connellybarnes

connellybarnes
Send Message
View as an RSS Feed
  • What Low Rate Environment?  [View article]
    I also noticed the same metrics with respect to the 2008 recession and have been buying for the same reasons. So I agree with the author. Nice writeup.

    One data point that does disagree with the thesis a bit is to compute AUM / market cap ratios. Presumably high ratios would indicate a cheap company (pay a little to get a lot of AUM). WDR has a lower multiple of AUM to market cap than some other companies in this space such as AB. I think this is somewhat similar to the P/B ratio because companies with higher ROE/ROIC merit stronger valuations with respect to both P/B and AUM/cap. But with WDR we should also watch out for falling ROE/ROIC which could cause P/B and AUM/cap to fall --- with multiple departing asset managers recently and poor fund performance, no premium multiples are guaranteed.

    With that said, I see the current price as pricing in really extreme adverse events so as I see it the long-term risk is low (as part of a diversified portfolio).
    Feb 10, 2016. 12:30 AM | Likes Like |Link to Comment
  • Investing With An Edge: Winthrop Realty  [View article]
    Sad story about Glen Nelson. From the photo it looks like he may have exceeded the speed limit.

    Stay safe everyone, especially driving. And either avoid non-commercial flights entirely (my recommendation) or else do everything possible to maximize safety. Talk about high risk levels: I already have a few people in my social graph who have died from non-commercial flights.
    Feb 6, 2016. 02:36 PM | Likes Like |Link to Comment
  • Apple Is #2  [View article]
    Well Chris, the last time I disagreed with you (Bitcoin), I was wrong, at least so far. *Shrug*.

    Gartner also predicts some rapid growth in smartwatch sales over all companies [1]. Growth investors may be excited to buy up $17,000 gold-plated Apple Watches due to the hot market [2]. Especially exuberant investors can actually pay double for the watches, and Apple will actually take all of your money, it's amazing!

    [1]. http://cnet.co/1SupNh9
    [2]. http://apple.co/1SupNha
    Feb 3, 2016. 10:46 PM | 2 Likes Like |Link to Comment
  • Apple Is #2  [View article]
    I disagree with you and Andrew on this one. Global smartphone sales are projected to continue to grow at mid single digits per year according to several sources [1]. Apple's revenues will likely ride this trend up, and margins are likely to fall a little but not that much assuming they continue to innovate. Currently they are rumored to be working on iPhone 7 waterproofing, making it slimmer, changing the audio jack, and improving Touch ID. They are also working on VR --- even though VR in general is bubbly, it is still an area they could add value.

    I remember Richard Chilton shooting down Apple when it was trading mid-$400s (adjusted for split the price would be around $60), due to saying it is just a hardware company. He was wrong on price action, but also just wrong. It is a hardware+luxury brand+ecosystem company, kind of at the midpoint of the luxury clothing brands, watch sellers, and perfumers, and the software ecosystem companies such as Facebook/Google. Their ecosystem generally hooks people on other hardware/services in the ecosystem, and thus is sticky and prevents margins from going down to zero. I believe a multiple like 12 would be appropriate for slowly growing future earnings of Apple, plus adding the cash gives ~140 for value.

    HP was quite profitable for me when I bought it at value prices in late 2012. The trick is to know that HP is a dubious company and to only buy it at ridiculously distressed multiples.

    [1]. http://bit.ly/1kIjKWs
    Feb 3, 2016. 07:06 PM | 1 Like Like |Link to Comment
  • Waddell & Reed: Proven Results, Future Profits  [View article]
    Hi Ken,

    Any new thoughts on WDR with its current market price of $22.8?

    I am starting to find it appealing from a valuation perspective with a TTM P/E of 7.8, forward P/E of 8.5, EV/E of 5.5, and EV/EBITDA of 3.4.
    Feb 2, 2016. 02:00 PM | Likes Like |Link to Comment
  • It's Time To Buy Gilead Sciences...Again!  [View article]
    Thanks for your moving story about your battle with cancer Ken.

    GILD looks pretty cheap to me but I do not know much about pharma. If it gets to "stupid cheap" I will likely open a position. I like that phrase. All my best investments have been stupid cheap.
    Jan 30, 2016. 10:45 PM | Likes Like |Link to Comment
  • In A Market Collapse, Where Are The Bargains? 2 Mispriced Opportunities Worth Considering (Podcast)  [View article]
    Just kidding :-).
    Jan 25, 2016. 10:23 AM | Likes Like |Link to Comment
  • In A Market Collapse, Where Are The Bargains? 2 Mispriced Opportunities Worth Considering (Podcast)  [View article]
    @Sleepless in the Alps: Nice catch. For entertainment in malls, I usually play a fun game where I try to make more money off of retailers than they make off of my family. But private companies mess up the game. For some reason I thought Victoria's Secret was private, due to "Victoria's Secret Stores, LLC" coming up as private on Google Finance. Thanks to you, I now have something entertaining to do while accompanying my wife in lingerie stores: look through SEC financials.

