Nizar Tarhuni

Long/short equity, options, portfolio strategy, macro
Nizar Tarhuni
Long/short equity, options, portfolio strategy, macro
Contributor since: 2013
If your gonna make that claim, at least provide some context. They guy has done a tremendous job over the years providing for shareholders. From his days with Sandy Weil forming citigroup, to bank one to jpm.
I understand what you're saying, but I think it is a bit more of a dynamic situation. Maybe Y/Y business segments are down but how are they on a relative basis? Corporate & Investment bank, yes, was down, but that segment is best in class leading all IB's in total IB fee's and #1 in EMEA, which could be major with ECB asset purchases and low rates there potentially setting the stage for significant M&A activity. Also, a major part of that IB decline was on the fixed income side which involved a sale of a couple of units and simplification administrative initiatives which bring the hit to the top-line early on: takes money to make money. Community banking saw deposits up 8%, which means more $ to earn revenue when spread compressions ease a bit. I understand we don't know when rates will rise, but current rates being this low are more of a function of investor flights to safety purchasing gov bonds. Unless your extremely pessimistic on the economy fund managers understand its not exactly the best thing to do to be buying treasuries paying 1 3/4% cause any rate hike is gonna drive the principal of those bonds down and in a stock pickers market, you cant have that type of volatility. Further, mortgage banking was still a sore spot for them hurting them, but that's the same for every bank! Also, the regulators comments are completely warranted. The same regulators that requested and in some conditions forced JPM, to buy WAMU, Bear Stearns and take the TARP money they didn't need are the same ones suing them, so any CEO would be upset. Who knows where the volatility will take it, but I don't think it's all bad for JPM in my opinion. Anywho, Just food for thought. All the best.
I like the airlines as well, especially giving the recent headlines about Ebola and such causing many transports to decline to better entry points. This should be a temporary headline swirl that will subside and allow stocks like LUV to be bought at those better entry points.
However, with that being said, I do wonder if the global political / macro worries may cause a dip in their earnings. With overall markets beginning to slide slightly, whether warranted or not, negative global headlines coupled with less than stellar earnings could give room for a greater sell off in the name, especially combined with the overbought conditions mentioned in the article.
Just food for thought, would love to hear others' reaction to the points I mentioned.
Any Updates or insight available at this point in time Jedi?? The stock has only tumbled since this article, however I do agree with the growth opportunities. I only recently began following the company and so I think you know much more about PNTR than I do.
SBUX had a rather large settlement with Mondelez intl. ( formerly Kraft) that it had to account for in 2013 Q3 and full year earnings. After they released Q3 earnings, they announced that they would be altering those results to reflect the settlement which significantly hurt their bottom line. That blow to their earnings is why you see hefty inflated current PE valuations from multiple websites. Better of using a forward ratio.
Goldman Sachs & Stifel Nicolaus just upped their price target this morning. See below.
- 10:07 AM EST, 01/31/2014 (MT Newswires) -- Analysts at Goldman Sachs have raised their target price on shares of Amazon.com, Inc. (AMZN) to $460 from $450, and maintained their Buy rating on the stock. "While growth slowed this quarter, we continue to believe the value being created by Amazon's innovation in retail and the cloud should continue to drive stock price outperformance," said Goldman Sachs. The firm also said its price target increase was due to higher EBITDA estimates and is based on an equal weighting of 17X 2014E EV/EBITDA.
- Equities researchers at Stifel Nicolaus lifted their price objective on shares of Amazon.com (NASDAQ:AMZN) from $400.00 to $440.00 in a research report issued on Friday
Qcom and smart_investoor,
I think the most crucial weakness in the analysis came from analyst sentiment. I stated in the headwinds section "I fear analyst estimates may be a bit on the heavy side. Last quarter the company guided for Q4 revenues to fall somewhere between $23.5B and $26.5B, however current estimates are looking for revenues of $26.07B: much closer to the high of the range management provided last quarter."
I briefly addressed this section but as the press release came out, I realized I should have emphasized this fear MUCH more. Looking at the quarter, FCF is up over 400% Y/Y and Q/Q. Net Income increased 20% and was positive and the share count came in slightly lower. For the year Net Income was $274M compared with a loss of ($39)M the prior year. So the underlying financials of the company slightly improved, however with analyst expectations so high, it was rather difficult for AMZN to beat the "street," much harder than I accounted for.
"Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in AMZN over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article."
That is the first thing you see above the article, so please no baseless claims.
"At the open Thursday, I'm looking to buy" I state that directly in the article.. these articles are submitted a good amount of time (days) before they are typically pubished, so again, no baseless claims.
By posting articles, I open myself up to the public when I am right AND when I am wrong. What I am NOT open too however is a user making baseless claims such as to the amount in my trading accounts. I would think most users are bit more mature than that, but maybe not.
I merely offer my insight based on my judgement. I will NEVER be right on every move nor will I be wrong on every move, the same with every analyst or SA author. I am also versatile enough to change my mind when I am wrong on a trade or position. Towards the end of the session I felt it was time to liquidate my position, however retrospectively, I would not have changed a thing about my analysis going into the day.
I was wrong on Amazon's release outlook. Easy for anyone to knock someone's work after the fact.
Appreciate it. FYI, I've read through some of your work today and enjoyed. I am now following you.
