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skibimamex

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  • PIMCO High Income Fund: Sell This Overpriced CEF Before It's Too Late [View article]
    The concept of "OMG it is at a premium to NAV" is analysis that is quite trite. PHK should sell at a premium to NAV (just not as high). The reason is that it has a $220M perpetual preferred in its cap structure that provides leverage at close to LIBOR -- that is not replicable in today's market, so the PHK shareholder is getting the benefit of the purchasing power of that instrument while paying near zero coupon on it. Having said that, the PHK trade is a carry-trade in that getting significant portion of its return by borrowing short while owning longer duration credits.

    This thing will blow up when short rates climb (if they ever will), or when it must reduce leverage (it uses repos in addition to the ARS prefs). The reason it has done well past 5 years is due to unprecedented monetary policy. I've been long the name for nearly all of that 5 years. Sold in October. Finding the right opportunity to go short. The minute it drops the dividend (and it must, once short rates start to climb) this thing will go down materially as investor confidence breaks. It may even get cheap enough again to go long again.
    Apr 18, 2015. 07:36 PM | Likes Like |Link to Comment
  • Netflix: My Key Earnings Takeaways [View article]
    Stays, so you think that if you pay $50M for 13 episodes of Daredevil that got delivered from Disney this quarter that it should be expensed because it will never be viewed again from next quarter onwards and have zero future economic utility? You should go back to the accounting school or b-school you went to and get a refund. Comcast for the first 25 years of its existence never had free cash flow as it was either building more plant or buying more cable systems. You get confused by an investment that uses cash with the returns. The challenge in many businesses is finding reinvestment opportunities that will generate adequate returns. NFLX is more like a restaurant chain or retailer where the format works and will generate over 30% margins by yr 4, just a matter of opening new stores and funding the launch and initial cash trough. Frankly it's like shooting fish in a barrel given the competitive moat that NFLX is developing with its content portfolio and purchasing power.
    Apr 17, 2015. 08:37 AM | Likes Like |Link to Comment
  • Netflix: The Bear Thesis Is A House Of Cards [View article]
    redstock, you obviously have huge conviction so you really should go all-in and put every last nickel you have to either short this stock or buy the longest-dated LEAP puts for Jan 2017. This sounds like that it will be one of the greatest ever short trades like Paulsen's sub-prime mortgage bet. Go for it!

    While I dont agree with you at all, i think it's important when you find such a high conviction bet as what you describe, you really should back-up the truck to play that card -- that's the only way to genreate sustained alpha.
    Apr 13, 2015. 12:21 PM | 1 Like Like |Link to Comment
  • Netflix: The Bear Thesis Is A House Of Cards [View article]
    it seems always a constant refrain from those who neither know accounting nor finance it seems, "OMG look at the so-called off-balance sheet content commitments, and how are they ever able to pay for all of that off-balance sheet debt when they don't make any profit"

    Well maybe it's because all those "liabilities" are really expense commitments and are paid from revenues through the income statement. In fact the content "commitments" are over a 5 year time frame but represent only 3x current annual content expense, with such period content expenses expected to keep pace with revenue growth due to the new market launches before such growth rate in annual content expense tailing off in another couple of years. So there are plenty of revenues to pay for the content obligations and in fact still generate increasing contribution margin.

    I won't argue the issue of valuation because that is not a clear call either way (AMC Networks sells at the same 4x+ revenues but with nowhere near the growth opportunity) however the ones running around spelling doom and gloom about the content commitments just simply don't understand any programming network business or basic accounting.
    Apr 8, 2015. 09:25 PM | 3 Likes Like |Link to Comment
  • WSJ: Apple talking Web TV service for fall launch [View news story]
    The difference is that AAPL isn't stealing the content like Aereo did and instead AAPL has negotiated licensing deals with the major networks. It will be a virtual MVPD with a base package as described and then supplemented by premium channels such as HBO Now, Netflix, Hulu, etc as "premium" channels.
    Mar 16, 2015. 10:29 PM | 3 Likes Like |Link to Comment
  • Why Is Apple Making A Gold Watch? [View article]
    If people like my wife can spend $10K on a Hermes bag, then there are plenty of folks that can and will buy a $10K gold Apple Watch. but the author is aboslutely correct. the purpose of anchoring a high-end luxury product line at a high price point is to establish brand halo for the product and make it an aspirational purchase. I actually think that Apple will sell quite a few of the Watch Edition pieces, but the point is that it doesnt matter. It is really the bottom and mid part of the demand pyramid where you make the most scratch due to the mass volumes there.

