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  • Housing - Misguided Optimism Continues Unabated [View article]
    The problem is there is no telling how long it will take for those convictions to be proved wrong. The housing bust of 2005 was at least 5 and probably 10 - 15 years in the making. Most are only focused on the next profitable deal and too easily revert back to the risk taking that caused the last bubble. Again, the unfortunate part of this is that without unprecedented government intervention the housing market would not have come back as much as it has. It is not unfortunate for those whose home prices have recovered until you realize that the underlying fundamentals do not support the recovery. The government is attempting to use policy to recreate wealth that was lost when home prices crashed and in doing so is creating the potential for another crash.
    Mar 20 12:12 AM | 2 Likes Like |Link to Comment
  • Housing - Misguided Optimism Continues Unabated [View article]
    I agree that I should better stated the time frame of the shift in down payments to lower amounts. The illustration I was trying to make was that there was a time before the 1930's and the great recession when down payments were 50%. Over time that allowable amount decreased to the point where it was 0 in the run up to the housing bubble burst. With my main point being what is a normal down payment? I vehemently disagree that a taxpayer funded entity such as the FHA or USDA which are now issuing over 20% of new mortgages should allow for a down payment of 3.5% of less.

    Also in what way are you suggesting that private capital in the mortgage market was the cause of the housing mess? Fannie Mae and Freddie Mac were offering no money down loans as early as 2000 or 2001 if I recall. This may have been because private capital entered the market, backed by mortgage insurance, with these 0 down offerings. But Fannie/Freddie certainly did not have to go along with the private capital. Especially in light of their goal being to promote home ownership or access to financing. If there is sufficient private capital in the market willing to lend money for mortgages that seems to give all the more reason for Fannie/Freddie to pull back and take less risk.

    Thanks for the comment
    Mar 19 11:38 PM | 1 Like Like |Link to Comment
  • Housing - Misguided Optimism Continues Unabated [View article]
    Any good ideas on how to capitalize on that Canadian thesis aside from Home Capital? Thanks
    Mar 19 10:45 PM | 3 Likes Like |Link to Comment
  • Toll Brothers: Betting Big On The Future [View article]
    In your opinion, why is it not worrisome that Toll has 32% of their land inventory classified as land held for future communities.

    Effectively they have $1.3B invested earning no return today.

    Home building is a game of how quickly you can turn your assets. In fact the longer you hold an asset (or piece of land in this case) the riskier it becomes because of the up/down nature of home building cycles.

    I am interested why this does not concern you more. My perspective is Toll is telling you they can not earn an acceptable level of profitability if they were to sell houses on that land. Toll does not have massive 1,000+ lot communities like some builders do. They do have the high rise business but once they start a building all of the land associated with those high rise buildings would move out of the "owned for future" classification.

    Would like to know more about your reasoning behind this conclusion.
    Mar 19 03:53 PM | Likes Like |Link to Comment
  • Amazon Is Cheaper Than You Think [View article]
    Camerashooter -

    You are saying Amazon is worth between $5B and $10B today. Here is a SA article where someone does a relatively good, albeit bearish, valuation of what AWS is worth in and of itself. This person values AWS at less than $10B today. You can find other DCF type analysis where smarter people than you or I value AWS above $20B today.

    So be bearish but don't shout fire in a crowded theater to make a point. Plenty of those on SA who are short Amazon and have logical reasons for their position would laugh at your $10-$20 share comment.
    Mar 18 11:24 AM | 1 Like Like |Link to Comment
  • Samsung Galaxy S4: A Gift To Apple Shareholders [View article]
    chopchop -

    I currently do not own a single Apple product so hardly a fan boy. I love this article below that talks about how Samsung had to hire Lebron James for their Note 2 commercials. They needed a 6' 8" giant of a man to make the phone not look overwhelmingly big.

    More power to you if you want to use that phone.
    Mar 18 09:15 AM | 1 Like Like |Link to Comment
  • Samsung Galaxy S4: A Gift To Apple Shareholders [View article]
    You must have big pockets or a man satchel to carry that Note 2 around.
    Mar 18 07:56 AM | 1 Like Like |Link to Comment
  • Amazon Is Cheaper Than You Think [View article]
    Revenue growth is illustrative of the remaining runway a company has to grow profits, cash flow, etc...

    There is not a single person or analyst who values a stock that ignores revenue growth in the context of it being one component of valuing a company.

    Again you are discussing historical FCF growth in your reply. Best Buy had great historical FCF growth, so did Hewlett Packard, and a number of other companies that used to be leaders in their field.

    Historical data is but a minor data point and has no use in the valuation of a company. If it did you would never find companies that trade at less 5 or 6x earnings like the companies I noted above.
    Mar 18 07:53 AM | Likes Like |Link to Comment
  • Amazon Is Cheaper Than You Think [View article]
    Timothy -

    You are comparing one company analysts estimate will grow revenue by 22% in 2014, one whose revenue is estimated to grow less than 15%, and another whose revenue is estimated to grow about 5%.

    If you did not know the names of those companies which would you allow to trade at a higher multiple of prior year FCF? Over time additional revenue should equate to additional FCF assuming a constant operating income ratio along with the growth in revenue.

