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Humble Eagles

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  • Apple: 4 Was Not The Magic Number [View article]
    They grew revs >30% YOY and AAPL is selling for about 10X this year's earnings less net cash. I wouldn't worry about the 5 number.
    Jul 22, 2015. 11:30 AM | 15 Likes Like |Link to Comment
  • Apple Earnings: Not A Blow-Out, But Good Enough [View article]
    Danny, I would say we need to be conservative, so $160. 15 X next year's earnings and half credit for the cash. Much will depend on the new products and the perception of them, but Apple's wheelhouse is electronics design--so that is probably OK. The big risk is probably macro, but if Apple ever decided to swing and miss on a new generation, that could be devastating. The fact that only 27% of the installed iPhone base has upgraded to the 6/6S is also a very strong positive. We are still using the 5, and I know several 4S users to this day!
    Jul 22, 2015. 10:49 AM | 6 Likes Like |Link to Comment
  • Apple Earnings: Not A Blow-Out, But Good Enough [View article]
    In line takes a lot of dreaming for me, tuna: 32% rev growth YOY and 45% EPS growth, AAPL selling for about 10 times this year's earnings less net cash. AAPL is back to half the price of the NSDQ 100! The funny part is comparing NFLX, GOOG, and AMZN reactions. But, everybody owns AAPL and there is nowhere to go but down?!? Please. As I pointed out when Maestri got back into the sandbagging routine, traders and analysts are like drug addicts, they will punish you for not giving them more of their drug--huge blowouts. That happened yesterday, as Apple is growing faster than almost every company and yet apparently they wanted 100% growth in earnings YOY! The important point for AAPL traders and investors is that this is the time to buy. July was the great time of the cycle, so barring macro disaster Mr. Market is giving away shares for the big upgrade cycle that starts in 8 weeks or so. Prices will lead that by a few weeks. GLTA.
    Jul 22, 2015. 10:39 AM | 20 Likes Like |Link to Comment
  • Economic Strength Has American Airlines Taking Flight [View article]
    Brandon, you mentioned 1 billion in net synergies, but how about $4 billion in fuel savings this year? Look back analysis is downright deceptive in this industry when you have big fuel price swings. All of the airlines, and AAL especially, are great ways to short oil. The price of oil is down, yet the market has given *ZERO* credit for that to the airlines. If oil goes back to $100 they are still cheap! So you are, in a sense, getting to short oil at ~$100 today by buying AAL. If one thinks oil might stay down below $80, airlines are a steal. At $50 oil, this is going to be funny. AAL won't stay 3.XX times earnings for long!
    Jul 22, 2015. 10:24 AM | 9 Likes Like |Link to Comment
  • Apple beats estimates, guides light; shares fall [View news story]
    Predicting the future is a difficult business. I had GILD on my watch list and shares dropped to the high 80s a few months back. I was ready to buy and then I started reading some very well reasoned comments on SA stating why it would drop to the 70s...well, you know the rest of that song. GILD is $25 higher and I still don't own any of it. There are risks both ways on limit orders.
    Jul 22, 2015. 08:59 AM | 1 Like Like |Link to Comment
  • American Airlines Vs. Delta Air Lines: Which Is The Better Long-Term Buy Right Now? [View article]
    IMO, the key to seeing the value in both names is understanding fuel costs and airlines. AAL has guided that they will use a little over 358 million gallons a month this year. Delta is similar. Fracking has changed the oil picture, and even the Saudis have commented that this is a sea change that should last for years. AAL is paying around a dollar per gallon less than last year when the stock price was higher than it is now! So, both companies have been on a ten year diet, getting lean and structuring the business to be profitable with the reality of $100-$120 dollar oil, and then we get the collapse in oil prices. For AAL, because they don' hedge, there is about a $350 million per month benefit over an already profitable model! I like all of the airlines because of this dynamic. Fuel probably isn't going back to $100 any time soon, so the airlines, even with a price war, are still likely to be profitable. The bankruptcies of the past stand as a stark warning against adding a lot of capacity.
    Jul 22, 2015. 07:20 AM | 6 Likes Like |Link to Comment
  • Apple beats estimates, guides light; shares fall [View news story]
    Back when Maestri returned to the old Jobs technique of sandbagging, I warned we would get back to this response after a few quarters. Sandbagging is like an addictive drug to analysts and traders. Feels good at first, but they have to get more and more as time goes by. Imagine if they had actually disappointed with the numbers. >30% YOY growth and it drops 7%! We have seen this play before, so you know how to handle it.
    Jul 21, 2015. 05:04 PM | 5 Likes Like |Link to Comment
  • American Airlines Group: What To Look For In Q2 Earnings [View article]
    10.86 and $2.68 are what I come up with from their guidance update, just hitting the middle of their numbers. No big surprises expected there. The current price would be about 15 times the *quarter's* earnings. With the S&P 500 selling for almost 5 times that amount, it is hard to imagine AAL being properly valued. AAL could double in price and still be selling for less than half the multiple of the S&P 500! Plus, some of the drop is just currency. The key is that AAL is making a ton of money, probably more than they ever have before. Spinning off ~$150 million in cash a week...not bad for a company that Mr. Market is pricing like it is losing money.
