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  • 2 Reasons Why InvenSense Is Not A Viable Takeover Target
    Today, 12:22 PM INVN 14 Comments

    Summary

    • InvenSense trades at 34x run-rate earnings.
    • The crowd thinks its robust p/e multiple is due to the fact that it is a buyout candidate.
    • It would be difficult to forecast InvenSense's declining asp and gross margin, and there is a risk Samsung or Apple would leave post-transaction.
    • Because of these two issues, InvenSense is not a viable takeover target at this juncture.
  • Bristol Myers' HCV Cocktail Has Gilead, AbbVie In Its Crosshairs
    Today, 10:32 AM GILD 20 Comments

    Summary

    • Bristol Myers' regimen for HIV-HCV co-infected patients achieved a 97% cure rate in a recent study.
    • The cure rate appears on par with the 96% cure rate Harvoni achieved in patients with chronic HCV genotypes 1 and 4 co-infected with HIV.
    • Individuals co-infected with HIV and HCV represent about 6% of the total HCV market.
    • For this subsection of the HCV market Bristol Myers could be a threat to Gilead and AbbVie.
  • Molycorp Earnings Preview - 3 Key Items
    Today, 2:54 AM MCP 8 Comments

    Summary

    • Molycorp announces Q4 earnings on Monday.
    • Operating costs, potential goodwill impairment and future debt-for-equity swaps are key items I hope management will address.
    • There is still money to be made in the stock. Visibility on these key items could help determine how to play this investment opportunity.
  • Yellen Gets Her Dander Up Over Inequality - 'A Hit Dog Will Holler'
    Yesterday, 7:14 AM QQQ, SPY, DIA 34 Comments

    Summary

    • Fed Chairwoman Janet Yellen recently got into a shouting match after being pressed on her October 2014 speech on inequality.
    • Now that QE has ended and the free fall in oil prices point to a global recession, it begs the question, "How effective was the Fed stimulus?".
    • All signs point to central bankers and their policies as having led to inequality.
  • Baker Hughes Is Worth $33 - $48 Standalone
    Yesterday, 2:40 AM BHI 9 Comments

    Summary

    • Analysts have speculated on merger activity in the oil & gas industry as oil prices have declined nearly 50% since June 2014.
    • Baker Hughes trades at $63. Its November merger agreement with Halliburton currently values the stock at $66.
    • The oil and gas industry has been in a state of contraction since November, and Baker Hughes' future earnings estimates are much lower.
    • Standalone the company is worth $33 to $48 - an indication of how far the stock could fall if the Halliburton deal gets re-priced.
  • Will Oil Free Fall, Petrobras Exposure Sink Dril-Quip
    Fri, Feb. 27 DRQ 2 Comments

    Summary

    • Dril-Quip reports earnings before the market opens on Friday.
    • The company's business prospects are down amid the contraction in the oil & gas industry.
    • Petrobras represents about 8% of its contract backlog, and Dril-Quip has high exposure to offshore drillers facing liquidity strain.
    • Investors should avoid the stock.
  • Transocean Beats Estimates, But Cash Burn And Debt Load Are Alarming
    Thu, Feb. 26 RIG 20 Comments

    Summary

    • Transocean reported Q4 earnings after-hours on Wednesday.
    • The company beat estimates, but $238 million cash burn and $9.1 billion debt load are alarming.
    • If the oil and gas industry continues to contract, Transocean may face a liquidity strain.
    • Moody's recent downgrade of Transocean's debt to junk status may limit the company's capital raising ability going forward.
  • BlackBerry's Enterprise Mobility Deal With Google Is A Potential Game Changer
    Thu, Feb. 26 BBRY, GOOG 310 Comments

