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Yosef Levenstein's  Instablog

Yosef Levenstein
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I am the VP of Monetization at Harvest (www.hvst.com). My role here is to ensure that Harvest is maximizing its monetization opportunities while maintaining the highest level of experience for our users, and advertisers.
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  • ZNGA Is A Dud; KING Is Rising... 2 Firms That May Know More About Video Games Than Your Kids

    Zynga (NASDAQ:ZNGA), the maker of "popular" mobile video game apps like Farmville and Angry Birds, has largely been a disaster the past 4 years. After a peak of almost $15 in mid-2012, the stock ended the year with a $2-handle, and has traded between $2-5 ever since. Currently ZNGA sits at $2.46.

    Despite an overall poor performance, there is still plenty of volatility in this stock creating opportunity. The stock jumped 12% back in November 2012 following the release of a new "Words with Friends app", then fell 20% in Feb 2015 following a light earnings release, and then after climbing all the way back to new highs in April, ZNGA once again failed to impress this month, as the stock fell another 20% on news that Zynga is hiring its old CEO again (if it didn't work the first time, let's try again). The stock has been so depressed, that ZNGA often shows up on "hedge fund crowding" lists, as consensus assumes this company will eventually figure it out.

    But Estimize disagrees. You may know Estimize as the platform dedicated to crowdsourced earnings and economic estimates from thousands of hedge fund, brokerage, independent, and amateur analysts. What you might not have known is that Estimize uses all of these great crowdsourced estimates to write valuable research on trends in the industry. Leigh Drogen, former quant fund manager and now founder of Estimize, shares a lot of wisdom on stocks that are heavily debated on Estimize. And he's been the clubhouse leader sharing his thoughts on why freemium mobile app game makers, like Zynga, are struggling.

    "Online connectivity has exploded recently, both in the availability of WiFi and the number of users enabling mobile data on their smartphones. The result has shaped the behavior of consumers. Five years ago, playing offline games a common way to pass time on a mobile phone. This was the heyday of Angry Birds. Today nearly everyone is connected to the internet, and that has changed the dynamics of the mobile experience."

    Drogen also told us back in August 2014 that the new Farmville 2 app specifically would be a dud. Make sure you follow Estimize to see what they are saying most recently, from bank earnings to Netflix (NASDAQ:NFLX) to airlines.

    And if your interests lie solely in video games, then Claudio Rojas from Hurt Capital has you covered with this informative piece on why King Digital (NYSE:KING) can bounce back after a rocky 2014 year. Rojas thinks the video game maker of app Candy Crush has rising fortunes ahead, and thus far he's been right as the stock is up over 30% YTD.

    For more posts from Harvest click here.

    Apr 20 1:25 PM | Link | Comment!
  • It's Been A Good Month When Your 2nd Best Idea Rises 18%

    Everyone has opinions; not everyone chooses to express them. Fortunately for Harvest, that isn't the case with Bradd Kern, Portfolio Manager at Armored Wolf.

    Kern is having such a good month that we're not even going to discuss his great long-thesis on Revlon (REV), which has gained 33% since his original thesis, capped off by an 18% move higher post earnings this month. And, according to Kern's original thesis, REV still has room to run to $68/share.

    Instead, we're going to focus on HC2 Holdings (HCHC), formerly known as PTGI, a stock in which Kern has been all over since Phil Falcone of Harbinger first created this deal vehicle.

    HCHC is up almost 200% since inception, with a more recent 50% run higher in March 2015 alone. Fortunately for Harvest, Bradd Kern began telling us about this high flyer since early 2014. This was not an easy story to grasp, so kudos to Kern for breaking this down into a digestible stock for all to participate in. Kern stated on March 18, 2014:

    "PTGI (now HCHC) presents an opportunity to simultaneously capture the discount to liquidation value, participate in a rights offering at a discount, and most significantly, participate in the huge upside of Harbinger's deal economics."

    But as we all know, one smart analysis isn't usually enough, especially if you weren't familiar with Kern or Armored Wolf prior to his research. But there became no doubt that Kern was an expert on this story after he continuously peppered Harvest with updates on HCHC's progress, over and over and over again. And over again.