Thanks,
Nizar
Update: The stock has popped +5% during today's session and I have covered my position for a +50% profit. While I was looking to hold my position through the earnings release, I did not expect a pop this big before it, and decided it would be prudent to take my profits off the table as my speculative position was small to begin with.
All of your points are extremely valid, but I never stated that Amazon's growth capacity warrants its high price but rather that "I do indeed believe the company's growth prospects are greater than those of its competitors," which I do. You are 100% correct in being uncertain with where your room for growth would be given current price levels, and I understand it would be very difficult to "rationally argue a greater chance for appreciation then decline," but maybe you are mistaken in thinking that I am considering this stock a value play. I am not. To simplify my take; I think online retailers will do well following the 2013 holiday season and that AMZN may be poised to report favorable earnings. I have engaged in a small, defined risk options trade to take advantage of a pop after the earnings release today and that is it. Nothing more. I am not looking to build a position around the name and I also thought that I made it clear in the article that I would only be looking to make a quick and short-term trade around the stock. As I stated before, I do not disagree with any of the comments you have made. The stock is overpriced; but I'd like to take my shot into earnings.
Thank you much,
Nizar
Hey Todd,
So that statement relates to the market becoming more efficient with respect to information flow. Any information and/or growth prospects are recognized by market participants rather quickly today, and as you mentioned become priced into the stock. That being said, high flyers such as AMZN, NFLX, FB or even TWTR tend to operate in a different realm. If one was to focus on solely cheap valuations, you would miss out on continued gains in many spaces. Think of a FB that also has a heightened valuation, yet if you were to overlook that valuation, you would have doubled your money over the past year.
All in all, valuation is critical and something I pay close attention to everyday, yet some names in certain sectors can still be profitably traded even while valuations may appear to be out of order.
Not necessarily a catalyst, but is definitely something to take note of. To simply dismiss something that would halt consumers from moving to traditional retail areas would not be prudent.
Also, out of curiosity, what makes you short into the press release?
Slim shady, you are correct and that is my mishap! As we speak I am currently looking at higher strikes to sell against the 390 calls to give me a bit more juice and also contemplating purchasing the calls naked with a tight stop just for a quick bet into earnings. Thank you much.
http://bit.ly/1fpGPYx
I am a subscriber to morningstar but I believe you should be able to see the link without being
What bank IS NOT having issues with their mortgage business?? JPM and BAC were both hurting bad there too. Increasing interest rates, refinances all used up, and uncertainty in the economy = a struggling mortgage sector that banks cannot avoid. They can't just simply shut down their mortgage businesses, but they can grow in other areas, such as deposit revenues, asset mgmt etc.. which they've done.
SBUX is a great long term buy, and could be reaching a decent entry point, but best to wait till after earnings. I had a long call risk reversal strategy i put to work that incorporated selling 72.5 puts. I'm willing to own it there if it moves lower (as it looks like it will).
Best article I've read so far this week! Great read.
I'm also long the dollar. My main conviction stems from that regardless of marginal economic growth, QE cannot be sustained for too much longer as an exit strategy to the program will be come increasingly difficult. At a given point (which we may have already passed) the program will experience diminishing returns. The fed has also claimed it would rather move to a more guidance based program, which in my opinion was a hint that they cannot sustain QE for too much longer. Good article.
Don't know about the other, but absolutely love USB. Great management team, great financials and efficiently run.
Yes, I agree shares may be at fair value, however I also think financials' stock's will do well this year in a rising rate environment. With that said, JPM should be bought on a dip not now; if for whatever reason shares drop considerably, management will more than likely buy support for the stock and thus a good dip is any bulls opportunity.
I agree. It's not acting well right now, but i think that is more of a systemic sensation as the markets have been tentative to say the least so far in 2014. After the last jobs number and now that we have rolled into earnings season, the market is looking for some assurance and as SBUX has a beta greater than the market, it can suffer some adverse effects if markets move lower. That being said, I highlighted the trade above was a speculative one but also contains a tight risk control. I STILL love the name long term as I don't believe their fundamentals are in danger, and so thus my trade is still on. If we move towards 72.5, I will not close out my trade but rather accept the stocks being put to me and own the name.
Great read!
I appreciate it! At current prices, the March 80 calls are currently worth $2.20, and the puts have declined to $1.27 for a net debit of $0.93 per option. The cost basis was $0.45 per option and so the trade is up 106% as we speak.
So by selling the 72.5 puts, you must account for and be willing to own the stock at that strike. Yes you will lose the premium on the call, but remember that by SELLING the put, you have received a premium as well. Therefore the difference in premium between the call and the put is what you will lose when being put. However this is defined, and you already know what that max loss is on the options play before you enter it.
Thank you much, and yes I agree about January. My only thought is that traders may be waiting on the Friday jobs number, but If we can break this sideways trend, SBUX is a name I want to be long!
Preet Bahrara always baffles me. He goes after JPM, who like you mentioned did little due diligence on acquisitions of banks such as Bear Stearns to help the government out and they get punished with billions in fines. JPM gets fined for unloading poor subprime exposure, and AIG who issued insane CDS' gets bailed out! Go figure.
I would add that long term options can be especially useful when implied volatility is low and an identifiable, bimodal catalyst exists. Otherwise your money could be dead and tied up in those options if the trades not timed correctly (which is very hard to do).
The stock went from being down for most of 2013 to finishing up slightly over 5%. If anything I feel there may have been some short covering.