Seeking Alpha


Send Message
View as an RSS Feed
View gjg49's Comments BY TICKER:
Latest  |  Highest rated
  • Sturm, Ruger And The Case Of Depreciation Deception [View article]

    RGR's 15 year depreciation policy represents a very safe policy rather than dishonest and unethical. Anyone investor in their right mind would prefer faster depreciation of an asset rather than slower. Would you prefer a one hundred or two hundred year depreciation schedule to the 15 year schedule? Why not a ten million year depreciation schedule?? If they used a 40 year depreciation schedule so that the asset is fully depreciated in year 41, does that make their financial reporting of the asset in year 41 dishonest and unethical??
    You can clearly call the depreciation incorrect as no one knows how long the true useful life of the asset will be. However, to call it dishonest and unethical is either pure misguided thinking or is itself dishonest and unethical (misguided thinking is acceptable as we all make mistakes; but if you really knew better, then shame on you.)

    (Disclosure: I owned RGR for a couple of years but sold the stock earlier this year. Hence, I have no personal interest).
    Aug 19 08:37 AM | 2 Likes Like |Link to Comment
  • Rogers Communications (USA) declares $0.4575 dividend [View news story]
    Rogers' website indicates that the $0.4575 is the same dividend paid in each of the last two Qs. The dividend is paid in Canadian dollars--it will be close to $0.42 in US dollars after currency transalation.
    Aug 15 02:21 PM | Likes Like |Link to Comment
  • Rogers Communications (USA) declares $0.4575 dividend [View news story]
    I don't think this is actually an increase. The press release says that this "the third quarterly dividend to reflect the increased $1.83 per share annualized dividend level". That would be consistent with a $0.4575 dividend in Canadian dollars, not US dollars. If so, the dividend in US dollars will be very close to $0.42 per share, essentially the same as the dividend paid in June.
    Aug 15 02:18 PM | Likes Like |Link to Comment
  • Cisco's guidance mixed; more job cuts planned [View news story]
    Chambers is the worst CEO of any company (tech or otherwise) and including or excluding Ballmer. Chambers was not even a good CEO during the dot-com era. The stock did well, but despite him.
    Aug 14 09:23 AM | Likes Like |Link to Comment
  • Sovereign Debt: The Default Debate [View article]
    "Argentina simply did not include a restructuring clause (permitting changes with a supermajority vote of bondholders) in its original indenture."

    Keep in mind that when you are trying to borrow money, you want the terms to look attractive to potential borrowers - putting in a clause saying the debt terms can be renegotiated makes the deal look a lot less attractive to potential lenders.

    Argentina had a choice when they issued the bonds--pay a higher rate but retain the right to change the terms or pay a lower rate and face the consequences. While this makes for a reasonable explanation of why Argentina didn't include the clause, using it as a rationalization for not abiding by it seems quite like moving the goal posts right before the game-winning field goal attempt.

    BTW, I have no axe to grind in this discussion (except that we all are citizens of some nation whose fiscal and monetary status somehow ties in to credit maybe more lending rather than borrowing).
    Aug 7 01:15 PM | Likes Like |Link to Comment
  • Where Are The Digital Shorts Now? [View article]
    glorysk87 and Qniform,

    Thanks for your sensible advice.

    Unfortunately, my info is straight from the company's 10-k for FY2013 and the 10-q for the March 2014 quarter as posted on (and the numbers are the same regardless of whether you use the full document or the "interactive data" numbers). I erred in reading DLR's statement of cash flows over the past year.

