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willggh

willggh
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  • Microsoft Earnings Preview: Device Sales And Business Strategy In Focus [View article]
    Best MSFT earnings preview in Seeking Alpha. Thanks guys!
    Jan 23 09:44 AM | Likes Like |Link to Comment
  • Of course Tilson shops at Costco [View news story]
    Tilson is the man!
    Dec 12 10:49 AM | 1 Like Like |Link to Comment
  • Losing My Religion: How I Unlearned Efficient Markets Folly [View article]
    I call you BS

    "computers can then just simulate all of it." I doubt it's that easy. Mandelbrot spent half of his life trying to model price behavior and he was never anywhere near satisfied with his results. Geniuses like Doyne Farmer and his buddies at the Santa Fe institute are slowly trying to build on Mandelbrot's foundations, but still, it's a slow process.

    One of the main features of a distribution that exhibits high kurtosis is that you will never get anywhere near the true value of the underlying distribution with any adequate statistical significance. One single outlier can distort the value of your estimated parameters so much, that it makes any kind of statistical inference useless. Even if you bootstrap employing long periods of time (say, 1 year) high kurtosis persists.
    Dec 6 02:21 PM | Likes Like |Link to Comment
  • A Method For Investors To Identify Companies With Competitive Advantages [View article]
    ^Agreed. It's quite hard to uncover companies with wide economic moats by just looking at its financial statements: you need to delve deeper into an industry's competitive dynamics and economics - qualitative stuff not readily quantifiable.

    I think that the author's point was mainly about screening (albeit imperfectly) for companies with economic moats. Of course, not all companies that boast high margins and ROE have wide moats. However, finding a company that enjoys a wide economic moat will be easier among companies with high margins/roe than among companies with lousy margins/ROE.
    Dec 5 08:28 AM | Likes Like |Link to Comment
  • Losing My Religion: How I Unlearned Efficient Markets Folly [View article]
    "CAPM is entirely sound" *IF* its underlying assumptions hold. But in reality, such assumptions never take place. Look at historic price time series: they always exhibit very high kurtosis, which points to fat-tailed, non-normal, non-finite variance and mean. CAPM was falsified by Benoit Mandelbrot's empirical studies, well before both CAPM and EMH were even conceived.

    Beta, one of the key ingredients of CAPM, results from linearly regressing a specific asset's return against the market's return - meaning that to calculate beta you NEED to presume finite mean and variance (presumptions that can be easily falsified with yahoo finance and MS Excel). And given that beta intends to acount for an asset's risk (sensitivity to systemic risk), it pretty much becomes useless. Why would anyone use a risk model that assumes a mild type of risk when past data clearly points to fat-tailed ("high risk", more prone to extreme outliers) probability distributions? It's the proverbial chocolate teapot, aesthetics for the sake of scientism, but useless (and quite dangerous) when you need to put it to use.

    I suggest you read papers by Mandelbrot, Doyne Farmer, Nassim Taleb.
    Dec 5 07:10 AM | 2 Likes Like |Link to Comment
  • A Method For Investors To Identify Companies With Competitive Advantages [View article]
    Everything else equal, high margins are indeed more desirable than low margins. However, I think you put too much emphasis in margins instead of return on equity and invested capital.

    Companies such as Costo (COST) have extremely low margins (net margin has been about 1.5% during the last decade) yet boasts of a very strong economic moat. In fact, Costco derives it's economic moat from being the low cost producer.

    Another example is CH Robinson Worldwide (http://bit.ly/1cQ7YPT), one of the biggest transport brokers, and quite possibly, one of the widest moats in the corporate world. CHRW exhibits a net margin of about 5%, yet consistently generates ROE of well above 30%. I would argue that trying to outcompete CHRW would be a lot harder than it would be Samsung (or Google or Huawei or some new upstart we haven't heard of yet) to outcompete Apple.

    By the way, I'm an not an Apple bear. Apple has clearly done very well. While i do not think that brand can be the source of long term competitive advantages, I do see a lot of optionality in its massive cash chest and in the potential network effects on such a large number of iOS users.

