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Tim Galginaitis
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I am a young, motivated professional, with an affinity for finance and investing. My goals are to educate anyone interested about the benefits and risks of a responsible, sound investment strategy. I am seeking to leverage my various and extensive work experience with knowledge gained from... More
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  • “GAO Watch” – The Implications Of Keeping Government Accountable

    In the performance of my job, I am required occasionally to read reports published by the Government Accountability Office [GAO]. If you're like me, you can find these reports as interesting as pastimes like whitewashing a fence (before you trick the neighborhood kids into doing it), and your mind wanders. The more I read, the more investment implications become evident. Even though the GAO's findings and recommendations are non-binding (and are often ignored), the "what-ifs" encountered while reading the reports offer a different perspective on the current and future economy. This makes these reports valuable to investors, but exceedingly difficult to process.

    GAO Background

    The GAO's website states that the US GAO is an "independent, nonpartisan agency that works for Congress." GAO investigates "how the federal government spends taxpayer dollars." Their mission is "to support the Congress in meeting its constitutional responsibilities and to help improve the performance and ensure the accountability of the federal government for the benefit of the American people." Their work, while it is to "advise Congress and the heads of executive agencies," can lead to the drafting of new laws designed to implement the recommendations in published reports.

    In addition to publishing these reports, the GAO handles all protests arising from the awarding of Government contracts. With bid protests becoming the new norm in a contracting industry beset with cut-throat competition, the outcomes of these decisions can determine the future prospects of the parties involved.

    Why Should Investors Care?

    While the GAO does not have direct policy inputs, its reports often portend future developments in the economy. As I wrote on an article about the US Postal Service, the GAO outlined the organization's perilous financial condition. Subsequent developments have reinforced these observations, including staff and service cuts, along with speculation of UPS (NYSE:UPS) and FedEx (NYSE:FDX) gaining business from the service's weakness.

    Additionally, these reports can offer tremendous insight into the efficacy of government programs. The Troubled Asset Relief Program [TARP] has come under much scrutiny in the wake of the financial crisis. In January, the GAO released a report detailing the status of programs unwinding from TARP, as well as opportunities to increase communication and effectiveness of those programs. The reports can also give clues as to the direction government may take. The GAO releases reports on the status of the recovery, which become especially important in an election year, as they can shape the tone of presidential politics. GAO also identifies government agencies most vulnerable to waste, fraud and abuse. These reports - in addition to giving Rick Perry ideas to forget during a debate - can offer insight into where the government's priorities may shift.

    What I Will Give Readers

    I will take these rather obtuse documents and distill them as much as possible. In this way, you my loyal readers, will be able to get the relevant information and cut out all the fluff. I will also attempt to do much of the tedious background work to the issues mentioned. By doing this, I will be able to frame the reports within their proper context, with all necessary details.

    I hope to chew through a number of GAO reports in the coming months. I invite you to comment on my plan to analyze these reports. I also invite feedback on any analysis I provide, so I can hone my analytical methods to be more effective, both for myself and for the readers of Seeking Alpha.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Additional disclosure: I work for a major US defense contractor. I will not write about reports or bid decisions to which my employer, a subsidiary, a competitor, or teammate is a party. I will not write about GAO reports concerning the Department of Defense, nor those reports mentioning my employer, a subsidiary, a competitor, or teammate.

    Tags: Macro View
    Feb 01 6:50 PM | Link | Comment!
  • $TOCK Analysis - My Method
    Here's a question: how can people that work for a living (like me) find the time to research and track their stocks?  Between commuting, meetings, and brief-prepping, there's little time to do actual work!  So how do we find the time to analyze not only our currently-owned stocks, but stocks we might consider buying?

    With a relatively simple, easy to understand system of course!

    I therefore give the world my method for breaking down a stock in a relatively short period of time.  I call it - brace yourself - $TOCK Analysis.  Here's a breakdown:

    $ - Valuation: what do the numbers say?
    T - Technicals: what do the charts say?
    O - Opportunities: what possible catalysts does this company see?
    C - Caution: what's the possible downside?
    K - Key Takeaway: what does all this information add up to mean?

    If you have a good research portal (like Seeking Alpha or Yahoo Finance), then this method should only take about an hour to get a rough grasp on a stock.  If you already own the stock, it should give you an update as to where it stands in the overall market.  If you're looking to buy the stock, you should have enough information to determine whether to dig deep into the company before buying it.

    I will write a few articles using this valuation method, just to test and see how it works.  As always, feedback is greatly appreciated and encouraged.