    I personally will buy the cheapest Sport version, because I am cheap, and also because I want to understand the utility of the device before stepping up the price ladder. I suppose at some point I can just sell 50 shares of AAPL and get a watch with the rose gold casing.
    Mar 12, 2015. 10:01 PM | 1 Like Like |Link to Comment
  • Time Warner Could Put Netflix Out Of Business Tomorrow [View article]
    Haha, a trip down memory lane. Indeed the Albanian Army did conquer some geographies (including more subscribers in the US now than HBO), and more importantly Netflix is one of the largest customers of Bewkes' Time-Warner by syndicating most of CW's prime time schedule for past seasons. Singlehandedly turning the economics for that network for the benefit of CBS and TWX. Separately HBO syndicated all its out of print library (since it wanted to keep the past seasons of current shows for its own HBO GO and HBO Now SVOD channels) to Amazon Prime to take advantage of incremental monetization of its aged library, largely because Amazon forced to keep up with Netflix content aggregation. Or that TWX's Warrner Brothers Television sold the global streaming rights (first run in most, except US, Canada, Australia, which are past season) of Gotham to Netflix as tha twas the best way to monetize. So Bewkes has to kiss up to his largest customer now.

    Rocco never understood the power and differentiation of Netflix was its ability to build direct-to-consumer distribution cost effectively and therefor was an unique platform to monetize content. Far from the truth of the trite statement that "content is king", the reality is that content is worthless without the ability to monetize via powerful distribution. Of course there are certainly very valuable content brands that are unique and scarce such as live sports (there is only one superbowl but hundred or thousands of pro basketball games or baseball games in a season) and can be most effectively monetized through mass media broadcast. However in the realms of serialized drama or comedy, there are constant supply of new ideas, new stories, new and old talent -- and the majority of those will not succeed. However narrowcast content has more value to an on-demand SVOD subscription model than an advertising -supported mass media linear broadcast network.

    To his credit, Rocco threw in the towel quite awhile ago, and at least went neutral if not positive (I lost track since he went click seeking at Motley Fool I think, but I think he may be back, but out of this name). I always did like Rocco's writing and flair for the dramatic, even though he was fundamentlaly wrong on Netflix (and Pandora too, where he was a bull, which made no sense to me at all), and I was entertained everytime reading his stories.
    Mar 11, 2015. 07:03 PM | Likes Like |Link to Comment
  • Netflix (NFLX) Management Presents at Morgan Stanley Technology, Media & Telecom Conference - Transcript [View article]
    Actually Per, he did precisely discuss the "good-better-best" tiered-pricing strategy at last year's Goldman conference. I think everybody went to that Marketing 101 class on pricing strategy.

    I just got annoyed with my kids hogging up the streaming slots when they started enforcing the limitations so I am at the "best". Will probably need to buy another subscription just to set aside for their iPads.
    Mar 5, 2015. 10:17 PM | 1 Like Like |Link to Comment
  • What Do 1,750 New Stores Mean For Sprint? [View article]
    I read author's rendition, and it sure made me glad that author is only a writer and analyst, rather than running the business. Negative FCF has everythign to do with a tear-up the network and entirely new re-build as well a sthe balance sheet interest that funded it and zilch to do with some store-front employees.

    Sprint is renting 1/3 the store floor (at 1/3 the cost) so establishing "micro" stores to broaden its distribution reach. You can always throw labor at it to meet peaks (such a san iPhone launch) and pull back during lull times, but the fixed costs of the location is the most significant portion of fixed costs. So having the distribution reach of 1750 stores for the the cost of 600 is not insignificant. Similalry Sprint is effectively buying exclusivity with co-branding -- now there will no longer be AT&T and Verizon brands.

    So it makes perfect sense to me, even if only as a "bridge" to expand the distribution footprint immediately in bulk until Sprint can grow through addiitonal organic additons of larger boxes. The author has identified the one weakness of the arrangement, as it reliese on RSH being there to bear the cost burden of the remaining 2/3 of store operating costs and whether its new merchandising model can be sustained longterm -- even if it were cherry-picking the best of hte RSH locations.