    Summary

    • Wednesday BlackBerry announced it was partnering with Google to provide enterprise mobility for Android devices.
    • The deal gives BlackBerry a wider universe of mobile devices to manage.
    • Google gets credibility that Android devices can operate securely within the enterprise.
    • The partnership is a potential game changer.
  • Transocean - 3 Things Investors Need To Know
    Wed, Feb. 25 RIG 41 Comments

    Summary

    • Transocean reports earnings after hours today.
    • The company is reeling under declining oil prices and a contraction in the oil and gas industry.
    • Cash burn, stickiness of the company's contract backlog and expected operating costs from maintaining idle rigs are 3 things investors need to know.
    • Until management addresses these issues, investors should avoid the stock.
  • Micron Stock A Hold On Samsung Deals With Apple And LG
    Tue, Feb. 24 MU 20 Comments

    Summary

    • Korea Times reports that Samsung has entered DRAM deals for Apple's iPhone 6 and LG's G4 smartphones.
    • Previous reports of Samsung's DRAM expansion were simply market chatter. Today's news solidifies it.
    • Micron gets 68% of its revenue from DRAM. The stock is down over 3% on the news.
    • Micron remains a hold.
  • Schlumberger Remains A Short Amid Oil Industry Contraction
    Tue, Feb. 24 SLB 27 Comments

    Summary

    • After Schlumberger announced 9,000 layoffs in Q4, I predicted it would portend a protracted decline in the oil & gas industry.
    • Four weeks and 650 fewer oil rigs later, the oil industry has officially battened down the hatches.
    • As a supplier to big oil, Schlumberger's revenue and margins will decline amid the contraction.
    • Schlumberger is a short.
  • Gilead: All Is Still Well Down On The Farm
    Tue, Feb. 24 GILD 59 Comments

    Summary

    • 2015 HCV sales are projected to be about $13B, down from previous estimates of $20B.
    • Market discounts have lowered Gilead's HCV revenue. However, lower prices have also expanded the market for consumers who can afford to pay.
    • A $15B stock buyback program should also be a boon to the stock.
    • At 14x p/e Gilead remains a buy.
  • Abbvie's 'One Trick Pony' Faces Patent Expiration In 2016
    Tue, Feb. 24 ABBV 15 Comments

    Summary

    • HUMIRA represents 63% of Abbvie's total revenue. HUMIRA's $14B run-rate revenue could decline precipitously once its patent expires in 2016.
    • Abbvie's HCV cocktail, Viekera Pak, will need to make up for the decline in HUMIRA.
    • Non-Gilead share of 2015 HCV sales could be about $3.3B. However, Viekera Pak will have to split that $3.3B pie with Merck and any new entrants.
    • Abbvie is in a precarious position.
  • Molycorp's Potential Delisting Still In Play
    Mon, Feb. 23 MCP 23 Comments

    Summary

    • Despite its rapid appreciation over the past month, MCP is still not in compliance with the NYSE's minimum average share price requirement.
    • To meet the requirement for February, it MCP must close at $1 or above on Friday and it must at least average $2.79 over next 5 trading days.
    • I do not think it will get there. A potential delisting is still in play.
  • 3 Reasons EIA Report Will Drive Financial Markets In 2015
    Mon, Feb. 23 BHI, BNO, DBO 3 Comments

    Summary

    • Thursday's EIA Petroleum Status Report had the market tuned in.
    • Oil stocks increased about 8 million barrels, less than the 14 million increase predicted by the API.
    • As traders look for signs that oil prices have bottomed, all eyes will be on the EIA report.
    • Oil prices will determine which oil producers will survive, impact high-yield bond returns, and have an outsized impact on U.S. unemployment figures.
  • Molycorp's $1.4B Bonds Are Screaming Bankruptcy
    Thu, Feb. 19 MCP 25 Comments

    Summary

    • Molycorp's stock has risen over 200% since the beginning of February.
    • Despite the euphoria from longs that Molycorp is on track to recover, nothing has fundamentally changed with the company.
    • Molycorp's corporate bonds have yields as low as 28% and as high as 125%.
    • Bondholders value the bonds as if Molycorp is headed for bankruptcy and I believe them.
  • Insiders Are Bailing On Dril-Quip
    Wed, Feb. 18 DRQ 4 Comments

