User 183867's Comments

More on Ackman / Target

Sat, 15 Aug 2009 08:49:37 -0400

Todd, your argument is internally inconsistent. You imply it doesn't matter whether his beneficial interest consists of common or options and then when he lowers his beneficial interest but increases the common component of the interest, you say he took up his stake. This logic is very shaky.

Agree with the previous poster -- Bill Ackman's idea works fine in a spreadsheet, but sucks in the real world. Taking a pristine property portfolio and levering it up to gain a tax shield might be a fine exercise for a summer associate willing to show you his Excel skills, but in the real world it imposes a strain on the company's credit, which can completely wipe out the benefits of the tax shield in a higher cost of equity and total capital. It is a bad idea.

Procter & Gamble Income Statement Analysis for June 2009 Quarter

Thu, 06 Aug 2009 08:45:58 -0400

What the heck IS this? A narrative of P&G's income statement? Do you get paid by the word or click? This added zero value. Not to be a hater, but come on...this was useless.

Wall Street Breakfast: Must-Know News

Sun, 09 Nov 2008 12:32:32 -0500

Labor is about 13% of COGS and contribution costs are about 55-60% of COGS. GM has a business model redesign issue that is much more important to unit costs.

On Nov 06 02:25 PM axelrod608 wrote:

> Robert Sare - if I get what you're saying correctly, the unions are
> willing only to choose between two options -
>
> work for wages that are unsustainable and will kill the company or

>
>
> not work.
>
> The ONLY thing that will fix our auto industry is to restrucure costs,
> the greatest of which is personnel. Without that, bankruptcy is
> just a matter of time.
>
> And it would also require serious reductions in officer, director
> and white collar salaries as well.
>
> There is NO other solution. Current personnel costs are unsustainable,
> long term.

Future of Auto Industry Up for Grabs with GM's Volt Debut

Wed, 17 Sep 2008 22:48:16 -0400

<>

I am a GM and A123 bull, but I haven't been able to substantiate this at all. Do you have a citation for this?

Harley Davidson Financing Leading the Pack

Fri, 15 Aug 2008 23:18:50 -0400

User, you are getting a little didactic. I never said they could not suffer losses in their lending business. I just questioned whether foreclosing on loans and auctioning off used motorcycles was a good thing or not for HOG. I suspect it is not.

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So they are not supposed to foreclose on loans? This is like saying a car manufacturer should not incur steel costs, labor costs, or costs for tires. It's a fact of life; loans go bad and you have to repossess. The idea is to look at the loss experience via frequency and severity and compare that against net interest income + fee income - noninterest expenses, look at that versus asset and capital, and make your judgment from there. Just saying "they take losses, ergo it's bad" is a pointless argument, if that's what you're trying to say.

Harley Davidson Financing Leading the Pack

Mon, 11 Aug 2008 21:42:51 -0400

But doesn't HOG lose on the lost financing contract with the original buyer? So they sell for 28% over what they sell to the dealer, but they lose their loan and they have to pay all costs involved in foreclosing on a loan.

I doubt HOG would call this a profit center. In the real estate context, they avoid foreclosures in part because of their expense.

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Credit losses are part and parcel of the lending business, a business which is damned profitable for Harley-Davidson. Credit losses are an expense like any other. Those companies that manage them best, which is what a high recovery value on recovered collateral means, relative to revenues win. Saying H-D can't have losses is like saying a business can't incur expenses; in other words, nonsense. H-D incurs low frequency of losses and low severity once it does, which are two good reasons why its pretax pre-provision ROA is so high and why the after-tax ROA and ROE are so attractive. In addition, the asset integrity and the capital integrity of the company's balance sheet is high because of the low severity of its loan losses. These evince adequate reserves, the quality of the balance sheet, and the quality of the income statement.

Why Visa Got Spanked

Sat, 09 Aug 2008 15:14:22 -0400

The only reason Visa has come down is due to a change in expectations. All the other stuff you're taking about above is total nonsense. Expectations have diminished somewhat because emerging markets are growing more slowly, which diminishes the NPV of the company since that's biggest driver of future value creation. This diminishes the stock price -- it's very simple.

Anyone with half a brain can figure out this is a wonderful business, but the stock market's not dumb, either, and it has priced in some very high expectations. There are enough people who actually have half a brain that believe everyone else possesses a quarter brain that this has been bid up to full value. Only if you believe there is no risk in this business (only the jackasses focus on the credit risk straw-man argument; there is plenty of regularly risk and customer concentration risk) would you believe 35 to 40 times earnings allows for excess returns in the future.

