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Michael Loeb

 
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  • Aflac's Japanese Risks Are Overstated [View article]
    If all you care about is Aflac's ability to pay its dividends and share buybacks without exchanging its currency, then yes, focus on the US numbers. That will give you a very limited picture of the company, as nearly 80% of revenues originate in Japan, and by extension, so do their investments.
    Mar 13 05:35 PM | 2 Likes Like |Link to Comment
  • Aflac's Japanese Risks Are Overstated [View article]
    This is one point of tension for me as I think about Aflac. A significant portion of my wealth is in Aflac for many of the reasons you cited, but I have a difficult time believing the "currency doesn't matter" as an investor. Dan Amos cites it in his numbers every quarter, and it's a valuable measure for tracking whether the business is actually growing or not.

    But, investing is about maintaining purchasing power. As Buffett might say, if I can buy 10 hamburgers today, I want my investments to allow me to AT LEAST buy 10 hamburgers in the future.

    So, let's take the "currency doesn't matter" argument to an extreme and say the yen continues to slide against the dollar, to say 200 Yen/ 1 US Dollar. But Aflac still grows operating earnings 7% a year in constant currency terms. The folks at Aflac may still not convert yen into dollars, but your purchasing power has still been impacted, and perhaps permanently in this extreme case.

    So, I think the currency value is vitally important. This does not mean I think the yen will continue to weaken, but I think the currency value absolutely needs consideration.
    Mar 13 11:40 AM | 6 Likes Like |Link to Comment
  • TiVo: Heading Into A Cloud Of Profits [View article]
    TiVo has been losing money for years on its DVR products. What makes their current growth profitable?

    I can buy 10 Cokes at $1.00 from the vending machine and sell them for $0.80 today, and do the same with 20 Cokes tomorrow. It's 100% revenue growth, but who wants that kind of growth?
    Mar 3 03:35 PM | Likes Like |Link to Comment
  • Despite Downgrades, PetSmart Is A Good Value [View article]
    I've been looking recently at this stock knowing that pet products do tend to be recession-resistant as you pointed out. A big plus for this company in my eyes has been its capital allocation, through a combination of investing in new stores, creating new store formats, paying dividends, buying back shares, and paying down debt. Any additionaly insight from your research on these topics I would find interesting.

    Thanks
    Mike
    Feb 18 04:54 PM | Likes Like |Link to Comment
  • TiVo Shares Look Undervalued With Growing Subscribers And Future Patent Litigation Cash [View article]
    Hi Chris,

    Great article, and don't disagree with any of the facts you laid out. Any idea what TiVo's underlying earnings/cash flow are? The litigation payments are great, but TiVo doesn't seem to make any money or even positive CFO when excluding litigation payments.

    It's absolutely insane this company trades at $1.5BN when it has $1BN of cash and $700M NOL's. At first glance, its absolutely screaming to be bought out.
    Feb 8 05:44 AM | Likes Like |Link to Comment
  • Michael Kors Is Found Eating Coach's Lunch [View article]
    At what price does Kors get too expensive? Do you see multiples expanding further along with the expected increases in earnings?
    Feb 4 10:37 AM | Likes Like |Link to Comment
  • Post Holdings - Not Attractive After Dakota Growers Deal [View article]
    While you are generally correct that Depreciation and CapEx should move closely together, it does depend very much on the industry. More stable industries such as cereal should probably have lower CapEx than coal or oil and gas. Look to Warren Buffett's example of See's Candies for confirmation.

    Also, refer to the end of Berkshire Hathaway's 1986 annual report for a discussion of owner's earnings and why all depreciation should not be treated the same. In the report, Mr. Buffett shows how a company he bought at over book value needs to reflect a depreciation charge to get rid of the premium over book value. To him, the assets still generate the same level of income, so they should not be depreciated any more heavily than before the acquisition.

