Seeking Alpha

Paul Zimbardo

 
View as an RSS Feed
View Paul Zimbardo's Comments BY TICKER:
Latest comments  |  Highest rated
  • Aol's Independence Issues [View article]
    Even if AOL currently looks "cheap", I cannot understand how anyone gets excited about investing in AOL with its outdated business model.

    I would rather have an overpriced company with a viable business any day of the week.
    Dec 11 03:59 PM | 2 Likes Like |Link to Comment
  • The iPhone: Apple's First Flop [View article]
    "The company has had a string of hits since it introduced the iPod and its shareholders have benefited sending shares from $7 in 2003 to the $100 they sit at today."

    Glad I didn't listen to this. $100+ /share glad.
    Dec 1 02:46 PM | 2 Likes Like |Link to Comment
  • While so-called pay czar Kenneth Feinberg's new rules for TARP-backed firms cut compensation by about half, they also boosted base salaries by 14% to an average of $438K/year after executives complained. The move contradicts Feinberg's goal of tying pay to long-term performance, and "deepens the confusion and skepticism" surrounding the program.  [View news story]
    This is all well and good but the real question is, who watches the pay czar? The watchmen?
    Oct 28 09:20 AM | 2 Likes Like |Link to Comment
  • Shoppers to Spend $400 Million on eBay Using Its iPhone App [View article]
    I do not know who this is more impressive towards: Apple or eBay?

    I would have to say Apple. I assume that the eBay bidders would just find some other way to bid if it were not for the iPhone/iPod Touch.
    Oct 26 01:57 PM | 2 Likes Like |Link to Comment
  • Insider selling has jumped to $6.1B - 30.6 times insider buys. TrimTabs CEO Charles Biderman: "The best-informed market participants are sending a clear signal that the party on Wall Street is going to end soon." (via)  [View news story]
    Regardless of whether the bull market is going to last, you would be foolhardy to not have taken some profits. It is impossible to sell at the absolute top.
    Aug 28 02:37 PM | 2 Likes Like |Link to Comment
  • Revenge of the accounting authorities? FASB is pushing to widen the use of mark-to-market accounting to include loans banks plan to hold until maturity. If the proposal goes through, it could set of a wave of writedowns.  [View news story]
    I understand why mark-to-market had to be loosened while the financial markets were on the brink of collapse, but in the long run, mark-to-market is better for investors. Requiring strict use of mark-to-market provides investors with a more meaningful and accurate portrayal of a company's financial situation. In contrast, one of the first tasks that an investor must do when presented with GAAP financial statements is dive into the footnotes to try and gleam as much information about market value as possible.

    The held-to-maturity classification merely expressed management's intent at the time. Although highly frowned upon (and the reason for the change is needed), these classifications can change and are far from set in stone. As an investor, I would rather have a conservative presentation of these financial instruments than one that reflects management's immediate intentions.
    Aug 11 10:50 AM | 2 Likes Like |Link to Comment
  • Time to Get Conservative? 50 Ideas for a Summer Sell-Off [View article]
    @Dr. O - In regards to commissions, that is a very good question. My broker charges the same fee for buy-write trades as it does for option commissions so I effectively get a 50% discount on commissions. A very important note - if your position is called away (as it often will be in this type of trade), you often have to pay a commission that is twice as high as a normal commission. As a result, you may consider buying back the option and writing out a covered call for the following month, especially if you are bullish on the underlying security.

    @User 274233 - I am very interested in ETFs that employ this strategy so I will look into BEO; however, I usually stay away from actively managed ETFs due to the fees.


    On Aug 04 06:52 AM Dr. O wrote:

    > Nice article on hedging/collecting premium with selling calls. As
    > you mentioned, this seems to work best in a sideways or declining
    > market. A declining market serves up increased call premiums, hence
    > the enhanced return relative to the index/stock. A sideways market
    > allows you to collect premium and make money even while the underlying
    > index/stock does nothing.
    >
    > As a frequent trader, the first thing I wondered about were costs
    > of commissions and how selling calls with each stock purchase might
    > affect returns.
    Aug 4 10:37 AM | 2 Likes Like |Link to Comment
  • Let CIT Fail: The Business Model Is Broken [View article]
    Great article that hits upon every major reason why CIT is in real trouble. Bloomberg has a nice quote that sums everything up well:

    "The lender [CIT] has reported more than $3 billion of losses in the last eight quarters, faces $10 billion of maturing debt through 2010 and hasn’t had access to the corporate bond market in more than a year, according to data compiled by Bloomberg.

    Without the TLGP, CIT may default as soon as April, when a $2.1 billion credit line matures, according to Fitch Ratings."

    Source: www.bloomberg.com/apps...

