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Matthew Dow

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  • Indofood: A Great Consumer Franchise At A Bargain Price [View article]
    Thanks for the comment. For Spekulatis's #1, I'm not sure why he assumes that. Although China Minzhong could be a bit of a gamble, what I like here is that it gives Indofood a stronger presence/access to a distribution network in China, which over time could allow it to significantly expand its market. Note that currently about 90% of revenues are in Indonesia, so greater access to China is huge. Also as China Minzhong is a vergetable processor, it gets Indofood into a business more focusing on healthier foods, which should be a continuing growing trend in these countries. So I think they got it pretty cheap, and was a worthwhile gamble.

    For #2, I know its not a pure consumer goods company. That was clearly described in my article in the business overview where I broke down each business. About 25% of the business is agriculture (palm oil mostly). another 25% is the flour business, which is the largest flour producer in Indonesia. They use the flour as a supplier to the consumer products division (e.g. to make noodles), but they also sell the flour directly to consumers.

    So what I like here in summary is that they have top market share in all major categories they compete in (noodles, flour, milk, etc), and the brand name is very strong. They have a huge distribution network built up over 4 decades, which in Indonesia is hard to replicate due to the geography (few big islands and hundreds of small ones..)

    So yes, the valuation should be a bit lower than major western consumer products franchises, (I also indciated that in the article), as you do need to factor in some emerging market risks here, especially currency devaluation and general instability in the Indonesian economy. But a few months back the stock traded at $40, about 33% upside from the current level, and I think the sell off was overdone and in the next few years investors will likely do quite well.
    Oct 16 10:13 AM | Likes Like |Link to Comment
  • GameStop: Going The Way Of Blockbuster? Not Anytime Soon [View article]
    yes ok in that sense you are right. For me, I had a specific thesis, and I stuck to it in this case. Of course I'm an expert on Dow Theory, you have seen my last name I hope ;)
    Oct 15 04:14 PM | Likes Like |Link to Comment
  • GameStop: Going The Way Of Blockbuster? Not Anytime Soon [View article]
    Thanks! Good news for me - I got a 50% gain on this one, selling around $30. Bad news, is I sold way too early and missed the run to $50! oh well... still was happy overall with my pick :)
    Oct 15 03:07 PM | Likes Like |Link to Comment
  • Orange Is The New Green [View article]
    Good article Mike. I live in Europe, and don't follow telcos too much, but I know a bit about KPN in the Netherlands as it is currently dealing with a takeover offer from Slim, who already was a minority holder.

    One interesting insight, is that I know the EU was recently pondering legislation to stop roaming charges across country borders in the EU. This would likely have a huge impact on these businesses, as currently they charge ridiculous roaming fees if you are sometimes only a few hours away (i.e. in Germany vs. Holland). I suspect this would cause several big time mergers to save costs, like Vodafone/Orange as an example
    Oct 13 09:52 AM | 2 Likes Like |Link to Comment
  • RealNetworks: The Catalyst Has Arrived With RealPlayer Cloud [View article]
    Thanks for the comment. It is risky in the sense that their new products have competition and its unclear whether they will gain much traction. But if they dont in the coming 1 year, downside is limited due to the cash and other assets, i cant see it going lower than $7, even if they flop. Upside though is huge - if realplayer cloud gains any kind of traction, the stock will double. The downward trend the last years was because smarphones and social games (facebook) really hurt their core markets, and only now are they releasing new promising products to counter this.
    Oct 13 08:58 AM | Likes Like |Link to Comment
  • LoJack: With Brand Appeal, A Looming Catalyst And A New Line Of Business - Investors Should Take Note [View article]
    Interesting idea. Seems like though you either get in now and gamble on a positive settlement, or you wait like you suggested for signs of a positive outcome. But in the case of the latter, you likely miss the big pop up...
    Oct 8 09:23 PM | Likes Like |Link to Comment
  • Indofood: A Great Consumer Franchise At A Bargain Price [View article]
    I think there could be some risks of this, but IndoFood is not just about instant noodles anymore. They are diversified with their Agribusiness (palm oils mostly), as well as Flour, Milk (growing rapidly for the health reasons you state), and now the past few months they bought a vegetable producer in China. Their market position is stronger in Indonesia that both Nestle and Unilever, and with the middle class doubling in the next decade all of their products will continue to grow double digits. Yes perhaps some shifting towards healthier choices, but I still feel this is happening on the higher ends mostly, and overall from my experience personally (i've been there many times), the country is still very much behind western cultures in true healthy eating awareness. Time will tell I guess how this plays out, but for now I personally don't see it as a risk to worry about with Indofood.
    Oct 6 04:14 PM | Likes Like |Link to Comment
  • Meru Networks: Ubiquiti On The Cheap? [View article]
    Great to hear real life examples :) I bet the Ubiquiti system was a bit cheaper too....
    Oct 6 03:49 PM | Likes Like |Link to Comment
  • Meru Networks: Ubiquiti On The Cheap? [View article]
    Paulo, It is "Ubiquiti" not "Ubiquity".

