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  • Angie's List: Portrait Of A Catastrophe [View article]
    I hear passion and rancor, but not much in the way of fundamental analysis.

    As an analyst, you don't have to be neutral, but in this article, your emotions outshine any factual analysis. Where is the cashflow analysis? Fair market value estimation?

    Yes, we get it; you hate their commercials. So what? How will those affect the company's profitability?

    I was hoping for some numbers that would help the reader assess ANGI's future prospects. Instead, all I got is a rant.
    Jul 8, 2014. 09:16 AM | 14 Likes Like |Link to Comment
  • Berkshire Value Screen, Only 1 Survivor [View article]
    "I'm not sure anyone knows what Warren Buffett is going to do besides Warren Buffett." - I don't think you can make such a generalization.

    I bought BNSF shares several months before Buffett bought it, and had IBM in my portfolio at half the cost Buffett paid for his shares. I also sold my Kraft shares before he sold his, and made my prediction public right here on SA:

    It's not that I have any special foretelling powers. It's just that I have a good understanding of Ben Graham's principles, and have been following Buffett long enough to know how he applies those principles.

    My goal is not to front-run Buffett. My goal is to benefit from market mispricing. However, since both Buffett and I seem to apply the same methodology, the two of us often end up on the same side of an investment.

    If Ben Graham has taught us anything, it's that value investing is a science, not an art. Do your research properly, and you'll be as successful as Warren Buffett, often following the exact same path to riches. Of course, if you ignore the principles of value investing, Buffett's moves may very well seem like a "wildcard", as is often the case with science viewed by a neophyte.
    Jul 6, 2014. 10:56 AM | Likes Like |Link to Comment
  • Berkshire Value Screen, Only 1 Survivor [View article]
    "What happened to the Buy Low and Sell High idea that most successful investors quote ?"

    Can you name one successful investor who quotes that?
    Jul 4, 2014. 08:17 PM | Likes Like |Link to Comment
  • Berkshire Value Screen, Only 1 Survivor [View article]
    I think you may be misconstruing Buffett's comment about "the mother lode of opportunity". All he was saying was that the vast majority of investing opportunities he finds are in America, not that he'd turn down such an opportunity if it were outside America. We've seen in the past that he doesn't shy away from overseas investments, when one that meets his criteria happens to show up.

    Otherwise, another solid analysis, Brad. Good work!
    Jul 3, 2014. 02:48 PM | 1 Like Like |Link to Comment
  • AutoCanada: CEO Sells Millions [View article]
    And here we go. Yay, growth!
    Jul 3, 2014. 12:03 PM | Likes Like |Link to Comment
  • Update: NQ Mobile's Audit In Major Jeopardy [View article]
    Mosbear64, this is an analysis piece, not a reportage. An analyst's job is not to present a neutral report, but to analyze the data and offer actionable recommendations.

    If you'd rather ignore any analysis and go solely by the company's official press releases, you are welcome to do so. However, I think you'd have to be pretty gullible to read the recent press releases in anything close to a favourable light.
    Jul 3, 2014. 09:13 AM | 3 Likes Like |Link to Comment
  • Update: NQ Mobile's Audit In Major Jeopardy [View article]
    Interactive Brokers shows 160,000 shares available to borrow for shorting, at a borrowing fee of only 2.5%/yr. Your broker isn't trying very hard.
    Jul 3, 2014. 08:50 AM | 4 Likes Like |Link to Comment
  • Retrophin Closes $91 Million Financing [View article]
    I'm sure Mr. Shkreli will find a way to give a positive spin even to this usurious loan.
    Jul 2, 2014. 07:58 AM | Likes Like |Link to Comment
  • AutoCanada: CEO Sells Millions [View article]
    And where are all the fans with the usual, "But the growth! Growth!"

    I guess an increase in the number of outstanding shares is also a form of growth, so to speak.
    Jun 30, 2014. 10:23 AM | Likes Like |Link to Comment
  • Potential Acquisition Targets For Berkshire Hathaway [View article]
    CStar, legally, that is correct. However, Buffett likes to avoid even the appearance of wrongdoing.
    Jun 28, 2014. 02:28 PM | 1 Like Like |Link to Comment
  • Home Depot Is An Unwise Investment At These Prices [View article]
    "I am short HD $50 and $45 puts."

