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Owen

Owen
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  • Lessons From A Dozen Years Of Short Selling [View article]
    Well said, Dialectical Materialist.

    The odds of the Don't Come bet in craps are actually slightly better than those of the the Come bet, yet it is still an unpopular bet that attracts derision.
    Mar 3, 2015. 11:21 AM | 2 Likes Like |Link to Comment
  • Lessons From A Dozen Years Of Short Selling [View article]
    Well said, civ-e.

    I engage in short selling quite often myself, yet I despise the type of glee-- verging on schadenfreude--that is often expressed by short sellers when the stock goes down.

    I'm not sure about the exact ratio, but it seems many short sellers are far more delighted by the misery of others than by their own enrichment.
    Mar 1, 2015. 09:16 AM | 1 Like Like |Link to Comment
  • Lessons From A Dozen Years Of Short Selling [View article]
    < It's not rocket science. >

    I don't know about that. Kahneman (relying on his work with Tversky) won a Nobel prize for his work on exactly this topic, while I don't know of anyone who won a Nobel for rocket science.

    Utility functions are a complex and fascinating field. That's why, if the author of this article developed methods for quantifying gratification, it'll be great if he shared those with us.
    Feb 27, 2015. 01:57 PM | 2 Likes Like |Link to Comment
  • Lessons From A Dozen Years Of Short Selling [View article]
    < I even got a cold call from a broker seeking to get me to open an account with a short position in February 2009. >

    Good one! Yes, on March 6, 2009, one of the talking heads on CNBC insisted that "Now is not the time to buy equities."
    Feb 27, 2015. 12:10 PM | Likes Like |Link to Comment
  • Lessons From A Dozen Years Of Short Selling [View article]
    "Economical utility"? I think you may be confusing several terms here.

    It's true that the economic utility of $10 is less than ten times the utulity of $1. But once a dollar is in my pocket, I gain the same economic utility from it, whether I laboured night and day for it, or found it on the sidewalk.

    I understand that it is more gratifying to win a long shot than a bet on the favourite. But I was surprised to see the author measure this gratification to within a factor of two, with his "5-10x" quantification.
    Feb 27, 2015. 11:57 AM | 2 Likes Like |Link to Comment
  • Lessons From A Dozen Years Of Short Selling [View article]
    <making $1 on the short side is 5-10x more gratifying than making $1 on the long side.>

    How do you quantify gratification? I'm interested in your methodology.
    Feb 27, 2015. 11:24 AM | 2 Likes Like |Link to Comment
  • Vornado Realty Trust: Screaming Pullback [View article]
    charliezap, you make a going point. However, both the GAAP P/E valuation metric and the FFO metric suffer from inherent flaws. While GAAP P/E often gives undue weight to the accounting fiction of depreciation, FFO ignores depreciation altogether.

    Even well-located properties required major maintenance or upgrades every few years. Retail properties, specifically, are routinely torn down and rebuilt, if they are to retain their appeal to shoppers. Ignoring this massive expense, or accounting for it as a recurring "one time event" gives an overly rosy picture of the REIT's finances.

    Going by dividend alone is also dangerous. While the 90% rule means dividends closely track earnings, REITs can easily "manage" their GAAP earnings by selling select properties in their portfolio based on the capital gains or losses each carries on their books. A simultaneous purchase of a similar property would make the transaction a wash from the operations side of things, but still trigger the profit or loss they need for GAAP reporting purposes.

    A meaningful analysis of a REIT must include a market value assessment of their portfolio, along with the forecast trend for it, in addition to the operations cashflow.
    Jan 30, 2015. 06:47 AM | 1 Like Like |Link to Comment
  • The Potemkin Parking Lot: Related Party Transactions And Questionable Revenue Recognition At Kandi Technologies [View article]
    Good comments, Arthur.

    My comment wasn't meant to assess the veracity of those defending the stock, but merely to summarize them. Specifically:

    1. Those defending the valuation did so without any fundamental analysis to support their claim. Basically, the reasoning is, the company is growing, so whatever you're paying for the stock now, it's worth it. Same logic that took us to the 1999-2000 market top.

    2. As the author pointed out, none of the major car companies sell most of their fleet to one non-arm's-length company. Whether we find this suspicious or not, the fact remains that it is different, and warrants our attention.

