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Michael Nau

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  • Weight Watchers International - Is The Fat Lady Singing? [View article]
    Good analysis, there is a decent business in there. The problem is that I don't trust Artal to do right by non-controlling shareholders. It is just too tempting for them to pile on the bad news in the coming months and take the company private for a song.
    Apr 16 04:18 PM | 1 Like Like |Link to Comment
  • 5 Explanations For Greece's Bond Yield [View article]
    I wouldn't bet on Eurocrats sorting things out before the whole ship sinks.
    Apr 11 08:30 PM | Likes Like |Link to Comment
  • Do Not Buy Alcoa [View article]
    Tom and phawk, I think you do a good job of briefly summing up the bull case. And the market seems to agree for now that AA will turn things around with its new strategy. But neither of you address the related issues of 1.) current valuation 2.) financial weakness.

    If AA can make the leap, then perhaps optimism is warranted. But if not, then the company is in serious trouble. Where we seem to disagree is 1.) the extent to which the macro environment in the coming year will support this new strategy 2.) whether financial weakness will spell disaster if things don't go according to plan.

    Time will tell who is correct, good luck!
    Apr 10 02:46 PM | 1 Like Like |Link to Comment
  • Emerging Markets, Should They Be In Your Portfolio? [View article]
    Good points about the risks in emerging markets. Russia, Japan, and China (add Egypt and India) have historically been quite risky.

    So I think the question is whether the losses in the first half of the 1900s were "random", or a cyclical phenomenon. In other words, does international trade and liquidity regularly expand and contract over the long term? It seems like it does: WWI marked the end of a long globalization cycle and EM investors were more-or-less wiped out. International trade and capital flows have been growing steadily since 1950, especially after 1980. So are we to expect more globalization forever, or are there serious imbalances that will eventually end the liquidity cycle? Looking at the debt bubbles in China and Brazil and the massive overcapacity across EMs, it seems to me that the EM party will be over within the decade.
    Apr 10 10:52 AM | Likes Like |Link to Comment
  • Should You Bet On Alcoa's Momentum? [View article]
    Did we read the same earnings transcript? GAAP EPS negative, yoy revenue decline, soft aluminum market. Management tried to spin this as positive, but these "restructuring" costs not counted in adjusted EPS seem to be a central part of the business model now. So what is there to be bullish about, especially looking at deflation in Europe and the coming credit bust in China? If I shorted stocks, AA would be near the top of my list.
    Apr 9 08:24 AM | 3 Likes Like |Link to Comment
  • Bank Of Internet: Higher Rates Will Compress Margins For Bank Priced At 3.5x Book Value [View article]
    Wow, excellent article, well reasoned and articulate. Personally, I side with BOFI management on interest rates, but who knows, they are making a large gamble. I do totally agree about the longer-term problems with funding, runoff from MBS, and heightened competition- I've changed my mind significantly in the last year about the sustainability of BOFI's moat (weak to nonexistent).

    All that said, valuation shorts seem risky in this market. This is clearly a battleground stock with huge price swings and widespread disagreement about fundamentals. Shorts and longs should both be careful. Good luck everyone!
    Apr 8 11:33 AM | Likes Like |Link to Comment
  • Tesla Motors launches business leasing subsidiary [View news story]
    Well, the stock is down. So they need something to pump it back up so they can sell more.
    Apr 8 07:53 AM | 1 Like Like |Link to Comment
  • California green car incentive program goes dry [View news story]
    If that is the case, then CA should stop giving handouts to the affluent and use the money on something more productive.
    Apr 4 01:25 PM | 7 Likes Like |Link to Comment
  • The Impact Of High-Frequency Traders [View article]
    Sensible analysis and proposals, the HFT threat to retail in terms of scalping is way overblown.

    I guess I'm a little less convinced that "flash crash" events are no big deal just because the 2010 crash was quickly reversed. In 1987, options and futures markets came close to collapse, and I'd hate to have the fate of markets depend on the whims of a few people in positions of power. That's why I'd add a very small transactions tax for trades held less than one minute (or hour or day or whatever). Won't affect long-term investors at all, but will make some of the HFT business models obsolete.
    Apr 4 07:40 AM | Likes Like |Link to Comment
  • Caterpillar Inc. Heading Towards The Right Direction [View article]
    CAT Revenue is declining, most quickly in Asia. And China's investment binge is just starting to end. This will not end well for CAT longs- revenue does not need to decline much further before margins will be crushed.
    Apr 3 07:53 PM | 1 Like Like |Link to Comment
  • Jim Chanos Is Wrong - Hewlett-Packard Is A Great Long Bet [View article]
    I think the issue hinges on strategy: should HPQ be 1.) a runoff company as its existing businesses with poor growth prospects but good cash flows are milked and cash returned to investors, or 2.) reinvented with current cash flows to compete in higher-growth areas.

    I'd prefer to see the first. Management is not Warren Buffet and tech is hard to get right for old, bureaucratic companies, so the second strategy seems doomed to failure. But unfortunately, being a conservative steward of company cash is not a formula for quick jumps in the stock or large bonuses for dealmakers, particularly in HPQ's industrial neighborhood. So unless I see real cash coming back to shareholders, I'd have to discount cash from operations heavily in my valuations.
    Apr 3 10:09 AM | 2 Likes Like |Link to Comment
  • Stop Shorting Volatility Right Now [View article]
    Shorting XIV and its evil twin VXX would have been the winning bet so far this year, both are down 3%-5%. Its hard to maintain a strong bias one way or the other when contango is relatively small and the VIX is choppy.

    I agree its time to step back a bit and wait for a real shakeout of the VIX shorts. It may take a while.

    Also, QTR, isn't shorting VXX riskier than long XIV or SVXY if things hit the fan? The logic of shorting means that you could lose several times your initial position, but you can only lose your initial position with XIV or SVXY.
    Apr 3 09:52 AM | 2 Likes Like |Link to Comment
  • Selling Client Order Flows To High Frequency Traders Is A Breach Of Fiduciary Duty As I See It [View article]
    Agreed, this is an unfair practice, but there needs to be a sense of proportionality. In the bad old days of fraction quotes and human market makers, spreads were wider and intermediaries often crossed over the line between legal and illegal. Remember the Nasdaq scandal? There needs to be some reform, but it is wrong to suggest that skimming and scalping are new phenomena.

    Two thoughts: for individual investors, don't trade so much. Make analysis and long-termism your advantage because you can't outrun the algos. For policymakers, do something to slow down the market to reduce flash crash risk, such as slower execution or a small transaction tax.
    Apr 3 09:28 AM | 2 Likes Like |Link to Comment
  • Chanos pitches shorts on CNBC [View news story]
    I think Chanos is right on the money will all of these calls, especially China, CAT and greek bonds.
    Apr 3 09:14 AM | 1 Like Like |Link to Comment
  • China announces mini-stimulus to keep economy on even keel [View news story]
    Those reserves are basically useless. So say they sell them to buy RMB-denominated assets, the RMB will go through the roof and the export sector will go down the toilet. If they touch them, their whole economic model will unravel.

    The reality is that China has been overpaying for dollars for years (i.e. undervalued currency) so they will have to realize a massive loss eventually when the RMB rises. There's no way around it, but they can keep trying to blow the bubble until there is absolutely no money left. Think Japan late 1980s multiplied by a factor of 2 or 3.
    Apr 3 08:53 AM | 2 Likes Like |Link to Comment