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Paulo Santos  

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  • Ripping The Shorts' Faces Off!
    Editors' Pick • Sat, Feb. 21 TSLA, AMZN 396 Comments

    Summary

    • There's a strange pattern forming that leads to rallies in names which greatly underperform expectations.
    • This has taken place in Amazon.com.
    • And now there seems to be preparations to make it happen in Tesla as well.
    • This pattern is related to how short-term expectations are taken unreasonably low, making it easy to provide short-term "beats" of those same lowered expectations.
    • I explain how this happened with Amazon.com and what kind of metrics seem to have been taken too low for Tesla as well.
  • What Can You Expect From A Greek Exit From The Euro?
    Sat, Feb. 21 GREK 41 Comments

    Summary

    • A Greek exit from the Euro cannot be ruled out.
    • This article covers the consequences for Greeks.
    • And it also covers the consequences for those wanting to invest in Greek equities through a Greek ETF.
  • Packaging Corporation Of America Might Be Affected By Dimensional Weight Pricing
    Sat, Feb. 21 PKG 2 Comments

    Summary

    • Packaging Corporation Of America has had a tremendous run.
    • Furthermore, it seems that its profitability is too elevated given the market it sells into (a commoditized market).
    • I explore the chance that dimensional weight pricing might be a significant negative for Packaging Corporation Of America.
  • Sealed Air Corporation Is Another Beneficiary Of The Dimensional Weight Pricing Development
    Thu, Feb. 19 SEE 7 Comments

    Summary

    • I am trying to find stocks which benefit or lose from the advent of dimensional weight pricing.
    • Sealed Air is one of those stocks. And it stands to benefit.
    • However, it's not clear if it will benefit enough to overcome other considerations.
  • Buy UPS And FedEx As There Is A Clear Catalyst Ahead
    Wed, Feb. 18 UPS 102 Comments

    Summary

    • There are many reasons to buy UPS and FedEx for the long term, mostly due to the demonstrated pricing power these companies have.
    • However, I've now found a short-term catalyst that implies outperformance even in the short term.
    • This catalyst should become obvious upon Q1 2015 reporting season and during 2015 as a whole.
  • Amazon.com Will Be Facing Much Higher Shipping Costs Even With Lower Crude
    Wed, Feb. 18 AMZN 123 Comments

    Summary

    • Some might have thought that Amazon.com would be a beneficiary of the oil price crash.
    • As it turns out, no such thing will happen. Indeed, 2015 will be yet another year of shipping cost increases.
    • If anything, there are reasons to believe 2015 will be worse than usual, given a new pricing scheme introduced by UPS and FedEx.
  • Alloy Steel's Q1 FY 2015 Earnings Are Out, Here's What They Mean
    Sat, Feb. 14 AYSI 17 Comments

    Summary

    • Alloy Steel International reported Q1 FY 2015 earnings.
    • These earnings confirm my previous suspicion that there was weakness coming.
    • This weakness is likely to persist, and the earnings, while bad, actually mask the actual deterioration that happened.
  • Truett-Hurst's Quarter And One-Off Effect
    Editors' Pick • Sat, Feb. 14 THST 55 Comments

    Summary

    • Truett-Hurst reported a seemingly horrid quarter.
    • However, there is a very significant one-off event affecting the numbers.
    • This article removes that effect from the P&L and discusses the consequences.
  • Why Is Tesla Throttling Production?
    Editors' Pick • Thu, Feb. 12 TSLA 1148 Comments

    Summary

    • Tesla's Q4 2014 quarter was horrid on EPS and revenues. However, that's not what this article is about.
    • This article covers the apparent throttling of production by Tesla.
    • This throttling can be seen from the production guidance, as well as past production and trends. This is strange in light of Tesla saying it is production-constrained.
  • Amazon.com Will Probably Be Rated Junk
    Editors' Pick • Wed, Feb. 11 AMZN 197 Comments

    Summary

    • While the market certainly does not expect it, there are good reasons to believe Amazon.com's debt rating is going to fall all the way to junk levels.
    • This is so because most of Amazon.com's metrics are already compatible with those same junk levels.
    • And even where Amazon.com's metrics still save it from being rated junk, there are both temporary and illusive factors supporting those better metrics.
    • In short, over time and barring some massive unpredictable improvement, I expect Amazon.com's debt rating to drop all the way to junk status.
  • I Made An Error In Switching To FitLife
    Wed, Feb. 11 FTLF 27 Comments