    Jul 20, 2015. 01:43 PM | 5 Likes Like |Link to Comment
  • Bank Of America Remains A Poor Investment [View article]
    So BAC hasn't appreciated as much as other banks and you think it won't in the future? What if the litigation kept the lid on it and now it is catching up to where it should have been? I was having this same discussion in April and it has risen almost 20% since many of us were buying it then. I suspect we will be having the same discussion in a few months after it rises another 10-20%. I suspect they will raise the dividend, too. There seems to be a lot of emotion on BAC. To me it is just a boring, but good value investment moving forward.
    Jul 17, 2015. 03:37 PM | 11 Likes Like |Link to Comment
  • Comparing 2 Monthly Eaton Vance Income Closed End Funds EOS And EOI [View article]
    Great article! I would only add discussions about the relative discounts on NAV and that covered calls should help in most markets--except strong up markets. The stocks can get called away and you can lose some return.
    Jul 17, 2015. 05:28 AM | Likes Like |Link to Comment
  • American Airlines: Value Play Or Value Trap? [View article]
    Biker, there could be another explanation. The airlines decoupled from reality a few weeks before they were targeted by the DOJ and certain Democratic Congressmen. This could simply be manipulation. The price action before sure makes it look like large trading entities received advance notice from somebody. AAL, if I'm doing the math correctly, basically guided for $2.40-$2.80 (likely in the middle) on a recent PR, so it is selling for about 15X the recent qtr's likely earnings--and yet it drops on every pop. It has looked like that for about a month or two. Oil is down dramatically since last qtr, so I would expect even better results this qtr.
    Jul 15, 2015. 11:18 AM | Likes Like |Link to Comment
  • American Airlines Group issues fresh guidance and June traffic report [View news story]
    I agree. They basically just guided for $2.50-$3.00 a share (according to my back of the envelope look), and fuel prices were higher last quarter than they are now, so earnings guidance isn't likely to be cut much. AAL is still selling for less on this quarter's earnings alone than the multiples for the whole year on the major market averages. IOW, even throwing out the other three quarters' earnings, AAL is still selling at a huge discount on the second quarter numbers alone!
    Jul 10, 2015. 09:48 AM | Likes Like |Link to Comment
  • The Parody Of Errors That Led To Grexit [View article]
    I was thinking "Comedy" or "Tragedy" of errors, perhaps?
    Jul 8, 2015. 07:58 AM | 1 Like Like |Link to Comment
  • American Airlines: Value Play Or Value Trap? [View article]
    Well, you sure put some effort into that article, but I have some big issues with it, and I think AAL is actually worth much more than you think. OK, so let's see if we can simplify and clarify some. AAL publishes their fuel numbers. Your guesses are decent, but why not use the real numbers? Mainline average fuel cost for 2014 was $2.91, which is much higher than your estimates. It was $1.83 in Q1, which was also a bit higher than you estimated. But, they expect to use just over 358MM gallons a month for all of 2015(avg). They save a little because they have bought a bunch of new planes, and they are more efficient, and they save a lot from lower fuel costs. So, assuming your $1.78 figure is accurate for average fuel costs in 2015, the actual savings over 2014 is over twice your $2.45 billion figure, or almost $5 billion! I suspect the number might be a little higher than $1.78, but they are also burning a little less fuel, and the fuel per seat mile will also be better. I think the analysts estimates are getting lower because they thought oil was going back up to the $70-$80 range. If it stays at $60, AAL should blow those lowered estimates out of the water. I think AAL should be selling for about 10X normalized earnings for $70 oil, or about $60-$70. If oil remains lower, AAL should be higher. At $50 oil, I think $70-$80 is very conservative. Overall, I thought it was a very thought provoking read on AAL. Thanks for writing.
    Jul 7, 2015. 06:14 PM | 8 Likes Like |Link to Comment
  • Greece Referendum: No - 61.1%. Yes - 38.9% [View news story]
    Harm, I am inclined to agree with you. Assuming Greece is soon to be out of the Euro, as one might suspect from the vote, wouldn't that actually make the Euro stronger? They have to deal with the losses, but the Euro minus Greece is a stronger currency. If Spain leaves, they are even stronger. I'm afraid we have the people of Greece in one corner, the rest of Europe in another corner, and the leaders of Greece in another corner. I fear the leaders of Greece are interested mainly in publicity for themselves, and that is what this sideshow has been about. They are absolutely loving the attention they are getting. I don't think the European leadership is going to keep playing their straight man in this comedy/tragedy much longer. Either they get a deal soon or Greece is printing Drachmas again.
    Jul 5, 2015. 06:43 PM | 2 Likes Like |Link to Comment
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