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Ricardo Espinosa

 
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  • Tesla: The Short Of The Decade? [View article]
    All fundamental analysis aside, I shorted $TSLA 255/265 call spreads, now that they gained around $360 per contract, I rolled down to 245/265, mainly to hedge against this week´s events.
    The market has been advancing very fast and I have been way too long for the past few days, gotta protect those gains!

    Their cars are great (if they don´t explode), but yeah, the valuation is way ahead of itself, but the market will stay irreverent longer than you or I can stay solvent.
    Stay hedged!
    Aug 19 04:27 PM | 1 Like Like |Link to Comment
  • Imposing Minimum Unit Pricing On Alcohol Helps Curb Alcoholism  [View instapost]
    Maybe in the UK...in Helsinki, even with very aggressive taxes on alcohol (making bottles cost double or triple its regular price), all the finnish do is take a ferry to Tallinn, take their car and fill it up with bottles and beer for the rest of the year (or months, they DO drink really heavily).
    Aug 6 01:53 PM | Likes Like |Link to Comment
  • Groupon EPS in-line, misses on revenue [View news story]
    Surprise, surprise. Overoptimism strikes again!
    Aug 5 05:49 PM | 1 Like Like |Link to Comment
  • Visa and Amazon weigh on averages [View news story]
    Finally Amazon is being started to be dropped like the expensive stock it is...took years, it was making me think this day would never come.

    "The market can stay irreverent longer than you can stay solvent".
    Jul 25 02:17 PM | 2 Likes Like |Link to Comment
  • A red flag on Wal-Mart's U.S. sales? [View news story]
    $92.50 per share based on what? Its earnings or expectations would need to go up +20%...please ellaborate on your calculations for your price target.
    Jul 8 01:29 PM | 2 Likes Like |Link to Comment
  • GDP contracted 2.9% [View news story]
    Hold your horses, this is the FIRST quarter of declining GDP (annualized). So no recession yet, unless the release on July 30th for Q2 2014 is also negative.

    Q4 2013 GDP was +2.6%, Q1 2014's GDP was first estimated at -1%, then re-stated to -2.9% because "the increase in personal consumption
    expenditures (PCE) was smaller than previously estimated, and the decline in exports was larger than previously estimated"...

