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tk77mann

tk77mann
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  • 4 Energy Stocks That Are Down 12% To Over 60% Since June 30 [View article]
    Like all economic shifts, the drop in oil pricing leading to a drop in gasoline prices, does not affect every person equally. The middle and lower economic sectors, who have very little in equities and who are barely getting by financially, are winning big with the price of gasoline dropping. I heard the average driver is saving $600 per year with a $1 drop in the price of gasoline. This is great for them, and they need it!

    The impact on their savings accounts has been minimal with the drop in energy company stocks. I also believe they are spending their gasoline savings in other areas (more than saving it), which is driving the economy forward in many other areas.

    The upper income sector, with the lion's share of wealth, including energy stocks, is feeling most of the shareholder wealth loss caused by energy prices declining. They also got huge benefits over the past ten years as the price of oil increased dramatically, as did the prices and dividends paid of energy companies. The upper income sector's benefits over the past decade are magnitudes larger than the meager savings the average consumer is getting now from low gasoline prices.

    Anyone who cries foul for those with lots of energy stocks is ignoring the huge disparity of wealth in the US and the needs of those just getting by. (I say this as someone with lots of energy stocks, so I am affected by the energy stocks dropping.)

    The drop in energy prices does a lot to even out the world power situations versus Russia, Iran, OPEC, and Venezuela, to name just a few. In addition it gives the average American with an average income, some economic breathing room that has been gone since the Great Recession. The drop in oil prices a great thing, in my opinion.

    GLTA,
    tk

    Long: BBEP, COP, CVX, PGH, PWE, RDSB, SD
    Dec 12, 2014. 09:51 AM | 8 Likes Like |Link to Comment
  • Rubicon Should Be Trading At A Discount To Cash [View article]
    GTAT could not get their own furnaces to make sapphire that met Apple's standards. Who in their right mind is going to buy these furnaces if the manufacturer of the furnace could not get them to work? (Except for scrap metal, maybe.)

    Secondly, mobile devices, such as iPhones, have much lower sapphire technical and optical requirements than do LED applications. I believe these 200+ GTAT furnaces will never ever produce sapphire that competes against Rubicon's sapphire for LED applications. Just is not going to happen. The furnaces could not meet the lower standards needed for the iPhones.

    GLTA,
    tk

    Long: RBCN
    Nov 11, 2014. 07:01 PM | Likes Like |Link to Comment
  • Rubicon Technology's (RBCN) CEO Bill Weissman on Q3 2014 Results - Earnings Call Transcript [View article]
    Just a couple quick corrections to the transcript above:

    The "bulls" which were discussed are really "boules". A boule is the roughly football shaped block of sapphire that comes out of the sapphire furnace.

    The "coding" discussed later on in the patent question should probably be "coating."

    GLTA,
    tk

    Long: RBCN
    Nov 7, 2014. 11:52 AM | Likes Like |Link to Comment
  • Rubicon Probably Won't Replace GT Advanced Technologies [View article]
    Rubicon decided a while ago its market advantage is producing sapphire with the highest technical specifications, that required by the LED market. Sapphire used for camera lenses and the mobile device home button is much less exacting and therefore much more lower priced with lower margins (since a lot of sapphire suppliers can meet that demand).

    Since GTAT could not get its own furnaces to produce sapphire of sufficient quality to meet Apple's needs, I doubt any other (sane) firm will try to use them to produce sapphire. I think these furnaces will be sold for scrap by Apple (since the loan they had to GTAT was secured by the Mesa building and the furnaces) and Apple will buy Gorilla glass for its iPhones as well as sapphire for the camera and home button. I am not sure there as many negatives for Rubicon as the author poses, but one of his scenarios could happen.

    There is no doubt the sapphire industry has been a roller coaster soap opera for the past couple years. I bet the ride will continue for a time to come.

    GLTA,
    tk

    Long: Rubicon
    Oct 14, 2014. 09:55 AM | 1 Like Like |Link to Comment
  • CSS Industries: Stable Fundamentals, Cash-Rich Balance Sheet, And Deep Undervaluation Argue For 30%+ Upside [View article]
    Great analysis of a great little value stock. Well done.

