Michael Blair

Long/short equity, contrarian, deep value, event-driven
Michael Blair
Long/short equity, contrarian, deep value, event-driven
Contributor since: 2013
Company: Renegade Capital Corporation
@adecinvestor - theoretically yes, but selling requires a buyer and buyers are scarce today.
@vlas - the standards are unlikely to be met. There are very few cars in existence capable of meeting 5 liters per 100 km and it will take a very long time to change the installed base fleet to a better usage pattern.
@techy 46 - great comment, thanks.
@Volte Face Investments - article is right on. U.S. inventories are rising because oil is cheap. With imports running over 7 mm barrels a day U.S. oil companies can deplete inventories quickly by simply buying less abroad. The reason they are not is that it is cheaper to import oil today than to drill for more so why not put as much into storage as possible. Moreover, in the shortage that will ultimately arise, inventories are their only protection against shortages and disruption. Headline numbers on inventories are irrelevant to world prices in my view. A more important datum is the simple supply and demand curve which, at this point, looks a lot like slowing growth in supply and increasing demand. When the lines cross, better be long.
@Buyandhold 2012 - no question AAPL has been a fantastic investment over that time frame. Well done if you held it.
@richard48 - Global banks are 18 times more exposed to China than to Greece. http://bit.ly/1Svtr9X
@Mark Hibben - how does a market share less than 15% globally translate into "dominance"?
@h206 - China's foreign debt is well over $1 trillion, about the same as Lehman when it collapsed. A Lehman moment is by no means out of the question.
@molli - true enough, but the same will apply to the new Tesla's and the new Bolt - each will come with differing trim levels. The segmentation by base price still has meaning.
@AntiBodian - The Tesla target price is $35,000 and the Bolt target price is $30,000, both net of incentives.
@Doc's Trading - fabulous result and well done. Just remember - bulls make money and bears make money but pigs get slaughtered. The growth story is intact and NFLX has momentum but that can turn quickly and the valuation is a nosebleed.
@Courage and Conviction Investing - Best article on the current price scenario I have seen. But with decline rates worldwide of perhaps 7% to 10% and drilling cutbacks the deepest in recent history, it is not hard to see production falling faster than your article suggests. The market is starting to recognize the risk may be slowing demand rather than burgeoning supply given the turmoil in China. My view is that a less than 2% global surplus is a rounding error (1.5 million barrels of 96 million daily demand) and that feast can turn to famine very quickly. As a result I am long oil and expect to get longer over the next 6 to 9 months. World inventory levels of 3 billion barrels seem very high until you realize that is a 33 day supply. Your suggestion that investors proceed with caution is a good one nonetheless. This is not a time for margin.
@Bill Maurer - I included the "other income" in my estimates.as part of the $38 billion of "all other". The rest is simply arithmetic. You may disagree with the estimates but your work does not contradict them with anything other than your own more bullish estimates. There are no "errors" despite your suggestions otherwise.
Adding to it.
@Georges Pierre - great links thanks. No question Apple is doing well in the U.S. but less so abroad. I would not put a lot of stock in the IDC forecast. They forecast great things for BlackBerry on the eve of its massive decline in market share and previously forecast sizeable gains for Microsoft that did not pan out. I think they are correct that Apple will continue to lose share nonetheless.
Sam
Thanks for the link. The article pretty well sums it up. All the best for 2016.
Michael
@ChampagneBob13 - glad to hear your son likes his iPad. They will become valuable as museum pieces in years to come. My short positions are puts so the losses are no greater than the premiums I paid, and, who knows, maybe they will become profitable after Apple reports Q1.
The beauty of record performance is that it is often peak performance. Investors look ahead, no behind.
Good luck with your investments.
@markpelmark - adjust for the margin given to carriers and re-sellers.
@6034700 - I have added to the holding.
@Mark Hibben - it is a bit early for a wake. The Priv likely sold 125,000 units at a high price and limited more by supply than demand. It is an excellent phone despite your unfavorable commentary. It would enhance your credibility if you bothered to actually use one for a few days. You would be impressed.
You may be right, of course, since carving out a meaningful position in high end Android phones is a daunting task but your conclusion that BlackBerry lacks the ability to do so is without much substance. BlackBerry can design phones just as well as any other vendor, and there is nothing preventing BlackBerry from using the latest components for the premium priced segment.
The Priv compares very favorably to the iPhone 6 which is where Apple continues to have the most volume after a pretty lukewarm reception to the 6S. Priv has a better screen; more storage; more DRAM; and a better applications library among other things. An iPhone 6 with equal storage is priced at about the same as the Priv but lacks the microSD; has an inferior camera; and, suffers from only 1GB DRAM.
I am often criticized for an anti-iPhone bias and perhaps with justification since I have yet to be impressed with Apple's offering but your blogs reek with blatant pro-Apple bias and perhaps suffer from that to the same degree as mine.
BlackBerry may never rival Apple but it should not be dismissed. It is an excellent company with strong management and has a decent chance at long term profit growth. With a market cap of only $5 billion it is very likely a better bet than AAPL for those who seek substantial gains.
@docnaka - great comments. Wise to hold both. I am skeptical of plans to enter businesses outside of Apple's core competence and particularly the car industry which in my view would be a major negative for Apple.
@Paulo Santos - I have a PRIV. It runs Android apps flawlessly, is much better than I expected, and has the look and feel of a true flagship. Try one out. You might change your mind.
