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  • Scalable Growth And A Substantial Addressable Market Make Health Insurance Innovations A Compelling Buy [View article]
    Thanks Envoy Global.

    Your main tenant to the bear case for HIIQ - the company is selling junk insurance to the suckers - pretty much nailed it.

    I will not touch this stock with a 10 meter pole.
    Nov 18, 2014. 07:26 PM | Likes Like |Link to Comment
  • Qihoo: Is Second Place In Search Enough For Higher Stock Prices? [View article]
    I recently talked to my cousin who is an engineer working for Intel in Shanghai. He told me Qihoo as a company compete like a Liúmáng (流氓), meaning gangsta or hooligan.

    He told me that the company had run into regulatory issues in the past with their anti-virus software business. So people in China do not have a very favorable view of the brand, even though many people do use their anti-virus software.

    He also said that most IT-savvy Chinese do try to stay away from its products.

    Just a data point, but enough for me to long Baidu and not touch Qihoo.
    Sep 26, 2014. 02:41 PM | 1 Like Like |Link to Comment
  • The Power And Growth Of Amazon Prime May Be Much Greater Than Believed [View article]
    Mano:

    I don't think you truly understand the new cloud computing business models. You may want to read this article in 2012 by Tien Tzuo:

    http://bit.ly/UwUoLu

    You can get seriously burned with this short.
    Sep 24, 2014. 12:34 PM | Likes Like |Link to Comment
  • The Power And Growth Of Amazon Prime May Be Much Greater Than Believed [View article]
    Hi Gary:

    Great insight. Many analysts and investors continue to value AMZN as an eCommerce retailer, which extract a toll which is per-transaction based. But it is in fact in the process of building a subscription business, moving towards a SaaS business model.

    If you were to study the company's 10-K and 10-Q. The company started to report "Unearned Revenue" on its balance sheet starting in 2013's 10-K: Unearned revenue primarily relates to both Amazon Prime memberships and AWS.

    Since a prime member pays his annual subscription first and then enjoys the service over the year, "Unearned Revenue" is essentially what AMZN will earn from that customer for the next 12 months.

    These are the Unearned Revenue for 2011, 2012 and 2013 ($M):

    2011
    Addition to Unearned Revenue $1,064
    Amortization of Unearned Revenue $(1,021)

    2012
    Addition to Unearned Revenue $ $1,796
    Growth: 69%
    Amortization of Unearned Revenue $(1,521)

    2013
    Addition to Unearned Revenue $2,691
    Growth: 50%
    Amortization of Unearned Revenue $(2,292)

    2014 (Q2-YTD)
    Addition to Unearned Revenue $1,986
    Growth: 66%
    Amortization of Unearned Revenue $(1,542)

    So what you have is a 50-60% growth business hidden within AMZN that is already about $4 billion in size (slightly smaller than NFLX).

    Part of that $4 billion is AWS cloud computing subscription, but the majority is Prime membership. And if we were to assume Prime membership is $100 per member, then AMZN has around 20-30 million paying members depending on Prime's percentage of "Unearned Revenue". But it is growing at a 50-60% rate.

    Hope this helps.
    Sep 22, 2014. 12:46 PM | 2 Likes Like |Link to Comment
  • TripAdvisor Looks Too Pricey [View article]
    @Jeff Bailey:

    Tripadvisor's profit margin got compressed 12.9% in 2011 to 9.5% in 2013 primarily due to their implementation of a feature called meta search. This feature temporary reduces visitor conversion rate but delivers a higher quality click for the travel agent or the hotel.

    In the past, after a user read the review of a hotel and then proceeded to check the price, a series of advertiser pop up ads appears. The user then had to click through to each advertiser’s website in order to view hotel pricing and availability information. Tripadvisor used to charge each pop up as a display ad impression. Not only is this annoying to the user, this is also totally unacceptable on a mobile device such as a smart phone.

    The company had the foresight to implement the metasearch - essentially displaying the pricings and the ticketing agents on the same webpage. It then charges a CPC (cost per click) when the user selects one of the ticket agents he is interested in booking with.

    The margin compression should be temporary because this metasearch feature positions the company extremely well for mobile and for a superior user experience.

    A company that is willing to make kind of these long term investments to achieve their mission of becoming the best travel research platform for budget travelers deserve a higher PE premium.
    Apr 17, 2014. 07:08 PM | Likes Like |Link to Comment
  • 3D Systems: A Good Opportunity To Buy? [View article]
    So mainly for the business segment right now.

    I see, thanks.
    Apr 16, 2014. 06:06 PM | Likes Like |Link to Comment
  • 3D Systems: A Good Opportunity To Buy? [View article]
    With laser and inkjet it was primarily for printing out papers, documents, etc., both in the office and at home.

