mcover

Equinix: The Biggest Fish in the Pond

In my opinion this is the biggest SHORT in the pond. Absurd valuation, debt growth is faster than revenue growth. They only grow if they spend aggressively - ie add new servers, storage and space. Their margins are without question unsustainably high (in fact there are competitors who price 20% below EQIX). No major barriers to entry. It reminds me of the Level III business model and we all (or at least most of us) remember how that story ended (-95%). Now they are buying one of their largest competitors, Switch and Data. Oh, and did I mention that gross margins for SDXC are 1500 basis points lower than EQIX and EBITDA margins 1200 basis points lower. So what happens to pro forma mgns when you put the two companies together? They go down! Does EQIX under-depreciate their equipment costs - sure looks like it. Yes, I am short the stock


On Oct 23 08:45 AM Paul Harper wrote:

> is a great area, I am looking hard at companies related to cloud
> computing. Rackspace seems to be one that gets a good rep from telco
> insiders.

Double Top or Advance the Rock?

I completely agree. Been doing this for 30 years - strangest market I've ever seen. We are having a terrific year but I am now (and its a recent adjustment) at the highest cash levels in a long long time? Also, it strikes me that the quality of the recent (as in last 7 - 10 days) has been especially poor with names like AIG and $2 stocks doubling or tripling being the norm. Not the stuff that normally preceded another leg up...

RIM, Mosaic Earnings Should Provide Upside Surprise

Vikram is absolutely right. What is also largely forgotten is that natural gas is the critical input for nitrogen fertilizer. Natty prices have risen sharply over recent months and the average analyst is using $7.25 gas prices in their models vs the $10 strip. Nitrogen fert margins are HIGHLY sensitive to nat gas prices. each 50 cent change in nat gas price impacts MOS eps by about 30-35 centes per share. The key point here is that while MOS will likely blowout this Q and pricing IS firm - models HAVE NOT been adjusted for higher input costs. Further multiples in this group are off the charts on peak earnings. Overlay that with a likely unwinding of the Q1 commodity trade and I think you have the udnerpinnings of a wonderful short opportunity.