Mikebrah

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23 Comments

    • Wed Sep 17th 22:05 PM | Rating: 0 0
      Commented on:
      Is AIG a Buy Following the Government Bailout?
      Joe,

      I just read the prospectus on AVF and AFF and it says that AIG can defer the dividend for up to 40 quarters without causing a default.

      I wouldn't be holding your breath on that 55% yield.
      View article »
    • Wed Sep 17th 21:27 PM | Rating: 0 0
      Commented on:
      Is AIG a Buy Following the Government Bailout?
      Also think about this...

      Why on God's green earth would AIG take an 11%+ loan for $85B if they didn't think the company was worth considerably more than that?

      Would you take a $500k loan with 11% interest to save your house thats only worth $100k?

      I would wager thats the real reason LEH went BK. They realized at that point it was the smarter decision. This is a steep price for AIG to pay, so they most feel very strongly it is well worth it.

      Think about it.
      View article »
    • Wed Sep 17th 21:13 PM | Rating: 0 0
      Commented on:
      Is AIG a Buy Following the Government Bailout?
      The government does not get 11.5% on a $85B loan AND get 80% of the company... that is downright false.

      Think about it... if someone propositioned you with that offer would you accept? Bankruptcy would be a much more attractive alternative. Why would you put yourself through all the effort of saving the business at a ridiculously high interest rate loan, only to be "rewarded" with losing most of your company.

      If that were the deal, it would be far more profitable to declare BK, walk away, and start a new business sometime later.

      Think about it.
      View article »
    • Thu Sep 11th 15:13 PM | Rating: 0 0
      Commented on:
      Sell the U.S. Dollar into Strength
      I've been reading every well reasoned, viable economic article I can get my hands on the past few weeks. From what I can gather, there is pretty much a 50/50 split on both the inflation vs. deflation issue and the debate whether the US is first-in, first-out of a recession, or the epicenter of a global economic earthquake and therefore the worst-off.

      It seems to me that in a global fiat economy, the country with the weakest (but still valued and accepted) currency wins. For this simple reason, I think the US was, is, and will continue to be the most desirbale investment opportunity for years to come. If we are able to succesfully trade "toilet paper for oil" as one poster suggested, thats fantastic! We have unlimited toilet paper at our disposal.

      The one caveat is that a country's currency must remain accepted as "legitimate."... For example, Zimbabwe has something like a 20,000% inflation rate and is the best example of an unvalued, non-legimate currency.

      Thats the main philosophical issue most people miss when they talk about "exporting our wealth" and you see the Boone Pickens talking about the greatest transfer of wealth in history. IT'S NOT TRUE! We are trading worthless paper for the most desirable hard asset known to man (at the present). We then use this imported asset to fuel our entire way of life. Yes, if we can ultimately pay ourselves for this product in the form of alternative energy that would be great. But only if/when it becomes more profitable than importing.

      But it is NOT necessary anymore than it is to stop exporting all our wealth to Vietnam, China, etc. for all the cheap clothing they manufacture. The more we import of everything the better off we are. Importing with a fiat currency is trading toilet paper for actual assets, and that benefits all US citizens. Importing oil from another country is the equivalent of "importing" food from the grocery store to your household. It is advantageous to you to "import" your food because it is cheaper than the time and labor it would cost you to provide all your own food. This same relationship applies on a global scale. The one opposing argument that one could make is that we are relying on countries who hate us for our energy.

      But it works for both sides, because OPEC has absolutely NO USE for all their own oil. They are a one trick pony, and if not for our insatiable desire for their "pony" they would still be riding camels to the local marketplace. Iran would wipe itself out of existence if it did anything to truly hamper its oil exchanges with the US. The entire Middle East's economy would collapse if OPEC ever decided to shut off its pumps.

      The same is true with Vietnam's and China's labor market. Currently they have no use for all the available labor within their respective societies, so they essentially export their labor to us in the form of Nike clothing. This is good for both sides.