    Radio Shack went banrupt because Salus Capital would not waive the covenant that prevented it to close non-productive stores, as well as via bankruptcy, it can right size its balance sheet and get rid of more than half of its leases. Jury still out whether a small box footprint even with 1/3 of the OPEX subsidized is sufficient, or sustainable, for Radio Shack, but that is the bet that Standard General and its other partner lenders are making.

    If 3 yrs from now, there ends up to be a Chapter 22 for shrunken Radio Shack, then Sprint will have had the benefit of hindsight optionality to cherry-pick the then remaining portion of the 1750 locations that it would want to take over entirely (going forward without the 2/3 subsidy being provided by the RSH merchandising).

    The author has just rekindled my interst in taking another look at going long Sprint after I had sold out of it for 2 years now. I was waiting for more hate but probably have missed the window for the bottom.
    Feb 17, 2015. 01:41 PM | 7 Likes Like |Link to Comment
  • Debunking Misconceptions Around Netflix Heading Into 2015 [View article]
    alpine, then you still don't know or understand the SVOD business compared to the PPV business. Pay Per View is a non-exclusive window after theatrical release often just after DVD release and digital ownership ("pay to own") window -- again all non-exclusive in that multiple providers and multiple retailers. Then it goes to an EXCLUSIVE window where a subscription pay channel such as BSkyB, or Canal +, or HBO, or Netflix has exclusive broadcast rights -- the pay per view channels and digital rental channels GO DARK at this time because the pay network has bargained for exclusive access during this Pay 1 window. Some films such as Paramount, MGM, and Lionsgate have currently partnered on pay service Epix which has created a Pay 1 1/2 window in the US by re-licensing it to Netflix, Amazon, and Redbox Instant (before its demise) on a non-exclusive basis. Netflix has publicly stated that it is unlikely to renew if the content is on a non-exclusive basis (particularly since it is getting all the Disney brands EXCLUSIVELY in pay cable 1 beginning 2016).

    You also are confused as probably 80%+ of the actual content are long form premium television content rather than movies, particularly serialized drama. a 13 episode season of an hourly drama is a "13 hr movie", and when not held hostage to the cadence of advertising supported television which has specific time constraints and designed to create various climatic cliff hangers -- in order to insert ads at that moment, or to create impetus to watch the next episode. That whole business has less vertical integration with different studios producing for different networks and then subsequently syndication. For example, the DC Comics inspired and licensed Gotham television show (the historical beginnings of Batman) was produced by Warner Brothers Television (owned by Time-Warner, which also owns HBO, and jointly owns the CW television network with CBS) but distributed for broadcast by FOX (owned by murdoch's 20th century fox which has its own movie an television studios) in the Us, and syndicated to other broadcasters in Australia, Canada and elsewhere. But the EXCLUSIVE back season rights WORLDWIDE have been purchased by Netflix -- so broadcast over the air or through MVPD distribution for broadcast viewing, and then back season for streaming and on-demand binging (to also promote new second season launch by letting viewers catch up on the first season in its entirety) via Netflix's global platform. Absolutely no one else could have done that deal with Warner Bros, as is own sister company HBO itself doesnt have close to the global distribution reach that Netflix has -- and HBO's business model is purely originals with only films from Fox, Warner, and Universal where it has licensed Pay cable 1.

    So your thinking about how you can get pay per view movies on Cablecom probably means that you should avoid the Netflix investment as you are not sufficiently familiar with the business model and the evolving media distribution landscape to understand the disruptive force that is being unleashed by the Netflix, Hulu, Viki, HBO Go, and amazon and other OTT services of the world and how that will impact how television and movie content is produced, financed, and distributed.
    Jan 27, 2015. 11:58 AM | 1 Like Like |Link to Comment
  • Debunking Misconceptions Around Netflix Heading Into 2015 [View article]
    alpine, I assume that you do know that Liberty Global owns Virgin Media, the UK cable operator that was the first to integrate Netflix on its set-top in the UK and is a distribution partner of Netflix. Now followed by the other MVPDs. Netflix doesn't compete with cable. Netflix is just another programming network and competes against other networks, not the pipes or the program aggregators who are distributors for programming networks.