    The investment industry is changing, and we applaud those that are willing to be transparent with their ideas, their thought processes and their people. For more on Armored Wolf, visit them on their website or follow their CIO, John Brynjolfsson, on Twitter.

    Apr 08 1:14 PM | Link | Comment!
  • Why Apple Is Down From $700

    After a recent Stocktalk posted by Seeking Alpha founder David Jackson, I decided to put my thoughts down on paper and share my thinking related to Apple (NASDAQ:AAPL) on my Instablog.

    I've been following AAPL closely for 10 years now. I started back in 2002 as I was intrigued by Steve Jobs presentations and ideas. In 2004 I took the plunge with my first Apple product (white iPod shuffle) and it was great.

    Since that time I've been a quiet bull on AAPL and enjoyed watching the company grow and exceed everyone's expectations. So why is AAPL down recently?

    For starters, if you look at the products released since SJ passed away you can see a change in the product development process. Obviously SJ didn't do everything from A to Z but he drove the company in the direction it needed to succeed. Tim Cook does not have the passion or brilliance to accomplish that. One of the first things SJ did upon his return to AAPL was eliminating the numerous product lines and focusing on fewer products that were all great. Since he's passed it seems like new product lines keep on coming out (MBP with retina, iPad mini etc.).

    When the MBP with Retina came out I said to myself, SJ would never have approved of this. The product was overpriced, overcomplicated, and the only thing SJ probably would love is the fact that it did not have an optical drive. Then came the iPhone 5, which in my opinion was an abomination of the iPhone. They changed its form factor from what was the perfect shape and size, destroyed the user experience for legacy users, and released an inferior product. Yes it's flying off the shelves, but that's momentum which can't last in the face of an inferior product development process.

    Now comes the mini-iPad and revised New New iPad. SJ said 7" tablets are dead on arrival back in 2010, and yet now they released one. Additionally, I've used the Nexus 7 and it's great. Yet now Apple comes out and says everyone missed the boat on the 7" tablet and we got it right. But that is incorrect, the Nexus 7 nails the 7" tablet UE and is only 199.

    The argument against android is substantial, and justified. Different pieces of hardware, non optimized, creates a messy environment. But if you zoom in on the product Google endorses you will find a different experience. The Nexus 7 is truly an amazing user experience, Google is now partnering with Samsung on a 10" tablet that will blow iPad away in tech specs, and let's not forget a small entity called MMI that Google now owns that is working in the background on what is most likely a Nexus smartphone. Of course we can't ignore the Chromebook (Macbook air priced at 249!).

    So why is AAPL down? For starters my belief is the current share price is based a forward looking expectation of continued YOY revenue growth of 50%. On the most simple of levels if that is not sustained the current share price is not justified. AAPL has a PE of around 14, that is on par with similar companies in its class, but the question in my mind is if PE remains at 14 but YOY growth is let's say 10%, what would AAPL trade at? I also think that people that follow AAPL objectively may be able to recognize the change in the company and may realize that while it's been a great run the stock price just can't keep on running up, and as such may be capturing profits now. By the way that isn't to take away from the fact that AAPL is still up 51% YTD.

    As a sidenote (a BIG sidenote). Apple currently controls a major share of the tablet market but Google has Apple in its sights. Larry Page has been cutting back on a number Google products and focusing on making a few products great (sound familiar?) additionally they are focusing on optimizing hardware and software for each other (hmmmmm). Apple may like to believe the 7" tablet has been a failure until now, but that just isn't true. Google nailed it with the nexus 7, and they are developing their own ecosphere that is guaranteed to give Apple a run for its money.

    My father always says you either predict a price or time, but never both. So I believe AAPL will probably get to around $500 per share before leveling out. At that level investors will evaluate the value of the company and see if that is its fair value. The main factor I'm watching closely is their YOY revenue growth. If it starts to slide, that would be reason enough to push the stock down. When that will happen only God and SJ know.

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

    Tags: AAPL, Short Idea
    Oct 24 8:15 AM | Link | 27 Comments
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