    Summary

    • Previously, I was convinced that switching to FitLife was a good move due to lower valuation and accelerating growth with what I saw as lower risk.
    • Unfortunately, further digging led me to find a clear and present risk which will likely materialize on Q4 2014 and beyond.
    • As such, I'm forced to conclude that my previous thesis is now invalid and I made an error in acting on it.
  • Network-1 Technologies: Nice Story, But Misleading Growth And Optionality
       • Tue, Feb. 10 NTIP 18 Comments

    Summary

    • Network-1 Technologies is an interesting IP company.
    • It already has a valuable IP asset that's yielding royalties, along with a couple of sources of optionality.
    • I try to establish whether there's value in the stock by modeling its future until the present yielding asset expires.
  • How Amazon.com Is Faring In India And What Will Happen Going Forward
    Tue, Feb. 10 AMZN 69 Comments

    Summary

    • India is seen as the last growth frontier still up for grabs in the worldwide ecommerce marketplace.
    • The Indian ecommerce market is highly contested with 3 leaders on very equal footing and with Alibaba recently having entered the market as well.
    • This, plus regulatory hurdles, has created a competitive dynamic that's likely to have far-reaching consequences for years to come. This dynamic makes India relevant even for Amazon.com as a whole.
  • FitLife Brands Has Lower Risk With Possibly Similar Upside To MusclePharm
    Sat, Feb. 7 FTLF 37 Comments

    Summary

    • In this article I evaluate FitLife Brands as an alternative to owning MusclePharm.
    • I did this because MusclePharm has not behaved as expected and seems likely to produce further bad newsflow even though it retains significant future potential.
    • What I found in the possible alternative pleased me, and led to portfolio adjustments as a result.
  • Debunking The Latest Amazon.com Myth - Fulfillment Leverage
    Fri, Feb. 6 AMZN 203 Comments

    Summary

    • The main bullish thesis being used to prop up Amazon.com is based on fulfillment cost leverage that was supposedly seen in Q4 2014.
    • I show that, due to some very basic effects, this fulfillment leverage does not exist.
    • Indeed, claiming that it does must be driven by an intent to mislead.
    • Still, there's no doubt that investors at large lapped up this misleading thesis. Which is amazing, given how easy it is to debunk it.
  • Beware Of Texas Cement Suppliers
    Thu, Feb. 5 ASHG, EXP, MLM 8 Comments

    Summary

    • Texas and North Dakota gained immensely from the energy boom. Texas is particularly relevant due to its economy's size.
    • Both now stand to lose significantly from the shale bust.
    • Cement is one of the industries likely to be hit both directly and indirectly by the energy bust. Thus, there are consequences for cement companies with exposure to Texas.
  • NuFarm: An Emerging Catalyst In Herbicides
       • Wed, Feb. 4 NUFMF 10 Comments

    Summary

    • A development took place in the herbicide market which stands to benefit NuFarm.
    • NuFarm benefits not just from its overall exposure to herbicides, but also from its already-strong presence in the particular herbicide favored by the development.
    • Finally, NuFarm is available at a sensible valuation in spite of its growth and exposure to this incoming catalyst.
  • Before And After Amazon.com's Amazing Quarter And The Great Improvement
    Mon, Feb. 2 AMZN 157 Comments

    Summary

    • Amazon.com analysts have lauded countless improvements shown by Amazon.com in its Q4 2014 earnings report.
    • All of these improvements were cited as a reason to be more optimistic going forward, and led to price target increases across the board.
    • I show just how much these improvements translated into analysts moving their own revenue growth and earnings estimates as much as two years into the future.
  • Apple: More Data On The iOS/Android Struggle
    Sat, Jan. 31 AAPL 509 Comments

    Summary

    • This article brings a lot of data to the debate regarding the iOS and Android struggle, and the risk it presents for Apple.
    • The data cover app spend, mobile web usage and usage in ecommerce.
    • The data confirm that present trends favor Android even if iOS continues to lead on most metrics.
  • Mylan Faces Short-Term News Flow And Reputational Risk
    Fri, Jan. 30 MYL 2 Comments

    Summary

    • A recent event in Europe has implications for Mylan.
    • The event can create negative news flow and reputational risk.
    • The event is likely to have a small direct impact on Mylan's revenues and profits. But the impact could spread and it could also make for negative news.
  • My Take On Amazon.com's Q4 2014 Earnings
    Thu, Jan. 29 AMZN 354 Comments

    Summary

    • Amazon.com reported yet another poor set of earnings numbers.
    • The earnings numbers were actually received as the second coming of Jesus, in spite of just beating lowered estimates and being lower than the year before.
    • There are many further observations to make, few of them pretty.
    • To be fair, there were two very slight improvements in there as well.
  • Why Is MusclePharm Doing So Badly? Here's My Best Guess
       • Thu, Jan. 29 MSLP 269 Comments

