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Michael Nau  

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  • Looking At Tesla's Most Overlooked Number: Customer Deposits [View article]
    I'd prefer to use a different metric: how much money the company makes.
    Dec 5, 2013. 06:46 AM | 6 Likes Like |Link to Comment
  • Yes Mrs. Yellen, QE Is Creating An Asset Bubble [View article]
    I find it puzzling that you speak of grand, historical, long-term forces yet are long UVXY, which is essentially guaranteed to lose money in anything but the short term. And even in the short term, you have to get pretty lucky. Why not just follow Hussman into SPX puts or some sort of put spread if you're bearish? Or, that my favorite hedge of all time: cash?
    Nov 18, 2013. 06:08 PM | 6 Likes Like |Link to Comment
  • U.S. Stocks Not In A Bubble; I'll Tell You What Is, Though [View article]
    I don't think that government deficits are the most important variable for determining profit margins. Instead, I believe that it is the relative bargaining power of labor. The labor market still looks pretty slack, so I wouldn't expect a reversion to the mean in the short run. Not sure about the longer term though.
    Nov 8, 2013. 09:19 AM | 6 Likes Like |Link to Comment
  • Gold sell-off tied to single trade: Nanex [View news story]
    That's good if you're a goldbug, right? You can accumulate more on the cheap. So whats the problem, provided you are able to hold in the long run?
    Oct 11, 2013. 05:14 PM | 6 Likes Like |Link to Comment
  • Apple Should Not Give In To Icahn [View article]
    I'm an AAPL shareholder with a 3-5 year time horizon, and I'd be glad to see a larger buyback. Right now, the market cap is $440B with $140B+ in cash and $17B in debt. The current buyback can be mostly funded by current operating income without dipping much into the cash. So the real question is whether AAPL needs $120B+ in net cash going forward.

    I don't think so. Big ticket acquisitions tend to destroy more value than buybacks. I think the long-term prospects for investors depend more upon current optimal capital allocation than companywide growth. After all, I don't own the whole company, I own shares. Those shares can still go up in value if growth is stagnant provided management grows my share of the pie.
    Oct 1, 2013. 02:50 PM | 6 Likes Like |Link to Comment
  • The Best ETF Of Our Time (AKA How To Become A Billionaire Without Really Trying) [View article]
    Macro, once again, I find that I totally agree with your main argument. It is in my nature to stress about details, so here are a few quibbles:

    1.) The VIX doesn't simply change over the course of a month, it actually gyrates up and down (often significantly) from day to day. The structure of SVXY is such that during every day the fund has to sell front month contracts and buy second month contracts to keep its weighted maturity. This means that the fund doesn't get the full contango boost if the VIX has an up day followed by a down day. During that first up day for the VIX, the fund sells "higher beta" front month positions to buy "lower beta" second month positions, essentially selling into a decline. During the second day, the fund has less of those "higher beta" front month contracts, so it may not recover exactly as one would suspect. While I don't have any real issues with the index construction, this detail means that actual performance of SVXY can vary somewhat on a monthly basis from a model that only looks at ( monthly % change in VIX + contango). Not a major issue, but it makes it tough to model in the short term, as I'm sure you know.

    2.) The first chart summarizes my strategy: buy and hold is good, but buy low sell high is better. The chart begins when the VIX was unusually high and ends when it is unusually low, a great period to hold. I suspect that SVXY won't do nearly as well in the next 20 months, so I'm waiting for that VIX spike (missed the last one b/c I was on vacation). I guess it is a philosophical difference in terms of trading time horizon, although you have clearly done better than me of late :)

    Keep those articles coming!
    Jul 24, 2013. 11:37 AM | 6 Likes Like |Link to Comment
  • U.S. LNG Exports - No Cause For Alarm [View article]
    Elliott, thanks for the article. This is a complicated issue with a lot different and possibly conflicting policy goals: lower energy costs for consumers and businesses, reducing our balance of trade deficit, energy independence, revamping our transportation infrastructure, etc. Not sure what the right policy is.

