are no options? Because it would be much safer to short the stock if options were available.

    SHAK is still a burger place. I stopped eating burgers and other fast food a year ago and eat very tasty and healthier salads (even with meat) instead. Eating more burgers and sweet drinks is not the way. For me, a modern fast-food is a salad menu with drinks of freshly squeezed fruit and vegetables. Not yet another burger-flipping place.

    "Shake Shack is basically the representation of what a modern day restaurant should look like. It gets everything right. Good social media, good taste, good locations, simplified menus".

    How hard is any of this to copy? McDonalds has already realized they need to become healthier and address the changing consumer taste. I think the current U.S. sales drop has scared them a lot to be honest. So with their high cash streams, from the time they decide to copy SHAK, it will take them what? Two years? Three years? They are testing new concepts (in Australia and maybe other places) and once they decide the change is what they want, they can roll it out worldwide almost instantly and crush SHAK or other copycat burger outlets.

    Posting a few times a day instead of a few times a week? How much does that cost? Not even one full-time person. Of course you need the good content, but you can get that too with the changes in the company. Getting 100K new followers on Instagram or whatever the next go-to social network will be in 10 years from now after Facebook-Instagram hype is over? It costs pennies (or dollars per follower just to start the wave, to be fair). The next generation will want to have their own social network again so Instagram will not be "in" by the time SHAK still tries to grow to the size of Chipotle.

    The youngest consumers are the most fickle and unstable. Their tastes change on a whim (or rather, on a popularity on Instagram as witnessed in the article). Once a new SHAK copycat opens a year from now across the street from SHAK, the Instagram crowd is going to flock to the new coolest thing.

    In conclusion, I think there is a place on the market for SHAK, but the price tag is just absurdly high. If the stock trades multiple times lower, I think it is a good long-term growth investment (still with many risks). If the price stays here, there are tons of better priced stocks.
    Mar 24, 2015. 02:56 PM | 3 Likes Like |Link to Comment
  • A​n Option Strategy ​For Beaten Offshore Drillers [View article]
    I think a better strategy than to sell naked calls is to sell call spreads. So you would buy a farther out of money call to the naked call to make it safer by limiting the maximum downside. Selling a same strike put spread is an equivalent.
    Mar 24, 2015. 01:00 PM | 3 Likes Like |Link to Comment
  • Update: NeoPhotonics Q2 Earnings: Record Revenue But Falling Margins And Weaker Cash Position [View article]
    Of the non-GAAP earnings of $0.19 per fully diluted share, foreign exchange benefit was $0.07 per share. So almost half was just the weakened Japanese Yen. Of course Yen can continue to weaken and probably will, but not that fast. So is this a sustainable long-term positive non-GAAP EPS base?

    And when I subtract just the management stock compensation ~$2M per quarter, the positive non-GAAP EPS is pretty much gone. If I add all the non-GAAP items, EPS was negative.
    Mar 24, 2015. 11:17 AM | Likes Like |Link to Comment
  • Update: NeoPhotonics Q2 Earnings: Record Revenue But Falling Margins And Weaker Cash Position [View article]
    Here we go. That doesn't mean anything. Look at the big picture. Look at their stock price since 2007 IPO. I am adding to my short today.

    The company made an acquisition in the meantime, so they naturally beat the sales and EPS targets. They restructured debt so that they will only pay some interest and no principal for three years. Almost every company "beats" because they set the targets low.

    Just a day after our conversation, NPTN files an S-8 filing to issue shares amounting to ~6% of all shares outstanding as a new employee incentive plan, triple in size from the previous: http://1.usa.gov/1HwD6UV. Look at the big picture. Of course I can be wrong, but there is a high probability I will make some money in a few years when the stock trades back below $3. The spike was unpredictable = uninvestable. The future fall is predictable = investable for profit.
    Mar 24, 2015. 10:54 AM | Likes Like |Link to Comment
  • Update: NeoPhotonics Q2 Earnings: Record Revenue But Falling Margins And Weaker Cash Position [View article]
    You just can't get over this one, can you? My recommendation was not wrong, it was just safe. I said do not invest. That's very different. Any stock can skyrocket for almost no reason, such as NPTN. Look what OCLR is doing just because of NPTN, no other reason.

