Desi's Comments RSS Syndication from SeekingAlpha.com http://seekingalpha.comuser/10204/comments http://seekingalpha.com/article/123456-alstom-bombardier-rail-stocks-bound-to-benefit-from-stimulus?source=feed#comment-410164 410164
This is a good posting and very detail analysis. keep up the good work !

Desi]]> Mon, 02 Mar 2009 18:02:41 -0500
This is a good posting and very detail analysis. keep up the good work !

Desi]]> http://seekingalpha.com/article/122881-vonage-loses-subscribers-but-does-anyone-care?source=feed#comment-409132 409132
Like everybody else I have been using Vonage since 2003 and I am quite happy with Vonage. The only additional point I wanted to add was that it would be interesting to understand the Vonage Subscriber composition. Vonage is very popular with the immigrant community because by taking two lines (as long as the home country can support the internet band-width of 256KB) the subscriber can cut his overseas telephone bills to almost negligible.

So there is a catch 22, if lot of the 2.6 millions subscribers represent actually a single user ordering two lines to support his overseas family then the real number will be lower. But if they get bought out then the big Telecom companies have opportunity not in grabbing current Vonage subscribers but if they decide to start overseas operations they will also get the loyal customers overseas.


Desi

]]> Mon, 02 Mar 2009 09:17:37 -0500
Like everybody else I have been using Vonage since 2003 and I am quite happy with Vonage. The only additional point I wanted to add was that it would be interesting to understand the Vonage Subscriber composition. Vonage is very popular with the immigrant community because by taking two lines (as long as the home country can support the internet band-width of 256KB) the subscriber can cut his overseas telephone bills to almost negligible.

So there is a catch 22, if lot of the 2.6 millions subscribers represent actually a single user ordering two lines to support his overseas family then the real number will be lower. But if they get bought out then the big Telecom companies have opportunity not in grabbing current Vonage subscribers but if they decide to start overseas operations they will also get the loyal customers overseas.


Desi

]]> http://seekingalpha.com/article/96348-adm-the-way-to-play-the-agriculture-commodities-game?source=feed#comment-258868 258868
Along with the bearish outlook in the commodity sector one of the biggest concern with ADM was the "ethanol bubble". With the crude oil prices down by almost 30% from its peak of $140+ few months back it seems that all "alternative energy" stocks are getting beaten down. How does this affect ADM as it was on the ethanol binge for last few years ? Does the current pricing discounts the excesses by ADM in Ethanol production in the Mid-west ?

Thanks in advance,

Desi]]> Fri, 19 Sep 2008 09:11:57 -0400
Along with the bearish outlook in the commodity sector one of the biggest concern with ADM was the "ethanol bubble". With the crude oil prices down by almost 30% from its peak of $140+ few months back it seems that all "alternative energy" stocks are getting beaten down. How does this affect ADM as it was on the ethanol binge for last few years ? Does the current pricing discounts the excesses by ADM in Ethanol production in the Mid-west ?

Thanks in advance,

Desi]]> http://seekingalpha.com/article/95173-foster-wheeler-best-of-breed-stock-in-a-beaten-down-industry?source=feed#comment-252627 252627
Even if you are wrong in the short term I think E & C business has solid long term prospects. BTW..even half of the Barron round table experts have been wrong this year on many recommendation they have given this year so age and experience is not an issue.

Keep it up !]]> Fri, 12 Sep 2008 10:40:11 -0400
Even if you are wrong in the short term I think E & C business has solid long term prospects. BTW..even half of the Barron round table experts have been wrong this year on many recommendation they have given this year so age and experience is not an issue.

Keep it up !]]> http://seekingalpha.com/article/93066-lawson-s-harry-debes-saas-industry-will-collapse-in-two-years?source=feed#comment-242311 242311
I think the Lawson's CEO, Mr Debes is absolutely right. I think all the major ERP/SCM/CRM vendors are saying the same thing the only difference is that Mr. Debes is a straight shooter. Based on a recent article in Financial Times (www.ft.com/cms/s/0/33c...), the SAAS business can be summed into three things >>> attracting new customers, generating subscription revenue and customer replacement. The first and last activity of this business is always a over-head on the companies balance sheet, selling a hyped product to a customer. The subcription business is driven by how much value is generated for the customer and is always a questionable issue.

