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Simon Moore, CFA

 
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  • Why Natural Gas Will Outperform Oil [View article]
    Thanks Gigem, great caveat on UNG. It's irritating that there aren't more efficient vehicles out there. Buying a gas focused company such as WPX may be an alternative, but that (or any specific firm) introduces it's own independent risks.

    Both you, Daniel (below) and another reader in a private message make the point about limits to substitution between oil and gas whether due to geographical limitations or existing fixed investment. I think those are fair points and I'm not saying we'll get to complete parity on oil/gas pricing, but when you see oil at 6x the gas price it seems so divergent from a pretty basic economic principle of substitution that you have to take note. But like all economic principles, when you get into the details the argument has some limitations, but I don't believe they make invalid, they just may delay the timing in this case.
    Jun 21 02:55 AM | Likes Like |Link to Comment
  • Phillips 66 Valuation Suggests 45% Upside - Part 2 [View article]
    No, Fama French (1992) provides some analysis on the ability of valuation metrics to predict stock performance in aggregate, but the exact weightings are subjective. I weighted averaged earnings and book value higher given Graham and Dodd emphasize those two, but again they don't provide weightings.

    However, the interesting thing about thing analysis relative to others is that the fair values from the different methods were all in the same ballpark, so changing the exact weightings won't change the upside too much.
    May 12 12:39 PM | Likes Like |Link to Comment
  • Phillips 66 Valuation Suggests 45% Upside - Part 1 [View article]
    Here's a source for reference, 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: http://bit.ly/IAJPmy
    May 10 05:25 PM | 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 http://seekingalpha.co..., 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 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 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 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 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 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 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 01:19 PM | Likes 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 http://bit.ly/xgOFi2 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 11:08 PM | Likes 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 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 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 12:06 AM | Likes Like |Link to Comment
  • Value Investors Should Look At HP [View article]
    Tradestar - what constitutes high debt is subjective, but the numbers Esekla quotes seem right. HP has healthy leverage and coverage ratios, but perhaps its fair to say it's high for the tech sector where many of the popular names are flush with cash. I'm not sure that that's a problem for HP though, in fact the tax efficiency debt offers may be beneficial. Ultimately though I don't see the debt issue as that important, either for a positive or negative thesis on the stock.
    Mar 6 02:08 AM | Likes Like |Link to Comment
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