    The relevant numbers, and they are readily and easily available to cross-check on
    From the 2013 10-K (all numbers in thousands):
    Net cash flow froms ops: 2013=656390 2012=542948
    Acquisition of Real estate: 2013=170322 2012=1560130
    Improvements to and advances for real estate:
    2013=1189510 2012=845761

    From the March 2014 10-q (3 months ended 3/31/2014):
    Net cash flow froms ops: 2014=116411 2013=89041
    Acquisition of Real estate: 2014=0 2013=77935
    Improvements to and advances for real estate:
    2014=224118 2013=258731

    Forget GAAP and AFFO and FFO etc. Profits are fiction, cash is real.
    There are items other than "acquisition of real estate" and "improvements to and advances for real estate" in the investing section of the cash flow statement. Those other items all appear immaterial to whether the company generates real cash returns and whether the dividend is sustainable (which is all that I am interested in). Based on the numbers above, DLR consumed a net of $703.442 million (operating cash flow minus acquisition of real estate minus the improvements stuff) in cash last year BEFORE they paid the dividend--this is the negative free cash flow I referred to above. The $400.953 million dividend payment resulted in over $1.1 billion in total cash outflow.

    Hopefully, almost ALL of the net cash invested was truly brand new investment in new buildings or equipment that generate incremental revenue and cash flow streams to DLR (hopefully only a small part of it would be NECESSARY maintenance capital spending to keep the current client lessees happy). The FFO implies this is the case, but FFO is not audited, so who knows??

    I erred as I somehow missed the "improvements to and advances for real estate" when I looked at DLR's cash flows. Admittedly, that resulted in a HUGE error. In missing that, I incorrectly thought that DLR ran positive free cash flow last year and in 1Q2014--they clearly did not. I discovered this error yesterday when I intended to support an earlier post.

    If DLR stopped or greatly slowed investing in new projects, we would know whether Jacobson's conjecture that they are understating maintenance cap spending (and hence overstating the FFO) is true. I incorrectly inferred that they had slowed the new spending greatly when I missed that one huge line. However, with current cash flow statements, we simply can not tell how closely FFO reflects the real economic value of DLR--i.e. Jacobson's theory has not been disproven.

    After realizing my error, I sold about two-third of my DLR holding yesterday--BTW, I owned some DLR before Jacobson's presentation and I had added to that position around year end 2013 when I became optimistic because I erred in missing that line in the cash flow statement. In my view, one needs to closely manage the risk they are willing to take in DLR just in case Jacobson is correct. People were not foolish to own Enron, but some who did not work for the company were fools to have virtually all of their life savings in the stock when serious questions were unanswered. In owning DLR, I am willing to bet that it is not an Enron, but I am not willing to make a sizable bet that it is not an Enron until I see some real tangible evidence.
    Aug 1 12:28 PM | 1 Like Like |Link to Comment
  • Where Are The Digital Shorts Now? [View article]
    To all:
    OOPS, ignore my previous comment.
    DLR's free cash flow according to the gaap cash flow statement was negative last year.
    My mistake.
    Jacobson could very easily be correct.
    As far as I am concerned, there is no way to confirm one way or the other what the actual truth about the financial position of DLR is.
    Jul 31 12:00 PM | 1 Like Like |Link to Comment
  • Where Are The Digital Shorts Now? [View article]
    Look at the cash flow statement.
    DLR generated MORE free cash flow last year than they paid in dividends.
    Usually, AFFO (or FFO, or whatever non-GAAP type metric a management prefers to use) will be greater than free cash flow derived directly from the GAAP financial statements. Last year, however, DLR's free cash flow (cash flow from ops minus capital spending) exceeded the dividend paid out so AFFO becomes immaterial as far as the dividend. Jacobson was almost certainly wrong if he thought that the company was a Ponzi scheme. (The one way that he could be correct is if, in fact, DLR spent virtually nothing last year on maintenance of their facilities so that in the next several years they have to spend tons of $$ to fix stuff to continue to capture the rent from their current facilities and clients--that seems highly unlikely though maybe not impossible).
    Jul 31 11:16 AM | 1 Like Like |Link to Comment
  • Where Are The Digital Shorts Now? [View article]

    "Highland's analysis was correct after all. And the problem has not been solved. Look out below !"
    and you say this because you can show what evidence??
    Jul 27 03:11 PM | Likes Like |Link to Comment
  • An End To Our Relationship With Yahoo, A New Era For Equity Research [View article]
    Agree that this does not sound good for Yahoo Finance.