With the global economy heading south and companies managing their cost to the n'th detail, I think we have a hurricane "Gustav" on the door-steps for the SAAS companies. And dont behold, even the company that pioneered the SAAS mantra (Salesforce.com) is forecasting dark clouds in Q3 and Q4' 08. ]]> Sat, 30 Aug 2008 18:23:09 -0400
I think the Lawson's CEO, Mr Debes is absolutely right. I think all the major ERP/SCM/CRM vendors are saying the same thing the only difference is that Mr. Debes is a straight shooter. Based on a recent article in Financial Times (www.ft.com/cms/s/0/33c...), the SAAS business can be summed into three things >>> attracting new customers, generating subscription revenue and customer replacement. The first and last activity of this business is always a over-head on the companies balance sheet, selling a hyped product to a customer. The subcription business is driven by how much value is generated for the customer and is always a questionable issue.

With the global economy heading south and companies managing their cost to the n'th detail, I think we have a hurricane "Gustav" on the door-steps for the SAAS companies. And dont behold, even the company that pioneered the SAAS mantra (Salesforce.com) is forecasting dark clouds in Q3 and Q4' 08. ]]> http://seekingalpha.com/article/92528-nbc-s-olympics-web-strategy-came-out-a-loser?source=feed#comment-238834 238834
I agree with the author on the overall usefulness of the NBCOlympics.com website. There were two occasions when I tried to use the website to watch the two world events, Usain Bolts 100m world record and Michael Phelps gold medal # 8. I thought such world events would be readily available on the NBC website but after trying multiple searches and clicking on multiple web-pages I didnt find anything and I had to leave the website and wait to watch the short video on the NBC nightly news. I fully accept the fact that may be I fumbled during the online search or just not savvy to find the the clips on the NBC website.

What I do think that NBC did loose an opportunity to increase traffic to its web-site and in turn open up an additional channel for revenue making. I know for sure I would never use the NBC website for anything in near future as Olympics was the only reason I watched NBC or went to the NBC website. I guess by making the Olympic coverage available both on TV and Internet, NBC had an opportunity to generate a goodwill with the internet community and make money through the TV advertisements. Its very difficult to value goodwill but in difficult times thats what comes handy. I am not sure on the future of NBC Universal whether GE will keep it, spun it or sell it but I dont think the Olympic coverage will sway that decision in any direction.

Thanks !

Desi]]> Mon, 25 Aug 2008 18:24:38 -0400
I agree with the author on the overall usefulness of the NBCOlympics.com website. There were two occasions when I tried to use the website to watch the two world events, Usain Bolts 100m world record and Michael Phelps gold medal # 8. I thought such world events would be readily available on the NBC website but after trying multiple searches and clicking on multiple web-pages I didnt find anything and I had to leave the website and wait to watch the short video on the NBC nightly news. I fully accept the fact that may be I fumbled during the online search or just not savvy to find the the clips on the NBC website.

What I do think that NBC did loose an opportunity to increase traffic to its web-site and in turn open up an additional channel for revenue making. I know for sure I would never use the NBC website for anything in near future as Olympics was the only reason I watched NBC or went to the NBC website. I guess by making the Olympic coverage available both on TV and Internet, NBC had an opportunity to generate a goodwill with the internet community and make money through the TV advertisements. Its very difficult to value goodwill but in difficult times thats what comes handy. I am not sure on the future of NBC Universal whether GE will keep it, spun it or sell it but I dont think the Olympic coverage will sway that decision in any direction.

Thanks !

