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Michael Allen  

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  • The Japanese Anomaly [View article]
    Your glass is half full. Currency debasement was not creating artificial demand. It was re-capturing normal demand and re-establishing normal competitive strength that had been artificially depressed by an over-valued currency that was itself a result of other currencies debasing and Japan doing nothing in response for decades.
    Jul 12, 2015. 10:15 AM | Likes Like |Link to Comment
  • The Risks Of Selling iShares 20+ Year Treasury Bond ETF And Buying American Capital Mortgage Investment [View article]
    Your arguments seem to support, rather than refute the trade. You are saying that rather than twice as sensitive, treasuries are 4x as sensitive. How is that a bad thing? If you think interest rates will go down, you obviously shouldn't make the trade in the first place.
    Jun 25, 2015. 03:51 PM | 1 Like Like |Link to Comment
  • Telefonica: A 6.8% Yielding Telco With Nearly 70% Upside Potential [View article]
    You cannot argue that because they cut the dividend, that it is "more" unreliable." Exactly the opposite is the case. The point of the dividend cut was to enable the company to pay down its debt so that the dividend payment could become more sustainable in the future. You could argue that the amount of debt retired is or is not yet sufficient. I'd like to see this discussion.
    Mar 23, 2014. 11:36 AM | Likes Like |Link to Comment
  • SoftBank: For Exposure To Alibaba, Look To Tokyo, Not Sunnyvale [View article]
    1. I don't see where you have charged a tax that Softbank would incur if it divested any of these assets. These charges would be significant.
    2. There is no arbitrage opportunity unless you can show evidence that the stock market does or is likely to value indirect ownership of these assets through Softbank the same way that it values direct ownership. Indeed, your evidence is all to the contrary. If I own Softbank only, and all three of these other stocks collapse, what will be my reward?
    3. If your argument were valid, the only way to lock in the value would be to short the shares of these three companies and buy Softbank, but then you have to show more than that the assets are priced differently. The market knows that they are priced differently and appears to be happy about this. What will make the market prices change? I have seen this type of mis-pricing in Japan for the last 25 years, and they never get corrected, mainly because when you dig deeper, they are never quite as illogical as they often seem.
    3. At the end of the day, you are confusing price with value. Share prices are often disconnected from value. A proper sum-of-the-parts analysis would value the cash-flows of these parts, not the share prices.
    Feb 16, 2014. 10:00 AM | 3 Likes Like |Link to Comment
  • There Is More Than A Mere Bubble In The Stock Market [View article]
    There is a great tendency among analysts to assume that any 50 year period must have some relevance on the future, since, well, 50 years is a long time. The actual data shows, however, that there was never any 50 year period that correlated well with any of the subsequent periods. During the best 50 year period in history, which ended in 1999, real returns were 6% annually. In the worst, which ended in 1980, real returns were 0.5% annually. The previous peak, in 1970, was 5%. The only thing structurally bubbly about recent history is that the most recent peak was 1% higher than the previous. Both were followed by very long-term weakness. If you knew nothing else, you would be forced to conclude that every 50-year period is an anomaly.
    Nov 13, 2013. 09:09 AM | 1 Like Like |Link to Comment
  • Cutting Through Market Noise With Boxplots [View article]
    An interesting start, but you need to find out if there's any correlation between the position of an asset class in the box-plot and future returns. Mean reversion isn't a given, nor is it likely to be consistent across asset classes. And who says that 1 year returns are any better than any other window?
    Nov 8, 2013. 09:44 AM | Likes Like |Link to Comment
  • How I Explain Amazon's Stock Performance [View article]
    Nice explanation, but not a good forecast. Anyone can increase their cash flow by 50% by increasing their borrowing 100%! Amazon required $3.4 in liabilities for every dollar in cash flow in 2010. Then $4.5 in 2011, $5.8 in 2012 and apparently about $7.1 this year, which means that cash flow covers less than 15% of liabilities. There is no hard rule, but 15% is a threshold that credit analysts are trained to take note of. Amazon might need to issue more equity if it wants to continue growing at this pace.
