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connellybarnes

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  • Quartet Merger Rights: 40% Upside For A Short-Term Event Driven Investment [View article]
    The rights could be worthless by May 1, 2015 if the extension criteria are not satisfied, as described in paragraph 2 of the prospectus:

    http://1.usa.gov/1nPthqK
    Sep 11 11:07 PM | Likes Like |Link to Comment
  • Quartet Merger Rights: 40% Upside For A Short-Term Event Driven Investment [View article]
    "May 1, 2015, or November 1, 2015 if the extension criteria have been satisfied."

    Extension criteria: "If we are unable to consummate a business combination within 18 months from the closing of this offering, or 24 months from the closing of this offering if we have entered into a definitive agreement with a target business for a business combination within 18 months from the closing of this offering and such business combination has not yet been consummated within such 18-month period."

    http://1.usa.gov/1nPthqK
    Sep 11 10:59 PM | Likes Like |Link to Comment
  • AVG's Rapidly Growing User Base Isn't Translating Into Revenue Growth [View article]
    More info on Location Labs from Tech Crunch:

    "Location Labs now has more than 1.3 million monthly paying subscribers for its mobile safety and security products. Its software has a penetration rate of 2.7 devices per household as multiple users within families are engaged with it. The company is profitable, and currently generates around $33 million in annual revenue." - http://tcrn.ch/1lUNzn4
    Sep 10 08:21 PM | Likes Like |Link to Comment
  • AVG's Rapidly Growing User Base Isn't Translating Into Revenue Growth [View article]
    I agree with your thoughts. But some other people seem to be misunderstanding AVG's mobile strategy. Here is CEO Gary on their last conference call:

    "The other thing that we're going to continue to do is do little trial experiments of monetization because there’s always a balance between when you monetize and when you go for users and we still think this market in the early stages and the revenue pools are just forming. So attracting and growing the user base is a premium today. So we want to push only when we think we can grab material revenue from the revenue pool that’s forming in."

    It's the right approach to monetize after scaling up.

    Why?

    Because if you are early to the market you benefit from strong network effects that keep your app in use. People tend to stick with what they know, and what works on their phone, PC, tablet, etc. The network effect lowers the ultimate acquisition cost of all those users, by just taking over early on. It also makes it difficult for latecomers because they have to invest a lot in building up a security infrastructure, before they can even play the game.

    If you invest a ton in monetizing now, you won't grow nearly as fast, because you will turn off users with all your ads and upselling, and your dev team will have too much on their plate to focus on adding features and growing. So you'll have to pay much higher acquisition costs later on to take share from the market leader(s), probably high enough that it won't be that worthwhile.

    No one can say what the numbers are at this stage.

    But for the sake of argument, let's hypothesize that AVG management's projections are correct: $100 million in mobile bookings in 2016 [1]. Now what is the total cap-ex per year required to generate that mobile revenue? Low, my guess is $15 million excluding the Location Labs acquisition. If we include the acquisition in cap ex and call the acquisition cost $180 million (the midpoint), and amortize over 5 years, then we should have roughly $50 million free cash flow a year in 2016. If we apply a 12x multiple to that cash flow stream, then it's $600 million. Already nearly as high as the currently quoted market cap of AVG.

    So the market is betting that AVG will either have very high cap ex costs for mobile, or management is too optimistic in their mobile revenue projection, or the 12x multiple I used is too high, or the PC sector is worthless, or some other grave assumption. But I don't see it so I think the market is wrong and a correct valuation is mid $20s.

    [1]. http://bit.ly/1umIYM7
    Sep 10 07:43 PM | Likes Like |Link to Comment
  • Sell King Digital Entertainment: It's Way Too Speculative [View article]
    Hi Alex -- What's your price target for King? (Or since it's hard to predict, how about pessimistic and optimistic price targets?)
    Sep 6 11:21 PM | Likes Like |Link to Comment
  • Monarch Is As Cheap As Cement And As Boring As A Cement Plant In Kansas [View instapost]
    @Biological: Interesting. I've been in similar ugly campus and government buildings -- mostly from the 1970s -- but didn't realize there was a "philosophic" movement behind the look.