    Link: http://1.usa.gov/vgZr0y
    Jun 25 02:29 PM | Likes Like |Link to Comment
  • Michael Kors Holdings Ltd.: The Gold Standard In The Retail Sector [View article]
    In a DCF scenario, with revenues doubling by 2018 and maintaining margins, discounting growth CapEx, KORS would be worth around $85-100 if the growth "normalizes" below 10% by 2020.
    EPV says KORS is worth around $86 with $2 billion EBITDA (double what is has).
    Price/Cash flow is 29, while COH has 8.
    So yes, market is expecting high growth from KORS (double in 4 years) and only 1% revenue growth for COH forever.
    If you disagree, go long COH or short KORS. I will sell COH puts for Nov, probably 35 strike, with a 20% annualized yield or being forced to buy.
    KORS is attractive for me around 70. Above 90 there is not much margin of safety.
    Jun 23 01:57 PM | Likes Like |Link to Comment
  • GE Seeks To Make Big Deal; We Still Like Shares [View article]
    Excellent work Valuentum, very clearly presented, saved me a lot of work. Keep up the good job. Going long GE with deep ITM call spread.
    Apr 29 10:42 AM | 1 Like Like |Link to Comment
  • Facebook Is A Buy, $85 Price Target Is Possible For 2014 [View article]
    The expectations for FB are way too high for the stock to continue flying higher. The earnings and revenue beat are incorporated into the stock price. I am not a "mega-cap" bank and could see that anything over $55 is too expensive.
    The $40 stock price might come sooner than expected, but if you're a FB bull, this is good news to you, because you can back up the truck and sell at $85 (more than double?!) ,oh boy what a great opportunity!
    Apr 28 12:02 PM | 1 Like Like |Link to Comment
  • Facebook beats by $0.10, beats on revenue [View news story]
    That short $FB 65/70 call spread and long $AAPL 500/530 call spreads doing great. Intelligent investors sell to optimists and buy from pessimists.
    Apr 23 07:54 PM | Likes Like |Link to Comment
  • Facebook's Share Valuation: What Is The Market Expecting? [View article]
    That´s extactly what the market is expecting, for Facebook to be like Google circa 2000. But the point is, there is very small room for mistakes. If they fail to provide positive guidance in any quarter, the market will punish the company more than it will drive the price up when Facebook beats guidance.
    Let´s keep tuned and check back by summer how this stock is doing.
    Apr 3 11:28 PM | Likes Like |Link to Comment
  • Facebook's Share Valuation: What Is The Market Expecting? [View article]
    My aim is still to generate maximum absolute returns, and my tolerance for risk is enormous. What I cannot do is put blind faith in a "story" stock such as Facebook. This company might as well be the next Google, but while I differ from this, my investment focus is on buying exclusively cheap companies. I do not think Facebook can deliver over 60 years of revenues as dividends, and do think the "greater fool" will stop buying once he realizes that the stock is valued to perfection (not anymore at stock below $60, but still expensive).
    The evidence has made me focus on companies that the market values as worse than their current assets globally, making us believe the company is better off being sold immediately rather than being operated by current management. This strategy returned 35% vs. a market return of 17% (data from 1985-2007, data from SG Equity Research).
    I do think you have developed a great diversified portfolio and have accumulated great experience in the market, let's hope to see the results of going long "cheap" stocks and short "expensive" stocks such as Facebook. Maybe this time it is different.
    I do hope to see you around in future articles, your POV is greatly appreciated.
    Mar 30 08:02 PM | Likes Like |Link to Comment
  • Facebook's Share Valuation: What Is The Market Expecting? [View article]
    Think of it from a marketer's perspective. Let's say you have a $10 million buget to advertise. What would justify you spending double that amount in 3 years? Only if your profits (not revenues) increase by more than $10 million from that ad spending. And how would you track how many incremental profits you have from advertising on Facebook? It's difficult, but you could say, if your profits increase by more than what you are spending on ads, you could theoretically keep advertising to about 7-10% more people per year, which is around what Facebook's users would keep growing year over year. So most of the +40% revenue the market is expecting from Facebook comes not from incremental users, but from price increases on ads. What I state is that I do not believe marketers would keep purchasing ads at any price, they are not that stupid.
    Mar 26 06:28 PM | Likes Like |Link to Comment
  • Facebook's Share Valuation: What Is The Market Expecting? [View article]
    That's true, Facebook is a growth stock and investors have, historically, placed a premium valuation on these stocks. At the end, those with high historical growth and continued high growth have, historically, given worse returns than the S&P 500.
    Of course my assumptions of future marketer demands are simply assumptions, and time will prove them right or wrong.
    And if Facebook is like Google around 2000, then this is the best buying opportunity you will ever get. I do not think that is the case, and I do not think this company will go bankrupt, just that it will not grow as much as expected, but that's why there are markets, buyers and sellers, everyone has a different opinion. Thanks for laying out your response logically.
    Mar 26 06:01 PM | Likes Like |Link to Comment
  • Facebook's Share Valuation: What Is The Market Expecting? [View article]
    Those are great purchases Nicholas! But I disagree that valuation metrics are exclusive to 3M or "mature" businesses. There is ample evidence suggesting investors overpay for growth. LaPorta (1996) and Forsythe (2007) showed that stocks with the highest long-term earnings growth forecasts delivered lower returns. Cusatis and Woolridge (2008) took a sample from 1984 to 2006 and found out that analysts and investors expected "growth" stocks to return 17% per annum, but results showed that actual delivered growth was a meager 7%.
    Take miners, as Greenwald did in his great book "Value Investing", where the market expected these stocks to have 27% earnings growth for 2 years and 15% long-term growth, or around 20% for 10 years. At the time this book was written (2009), the mining industry was trading at around 60x earnings. That didn't end very well.
    Right now,the only industries trading at above 4 times price/sales ratio (more than 4 years of earnings= "growth"?), according to data from Prof. Damodaran (http://bit.ly/w4jRpw~adamodar/New_Home_Pag... , with data from Bloomberg, are:
    Biotech (10.27), Computer Software (4.43), Information Services (4.14), R.E.I.T. (5.03), Real Estate, Development (6.04), General/Diversified Real Estate (10.32). Facebook is trading at 22.61 times sales. If that doesn't sound like investors are overpaying for growth, I don't know what does.
    Mar 26 04:50 PM | Likes Like |Link to Comment
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