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Michael Orwin  

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  • EnerNOC: Growth Potential Of Energy Intelligence Software Business Obscured By Short-Term Issues [View article]
    I've checked the employee reviews on glassdoor http://bit.ly/1DL2EhQ . The average score is 3.5 and 70% approve of the CEO. My impression of the reviews is that they are fairly good. There are a few quite negative comments but that's normal. There's a lot of judgment in assessing the reviews so I suggest reading them yourself, and reading reviews for other companies for comparison.

    Glassdoor claim a positive correlation between the scores and stockmarket performance in this piece http://bit.ly/1azxI8s , which is quite good except it looks like they only tested for the best scores and the worst scores.
    Apr 16, 2015. 07:17 AM | Likes Like |Link to Comment
  • EnerNOC: Growth Potential Of Energy Intelligence Software Business Obscured By Short-Term Issues [View article]
    Baird equity research analysts arrived at a $20 target price using a similar approach of valuing the parts using price-to-sales multiples, see "ENOC" http://bit.ly/1NMXDMi by Micheal Kaufman, Mar 26, 2015 (bidnessetc.com).

    Kaufman's piece briefly mentions a legal case which I think investors new to ENOC ought to know about. ENOC need a Supreme Court decision about jurisdiction to go their way. There's some detail on http://bit.ly/1NMXCbn but it isn't explained from the beginning.
    Apr 15, 2015. 11:02 PM | Likes Like |Link to Comment
  • EnerNOC: Growth Potential Of Energy Intelligence Software Business Obscured By Short-Term Issues [View article]
    About ENOC's double counting, from this http://bit.ly/1NMRvDG it seems to have been a dispute over new rules which PJM wanted to implement, with FERC initially favoring ENOC before deciding in favor of PJM in February 2012.

    ENOC's financial history on morningstar http://bit.ly/1aXRaMS looks erratic to me rather than hopeless, with five years of positive but fluctuating free cash flow, after four years of negative FCF. The returns metrics ROA, ROE and ROIC have improved from awful to a bit dull, but they are based on earnings rather than cash flow, and ENOC's cash flow has been better than their earnings.

    I'm long ENOC but I regard the stock as speculative and have not done much research into it.
    Apr 15, 2015. 10:47 PM | Likes Like |Link to Comment
  • Gilead Versus Celgene: Value Play Versus Reinvestment Opportunity [View article]
    I've calculated 2014 R&D spend / Market cap for both companies, using figures on Morningstar, in $ billions.

    http://bit.ly/1BJRTqE
    Gilead R&D spend / Market cap
    = 2.854/146.2
    = 0.01952120383
    or 1.95%

    http://bit.ly/1BJRUep
    Celgene R&D spend / Market cap
    = 2.431/92.3
    = 0.02633802816
    or 2.63%

    So for each $100 currently invested in Gilead, there was $1.95 of R&D in 2014, and for Celgene there was $2.63 of R&D in 2014.

    Just using Morningstar's Price/Cash Flow ratio, for each $100 currently invested in Gilead, there was $7.75 of cash flow (presumably OCF) in 2014, and for Celgene there was $2.80.

    Gilead's R&D spend in 2014 was more than double the 2010 figure.

    Gilead's R&D / Gross profit (in $ thousands)
    2010 -
    1,072,930/6,079,544
    = 0.17648198614
    or 17.6%
    2014 -
    2,854,000/21,102,000
    = 0.1352478438
    or 13.5%

    The fall from 17.6% to 13.5% was due to the big rise in Gross profit, of 247% (not annually). It's not surprising that R&D did not keep up, increasing by 166%.

    Obviously those few figures are far short of a full analysis.
    Mar 31, 2015. 06:54 PM | 2 Likes Like |Link to Comment
  • Ubiquiti Networks: A Rare Opportunity In An Overvalued Market [View article]
    "Plus if company continues strong growth, where do they get the funding in the future for it?"

    They don't need funding for normal growth, unless having cash in the wrong place becomes too much of a problem.

    From the Q2 2015 10Q, in thousands

    Cash and cash equivalents $ 388,603
    Total liabilities 161,019

    The lean model seems to mean they don't have big off-balance-sheet obligations.