    @BPYHO

    Trading in CIT with such poor fundamentals is paramount to gambling. I wish you good luck.
    Jul 10 04:30 PM | 2 Likes Like |Link to Comment
  • How Investment Banking Has Changed - And Why It Must Be Addressed [View article]
    Excellent historical account of the evolution of the banking industry – these days investment banks look much more like hedge funds than at anytime that I can remember (take my youthful opinion with a grain of salt!). Despite these drastic changes, it appears as if the compensation structure has not kept pace. The rewards have always been based on short-term performance, which was logical when the primary business was M&A related, but loses merit when the business orientation shifts to trading. With the government standing at the ready to bail out these institutions, the risks are shifted away from the firm so all that is left is reward. The equation clearly was knocked out of balance at some point.

    Contrary to your faith in regulators, I believe that the best way to restore order is to return the risk to where it belongs in a simple manner: Weaken too big to fail. By signaling to the management of these firms that there are real consequences for taking on risk, I am hopeful that some semblance of order can be restored. I am still a believer in free markets and I do not want to over-regulate the industry to provide a short-term fix, but impair growth for the foreseeable future.

    You allude to the point but do not discuss it enough: partnerships. Back when these firms were partnerships, they were much more risk-averse as they were putting their own capital in harm’s way. When these institutions when public, the culture shifted as they were dealing with OPM (other people’s money).

    I attended a speech by the aforementioned Joe Perella earlier this year on just your topic – the changes in Wall Street – and he hit on all of these points. One additional point that he mentioned that is difficult to quantify is the role of technology. Back when he was getting started, technology was primitive so the trading still had to initially be reported manually. As you could expect, this slowed down trading significantly so the profit potential was limited. On the other hand, technological advances have not significantly enhanced the profit potential of M&A. Fast-forward to today and firms like Goldman have proprietary trading systems that seem to the outside world to be largely automated.

    I clearly cannot do Mr. Perella justice in summarizing his speech so I suggest watching it:

    www3.lehigh.edu/busine...
    Jul 10 11:14 AM | 2 Likes Like |Link to Comment
  • Why AT&T Is a Strong Growth Story [View article]
    @Brad Castro & Stephen Rosenman

    You both raised excellent points regarding AT&T’s debt level. As you noted, telecom is an extremely capital intensive industry so the risks related to high levels of debt are always present; however, the commitments are manageable. Specifically, the weighted-average interest rates for the next five years are as follows:

    2009: 4.3%
    2010: 5.2%
    2011: 7.1%
    2012: 6.6%
    2013: 5.6%

    I did not conduct an in-depth constructive capitalization analysis of T’s obligations as I did not see any red-flags but it is always important to investigate companies with high levels of debt outstanding.

    The intangible asset item is another pertinent observation but your assertion that “ATT is in great danger” is quite the exaggeration. Over thirty years ago, the telecom industry revolved around tangible assets but as of 2006, 79% of telecom assets were intangible. To quote ‘Power of Intangible Assets’ (cited below), “With the introduction of wireless and cellular service, and the widespread use of computers and the internet in the 1990s, knowledgeable investors no longer assessed the value of the sector solely on its tangible assets. The assessment of a company’s capacity for innovation and proprietary technology, its intangible assets, are the most meaningful, relevant, and valuable criteria to assess a telecommunication company’s value.”

    Diving into the footnotes once again (my accounting background is coming in handy!) reveals valuable insight into T’s intangibles. AT&T has had no impairment of its intangible assets recently. Unlike traditional goodwill/intangibles that arise from overpaying for acquisitions, much of AT&T’s intangibles are FCC licenses related to radio frequency spectrum: despite being intangible, these are most definitely real assets with value.

    Sources:

    www.att.com/Common/abo...
    adiat.ciateq.mx/wp-fil...

    @Anthony B

    If we ever reach the point in which the majority of cell phone users are subscribing to data plans, AT&T will be absolutely swimming in cash. Check out the following article from this week’s BusinessWeek which explores even more possible avenues for AT&T’s growth.

    www.businessweek.com/m...

    @JamesApple

    You again make convincing points. The iPhone and Apple’s OS are certainly better than any offering from RIMM but the hardware QWERTY keyboard is going to continue to keep Blackberries relevant in the corporate setting for the foreseeable future. As far as AT&T is concerned, they have great offerings from both Apple and RIMM so the company can offer the best of both worlds.

    Thanks all for the comments. I hope that I have been successful in shedding some additional light on AT&T and the industry thus far.
    Jul 9 11:31 PM | 2 Likes Like |Link to Comment
  • Do Mac and Windows Users Read Blogs Differently? [View article]
    Interesting data and I have two observations:

    1. From my experiences, Mac users tend to be younger which may explain why they are more willing to experiment with new services. This could easily explain the Twitter data.

