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Simon Moore, CFA  

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  • Phillips 66 - Disciplined Company, But No Upside Left [View article]
    I see, thanks for clarifying
    Jun 18, 2013. 06:28 PM | Likes Like |Link to Comment
  • Phillips 66 - Disciplined Company, But No Upside Left [View article]

    Good point, MLP spinoff could be a source of upside, in that spinoffs often are (PSX is a case in point), but often happens when a stock is undervalued and/or management incentives aren't aligned and the spinoff serves as a catalyst to realize the value. I'm not clear the PSX is undervalued right now and incentives seem pretty aligned.


    Thanks for clarifying, I should have made this clearer. I'm talking about upside relative to the US stock market. So, I don't see PSX moving in a materially different way to the S&P 500 in the coming months. That doesn't mean it won't rise if the market rises or fall if the market falls, but I don't necessarily see it as a better investment than, say, an S&P 500 ETF right now. I'm not rushing to sell because it's basically at fair value now, in line with the market. If it were overvalued there would be more incentive to sell, but it isn't.


    Yes Warren Buffet owns the stock, he typically buys and holds for the very long term and through the business cycle. I think the difference between my thesis and his, is that we're at pretty close to peak refining earnings right now and when/if that changes there's a risk it hurts the stock since there's no margin of safety on valuation. As smart a guy as he is, I'm not comfortable following him blindly as an investment strategy. Again, "no upside left" as in my comments to Adec above, is a market relative statement. I'm not saying the stock will be flat forever, just that it won't do materially better than the S&P 500 in the foreseeable future based on valuation.
    Jun 17, 2013. 05:56 PM | Likes Like |Link to Comment
  • Phillips 66 - Disciplined Company, But No Upside Left [View article]

    If you disagree with the valuation, I'd be interested to hear why.

    Jun 16, 2013. 11:28 PM | Likes Like |Link to Comment
  • Phillips 66 - Disciplined Company, But No Upside Left [View article]

    Yes, I think dividend increases are likely, and generally management are aligned with shareholders. However, that payout ratio does assume very healthy refining margins, bear in mind that PSX are themselves selling refineries, which I think tells you something. Basically, make sure you're looking at a payout ratio that reflects normalized refining net income through the cycle, not just the past two years, which are high relative to historic, that's why most refining companies are on a p/e of less than 10 right now.


    Glad your trades worked out. Not entirely sure what point you're making.
    Jun 16, 2013. 01:30 PM | Likes Like |Link to Comment
  • Apco Oil & Gas: Unjustified Selling Leads To Unjustified Valuation [View article]
    I own this stock,and agree there's fundamental upside here, but to Alan's point it's all about the political environment in Argentina. There's definitely clear political risk that's tricky to forecast. Personally I think there's enough margin of safety to offset it.
    Jun 8, 2013. 05:24 PM | 2 Likes Like |Link to Comment
  • Garmin: Own For The Dividend While Waiting For The Catalyst [View article]
    I agree with this - $6.8B market cap, back out the cash and it's $4B, then even if in-car GPS goes away completely that's ~$200M of operating income gone, so you're at ~$300M of free cash flow,so a 13x FCF multiple on the stock with a negative state of the world that doesn't exist yet and may well be too pessimistic. However, it's just as possible that they do a stupid acquisition rather than have an activist investor come in and force a stock buy back, so there's some real risk there. So I think it's cheap with perhaps 30-50% upside, but a little more margin of safety might be better given the thesis relies on them not destroying value with the cash, and so many companies do.
    Jun 8, 2013. 05:08 PM | Likes Like |Link to Comment
  • The Surprising 'Growthy-Ness' Of A Breakthrough ETF [View article]
    Thanks for the detailed analysis. Nice work.
    Mar 1, 2013. 12:40 AM | Likes Like |Link to Comment
  • 5 Stocks For Playing The January Effect [View article]
    No, I ultimately bought TPX and APAGF and I already owned FNB. Thus far they are all ahead of the S&P 500 for the year except DECK which is off 7%. Though January is not over yet so things could change for better or worse.
    Jan 19, 2013. 11:22 AM | Likes Like |Link to Comment
  • City Telecom's Dividend Yield Deeply Misleading [View article]
    Thanks for the comment. That's certainly the upside case, but at the moment it's basically an idea rather than a business. There are plenty of cases of smart people with good ideas not generating the results they anticipate. For example, the lack of a TV license right now is a fundamental concern. You're right though, this is really a pitch to warn though buying into the seemingly juicy yield, since every couple of months I see an under researched article plugging the company based on stock screener results.
    Dec 2, 2012. 10:52 AM | Likes Like |Link to Comment
  • City Telecom - Dramatic Change Increases Risk [View article]
    The source links are in the article, but if you just want one source read the SEC document here:
    I was long CTEL before they did the disposal, then they did the special dividend and I sold. My short position is small, and I don't typically short, but this whole situation is so bizarre and the logic of a short made sense to me as I've outlined above. I think more detail (in terms of balance sheet and income statement run rate) will come to light when the company next reports which I think is November. I was slow to publish, simply because it took me a while to research and write this relative to other priorities, frankly, I'd assumed someone else would comment on it, but they never did.
    Sep 17, 2012. 10:46 AM | 1 Like Like |Link to Comment
  • City Telecom - Dramatic Change Increases Risk [View article]
    If you disagree with the negative investment thesis, then it's probably more helpful to other readers (and me) to explain why, as others have done in the comments. Thanks.
    Sep 15, 2012. 11:59 AM | 1 Like Like |Link to Comment
  • City Telecom - Dramatic Change Increases Risk [View article]

    Yes, the potential cash balance is the bull case on the stock, though we'll have to wait for an updated balance sheet to be sure given potential taxation on the disposal, and the cash burn management anticipates for the media business is aggressive.
    Sep 15, 2012. 11:40 AM | Likes Like |Link to Comment
  • City Telecom - Dramatic Change Increases Risk [View article]
    I was surprised by that article too, although the company hasn't actually stated its dividend policy going forward, so conceivably they may maintain it, but not sure it would get board approval given the high level of investment going into the media business.
    Sep 15, 2012. 11:35 AM | 1 Like Like |Link to Comment
  • City Telecom - Dramatic Change Increases Risk [View article]
    Sorry Alex, I don't know the tax implications of that one.
    Sep 13, 2012. 09:19 PM | Likes Like |Link to Comment
  • Orchard Supply Hardware: An Attractive Small-Cap Replacement For Lowe's Or Home Depot [View article]
    Thanks for the comments, they have a bearish tone, but make sense.
    silence_twain - thanks for the detailed comment, fundamentally I believe the difference is you're doing an EV/EBITDA forecast, whereas the numbers I've pulled from Yahoo are historics.
    On the +$3M for stores, that's because with only 88 stores, +3 is still 3.4% growth for a full year on revenue, I then half that for 6 months of operation in the year take incremental gross margin of 34%, less tax of 30% assuming some operational leverage will come through from those stores on the fixed costs of the business (corporate, procurement, advertising, distribution etc.). On the extra week, I make a similar assumption of 1/52th contribution, though that one is more vague given underlying earnings are unknown. The net net on all that, is that even on my relatively bullish assumptions, positive earnings still don't come through.
    SunsetKid - that's a helpful perspective, albeit a bearish one. However, I suspect the key question is OSH doing better than last year, rather than better than LOW and HD. The stock price isn't assuming best in class, just the potential for some forward progress, though even that may be a challenge.
    Aug 22, 2012. 01:35 AM | Likes Like |Link to Comment