Desi]]> http://seekingalpha.com/article/84708-premier-exhibitions-the-controversy-continues?source=feed#comment-204144 204144
It would be great to hear from Mr Sellers as we the FT readers really miss his Sunday wealth column. Thanks,

Desi]]> Sun, 13 Jul 2008 09:23:35 -0400
It would be great to hear from Mr Sellers as we the FT readers really miss his Sunday wealth column. Thanks,

Desi]]> http://seekingalpha.com/article/82769-currency-bundles-pegged-to-the-dollar?source=feed#comment-193813 193813
Thanks for your prompt reply. I fully agree that there are so many factors that affect the currency markets. Hence every word of advice or hint is useful for an individual investor.

Thanks once again,

Desi]]> Thu, 26 Jun 2008 22:32:49 -0400
Thanks for your prompt reply. I fully agree that there are so many factors that affect the currency markets. Hence every word of advice or hint is useful for an individual investor.

Thanks once again,

Desi]]> http://seekingalpha.com/article/82769-currency-bundles-pegged-to-the-dollar?source=feed#comment-193092 193092
First of all its a joy and pleasure to read your timely articles !

One question I have is on the latest signal from the Fed on holding the interest rates steady and probability of raising the rates in Q3/Q4 2008. The markets are already including this news in the currency valuation with dollar becoming stronger against Euro as well as the Yen. How would the strengthening dollar affect the two ETN's mentioned above and will the sky-rocketing inflation break the "Camels Back" in the emerging markets.

Thanks,

Desi ]]> Thu, 26 Jun 2008 08:16:52 -0400
First of all its a joy and pleasure to read your timely articles !

One question I have is on the latest signal from the Fed on holding the interest rates steady and probability of raising the rates in Q3/Q4 2008. The markets are already including this news in the currency valuation with dollar becoming stronger against Euro as well as the Yen. How would the strengthening dollar affect the two ETN's mentioned above and will the sky-rocketing inflation break the "Camels Back" in the emerging markets.

Thanks,

Desi ]]> http://seekingalpha.com/article/81337-strategies-for-currency-investors?source=feed#comment-185793 185793
Please keep up the good work. Thanks,

Desi]]> Sun, 15 Jun 2008 08:24:52 -0400
Please keep up the good work. Thanks,

Desi]]> http://seekingalpha.com/article/80674-el-erian-s-recommended-allocation-vs-harvard-yale?source=feed#comment-182305 182305
Thanks for linking the portfolio allocation to ETF's . This helps an individual investor to easily create his own portfolio. In an Interview with Barron's two weeks back, Mr EL Erian had recommended a similar allocation. Thanks again]]> Tue, 10 Jun 2008 07:10:46 -0400
Thanks for linking the portfolio allocation to ETF's . This helps an individual investor to easily create his own portfolio. In an Interview with Barron's two weeks back, Mr EL Erian had recommended a similar allocation. Thanks again]]> http://seekingalpha.com/article/26897-goldman-sells-gsci-to-s-p-following-lucky-coincidences?source=feed#comment-81410 81410
First of all thanks for all your timely and informative articles on Seeking Alpha. In reference to this article on Goldman selling the GSCI index to S&P, I have attached a very timely article from Mr John Dizard in FT (Financial Times) few weeks back. I am not sure whether this is just a coincidence or Cat was out of the Bag for Goldman.

Thanks,

PS >>&g... The article attached is for reference purpose only and all credit for the article & its importance goes to Mr John Dizard & Financial times. We the Investors really appreciate your diligence & motivation to educate us on these behind the scene drama in equity & derivative markets !

Shri Ghanekar

----------------------...
How the speculators profit from investors in commodities

By John Dizard

Published: January 23 2007 02:00 | Last updated: January 23 2007 02:00

Speculators on the floors of commodities exchanges have been called many things, but sensitive, or solicitous of the interests of public investors, are not among them.

So it shouldn't be surprising that one of the ways they have of profiting from the passively investing public is called "date rape". In the pits, physical or electronic, that means betting against the certainty that commodity index investors' positions are rolled in a mechanistic manner every month, in known patterns on particular days. The phenomenon could be called index roll congestion, or some other euphemism, but as we noted, these are not people who worry about your feelings.

