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TMKrause

TMKrause
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  • Here's a quixotic twist: It appears that battling certain types cancer may lower the risk for developing Alzheimer's disease, new research suggests. After pouring over data, investigators have concluded that most kinds of cancer - with the exception of prostate cancer - seem to confer some degree of protection against Alzheimer's, reducing risk of the age-related brain disorder by anywhere from 9% to 51%. They've also linked a common form of cancer treatment, chemotherapy, to a lower risk for developing Alzheimer's-related dementia. [View news story]
    Great! Isn't this opposite of having your cake and eating it too?

    I have no idea what this means for my investment strategy. Maybe I need chemo?

    OK. Not funny.
    Jul 15 12:47 PM | Likes Like |Link to Comment
  • Ponzi Or MLP? Linn Energy's Unsustainable Distributions [View article]
    James and all, Thank you for the robust dialogue. I understand more about MLPs now but LINE is a complex and confusing case (which means I should not have invested a even a small amount in it), and I cannot see where LINE will go from here.

    James, what do you think is a fair market price for LINE? Do others have a view?

    FInally, I would encourage everyone to take a deep breathe, go for a walk and relax a bit. Life is too short to worry about the definition of a Ponzi scheme or to worry about double-entry accounting or who has what credentials.

    Business is about individuals, their motivations and characters. What is most telling about LINE is that there is a huge lack of transparency by the company's management.

    When should I sell?
    Jul 14 01:10 PM | Likes Like |Link to Comment
  • Sell Verizon - Its Brand Value Is Tarnished [View article]
    Agree with many others that this article is short-term myopia. I see no long-term implications for Verizon.

    Political implications of the cyber-spying is another question, but also very complex since Congress has been well-informed and cannot blame the Executive Branch. Mostly, I think average Americans MAY lead the protest against the government collecting such gigantic amounts of information at their new humongous data centers in Utah and Maryland. I don't believe that government analysis will be limited to foreigners, and even if it is, I think this is a direct violation of the First Amendment passed on December 15, 1791:

    "Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances."

    I leave to lawyers to decide exactly how invasion of personal correspondence violates American freedom of speech, but I am almost certain that it does.

    I sincerely hope that Americans will overturn the Prism program which has echoes of Orwell's 1984 and the abuses of the former Soviet Union. The last thing America needs today is the return of a new strain of McCarthyism.
    Jun 11 11:55 AM | 2 Likes Like |Link to Comment
  • No Longer a Fan of Aberdeen Asia-Pacific Income Fund [View article]
    I've also had FAX for many years and have had a great return, but I think Mr. Van Meerten has made a very important point for nearly ALL fixed income issues or collective vehicles. With the 30-year US Treasury having increased over 25bp in May, from 2.99% on April 30, this is an 8.4% increase in one month, which is huge, but, I think only the start. So I am struggling to decide what to do with investments like FAX and other fixed-income types. I think there could easily be another 20% decline in these investments by year end as QE3 eases and the interest rate curve begins to resemble something more normal. Would be very grateful for the insight of others!
    Jun 11 11:34 AM | Likes Like |Link to Comment
  • Taking A Closer Look At Microsoft Using DuPont Analysis [View article]
    Great article. The discipline of the DuPont analysis will never fail, but how to interpret it will always be uncertain. You are right to say that MSFT needs to focus on profitability, but more importantly MSFT needs to stay relevant in the IT world, and I think their move towards mobile and retailing is doing exactly that. In this case, I think we need to understand consumer trends better and to see if the Nokia/MSFT partnership can move MSFT into a new and better consumer space despite all it's corporate position, which must be maintained.
    Jun 9 01:05 PM | Likes Like |Link to Comment
  • Apple Could Destroy Xbox One With An iTV [View article]
    As several others have written, more or less, I think this article has things backwards and is deifying Apple with the hopes that they will overtake MSFT and Sony in a space they have never occupied. That seems unrealistic to me. So, the title of this article is hyped and misleading, in my humble opinion.

    More importantly, the writer made one very important and correct observation. There is a convergence of technology resulting in media integration for the home. This is occurring now and will continue. Even if you buy something as low-tech as a DVD player, you will see that many come with a WIFI internet link, and thus uTube, WSJ, and many other things are now available via your old DVD player.

    What I think is obvious is that MSFT has launched Xbox One, which sounds to me like the leading gadget in this home media integration space. While some gamers will be miffed, non-gamers will be more interested in this integrated product. MSFT is first in this space, far ahead of Apple.

    I think that MSFT is looking forward in a very positive way, even if the immediate results from the Xbox One launch are limited.