    Summary

    • Big oil is cutting capital outlays and reducing the rig count amid the free fall in oil prices.
    • Dril-Quip sells drilling and rig equipment to the oil & gas industry. Such sales should decline as the industry contracts.
    • Insider selling has accelerated over the past three months. Investors should follow suit.
  • Rolls Royce Accused In The Petrobras Scandal - Who's Next?
    Tue, Feb. 17 RYCEF 6 Comments

    Summary

    • Rolls Royce was recently accused in the Petrobras mult-billion kickback scheme.
    • This comes at an inopportune time as the company expects 2015 revenue and earnings to decline due to the contraction in the oil and gas industry.
    • The scandal could result in the company losing future business from Petrobras and a loss of reputation in the oil and gas industry.
  • Molycorp's Shorts Are Getting Cooked
    Mon, Feb. 16 MCP 24 Comments

    Summary

    • Molycorp has nearly tripled in value since a February press release divulging higher production volume and lower cash production costs at its Mountain Pass facility.
    • Recent volatile trading signals short covering - 57 million shares were sold short (9 days to cover) on January 30th.
    • Shorts are getting cooked, but the losses may be short-lived.
    • I expect management to report another quarter of operating losses and cash burn when earnings are released in a few weeks.
  • Oil States International Earnings Preview
    Mon, Feb. 16 OIS Comment!

    Summary

    • Oil States International reports Q4 earnings on Wednesday.
    • The oil & gas industry is contraction. As an oil & gas services company, I expect Oil States' future revenue and earnings to decline.
    • Investors should avoid the stock.
  • Petrobras Represents 8% Of Dril-Quip's Order Backlog
    Mon, Feb. 16 DRQ 5 Comments

    Summary

    • Seadrill recently reduced its order backlog by its $1.1B Petrobras orders (5% of total). The stock sold off 5%.
    • Dril-Quip has completed $24MM of work in dispute with Petrobras and has $104MM (8% of total) of Petrobras orders in its $1.25B backlog.
    • The Seadrill action may trigger a reduction in Dril-Quip's backlog as well.
    • In addition to the contraction in the oil & gas industry, the Petrobras exposure makes Dril-Quip a sell.
  • Molycorp Nearly Triples On Higher Production Volume - Too Bad It's Ethereal
    Fri, Feb. 13 MCP 65 Comments

    Summary

    • Molycorp recently issued a press release stating Q4 production was up Y/Y and Q/Q. MCP has nearly tripled on the news.
    • The positive press release followed a January 30 Seeking Alpha article on a potential delisting by the NYSE.
    • It is reminiscent of a positive press release from Molycorp on June 19, 2014 - the same day Moody's announced a debt downgrade.
    • The Company has never addressed cash burn, operating losses or how it would avoid a potential delisting.
    • Until these matters are resolved the recent surge in the stock price could be ethereal.
  • Qualcomm: South Korea Opens Pandora's Box
    Thu, Feb. 12 QCOM 36 Comments

    Summary

    • Qualcomm recently agreed to reduce its 4G and 3G licensing fees in China by more than one third.
    • South Korea opened Pandora's Box after it launched an investigation amid complaints from Samsung and LG over Qualcomm license fees.
    • I expect several countries to demand royalty rates on par with those garnered by Chinese officials.
    • Revenue from chipset shipments also could decline due to loss of market share and continued erosion of the average selling price.
    • The stock's 15x p/e ratio does not appropriately reflect these risks.
  • Avoid Precision Drilling Amid Oil And Gas Industry Contraction
    Thu, Feb. 12 PDS 23 Comments

