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Simon Moore, CFA  

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  • Phillips 66 Offers Opportunity After Spin [View article]
    There's an article that explains the principle here based on a former split: and another one here: It appears you pro rata your COP tax basis across the new shares according to their "fair market value", and the allocation ratio.Therefore, based on a 2:1 ratio COP:PSX and prices of $56.51 and $36.72 respectively (closing on the first day of the split) it appears 24.5% of your former COP tax base should be in PSX leaving 75.5% in COP. Of course, seek professional tax advice to get the precise numbers. The issue of 'fair market value' is ambiguous so I'm using the closing price on May 1, but either the company or a tax professional would be able to offer precise guidance.
    May 6, 2012. 12:46 PM | 2 Likes Like |Link to Comment
  • Phillips 66 Offers Opportunity After Spin [View article]
    At their April 9, 2012 analyst update they make the statement "We'll pay an $0.80 annual dividend to start off with. It's about $500 million a year." The link to the transcript is here:
    May 5, 2012. 02:48 AM | 2 Likes Like |Link to Comment
  • E-Trade: 17% Upside, It All Hinges On The Loans [View article]
    Dan - interesting point, I guess you're referring to their Q1 call transcript, but at the same time as acknowledging spreads may improve as you suggest, they also talk about it as being a long term event, with spreads expected to contract slightly for the remainder of the year.
    So from a long term perspective it could drive upside, but I don't think we'll see it this year, and I'd expect the loan portfolio to dominate.
    May 2, 2012. 12:35 AM | Likes Like |Link to Comment
  • Short Treasury Trade Has Room To Run [View article]
    Yes, I would like to hear what others think, but I believe probabilistically yields are more likely to rise than fall when you look at historics (as above). My current TLT puts expire in June and I will likely continue to roll the trade forward after that assuming the put pricing is reasonable. In the near term the main risks appear to be continued FED easing or unexpected economic weakness, but on the long view I believe the logic of the trade is intact.
    Apr 22, 2012. 11:33 AM | Likes Like |Link to Comment
  • Short Treasury Trade Has Room To Run [View article]
    Thanks for the comment, to be clear though I'm explicitly forecasting the yield on the 10 year itself (rather than a change underlying rates and the bond's reaction to that). It's still an issue though in the case of shorting TLT, since TLT has a longer duration than the 10 year Treasury.
    Mar 20, 2012. 12:12 PM | Likes Like |Link to Comment
  • Potential Spin-Offs To Consider (Part 1) [View article]
    Thanks for the comment. Yes, EQIX is also a valid comp, I just wanted to pick one for simplicity and chose RAX though I could have chosen EQIX. EQIX is at slightly lower multiples than RAX, using that would take the valuation on CCB down a notch if you focus on price to sales, though EQIX is still at 84x historic earnings and 4x sales, so I think the point remains valid that if CCB spun out it's data center operations they would trade at a substantial premium to the telco operations. Nonetheless, I still worry that valuations on data centers are a little frothy.
    On EV/EBITA, I get that a lot of people on Seeking Alpha like to use that, I'm just not a fan given it ignores capital spend/depreciation and there's less academic work that I've seen (a la Fama/French '92 etc.) that shows it has predictive value in the same manner as p/e p/b and yield.
    Mar 16, 2012. 02:10 AM | Likes Like |Link to Comment
  • Potential Spin-Offs To Consider (Part 1) [View article]
    Good points, on a historic p/e basis HIG looks inline, but certainly at a discount on price to tangible book and forward earnings. I was really focused on a spin-out as a source of upside, but I agree it's cheap on the metrics you mention without any changes to its structure.
    Mar 16, 2012. 02:03 AM | Likes Like |Link to Comment
  • What The Stress Test Headlines Miss [View article]
    Thanks for the comment Greg, certainly it's true that any one metric only tells you so much, that particular one gives you a sense of how equity holders might fare today if the stress test scenario actually occurred.
    Importantly, in the case of BAC, bear in mind the forecast net income loss is $50B, that's about double most of the others except Citigroup. Hence in that case the metric driven more by the scale of the net income loss than the market cap.
    Mar 14, 2012. 05:44 PM | Likes Like |Link to Comment
  • Watch Lions Gate Surge As The World Watches 'The Hunger Games' [View article]
    Your reply doesn't seem to address the point Alex makes about valuation.
    Mar 14, 2012. 01:19 PM | Likes Like |Link to Comment
  • A Once-In-A-Decade Buy In Corporate Bonds [View article]
    Ok, but we shouldn't confuse good outcomes with good process. It's great that the trade worked out for you but it seems due to company performance beating expectations, rather than anything to do with the Volcker Rule that the article emphasizes as the investment case.
    Mar 13, 2012. 12:36 PM | 1 Like Like |Link to Comment
  • A Small Cap Alternative Not Quite On The Level Of Lowe's And Home Depot [View article]
    Thanks, you're totally right, Google Finance has the shares outstanding wrong (they have ~4M not 6M) and it threw off my numbers as a result I'm updating the information in the article for this. Not sure that I understand what you mean on store size though, "Our stores average approximately 43,600 square
    feet of enclosed space plus approximately 8,300 square feet of nursery and garden area".
    Mar 12, 2012. 11:08 PM | Likes Like |Link to Comment
  • Debunking S&P 500 Profit Margin Anxiety [View article]
    1. Certainly possible domestically, though internationally the weaker dollar may actually help since US imports become more expensive and so US firms are a little better positioned competitively for the time being.
    2. Very true, as you can see from the charts a recession would certainly tank profit margins. So that's a clear risk.
    Mar 12, 2012. 06:33 PM | 1 Like Like |Link to Comment
  • Aircastle: Sustainable 4.5% Yield And $17 Price Target [View article]
    Yes, given the company is not selling shares there is no negative information, so if anything it's a slight opportunity in my view. However, I hold a reasonable chunk of stock across different accounts, so I won't be adding based on the price decrease, but not tempted to sell either. Also check out FLY as an alternative for relative value, the story is similar and I own that too.
    Mar 8, 2012. 01:51 AM | Likes Like |Link to Comment
  • A Small Cap Alternative Not Quite On The Level Of Lowe's And Home Depot [View article]
    Yes, if you believe in the company it really has to be on a cashflow basis rather than earnings.
    Mar 7, 2012. 12:07 AM | Likes Like |Link to Comment
  • A Small Cap Alternative Not Quite On The Level Of Lowe's And Home Depot [View article]
    The stores are about 44,000 sq ft with 8,000 of external space. Not sure how that compares with Ace.
    Mar 7, 2012. 12:06 AM | Likes Like |Link to Comment