    I am just trying to figure out what I will be printing 3D at home on a weekly basis.
    Apr 16, 2014. 05:17 PM | Likes Like |Link to Comment
  • 3D Systems: A Good Opportunity To Buy? [View article]
    I am a bit perplexed about this sector, and I live in Silicon Valley.

    I still don't get why the consumers need 3D printing. What is the killer app?

    Back in the days, I totally understood why laser printer and inkjets are important in everything I did. But 3D printing? I don't know why I need one at home.
    Apr 16, 2014. 03:41 PM | 1 Like Like |Link to Comment
  • Momentum Stocks Have Momentum Down As Well As Up! These 6 Are Good Shorts [View article]
    The acquisitions of these libraries are paid ahead of its being consumed later on. The trend from 2011-13 tells me that the company has stabilized its acquisition budget to 71% of revenue even as the company invested in these libraries ahead of entry into oversea markets.

    This means:

    (1) The company still have plenty of room to reduce content acquisition cost as a percentage of revenue.
    (2) It can slow down oversea entry to bring the company into profit if necessary.
    (3) Original content, which is an integral part of their strategy, can further reduce these library acquisition costs by giving them the leverage to negotiate away less viewed programming within the studio's library (their willingness to walk out of Warner Bro's deal in 2013 being a prime example).

    2013
    Revenue ($M) 4374.6
    Acquisition of streaming content library -3,049
    Acquisition of DVD content library -66
    (% revenue) 71%

    2012
    Revenue ($M) 3609
    Acquisition of streaming content library -2,516
    Acquisition of DVD content library -48
    (% revenue) 71%

    2011
    Revenue ($M) 3205
    Acquisition of streaming content library -2,321
    Acquisition of DVD content library -85
    (% revenue) 75%
    Apr 14, 2014. 04:33 PM | 1 Like Like |Link to Comment
  • Mindray Medical: The Smoking Gun [View article]
    The following is a case study written about Mindray's early acquisition of Datascope by INSEAD - the top European MBA program based in France.

    It provides a glimpse upon the mindset of the two founders and the motivation behind their business push:

    http://bit.ly/1sXHDu0

    It is a very interesting read for serious long term investors in Chinese high tech companies.
    Apr 13, 2014. 06:25 PM | Likes Like |Link to Comment
  • Momentum Stocks Have Momentum Down As Well As Up! These 6 Are Good Shorts [View article]
    Hi eenk,

    You should look at the sum of "Acquisition of streaming content library" and "Acquisition of DVD content library" in their cash flow statement as the leading indicator of their future content cost. Compare those as a percentage of their revenue in 2012 versus 2013.

    Check it out and you will see why I made the statement above.
    Apr 13, 2014. 01:24 PM | Likes Like |Link to Comment
  • Momentum Stocks Have Momentum Down As Well As Up! These 6 Are Good Shorts [View article]
    I would stay away from shorting NFLX if I were you.

    Their 2012-2013 results indicate an improvement trend on their gross margin:

    2012
    Revenue $3.6B
    Gross Profit $983M
    Gross Margin 27%
    Net Margin 0.5%

    2013
    Revenue $4.38B
    Gross Profit $1.3B
    Gross Margin 29.5%
    Net Margin 2.6%

    The key reason for this margin improvement is the company's transition from sourcing its programming from content middlemen (Starz) to directly from the studios (Walt Disney) or from original content creation.

    This trend should continue and there will be unexpected improvements on the company's net earning in the coming years.
    Apr 12, 2014. 06:03 PM | Likes Like |Link to Comment
  • IKang Posts Solid But Unspectacular Debut [View article]
    Hi Doug:

    Thanks for your continued coverage of Chinese internet and tech companies.

    While traveling in China this winter, I overheard conversations in subways that young people are moving away from SINA's Weibo, and adopting in its place Tencent's WeChat.

    I have not yet fully understood why this is taking place, and would like to get your take on this. There are several possible explanations offered on the web:

    (1) Sina Weibo has been placing a lot more Ads and spam in its messaging while Wechat on the whole is almost ad-free.

    (2) In the past, people use Weibo to follow influential figures, and apparently there had been scandals where these influencers were getting "paid" somehow.

    (3) Weibo has been getting more government censorship and control.

    Not sure what your take is on these explanations above.
    Apr 10, 2014. 05:17 PM | Likes Like |Link to Comment
  • Valuing Intuitive Surgical For Turnaround Investing [View article]
    Then you should do OK.

    Use some of the data I supplied to construct your model, so that you can compare how the company actually perform to your own projection and expectation.

    You will then find the right price to accumulate and the right price to harvest this investment.
    Apr 9, 2014. 09:31 PM | Likes Like |Link to Comment
  • Valuing Intuitive Surgical For Turnaround Investing [View article]
    Yes, it will not be an easy turnaround. This is why the price you pay needs to be low enough to make the wait worthwhile.
    Apr 9, 2014. 05:14 PM | 1 Like Like |Link to Comment
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