    This is the same response that many analysts have given to Windows 8; damning it for lack of immediate results. Again, I think MSFT is looking forward, even if W8 is a flawed product. What W8 does for MSFT is to take them into the tablet and smartphone space in an important way, and to introduce the concept of a common OS for all key consumer IT access products.

    I'm just an ordinary consumer with no special IT expertise, but I like to watch this space, and I my views may be completely wrong.

    Thank you for a stimulating article!
    May 27 12:01 PM | 5 Likes Like |Link to Comment
  • Hardware Sales Contribute To Increased Sales And Profits At Microsoft [View article]
    An excellent response. Oddly, while I was aware of all these bits and pieces, I never looked at them holistically. You have described the risk well. Time to think about dropping my gmail account. Thank you.
    Apr 21 04:57 AM | Likes Like |Link to Comment
  • Hardware Sales Contribute To Increased Sales And Profits At Microsoft [View article]
    I should look at the tablet/mobile numbers compared to PC numbers, but in principle, what you say makes absolute sense. I and the market have probably over-responded to the short-term, high-growth segment of the computer world. I will keep this in mind in watching the segment in the future.
    Apr 21 04:54 AM | Likes Like |Link to Comment
  • Hardware Sales Contribute To Increased Sales And Profits At Microsoft [View article]
    Michael, thank you for your article. You have given a human analysis about products that others only analyze from a distance, without recognizing that people buy things they like, things that work. And that markets change because of people, not because of analysts.

    Mostly, I agree with your article, except for what you wrote about Android. I was an iPhone addict like many, but recently I bought Sony's Xperia Z, which I think is the best smart phone on the market... I think it is FAR better than the iPhone 5. Of course, this will change in a few months, except that the Android user system is BETTER than IOS, from a user perspective, as far as I can say. The point is that I feel no security risk from Android; I need to understand why I should.

    I would like to challenge your view that Microsoft and Intel can prevail. There is no positive buzz about MS Windows 8 anywhere in the market. When and why will consumers decide it is a superior product, even if it is today? Will Nokia, MS's mobile partner survive given the overwhelming competition from Android devices? If not, how will MS remain relevant in the mobile space; the most important space?

    I worry that you and I are logical, non-cyclical investors, but that we do not fully understand the consumer sentiment concerning tablets and mobiles. I agree with you that Apple is descending, but I'm not sure MS and Intel can begin to ascend. I think Android/Google, Samsung, HTC, and other Anrdroid-linked hardware providers is where we will see growth.

    That being said, I am long Intel and MSFT, but mainly for the yield. For how long, I wonder.
    Apr 19 02:17 PM | 1 Like Like |Link to Comment
  • Buy Hercules Tech Growth Capital Instead Of OCZ Tech [View article]
    Thanks! Hearing about Hercules' deals is especially helpful. Your short article helped me understand their business better than several analyst reports that focus on lots of analytics with no real feel for the business.

    I bought Hercules after some research and then read another SA member who was down on them for taking single sector risk. I've held in there since I want tech/bio exposure. You're article encourages me.
    Mar 27 01:10 PM | Likes Like |Link to Comment
  • I Invested In Microsoft But I Have More Than A Few Words For Steve Ballmer [View article]
    A really great and BALANCED editorial. Thank you! I agree with it all (except that maybe W8phone may take off) and I admire you for writing so carefully! You did not whine or overreact, but really stuck to the facts. As others have said, I hope your letter goes to MSFT's board. I still think this company has great potential, but it has not been unleashed. I can't comment on Ballmer as a CEO/individual, but I do know that corporate culture starts from the TOP, and I agree that MSFT's corporate culture has not lived up to its ROOTS. Can you imagine how Microsoft of the 80s would act today??? That is what shareholders are looking for.

    Instead, we have a kind of utility, where we can safely invest for a yield but not much of a future. I have a little MSFT in my portfolio, but I am reluctant to increase my holding. INTL is another utility, but with better upside. I have bought more INTL this past year.

    Mr. Ballmer, who are your successors? What is your vision for MSFT? Will MSFT become a server company and game console player with a monopoly on Office, but nothing else, or can MSFT lead the way into the mobile world where we will see an evolution of 5" smartphones (Sony Xperia Z) and mini-tablets?

    Look to IBM in the 1980s and Apple in the 1990s. Which will MSFT be? A solid utility or a leading market innovator?
    Mar 10 01:54 PM | Likes Like |Link to Comment
  • Wells Fargo: 2 Huge Upside Catalysts [View article]
    Wells Fargo is a bank I want to love given its traditional management, which served it well in the financial crisis, but I am very doubtful of your assumptions which imply a relatively rapid growth in the US Economy (i.e., this year) which very few (including me) are expecting, and a relatively rapid rise in interest rates, which is also relatively unexpected. With Washington's gridlock on the budget, I expect slower U.S. growth and continued low interest rates to support a weak economy and an even weaker job market. I could easily see this lasting for another 3 years until we are in the next election cycle which will introduce more uncertainty. All of this ignores the ongoing problems in the Eurozone, which also seem to require a 3-5 year fix at best.

