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Michael Verd  

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  • Sirius XM, Pandora, Netflix And The Merits Of Averaging Down [View article]
    Everytime I have averaged down, I've ended up losing money. Everytime I have not I would have made money. I try not to think about it anymore.
    Apr 3, 2012. 12:06 AM | Likes Like |Link to Comment
  • Wow, Apple's Going To Have Yield Support [View article]
    I really think you consistently write the most novel and interesting, data supported takes on the market of everyone I read. Keep up the good work.
    Mar 20, 2012. 09:09 AM | Likes Like |Link to Comment
  • Watch Lions Gate Surge As The World Watches 'The Hunger Games' [View article]
    Excellent article. My main question is whether this might be priced in? What has the movement been since HG was announced? I know they're near their 52 week high. Finally, there's always the risk it bombs. I think playing it with mid-dated OTM calls is probably the best bet.
    Mar 15, 2012. 12:46 AM | Likes Like |Link to Comment
  • The Weather Impact On Economic Data [View article]
    completely agree... we'd be in a very different market if it'd been a bad winter.
    Mar 9, 2012. 03:33 PM | 2 Likes Like |Link to Comment
  • Why I'm Buying Pandora While Others Are Afraid (And Clueless) [View article]
    Here are some others in a similar position: Bankrate.com has 10m unique monthly users, 2.34b market cap, mktcap/users=234; XOXO group has 3m monthly unique users, 0.27b market cap, mktcap/users=89.4; tripadvisor.com has 60m unique monthly users, 4.12b market cap, mktcap/users=68.67. For the not-so comparable whales in this space: google 196.51 mktcap/users; yahoo 136.54 mktcap/users; facebook 116-160 mktcap/users. For one in the range of pandora: webmd has 44.8m unique monthly users and a 1.44b market cap, so 32.14 mktcap/users.
    Mar 9, 2012. 03:13 PM | Likes Like |Link to Comment
  • Why I'm Buying Pandora While Others Are Afraid (And Clueless) [View article]
    Pandora's market cap is 1.78b with 47m active monthly unique users giving a per user multiple of $37.87. In 2006, Google bought YouTube for 1.65b. At that time, YouTube had 20m unique monthly users. That's a per user multiple of $82.50. There were plenty of comments at the time about YouTube being easily replicable, no moat, etc. dismissing this purchase as a bad investment by Google. YouTube is far, far more valuable for Google now. I'd be interested in what the current multiple is, but I don't know it.

    The question you need to ask is, how much of a haircut do you think the fact that Pandora pays royalties is worth? Is it larger than the legal trouble that hung over YouTube in its early days (and to some extent still does)? I'm not even sure that's the case. In my mind, 50% is an absurd discount.

    A comparison of the same multiples with other web-based companies with advertisement driven revenues would be worthwhile. This is just a starting point for my thoughts.