    Speaking of concrete I recently saw this architectural disaster, Digital Beijing, used for the Olypmics:
    http://bit.ly/1rJw4J4
    http://bit.ly/1rJw7og
    I like how 15 out of 16 sides of its 4 buildings are near-windowless concrete or have a view that is entirely filled by the adjacent concrete building.

    But for an overpriced USD 20 tira misu you can get a sunset view from a nearby hotel restaurant of the other beautiful Olympics buildings:
    http://dailym.ai/1rJw7oi
    Sep 1 04:36 PM | Likes Like |Link to Comment
  • Monarch Is As Cheap As Cement And As Boring As A Cement Plant In Kansas [View instapost]
    @foretherecord: I should have specified Wall Street instead of finance. Wall Street/lawyers/kings/ casinos in most cases are playing zero sum games and consequently cannot add to aggregate profits. In contrast, concrete workers typically are adding to profits. Essentially it goes back to that Adam Smith chapter I linked -- many esteemed jobs actually add little economic value in aggregate (although obviously it's possible to win at zero sum games!).

    One can certainly find counter-examples, e.g. activist investors can work with companies to optimize capital structure, take beneficial corporate actions, and improve tax efficiency.

    Clients of Wall Street are frequently unreasonable people with a speculative mentality, and Wall Street is frequently selling unrealistic dreams, so it's a natural marriage. Luxurious environments are certainly rational given the client base.

    Note that I work in academia and consider myself to be part of the unproductive capital, and my spouse works in finance. So I'm not claiming to be a saint here.
    Aug 30 02:38 PM | Likes Like |Link to Comment
  • Spotting Lies For Fun And Profit [View instapost]
    Good point about illusions. There is a 'self-serving bias' in psychology that documents many of these cognitive distortions:

    http://bit.ly/1bASQb0

    The visual illusions are mostly due to the first layers of the visual cortex trying to recover 3D geometry and materials from only 2D images. This is an ill-posed problem so our brains have instead evolved to make many assumptions. Here are some I showed in class in the last couple days:

    http://bit.ly/Y1u2ab
    http://bit.ly/Y1u3ed

    We also are evolved to detect human and animal faces everywhere, so we detect faces even in randomness, like Mars or in clouds:

    http://bit.ly/Y1u2af

    We can't recognize identity as well for people from other ethnicities (known as the "Other Race Effect"), probably due to more training examples of people of our own ethnicity, as well as mentally abstracting "others" into crude stereotypes. This has caused some people to be wrongfully convicted:

    http://bit.ly/Y1u3ee
    http://onforb.es/Y1u2ah

    Much of this happens in the visual cortex which decodes raw retinal information so it is subconscious. Interestingly even our perception of distance is modified based on whether we are sitting or standing, and our body geometry.

    There are a lot of connections between visual perception and behavioral economics.

    Three main themes I see are:

    (1) Information is subconsciously parsed by the brain under myriad assumptions, therefore it is more reliable to use objective measurements than to use what we see, hear, and feel;
    (2) Randomness is perceived as false patterns, particularly when these patterns are centered around the self;
    (3) Self-serving bias.

    I believe these biases actively conspire to cause many terrible investment behaviors. For example: extreme over-trading, belief in unprovable but likely dangerous assumptions ("the Fed has our back"), lack of Munger's "inversion" to carefully critique past mistakes and invert widespread beliefs, need to be right, not comparing with benchmarks in the long term, obsession with benchmarks in the short term, use of technical analysis to find imaginary patterns, unreasonable optimism and pessimism about future returns at market highs and lows, unwillingness to consider base rates and forecast returns objectively, and a mentality that there are many actionable ideas and relevant news.

    Since many of these biases are subconscious they occur in everyone, it's not a matter of "being smart enough" to avoid them. Thus, I use explicit rules to counteract them. For example, since people overtrade, I've started to target only two investment ideas a year. Since people over-react to randomness I take the default view that essentially everything I see and read is random, and I want a very extreme margin of safety. For investment techniques that appear to have worked well, I ask whether it was an illusion created by self-serving bias, and what are the dangers going forward?