    Interest payments on debt payment obligations 4,430
    Operating Leases 7,422

    "The Company had other obligations of $487,000 as of December 31, 2014 , which consisted primarily of commitments to acquire capital assets, including manufacturing equipment." (i.e. $487 in thousands)

    There's a Shareholder Class Action Lawsuit, where the court ordered the dismissal of the lawsuit with prejudice, but it's being appealed, and "The Company cannot currently estimate the possible loss, if any, that it may experience in connection with this litigation.".

    When I searched the 10-Q and the 10-K for "pension" I only got "suspension", and "retirement" only got the retirement of debt and assets.

    The last time I looked into it, Ubiquiti had partly insured their officer liability, and any insurance of officer liability is rare for public companies.

    Six Months Ended December 31, 2014
    Net cash provided by operating activities 79,618
    The "Changes in operating assets and liabilities" were negative for OCF, which I mention because they can be an unsustainable source of cash flow.

    The only "Cash Flows from Investing Activities:" are
    Purchase of property and equipment and other long-term assets (8,391)

    That's only six months' figures, but I've charted OCF against the Investing flow and "Investing" has consistently been small compared to the OCF. The growth has been excellent except for a dip in 2014, which I've written about.
    Mar 29, 2015. 11:03 AM | 2 Likes Like |Link to Comment
  • IPG Photonics: Hard To Gauge Reliance On Russian Operations [View article]
    I can't read Russian, but the info on Rusnano's site suggests there's no current stake. Under Portfolio Companies / IRE-Polus
    http://bit.ly/1xFbs2L , there are some details including "Investment Started: 2010". At the bottom is a link to "RUSNANO Makes Successful Exit from Fiber Laser Producer IRE Polus, IPG Photonics Group" dated 29 June 2012, on http://bit.ly/1xFbtUd .

    From the info presented, the investment was good for both parties and they "plan to continue to cooperate in the long term".

    The first link has a little history about how IPG started "more than two decades ago with Russian company IRE-Polus".

    About "the intent of the investment seems to have been to produce fiber lasers domestically in russia", that seems to have been achieved, find "made in Russia with Russian parts" in my article.
    Mar 20, 2015. 08:23 AM | Likes Like |Link to Comment
  • Ubiquiti Networks Has A Cost Advantage [View article]
    Thanks for that perspective, whiteowl.

    A strong dollar isn't all bad news for emerging markets, because it ought to benefit exports to the U.S.A., which has to be balanced against the risk of currency and debt crises. I don't know how that looks "on the ground", though. A search just got the problems of U.S. exporters, and speculation that Swiss exporters ought to benefit. In theory, some emerging economies should benefit from increased exports.

    One way Cisco could benefit from dollar strength is if it leads to more outsourcing of IT to places where they'll need more kit.

    BTW I'm not trying to predict the dollar index, just pointing out the possible effect of all the dollar debt. After a rise of about 20% in eleven months, I suppose the dollar could correct, but I'm not much a chart-watcher, and I don't pay much much attention to short term things like the Fed dropping "patient".
    Mar 19, 2015. 08:58 AM | 1 Like Like |Link to Comment
  • Ubiquiti Networks Has A Cost Advantage [View article]
    My guess is Pera would say no, unless he develops some very expensive tastes, or for some reason could not continue as CEO. There's no reason I know of for why he would like to have a boss. If Cisco offered, and Pera refused, and word got out, it might look like Cisco were worried about the threat. It's also typical for incumbents to have a phase of denial about disruptive innovation, and 'up-market' incumbents can do well for a while before the world changes.
    Mar 16, 2015. 08:33 AM | 2 Likes Like |Link to Comment
  • Ubiquiti Networks Has A Cost Advantage [View article]
    "value of biz model" yes. "dollar falls on interest rate increase" doubtful. People who buy bonds like safety and prefer high interest rates. It's possible for a price to move up due to expectation, then fall on the event, and the recent rise of the US dollar index has been sharp and currencies don't move up in straight lines forever, but I wouldn't bank on an interest rate increase keeping the dollar lower.
    Mar 12, 2015. 10:10 AM | 1 Like Like |Link to Comment
  • Ubiquiti Networks Has A Cost Advantage [View article]
    I've written "Ubiquiti Networks and foreign exchange rates" http://bit.ly/18DjD93 on my bog site, with quotes from the two latest earnings call transcripts and some comment.
    Mar 12, 2015. 09:13 AM | 1 Like Like |Link to Comment
  • IPG Photonics: Hard To Gauge Reliance On Russian Operations [View article]
    I now have permission to quote from the private message. It's from Allen Nogee, an industry analyst, "anogee" on Seeking Alpha, and it's worth seeing his profile on http://bit.ly/1MpPgjV .