    There are definitely some points to be argued here, especially on the point that book value for an asset bought a long time ago is not necessarily indicative of replacement value today, but I believe Mr. Buffett's point on owner earnings applies well to Post.
    Jan 3 12:48 PM | Likes Like |Link to Comment
  • Why Procter & Gamble Is No Longer A 'Buy And Forget' Stock [View article]
    How are you calculating Invested Capital? I didn't do the calculation, but it seems P&G continues to invest in its business over the last 6 years. Its CapEx from 2008 to 2013 was (3,046), (3,328), (3,3067), (3,306), (3,964), (4,008). Asset sales meanwhile were 928, 1087, 3068, 225, 2893, and 584 over the same period. It seems like they are still investing, although this is obviously just a regurgitation of their Annual Reports. What numbers are you seeing?
    Dec 23 05:38 PM | Likes Like |Link to Comment
  • Renaissance Re Will Not Lead To Enlightened Value For Shareholders [View article]
    How do you come up with estimates for RNR if its earnings are dependent on low frequency, high cost events not happening? How many points on their combines ratio will they lose as the result of the increasing prevalence of ILSs?
    Dec 19 05:26 PM | Likes Like |Link to Comment
  • Why Procter & Gamble Is No Longer A 'Buy And Forget' Stock [View article]
    I'm taking Operating Cash Flows and subtracting capital expenditures (or purchase of PPE on ADVFN). I don't know where ADVFN calculates its FCF from, but I don't think thats right. Can you show me how they got to the numbers above with other figures from the website?
    Dec 18 05:16 PM | 1 Like Like |Link to Comment
  • Why Procter & Gamble Is No Longer A 'Buy And Forget' Stock [View article]
    Mike,

    How are you calculating free cash flow and what is your source? P&G most-recent 10-K says free cash flow has been about $10B, arrived at by the $14BN in operating CF's minus capital expenditures of $4BN. Am I missing something?
    Dec 17 04:02 PM | Likes Like |Link to Comment
  • Priceline.com: Strong Fundamentals With Strong Future Growth [View article]
    How do you think the consolidation of the airline industry will affect the prices sites like Priceline and others will be able to offer?
    Dec 17 11:49 AM | Likes Like |Link to Comment
  • Should Aflac Be Added To My Dividend Growth Accumulation Portfolio? [View article]
    I think a half position might make sense, although I'm biased as an AFL owner. With regard to the 5 year timeframe, I think any consideration of PE should be adjusted. The last 5 years have been extraordinary in the markets, so while AFL may not be a 15 PE company in the future (I still think it could be), a reasonably safe assumption could be a middle ground of say 12. Using that multiple, you have a company trading at a good discount.

    Any worries about the decrease in JGB prices to me are overblown, as AFL holds those securities to maturity. I am not too familiar with the SMR ratio, a Japanese insurance liquidity measure, but the concern with any investment losses, even on paper, would be that the SMR ratio could be impacted. All these things considered, AFL has grown tremendously in a country that has been in a Depression since 1990 selling a product that is "supplementary".

    There may be short term pain as the Yen/dollar exchange rate reverts back to a historically normal level, but waiting for those risk factors to clear up is not prudent for any value investor.
    Dec 11 10:22 AM | 2 Likes Like |Link to Comment
  • Should Aflac Be Added To My Dividend Growth Accumulation Portfolio? [View article]
    What dividend companies are you investing in, and what are their valuations? Aflac looks quite undervalued to me, and you can refer to the F.A.S.T. graphs article on Aflac to see by how much. Aflac is being offered at a historically high dividend yield, and is valued at only 66% of its 10 year average P/E of ~15.
    There are no other insurance companies out there that make as much money as Aflac does. Buy good companies at a discount.
    Dec 10 04:29 PM | 8 Likes Like |Link to Comment
  • Amazon: A Retailer Valued Like A Tech Company [View article]
    This is a very interesting article, and in my opinion very ably captures the comparisons of companies against which Amazon competes.

    Good job, and thank you for putting words to my gut feeling that Amazon is not worth what it's currently selling for.
    Dec 9 01:06 PM | 1 Like Like |Link to Comment
COMMENTS STATS
80 Comments
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