    Nov 6, 2013. 01:06 PM | 1 Like Like |Link to Comment
  • UR-Energy: A World-Class Junior Uranium Producer Right Here In The USA With Huge Potential [View article]
    "Though it was hardly the fault of the Fukushima Daiichi plant itself that it failed (but rather an incredible 55-foot wall of water that inundated it)"
    It was entirely the fault of the Fukushima Daiichi plant. An equally high wall of water hit all 7 reactors, yet only 4 were damaged. The other three had adequate back-up systems in place. The damage was not a result of the wave, but a result of utterly reckless negligence and stupidity. All of this trouble could have been avoided for the cost of one additional well-protected generator. The Japanese are struggling to determine whether or not stupidity can be avoided in an operation that is run by human beings, and unfortunately, throughout the aftermath, TEPCO has given them no reason for confidence whatsoever. Polls show the Japanese population to be about 95% in favor of a permanent shut-down.
    Nov 4, 2013. 09:57 AM | Likes Like |Link to Comment
  • I Concede Defeat In [View article]
    The stock market is like a game of poker in some important ways. The best players don't play the cards in their hand, they play their opponent. In your hand was the best analysis of the company anywhere, but throughout, you've had no idea who was investing in this or why. You haven't figured out what would disappoint them or cause them to alter their stance. Neither have I, which is why I'm not short.

    Incidentally, it's not much of a concession if you are still short the stock. Do let us know when you have covered.
    Oct 26, 2013. 08:28 PM | 1 Like Like |Link to Comment
  • Deficit To Cripple S&P 500 Earnings? [View article]
    Good research.
    Oct 25, 2013. 09:46 PM | Likes Like |Link to Comment
  • What Happened To The Part-Time Employment Issue? [View article]
    Careful. Just because we can't see the impact doesn't mean it isn't there. We do not know what employment would have been if there were no ACA. Also, seasonally adjusted data do not give any indication that our labor market is healthy. Suffice it to say that ACA effects, whatever they are, are difficult to pinpoint, and therefore, probably not the most important reason that so many people still find it difficult to find meaningful employment. We have serious structural problems that began long before the most recent recession that have not been addressed by either party.
    Oct 24, 2013. 08:57 AM | 5 Likes Like |Link to Comment
  • The New Kindle Fire Is Not Selling Well [View article]
    Paulo, as I understand from your previous postings, you agree that Amazon could be making more than it is making now. I your estimation, what are the realistic normalized margins on Amazon's entire business, and what is a reasonable expectation for sales growth over the next 5 years?
    Oct 19, 2013. 02:26 PM | Likes Like |Link to Comment
  • What The Bears Don't Get About Amazon [View article]
    You attempt to justify the bull case with numbers is laudable, and I enjoyed the article. As an analyst, you have to try to figure out a plausible reason for why the market is doing whatever it is doing. But unfortunately, even if you're numbers are right, a sane market would not pay as much for all these what-ifs as it does for a company that actually makes the profit. What if Jeff Bezos gets in a car accident and breaks his neck?
    Oct 18, 2013. 03:46 PM | 1 Like Like |Link to Comment
  • The Importance Of P/E Ratios In Selecting Stocks - An S&P 500 Case Study [View article]
    1) Obviously, you have a small-cap bias in your data, since every decile outperforms the market, even if you include dividends, and it's entirely unclear why you chose not to. 2. Rebalancing monthly is totally impractical. If you replace your portfolio every month, as you could with this strategy, the commission and slippage costs could be as much as 12% annually for an individual investor - maybe more. All of your gains would be taxed at the short-term rate, which, for anyone who has enough wealth to engage in this kind of strategy after state and local taxes, could easily be half of your gains.
    Jul 29, 2013. 05:35 PM | 3 Likes Like |Link to Comment
  • Warning: Bond Bears Might Be From The Twilight Zone [View article]
    Nice trading, but I hope you are not suggesting that what happened between 2009 and 2013 was enough to form a statistically meaningful thesis. That would be a great example of twilight zone thinking.
    Jun 17, 2013. 08:28 PM | Likes Like |Link to Comment