Seeking Alpha
View as an RSS Feed

Michael Fu  

View Michael Fu's Comments BY TICKER:
Latest  |  Highest rated
  • Accounting Lessons From Corning [View article]
    BTW, here is a link to an overview on Hemlock, which is 63% owned by Dow Corning (therefore consolidated in Dow Corning's financials, but Dow Corning is 50% owned by Corning and is "equity method" to Corning's financials).

    http://bit.ly/YAZeYZ

    As for silicon for solar panel price drop, looks like prices have dropped +50%, given overcapacity issue (330,000 tons produced with just 200,000 tons demanded). Need to watch this Hemlock thing carefully in the next few quarters, see if there are additional write-downs and negative affects on Corning.

    http://bit.ly/13I3sTH
    Mar 7, 2013. 12:27 AM | 1 Like Like |Link to Comment
  • Accounting Lessons From Corning [View article]
    another reader sent me an email highlighting the point that the 2007 peak in TV demand, may have been a one-time peak, given there was a transition from CRT to LCD TV's during that last big upgrade. I think that is a very good point he made.

    I think though that the new LCD/Plasma TVs we have now still have to be eventually replaced, just like computers need replacement in 4 yrs and cars need replacement in 8-10 years. The TV replacement cycle may not be at the same peak as it was in 2007 though (to the reader's point), but there should still be a bump.

    Also, rising middle class in developing markets should help drive LCD TV demand outside of U.S. The Samsung Corning JV is building new facility in China scheduled to complete in 2013/2014, to try and capture more of this demand.

    Good luck!
    Mar 7, 2013. 12:03 AM | 3 Likes Like |Link to Comment
  • Accounting Lessons From Corning [View article]
    Hi MWinMD,

    There are a few major legal liabilities from my read of 10-K:

    a) Asbestos Liab at Corning: Corning has set aside $671mm liability for this concern (under non-current liabilities). an ultra conservative approach is to count this as "debt" as well and deduct from Corning's net cash (net cash incl JV currently is $4.3bn).

    b) Silicon Implant Liab at Dow Corning: Dow Corning has set aside $1.6bn in implant reserve liability for this concern (b/c it's a big number, I have deducted this amount from the JV's net cash).

    c) Silicon solar panel issue at Hemlock, subsidiary of Dow Corning: too much supply in solar industry, so sales and demand declining significantly. MOFCOM in China also labeling U.S.
    solar panel makers with anti-dumping, further affecting sales. Dow Corning took a $365mm restructuring charge in 2012 for this, but could take more charges in future.

    Hope this helps. There are reasons why GLW trades so cheap (like these mentioned above). I think these concerns are priced in already/fully, but I could be wrong. Good luck!
    Mar 6, 2013. 11:57 PM | 4 Likes Like |Link to Comment
  • Is Inorganic Growth What's Really Driving Amazon's Sales? [View article]
    well, i guess i was wrong on AMZN, at least with respect to timing. My puts have expired worthless post earnings.

    I shorted AMZN twice in past 12 months for slight net loss (Sep-Nov 2012 made money, but that could be b/c of overall markets correcting then. Most recent Feb 2013 puts expired worthless).

    I also shorted AMZN twice back in 2007/2008, net gain $2,500. Way back in 2003 I shorted AMZN, lost $2,000.

    I'm probably done trading AMZN for awhile. Time to move on to other stocks. Good luck whoever still has position (either way) in it!
    Mar 6, 2013. 03:27 AM | Likes Like |Link to Comment
  • 5 Stocks Trading Below Book Value [View article]
    anyone else pick up HES (up 40%), CHRM (up 40%) or ABFS (up 20%) since this artilce? I luckily got in on CHRM and HES.

    I've had my share of misses too (Long Apple, down 25%) (Shorted AMZN, puts expired worthless).

