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Michael Nau

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  • Apple And Samsung Just Don't Have A Chance Against BlackBerry [View article]
    Well, you got me to read the article based on the title. But it doesn't seem like you really think AAPL or SSNLF is in trouble.....
    May 6 07:45 AM | 2 Likes Like |Link to Comment
  • Why Is Apple Issuing Debt For Share Repurchases? [View article]
    Excellent article, I like how you raise questions and acknowledge the complexity of the issue. I'm personally a big fan of the debt issuance, it can be financed at a cheaper rate than dividend payments on the stock, especially considering likely dividend growth in the next 5 years. With AAPL's fortress balance sheet, I'd like to see them lever up a bit and return cash to shareholders.

    I like your question "what's the value of cash you can't use anyways?", because issuing debt does not really solve the problem of $100B+ overseas. I believe that some day AAPL will have to bite the bullet and bring back that cash. The opposing side would say that there will be a tax holiday (doubtful), or that the foreign cash pile should just keep accumulating until the end of time. Taken to its logical conclusion, squirreling profits away where they can't be used on anything productive will make less and less sense as the pile grows. I'd like to see the cash brought back to increase the buyback while the stock is still cheap.


    May 2 12:35 PM | 3 Likes Like |Link to Comment
  • Has Krugman Really Won? [View article]
    Wait, I think we are agreeing that for the PIIGS, balanced budgets equals deepening depression. So if we are seeing the results of "mild" austerity, what do you suppose would happen if the true balanced budget believers got into power?
    May 2 11:15 AM | 2 Likes Like |Link to Comment
  • Market Valuation Overview: It Keeps Getting More Expensive [View article]
    Thanks for the update. I always like reading your articles because its easy to miss the forest for the trees.
    May 2 11:12 AM | Likes Like |Link to Comment
  • Has Krugman Really Won? [View article]
    I think it is more fair to both sides of the debate if everyone makes clear predictions that are falsifiable by subsequent events. Otherwise, we are trying to do counterfactuals with small sample sizes (a methodological no-no), uninformative RR-type correlation analyses, etc. If you support an intellectual position and are scientific, you must clearly spell out the sort of evidence that would make you change your mind. So what predictions do you make? What evidence would it take to convince you that fiscal and monetary stimulus in a liquidity trap is a good idea?

    Various anti-keynesians have been making predictions about interest rates, inflation, the PIIGS' recovery through austerity and have been wrong so far.
    May 2 11:04 AM | 2 Likes Like |Link to Comment
  • Apple: Dividend Growth Investor's Dream? [View article]
    Its not legal, or else they probably would. Buying back shares means it is "onshore".
    May 1 09:55 AM | Likes Like |Link to Comment
  • Hedge Funds May Hate Apple, But Consumers Are Still In Love [View article]
    Well said. AAPL is in it for the long term, not shifting strategy according to armchair CEOs that comment on internet message boards. What other company can boast that 70% of its customers are "very satisfied" with their products, with 90%+ satisfied? Its going to be a fun ride back up.
    Apr 30 08:07 PM | 3 Likes Like |Link to Comment
  • Bank Of America Looks ... Intriguing [View article]
    Tim, most of the time I agree with your calls, but beg to differ on this one. The ttm ROE is 1.28%. Buying that equity at half off means that the effective return on the reduced market price is about 2.5%, about the yield of long duration bonds with greater risk.

    So buying BAC means that you are ok with the likelihood of terrible performance for a little while longer as the balance sheet continues to improve. But it will have to improve significantly to make paying 50% BV worth it: a 5% ROE means an effective return of 10% if bought at half book value. A lot of optimism is actually already priced in at this point. If you're less optimistic about BAC's future and business model like I am, you'll stay away at current prices.
    Apr 30 12:38 PM | 1 Like Like |Link to Comment
  • Reinsurance Update: Interim 2013 Q1 Earnings Comparisons [View article]
    Ok, the tail risk part makes sense to me. But then why should investors pay book value for reinsurance companies, given that their business model involves occasional catastrophes? It seems like valuing pre-crisis, tail-risk-heavy AIG at book. Given the opacity, I'd like to have more margin of safety.

    I remember you had an article a while ago in which you discussed a strategy of buying companies when trading at 70% BV or something like that. Do you have some sort of indicator you watch to totally cash out of reinsurance holdings and wait for tail risk to show up again? Or is there always some reinsurance company somewhere that is trading at a discount?
    Apr 30 08:08 AM | Likes Like |Link to Comment
  • The Good, The Bad And The Ugly (Part 1) [View article]
    Bret, interesting article, I totally agree with your tech sector and BBBY calls, wish I hadn't gotten cold feet on BBBY in January.

    Out of curiosity, what's your take on energy and industrials? Commodity prices seem so wacky and hard to predict.....
    Apr 30 08:00 AM | Likes Like |Link to Comment
  • Why Apple Is Becoming Irrelevant [View article]
    Vegan, I totally agree. Its hard to have much visability for AAPL releases 2 quarters out, much less through 2018 as the article suggests.

    I expect that the smartphone market will evolve as much in the next six years as it has in the last four, so its really hard to predict what AAPL will or will not do. But at current valuations, the bar for AAPL is quite low and mediocre business performance will yield excellent returns.
    Apr 30 07:47 AM | 2 Likes Like |Link to Comment
  • Aflac's False Currency Woes Create Undervaluation And Opportunity [View article]
    Daniel, your point is well taken, and I largely agree. Where I would advise caution on the currency issue is extrapolating from historical earnings growth. In the last decade the Yen has steadily appreciated against the dollar, boosting reported EPS. But, as you point out, this is primarily a reporting rather than economic issue, so the underlying business has not done as well as last decade's earnings growth would suggest.

    At this point, it looks like AFL is priced in for a long-term secular decline in the Yen against the dollar, reversing the EPS boost it got in the last decade. Sounds possible, given recent news out of Japan, although I'm definitely getting interested if it drops below $50 again.
    Apr 29 06:13 PM | 1 Like Like |Link to Comment
  • Some Blue-Chip Dividend Stocks Have No Margin Of Safety [View article]
    Tim, great article, thanks! I'd like to stock up on defensive blue chips like HSY but agree that the whole lot is pretty optimistically priced right now. I think CVX, WFC and XOM are better bets at current prices.
    Apr 29 11:23 AM | 1 Like Like |Link to Comment
  • Why The Fed Doesn't Fear Inflation, But You Do [View article]
    Interesting article, I learned something new. I've always wondered about how we conceptually draw the line between "inflation" and "bubbles". I guess housing can be subject to both, but I've never heard of stock market inflation. When/which assets should be included in inflation metrics? Does anyone smarter or more knowledgeable than than me know the answer?
    Apr 29 11:12 AM | Likes Like |Link to Comment
  • Reinsurance Update: Interim 2013 Q1 Earnings Comparisons [View article]
    Thanks for the update! I'm no expert on reinsurance companies, but they don't usually trade much more than 120% BV, right? What is your sense about a 90%-95% BV valuation? is it about the median historically, or does it represent a pretty good discount relative to history? I'm just wondering because if these are middle-of-the-road valuations historically speaking, might it make more sense for a market pullback or a hurricane or something?
    Apr 27 02:26 PM | Likes Like |Link to Comment
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