Seeking Alpha
View as an RSS Feed

Warren Mitlak  

View Warren Mitlak's Comments BY TICKER:

Latest  |  Highest rated
  • When Opportunity Knocks, It's Wise To Open The Door - Low Valuation Trumps Growth [View article]
    Chuck,
    The fact that IBM has successfully transitioned from shrinking businesses to growing businesses in the past does not guarantee that they will be successful this time. As you pointed out, IBM just announced that they will miss their 2014 forecast and announce their new 2015 forecast (certainly reduced from their previous forecast) in January. I am leery of a company that puts such effort into promoting their financial targets and then has such a big miss (they met their targets for the first half of the year). I wonder how Richard Kinder at Kinder Morgan would handle a large miss. You mentioned MCD and KO as examples of blue chip companies that are also experiencing weakness in their businesses. I think the equivalent of the transition that IBM is trying to do would be something like MCD trying to become Subway or KO trying to become Diageo. I believe it is a fact that buying companies with low P/E ratios tend to outperform the market. As long as you have many companies like that in your portfolio it should work out but IBM is not a company I want to own.
    Oct 24, 2014. 09:44 PM | 1 Like Like |Link to Comment
  • The Forest Vs. The Trees Of The Offshore Drilling Industry [View article]
    Bulldog,

    Thanks for your reasoned rebuttal. I will look into the RIG contract coverage.
    Sep 19, 2014. 11:19 AM | Likes Like |Link to Comment
  • The Forest Vs. The Trees Of The Offshore Drilling Industry [View article]
    go-4-it,

    Why are you so interested in this article that you commented on it twice if you feel that I don't have a clue? I put this out because I thought I had something interesting to share.

    I am not interested in investing in drillers for the LONG HAUL because I don't like the business model of the industry as I understand it.

    You are right that I get $.01 the first time you look at my article but it is free to you.

    If you don't think it is worth reading why don't you move on?
    Sep 16, 2014. 07:10 AM | 1 Like Like |Link to Comment
  • The Forest Vs. The Trees Of The Offshore Drilling Industry [View article]
    Pedro,

    I am happy with my investment results and hope that you are happy with yours.

    I read plenty of articles on Seeking Alpha and other places but make my own decisions.

    I don't claim any special knowledge of this industry but since the stocks of all of the companies that I mentioned hit new 52 week lows on Friday and again today, shouldn't it make you wonder about what makes all of the other authors that have written positively on the these companies for the past year so smart?

    I have so far been able to resist the siren song of the high dividend paying off-shore drillers. I was seriously considering an investment in SDRL just after it raised its dividend to $1.00 a few months ago at around $39 but decided against it.

    All the best.
    Sep 15, 2014. 07:55 PM | 1 Like Like |Link to Comment
  • The Forest Vs. The Trees Of The Offshore Drilling Industry [View article]
    11 and 85,

    Thanks for your comments, I agree that good management makes a difference in this business as in all others. Price may not be the sole determination of which rig gets chosen for a job, however, the day rates for new contracts are falling, wouldn't this mean there is some price competition between the off-shore drilling companies and that multiple companies have rigs that are appropriate for the same job?

    Thanks,
    Warren
    Sep 14, 2014. 07:55 PM | Likes Like |Link to Comment
  • The Forest Vs. The Trees Of The Offshore Drilling Industry [View article]
    85,

    My main point was that it is not a good industry for two reasons:
    1) The firms have to invest money on speculation that they will be able to recoup it later.
    2) The firms have no moat. Having the most modern fleet is not a competitive advantage if every firm can order new drill ships.

    For point one, consider how an MLP like Kinder Morgan does business. It does not invest in building a pipeline until it has leased out the capacity or sufficiently all of the capacity for a long enough period to give a guaranteed return on their investment (of course, there is always execution risk that there will be delays or cost overruns in the construction).

    For point two, consider that Coca Cola wants to build a new bottling plant to expand production. They might misjudge the market for Coke, but they are not competing with other companies that also sell Coke.
    Sep 14, 2014. 03:14 PM | 1 Like Like |Link to Comment
  • The Forest Vs. The Trees Of The Offshore Drilling Industry [View article]
    Dan and Al,

    Thanks for reading and thanks for the comments. People like to predict when the downturn will end and ESV might be the best "tree" in the forest. My point is that these companies do not have moat and one is pretty similar to the next. Isn't it better to avoid the whole bunch of them?

    Good luck with ESV.

    Warren
    Sep 14, 2014. 02:26 PM | 1 Like Like |Link to Comment
  • Citigroup And Its $62 Price Target [View article]
    One of Ben Graham's famous sayings is that the market is a voting machine short term and a weighing machine long term. Citi is not getting a lot of votes right now but if it keeps growing earnings and book value, sooner or later the stock will pop!
    Apr 9, 2014. 07:03 PM | 1 Like Like |Link to Comment
  • Crown Castle's Business Model Requires Multiple Carriers [View article]
    1shawna1,

    Thanks for your question.

    The point I wanted to make in this article was that CCI's business model is based on leasing their cell towers to multiple carriers. For example, the ATT towers that CCI is leasing have 1.7 tenants per tower on average while the CCI towers have 2.8 tenants (after being in their lease pool for 5 years). The business opportunity for adding the ATT towers is to lease space on the towers to more carriers.

    Since CCI's biggest customers are ATT, S, and TMUS, if S and TMUS merge, how will they get their new towers up to 2.8 tenants per tower? Also, if S and TMUS merge, I would expect that over time as their leases terminate, they will reduce their footprint on the existing towers. This will lower CCI's leasing income on their existing towers.
    Jan 7, 2014. 07:33 AM | Likes Like |Link to Comment
  • Crown Castle's Business Model Requires Multiple Carriers [View article]
    La Marque and Smartstocks,

    Thanks for your comments. Barrons today has a very positive article on American Tower by Alexander Eule that you might want to read. The article mentions the possible merger.

    Happy Holidays.
    Dec 21, 2013. 11:29 AM | Likes Like |Link to Comment
  • Markel Goes On Sale [View article]
    Tomkat,
    Thanks for the explanation.
    The expense line for Markel on the income statement is called
    "Underwriting, acquisition and insurance expenses" vs. "Acquisition expenses" on the Alterra income statement. Isn't the combined ratio the way to compare the profitability of different insurance companies' operations?

    Jan 3, 2013. 07:17 AM | Likes Like |Link to Comment
  • Markel Goes On Sale [View article]
    TomKat, Thanks for your comments. I would be concerned as well if Markel had higher expenses than its competitors. Where did you get the figures that their expense ratio has grown from 30% to 44%? Their 2011 annual report shows that their combined ratio is less than the industry average.

    Markel continues to sell more insurance so it does not seem to be affecting their sales. According to Markel's most recent 10-Q, the company's revenue from premiums is up for the third quarter 2012 vs. 2011 and for the first nine months of 2012 vs. 2011.

    Also, I haven't seen any estimates from Markel on their losses from Hurricane Sandy. Last year they reported 8 points of loss on their combined ratio of 102%. The loss was for multiple natural catastrophes.
    Jan 1, 2013. 08:46 AM | Likes Like |Link to Comment
COMMENTS STATS
12 Comments
6 Likes