    Good luck as always.
    Mar 6, 2013. 03:16 AM | 1 Like Like |Link to Comment
  • Companies With Economic Moats For The Next Stock Market Pullback [View article]
    sheesh, why so bitter on buffett? i just like the general fundamental approach to investing, b/c the more you understand and view stocks as a business (what's the negative thing that buffett said about RSG by the way, i missed that, i am always open to learning new things), the more you will not panic and sell at the wrong times.

    that doesn't mean i just buy and hold forever, i'm more practical. if a stock is up +15% in less than a year, i sell and take the gain (and may re-enter later when it corrects again). i'm a small retail investor so have advantage of getting in and out of positions without moving the markets (unlike buffett and large funds who if they sell their significant stakes, it affects prices dramatically, so they tend to hold longer).

    i'm also cheap so will wait for prices to get to a certain level before entering it, so i guess i somewhat market time, which is also against buffett thinking (i got in on RSG around $25 after their big drop in may/june).

    anyways, everyone is their own person and can make their own investment choices that best suits them. i like fundamental approach because i like understanding how a business works (and again, i can always keep learning and do when i own a stock), and that understanding keeps me from panicking during bad times. but i also add to that some element of market timing, b/c markets are volatile and will occasionally over-react. and finally, i'm happy swinging for singles and doubles (sell when up 15-20% in a year), instead of swinging for homeruns (chase high valuation/momentum stocks that can put up +40-50%).

    who do you look to in the investment world and what style of investing do you prefer (momentum, technical, macro thru etfs, etc.)? to each his own and good luck!
    Feb 5, 2013. 08:35 PM | Likes Like |Link to Comment
  • Companies With Economic Moats For The Next Stock Market Pullback [View article]
    having said all that, I think i tend to favor some of the "rights of way" companies (RSG or utility companies like DUK/POM which I own), because they're competitive advantage/moat is a bit more protected (by legal rights). but note their upside is also limited (utilities have regulated ROE they are allowed to receive/apply for on their capex investments).

    i also tend to favor MCD/KO, which because they're low priced, everyday food/beverage products, they tend be a bit more recession proof. I own MCD, but may try and pick up KO on the next market correction.
    Feb 4, 2013. 10:48 PM | Likes Like |Link to Comment
  • Companies With Economic Moats For The Next Stock Market Pullback [View article]
    hi techwork, yes great point. no company is bulletproof, so need to continuously monitor to make sure they maintain their advantage (or if they are starting to lose it). apple use to have an advantage (brand, ecosystem/network effect, etc.), but obviously started slipping recently (and I got caught owning it into the pain, down +20%).

    i think the other thing to keep in mind, is that a company may have strong advantages within an industry, but if the entire industry's demand changes/declines, then that company may still be a market leader in that industry, but it's now a declining industry. overall industry demand/drivers need to be tracked.

    your examples of concrete producers and rating agencies, falls into this category of the overall industry demand of housing had to correct (housing has cyclical downturns too, not just consistently up every year). housing got ahead of itself in 2003-2007, just built too many houses, financing due to MBS and CMBS just got too cheap, prices kept going up. so when it finally turned negative, all the market leaders in various housing sectors (concrete makers, homebuilders, rating agencies, banks financing housing) all got hit as well.

    this applies also to when entire global economy slows down, all stocks will get affected by global demand of everything declining. some industries may be more recession resilient, but will still feel some impact.
    Feb 4, 2013. 10:44 PM | Likes Like |Link to Comment
  • Yum! Brands Announces Full-Year 2012 EPS Growth of 13%, or $3.25 Per Share, Excluding Special Items; Opens a Record 1,976 New International Restaurants; Adverse Publicity Regarding Poultry Supply Continues to Significantly Impact China KFC Sales [View article]
    $YUM is way too leveraged to China, and leverage works both ways (positively when times are good, and negatively when times are bad): http://seekingalpha.co...
    Feb 4, 2013. 09:49 PM | Likes Like |Link to Comment
  • Gold And U.S. Government Debt: Highly Correlated [View article]
    isn't the gold price to u.s. debt chart just highlight inflation over time, and not so much causation? meaning, if you graphed gold prices to say, a can of coke, from 1970s (coke can was what $.05-$.10 back then?) to now, wouldn't it show strong correlation as well (so then would we imply coke prices/coke demand causes gold prices to increase)?

