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Ron Sommer

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  • Israel - A Standout Among The OECD Economies [View article]

    Your association of the diamond industry and alleged Israeli war crimes betrays your prejudices.
    Apr 20 06:15 PM | 7 Likes Like |Link to Comment
  • Want to Seek 'Significant' Alpha? Look Beyond Dividend Stocks [View article]

    Thank you for your insightful article and for moderating the ensuing discussion.

    Have you compared the total return of growth stocks (as you define the term) with undervalued dividend paying companies? can you also share your definition of undervalued?

    Thank you and i look forward to your series on growth.
    Apr 16 12:39 PM | 3 Likes Like |Link to Comment
  • Why Dividend Paying Consumer Staples Are No Longer a Safe Haven [View article]
    The title was chosen by the SA editor and not the author. Readers have raised valid questions concerning the data used in this article. I will verify the integrity of the data used. If necessary, I will update the article with corrected data.
    Mar 22 09:17 AM | 3 Likes Like |Link to Comment
  • Shhh! My Secret Valuation Model Revealed [View article]
    Thank you for the article. readers may be interested in knowing that Aswath Damodaran, Professor of Finance at the Stern School at NYU posts on his website market-wide regressions of multiples that serve the purpose of your own estimates. For example, Damodaran uses the following formula to estimate PSR:

    PSR = 0.36 + (2.81 * EPS Growth Rate) -(0.22 * Beta) + (12.94 * Net Margin)

    If we use AAPL as the example with EPS growth at 22% and beta at 1.21 and net margin of 21.52, PSR + 0.36+0.618-0.266+2.78 = 3.49 or $582.43. In this example I used a five year average net margin.

    Damodaran provides similar formulas for a number of valuation ratios. These are all updated annually. I should add, he provides the same regressions for equities traded in Europe, Emerging Markets and Japan.
    Oct 31 08:35 AM | 2 Likes Like |Link to Comment
  • Microsoft: A Good Addition To A Portfolio Built Around Dividend Stocks [View article]
    Your comment reflects the point I was trying to make. With a company as large and as widely followed as MSFT, it is very, very difficult to have an original insight.
    Feb 21 10:00 AM | 2 Likes Like |Link to Comment
  • Why Dividend Paying Consumer Staples Are No Longer a Safe Haven [View article]
    I take my underlying data from Reuters Research.
    Mar 21 05:20 PM | 2 Likes Like |Link to Comment
  • Is Baxter International a Value Investment? [View article]
    BAX has a current LTD to Equity ratio of about 47% and a FCF yield of about 4.6%. These are not great numbers for a value play.
    May 11 07:13 PM | 2 Likes Like |Link to Comment
  • Creative Destruction And The Pharmaceutical Industry [View article]
    The same people who pay the bill now, i.e. either the consumer who will pay higher premiums to the insurance company or the taxpayer. The other option is not to invest in better medical care.
    Jan 6 05:04 PM | 1 Like Like |Link to Comment
  • Teva Pharmaceutical: A Company In Transition [View article]
    I use industry-wide comparisons wither medians or averages to avoid the problems associated with cherry picking comparables.

    In my analysis, I could not find the drivers to justify higher EPS for 2013. Sales will be flat or down. Earnings from cost savings are ephemeral.

    My last point refers to my expectations for ROE, ROIC and CFROI. When I invest, I require higher returns than that offered by TEVA. If Levin succeeds, then these metrics will improve perhaps to the level I require.
    Dec 31 08:13 AM | 1 Like Like |Link to Comment
  • Have Exxon Mobil's Shares Peaked? [View article]
    Vertical Spread,

    I think the share price will fluctuate as long as the price of oil fluctuates. Eventually, barring a disruption in supply, oil prices will stabilize. When supply and demand for natural gas come into balance, gas prices will also fluctuate. XOM is for the long term and these short term swings are just noise. At least, this is my opinion.
    Oct 25 12:37 PM | 1 Like Like |Link to Comment
  • Buy Seagate, Sell Western Digital [View article]

    Agree with me or not, but I stated my reason for preferring STX over WDC in my conclusion. I have owned WDC since 2010 and wrote here about WDC in 2/10. Now I pay more attention to share buybacks or new share issuance. I happen to think that new share issuance is not in the best long term interest of the shareholder. WDC's announcement of share buybacks would change my opinion but an announcement is not a buyback. PA pointed out that WDC purchased 16.4 million shares at a cost of $604 million and the Board authorized $1.5 billion in repurchases. $604 million hardly moves the needle when looking at average shares outstanding over the past 5-7 years. If, in fact, WDC spends $1.5 billion on shares, then my argument would be moot.

    I state very clearly that both companies are profitable and growing and that the share issue is what differentiates them.

    I should add this point, if I don't already own a company that I write about, I do not buy it right after the article is published. I do not pump stocks and I do not dump them either. I also cannot own all the stocks I think may be good investments; I just don't have the capital to do that.
    Aug 7 08:44 AM | 1 Like Like |Link to Comment
  • Netflix: My Missed Opportunity [View article]
    Thank you all for your comments.I don't usually look over my shoulder at past decisions but NFLX just seemed to stand out. As I wrote above, the shares are overpriced, by my estimation, and I personally experience service issues. I did not buy NFLX before and I don't intend to buy now.
    Feb 7 06:43 PM | 1 Like Like |Link to Comment
  • Qualcomm Runs With The Bulls [View article]
    I do write about stocks I own. However, I would not want to be accused of pumping a stock either. In any event, there are more stocks that may be good investments than I have available funds to invest.
    Jan 17 12:31 PM | 1 Like Like |Link to Comment
  • Against The Grain: Abbott Is Not Worth Your Money Now [View article]
    ABT is a good company with a meaningful dividend. However, neither the dividend nor the pending split tell the whole story. A look at the fundamentals show some deterioration. I see operating margin contraction since 2009 and concomitant contraction in ROE. The dividend payout is 64% of earnings which, for me, is high. Analysts are revising downward forward earnings. ABT is selling at a substantial premium to its industry median on an EV/EBITDA basis.

    I am long ABT but will consider selling in the near future.
    Jan 14 12:33 PM | 1 Like Like |Link to Comment
  • Evaluating Dividend Market Niches: 4 High Yield Container Leasing Companies Currently At Risk [View article]
    The decline in global trade is apt to be more than a "soft spot" and rosy forecasts are self-serving. The real points that I believe I made are that valuations are deceptively low and that the dividends are unsustainable.
    Sep 5 10:28 AM | 1 Like Like |Link to Comment