    Disclosure, long pandora since 9.50ish (but cost basis down to 8 and change because of covered calls).
    Mar 9, 2012. 11:41 AM | Likes Like |Link to Comment
  • Why I'm Buying Pandora While Others Are Afraid (And Clueless) [View article]
    What Pandora can do with their data far outstrips what other radio companies can do. They have data about their customers that is at least as good as what Netflix has but, because they sell ads, it has the potential to be far more profitable. They just need to convince advertisers of this. If I were them, I'd start with teen retailers; nothing segregates a high school like music tastes, and those overlap strongly with clothing preferences. There is so much potential for them that valuation barely matters at present.
    Mar 8, 2012. 11:42 AM | Likes Like |Link to Comment
  • Why I'm Buying Pandora While Others Are Afraid (And Clueless) [View article]
    What Pandora can do with their data far outstrips what other radio companies can do. They have data about their customers that is at least as good as what Netflix has but, because they sell ads, it has the potential to be far more profitable. They just need to convince advertisers of this. If I were them, I'd start with teen retailers. Nothing segregates a high school like music tastes. There is so much potential for them that valuation barely matters at present.
    Mar 8, 2012. 11:39 AM | Likes Like |Link to Comment
  • Freeing Up Cash For A Little Carnage [View article]
    I agree, just wanted to offer a cautionary tale that I, at least, didn't realize could happen. When this happened to me, it wasn't too bad but could have been atrocious. The stock moved gapped massively pre-market and I nearly had a heart-attack, but it actually opened quite close to the breakeven point so I got out with the loss I'd imagined possible. I have talked to lots of people about this and it's not something they had thought of either.
    Feb 22, 2012. 01:17 PM | 1 Like Like |Link to Comment
  • Freeing Up Cash For A Little Carnage [View article]
    I know it's simulated money, but be careful with that aapl spread. If it expires between the strikes you might be on the hook for a lot, especially if you want to avoid margin. If it expires above 500 but below 510, you will get assigned 1000 shares of apple short at 500$ on the lower side while the upper side expires worthless, and because 500k will trigger a margin call on the account you'll have to buy back those shares at whatever the market price is on Monday morning, even of it goes to 550. I think this is an underappreciated risk of credit spreads because the risk graph makes it look like you have a max loss of the difference in the strikes, but that's only true in certain circumstances. Basically, I've learned the hard way to always close them out prior to expiry.
    Feb 22, 2012. 11:50 AM | 1 Like Like |Link to Comment
  • Coinstar's Redbox Margin Tailwinds Are Blowing Hard: Point To Nearly $6 EPS In 2012 [View article]
    Probably true, and I think you're probably right. If I find time, I'm going to try and replicate this analysis this weekend and I'll send you a personal note with my thoughts when it's done.
    Feb 15, 2012. 02:59 PM | Likes Like |Link to Comment
  • Coinstar's Redbox Margin Tailwinds Are Blowing Hard: Point To Nearly $6 EPS In 2012 [View article]
    Both this and your last cstr article are excellent. However, I wonder whether what you are picking up on is simply growth over time. As you show, average age increases (almost) monotonically over time, so I wonder whether it's just a population growth/knowledge of the brand effect. In other words, is it the average age of a kiosk or the cultural penetration of redbox more generally, or management's better knowledge of where to place kiosks, or anything else that is well correlated with time?

    I'd be very interested if average age remained significant or at least had the same direction/magnitude when controlling for year+quarter/4 in your model; I know this is straining the degrees of freedom, so I'd be encouraged by anything with p<0.15 that's in the same direction.

    Perhaps another way to get at the issue would be to compare two periods between which the average age of kiosks changed dramatically - one where they introduced an incredible amount of new ones, for instance. Comparing the raw revenues vs. the per kiosk revenues in these might be instructive. I think for what you're saying to be true, we'd expect the proportionate drop in per kiosk revenues to be larger than the proportionate increase in raw revenues, right?

    I like that you've standardized all of the data to the kiosk level to account for growth in kiosk numbers over time. I wonder, however, whether there is a problem with decommissioning of kiosks. Probably not, but worth at least knowing how often they decommission them. This may substantially overestimate your kiosk ages and correspondingly underestimate your effect sizes.

    Again, really awesome.
    Feb 15, 2012. 12:55 PM | Likes Like |Link to Comment
  • Netflix: Devil In The Details [View article]
    This is the same logic I've been using. Not to mention that you're likely being conservative because not all subscribers will be there for three months. So it's more like 858m/(11.56*2.95)=25.15m for the middle, for the bottom of the range it's more like 841m/(11.56*2.95)=24.66m. I'm surprised there hasn't been an update... and worried. Disclosure: long nflx puts.
    Jan 25, 2012. 03:03 PM | Likes Like |Link to Comment
  • Win Investing-Related Stuff (No Purchase Necessary!) [View instapost]
    48 and 30.5 million shares
    Jan 23, 2012. 10:52 PM | 1 Like Like |Link to Comment
  • The Power Of Pandora: They've Cracked The Code [View article]
    I like the new photo.
    Jan 17, 2012. 11:21 PM | 1 Like Like |Link to Comment
COMMENTS STATS
58 Comments
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