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  • Icahn proposal reportedly calls for buyback of "at least" $50B [View news story]
    King Carl reading Valuable Insights on Seeking Alpha http://bit.ly/LVJMj9 - you heard it here first.
    Dec 4 04:03 PM | 3 Likes Like |Link to Comment
  • Millennial Media Jumps Back Into A Promising Ad Tech [View article]
    Stone Fox has written 6 positive articles on MM since our SHORT CALL at $14+ last September http://bit.ly/1b4oD0a - We recommend reading it to anyone considering an investment. We are no longer short, but our thesis holds.
    1. MM ex/acquisition is growing below the market growth rate
    2. Market growth decelerating
    3. Structural limitations to GM expansion
    4. Op-ex needs to grow to support top-line (this is an advertising business like newspapers or TV and requires salespeople)
    5. Limited IP/technology differentiation - we have spoken to dozens of app developers, advertisers who concur
    6. No one will buy them out at premium.
    The company is still relatively expensive with little evidence it can materially increase profitability.

    We welcome dissenting views.
    Nov 27 05:17 PM | 3 Likes Like |Link to Comment
  • Digirad: Fat Dividend Limits Risk, Operating Leverage Drives Potential 100% Upside [View article]
    Thanks for the positive feedback. To anyone that appreciated this article, or enjoys our work in general, we recommend following Inflection Point Research. Exceptional at identifying growth ideas early - while still trading as value stocks.

    We didn't include this quote, nor did we include several other positive items (i.e. a full listing of all the insider stock purchases over the past 18 months).

    As we write in our disclaimer, please do your own research. We have conviction that the more one looks into DRAD - the turnaround, cost structure, Eberwein and Board, dividend, selling from Red Oak - the more positive you will feel about the stock. And we didn't even touch on the NOLs.

    This is one of our top ideas for the next 6-12 months.
    Nov 9 10:45 PM | 3 Likes Like |Link to Comment
  • Digirad: Fat Dividend Limits Risk, Operating Leverage Drives Potential 100% Upside [View article]
    Thanks for the feedback.

    1) As we wrote in the article, there could be lumpiness in the business. That being said, we are 2 quarters into the implementation of a new strategy, and it has already produced the best quarter in the company's history. We can't guarantee a blow-out 4Q, although if you read the last cc transcript (everyone who might possibly buy this stock should, and should also do their own dd) it sure seems positive about the short-term as well:

    "So, we feel very good and very confident about the markets that we're currently in. And we feel like that is something that we can continue to sustain. I will tell you though, there is seasonality in gross margin. Obviously, due to weather, due to vacations and other things like that, that we have to overcome, there is definitely seasonality in our gross margin. But overall, we feel very confident about the strength of DIS and its gross margins."

    We will not rehash the quote from Inflection Point Investing below, but we would love EVERY MANAGEMENT of every company we invest in to speak of their excitement and their view that they are just at the "starting line."

    We also believe Jeff Eberwein has a plan. There is plenty of public info on how he invests. In our opinion its well worth your time to do the work and figure it out.

    2) Yes, the company IPOd too early and the original management were 1) fools, 2) misleading, 3) unlucky, 4) bad guys, 5) good guys, etc. None of the management today has anything to do with the IPO. In addition to reading our write-up, please spend 2 minutes on the Internet doing your own research (not really a question you need to ask, if you do).
    The CEO only joined the company in 2007 and has nothing to do with the IPO, and the CFO has been on the team less than 18 months. The key people on the Board are all new. We think it is now a great team.
    3) According to your SA bio you state "We trade equities, commodities and forex, day and night, long and short." If you're managing a $500+ million fund, this article is a complete and unadulterated waste of you're time. We assume that's not the case, since you chose to read it and to post a comment.
    We are not fans of the sub $100 million SA article that trades 12,000 shares a day, however in the case of $DRAD, there is reasonable volume, and we would wager, that if you wanted to, you could buy a quarter million shares first thing Monday without moving the stock more than 2% or 3%. VERY fortunately, there is currently a seller (Red Oak - a sloppy seller in our view) that will allow the next 500k - 1 million shares to be purchased at bargain basement prices. When they're done, we think the stock quickly goes to $5+ (as we will detail in instablog soon).

    We're not in it for $5+, we see substantial upside to that. Not sure what you're playing for.
    Nov 9 10:36 PM | 3 Likes Like |Link to Comment
  • Questcor And The Chronic Disease Fund: Is Free Drug Truly Free? [View article]
    Sbremer/Mongoose - Appreciate the advice on how to manage money and time my investments. We believe there are currently numerous good shorts (and longs) and timing is of the essence. No doubt we've been investing since you were in grade school. We have no desire to be run over by runaway trains so our shorts need to be well-timed. Perhaps a post-earnings short will make sense...our call. We like to see catalysts.