    3. I have no way of telling who is right--the company or the author. However, the author raises some valid concerns with the reported numbers. I wouldn't dismiss what he said based on his disclosed interests any more than I'd dismiss the company's reported numbers based on the fact that they want to appease shareholders and raise capital. Many of the commenters here did exactly that: point out the author was short the stock, and use that to dismiss anything he says. That, in my view, is a childish approach to assessing analyses.

    4. While most of those comments have since been erased, there were several who contributed nothing beyond puerile jabs at the author's name.

    Again, I am neither long nor short the stock, and I don't have any strong opinion about it. My comment was about the generally poor level of refutation I saw in the responses here.
    Jan 29, 2015. 08:05 AM | 5 Likes Like |Link to Comment
  • The Potemkin Parking Lot: Related Party Transactions And Questionable Revenue Recognition At Kandi Technologies [View article]
    "I'm a founding member of the North American carshare association. KANDI just applied to join. That's good enough for me. "

    Exactly. If they have the $300 fee for the application, they should be good enough to invest in.

    Would you invest in my company, too, if I applied for that carshare association thingy? I don't make or sell any cars, but I can shift some money around between companies I own, if it'll win me your favour. Do we have a deal?
    Jan 28, 2015. 02:47 PM | 4 Likes Like |Link to Comment
  • Lowe's Reaches Nosebleed Territory; Look Out Below [View article]
    "PE is way too high now."

    Not according to the author, who believes it is only 15-18% above where it should be. Although, that still puts it in "nosebleed territory", apparently.
    Jan 28, 2015. 10:43 AM | Likes Like |Link to Comment
  • The Potemkin Parking Lot: Related Party Transactions And Questionable Revenue Recognition At Kandi Technologies [View article]
    This article has certainly stirred up some strong emotions, especially from those who believe the stock is a good investment. However, I couldn't find any comments disputing the numbers presented in the article. The main objections I see among the comments can be divided into several categories:

    1. The company is growing quickly, has an unlimited market, is winning accolades. Forget the numbers; buy!
    2. All car companies engage in this practice, to one degree or another. Y U HATIN ON POOR KANDI??
    3. Ha! The author is short the stock, and benefits if it falls. Why should we believe anything he says?
    4. Ha! The author has a funny name. Why should we believe anything he says?

    And that's pretty much it. I would have thought that a disputed sale of 15,000 cars would be pretty easy to prove if it were true, but I might be naïve.
    Jan 28, 2015. 06:55 AM | 9 Likes Like |Link to Comment
  • The Potemkin Parking Lot: Related Party Transactions And Questionable Revenue Recognition At Kandi Technologies [View article]
    Where did the other half of the comments go? We had over 80 comments a few minutes ago, and now there are only 41. Someone is really busy with that "Delete" button. I wonder how long this comment will stay up...
    Jan 27, 2015. 12:59 PM | 14 Likes Like |Link to Comment
  • Tiffany's Growth Is More Than Priced In; Look Out Below [View article]
    This article would have been useful last Friday, when the stock was trading at $104. But now, valuing an $88 stock at $75 isn't much of a revelation, and leaves almost no margin of safety for a potential trade.
    Jan 13, 2015. 12:14 PM | 2 Likes Like |Link to Comment
  • Don't Get Fooled By This DCF Valuation: Nike Is Overvalued, Not Undervalued [View article]
    Correct. Well-established brand names can be evaluated more accurately, since their contribution to future earnings can be assessed based on its contribution to past earnings.

    Better predictability means lower volatility, which in turn allows us to use a smaller margin of safety in evaluating a company, and as you pointed out, a lower DCF discount rate. This is exactly the premium provided by a strong, mature brand name. Adding another premium on top of that would double count that benefit.
    Jan 7, 2015. 10:24 AM | Likes Like |Link to Comment
  • Why I Cashed Out Most Of My LendingClub Shares [View article]
    The 60 million share number _is_ fully dilutive. The 372 million shares that haven't been issued aren't dilutive, since if and when they are issued, they'll be sold to the public to raise additional capital, not issued as a bonus to employees.

    Taking the numbers from a company's regulatory filing makes more sense than going by their prospectus. I find it hard to believe that Bloomberg, Reuters, Yahoo and all other financial reporting agencies got the market cap wrong, while only Mr. Wu has it right.

    You'd be well advised to admit your mistake and correct it, if you want your analyses to be taken seriously.
    Jan 7, 2015. 10:18 AM | 1 Like Like |Link to Comment
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