I do agree PRIV will not sell in large volumes - my expectation is about 100,000 per quarter at the current price point. But I do think it is profitable at that volume as an individual item. Other Android phones will follow at differing price points. Will they be profitable? I think so, unless BBRY targets volume which would be a mistake.
The PRIV is nonetheless a very good phone. The keyboard is excellent despite the naysayers, and the combination of a solid keyboard and predictive typing (at which BlackBerry excels) makes it a very effective device for those who send a lot of texts. The Google Play access and Snapdragon 808 AP make it a very good device for most apps as well. It has very good battery life as well. Support for a 200GB SD Card gives it massive storage not available for many phones.
For my money, it is a better phone than the original iPhone 6. At $249 on a two year contract from AT&T it is comparable to an LG V10 and $50 less than a Samsung S6 Edge or a 64GB iPhone 6S. While expensive, it is not outrageously priced.
@George Kesarios - is this a review by a writer who does not own a Priv, has not seen one in real life, and has never used one?
@David653 - I agree shipments to carriers were very limited.
@Alex Pitti - solid article. Apple just seems to have missed the boat with this product, despite its potential. Having a large screened iOS device will appeal to many Apple fans but is unlikely to move anyone from a Surface or similar 2 in 1 running Windows 10, but the latter may prompt many iPad users to switch to Windows. Apple's saving grace is its very strong MacBook line which fortunately uses powerful Intel processors with x86 capability and runs OS X which has a decent library of applications including a very good MS Office suite and Adobe Creative, without which it would be of limited value.
@MarkOfO -Of course it is a protocol and thanks to Tim Berners-Lee for his innovation, but IP makes it possible to do away with CDMA and its successors as Verizon has done with the HTC device. IP does not replace CDMA, just makes it irrelevant.
@Mark Hibben - I note you compare the Priv to the very recently released Apple iPhone 6S rather than the more prevalent iPhone 6. I understand why - the Priv makes the iPhone 6 look archaic.
Before you write it off, try to buy one. You will find that pretty difficult since almost every one who carries the Priv is sold out.
You may also find there is a growing concern over security that your beloved iPhone pays lip service to but in fact fails to provide. The iPhone 6S launch was contemporaneous with the worst security breach in iPhone history. http://bit.ly/1j3KXmd
Your last article points out that Apple continues to sell the iPhone 6 and 6 Plus and looks to them for volume in its fiscal Q1. The Priv compares favorably. http://bit.ly/1j3KY9G
Some informed observers think it compares well to the iPhone 6S as well, with intangibles making up the differences. http://ubm.io/1j3KXmh
I do think your quarterly estimate is quite reasonable. Given the Priv has just been released and is unlikely to have been produced in any real volume, Priv sales of $200 million could be ambitious for the period.
@Mark Hibben - great article with the sales of last year's model no doubt a factor in Q1 sales not to be overlooked. I have called iPhone sales within 5% for the last few quarters based on MixPanel and Fiksu data and the differences have been rounding errors. The Android data are useful. If there are 1.4 billion Android devices in use (rather than 1.6 billion) Tim Cooks 30% of 48 million conversions remains at about 1% of the Android population switching to the iPhone with little data on how many iPhone users switched the Android.
What I see is about 70 million iPhones this Q1 versus 74.5 million last year. We are not that far apart despite my bearish and your bullish thesis. Perhaps the twain shall meet.
@DPSS - I am guessing you are not a math major. The CIRP data show as many iOS users switching to Android as Android users switching to iOS within reasonable tolerances. But there are 4 times as many Android users so the percentage of users jumping ship is a lot less in the Android community and Apple is not making inroads into Android territory. That is obvious, of course, when you see that the percentage of smartphones running Android continues to rise while the percentage of smartphones based on iOS continues to fall (gsstatcounter.com).
If any material percentage of Android users switched to iPhone sales of iPhones would soar. A 15% switch rate would see 240 million Android users jump on the iPhone bandwagon in one year, increasing the iPhone installed base by half. By contrast, a 15% jump from iOS to Android would add 75 million Android users to a base of 1,600 million, or about 4-5% growth.
Growth in global smartphone demand has simply masked the weakness of Apple's unit sales. As that growth matures, the obvious will become all too obvious and you and your fellow Apple fans will see some pressure on your favorite stock, I would think.
@KIA Investment Research - apparently you would, with less opportunity to make these insightful comments.
@djstocks - 13 million Android users switching to iPhone in a quarter is a meaningless when a larger number of iPhone users switched to Android and those leaving Android are less than 1% of the installed base. You might review your own "analytical issues".
@Mark Hibben - good article although a bit to Apple-centric. Qualcomm's problems are Samsung; Mediatek; and, Intel not only for chips but also for communications IP. It is only a matter of time.
With respect, Apple depends on ARM for basic technology and Qualcomm (and ultimately others) for radios and has no defensible position in semiconductors despite its annual upgrade of its SOC. Without basic technology and without its own fab capability, it will see Samsung edge away over time and will have to scramble for capacity for its home-grown designs.
At some point, ARM may decide to take advantage of its near monopoly in non-x86 technology to raise prices and Apple will bear the brunt of that shift, should it happen.
Putting pretty ribbons on third party technology does not make Apple a tech giant. There is not much unique about an iPhone except its cult-like following among Apple fans. Apple's success is marketing, not technology. That makes it vulnerable in my opinion.