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raytoei is a Corporate Ronin in a US technology company based in Singapore. When he is not selling brand spanking new hardware to clients, he can be found reading and writing about the market. raytoei's investment process involves a healthy dash of skepticism, superior analysis and bargain... More
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  • Things That Interest Me In The Month Of Feb 0 comments
    Feb 24, 2013 7:04 AM | about stocks: AVP, WU, SNE, MCO

    I was watching several stocks in the month of Feb:

    * Avon Products AVP

    * Moody's MCO

    * Sony SNE

    * Western Union WU

    (a) Avon Products

    I bought AVP a year back when the CEO came in and the AVP board rejected a buyout from a Coty. Everything was wrong about the company, the investigation of some transactions, a failed ERP implementation, a CEO (Now Chairman)who liked the glamour but didn't fit the selling model of AVP. I bought because of the new CEO. Ms McCoy was a 30 year veteran of J&J, and gave up around 12-18m USD of retirement benefits plus stock options to run AVP. I really didn't know the motivation for joining AVP but as a Vice-chairman of one of the J&J divisions, she would be a credible candidate for running AVP. One year later, AVP still had lackluster results but the company seemed to have stabilized. I do expect 2013 to be the year where AVP will continue to stabilize and hopefully grow. I am not going to add my position but neither am i going to sell it.

    (b) Moody's

    I wrote the following on 8th Feb after the announcement that the US Govt was suing S&P:

    + Quite a good moat, not easy to replicate or displace. Only 2 other competitor.

    + US Govt not going after it unlike S&P (MHP stock ticker)

    + Even if it settles, it will be 1bn with US Govt (1bn was the asking price to S&P)

    + Stock is down around 15-20% from peak recently.

    - If it settles with Govt, it may open up to more lawsuits from banks.

    - Even at current price, it may not be cheap enough (needs more analysis)

    Additional Notes I added on 9th Feb:

    * If the US Govt wants to teach a lesson, it will kill off one not two out of three parties. Moody's will dodge the bullet.

    * Strong quarter. all cylinders firing.

    I added onto my existing position after a report, ""When a company such as Moody's is facing a potential existential threat, investors are going to be must less focused on how the numbers look in the quarter that just ended," he said, adding that the legal overhang raises questions about business volume, client and employee retention and cost of capital."

    (c) Sony SNE

    Sony stock fell after announcing the new PS4. Key concerns were:

    - 10 more months until holiday season

    - No console shown, no pricing announced

    Most analyst panned it, saying that Sony's business was flawed and declining because it could not compete with Apple's apps store. The annual decline of consoles sold was a worrying factor.

    + PS3 is 6+/7 years old. There is a pent-up demand for the new console from a loyal base of gamers.

    + PS4 graphics and networking ability (Sharing control and screen, preview of upcoming games, off-line downloads) is beyond the technology of existing handheld devices. Windows or Mac OS doesn't have an integrated launch-point for gaming with these features yet.

    I initiated a small position as the market will slowly digest these facts and I expect the price to be volatile.

    (d) Western Union WU

    WU hasn't recovered since 40% of the agents were dropped last quarter in 2012. I see this as a one-off situation, as WU cleans up and tightens the compliance. As the largest brand for remittances, I find WU an attractive alternative to no2 Moneygram.

    Disclosure: I am long AVP, WU, SNE, MCO.

    Stocks: AVP, WU, SNE, MCO
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