    I believe you are right, this is the kind of company private equity investors would love to buy since it is so cheap relative to its value, it is in a stable industry, plus it has a ton of cash to help offset the purchase. The the P.E. firm could flip it after loading it with debt and taking out all of its investment and then some.

    Great work. GLTA,
    tk

    Disclosure: Neither long nor short in CSS, but might buy some in the near future.
    Sep 30, 2014. 09:48 AM | Likes Like |Link to Comment
  • Rubicon Technology: 6-Inch Wafers, Prices, And Other Questions [View article]
    RBCN includes its idle equipment and labor costs into its cost of goods sold. Since it has idle capacity (hopefully short term), its COGS as a percent of revenue are dramatically higher. When their plant utilization rate goes up its COGS as a percent of revenue will decline, driving up its gross margin.

    This will likely be driven by the growth in the LED market, which is RBCN's main market target. The LED lighting market has been slower to grow than was predicted, and Rubicon had added more capacity (now partially idle) than would have been profitable. But if and when the LED lighting market grows dramatically RBCN will benefit.

    GLTA,
    tk

    Long RBCN
    Sep 9, 2014. 09:59 AM | Likes Like |Link to Comment
  • Consolidated Edison: A High-Dividend Stock For Current Income [View article]
    ED continues to borrow big money to fund its capital spending and its dividend payments. At some point the capital market will not loan ED money, except at very high interest rates. Then it will have to cut its dividend. This will shrink its stock price dramatically, hurting shareholders in two ways.

    I think owning ED shares is actually a very risky investment given the low revenue and earnings growth potential of this regulated industry business. I believe there are many better, growing stock investments that pay about the same dividend yield as ED. Unfortunately I believe this "widows' and orphans'" stock is going to hurt a lot of trusting investors looking for security.

    GLTA,
    tk

    Disclosure: Neither long nor short in ED
    Sep 8, 2014. 03:15 PM | Likes Like |Link to Comment
  • Rubicon Technology: 6-Inch Wafers, Prices, And Other Questions [View article]
    I think there is minimal pricing risk to Rubicon from the device market. It is a lower-priced market for sapphire, though. Rubicon's focus is supplying the LED market, and only gets minimal revenue from the device market.

    On another point, at the annual meeting the RBCN management said 2014 was going to be a loss year since they were investing in R&D for their LED customers and the oversupply in the sapphire market would continue through the end of the year. Thankfully they said they thought demand would likely increase dramatically in 2015. Hopefully that will happen!

    GLTA, tk

    Long RBCN
    Aug 13, 2014. 11:51 AM | 1 Like Like |Link to Comment
  • Rubicon Technology: 6-Inch Wafers, Prices, And Other Questions [View article]
    I think the article meant to say "cellular orientation of GTAT" not the "solar orientation of GTAT" in about the sixth paragraph.

    At its recent annual meeting Rubicon said they are selling some sapphire to the mobile device (AKA cell phone) market, but their emphasis and technology advantages are focused on the needs of the LED market. They said they are the only sapphire supplier that makes all patterns used by all LED companies. (Each has its own set it uses.) Also, Rubicon is working on adding a second production step that will make its patterned wafers even more cost effective for LED manufacturers. Rubicon said 17 LED manufacturers are testing their PSS for use in their products.

    Sapphire for mobile device usage does not require as much finishing or as many critical optical features as do LED applications. LED-application sapphire will have higher pricing (and most likely higher margins) since fewer suppliers can provide this quality.

    All other sapphire suppliers are in (low cost) Asia, except for one in Russia and GTAT, which is building its plant in Arizona. I think Rubicon's focus on the more critical (and less price sensitive) needs of the LED market is good strategy.

    There is just still too much sapphire capacity in the market and not enough demand, creating prices too low for any sapphire supplier to make money in 2014. In 2015, however, with the growth of the LED and mobile device markets, it will likely be a different story, I believe.

