Belvedere Research

10 Comments

    • ON: Thu Sep 25th 11:31 AM
      Commented on:
      The Truth in Advertising: $700B Means $700B (and Maybe More)
      Thanks for the comments. User: Buffett got warrants - he is (very) smart. Gross went on national TV and explained that we'd make a profit on this. Here's the video. www.cnbc.com/id/158402...

      If I was shaping policy, I'd say: do the bailout, structure the subsequent MBS deals with warrants for anything purchased over current market clearing prices (ie if treasury thinks the market is paying fire sale prices for a certain security and wants to pay above that...)
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    • ON: Tue Jul 22nd 15:29 PM
      Commented on:
      Polycom Benefits From Rising Travel Costs
      I couldn't agree more about PLCM as a solid medium to long term tech play. The products (including telepresence) are rock solid, the segment is one which can benefit from either a strengthening of the economy or a weakening, and the valuation at current price levels offers a great risk/reward proposition.

      My only question about PLCM relates to the investor relations of mgmt. This was the first webcast that I watched in its entirety and there was something "off" about the flow of the call, maybe the marginal video quality, or maybe the rah-rah spinning of all responses. Did you/anyone else walk away with this sense?

      Still, I'm long PLCM and think the story is too good to pass up
      View article »
    • ON: Wed Jun 18th 13:50 PM
      Commented on:
      U.S. Credit Card Performance: More Deterioration in April
      Visa & Mastercard are just payment processing companies, like PayPal or whatever. They provide a service that offers convenience and deserve to make their profits for doing so. The banks (COF, BoA, Providian, AmEx, etc...) that extend the lines of credit are not so clearly adding value to the economy and their profits are far less deserved.

      COF for one (I'm short w/ puts) has fallen about 20% in the last month or so, and I believe they have a ways further to fall. Issuing banks have several factors squeezing them right now:
      (1) debt already on the books is much less likely to pay off than they thought when they issued. "thought" may be too generous, maybe "hoped" is a better word
      (2) overextended consumers, and those who file bankruptcy etc... will (eventually) stop charging as much to their cards as they feel the pinch which bounds their profits. Admittedly, in the short term, they may charge more because they have to, but you can only spend more than you make for so long...
      (3) As more consumers/voters get overwhelmed with their credit card situations, there will be more public outcry and vilification of the credit card industry for their shady double cycle billing and high APR fees. Congress will get in on the act and will pass legislation limiting the fees that card companies can charge (it's an election year after all!) and this will SEVERELY squeeze profit margins. Intuitively, I have to believe that a lion's share of card issuers' profits come from penalties and fees that could be (and probably should be) curtailed.

      I'm talking my book here since I'm betting against COF, but in my opinion COF will be the CFC (countrywide) of 2008...
      View article »
    • ON: Mon Jun 16th 22:15 PM
      Commented on:
      I Think Microsoft Is Bluffing on Yahoo
      keep in mind that the stock was trading BELOW $20 per share when MSFT made their first offer. It's still trading at a 15% premium to that price, so it's not a logical conclusion that because the stock is trading at $23 it can be had for $23.

      Either way, Yang had better start polishing his resume...
      View article »
    • ON: Fri Apr 4th 10:34 AM
      Commented on:
      The Reverse Ripple Theory of Metropolitan Home Price Corrections
      Very interesting look at things. I live in San Francisco and have noticed the same phenomenon - outlying areas like Stockton, Tracy, and San Jose (though they'd take offense to being called an "outlying area" of SF...) are getting crushed while prices in good neighborhoods of SF seem to be about flat. By any standard valuation metric, they have at least 20-30% of excess in prices, so time will tell whether it's just in the midst of the reverse ripple.

      I'd offer one more possible reason for why. In the bay, outlying areas were the ones where subprime was the biggest factor as people who otherwise couldn't afford a house decided to accept a 45 minute or 1 hour 45 minute commute and "stretch" for that house. They're most susceptible to the jolt of foreclosures and abrupt halt of banks willing to lend. Factors leading to inner rings of the ripple lowering prices have more to do with the slow process of price discovery and inward diffusion of prices.

      If a buyer was formerly willing to add 30 minutes to commuting to save $200K, they're still directionally willing to do so, and if Stockton houses drop, it's a matter of time before the next buyer looking at Stockton vs Concord, or Concord vs Freemont, or Freemont vs. Berkeley, etc... will ripple that price inward.

      The other possible reason is level of speculation. Just a guess but I'd suspect more were speculating on new home developments out on the fringes than on 100 year old (and much pricier) homes in the city center.
      View article »
    • ON: Thu Feb 28th 01:13 AM
      Commented on:
      Housing Prices Are Still Headed Down
      Great article and agreed with the above comment on homebuilder runups happening now. I wouldn't be surprised if the mortgage related companies (Countrywide, etc...) find their feet in a matter of a few quarters, but these homebuilders are going to be fighting a headwind of industry overhang for quite a while.
      View article »
    • ON: Wed Feb 27th 14:10 PM
      Commented on:
      Intel's Plan: To Bring Personal Computing to the Masses
      Any chance this Diamondville chip is intended for the $100 PC that Intel has been floating in competition w/ Negroponte's One Laptop Per Child program?
      View article »
    • ON: Wed Feb 27th 14:04 PM
      Commented on:
      Zoran: Riding the Consumer Electronics Wave
      Great write-up. I'm curious about one more driver that didn't make it into your analysis (and probably wasnt relevant at the time you published in your newsletter), and that's the end of the standards battle between HD-DVD and BluRay. Now that there's certainty, many are expecting it'll encourage consumers to dive in and replace their DVD players. That should be a positive catalyst.

      That said, the consumer spending slowdown does give me concerns about such a gadget focused silicon player.
      View article »
    • ON: Wed Feb 27th 13:47 PM
      Commented on:
      Latest Case-Schiller Report Shows the Sky is Falling
      Take a look here:

      www.housingtracker.net...

      For a good (albeit 5 months out of date) set of affordability stats on 50+ markets. It's pretty clear that some markets are working thru a short term pricing reset, while others have a huge headwind of fundamentals that'll likely be blowing for 5+ years.

      Even if you believe that LA/SF have fundamentally changed so that now paying 50 or 60% of income for mortgage payments is going to continue to be the new reality (I highly doubt that, by the way) that means the real estate market would only grow at the rate of wages going forward (i.e., no 10-15% per year upside anymore!).
      View article »
    • ON: Wed Feb 27th 13:38 PM
      Commented on:
      Case-Shiller: Steepest Price Decline On Record
      Take a look here:

      www.housingtracker.net...

      Not academic, but a very clear summary of what you're talking about. It's clear that some metro areas are in a shorter term downcycle from a wave of foreclosures and illiquidity (e.g., Detroit) while others are in for a longer term fundamentals-based downcycle (e.g., LA, SF). Remember that in LA in the early nineties, prices got out of touch with fundamentals and stayed underwater in some areas for almost a decade
      View article »
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