    With that in mind, I currently maintain a portfolio of 200 to 300 tickers on Yahoo in an order that I want them that corresponds with a Excel spreadsheet for portfolio analytical purposes. I usually download the prices from Yahoo a couple of times a week. Would SA consider creating a facility to download larger portfolios (when I loaded portfolios into SA the portfolios only allowed 50 or so tickers) into Excel (I am not aware of such an ability now)?
    OR can anyone point me toward a free (or inexpensive, say $100 per year max for a subscription) that would allow downloading stock prices into Excel in the exact order that I want them?
    Thanks in advance...
    Jul 26 09:10 AM | 3 Likes Like |Link to Comment
  • More on Omega Healthcare results [View news story]
    The dividend is $0.51, up from $0.50 in the first quarter.
    The company announced the dividend increase on July 15 and noted the $0.51 quarterly dividend in the press release issued today.
    Jul 24 02:29 PM | Likes Like |Link to Comment
  • Where Are The Digital Shorts Now? [View article]
    DLR also slammed on the brakes on their capital spending in 2013. As a result, their free cash flow (after cap exp) totally covered the dividend for the full year and for the 12 months thru March 2014. Last year was the first year in at least four years that free cash flow fully covered the dividend (normally, for a REIT, we simply want FFO to cover the dividend, but free cash flow covering the dividend is financially much stronger, though potentially at the expense of future growth).
    Highfield argued that DLR overstated FFO by improperly understating maintenance capital spending. With enormous capital spending in 2012, DLR simply could not immediately refute Highfield's claims except to say "trust us"; the market did not trust DLR as the market learned from real criminals such as Enron that "trust" alone is not a prudent strategy.
    The very very low capital spending numbers from 2013 indicate that either Highfield was incorrect all along or that DLR seriously underinvested in maintenance cap exp.
    Personally, I placed several bets on DLR late last year and during the first half of 2014 that Highfield was incorrect. By the way, last year's cap exp was so low that I am also implicitly betting that DLR's CEO did not leave due to underinvesting in necessary maintenance projects. That seems like a fairly safe bet to me though we will need to wait a couple of years to see whether DLR's business stays firm.
    Jul 11 09:45 AM | 1 Like Like |Link to Comment
  • Vodafone Is A Buy Considering Its 5.30% Yield [View article]
    Also, no mention of Vodacom and the potential money transfer business. Most transactions in Kenya today go thru Vodacom's money transfer biz. The stock currently comes with a free "call option" on the possibility that Vodaphone can start to move this to India and other locations, and take over the function of Visa and/or Paypal etc.
    Jun 5 06:05 PM | 2 Likes Like |Link to Comment
  • McDonald's annual meeting: Arrests outside, cool confidence inside [View news story]
    At the annual meeting some woman gave an impassioned plea to Don Thompson to stop marketing to her kids. She finished by saying that MCD needs to eliminate My wife just checked out that site. One look will tell you that MCD has nothing to do with that site.
    MCD is a lightening rod for "interesting" people with all kinds of agendas--some of which are highly questionable.
    May 22 05:53 PM | 1 Like Like |Link to Comment
  • Dividend Investing During The Financial Crisis [View article]
    You might find Robert Shiller's long term data to be instructive.

    Shiller's data indicates that dividends on the S&P 500 declined 55% from the peak (at the end of 1930) to the trough (in early 1933). Interestingly, dividends increased slightly during 1930 and did not begin to decline until 1931.

    Since deflation occurred during the depression and Shiller tabulated the data, dividends adjusted for price changes only declined 47% from peak (still end of 1930) to trough (in mid-1935).

    While this sounds pretty gruesome, keep in mind that the S&P "price" declined 69% from the end of 1930 to its trough in June of 1932 and 85% from its peak in September of 1929. (This is based on Shiller's data. By the way, the S&P data for the 1930s and earlier was probably constructed by Shiller. I, for one, do not doubt the general validity of his data). Additionally, while it may not be "fun" to reduce one's standard of living by 50%, at least the dividends provided some reasonable income.
    May 13 02:25 PM | 1 Like Like |Link to Comment