    NPTN margins are still mediocre and the company will probably need new financing soon. Plus the 15% Russian exit is looming. I think the Russians bought for ~$8 per share, so that's where this stock may be headed, then there will be a secondary offering, and then the stock will fall back to Earth over time. However, the company could manage to log positive EPS for several quarters or years, so this is not a very safe short either. Although I am shorting this one, I recommend others stay on the sidelines as the stock can still triple from here for no reason, or for expectations of a positive inflection point, which may happen.
    Mar 23, 2015. 08:02 PM | Likes Like |Link to Comment
  • Update: NeoPhotonics Q2 Earnings: Record Revenue But Falling Margins And Weaker Cash Position [View article]
    They are preparing to offload a 15% stake of the Russian partner. They are considering to dilute shares as part of this offering. So I would not buy this rally. I am actually shorting it since $6.50. But to each his own, everybody needs to do their own research.
    Mar 23, 2015. 05:43 PM | Likes Like |Link to Comment
  • Return Of The Gold Standard [View article]
    Stephen,

    I own some physical gold as an insurance as well, plus lots of real estate as a percentage of my NAV. Coincidentally, my grandfather left me with a savings account as well during a period of fast inflation. He also left the family with real estate which is a good long-term store of value. There have been currency "reforms" and government bond haircuts, corporate nationalization and complete real estate confiscation, plus two world wars during his lifetime.

    That's perhaps why he taught me not to dwell on material things but gave me the most valuable thing that nobody can take away from you, and that is wisdom, constant learning and the ability to use my brain and think independently.

    But going back to gold, gold has been stolen, confiscated, diluted with silver or exchanged at disadvantageous rates throughout the ages many times, as other assets (1933 was it in the U.S.?, WW2 in Europe?).

    So a theoretical rate of return of an asset over centuries is one thing. The real ability to pass the specific piece of gold/stock/real estate to your heirs is a completely different matter and the real rates of return are abysmal IMO for all assets over centuries, even though the assets still exist, the owners are different.

    Diversify and don't dwell on material things too much and hope to be lucky and on the right side during the next revolution or war is the best advice I can give for the really long run.
    Mar 23, 2015. 01:22 AM | 2 Likes Like |Link to Comment
  • Return Of The Gold Standard [View article]
    "Something like the SDR - a basket of major currencies that also includes gold".

    I think this might be the likely setup but I don't see gold as a real store of value, but just an insurance. Sort of like a VIX index. It can spike tremendously during periods when the global monetary system is undergoing big shift or turbulence. But in the long run, I prefer productive assets that generate FCF and can compound that FCF.
    Mar 22, 2015. 10:07 AM | Likes Like |Link to Comment
  • Seadrill's Interesting Use Of Swaps Boosts Income And Lending Capacity [View article]
    Ngwaiyeong,

    A very good point, regarding selling at a smaller loss if the stock bumps up. I believe a large portion of investors (especially dividend investors) bailed out when the SDRL cut the divvy, but I suspect there are still some newer investors left who entered after the dividend cut (such as me who first entered at around $15-$16), who are at a loss on the first part of their investment (my break-even price is now around $10 due to selling calls and buying the second part of the investment at $9).

    The $15-$16 purchase was just a quarter of the planned full SDRL position for me, but if someone established a large position already, they may be having second thoughts. So I expect some selling around $10 (now) and later around $14-$15.
    Mar 21, 2015. 02:43 PM | Likes Like |Link to Comment
  • Seadrill's Interesting Use Of Swaps Boosts Income And Lending Capacity [View article]
    Thanks! I have some more info but the article would have been too long and complicated. I will perhaps try to put together some additional info on SDRL in the future.
    Mar 21, 2015. 02:40 PM | Likes Like |Link to Comment
  • Will Berkshire Outperform The S&P 500 In The Future? [View article]
    Kyle, thanks for your kind words and let's hope my expectations of BRK's outperformance are correct as I am planning to devote a part of my portfolio to BRK once I do some portfolio rebalancing.
    Mar 21, 2015. 02:36 PM | Likes Like |Link to Comment
  • Artisan Partners: Renewed AUM Growth And Past Stock Price Pressures Create A Buying Opportunity [View article]
    Adib,

    You make a very good point. I am not sure if the source I used calculates the consolidated value or not. In any case, I am relying on my DCF valuation rather than the metrics such as EV/EBITDA. I use the financial metrics as a sanity check to see whether they are reasonable and how they relate to the DCF valuation. In any case, thank you for a good observation!
    Mar 18, 2015. 11:08 PM | Likes Like |Link to Comment
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