Angie's List A Compelling Short Opportunity [View article]
The recent surge is based on 2 things, in my opinion: momentum and a favorable analyst report (link below). I'm down on my investment as well, but I plan on holding or adding to my short as my thesis is still intact. As I'd said in my last line, "I think ANGI is a compelling short opportunity at current prices, and although its price could go anywhere in the short term, over the medium and long term it will only go down."
Angie's List A Compelling Short Opportunity [View article]
I decided August because it was the longest duration out available. With the continued run I am considering doubling down but I may wait until the November puts are available. The longer the better; anything could happen in the short term but over the long term this should be a profitable short.
Angie's List A Compelling Short Opportunity [View article]
Yeah, they have a tough road ahead of them. Thank you for reading, its great being able to read other people's opinions while formulating your own investment thesis and I'd like to hear more people's opinions on ANGI.
Angie's List A Compelling Short Opportunity [View article]
I hear you; that had a large impact in their lower cost per customer acquisition. Simply put I don't think there are enough customers out there to make their service profitable enough to justify their current valuation.
5 Reasons To Short Netflix Right Now [View article]
Good article. Personally I would be worried to do a short without an out of the money call due to the extraordinary volatility. I was considering buying a put but the cost seemed high yesterday; the continued run-up has me looking closer but I'll be waiting til the stock settles and implied volatility decreases to open a position (if I do).
Netflix's cash flows are extraordinarily volatile because of the timing of content payments. Because of this I'd say earnings are a better determinant of value for this firm.
It will be interesting to see how subscribers respond to original content, but my (and Reed Hastings') view is relatively muted in the short term at least. It's unlikely that Netflix will get a hit show out of the small number they will be releasing (2 this next quarter, I believe) although it is possible that they will get 1.
Mobile Is Part Of A Greater Trend Which Could Hurt Satellite And Cable [View article]
Once again thank you for an intelligent response; I believe debates such as this are healthy and can produce better investment results.
It appears the heart of your challenge is: "the low current capacity and the enormous expense to increase [capacity] is the problem..." This is a fair objection. When I try and make an argument I first make clear assumptions then use those assumptions to create a thesis. The difference in our thinking is simply that I believe obstacle 2 (costs decreasing) is likely to occur over time. I believe that mobile is experiencing something similar to Moore’s Law where cost per bit of transmission is decreasing and speed is increasing. If the rate of decrease in costs slows prematurely my premise will have been proven wrong. The way I see it investments such as 4G development make improvements to operating efficiency, marketing and speed. The increasing speed and the resulting marketing benefits (we have more 4G coverage than XXXX) to the company are the most readily apparent but moving people to 3G then to 4G actually makes each customer use less spectrum per unit data. I believe that simply continuing these same expenses with the next generations of improvements will continue this trend of cost reduction. If these cost reductions aren’t sufficient and large increases in spectrum purchases or large, extraordinary capex payments are made to compete in this segment then I also would need to re-evaluate my thesis and may discontinue my investment in Vodafone.
I had heard that Comcast was an investor in Clearwire but not the other 2. I think a wireless company such as T-Mobile would actually be a good fit in with Comcast's other varied holdings. Comcast actually started me looking into the subject this article is about: I'd wanted to see why their cable customers were declining, which led me to AT&T and Verizon. I was originally looking for future events which could challenge Comcast's current moat and, as I'd said in my ending remarks, my conclusion was that this doesn’t impair Comcast’s value now, and may not in the future (the biggest detriment is likely to be satellite).
I own VOD less for this argument as I tend not to be speculative in nature and more for an eventual European rebound and its low valuation (I think Vodafone’s stake in Verizon is worth more than half of its market cap).
Mobile Is Part Of A Greater Trend Which Could Hurt Satellite And Cable [View article]
I appreciate your well thought out reply, and thank you for reading. In response to some of your comments:
It is impossible to guess at the ROIC of a future technology whose costs are uncertain and whose revenues would depend on the competitive dynamic of future industry participants. I can guess margins would be similar to satellite, with programming costs at roughly half of revenue.
What I do know is that investing in LTE, additional spectrum and other technologies is also pushing them closer to being able to offer mobile video, as all of their investments have done an effective job of significantly reducing cost per MB. I believe the low data caps are simply a result of low current capacity because of inadequate spectrum availability and young technologies, and that the caps will rise significantly for plans in the coming years.
Also, internet is relatively inefficient in this regard. If you are sending out different streams of data to everyone the network has lower economies of scale; if you are sending the same channels to everyone, similar to satellite, you can lower the cost per person.
