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Slim Shady  

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  • I Wouldn't Get Used To $65 Oil [View article]
    And in order to be able to adapt our activities / economies / culture to changing climate, the more reliable and cheapest source of energy to do this is....Fossil Fuels.
    Dec 3, 2014. 06:20 PM | Likes Like |Link to Comment
  • I Wouldn't Get Used To $65 Oil [View article]
    David - don't believe everything people say without understanding the underlying motivations behind what people are doing. While it may be detrimental to US Shale operators, it could be devastating to Russia. Look at the chart of oil from the end of August when Russia was invading Ukraine. Per an EIA report on July 23, 2014, 68% of Russian exports are Oil & Gas, with Oil 4x as much as gas. You want to hurt Russia, you cut the price of oil and blame it on the U.S. Shale producers, an easy scapegoat.
    Dec 2, 2014. 10:14 PM | 25 Likes Like |Link to Comment
  • I Wouldn't Get Used To $65 Oil [View article]
    I seriously doubt Russia is targeting US fracking ops for removal from the market. More likely they are selling as much as they can since the Ruble has declined 40% and they are trying to raise more money with more volume given lower prices since they are having difficulty raising funds in the debt market. Russia would seem to be on the defensive, not offensive.
    Dec 2, 2014. 09:22 PM | 19 Likes Like |Link to Comment
  • I Wouldn't Get Used To $65 Oil [View article]
    Zeits - you follow the oil industry a lot closer than I do. I'm confused as to where all the glut in oil is being stored, because it doesn't look like U.S. inventory numbers that are released are showing that. Any insights on why there is a discrepancy between "glut" and reported storage numbers?

    Also, the talking heads were saying OPEC needed to cut 1mm to 1.5mm bbls per day in order to bring the market in balance. On 90 mm bbls per day of demand, is that 1%-2% per day "glut" significant enough to knock the price down 40%? Or was spot oil to high to begin with and now it has overcorrected the other direction?

    Is it any coincidence that the 1998 drop in Oil preceded the Russian Financial crisis and the recent drop occurred in step with when Russia was allegedly invading the Ukraine (headlines around end of August)? Is the drop in oil over the last 3 months more a product of political punishment of Russia rather than a severe supply/demand imbalance?

    Any thoughts appreciated.
    Dec 2, 2014. 04:59 PM | 8 Likes Like |Link to Comment
  • Intel Valuation Analysis: Undervalued On Fundamentals [View article]
    Ernie - if you are buying a stock, then I think it is more appropriate to use the market value in determining the WACC. If you were looking at buying a whole company, and could choose the capital structure, then you would look at the equity you would have to put up vs. the amount that you could finance.

    The cost of equity should be based on the riskiness of the cash flows. Personally, I wouldn't invest in the equity of something with variability in cash flows if I was only expecting a 7.2% return. Tying your cost of equity to the risk free rate means that you are also getting long bonds, since if interest rates back up, so would your expected return. If your cost of equity is tied to the risk free rate, you should be short the risk free rate to offset that exposure.
    Nov 28, 2014. 01:03 PM | 1 Like Like |Link to Comment
  • Intel Valuation Analysis: Undervalued On Fundamentals [View article]
    Ernie Mac - the other problems are the cost of equity is only 7.2%. I for one, wouldn't invest in a company for an expected 7.2% return on equity. The other is the allocation of the cost of equity and debt of 62%/38%. That may be the book allocation, but isn't based on the market valuation, which is more important when determining a DCF valuation for an investor.
    Nov 27, 2014. 09:06 AM | 1 Like Like |Link to Comment
  • Best Idea For 2014: Sanofi Rights Post-FDA Approval [View article]
    "In late 2013, the FDA denied Lemtrada's approval, throwing investors and multiple sclerosis/MS patients for a loop, and knocking the price of the CVR from $2 per share to $0.30 by December 31, 2013. At that point, we believed the downside was more than priced in as selling pressure far outweighed rational assessment of probabilities. So we purchased more shares of the CVR, published GCVRZ as our Best Idea for 2014, and robustly advocated for approval of Lemtrada in multiple venues. "