    At the very least the type of analysis your are attempting to give should incorporate an estimate of future FCF for these companies. I hope most people are not investing based on past earnings or cash flow multiples.
    Mar 17 09:49 PM | Likes Like |Link to Comment
  • If Amazon Is So Overvalued Why Does Google Want To Be Like It? [View article]
    Your comment could be applied to every stock not just Amazon. If the whole stock market truly is a house of cards built on Bernanke's printing press no company will be spared if that printing press stops.

    I could give you plenty of other of companies that will fall harder and faster than Amazon if the market were to enter a free-fall and interest rates were to rise dramatically. Just start with the companies with huge debt balances and the lack of cash to service their debt as it matures.
    Mar 17 01:59 PM | Likes Like |Link to Comment
  • If Amazon Is So Overvalued Why Does Google Want To Be Like It? [View article]
    My comment assumes that anyone investing, individually their own money in stocks, understands the concept of a stop loss order. With companies like Amazon, Salesforce, Netflix, etc...the pure disdain for the valuation seems to take away the discipline needed to have a stop loss order. If you believe as whole heartedly as many here do that Amazon is overvalued, then it is entirely possible they do not have a predefined point at which they would cut their losses.
    Mar 17 01:55 PM | Likes Like |Link to Comment
  • Panera's Dirty Little Secrets [View article]
    "The general sentiment of Panera patrons is that they're getting fresh-made food that's healthy for them"

    Any research to back that statement up? The company is certainly not saying to "eat here because we offer a heart healthy menu and other companies do not".

    Maybe more importantly Panera Bread, though not offering healthy food by your definition, still is a better alternative than the other top 15 fast food restaurants that consumer's dine at.

    So given the option between Panera and the other 15 top fast food restaurants in the survey linked to below it is pretty clear Panera is your best bet. Considering you want some inkling of portion control or healthier foods to choose from and are eating at a fast food or fast casual restaurant..
    Mar 17 01:10 PM | 1 Like Like |Link to Comment
  • If Amazon Is So Overvalued Why Does Google Want To Be Like It? [View article]
    No question I wish I would have seen that bubble. Your analogy however misses one critical point. The most I could lose on buying a house is 100% of my investment. There is no limit to what you could lose shorting Amazon or any stock.

    Regardless buying on that tip top of the housing bubble cost me maybe 25% of my investment. Going short Amazon at around $180 or so where it was the about a year ago would be a 50% loss for those investors.

    Frankly the only bubble I see right now is the Fed and until someone can pop that you could probably invest in acorns appreciating in value and somehow make a ton of money.
    Mar 17 09:35 AM | Likes Like |Link to Comment
  • Samsung Galaxy S4: A Gift To Apple Shareholders [View article]
    Under what analysis or set of statistics are you saying "now iPhone can't top itself"?
    Mar 17 08:59 AM | 1 Like Like |Link to Comment
  • If Amazon Is So Overvalued Why Does Google Want To Be Like It? [View article]
    I am saying don't short Amazon based on a price to earnings multiple using current or future earnings.

    For those who are shorting Amazon I am asking, if they believe the company is overvalued enough to short the stock, why does Google want to enter the same types of business Amazon is engaged in.

    I am using the Google analogy to make two points. Either the shorts are correct and Amazon is overvalued. If that turns out to be the case Google will shortly proceed to be overvalued as well.
    The counter point is that Google see's the same opportunity to generate revenue growth that Amazon see's and ultimately feels they need to compete with them.

    I lean towards the second point being more likely to be correct which helps support Amazon's valuation and will also negatively impact the operating income ratio for Google.

    I disagree with your comment on lack of analysis. I believe I am using both qualitative and quantitative analysis throughout. For example I am taking the 2020 revenue estimate from someone who is extremely bearish on Amazon at it's valuation today. I believe this contributor understands the company and it's business prospects. I just don't agree their method of valuing the company. With that in mind, and his $165B revenue estimate for 2020, I am saying I do not think a 13% CAGR over the next 8 years is going to be hard to achieve. This is made more so by the fact the company is growing at around a 25% annual clip right now. Growth is expected to be above 20% for the at least the next two years per the consensus of 32 analysts who cover the company. It would take a meaningful slow down from 2015 to 2020 to not obtain a 13% CAGR. if Amazon reaches the consensus revenue in 2014, of $92.5B, put forth by those same 32 analysts noted above their growth will only have to average 10% for the next 6 years. Walmart sales grew about 6% this year as a reference point.

    Lastly, the main argument I made in previous comment's was that I believe Amazon will exit the heavy investment stage they are currently in at some point in the future. I don't know what year and quite frankly I don't care because they are not going to be investing unless it is for growth. At that point when they do stop investing I believe they can have a FCF yield of 6% of revenue which they achieved prior to starting this multiple year period of infrastructure build out. 6% of $165B in revenue is roughly $10B in FCF annually. That would equate to an 8% FCF yield at the market cap Amazon trades at today.

    Qualitatively I am expressing that I think valuing Amazon on their ability to generate significant cash flow in the future is a better way to assess whether the company is overvalued than by making that judgment on GAAP earnings.
    Might be hard to miss all that analysis through 100 comments. Probably should have just turned this comment into an instablog or article but here it all is in one place for you.
    If there is certain analysis you still feel I am lacking I truly would like to know in order to do a better job presenting a contrarian view in the future on Amazon or in other cases.
    Mar 17 12:46 AM | 1 Like Like |Link to Comment