    "In any case, I would have to agree with most of your assessment. It is my belief that IPG does not produce any components in Russia that can't be obtained from other sources. The pump diode are the "secret sauce" that gives IPG the big cost advantage over competitors, at though that is shrinking."

    I'd like to thank Allen for the contribution.
    Mar 10, 2015. 07:02 PM | Likes Like |Link to Comment
  • IPG Photonics: Hard To Gauge Reliance On Russian Operations [View article]
    I've had a private message from someone who will have a good knowledge of the laser industry (not an IPG employee), who believes that IPG's components from Russia can be alternatively sourced. It's the pump diodes that are critical. I think Mbrot's point that "others can eventually learn from & copy IPGP down to learning how to manufacture Diodes ..." seems to be confirmed.

    The only location with "Diodes" included in "Primary Activity" is Oxford, Massachusetts (as in the list in the article, and in the 10-K).

    I have not been told that I can or can't quote from the message. I'm trying to balance the need to inform readers with the need to respect the privacy of a private message. I hope I'm not too far off in either direction, and I hope my paraphrasing isn't worse than quoting without permission.

    The message also pointed out that I missed the military aspect. The U.S. Department of Defense is not likely to send much business IPG's way due to the Russian connections, at least not for anything at all sensitive. I'm hoping the Russian government feels the same way, which I think is better than being pressured to develop lasers for them.
    Mar 6, 2015. 09:14 PM | Likes Like |Link to Comment
  • General Electric: This One Chart May Spell 'The End' For Immelt [View article]
    Roger Martin gave Jeff Immelt some credit, although that was two years ago. Martin co-authored the highly acclaimed business strategy book "Playing to Win" with A.G. Lafley, CEO of Procter & Gamble. Find "Immelt" in this interview on Motley Fool - "Playing to Win: How Procter & Gamble Increased Its Market Cap By $100 Billion" by Brendan Byrnes, February 27, 2013
    http://bit.ly/1Mb44Vb

    Wikipedia mentions Martin's career at the consulting firm Monitor Group on their page "Roger Martin (professor)", whch may need an update - see "Why did the smartest guys in the room go bankrupt?" by Farah StockmanGlobe Staff, January 20, 2013 http://bit.ly/1Mb45Zn (bostonglobe.com).
    Mar 5, 2015. 01:00 PM | Likes Like |Link to Comment
  • IPG Photonics: Hard To Gauge Reliance On Russian Operations [View article]
    I have absolutely no problem with that. As an author my usual style when I'm not just giving an opinion, is to quote or paraphrase and give a link so statements can be verified, although I don't promise to stick to that 100%.
    Mar 5, 2015. 11:02 AM | Likes Like |Link to Comment
  • IPG Photonics: Hard To Gauge Reliance On Russian Operations [View article]
    When I said "Inventories for the latest quarter fell year-on-year (from $172,700 to $171,009, in thousands)", I should have repeated that currency effects reduced the value of inventory by about $9 million. Adjusting for that by adding $9 million, inventories would have risen by 4.23%. The annual sales grew by 18.80% ($648,034 to $769,832 thousand), and the quarter's sales grew 25.05% year on year ($165,859 to $207,402 thousand), so there's still no evidence of stockpiling, although it doesn't prove that critical parts have not been stockpiled (or that there's any need for it).

    Thanks for the feedback. The piece was an exercise in using limited information, and I was a bit worried I might have missed a huge fact. I thought, if I'm wrong, I could help to get the situation clarified. It's still possible that the article could help to bring out some useful information.
    Mar 5, 2015. 10:10 AM | Likes Like |Link to Comment
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