    Thanks.
    Jan 21 1:50 PM | Link | Comment!
  • The iPhone's Support Network will Continue Apple's Smartphone Dominance
    I have a problem.
    A few days ago, I was reading another Seeking Alpha article on my Droid 2 and it restarted itself…for the 3rd time…that day. I began to question why I ever abandoned my Apple (NASDAQ:AAPL) iPhone 3G in favor of Google’s (NASDAQ:GOOG) Droid 2.  The iPhone more than satisfied my needs, integrating effortlessly into my everyday life.  With the Droid, I have found myself struggling to customize the device to fit my individual circumstances.

    Apple enjoys market dominance in the smartphone market largely because it provides its customer with an unrivaled experience through seamless integration.  This presents the user with one product, multiple platforms.  This experience, however, is not limited only to the phone’s physical borders. A large support network, one created both by Apple and by various third-party suppliers, allows the iPhone to present a more customizable experience to its users.  The combination of device customization and Operating System [OS] security will allow the iPhone to retain its dominant position in the smartphone market.
     
    Apple’s Organic Support Network
     
    If consumers switch to the Apple family of products, Apple does not make it easy to switch back.  Want to listen to an album you downloaded on iTunes during your morning commute? Just heard a song on the radio and want to download it from the office for later? If you don’t have an iPhone, be prepared for frustration when you try to sync a non-Apple device, and disappointment when you discover no mobile iTunes store exists in the Android market.  I have experienced this disappointment first-hand.
     
    Apple's OS fidelity and security also contributes to the company's strong position. While the closed nature of the Apple mobile OS does not allow for the collaboration and customization that the Android OS allows (which ironically, may hinder Google), it preserves the underlying structure of the source code. This contributes to OS stability, making issues (and the restarts I know all too well) much less frequent. This article details the risks inherent to an open-source OS.  To users of Android devices, these risks can become real problems.
     
    Third Party Support
     
    The wide-range of iPhone accessories allows the device to appeal to a wider range of audiences.  Go to either the Verizon Wireless (NYSE:VZ) or AT&T (NYSE:T) phone accessories page. The VZ website offers about 16% more accessories (101 vs. 85) for the iPhone than the touted Droid RAZR. The AT&T website offers 49% more accessories for the iPhone than the Galaxy S II. Amazon (NASDAQ:AMZN) offers over 100,000 iPhone accessories, just over 16,000 for the Galaxy S II, and about 4,700 for the Droid RAZR. The accessories available for the iPhone allow anyone to purchase the device and customize it to their own taste.
     
    The peripheral devices built around the iPhone can make the device a part of the user's everyday experience. Bose makes an entire line of stereos (SoundDock) with integrated iPhone docks. Numerous car stereos are advertised as ‘iPhone compatible,’ which allow the driver to control the iPhone’s audio from the stereo receiver.  Once a consumer buys an iPhone for $200, invests $250-$600 on a Bose SoundDock, and another $200 - $500 on a car stereo receiver, there exists a tremendous financial incentive to buy another iPhone when the time comes to upgrade.
     
    Perhaps most importantly, the Apple App Store presents the greatest opportunity for users to tailor their devices to individual needs and tastes. My personal opinion: the Apple App Store presents a more organized, diverse, and useful array of offerings than the Android Market. The Android Market can sometimes feel like a tough slog to navigate. Developers take some measure of pride in getting an offering into the App Store.  The App Store's integration into iTunes and the iPhone lends to the one product focus of the Apple system of devices.  If a consumer attempts to replace one part of the Apple system with a different device, it can become quite difficult to replicate that seamless integration of multiple devices.
     
    This Investopedia article details the discrepancy in app store revenues between Apple and Google. While the article does highlight the growing parity between the two providers, I believe that Apple’s ability to net more money for application developers will continue to drive the high-quality apps to the iTunes Store first, granting a certain measure of exclusivity to the apps on Apple devices.
     
    What Does it All Mean?

    Both companies have already cemented their respective footings, and will continue to be remarkably successful.  While Apple will continue its dominance of the smartphone market, Google will continue to increase revenues from its incredibly diverse array of products.  The Google Wallet presents a potentially disruptive (and potentially lucrative) evoloution in the way smartphones are used.  Even though Google's purchase of Motorola Mobility will allow the company to continue to increase profits from the smartphone market, Google will ultimately struggle to gain the kind of widespread integration the iPhone has achieved.  The iPhone occupies a unique position within the smartphone market.  If Apple can continue delivering a seamless one product experience with its successive generations of iPhone, the company will continue to enjoy a position as the premier smartphone manufacturer in the industry.



    Disclosure: I am long AAPL, VZ.
    Jan 16 8:08 AM | Link | Comment!
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