    P.S.: When "killing two birds with one stone," I naturally understand your money-saving value investor mindset. But I really think it wise to get different lingerie for the wife and the girlfriend!
    Jan 24, 2016. 10:11 PM | Likes Like |Link to Comment
  • In A Market Collapse, Where Are The Bargains? 2 Mispriced Opportunities Worth Considering (Podcast)  [View article]
    @Carlosgpr: I am not an investment advisor, nor do I even work in the investment industry, so I cannot advise.

    But for your own due diligence and to have a general knowledge of this industry, you might wish to read Jack Bogle's publications such as the "Little Book of Common Sense Investing" [1], and the "Cost Matters Hypothesis" [2].

    The fund GMZ has a prospectus that is public [3]. It gives an example of a $1,000 investment, and that after 10 years the amount spent on fees by the investor is about $244. You as the customer have to be the judge of whether these expenses are worth it!

    [1]. http://amzn.to/1m1tfSL
    [2]. http://bit.ly/1UkDdcI
    [3]. http://bit.ly/1UkDaxN
    Jan 24, 2016. 01:32 PM | Likes Like |Link to Comment
  • Outerwall: Melting Ice Cube, Get Out Now  [View article]
    I have not valued this company recently but I agree that the DVD business is not worth very much. I would value that business division as like 1 or 2x current earnings, assuming a massive fall-off of earnings in the near future. DVDs are going to be obsolete soon, if they are not already.

    My high-end Macs have not had DVD drives for several years. I never noticed a problem due to this. I haven't even used a DVD since 4 or 5 years ago, since I have generally had bandwidth sufficient for high-definition streaming. As a fairly tech-savvy person, I would guess I am representative of where this market is going.
    Jan 23, 2016. 12:50 AM | 1 Like Like |Link to Comment
  • Mr. Market's Manic Month - A Rangeley Capital Portfolio Managers Discussion Of Market Opportunities (Podcast)  [View article]
    I am not optimistic about investors on SA being able to figure out the math of the mispricings in options chains for corporate events. However, the area does have capacity constraints due to limited liquidity in options, Ph.D. geek counterparties running maker maker codes that are designed to always profit, and due to being in already highly-analyzed hedge fund areas such as merger arb. It seems to me like the kind of green grass that some extremely smart folks might like trample on and turn into mud. But I am also being selfish because I prefer all options to be mispriced.
    Jan 22, 2016. 11:41 PM | Likes Like |Link to Comment
  • Buffett Berkshire Buyback Bound?  [View article]
    I agree with the commentator that, in fact, the author calculated himself rich.
    Jan 22, 2016. 11:12 PM | Likes Like |Link to Comment
  • Mr. Market's Manic Month - A Rangeley Capital Portfolio Managers Discussion Of Market Opportunities (Podcast)  [View article]
    Nice tricks with options in corporate events. I had not looked at those too closely in specific, although I had noticed occasional bizarre pricings in this area. It seems like a niche that should not be too widely discussed on public forums. The reason is the liquidity is relatively small, and the counterparties are running computer programs --- they just have to reprogram or disable their models for the given events if they notice consistent losses.
    Jan 21, 2016. 09:46 PM | 1 Like Like |Link to Comment
  • Oprah Gobbles Up 10% Of Weight Watchers  [View article]
    WTW down 53% since my last comment on November 7. I still see this as a mostly dead company. Like Cadiz. Of course there's a big difference between a mostly dead and an all dead company. As Miracle Max says: "It would take a miracle." I like miracles but I do not like betting on them.

    Obligatory Princess Bride clip:
    http://bit.ly/1zvZvvz
    Jan 19, 2016. 07:57 PM | Likes Like |Link to Comment
  • Bitcoin Discussion Forum  [View instapost]
    Lead Bitcoin developer Mike Hearn on his decision to leave the community due to his belief that Bitcoin will fail:

    http://bit.ly/1Zu7Z4p

    I think there are some good takeaways here on how to run an effective organization.

    One lesson is to make sure that key contributors feel they are being listened to and can contribute, under a rational decision-making process, rather than just being shut out of decisions for no clear reasons. Another lesson is to be careful that incentives are not introduced that cause civil wars between people who should really be working together. A third lesson is to make sure that decisions are never made based on finding a cheery middle ground that protects different parties' feelings, but rather to ensure that all decisions make minimal errors with respect to the collection of all substantiated facts and evidence.
    Jan 17, 2016. 02:57 PM | Likes Like |Link to Comment
COMMENTS STATS
506 Comments
204 Likes