    anyways, just a thought. I'm looking to pickup some gold (5-7% of portfolio) for diversification only, but I don't really have a desire to bet the farm on gold (a non-productive asset). that would be just too fearful...or greedy.
    Jan 28, 2013. 10:42 PM | Likes Like |Link to Comment
  • Don't Let Analysts Trick You, Western Union Below $13 Is A Rare Investment Opportunity [View article]
    hi greg,

    just an observation, i don't think you can add the $2 cash per share in your valuation, if the company has net debt of $2 bn ($3.4bn debt, but only $1.4bn cash).

    regardless of that point, I'm going to start looking into WU over next few days. it does look cheap at 10-12% FCF yield, just don't know how the fees charged by WU compares to competing options (is WU way more expensive like others have commented, then can continue to add to margin pressure). Thx.
    Jan 28, 2013. 02:39 AM | 1 Like Like |Link to Comment
  • Lessons Learned From An Apple Bull [View article]
    yes, i do like the upside on the business/education side, of selling more ipads/pcs/iphones to corporations and schools, and taking market share there from traditional pcs. note from my model, i've taken an extremely conservative approach of just modelling just the same units sold in Q1 for remainder of the quarters in 2013, which implies a decline in units sold from 2012 levels. this could prove to be too conservative and could provide some upside particularly given business/education sales.
    Jan 26, 2013. 11:55 PM | Likes Like |Link to Comment
  • Lessons Learned From An Apple Bull [View article]
    thanks very much. i took those haircuts so it can help remind myself of what should be the absolute bottom, and hopefully force me to be patient through the short term pain, until some positive news from apple hopefully can get announced (ie: china mobile deal, new iphone 6 later this yr, iTV, etc.) and can begin to get priced in. i just hope internally, apple hasn't started to focus more on operations (b/c of tim's background, iphone 5 and ipad mini felt like operational type products, of just increasing or decreasing screen size/speed capabilities of existing products) over innovation.
    Jan 26, 2013. 11:49 PM | Likes Like |Link to Comment
  • Lessons Learned From An Apple Bull [View article]
    very good comment tom. patience and long term horizon are advantages that individuals have (b/c we don't have quarterly/annual results and comps against benchmarks). but the hard part is picking which stocks are a good long term investments. there are also such things as bad long term investments, especially related to tech stocks that can change so much do to newer technology products that come along (ie: what happened to NOK, RIMM, HPQ in the past 5-7 years, to apple's benefit). i want to believe apple remains long term secular play, but until apple announces new info that proves otherwise (new iphone 6 that creates excitement again, new china mobile contract, new iTV), then i can only give them credit now at best as an income like stock at 10x P/E, while keeping in mind potential downside that has happened to other tech stocks in the past (and apple is no different, they at the end of the day, need to continue to innovate or they too will be like NOK in the past).

    i hope Apple does announce something positive as a catalyst soon, so i can update my valuation to the upside. but for now, it remains at best $550, without accounting for momentum/fear discount.
    Jan 26, 2013. 11:39 PM | 1 Like Like |Link to Comment
  • Lessons Learned From An Apple Bull [View article]
    i think that for now partly shows up in their itunes/services category (which is 9% of sales, and 12% of gross profit if you assume service has 50% gross margins). for example, when they kicked google maps off, google had to then create a google map app. and whatever eventual map ads google sells, in theory they would have to give apple their 30% cut b/c its under the App contract. also, Apple's passbook app prob gets some kind of cut for helping to promote store value cards, movie tickets, coupons, etc.

    going forward, i agree apple could do more with search ads/mobile ads, with their existing safari on mobile and maybe offer their own search platform. but i think that takes a good amount of r&d and possibly different expertise to offer a good offering (look at apple's map app, it's unfortunately inferior to google maps and they've gotten criticized for it since launching it).

    apple has a huge advantage in mobile, b/c of beautifully designed hardware consumer products that alot of people use. but on the software side, they need to decide whether to a) continue to be a platform and leverage 3rd party developers (like they do with apps), or b) if they want to and can successfully develop their own software that is as good/if not better than competitors (apple mail, safari, maps). good luck.
    Jan 26, 2013. 11:26 PM | 1 Like Like |Link to Comment
COMMENTS STATS
202 Comments
152 Likes