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  • The IBM Valuation Disagreement [View article]
    Mark, looking at IBM over the last 10-15 years you do not see the correlation of stock price to earnings because like MSFT, GE, ORCL, etc. these one time growth stocks saw their multiples contract. At 10X, which is around where IBM is trading, this is likely a level that better reflects its growth constrained size. I imagine that should IBM be able to successfully divest their no-growth legacy businesses and continue to demonstrate that their new business initiatives can post 10%+ growth that ultimately the market will reward the stock with a multiple closer to 15X. I am not counting on 15X anytime soon, but 11X to 12X over the next several years seems reasonable.
    Nov 6, 2015. 05:24 PM | Likes Like |Link to Comment
  • The IBM Valuation Disagreement [View article]

    Like the author, Warren Buffett and virtually any other successful investor (not trader), I believe that stock ownership is in fact a fractional ownership of an underlying company and thus the value of that ownership will ultimately reflect a reasonably fair and accurate present value of future cash flows that will either be used to invest in positive ROI endeavors, payout dividends or buy back stock.
    Nov 6, 2015. 05:18 PM | 2 Likes Like |Link to Comment
  • The IBM Valuation Disagreement [View article]
    G2, Google has the algorithmic know how to process vast amounts of data for their own use and that is one reason why they have been so successful. However, IBM has the capability to process, analyze and package all of this data for others to use and that capability distinguishes them from Google and Microsoft.
    Nov 6, 2015. 05:14 PM | 3 Likes Like |Link to Comment
  • The IBM Valuation Disagreement [View article]

    I will take the bait. Cloud computing first of all is a rapidly expanding market, much like network computing was a rapidly expanding market in the mid-nineties through the mid-2000's. Today, all technology is networked, which led us to cloud computing. Cloud computing is now a business model that has evolved from network computing. The next ubiquitous technology shift that will evolve from cloud computing will be "internet of things". What company is better positioned to be at the center of managing all of the data which flows from the push to "internet of things" than IBM?
    Nov 6, 2015. 02:47 PM | 7 Likes Like |Link to Comment
  • The IBM Valuation Disagreement [View article]
    Very interesting analysis which largely validates a low to mid-teen IRR that I forecast over the next three years. IBM appears to be a very good risk/return proposition at current levels.
    Nov 6, 2015. 02:29 PM | 1 Like Like |Link to Comment
  • Retirees: I Did Not Buy IBM To Sell; It's About The Dividend Income, Stupid [View article]
    elvis, your comment that the author did not mention "why the market has been in violent disagreement for the past two years" jumped out to me. A value seeking investor cannot worry about what "the market" agrees with or disagrees with. Values would not exist is the market does not routinely over-shoot or under-shoot the long-term value of businesses. The fact is that the market is a big auction where the vast majority of daily participants are not bidding on shares of companies based upon any well thought out estimate of long-term value. Instead these auction participants are either following a herd or believe that they can catch some market momentum and profit on a short-term trade. This is not a particularly effect manner to discount long-term value.
    Oct 28, 2015. 07:59 PM | 5 Likes Like |Link to Comment
  • Retirees: I Did Not Buy IBM To Sell; It's About The Dividend Income, Stupid [View article]
    If you are looking for a historical comparison for IBM, why not just look at IBM over the last 100 years or so? IBM is IBM, not Kodak, certainly no KO. Generally speaking a slow growth dividend paying stock is not something that I am drawn to, however I like the extreme negative sentiment and low valuation created by it. I like that the company has a stellar balance sheet and strong cash flow. I like that a reinvention period for a company like this provide many possible catalysts over the next couple years. All the while an investor can collect a 3.50% dividend.
    Oct 25, 2015. 03:37 PM | 3 Likes Like |Link to Comment
  • Retirees: I Did Not Buy IBM To Sell; It's About The Dividend Income, Stupid [View article]
    I am a value seeking investor, not a value investor or a growth investor, and certainly not a traditional dividend investor. That being said, I agree 100% with the author when it comes to IBM today. The company is in the midst of what is typically a once every 20 years realignment of its core businesses. The stock's valuation is at the low end of the historical range, the sentiment surrounding the company is overwhelmingly negative, however the fundamentals of the balance sheet and cash flow are as strong as ever. I don't have high expectations for top line growth for IBM over the next 5 years, however even if the company meets today's low consensus expectations and the P/E multiple is at 10x or higher, the total return for an investor purchasing shares today should equate to an annualized return in the mid-teens. Not too bad for an investment in a high quality slow growth company.
    Oct 24, 2015. 05:32 PM | 3 Likes Like |Link to Comment
  • Total: Undervalued Oil Stock With A Secure 5% Dividend [View article]
    Bob, thanks for the article on Total. I was surprised that you had not mentioned Total's significant ownership stake in SunPower, one of the top integrated solar energy companies in the world.
    Jul 6, 2015. 08:27 PM | 2 Likes Like |Link to Comment
  • Aaron's: Likely Approaching Fair Value [View article]
    Nice overview, thanks.
    Jun 24, 2015. 12:17 PM | Likes Like |Link to Comment
  • Gilead Versus Celgene: Value Play Versus Reinvestment Opportunity [View article]
    Something has to give with GILD given it current cash position and ongoing cash generation. Either the company does a large acquisition, buys back a significant amount of stock or institutes a dividend, under all of these scenarios GILD would likely create shareholder meaningful value. I personally believe that the most likely actions will be acquisitions or buybacks. A meaningful dividend would likely send the wrong message to growth investors.