    You are short the puts? So your only position on this stock is that you do not believe it will drop below $45-50? That doesn't quite reflect the bearish stance from your article, even if it doesn't directly contradict it.
    Jun 25, 2014. 03:27 PM | 1 Like Like |Link to Comment
  • Potential Acquisition Targets For Berkshire Hathaway [View article]
    "I thought the last guess of BRK buying Heinz was nuts and boy was I wrong!"

    I don't think you were entirely wrong. Buffett would have never bought Heinz if it weren't for that juicy 9% warrants/preferreds. With that 9% dividend stream, the ROI for _Berkshire_ is much better than Heinz's ROI, which is not the case when you just buy the common.
    Jun 25, 2014. 02:42 PM | Likes Like |Link to Comment
  • Potential Acquisition Targets For Berkshire Hathaway [View article]
    "Order of likely acquisition I believe: DE, ITW,BDX,RTN,VFC,BRCM"

    I'd agree with that order, although I think the last three in this list are a very long shot indeed.
    Jun 25, 2014. 09:32 AM | Likes Like |Link to Comment
  • Potential Acquisition Targets For Berkshire Hathaway [View article]
    Impressive work, Brad!

    I reached some of the same results when I applied what I believe to be Buffett's criteria. However, there were a few differences in the filters I applied:

    1. Buffett doesn't care about a company's beta. As per Ben Graham's writings, the volatility of a company's stock price is the friend of the intelligent investor. The reason his current portfolio includes low beta stocks is that he likes companies with predictable earnings, and those tend to have stable prices. It is entirely possible, though, that his next purchase will be a highly volatile stock -- as long as Buffett believes he can forecast its earnings.

    2. Buffett doesn't look at things like PEG ratio. He certainly cares about growth, but there is no set threshold. He'll invest in a company with zero growth, if the price is right. His favourite example is a toll bridge.

    3. Dividend, and dividend growth rate, are minor considerations to Buffett. Since he sees shares as representing ownership of a business, he doesn't care how much of his retained earnings are distributed as dividends. In fact, for tax optimization, he'd prefer earnings were retained and reinvested rather than paid out as dividends. That's not the case when he buys preferred shares, of course, as he doesn't see that as owning the business.

    4. He will not buy a business like Broadcom, for the simple reason that he can't forecast what that business will look like in ten or twenty years. While he surprised many people by purchasing IBM, Broadcom relies more heavily on constantly changing technologies, and it is not at all clear whether they have an enduring moat.

    5. I could be wrong, but I find it hard to imagine Buffett buying a company that does most of its business with one customer, particularly one as finicky as the Pentagon. That's why I think Raytheon is an unlikely candidate.

    6. Buffett's experiences in the retail sector made him weary of department stores. Walmart is a notable exception that he likes mostly for their independence from labour unions. Macy's doesn't enjoy such freedom, and its mixed history will likely scare him off. The same is likely true for VFC - the failure of the shoe company he once bought will likely keep him away from such companies. His 2002 purchase of Fruit of the Loom was at highly distressed prices, which isn't the case with VFC.

    7. One of his favourite criteria you completely ignored is the judicious use of debt. Viacom, with a 3:1 debt to equity ratio, and interest payments of 11% of its pretax operating income, is an unlikely candidate. Of course, you already eliminated it for other reasons.
    Jun 25, 2014. 08:22 AM | 2 Likes Like |Link to Comment
  • AutoCanada: An Easy Short [View article]
    "How do you get those discounted future cashflows in a reasonable time if you buy a stock that doesn't pay a large dividend?"

    And that's another difference between an investor and a trader. As an investor, I don't need dividends to give a company value. If a company I own has retained earnings, it has value. I don't need to move money from one of my pockets to another to create the appearance of value. I'd rather the company use its retained earnings to expand the business or buy back stock.

    A trader, on the other hand, doesn't consider the shares he holds to be a fractional ownership of an actual business. If "they" don't pay him a dividend, he has no use for "them", no matter how much money the company makes.

    Berkshire never paid any dividends, and possibly never will. Is it worthless?

    Also, there is no such thing as "reasonable time" in TVM calculations. A zero-coupon 30-year bond is still worth a considerable amount today, despite not showing any cashflows for the next 30 years.

    I know you are unfamiliar with these valuation methodologies. It's a good thing that you are. As Keubiko and Weighing Machine mentioned, it's helpful to have someone take the opposite side of our trades.
    Jun 19, 2014. 03:09 PM | 1 Like Like |Link to Comment