    Even subtle things like color are backwards on Wall Street. In China they have better colors: green for loss and red for gain. If stocks showed green ("go") for joyful market crashes and red ("stop") for painful bull markets, investment performance would likely be better on average.

    http://bit.ly/Y1u3eh
    Aug 30 02:02 PM | 1 Like Like |Link to Comment
  • Monarch Is As Cheap As Cement And As Boring As A Cement Plant In Kansas [View instapost]
    Good question. Why do kings, casinos, and famous people in finance and law buy up all that fancy indoor space? Whose money are said people spending, and who do they hope to impress?

    Who generally adds more to the economy, the above parties, or owners of cement factories?

    http://bit.ly/1vVL9oR
    Aug 30 12:38 AM | Likes Like |Link to Comment
  • How Much Would You Pay To Avoid Volatility? [View instapost]
    Thanks -- here's the plot I made (I also double-checked jrv's data):
    http://bit.ly/1wEM15F

    Any idea whether these ETF options qualify for IRS 1256 treatment? (60% long-term, 40% short-term).
    Aug 27 07:04 PM | Likes Like |Link to Comment
  • How Much Would You Pay To Avoid Volatility? [View instapost]
    Alternatives to TVIX:

    TVIX is not optionable. But UVXY is. Don't ETF options in general give better tax treatment due to IRS 1256, as opposed to shorting outright?

    One could also go long 2 SVXY which is nearly equivalent to short 1 TVIX (I tested this on hypothetical backfilled portfolios since 2004, but without including borrow costs -- one can get the backfill data from jrv's website http://bit.ly/zZ4gZ2 ). SVXY is also optionable.
    Aug 27 06:30 PM | 2 Likes Like |Link to Comment
  • Bitcoin Discussion Forum [View instapost]
    Mike Novogratz is also buying BTC:

    http://bit.ly/YWKZms
    Aug 26 08:17 PM | Likes Like |Link to Comment
  • Candy Gets Crushed: Presents Investors With Opportunity To Collect A KING's Ransom [View article]
    If you're talking to me just follow the link I gave above in Google Chrome and activate 'translate' at the top of the browser (the game title is "糖果传奇"). I should think the iOS charts are accurate. Here's an article discussing the limitations of Google Play in China (not many people use it due to it being blocked, so I wouldn't read much into Google Play charts in China):
    http://bit.ly/1l5IqYW
    Aug 24 12:43 PM | Likes Like |Link to Comment
  • Candy Gets Crushed: Presents Investors With Opportunity To Collect A KING's Ransom [View article]
    Is this the link you looked at?
    http://bit.ly/1mCMg7m
    It looks like it's #1 in free and #51 in grossing for iOS (it translates as 'Candy legend' in my browser). I don't see it in Google Play charts (however there appears to be a clone called 'Candy journey'). I'm a little skeptical of those charts however since Google Play is blocked by the Communists in China.
    Aug 24 02:38 AM | Likes Like |Link to Comment
  • Spotting Lies For Fun And Profit [View instapost]
    I think the stealing/lying is partly genetic. Here's a good article about that by Joshua Kennon:

    http://bit.ly/1pUYLyC

    Personally I will say "white lies" to make peoples' feelings be pleasant, after much experience as a kid being absolutely devoted to accuracy and scientific truth and pissing everyone off. However, people usually detect the white lies because I have to think carefully and state each word slowly in an ambiguous way to make it be roughly consistent with objective reality.

    I would be terrible at poker. Actually on the topic of poker I would guess that there are small imperceptible motions of the face and eyes, that could be amplified by graphics techniques, to gain an edge. For example, I would guess peoples' eye motion is statistically different when they have a bad card than when they have a good card (and eye motions such as saccades are involuntary). Reminds me of the first wearable computer by Ed Thorp, which was for the purposes of gaining an edge in blackjack.
    Aug 17 05:00 PM | 1 Like Like |Link to Comment
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