    Maybe there's some sort of middle-ground compromise, like the following: companies are given the green light for unlimited exports, but a series of graduated export volume caps come into place as the price rises. That way, if the NERA report is correct, then we can export away for a net gain, but if the EIA report is correct, we can provide some sort of balance between competing interests.
    Apr 25, 2013. 12:49 PM | 6 Likes Like |Link to Comment
  • Apple: How To Admit You're Out Of Ideas [View article]
    I disagree. AAPL is using tons of cash to reinvest in the business, $10B in the last year. That sounds like plenty to me. It makes sense to return the rest to shareholders after setting aside a rainy day fund.
    Apr 24, 2013. 10:14 AM | 6 Likes Like |Link to Comment
  • A Different Perspective On Apple's Valuation [View article]
    I don't understand your calculations. At the beginning of the article, you say that AAPL is valued for slightly negative cashflow growth. I agree.

    But then you come out in different scenarios that include positive earnings growth and valuations like $164.48 (scenario 2) or $383.79 (scenario 3). Are you treating earnings different than cash flow? What especially raised an eyebrow for me was that AAPL could be worth $164.48, which is only a bit more than its cash, with 5% earnings growth. A zero-growth AAPL is worth about $500 in my opinion.
    Apr 11, 2013. 07:29 AM | 6 Likes Like |Link to Comment
  • The 'Too Big To Jail' Red Herring: The Jamie Dimon Edition [View article]
    I don't buy that slippery slope argument, it distracts from the main issue. The borderline between negligence and fraud is somewhat fuzzy, but that does not mean that white collar crime is fundamentally un-prosecutable.

    There is a case to be made that all the Enron executives and accountants did was feed their assumptions into models while following the letter, if not the spirit, of the law. Off balance sheet entities were indeed disclosed in regulatory filings. Negligence, or incompetence, sure, but fraud?

    Here's how the prosecution made its case: Enron built a house of cards and tweaked its balance sheet to an extreme in numerous small instances. These instances put together gave the illusion of value where really there was nothing. Sounds a lot like CDOs and investment banks to me.
    Mar 18, 2013. 12:54 PM | 6 Likes Like |Link to Comment
  • Investing In 2013: Remember 1977 [View article]
    Zartmoney, people have been underestimating the next generation since the beginning of time. We'll keep politely listening to you recount your glory days, how you had to walk uphill both ways to school. We'll take care of you when you're no longer able to physically care for yourself. But we are starting to doubt whether our 50+ leaders in the public or private sectors know what they are talking about.
    Feb 27, 2013. 01:09 PM | 6 Likes Like |Link to Comment
  • Apple: When Negatives Can Be Positives [View article]
    AAPL should take its time to launch new products, make sure all the kinks are worked out and that consumers are ready. Speeding up product lunches for short term gains is likely to destroy value. If you're in the business of creating brand new product markets rather than trying to make existing widgets a bit better, it pays of to be careful and really think things through.
    Feb 25, 2013. 12:28 PM | 6 Likes Like |Link to Comment
  • Worries Over Apple's Q2 Will Pressure Shares [View article]
    As an AAPL long, I hope you're right. They're still buying back something like $8 billion in shares to offset their employee incentive program, and a price decline will make that a lot cheaper. As they raise the dividend and initiate a regular buyback program, I hope the price craters to $300 and stays there for at least a year. This is a classic patience arbitrage: wealth gets distributed from the hyperactive to the level-headed.
    Feb 25, 2013. 10:19 AM | 6 Likes Like |Link to Comment
  • Medical Marijuana: It's Just A Pump And Dump [View article]
    Jim, be careful. If this is a pump-and-dump scheme, then chances are the stock is worth $0 because the company is not legitimate. If you adopt Warren Buffet's definition of risk, which is avoiding permanent capital impairment, then this stock is clearly risky because it has a non-trivial risk of going to zero.

    If you want to buy the stock because it is fun to watch, think of it as playing a slot machine, and view the money you paid as an entertainment fee, not an investment.
    Feb 18, 2013. 09:26 AM | 6 Likes Like |Link to Comment
  • Medical Marijuana: It's Just A Pump And Dump [View article]
    Also, assume that there is a vast short selling conspiracy to lower the price of the stock? Longs should like it because they can add to their positions on the cheap. The only way that a significant stock price decline would actually hurt the company is when it depends on selling ever more stock to the public in order to realize positive cash flow.

    This was how MJNA became cash flow positive last quarter. Retail longs, please be careful, consider the alternative viewpoint for a moment. If you don't want to read financial statements, you're best off buying an index fund.
    Feb 18, 2013. 08:45 AM | 6 Likes Like |Link to Comment
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