    GLTA,
    tk

    Long RBCN
    Jul 18, 2014. 06:03 PM | 4 Likes Like |Link to Comment
  • Windstream Needs To Revise Dividend Strategy As Company Remains Overvalued [View article]
    There are 80 million WIN shares short out of 602 million shares outstanding. These shorts have to pay the ~10% annual dividend as they hope for a significant enough share price decrease so they can cover their position without losing big money. With the recent WIN share price increase many of them must be seriously underwater. No wonder some people want the company to decrease its dividend.

    On a free cash flow basis WIN has its dividend well covered since its investment in fiber-to-the-towers project is winding down. I would never bet against and short a company paying a high dividend that is covered by its cash flows.

    GLTA,
    tk

    Long:WIN
    Jun 27, 2014. 11:51 AM | 10 Likes Like |Link to Comment
  • Windstream: Stop Focusing On The Dividend Yield [View article]
    Stone Fox,

    Of the $1.00 per year in dividend that WIN has paid for the past two years and will likely pay in the future, ~$.40 - $.50 is return of capital. That portion is NOT reported as income on any tax form. It is shown as a return of capital on the 1099 form that goes to shareholders. It is supposed to be deducted from the investment's cost basis.

    Whether all investors recognize this is another issue, but I am assuming with the fairly new (~2011) stock tax reporting requirements imposed by the IRS on stockbrokers, this will be tracked accurately by the stockbrokers. It will likely be the source of a difference in cost reporting when shareholders sell their shares.

    Windstream retroactively changed some of its 2012 dividends to returns of capital in July 2013 (http://bit.ly/1fJKmx7). This is, of course, after the April 15 deadline for income tax filing. This means shareholders could file amended returns to reduce their dividend income and get money back from the IRS potentially, but I bet not many did. And again, their cost basis should have been reduced by an equivalent amount.

    GLTA,
    tk
    Mar 20, 2014. 10:03 AM | Likes Like |Link to Comment
  • Windstream: Stop Focusing On The Dividend Yield [View article]
    The return of capital is not taxed as income. The cost basis of the shares owned is reduced by this amount, however. When WIN shares are sold their revised cost is used to calculate the capital gain or loss.

    What returns of capital can do is to generate capital gains when the stock is sold. This is especially good for those of us who have lots of capital losses from the Great Recession (thank you, bank stocks) since we can only deduct $3,000 per year in capital losses per year from our income on our tax returns.

    Windstream still provides the same amount of dividend per year, and keeps our taxes low when we sell the stock at a profit. Returns of capital are a great thing, in my opinion.

    Also, returning capital really messes up those analysts and investors that look at the dividend payout ratio for a metric to measure stocks against. WIN has large paper (non-cash) losses from depreciation, but has plenty of cash to pay dividends with. As Stone Fox says, the much more critical metric is free cash flow.

    GLTA,
    tk

    Disclosure: Long WIN
    Mar 18, 2014. 03:20 PM | 5 Likes Like |Link to Comment
  • Rubicon Technology: Fundamentally Flawed [View article]
    STFUDonnie,

    Do you have a link to a Sapphire Technology page that shows their 10% operating profit? The only links I find for them are very limited, and in Korean with no English translation. Their Investor Relations page, http://bit.ly/1fpUIlL , says it is "Under Preparation" and it has been for months. Their latest financial report I can find is from March 2013 and only contains a balance sheet, http://bit.ly/1fpUIlL.

    With regard to RBCN's large negative gross margin, a good portion of it came from their idle production capacity costs, which is included in their Cost of Goods Sold. Here is what the CEO said regarding this from their last earnings call, "The $600,000 reduction in idle plant cost is due to the increased utilization in crystal growth. We will reduce the idle plant cost in the first quarter by at least an additional $400,000 as we will be running at full utilization in the crystal growth for nearly the entire quarter." I think the RBCN gross margins will look much better this coming quarter and for those that follow. Higher prices for sapphire, which were also announced by RBCN, will also help.

    I believe Rubicon is selling to Apple, and it might be via polishers as you say. As long as they sell more sapphire, this is a good thing for their business, no?

    As I mention in my earlier post, Apple includes non-disclosure clauses in its contracts with its vendors, so RBCN can not disclose the relationship without violating the agreement. The Rubicon CEO travels to Asia a lot (as he stated at the two RBCN annual meetings I attended) and knows all of the major consumers of sapphire. I have to believe he knows the key folks at Apple, Samsung, and the other major handset manufacturers.