    Summary

    • Precision Drilling announces quarterly earnings after-hours on Thursday.
    • 85% of the company's revenue is derived from on shore drilling contracts for oil and gas exploration.
    • The oil and gas industry is shutting down rigs amid the free fall in oil prices.
    • Precision Drilling's revenue and earnings should decline in 2015 and beyond. Precision Drilling is a sell into earnings.
  • Sell National Oilwell On A Severe Market Downturn In 2015
    Wed, Feb. 11 NOV 18 Comments

    Summary

    • National Oilwell Varco reported earnings late last week.
    • The company's revenue and normalized EPS met or exceeded analysts' expectations.
    • However, management expects a severe downturn in 2015 drilling activities, and equipment sales to the oil and gas industry.
    • At 13x 2015P EPS, National Oilwell is overvalued. Investors should avoid the stock.
  • FMC Technologies Misses On Earnings - Short Thesis Intact
    Wed, Feb. 11 FTI 9 Comments

    Summary

    • FMC Technologies reported Q4 earnings after-hours on Tuesday.
    • Revenue beat analysts' expectations, but eps fell shy due to charges related to a defined pension benefit plan and a strengthening dollar.
    • Management declined to give forward guidance due to uncertainty over contraction in the oil & gas industry.
    • I expect revenue and earnings to decline in 2015 and 2016. My short thesis remains intact.
  • Sell FMC Technologies Into Earnings
    Tue, Feb. 10 FTI Comment!

    Summary

    • FMC Technologies reports Q4 earnings after-hours today.
    • I expect the company to meet or exceed analysts' expectations, but give weak guidance amid a contraction in the oil & gas industry.
    • FMC Technologies is a sell into earnings.
  • Regulators Probe Reuters' Report Of A Samsung Takeover Of BlackBerry
    Fri, Feb. 6 BBRY 123 Comments

    Summary

    • Regulators are probing a recent Reuters report that BlackBerry and Samsung were in takeover talks.
    • At issue is whether someone leaked the report to Reuters in order to manipulate BlackBerry's stock.
    • I expect news reports of the BlackBerry takeover interest to persist. However, potential investors should focus on the company's earnings fundamentals.
  • Did InvenSense Make A Faustian Bargain With Apple And Samsung?
    Tue, Feb. 3 INVN 24 Comments

    Summary

    • InvenSense reported its fiscal Q3 earnings last week.
    • It beat on revenue, but the stock dropped 7% due to declining profit margins.
    • Apple and Samsung represent nearly 70% of total revenue.
    • The company appears to have sacrificed profit margins in order to win high volume business.
    • Declines in average selling price and profit margin may not justify the company's 35x run-rate P/E multiple.
  • AbbVie Projects $3B Sales For HCV Cocktail, But Shares Fall 3%
    Mon, Feb. 2 ABBV 13 Comments

    Summary

    • AbbVie reported solid Q4 earnings last week, despite one-time expenses for fees related to backing out of acquiring Shire Plc.
    • Management did nothing to assuage investors that its HCV regimen was on pace to achieve its $2 billion 2015 revenue target.
    • With Merck expected to launch its own HCV regimen, AbbVie may be wasting a chance to establish itself as the number two player behind Gilead.
    • AbbVie is a hold.
  • Bet The Farm On Gilead... Again
    Mon, Feb. 2 GILD 164 Comments

    Summary

    • Gilead is set to report Q4 earnings on Tuesday.
    • Revenue and earnings will reflect the full potential of the blockbuster HCV treatment, Harvoni.
    • At 14x run-rate earnings, there is more upside ahead.
    • Bet the farm on Gilead... again.
  • Insider Selling Accelerates At FMC Tech
    Mon, Feb. 2 FTI Comment!

    Summary

    • FMC Tech reached a 52 week low last week amid a free fall in oil prices and decline in U.S. rig count.
    • Insider selling has accelerated over the past three months.
    • My short thesis remains intact and I am emboldened by insider sales data.