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The Unintelligible Investor

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  • Oracle: 40% Upside And More For Patient Investors [View article]
    I am going to jump in here and say that, in my mind, it is pretty clear that 1) FCF should incorporate growth via acquisition ... An acquisition is simply another way for a company to reinvest its cash flows in order to grow the business. It is, in that sense, no different than using the cash to invest in new products internally. The ability to allocate capital successfully is a factor that must be used to evaluate management and determine growth rates whether that capital is allocated within the business or outside it via acquisition.

    and 2) you don't need "proof" in order to incorporate such growth in your valuation. We are trying to project the future here. The past we know with certainty, but there is no real "proof" that anyone can give of anything going forward. If you believe in the ability of a company to allocate capital effectively, then you should incorporate that into your growth rate projections.

    ..... Now, whether ORCL is a good capital allocator is another story ......
    Oct 21 09:24 AM | 2 Likes Like |Link to Comment
  • Premier Inc.: Healthcare Crisis Creates A Growth Environment [View article]
    Well written article ... unfortunately, after reading it in detail, I still don't really understand how PINC earns its $$.

    Do the members pay for software that gives them access to healthcare data?

    I read "group purchasing organization" and I think "buying group". Does PINC buy medical supplies on behalf of or facilitate the purchase of medical supplies by its members?
    Oct 18 09:39 AM | 4 Likes Like |Link to Comment
  • IPO Preview: SFX Entertainment [View article]
    hmmm ... prospectus pro formas show the post-acquisition company is going to be bleeding cash. The growth is impressive but they have serious work to do make this venture even profitable, let alone worth $1 bill market cap.
    Oct 9 09:51 AM | Likes Like |Link to Comment
  • Datalink: An Underappreciated, Long-Term Play On Cloud Computing [View article]
    Great analysis ... I see no problem with an growth-by-acquisition strategy so long as the acquisitions are reasonably priced. Given the high valuations in the sector, it may be tough to find such reasonably priced acquisitions.

    Unfortunately for me, I don't think the upside outweighs the downside to a large enough degree to justify purchase. I think your belief that the "worst" case scenario is a 50bps decline in operating margins is aggressive.
    Sep 23 09:40 AM | 1 Like Like |Link to Comment
  • New Jersey Resources: Superstorm Creates A Superb Opportunity [View article]
    thanks for the feedback ... increasing long-term rates have obviously had a major impact since I wrote this ... it will be interesting to see if dividend growth can be maintained in the face of higher borrowing costs.
    Sep 16 09:01 AM | Likes Like |Link to Comment
  • Moody's And S&P: Lawsuits Can Be A Good Thing For The Value Investor [View article]
    yes i did quite well on this one ... still waiting for the next big opportunity ... let me know if you find something
    Sep 14 10:26 AM | Likes Like |Link to Comment
  • "War" breaks out between AIG and Berkshire [View news story]
    that is an interesting point ... it is a bit out-of-character for Buffett to start a business from scratch, especially to take on an already soundly entrenched competitor. If the commercial insurance business is so appetizing and AIG has a leading position (including top management), why wouldn't Buffett just buy AIG? particularly with AIG appearing to be so undervalued (at least from a P/BV perspective).

    Perhaps buffett thinks there are some truly ugly assets still in AIG that he wants no part of ... or maybe buffett already tried to buy AIG and was rebuked????
    Sep 13 10:24 AM | Likes Like |Link to Comment
  • Apple's P/E Calculation: Subtract The Cash? [View article]
    thank god someone addressed this "net of cash PE" nonsense. thank you for that sir!
    Aug 30 08:54 AM | Likes Like |Link to Comment
  • Here's What Happened The Last Time The Fed Owned All Outstanding Treasuries [View article]

    It looks like an interesting article and I look forward to reading it tonight, but within the first 3 paragraphs I was struck by this thought ... wouldn't the end of the deadliest, costliest conflict history has ever known help to improve investor sentiment somewhat???? Thus supporting equity markets even in the face of recession? A short-term recession related to decreased demand from the military industrial complex is an afterthought when investors once again have complete assurance of the ongoing survival of the free world.
    Apr 5 10:16 AM | 11 Likes Like |Link to Comment
  • New York & Co.: Buy This Turnaround Story Before Everyone Else Does [View article]
    It is a strong report but I have a couple issues: Revenue growth of 10% per year still seems rather aggressive given sales per sqft, yoy comparable store sales, and net sales all grew at much less than this clip over the past 3 years and given that the business ahd difficulty maintaining 10% revenue growth pre-2009 when it was opening what turned out to be a glut of new stores. What exactly is expected to drive this revenue growth?

    By extension, a P/E multiple of 16x or more again seems aggressive.

    Also, did you account for the 2-3% drag of the share dilution?
    Feb 25 11:47 AM | Likes Like |Link to Comment
  • New Jersey Resources: Superstorm Creates A Superb Opportunity [View article]
    I don't doubt it. I plan on being a long-time owner as well.
    Feb 12 07:43 AM | Likes Like |Link to Comment
  • Canadian Oil Sands: Analyzing And Valuing The Oil Sands Operator - Part II [View article]
    great job
    Jan 15 08:54 AM | 1 Like Like |Link to Comment
  • Lots Of Real Estate Value At Assisted Living Concepts [View article]
    Great analysis. Looks like a good opportunity.

    Question: You say "most" of their locations are rural. How much is "most"? Just how "rural" are they? The more rural the facility the lower the price it could fetch presumably. Can we be sure that the facilities owned by ALC are of as high quality in terms of location and other factors as the those other purchases you've referenced?
    Jan 4 11:07 AM | 1 Like Like |Link to Comment
  • The Canadian Banks And The Pre-Emptive Bailout [View article]
    Not all the banks provide that kind of geographic detail. I did attempt to provide info on the banks that were that granular.

    I agree that Alberta is in the best shape now but the bloom may be off the wild rose and their economy has the further to to fall.
    Dec 18 11:06 PM | Likes Like |Link to Comment
  • The Canadian Banks And The Pre-Emptive Bailout [View article]
    Yup I agree ... BMO is in pretty good shape going forward.
    Dec 5 08:56 AM | 1 Like Like |Link to Comment