    I own a little of WFC already, and I must say that I'm disappointed by its performance in 2012. The truth is that WFC has had a hard time getting past $35, which is as high as its been since Sept 15, 2008, when it almost hit $40. This is not a stellar performance. There have been far better opportunities in the oil and gas, pharmacare and REIT sectors, to name a few.

    At this time, all of WFC's performance indicators run absolutely contrary to your assumptions. Their NIM dropped 35bp in the last half of 2012 and their pipeline of mortgages also declined during this period. Simply speaking, their risk-off approach is hurting their bottom line. At the same time, they are holding more of their newly originated mortgages, which means they are foregoing fees and assuming more credit risks.

    In terms of capital, they have less cushion than I would have thought with Tier I of only 10.1%.

    For the last two years, they've focused on digesting the Wachovia merger and they've done a good job, but their expense-to-revenue ratio is still at 58%. The most efficient banks in Asia and other emerging markets have expense ratios well below 50%.

    Finally, Wells is trading at 1.7x tangible BV, which is well above the average of its national-tier top peers. I generally want to buy a bank below 1.5x BV and sell above 2.0x BV. Of course, if a bank is growing above 15% p.a., one can make an exception, but Wells only grew 6% last year.

    Nevertheless, your scenario may well be correct and it may explain why Warren Buffet holds so much WFC, but for my own account, I feel more comfortable holding what I have and waiting to see better growth and profitability from this bank, or at least a clearer macro picture that would help support your sanguine assumptions.
    Mar 4 01:41 PM | Likes Like |Link to Comment
  • What's up with mortgage REITs and special dividends (first CYS, now AMTG)? REIT dividends have always been taxed as ordinary income, and thus won't be hit by a hike in the dividend tax rate. It smells of the companies trying to throw in some nominal good news amidst big dividend cuts. Trouble is, the use of this "slush fund" money now makes bigger cuts more likely in the new year. AMTG now -0.2% premarket. [View news story]
    AMTG's 4th quarter dividend announcement was more complicated than I knew. The company had high income in 2012 due to MBS sales and will have lower income in 2013. Management lowered the base dividend rate in anticipation of lower income, which is wise. Other mREITs will likely have similar experiences.

    Here's a really good summary of AMTG's status from another Alpha member: http://seekingalpha.co...
    Dec 15 01:28 PM | Likes Like |Link to Comment
  • Apollo Residential Mortgage Muddies Up The mREIT Dividend Waters [View article]
    Thank you for a very sensible analysis of AMTG's fourth quarter dividend and its prospects going forward. You've clarified several questions that I had about the nature of AMTG's underlying income and implications for next year.
    Dec 15 03:07 AM | 1 Like Like |Link to Comment
  • What's up with mortgage REITs and special dividends (first CYS, now AMTG)? REIT dividends have always been taxed as ordinary income, and thus won't be hit by a hike in the dividend tax rate. It smells of the companies trying to throw in some nominal good news amidst big dividend cuts. Trouble is, the use of this "slush fund" money now makes bigger cuts more likely in the new year. AMTG now -0.2% premarket. [View news story]
    There is a very simple explanation to this. Because a REIT is a unit trust, it must pay out 90% of its income to its unit holders (read, shareholders), or it will be subject to tax at the Trust level. Here's a basic explanation of how REITs work: http://bit.ly/Xm9DF3

    AMTG did not increase its dividends during the year to account for its increasing levels of income. As a result, it needed to declare a special dividend for Q4. I think this was widely expected by the market, as a well-informed Alpha writer predicted this special dividend several months ago.

    Also, please note that the dividend will be paid in January of next year and recipients will be taxed at the prevailing income rates for 2013, which are currently unknown. So the idea that the special dividend is designed to save shareholders taxes is incorrect.

    Others on Alpha have analyzed AMTG and understand the fundamentals of the company much better than I do. However, I don't think the special dividend means that the company is now rushing to increase dividends which will decrease their ability to pay a consistent yield in the future.

    As with all mREITs, AMTG's income will depend on interest rate movement, whether they buy agency or non-agency mortgages, the overall performance of the mortgage market, and actions by the Fed to buy mortgages which can distort the market quickly.

    I am long AMTG.
    Dec 14 10:33 AM | 2 Likes Like |Link to Comment
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