    Check out our track record on this site. We have only recommended 2 shorts, Groupon and Millenial Media in articles - each was well-loved, and each fell by over 50%. We're particularly proud of MM ( http://bit.ly/SN3Oin ) since we were right for all the right reasons - since the article MM is down 50%+, the NAS up 25%+, and advertising/internet/m... darlings are all much higher. Could say we nailed it.

    Incidentally, everyone should get off the conspiracy theory bandwagon. There's not some secret committee ruling Wall Street out to manipulate stocks and bash otherwise pristine, precious companies.
    Oct 22 06:09 PM | 3 Likes Like |Link to Comment
  • L&L Energy's Falsely Disclosed Phoenician Deal [View article]
    Wow, first time writer bashing for profits...Well done!

    Investors need to rely on facts, not hopes, and Wall Street needs to be cleaned up of scam companies - the entire investment community benefits from work like this.

    As an aside, am curious why this supposedly cash-rich company would need to issue debt in the first place...but I'm sure we all know the answer to that.
    Oct 21 02:17 PM | 3 Likes Like |Link to Comment
  • Weight Watchers: A Wonderful Business For A Great Deal [View article]
    We concur we several of the more critical comments in the comments section regading this article having studied WTW dating back to the mid 2000s as both prescription and over-the-counter (Alli) were being discussed as competitive threats.
    We agree that WTW has a powerful franchise, however the pace of technology change (ie online communities/apps/servi... etc.) are an accelerating threat, and has resulted in decreasing enrollment.
    We'd point out that a significant portion of buybacks has come not just from cash flow, but from debt raises. While nothing is wrong with adding debt to the capital structure, there is little room to add additional leverage, and therefore it is improbable that future repurchases will occur at the same pace as they did historically.
    Also, well worth noting that debt was taken so that Artal, the biggest shareholder, could puke their shares.
    The author doesn't mention much background behind the exit of long-time CEO David Kirchoff. We were never particularly impressed by him - he also sounded more like a TV commercial or talk-show host than a real CEO, but we can't see his exit as a favorable sign. The contrarian might say, it's baked in and any new management will be a step up, but we think the realist would say, "houston, we have a fat problem."
    Aug 27 05:21 PM | 3 Likes Like |Link to Comment
  • Peerless Systems Is A Rare, Profitable Net-Net And My Pick To Click [View article]
    Jae - At first glance, this looks like a great net-net idea. HOWEVER, after some further digging, I might actually write an article espousing a short thesis.

    It appears that PRLS is violating securities regulations. Review their 10-K.

    They list in their risk factors that they could be deemed to be an Investment Company (with associated limitations, costs, and potential penalties) if "the value of its investment securities (as defined in the Investment Company Act) is found to be more than 40% of its total assets (exclusive of government securities and cash and certain cash equivalents)."

    In FY12 PRLS had about $10 million of cash and $6 million of marketable securities, yet according to the statement of cash flows in the 10-K they bought over $391 million of securities and sold $388 million. Sure sounds like someone was trading...a LOT. Compare this to buy/sales of marketable securities for cash of any NON-investment company - we've never seen anything like this.
    In FY12 they note that they had $1.8 million in realized gains - meaning they had over a 10% yield on cash and marketable securities. In our experience, companies are supposed to put cash in government, munis, or the like...a 10%+ yield looks like someone was running a hedge fund.
    In FY13 they "scaled" back the activity and only had a $0.1 million gain on over $190 million of buys and sales.

    The 10-K also says there are only 3 employees, meaning this clearly was done under Mr. Brog's direction - and amazingly, the Board did not report this, although a couple of members departed.

    Liquified, there could be upside to shares, but if the SEC gets involved, this could be worth much closer to zero.
    Aug 14 05:25 PM | 3 Likes Like |Link to Comment
  • Xinyuan Real Estate: Trading At 36% Of Book Value [View article]
    Good comments by Jake. Agree with the thoughts. It is intriguing.

    One area in which we STRONGLY disagree with the article is the assertion that a buyback is an expensive way to tell shareholders that they care. At 1.9x EPS (if EPS is real), a buyback is the ABSOLUTE CHEAPEST, highest IRR investment, that the company could possibly make. A buyback would yield far higher returns at the current multiple than 30-50% levered returns in potentially risky assets/projects. A management that is not buying back stock hand over fist at these levels either doesn't get it (a major concern) or isn't playing on the up-and-up (an even greater concern).
    Incidentally, as far as we know, Sam Zell and John Griffin are still extremely astute investors - where are they now?
    Jul 11 06:28 PM | 3 Likes Like |Link to Comment
  • Chipmos: Shares Have Over 100% Upside And Near-Term Catalysts [View article]
    The Taiwan subsidiary (IMOS is a Bermuda hold-co) will issue less than $1 million of stock. Given the multiples at which peers in Taiwan trade, and the lack of supply, shares should trade up significantly. Funds will go to IMOS (Bermuda) and it is likely that IMOS will use these funds for additional share repurchases of IMOS stock. The Bermuda entity will sell additional shares of Taiwan on an ongoing basis if the price is attractive.