Commodities indices were devised to provide a transparent, systematic means for the public to obtain exposure to an asset class that gives a diversified return on capital.

Well, actually, they were devised as a way for investment dealers to make money from investors who wanted that diversification. They've worked extremely well for the latter purpose, and reasonably well for the former purpose.

For example, the most successful index, the Goldman Sachs Commodity Index, is the benchmark for an estimated $60bn in funds. The Dow Jones-AIG Commodity index would be the benchmark for the second-largest group of funds, representing around $40bn in assets.

The good thing about transparency is that the investor doesn't have to worry about the market timing skill of the index manager. The only issue is the financial strength of the manager, so that the investor can make sure he will have the ability to execute the transactions and deliver the return.

It is the managers' job to deliver pure beta, or market risk. And at the beginning of commodities index investing, when the indices were a small proportion of the total market, that could be done with little effect on the market prices.

Goldman, which is not the sole manager using the GSCI as a benchmark, will roll the index positions from one contract month to the next over a five-day period, 20 per cent a day, and commit to delivering the closing price on the commodity on each day.

The DJ-AIG managers do the same on another set of days with their set of contracts. As the volume in indices began to grow, the speculator community began to game the index managers by running up the prices just when the managers needed to roll their positions.

This didn't hurt the managers, who were committed to delivering the prices on a certain date, whatever the prices were. But it does hurt the investing public.

Jonathan Spencer, the president of Gresham Investment Management, which manages over $2bn in commodities funds that are not passively indexed, says the firm's research indicates that commodity index investors lose between 100 to 150 basis points a year of yield thanks to the professionals taking advantage of the traffic jam at index roll dates. Last year that would have been particularly painful, since the GSCI lost about 15 per cent, due in large part to the decline in energy prices.

Even so, Mr Spencer says, "We think the index providers (such as Goldman) are a hell of a lot better at providing direct commodity exposure than buying managed futures or commodities." That 100 to 150 basis points a year of "date rape" is less of a drain than the excessive management fees charged by most commodities trading advisers for using technical analysis programs you could buy on the internet.

It's the very success of the Goldmans and AIGs that has led to the problem. The US Commodities Futures Trading Commission has started to break out the proportion of exchange traded futures contracts accounted for by index traders. It's an eye-opener. In the corn (maize) contract on the Chicago Board of Trade, for example, according to the January 9 report, index traders accounted for 412,916 of the 1,779,250 long positions. That's an easy target for the speculators to shoot at over a known number of days for a known time of day.

I called Goldman to find out what the managers (or, rather, marketers) of the index would say about the issue, but they had other things to do, and were unable to answer my inquiry. In their defence, and in their absence, we can say they deliver what they say they will deliver, which is the closing prices of the commodity contracts on the days they specify. Given the rules-based trading formula, and the sheer size of the fundsthey need to service, they do the best they can.

The problem is the very transparency that the indices promise, which is what the investors were demanding. Smaller managers who have more flexibility than the indexers in executing a rules-based trading methodology can reduce, or avoid, the date rape problem.

Gresham, for example, has been ahead of the index providers by about one to three percentage points a year. It uses its managers' discretion in picking roll dates, and rebalances the portfolio periodically, rather than using a fixed proportion of contracts. The GSCI will do better in a hot energy year, but will also have more volatility.

The indexers are selling the idea of a black box that will solve your investing problems. Unfortunately,the speculators know what's in the black box.]]> Tue, 13 Feb 2007 19:49:38 -0500
First of all thanks for all your timely and informative articles on Seeking Alpha. In reference to this article on Goldman selling the GSCI index to S&P, I have attached a very timely article from Mr John Dizard in FT (Financial Times) few weeks back. I am not sure whether this is just a coincidence or Cat was out of the Bag for Goldman.

Thanks,

PS >>&g... The article attached is for reference purpose only and all credit for the article & its importance goes to Mr John Dizard & Financial times. We the Investors really appreciate your diligence & motivation to educate us on these behind the scene drama in equity & derivative markets !