As for Wi-Fi being available in 100% of service areas, I don't believe this would be feasible. At a range of only a few hundred feet city-wide Wi-Fi is already available in a few cities, but it would have a tough time making it out to the suburbs or the rest of the country. This has also been part of the solution for expanding wireless provider's networks, as AT&T already has thousands of Wi-Fi hotspots for wireline and wireless customers.
A New Method For Calculating Fundamental Returns [View article]
@SDS: Thank you for linking that article. I read it and I've got to say I actually agree with most of it (I don't agree with the conclusion that every new financial product needs to be scrutinized as I believe that would stifle innovation; most new products can be viewed within the capital adequacy standards already established).
I would, however, disagree with its relevance here. Finance and economics are 2 different animals despite being related. Economics is, paraphrased from your article, trying to predict the actions of irrational people. Finance is different. Finance is valuing streams of uncertain future cash flows. Although finance and economics interact, as all cash flows eventually lead to people, financial equations have far more reliability to them. So as much as you could argue the cash flows or margins a company would receive in a year, it's more difficult to argue against using a DCF analysis or another financial tool such as this.
A New Method For Calculating Fundamental Returns [View article]
@SDS: Thank you for your comment; it appears based off the lackluster response to this article that it would have done better in a different section.
@SDS and Bikerguy: This was influenced less by college and more by books read outside of school. With many books trying to establish correlations between higher returns and lower P/Es, P/Bs and other factors I wanted to see exactly what causes these results. This was more an attempt to qualify statements such as "this stock is cheap because of its low P/E ratio" by being able to ask other questions which will affect future returns in a predictable way.
@ Bikerguy: all of the factors you listed are indirectly incorporated. Change in sentiment or risk tolerance: lower (or higher) future P/E. Changes in future economic expectations: lower future ROE. Also I agree that investment success isn't just a formula. Using this to predict future returns involves making assumptions based off of industry and competitive factors, similar to how a DCF projection needs various assumptions to be useful. I have been investing for years now and this is simply a tool in my toolbox.
@Brad: I originally had "Will Verizon Acquire Verizon Wireless?" but opted to change this to get the attention of Vodafone owners as well as Verizon owners. I feel this is an appropriate question given other articles say that an acquisition of Vodafone is possible, and I believe it is unlikely given the other options available (the answer to the question is a no). I take the accusation seriously as I also dislike articles which have a deceptive title, and I will try to be clearer in the future. Thank you for reading.
@MexCom: Thank you for the welcome. I think the market welcomes a deal as both VOD and VZ rallied on the rumor.
@FatMinxie: I plan on doing a full write up on VOD but I felt this news was worthy of comment before I get all the other details together to do a full VOD article. Thank you for reading.
S&P 500 Market Valuation And Historic Returns [View article]
@ Cranky: Thanks for your comments and your article was interesting. My point was to try and show the long term view as we are undeniably in a 15 year bear market. This is shown and commented on in my last graph which shows that despite the 15 year bear market we are in line with averages over 20 years.
@ Cranky, Soloprop and Diego: In retrospect I would have added in a graph with inflation. If I redo this article in the future I will adjust it accordingly.
@ Soloprop: I believe those trading fees will be relatively low in the S&P index due to the long holding period of the index. Also the log scale was used to make the long-term effect of compounding into a linear scale. This makes data toward the beginning of the graph readable.
@Rob1221: This was meant for current savers more than current retirees. Also the head and shoulders is a reflection of the 2000 and 2007 highs; the rightmost portion of the graph also has the least data as there are fewer and fewer periods that long available in the data so this has the least relevance to the article as it was written.
Angie's List A Compelling Short Opportunity [View article]
http://bit.ly/12IOAoq
Angie's List A Compelling Short Opportunity [View article]
Angie's List A Compelling Short Opportunity [View article]
Angie's List A Compelling Short Opportunity [View article]
Angie's List A Compelling Short Opportunity [View article]
5 Reasons To Short Netflix Right Now [View article]
Why Netflix Is Outperforming [View article]
Why Netflix Is Outperforming [View article]
Why Netflix Is Outperforming [View article]
Mobile Is Part Of A Greater Trend Which Could Hurt Satellite And Cable [View article]
It appears the heart of your challenge is: "the low current capacity and the enormous expense to increase [capacity] is the problem..." This is a fair objection. When I try and make an argument I first make clear assumptions then use those assumptions to create a thesis. The difference in our thinking is simply that I believe obstacle 2 (costs decreasing) is likely to occur over time. I believe that mobile is experiencing something similar to Moore’s Law where cost per bit of transmission is decreasing and speed is increasing. If the rate of decrease in costs slows prematurely my premise will have been proven wrong. The way I see it investments such as 4G development make improvements to operating efficiency, marketing and speed. The increasing speed and the resulting marketing benefits (we have more 4G coverage than XXXX) to the company are the most readily apparent but moving people to 3G then to 4G actually makes each customer use less spectrum per unit data. I believe that simply continuing these same expenses with the next generations of improvements will continue this trend of cost reduction. If these cost reductions aren’t sufficient and large increases in spectrum purchases or large, extraordinary capex payments are made to compete in this segment then I also would need to re-evaluate my thesis and may discontinue my investment in Vodafone.