    Dish in the US just enabled its Hopper set-top box to integrate Netflix as well as Dish's own new micro bundle called Sling TV. these guys are more complimentary than competitors.
    Jan 22, 2015. 12:04 AM | 2 Likes Like |Link to Comment
  • Netflix Should Beat On Tuesday [View article]
    where did all the shorts go?

    no more hate on higher content commitments? dilution for overseas expansion? can't possibly grow subs because of all the competition? or even sequential decline on contribution margin in domestic streaming?

    however, I do see a bear trade where there is a downdraft potential: international now big enough to see the same Q2 seasonal slow-down on subscriber net-adds (really a function of the bulge of holiday season activations that on trial that don't convert), coupled with the full quarter financial dilution of AU/NZ launch in Q2. that headwind will bring all the naysayers out of the wood work, and it actually will be reflect in Q1 earnings when company gives Q2 guidance. That probably will create an entry point for long biased who can't get themselves excited to buys something 25% higher than 2 days ago.
    Jan 21, 2015. 11:54 PM | Likes Like |Link to Comment
  • Netflix Should Beat On Tuesday [View article]
    galaxie13, the $6.2B of content commitments isn't a "liability" according to GAAP because it is a commitment for content that is not yet available. If you are going jump up and down about that, you should also talk about "off balance sheet revenues of $18B+" over the first 3 years.

    normally a liability is only a balance sheet item whose repayment is generated by earnings or free cash flow (or refinancing) and such repayment doesn't go through the income statement (other than the interest expense). These content commitment that you refer to as so-called "liabilities" are actually future EXPENSE obligations run through the income statement that are paid for by revenues.

    Just keep on shorting. You will make some money given the volatility, but the guy who is actually long and understand his accounting will make a lot more money than you will (or even the long biased trader).
    Jan 19, 2015. 07:41 PM | Likes Like |Link to Comment
  • Why An 'iPhone 6s Mini' Makes Sense For Apple [View article]
    There's already a 4" iPhone 6 Mini. It's called an iPhone 5 series. They can simply introduce iPhone 5X (or "iPhone 5 Pro") and iPhone 5CX on the existing 5 series platform to include newest generation processor and higher RAM. Why would they screw up the positioning of the 6 Series by further confusing that series with another form factor size?

    The "Mini" designation implies something diminutive, which is not the case for those who prefer the form factor of the 5 series (not me, since I purposely waited to switch to iOS when Apple finally had the larger form factor and went with the 6 Plus), while the "X" designation or "Pro" nomenclature would denote something "faster" or "extra", such as faster processor, more RAM, and improved photo processor.

    In any case, Apple has an excellent history of product line extension to offer a broad line of form factors, colors, and specs, so I have perfect confidence that it will manage its product life cycle migration appropriately without abandoning those consumer that prefer the 4" form factor.
    Jan 6, 2015. 01:10 PM | 1 Like Like |Link to Comment
  • Debunking Misconceptions Around Netflix Heading Into 2015 [View article]
    The funniest thing about misconception #3 is that somehow we live in a world where there is only one channel. That folks will subscribe only to one or the other and that the OTT SVOD market is a zero sum game. Does the fact that CBS has a good prime-time line-up that NBC, ABC, and Fox should just hang it up, let alone CW and its targeted demos. Amazon's success in generating good original shows just means even more talent is gravitating to SVOD distribution rather simply broadcast, basic cable, or the premium pay cable networks. In fact all these are staring to blur where CBS is offering a SVOD option (sans NFL), as will HBO go direct to consumers OTT rather than rely solely on MVPDs, while Netflix is not only SVOD OTT but also now being increasing integrated on MVPD channel line-ups.

    at the end of the day, it's which network has the distribution to best monetise content, either in the form of ratings for advertising monetisation, or via subscription revenue streams, or a Hulu that executes a hybrid model (charge a subscription fee AND sell ad insertions).

    The point of misconception #3 is there is not singularly one instance in the media world where there is only one sole source entertainment channel, where one channel succeeds necessarily means the demise of the other, let alone all the others. All will prosper but in the end content is what is valuable but it takes distribution to best realize that value, and what Netflix has is a huge advantage in low cost distribution acquisition with its direct to consumer subscription model.
    Jan 3, 2015. 08:07 PM | Likes Like |Link to Comment
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