Hansen Narrowly Misses Estimates, But Earnings Are Far From Failure

Fri, 08 Aug 2008 08:17:35 -0400

I agree the company is undervalued and this quarter was fine, but disagree with your read on margins. Adjusting for some chunky corporate expenses in Q2 last year, operating expenses were up 22% on 15% revenue growth. With gross margin down, EBIT margin contracted by 200 bps, to a still quite-attractive 27.6%. What's most interesting is operating expenses per case, adjusting again for corporate items last year, were up 15%. Ex G&A, I would bet marketing was up even more per case. The company isn't making its numbers by stinting on marketing support and product innovation and they're not goosing volume by increasing trade promotion per case. That's the bullish takeaway here.

Harley Davidson Financing Leading the Pack

Fri, 08 Aug 2008 08:01:48 -0400

Mallarde,
You asked about the quality of the on-balance sheet portfolio, so I gave you the answer because you apparently cannot access or interpret the data yourself. Sorry you don't like the answer, but the implication of your question about retaining the crap they couldn't sell is without merit.

How discretionary are their charge-offs? Why don't you figure out how to analyze delinquency roll rates, frequency of loss, severity of loss, and reserving and then get back to us on that.

Harley Davidson Financing Leading the Pack

Thu, 07 Aug 2008 08:37:43 -0400

For those with the patience to power through the above article, here is where the smoke and mirrors comes in:

---

Uh, net charge-offs ran at 0.6% of the on-balance sheet portfolio and loan loss provisions ran at 226% of net charge-offs. These are annualized numbers, so dividend by four for the quarterly rate. Loan loss allowances at the end of the quarter were equal to 157% of the annualized net charge-off rate. Given these numbers (look it up in the Q), I wonder about what kind of smoke and mirrors Mallarde is using.

Norfolk Southern a Sell Based Solely on Valuation

Sun, 03 Aug 2008 00:02:50 -0400

I agree with Railtruck. Ockham Research has been the only Co. to make negative comments. All other research has only good things to say about NSC & other railroads.

----

Which is almost reason enough to sell.

GM Should Tumble on Merrill's Pessimism

Wed, 02 Jul 2008 08:48:07 -0400

Are you kidding? The last buy on the street lowers his rating and price target and you think that's negative? Bankruptcy risk? Like the CDS market hasn't picked that up yet? Wow. "Seeking Alpha" doesn't mean you're going to find it in this call.

Moto-Kodak Cameras? You Bet

Sun, 04 May 2008 08:14:35 -0400

Kodak and Motorola announced this partnership at CES 2006, nearly 30 months ago:

LAS VEGAS, Jan. 5 -- Motorola, Inc. (NYSE: MOT), a global leader in wireless communications, and Eastman Kodak Company (NYSE:EK), the world’s most recognized brand in digital imaging and the U.S. market-share leader in digital cameras, today announced a 10-year global product, cross licensing and marketing alliance intended to fulfill the promise of mobile imaging for the benefit of consumers.

American Express: False Sense of Security?

Mon, 28 Apr 2008 07:55:45 -0400

<1. American Express, (for the most part) requires monthly payoff and does not allow debt carryforward.

2. American Express caters to the "Baby Boomers" who are minimally affected by the credit crisis, expecially the "sub-prime" crisis.>

58% of the company's card assets are revolving loans.

Also, you don't get a national credit problem without involving the country's largest generation. The Baby Boomers are, most assuredly, in the thick of the subprime crisis. "Subprime" doesn't necessarily mean someone who has no means. Subprime means someone who has stretched themselves to far. In any case, this isn't just a subprime crisis. There are plenty of people who are not subprime but who are stretched and who have structured their balance sheets poorly.

A better argument would involve the 12% of card receivables and loans that are backed by corporations, where the risk of default is minimal.

American Express: False Sense of Security?

Sat, 26 Apr 2008 14:16:22 -0400

Amex's Q1 provision for losses on the charge card went up 65% YoY while net charge-offs went up 32%. Charge card receivables increased 7% YoY.

For cardmember loans (revolving credit), provisions for credit losses increased 43% YoY and net charge-offs were up 58% while loans increased 17% YoY. The coverage of loan loss allowances to delinquencies increased YoY to 101% from 100% last year.

I don't know where your numbers are coming from, but those are the numbers as I see them.