    Hypothetically, Taiwan shares trade to $20+ (peer valuation suggests worth $25-$40 and there is likely very near-term coverage in Taiwan that will say exactly this). IMOS can sell additional shares (legally they need to in order to move up to the Taiex), say at $21, which is below peers, but far above the current US price. They could then take this money and do buybacks in the US. It is essentially an arbitrage (Cowen's TIm Arcuri wrote a very informative piece about this last week). If the US price does not come up to the Taiwan price, we'll keep seeing buybacks.

    Unquestionably, it makes sense to be long IMOS in front of this knowing fundamentals are excellent, and buybacks are waiting in the wings.
    Apr 15 01:42 PM | 3 Likes Like |Link to Comment
  • The pace at which new technologies are disrupting companies makes it dangerous to be a value investor, argues VC Ashvin Bachireddy. As mobile devices, cloud software, e-commerce, and much else upends old business models, investing in a BlackBerry or an OfficeMax/Office Depot due to a low P/E can prove painful. "While there may still be opportunities for value investing, you need to be cautious of businesses that appear to be on a slow decline." His remarks seem prescient in light of what happened today to several PC-related names with low multiples. [View news story]
    We strongly disagree with Mr. Bachireddy. The challenge for any value investor is (and always has been) to separate value from value traps. We would argue that the pace of technology change is presenting more opportunities at a faster pace, and as a result, as value investors we've never seen a more exciting set of opportunities. For every dying PC stock, there is a Himax that one could have bought for under $2 at 3x EPS (ex-cash) in NOVEMBER, that started trading up due to solid fundamentals, but moved even higher due to the emerging segment of wearable computing. We agree, don't assume anything, and be aware of the pace of change, but this is increasing the opportunities for value investors (both long and short) not decreasing them.
    Apr 11 08:55 PM | 3 Likes Like |Link to Comment
  • Chipmos: Shares Have Over 100% Upside And Near-Term Catalysts [View article]
    Tyir,

    1) I'm not sure how EBITDA is overstated. If depreciation were lower, then operating income would be higher - no difference. The company spent excessively on cap-ex in '05-'07 leaving them with above trend depreciation which will be approximately $105 million in 2014 vs $200 million in 2011. The company could spend 13-15% of revenue on cap-ex for maintenance and new technology and support 5-10% annual growth. Our thesis does not rely on hyper growth to support a far higher valuation. However, if there were business opportunities that could drive faster growth, it is likely the company would pursue them if they were significantly profitable. We doubt management would pursue growth at the expense of creating any business risk or harming margins.

    2) This strikes us as a case of creating a story to explain the stock price. Why is the stock cheap? Because of the CEO of course. But take a look at when the news broke in 2005. And look at the stock price in 2006 and 2007. This was a $20-$50 stock despite a questionable CEO. Now that the stock is cheap, this suddenly becomes a viable explanation for the story. Ironically, if shares were $20 or $30, you, and others, would likely pay little attention to this.

    Val
    Apr 3 01:25 PM | 3 Likes Like |Link to Comment
  • After selling off sharply over the last few trading days, UniPixel (UNXL +18.2%) is skyrocketing today. Yesterday evening, SA contributor Ivan Jimenez argued both UniPixel's UniBoss metal touch sensor tech and rival Atmel's (ATML -1.1%) XSense sensors have the potential to take share from traditional ITO sensors: UniBoss is seen having an edge in price, and XSense in transparency and thickness. 44% of UniPixel's float was shorted as of March 15. [View news story]
    Chris, would be interested to know on what side your dog is. We do not have a dog in this fight currently. Technology could very well prove real, but many of the arguments seem excessively incendiary - not what we're accustomed to seeing in legit stories.
    Apr 3 11:52 AM | 3 Likes Like |Link to Comment
  • What If Google Glass Flops? [View article]
    Karl and Mark, you guys have had a great intelligent discussion regarding google glass and Himax. Now you are both long Himax. At what level would you take any off the table. With conservative guidance, lots if cash, solid business trends, and optionality from google glass, potential significant upside - what is your sell level?

    Thanks,
    Val (am long HIMX)
    Mar 12 10:38 PM | 3 Likes Like |Link to Comment
  • Apple (AAPL) has adjusted expected iPad (down) and iPad Mini (up) shipments in 2013 to 33M and 55M respectively, reports Digitimes. Originally the company had predicted 60M for the iPad and 40M for the Mini. It may be bad news for panel suppliers to the iPad, but good news to those for the iPad Mini. [View news story]
    Why are you publishing this today? This news is at least a week old http://bit.ly/YCnWIy

    Given lower margins for the mini it is negative for Apple, but it is also week old news.
    Mar 7 07:58 AM | 3 Likes Like |Link to Comment
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