    My point is that focusing on income statement margins ignores a significant number of excellent businesses that have durable competitive advantages (just as strong - maybe stronger - than Apple's) even though they operate under low margins.
    Dec 4 10:20 AM | 1 Like Like |Link to Comment
  • Ultra Value In Ultra Petroleum: Shares Trading Below NAV [View article]
    Thanks for writting this article and for your well thought replies to the questions here in the comment section!
    Dec 2 10:06 AM | Likes Like |Link to Comment
  • Chanos bearish on Exxon [View news story]
    James Chanos has one of the best records among the shorts. As far as my experience goes, fundamental short analysts/funds tend to be a heck of a lot more insightful and perform much deeper analysis than most long investors.
    Buffett is one of my biggest heroes, and by far, the investor I most admire. That's probably the case for many of you too. But that does not mean that you should immediately dismiss someone whose on the opposite side of Buffett's trade, especially when we're talking about someone as accomplished as Chanos.
    Nov 21 08:18 AM | Likes Like |Link to Comment
  • How Cloudy Is IBM's Future [View article]
    The BMC survey you cite appears to have been published in 2011, or at least, thats the date of the article which discusses the survey.
    Oct 16 12:02 PM | Likes Like |Link to Comment
  • Taleb Versus Reality [View article]
    Great article, thanks for sharing!
    Oct 14 02:50 PM | 1 Like Like |Link to Comment
  • Are Sapphire Screens About To Crack Corning's Gorilla Glass? [View article]
    I recall Corning's CEO saying that before 2015 they would be mass producing a flexible gorilla glass for mobile devices, allegedly scratch and shock resistant (no cracked screens anymore).
    Sep 20 01:59 PM | 2 Likes Like |Link to Comment
  • Future Internet Trends In Latin America And MercadoLibre [View article]
    No prob James. I do think that MELI is ideally positioned to benefit from an increase in latinamerican e-commerce and internet access.

    I'd like to point something though:

    "Sales per user" have grown at a mild rate, from $4,06 (2009) to $4,58 (2012) = 3% CAGR. Meanwhile sales have increased from $173M to $374M in the same timeframe = 21% CAGR. Therefore, most of the growth in sales had to come from growth in the number of users, and that's my problem.

    MELI boasts 90 mln users (2q2013). According to internetworldstats.com, Latinamerica currently has about 250M internet users. This would mean that 36% of latinamerica's internet population has an account in MercadoLibre. This by itself is already is quite a feat. If you assume that they cannot increase internet population market share, then, most of future growth will have to come from (1) raw internet population growth and from (2) an increase in sales/user. Both of those figures have grown at moderate rates. Have any thoughts?
    Sep 17 10:53 AM | Likes Like |Link to Comment
  • Future Internet Trends In Latin America And MercadoLibre [View article]
    "By 2015, Latin America is expected to boast over 750 million mobile users"

    Currently latin america has a total population (with and without internet access) of less than 600M people, which makes that "expectation" of 750M users quite hard to believe.
    Sep 5 09:01 PM | 1 Like Like |Link to Comment
  • Brookfield Infrastructure: Safe Dividend, Attractive Growth -- A Compelling Buy [View article]
    Great article! Wide moat business at a reasonable price always pick my interest. I'm one of those lucky few living in a country with a 0% tax on dividends :D
    Aug 12 04:08 PM | Likes Like |Link to Comment
  • Mixed Emotions As Solazyme Roquette Nutritionals Breaks Up [View article]
    Could it be that Roquette just "used" Solazyme to learn more about algal fermentation? What is stopping Bunge and ADM from doing the same? That is, partnering up with SZYM to gain knowledge from SZYM's operations/algal fermentation technologies, then breaking up the JV's to pursue SZYM's target markets?

    In any case, there would still be a huge market for SZYM, but it would have to find sources other than JV's to finance plant construction. Bunge and ADM, by their bigger size alone, would have clear advantages when it comes to building up plant capacity. Why would they bother to maintain their partnership with Solazyme?
    Jun 25 10:01 AM | 1 Like Like |Link to Comment
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