    Doing nothing but growing earnings by a very conservative 10% over the next few years is probably the lowest probability scenario, however even this scenario would likely drive the PPS up to around $135 based upon a very modest P/E multiple of 12.

    As investors we do not necessarily have to make sense of the valuation assigned to a stock by the public markets, all we really have to do is be comfortable forecasting what the outcome of various future scenarios and based our investment entry point on an assessment of downside versus upside risk.
    Mar 31, 2015. 07:45 PM | 1 Like Like |Link to Comment
  • General Motors: Massive Share Buyback A Victory For Hedge Funds And Shareholders [View article]

    The forward P/E on current year estimates excluding one-time expenses is around 8X and the forward 2016 P/E at the current price is around 7.7, not including the impact of the buyback.

    With a forward EPS growth rate of approximately 10% and a 3.8% forward dividend yield, GM's current valuation is very compelling based upon these metrics.
    Mar 9, 2015. 08:18 PM | 7 Likes Like |Link to Comment
  • Friday's Sell-Off: Assessing The Damage And Opportunities [View article]
    The Federal Reserve engaged in very large and sustained QE following WWII when our debt levels are also very high relative to GDP.
    Mar 8, 2015. 08:21 PM | Likes Like |Link to Comment
  • One Reason Investors Should Not Buy Seadrill's Stock [View article]
    Brian, you said it yourself in your article, no one really knows the near to intermediate term level of oil prices. That uncertainty for the management team of a company like Seadrill means that the last thing that they should be doing is thinking about whether or not they should be buying back stock. Mr. Hendrickson may be buying stock in some convoluted way through a related vehicle, but the company needs to remain as liquid as possible until such time that oil prices have stabilized at higher levels and the uncertainty surrounding the Russian sanctions eases up.
    Mar 1, 2015. 04:38 PM | 2 Likes Like |Link to Comment
  • Predictable Fast Growing Healthcare Dividend Growth And Growth Stocks For Your Retirement Portfolios: Part 5 [View article]
    Robert, I assume that you were directing this post to a comment that I made about GM once again being the number one auto manufacturer in the world. You point to Toyota, who still generates more revenue than GM. My comment pertained to global market share of vehicle sold. I believe that when 2014 figures are finalized GM will have edged out Toyota. See the copied link below which shows ranking by this measure and provides an estimate for 2014.
    Feb 16, 2015. 02:53 PM | Likes Like |Link to Comment