    Summary

    • MusclePharm stock has been doing much worse than expected.
    • This, along with other circumstantial evidence, has led to fears and doubts on my part.
    • In this article I explain what could have gone wrong, and what could confirm or dispel these fears.
  • Revisiting Broadwind Energy Due To A Long-Term Catalyst
    Wed, Jan. 28 BWEN 25 Comments

    Summary

    • Broadwind Energy is as cheap as they come.
    • Yet, the stock has been hit with troubles that are short-term in nature.
    • The valuation, along with the nature of its troubles and a long-term catalyst that's been brewing lead me to consider Broadwind Energy a clear buy.
  • Apple: Winning The Profit Battle, Losing The Smartphone War
    Wed, Jan. 28 AAPL 759 Comments

    Summary

    • Apple had an extraordinary quarter due to the new iPhone 6 and 6 Plus.
    • However, the overall dynamics of the smartphone market are now deeply unfavorable to Apple.
    • If these dynamics are allowed to persist - and they most likely will persist - Apple will be exposed to the same thing that happened to the Mac.
    • Android devices are now as useful as iPhones even at very low price points.
    • And Android already overwhelmingly dominates the market. Habits are forming which favor Android.
  • If Your Broker Did Not Lose Money In The CHF Debacle You Should Be Afraid
    Mon, Jan. 26 FXCM, FXF, IGGHY 13 Comments

    Summary

    • The CHF debacle took the broker world by storm, with brokers reporting losses left and right.
    • I explain why brokers having losses in this scenario was to be expected.
    • I also explain why brokers having no losses in this scenario is actually a red flag for those brokers.
  • United Parcel Service Hints At Peak Season Pricing Changes
    Sat, Jan. 24 UPS 41 Comments

    Summary

    • In guiding down its earnings, UPS left an hint that it might be changing its pricing structure during the ecommerce peak season.
    • Obviously, and like with other "peak pricing" schemes, this will mean higher shipping costs for ecommerce players during their peak season.
    • This is a positive for UPS over time, as it shows its pricing power.
    • It's also a negative for ecommerce players, namely for Amazon.com directly as it subsidizes shipping, and for eBay indirectly.
  • Monitise Provides A Trading Update - And It Looks Horrendous
    Fri, Jan. 23 MONIF 45 Comments

    Summary

    • Monitise provided a trading update.
    • In it, Monitise confirmed the worst fears; the company is coming unglued and is entirely unlikely to reach its optimistic long-term objectives.
    • Indeed, it now looks likely that Monitise won't be with us within 2 years.
  • A Simple Pairs Trade In Online Coupons
    Fri, Jan. 23 COUP, SALE 51 Comments

    Summary

    • There are two very relevant stocks in the online coupon space.
    • One of them is cheaper, more profitable, larger and exposed to better trends than the other.
    • It thus might pay to go long on that stock and short the other, using a pairs trade.
  • Why Does Amazon.com Keep Cleaning eBay's Clock?
    Fri, Jan. 23 AMZN, EBAY 140 Comments

    Summary

    • While there's a lot to criticize about Amazon.com, there's a specific segment where it keeps on beating eBay.
    • And amazingly, this is a very profitable segment to boot.
    • I list some of the reasons why Amazon.com is winning there, and explain what eBay could do to negate the advantage.
  • Natural Gas Fundamentals Are Now Compatible With Higher Prices
    Fri, Jan. 23 BOIL, DCNG, DGAZ 63 Comments

    Summary

    • My previous stance on natural gas was that it had not bottomed yet.
    • Now, natural gas fundamentals have changed enough for me to revise my stance.
    • Hence, I now believe fundamentals are supportive of higher natural gas pricing. This article explains why.
  • Free Windows 10 Upgrade Can Impact Microsoft And The PC Market
    Wed, Jan. 21 MSFT 113 Comments

    Summary

    • Microsoft will offer free upgrades from Windows 7, 8 and 8.1 to Windows 10 for free.
    • This is surprising in that it includes Windows 7.
    • So the overwhelming majority of the Windows installed base will be included.
    • This could impact both the PC market and Microsoft.
  • BHP Billiton Will Close 40% Of Its Shale Oil Wells - Or Will It?
    Wed, Jan. 21 BHI, BHP 12 Comments

    Summary

    • Some recent news articles were mis-titled regarding what BHP Billiton was about to do to its shale oil wells.
    • BHP is not going to shut down wells, but it will remove rigs at a quick pace, confirming the bullish crude thesis.
    • However, there are, indeed, producing oil wells that might actually get shut down because of the lower oil prices.