    It will be interesting to see how the sapphire market develops and how GTAT executes on its dramatic redirection of its business model.

    GLTA,
    tk
    Mar 12, 2014. 10:04 AM | Likes Like |Link to Comment
  • Rubicon Technology: Fundamentally Flawed [View article]
    ikarus,

    RBCN was $8.86 per share on December 18, 2013 when this article was written. It closed yesterday at $14.34.

    Between those days a lot of positives have happened for Rubicon. It appears they have started selling to Apple. Rubicon does not mention the handset (AKA cell phone) manufacturer they are selling to (Apple hates its vendors to drop their name), but since Apple is the only handset manufacturer using sapphire and Rubicon is selling to a handset manufacturer, it makes sense to me. (See the comments made by the CEO and CFO in their latest earnings call here http://seekingalpha.co...)

    Elsewhere in the call the CEO said, ". . . the sapphire camera lens cover and dual flash now being adopted by more smartphone manufacturers." He said Rubicon has talked to those other smartphone manufacturers about their (non-electronic) handset applications like lenses. Since Samsung and Apple are intense competitors Samsung will likely adopt sapphire on its high end phones. Since GT Advanced Technology has to "maintain certain exclusivity terms" with Apple for its sapphire (per their recent supply announcement with Apple http://bit.ly/1fvoCaz), it is very likely Rubicon will add Samsung and other cell phone manufacturers to its customer list soon.

    GTAT is doing a major strategic change from supplying sapphire furnaces to supplying low cost sapphire. They state they must accelerate the development and introduction of their new furnace design, install bunches of them in a new factory that is just being planned, they have to hire a completely new staff and train them on making sapphire (which is as much art as science), and they have to make and consistently deliver lots of high quality, low cost (because Apple negotiated a low price from GTAT) sapphire. And they have to make it all happen this year. Having been involved with lots of new product start-ups, I can tell you they have lots of challenges ahead of them. If everything does not work well, this will open the door for even more sapphire sales by Rubicon to Apple.

    Rubicon also reported the LED market for sapphire has started to improve. They had been premature about its growth curve in the past, but it appears to doing so now. Rubicon recently restarted more of its production capacity which reduces their costs due to improved efficiencies. So their profit margins are going up.

    The market price of 2" and 4" sapphire boules increased 10% recently and is predicted to increase again this quarter. Rubicon will benefit from this.

    There are lots of secular changes leading to a dramatic, and I believe permanent, increase in the demand for sapphire. As the world's largest supplier of sapphire (and perhaps with the best and lowest cost production technologies), Rubicon is benefiting from this jump in demand.

    There could be an incredible short squeeze soon on Rubicon shares. As of Feb. 14 Yahoo Finance says there were 8.67 million RBCN shares shorted out of a float of 18.44 million shares. If any (or all!) of the above starts to significantly shift business Rubicon's way soon the short sellers could be caught in a tight short squeeze. This will really drive up RBCN's share price.

    Bottom line, ikarus, is RBCN really a short position you want to get in on? The risk for short sellers here is huge.

    GLTA,
    tk

    Disclosure: Long RBCN
    Mar 8, 2014. 10:35 AM | 1 Like Like |Link to Comment
  • Prospect's Growth Hides Bad Underwriting [View article]
    LZG,

    Great article supported by great detailed analysis and data.

    The biggest concern I have is how PSEC management touted its quality of lending but was not directly forthcoming when client situations went bad. Repeatedly stating they have not had any loans go non-accrual in six years (by converting them to equity and then writing them off quietly) is just wrong, way wrong. Not illegal, but certainly pushing the boundaries of ethical reporting.

    Not trusting management really makes me question my PSEC investment, which is one of my biggest holdings. It is too bad, too, since I thought they had a perfect lending company and a top quality organization.

    tk

    Long PSEC, but may scale back my holdings significantly unless management responds to their bad reporting approach.
    Mar 3, 2014. 04:09 PM | 4 Likes Like |Link to Comment
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