Shri Ghanekar

----------------------...
How the speculators profit from investors in commodities

By John Dizard

Published: January 23 2007 02:00 | Last updated: January 23 2007 02:00

Speculators on the floors of commodities exchanges have been called many things, but sensitive, or solicitous of the interests of public investors, are not among them.

So it shouldn't be surprising that one of the ways they have of profiting from the passively investing public is called "date rape". In the pits, physical or electronic, that means betting against the certainty that commodity index investors' positions are rolled in a mechanistic manner every month, in known patterns on particular days. The phenomenon could be called index roll congestion, or some other euphemism, but as we noted, these are not people who worry about your feelings.

Commodities indices were devised to provide a transparent, systematic means for the public to obtain exposure to an asset class that gives a diversified return on capital.

Well, actually, they were devised as a way for investment dealers to make money from investors who wanted that diversification. They've worked extremely well for the latter purpose, and reasonably well for the former purpose.

For example, the most successful index, the Goldman Sachs Commodity Index, is the benchmark for an estimated $60bn in funds. The Dow Jones-AIG Commodity index would be the benchmark for the second-largest group of funds, representing around $40bn in assets.

The good thing about transparency is that the investor doesn't have to worry about the market timing skill of the index manager. The only issue is the financial strength of the manager, so that the investor can make sure he will have the ability to execute the transactions and deliver the return.

It is the managers' job to deliver pure beta, or market risk. And at the beginning of commodities index investing, when the indices were a small proportion of the total market, that could be done with little effect on the market prices.

Goldman, which is not the sole manager using the GSCI as a benchmark, will roll the index positions from one contract month to the next over a five-day period, 20 per cent a day, and commit to delivering the closing price on the commodity on each day.

The DJ-AIG managers do the same on another set of days with their set of contracts. As the volume in indices began to grow, the speculator community began to game the index managers by running up the prices just when the managers needed to roll their positions.

This didn't hurt the managers, who were committed to delivering the prices on a certain date, whatever the prices were. But it does hurt the investing public.

Jonathan Spencer, the president of Gresham Investment Management, which manages over $2bn in commodities funds that are not passively indexed, says the firm's research indicates that commodity index investors lose between 100 to 150 basis points a year of yield thanks to the professionals taking advantage of the traffic jam at index roll dates. Last year that would have been particularly painful, since the GSCI lost about 15 per cent, due in large part to the decline in energy prices.

Even so, Mr Spencer says, "We think the index providers (such as Goldman) are a hell of a lot better at providing direct commodity exposure than buying managed futures or commodities." That 100 to 150 basis points a year of "date rape" is less of a drain than the excessive management fees charged by most commodities trading advisers for using technical analysis programs you could buy on the internet.

It's the very success of the Goldmans and AIGs that has led to the problem. The US Commodities Futures Trading Commission has started to break out the proportion of exchange traded futures contracts accounted for by index traders. It's an eye-opener. In the corn (maize) contract on the Chicago Board of Trade, for example, according to the January 9 report, index traders accounted for 412,916 of the 1,779,250 long positions. That's an easy target for the speculators to shoot at over a known number of days for a known time of day.

I called Goldman to find out what the managers (or, rather, marketers) of the index would say about the issue, but they had other things to do, and were unable to answer my inquiry. In their defence, and in their absence, we can say they deliver what they say they will deliver, which is the closing prices of the commodity contracts on the days they specify. Given the rules-based trading formula, and the sheer size of the fundsthey need to service, they do the best they can.

The problem is the very transparency that the indices promise, which is what the investors were demanding. Smaller managers who have more flexibility than the indexers in executing a rules-based trading methodology can reduce, or avoid, the date rape problem.

Gresham, for example, has been ahead of the index providers by about one to three percentage points a year. It uses its managers' discretion in picking roll dates, and rebalances the portfolio periodically, rather than using a fixed proportion of contracts. The GSCI will do better in a hot energy year, but will also have more volatility.

The indexers are selling the idea of a black box that will solve your investing problems. Unfortunately,the speculators know what's in the black box.]]>