    2. Despite the growing popularity of Macs, corporations are still dominated by Windows. Given the financial nature of your posts, you are more likely to draw a more corporate crowd that goes directly your site. As with my first point, the average age at corporations is likely to be higher so age could again be a factor.
    Jul 9 02:39 PM | 2 Likes Like |Link to Comment
  • Why AT&T Is a Strong Growth Story [View article]
    Thanks for all of the comments. Please bear with me while I get the hang of replying en mass.

    @buoy

    Alas, life without a smartphone is even harder.

    ---

    On Jul 09 09:11 AM buoy wrote:

    > Life without a telephone is difficult.


    @ john12345

    I am a big fan of Peter Lynch and his investment strategy but I believe that it is only one aspect of the investment decision. In fact, I have done the following in the last month: (1) called AT&T customer service, (2) visited AT&T’s website, (3) visited an AT&T outlet, and (4) purchased a new cell phone from AT&T. Was the experience great? No. Did I have to call multiple times and deal with unknowledgeable sales people? Yes. Was the experience much worse than what I have heard from my associates with Verizon or T-Mobile? No. Currently none of the big telecoms are trying to compete with their customer service so I did not view this as having a material impact on my financial analysis. This is not the case in other industries as customer service and an operational experience is a tremendous factor, such as in the retail industry.

    It is worth noting that AT&T does have a leg-up with the service provided by Apple and its Genius Bar. I have an iPod Touch and I personally had no problem setting up my email service. Check out this account from the most recent eWeek regarding Mr. Sturdevant’s experience with the Genius Bar.

    www.eweek.com/c/a/Ente.../

    ---

    On Jul 09 10:15 AM john12345 wrote:

    > Peter Lynch recommended visiting the company's operations and becoming
    > familiar with it's operations. He was very successful with Dunkin
    > Donuts etc for a long period. I suggest you visit an ATT outlet and
    > try to get service of any kind. For more fun, go to their website
    > or call them. Then call a psychiatrist. This is one of the problems
    > when stock analysis looks at financial info and data and avoids the
    > reality of where the rubber meets the road. ATT will drive me to
    > Pre, Rim or other in spite of the iPhone's great features. By the
    > way, can you help me get the email to work on my iPhone?


    @JamesApple

    I have not personally used the Genius Bar but I have heard good things about their service (although I have also heard it is overpriced). I suspect that you are not surprised by Mr. Sturdevant’s experience with the Genius Bar that I posted above in response to john12345.

    I own both a Blackberry and an iPod Touch and it is hard to say flat-out that all Blackeberries are inferior. Both have their uses but I will agree that Apple clearly has the upper hand and momentum right now. I would be foolish to stand in front of the freight train that is Apple.

    ---

    On Jul 09 10:44 AM JamesApple wrote:

    > For all intensive purposes, the best iPhone support in the world
    > are the iPhone geniuses at the Apple Stores, far superior to anything
    > I can imagine on this planet. I applaud these Apple Geniuses for
    > their superlative contributions to mankind in the area of knowledge
    > sharing and tutoring in making what is already super easy iPhone
    > even painlessly smoother experience.
    >
    > I also abhor the complacencies of the phone carriers of the world,
    > either ATT, Verizon, or Sprint. The runaway successes of the iPhone
    > has produced a generation of arrogance tucking along Apple's coattail
    > for a ride, and this doesn't stop with the carriers only, even incompetent
    > companies like Research in Motion tags on Apple's coattail for the
    > remnants of the smartphone waves Apple has generated benefitting
    > from people who would not subscribe to ATT but chose Verizon's instead.
    >
    >
    > Rim blackberries are inferior.
    Jul 9 12:11 PM | 2 Likes Like |Link to Comment
  • 6 Ex-Dividends To Consider, 5 To Avoid This Week [View article]
    I do prefer AGNC and am long. I highlighted ARR because it is going ex-dividend this week. The AGNC conference call transcript is a must read for any MBS investor.
    Feb 12 03:05 PM | 1 Like Like |Link to Comment
  • Is Apple's Secret Hedge Fund Prepping For A Dividend Boost? [View article]
    I question any article that calls Apple's SEC reported "cash+" or "hedge fund" a secret. This is available with a quick google search.
    Feb 6 11:29 AM | 1 Like Like |Link to Comment
  • Is Apple's Secret Hedge Fund Prepping For A Dividend Boost? [View article]
    Apple's "secret" hedge fund that is disclosed as a subsidiary in the publicly available SEC filings? Apple's investment portfolio that is also disclosed in the public available SEC filings?
    Feb 6 10:22 AM | 1 Like Like |Link to Comment
COMMENTS STATS
576 Comments
442 Likes