      Once the gold standard was universally dropped, the whole landscape became inverted. Currency strength is almost entirely undesirable in today's fiat economy. Look at how long the dollar has been in a long-term decline against all major currencies, this is not some recent development. And yet we remain the most innovative and wealthy place on the planet (for the most part.. in no way am I suggesting the US is anywhere NEAR ideal, but thats a whole other topic). It is the intentional strategy of US policymakers, the Fed, Treasury, etc.

      The only time a country's weak currency truly hampers its citizens is when they travel abroad. But anyone able to afford traveling abroad can afford this "tax."
      View article »
    • Sun Mar 30th 13:55 PM | Rating: 0 0
      Commented on:
      Short Interest at Record Levels
      PS - Long CROX...if that wasn't obvious. Initiated position at 18.95 and have been accumulating.
      View article »
    • Sun Mar 30th 13:47 PM | Rating: 0 0
      Commented on:
      Short Interest at Record Levels
      shortsqueeze.com has a lot of helpful short information available for free, and a subscription service with even more info.

      Is CROX dead, or is it being murdered? Personally, I think its the latter. I could understand the skepticism if it were still in the $70s, but at $17 it seems this short is over.

      40% short interest in a stock that has 30% forward earnings growth? 6.5x forward earnings? Chairman just bought $5m worth of stock at $20/share? Rampant international growth...I just fail to see the justification for an OVERWHELMINGLY bearish view of this company.

      Are the shoes ugly? Yeah, but they're really comfortable and extremely versatile and functional.

      The decelerating growth rate was a valid argument when the stock was in the 60s and 70s, but at $17 with its current valuations, the decelerating growth is irrelevant if they continue to grow at 20-30%.

      Anyway, just my $.02
      MM
      View article »
    • Mon Mar 24th 14:19 PM | Rating: 0 0
      Commented on:
      Starbucks is Struggling for Renewed Success
      Couldn't disagree more with this article (and the swarm of others making the exact same argument).

      For the past 6 months all I have heard is how bad of a buy SBUX is and how great a buy MCD is. I would (and soon will) happily take the other end of that trade. SBUX and MCD have roughly the same forward multiple, and yet with all the bad press its getting SBUX still has a higher expected growth rate, and SBUX's international growth is in a much younger stage than is MCD's.

      So what if McDonalds makes gourmet coffee? Skechers could start making basketball shoes, but that doesn't mean people will stop buying Nike. SBUX customers won't be switching anytime soon. You could get McDonalds quality coffee at home, or at a good gas station. Plus, if you buy MCD coffee that means you have to drink it at MCD, right? Although many people take theirs to go, I can't see MCD blossoming into coffee-shop hangout atmosphere. SBUX customers will continue their patronage.

      As to the recession argument, I think coffee (in all its forms) is as recession-proof as cigarettes. A recession may even make this a better buy because people will maintain their small pleasures (coffee and cigs) but put off buying a new JetSki.

      I've been watching SBUX all the way down hoping to get it somewhere in the 16-18 range. No position yet, but soon. This is a phenomenal long-term investment.

      One last pro is that Schultz is back. While there haven't been any earthshaking announcements, just the fact that a retired billionaire was so compelled/unsatisfied with his former baby that he needed to come back is the type of management I love to see in a company I own.

      Anyway, just my $.02
      No position (yet).
      View article »
    • Sun Mar 23rd 12:44 PM | Rating: 0 0
      Commented on:
      Crocs Appears Well Positioned, Stock Is Cheap - Baird
      Chairman of the board just bought $5M worth of stock at around $20/share. I understand this is not a foolproof reason to buy the stock, but compare it to something like Heely's (HLYS) where insiders are selling large chunks of stock even at ultra depressed stock prices and you have to at least think twice before dismissing CROX as a fad.

      I agree the shoes are hideous, but they are apparently extremely comfortable and functional. As to the knock-off issue, I don't think that is a big problem for something that retails for $20-40. People buy Coach and Luis Vuitton knock-offs because they can't afford the hundreds (or thousands) of dollars to buy the real deal.

      Even if CROX misses estimates and only grows at a "paltry" 15% for the next several years, this stock is way undervalued. 33% short interest is absurd, it seems pretty clear there are a couple big boys getting together to blast this thing, but how long can that work?

      Anyway, just my $.02
      Long CROX
      View article »
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