    This is an interesting company, I have looked at it a bit, I know a lot more about Ubiquiti though. I think you should also mention that of course they compete with Cisco and Aruba especially... bit with Ruckus too. UBNT is growing significantly in this space, and its main differentiation is its very lean operating structure and compelling price points. Meru has an operating structure that appears more similar to Aruba - sales&marketing is 44% of revenues, so for sure they have a direct sales force. UBNT has no sales force, and operating expenses are only 13% of revenues , where as Meru it is like 67%. UBNT relies on their community of end users and entrepreneurs to grow. Long term maybe they might run into scalability issues, but near term there is still a long ways to run in this model I believe, and it completely sets them apart from the competition in their unique approach. Also I think Meru focuses on a few specific verticals, namely education, hospitality and healthcare.

    So for me, when I look at Meru, Cisco, HP, and Aruba here, they all have some selling pionts in their products but I have a hard time figuring out from an investing perspective which ones may be the winners. UBNT is coming up from the bottom and squeezing all of them, at least in enterprise WLAN, which is why I'm keeping my money there for the time being.
    Oct 4 10:19 AM | Likes Like |Link to Comment
  • Indofood: A Great Consumer Franchise At A Bargain Price [View article]
    Thanks for the message. I think the company has about 30% upside, so close to $40/share. This Based on a comparative valuation against other similar companies, and their growth prospects.

    I did mention the currency exchange bit in the article - for every 20% drop in the Rupiah vs. US Dollar, profits drop about -6%, assuming no other changes occur in parallel. This has to do mostly with that their debt becomes more expensive to pay (half of it is in US dollars).

    Recently the currency dropped about this much, but the stock dropped -25%. So I think the sell off was overdone, and the stock could recover in the coming year.

    As for others in SE Asia, at this time no I don't have any good recommendations... but I'll write more articles if I find others I like
    Oct 4 02:53 AM | Likes Like |Link to Comment
  • The Hackett Group Is 'Going Dutch': The Upside Potential In This Special Situation Is Worthy Of Note [View article]
    I work for a large consulting company, and I'm not sure I agree with your assessment that benchmarking is at odds with strategy. For example one program I was recently involved in, my company did a large benchmark assessment for the client on how they compared to major peers in several areas, and then based on the results a team from the IT strategy practice helped them formulate a new strategic direction to improve. You are right in that cost is one tangible metric , but sometimes they benchmark against more qualitative aspects as well...

    Now that said I do believe Hackett is a niche company, and I"m not sure about them as a long term investment... I bought a little here recently more related to a short term special situation purchase.
    Oct 4 02:45 AM | Likes Like |Link to Comment
  • Ubiquiti Offers Investors 25% Upside By Q1 Of 2014 [View article]
    Great Article Inflection Point!

    I'm also extremely honored that you have called me out in the beginning of your Alpha Rich article..... I haven't managed to publish my own AR article yet, but this is the 2nd best thing :)

    As for your analysis, only points I would add:

    I think the other product lines besides Air Max and UniFi also have good potential, which you didn't mention. Right now all the excitement is around those 2, but if just one more of the other ones starts to gain any traction (AirVision, AirFiber for example...) then they are significant room to run to the upside. I'm going to look to dig deeper into this in the coming month, and hopefully will publish another follow up.

    Only point I'm not sure about in your analysis is the short interest. It
    was always very high, but I suspected that Summit was hedging their position, and they were reducing it overtime as they sold out. Any ideas on this? In either case, the reduction there is a good thing....

    I agree with your assessment that another blowout quarter will again put significant upward pressure on the shares, still some ways to go before it is fully discovered by the market.

    With all that said, I'm more of a value investor than anything else, and UBNT is becoming much more in favor and recognized than it was, and the expectations are increasing. It is still however not priced fairly compared to peers, especially with the operating metrics we're seeing... so from that sense still some value left. I'm not a technical guy, which I see you are partially.... so I don't put much weight at all into that aspect.
    All in all I'm still cautious on adding shares due to the increasing high growth expectations built into the valuation. I will though if it dips below $30 in the coming month before earnings release or if we have any kind of broad market pullback.
    Oct 3 10:56 AM | 2 Likes Like |Link to Comment
  • Government Shutdown Looms Large Over The Market [View article]
    Thanks Bret. I might consider picking up some high yielding REIT/MLP as a diversifier. One question I've been meaning to investigate for some time though is what are the tax implications for MLPs? I'm a relatively small investor, so don't want to go that route if it brings unnecessary headaches....
    Oct 1 09:30 AM | Likes Like |Link to Comment
  • RealNetworks: The Catalyst Has Arrived With RealPlayer Cloud [View article]
    Thanks, interesting on Rhapsody, indeed I assumed it has a value of zero in my valuation. I think if you add this plus some value for the mobile entertainment division which will launch a new product soon, then upside potential is even greater than I stated. More reasons that im confident my valuation was conservative.

    Matt
    Oct 1 12:15 AM | Likes Like |Link to Comment
  • Read Seeking Alpha, Consider Investing In TheStreet [View article]
    Good points Mike, although Im not going to invest in TheStreet myself, I think you have brought a very thought provoking piece here to SA, and I enjoyed reading it along with your many many other high quality AR pieces!
    Sep 23 04:56 AM | Likes Like |Link to Comment
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