    Chris, this timeline isn't accurate. You published GCVRZ as your Best Idea for 2014 on December 20th, 2013 when the CVR closing price was $0.75 on that day, up from $.7049 the previous day and traded into the mid $0.80's the following Monday, the first day I suspect a non-pro subscriber would've been able to purchase it. Your thesis was that they would get U.S. approval, which would be worth $1 payout, and even if they didn't, there was a good chance they'd hit the $400 million milestone with International sales for the $2 payout. Then the decision came out for the U.S. to not approve and the CVR traded down to $0.3175 on December 30th. Your article implies that your Best Idea recommendation happened AFTER the fall into the $.30s and that is simply not true.
    Nov 27, 2014. 09:02 AM | 8 Likes Like |Link to Comment
  • Intel Valuation Analysis: Undervalued On Fundamentals [View article]
    Using a weighted average cost of capital of 4.92% will provide a DCF value that makes almost any company appear undervalued. You may be conservative in your other assumptions, but your discount rate is not one.
    Nov 25, 2014. 05:38 PM | 4 Likes Like |Link to Comment
  • Is It Time To Get Onboard Teekay Tankers? [View article]
    Nice article - you summarized all the key points. It's good to know that at least one other investor is looking at this company.
    Nov 25, 2014. 12:05 PM | 3 Likes Like |Link to Comment
  • Amazon Trades For 370 Years Of Earnings, Jack Ma Thinks It Might Not Be Here In 20 [View article]
    Tradebr2010 - Walmart went from well under $1 billion of Revenues in 1977 to $104 billion for the FYE 1/31/97 (they hit $100 billion in inflation adjusted dollars in FYE 1/31/94). And they were profitable the entire time.
    Nov 23, 2014. 07:01 PM | 6 Likes Like |Link to Comment
  • Amazon Trades For 370 Years Of Earnings, Jack Ma Thinks It Might Not Be Here In 20 [View article]
    On January 4, 2011, Jeffries estimates for 2015 were $10.67 of EPS and $16.07 of FCF per share on $100 billion of revenues, with Cap Ex of only $835 million. Their price target was $205 based on a five-year DCF using a 10% WACC producing an Enterprise Value of $89 billion.

    Fast forward their previous DCF 4 years at 10% produces a current Enterprise Value of $130 billion IF everything had played out according to their model. Adjusted for the current capital structure of $6.8bln of cash, $3.0 billion of debt, and $4.4 billion of capital leases, leaves an equity value of $129.6 billion - which based on 481 million fully diluted shares would be a current target based on their previous projections of $269/sh.

    Even though none of their earlier projections were remotely close to reality that would justify a $269 target, their current price target is now $380 based on a 10 year DCF and a 12% discount rate. Their estimate of FCF per share for 2015 is now $2.41 compared to $16.07 previously.

    However, they don't even calculate FCF correctly since they do not include equipment obtained through Capital Leases in their Cap Ex number, even though they include the depreciation of previous Capital Leases in their EBITDA number. In the last twelve months, $4.2 billion of PP&E has been obtained under Capital and build-to-suit leases, which is NOT included in the Cap Ex number on the Cash Flow Statement. Free Cash Flow for Amazon is already significantly negative when accounting for those Capital Leases.

    Jeffries Cap ex estimate for 2015 is now $5.3 billion compared to their previous estimate for 2015 of $835 million, without even including the Cap Ex under Capital Leases. Clearly, the business model that Amazon was pitching at the end of 2010 with unlimited growth with minimal capital required has not come to fruition.
    Nov 23, 2014. 09:52 AM | 9 Likes Like |Link to Comment
  • Salesforce provides light FQ4 and FY16 guidance [View news story]
    Does anyone else find it fascinating that a software company which 1) still hasn't figured out how to make an economic profit with $5 billion of revenues, 2) trades at 5.5x next years' revenues, 3) guides Q4 revenue and profit lower as well as the next fiscal year, and 4) it's COO is taking a 6 month leave of absence for unspecified reasons, and the stock is only trading down 4%?
    Nov 19, 2014. 05:57 PM | 4 Likes Like |Link to Comment
  • Park City Group: An Imaginary Growth Story With 65% Downside [View article]
    Lou - how do you reconcile the terms of the subscription contract with the revenues actually being reported? According to that, it looks like they have no revenues. Other than listening to Randy Fields ramble incoherently on the conference call, what evidence is there that they are generating any revenues?
    Nov 10, 2014. 10:11 AM | Likes Like |Link to Comment
  • Park City Group: An Imaginary Growth Story With 65% Downside [View article]
    Lou - How can you say "Clearly, Repositrak is generating cash" when it appears, based on their contract with Park City, that they are not generating any revenues? Where would the cash generation be coming from?

    From the 10Q:
    Management fees, consisting of reimbursement of expenses incurred on behalf of ReposiTrak, totaled $230,000 and $165,000 during the periods ended September 30, 2014 and 2013, respectively

    Isn't this simply PCYG offsetting some of it's expenses, but they are increasing their revenues instead of reducing the expenses that are being reimbursed?

    Nov 10, 2014. 09:32 AM | Likes Like |Link to Comment
  • Park City Group: An Imaginary Growth Story With 65% Downside [View article]
    Lambda - looking at the 10Q filed for the 9/30/14 quarter, it looks like subscription revenue from Repositrak was $400,000, and the terms of the agreement are for $400,000 per quarter plus a % of revenues. Is it your reading that Repositrak actually had no Client Revenues for the quarter, even though PCYG booked $400,000 from their agreement in return for increasing the Note Receivable by the same $400,000?

    Here is what Randy Fields said on the conference call:
    "In fact, the view of management is this year (if Repositrak) were consolidated, it wouldn't make any meaningful difference in our top line etcetera versus the current structure. So that's a way of saying that it is doing well enough that the current structure is strong and intensive purpose is couple hundred thousand year or whatever. It's neutral in terms of its impact on Park City Group."

    If you read through his incoherent ramblings, it sounds like he is suggesting that if Repositrak were consolidated, it wouldn't impact their consolidated revenues. How can that be if, under the agreement, they are paying the minimum amount with no amount of Client Revenue?
    Nov 9, 2014. 04:57 PM | Likes Like |Link to Comment