I had heard that Comcast was an investor in Clearwire but not the other 2. I think a wireless company such as T-Mobile would actually be a good fit in with Comcast's other varied holdings. Comcast actually started me looking into the subject this article is about: I'd wanted to see why their cable customers were declining, which led me to AT&T and Verizon. I was originally looking for future events which could challenge Comcast's current moat and, as I'd said in my ending remarks, my conclusion was that this doesn’t impair Comcast’s value now, and may not in the future (the biggest detriment is likely to be satellite).
I own VOD less for this argument as I tend not to be speculative in nature and more for an eventual European rebound and its low valuation (I think Vodafone’s stake in Verizon is worth more than half of its market cap).
Mobile Is Part Of A Greater Trend Which Could Hurt Satellite And Cable [View article]
It is impossible to guess at the ROIC of a future technology whose costs are uncertain and whose revenues would depend on the competitive dynamic of future industry participants. I can guess margins would be similar to satellite, with programming costs at roughly half of revenue.
What I do know is that investing in LTE, additional spectrum and other technologies is also pushing them closer to being able to offer mobile video, as all of their investments have done an effective job of significantly reducing cost per MB. I believe the low data caps are simply a result of low current capacity because of inadequate spectrum availability and young technologies, and that the caps will rise significantly for plans in the coming years.
Also, internet is relatively inefficient in this regard. If you are sending out different streams of data to everyone the network has lower economies of scale; if you are sending the same channels to everyone, similar to satellite, you can lower the cost per person.
As for Wi-Fi being available in 100% of service areas, I don't believe this would be feasible. At a range of only a few hundred feet city-wide Wi-Fi is already available in a few cities, but it would have a tough time making it out to the suburbs or the rest of the country. This has also been part of the solution for expanding wireless provider's networks, as AT&T already has thousands of Wi-Fi hotspots for wireline and wireless customers.
A New Method For Calculating Fundamental Returns [View article]
I would, however, disagree with its relevance here. Finance and economics are 2 different animals despite being related. Economics is, paraphrased from your article, trying to predict the actions of irrational people. Finance is different. Finance is valuing streams of uncertain future cash flows. Although finance and economics interact, as all cash flows eventually lead to people, financial equations have far more reliability to them. So as much as you could argue the cash flows or margins a company would receive in a year, it's more difficult to argue against using a DCF analysis or another financial tool such as this.
A New Method For Calculating Fundamental Returns [View article]
@SDS and Bikerguy: This was influenced less by college and more by books read outside of school. With many books trying to establish correlations between higher returns and lower P/Es, P/Bs and other factors I wanted to see exactly what causes these results. This was more an attempt to qualify statements such as "this stock is cheap because of its low P/E ratio" by being able to ask other questions which will affect future returns in a predictable way.
@ Bikerguy: all of the factors you listed are indirectly incorporated. Change in sentiment or risk tolerance: lower (or higher) future P/E. Changes in future economic expectations: lower future ROE. Also I agree that investment success isn't just a formula. Using this to predict future returns involves making assumptions based off of industry and competitive factors, similar to how a DCF projection needs various assumptions to be useful. I have been investing for years now and this is simply a tool in my toolbox.
Will Verizon Acquire Vodafone? [View article]
@MexCom: Thank you for the welcome. I think the market welcomes a deal as both VOD and VZ rallied on the rumor.
@FatMinxie: I plan on doing a full write up on VOD but I felt this news was worthy of comment before I get all the other details together to do a full VOD article. Thank you for reading.
S&P 500 Market Valuation And Historic Returns [View article]
@ Cranky, Soloprop and Diego: In retrospect I would have added in a graph with inflation. If I redo this article in the future I will adjust it accordingly.
@ Soloprop: I believe those trading fees will be relatively low in the S&P index due to the long holding period of the index. Also the log scale was used to make the long-term effect of compounding into a linear scale. This makes data toward the beginning of the graph readable.
@Rob1221: This was meant for current savers more than current retirees. Also the head and shoulders is a reflection of the 2000 and 2007 highs; the rightmost portion of the graph also has the least data as there are fewer and fewer periods that long available in the data so this has the least relevance to the article as it was written.