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satyr

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  • Genworth tumbles after disclosing accounting "material weakness" [View news story]
    Financial Insights, I would be interested in knowing how you have come to the conclusion that every large public company has materially weak internal controls. and that external, internal, and management collude to hide them. Please include the appropriate links to your sources. Thanks in advance.
    Mar 2, 2015. 08:56 PM | Likes Like |Link to Comment
  • Indonesia sets Newmont deadline for Freeport smelter deal [View news story]
    james, I don't think you can use arithmetic to sort out a situation that is highly political, particularly when it involves business dealings in Indonesia.
    Mar 2, 2015. 05:49 PM | Likes Like |Link to Comment
  • One Reason Investors Should Not Buy Seadrill's Stock [View article]
    Very good comment, Tony Naples. I, too, was taken aback by the notion that "....management's job is to sell investors on the fact that the future is bright, and things aren't as bad as they seem." Management operates the company, and if they do it well, the stock price takes care of itself. Whenever I get the sense that a company's management is attempting to actively manage the stock price, that's when I search for the exit.
    Mar 2, 2015. 01:44 AM | 1 Like Like |Link to Comment
  • Rite Aid - Opportunities For Future Growth [View article]
    Thanks for making me smile, popeye... and reading my mind. Any time I see someone refer to "we" when it comes to investments, I suspect it could be just one person wanting to sound big. Or, it could be a firm of thousands. But, as many of us have learned over the years, one astute investor can easily do better than an office building full of inept analysts. For example, S&P Capital IQ today reaffirmed their "hold" rating on Home Depot (HD). Their rating has been between sell and hold since the stock was under $30. They have earned the dubious designation as sometimes being my contrary indicator for investments
    Feb 24, 2015. 09:33 PM | 1 Like Like |Link to Comment
  • Offshore drillers sink on Diamond Offshore contract woes, RIGP downgrade [View news story]
    Darren... a few thoughts here. First, not all offshore is deep water, so you don't want to lump everything together just because it's not on land. Second, offshore wells generally have a much longer lifespan than shale oil, so the economics are somewhat different. Third, you need to be careful about using average costs when analyzing any oil and gas project or approach. Some shale oil wells require $100/barrel to make a profit, and others need $30/barrel. Offshore can vary quite a bit in cost, as well.

    As I write this, some major oil companies are bidding on offshore leases. If they thought that shale was across the board superior, they would not waste their time or resources, because there is plenty of undrilled shale available.
    Feb 24, 2015. 09:22 PM | 6 Likes Like |Link to Comment
  • House Price-To-Rent Ratios In Major U.S. Markets [View article]
    I like this article, because it provides food for thought. I would be a bit careful about concluding that any particular city or individual piece of real estate is "overvalued" or "undervalued". Markets have a way of properly valuing any asset in the moment... which may turn out to be much different than the value assigned some time off in the future.

    I do think that anyone who is trying to decide between renting and buying ought to do this type of analysis, though, if they are figuring on living somewhere for maybe 5 years or less. Within that time horizon, it can make a significant financial difference if one is living in an area that has either a very high or low P/R ratio.

    Over a longer time horizon, the decision process needs to be different for a variety of reasons too numerous to mention here. The obvious ones, though are: 1) You can do a lot of things to an owned home that are not allowed in a rental, and; 2) Over time, it is quite possible that instead of housing prices going down, rents will simply rise and the P/R ratio will decrease. Then you can live the next decade lamenting your decision.

    Since there has been some mention of owning real estate as a rental investment, I will give my 2 cents worth here, because I worked professionally in property management once upon a time, and have owned rental real estate for several years. If you have no experience with rental property, think three times before buying real estate with that purpose in mind. It can be lucrative, and it can just as easily be nightmarish. It's one of those things that looks easier (and like more fun) from the outside. Think of all of those people who have opened bars or restaurants with no experience because they had a great soup recipe or liked talking to people over a beer. Anyone who has ever asked me if they should buy rental real estate gets the same suggestion from me: first watch the movie Pacific Heights, and then we can have another conversation if you are still interested.
    Feb 24, 2015. 09:02 PM | 4 Likes Like |Link to Comment
  • House Price-To-Rent Ratios In Major U.S. Markets [View article]
    Darren, your point about scarcity is very true, and it is what drives prices in real estate and every other kind of investment. Of course, it is a case of supply and demand finding equilibrium. Once prices reach their "proper" level, there is no scarcity, just a smaller number of individuals who can afford to buy. On any given day, someone with unlimited funds can purchase a home anywhere on the planet. Let's also recognize that the scarcity in real estate can be caused geographical constraints, OR constraints which are created by humans. For example, zoning rules or growth limits can have the same effect. Look at Boulder, CO.
    Feb 24, 2015. 08:48 PM | Likes Like |Link to Comment
  • Rite Aid - Opportunities For Future Growth [View article]
    popeye, you've got that right for certain. Canada is a regulated price environment, and it's no coincidence that neither CVS nor WBA have bothered. Rite Aid will expand into Canada probably in the same year that they open a store in Libya.

    Florida makes particular sense, not only because it is full of pill poppers, but because you have a lot of snowbirds from the NE who go there for the winter. Since the NE is Rite Aid's biggest market, they could gain a huge number of affinity customers who want to keep with the same pharmacy year round. They already do business in GA, so it's not a huge leap from a management and distribution perspective.

    That said, there is not so much loose change laying around these days, given the pending acquisition or Envision. Had it not been for that, I would have expected an announced invasion of FL and/or TX in late 2015. Now, it may have to wait until 2016 or 2017, unless they want to take a very incremental approach and open a handful of stores in the major metro areas. Keep in mind that because McKesson is now handling the drug distribution, they only have to worry about getting front-end merchandise to new locations. So, it's not as costly of an undertaking as it once would have been.
    Feb 23, 2015. 12:00 AM | 2 Likes Like |Link to Comment
  • Rite Aid - Opportunities For Future Growth [View article]
    PeanutBuddaJamm, I would like to see your arithmetic. To get to $5.00/share, unless there is a major stock market crash, California would have to fall into the ocean. Depending on which analyst you prefer, forward earnings are going to be around $0.40 to $0.48. So, at the low end, we are trading at a PE of 20, but more probably in the teens. Given the earnings growth rate, that is not a high multiple in this market. That is not to say that the PPS cannot drop, because anyone who has followed this company knows that they it could as easily hit $7 tomorrow as $9. However, from a traditional valuation approach, it is not priced unreasonably, and major analyst have price targets of $9 to $10 over the next 12 months.
    Feb 22, 2015. 11:52 PM | 1 Like Like |Link to Comment
  • What Yahoo Investors Should Expect In 2015 And 2016 From The Stock [View article]
    In summary (in case anyone is interested still trying to make sense of what has been presented/commented):

    1) SpinCo allows holders of YHOO to get BABA shares without losing the 35% that would be due the to the US Treasury if YHOO sold them on the open market.

    2) Holders of SpinCo will not realize a taxable event until they sell their shares. It will be a taxable gain or loss. The allocation of basis between YHOO and SpinCo will be communicated to shareholders soon before or after the spinoff occurs.

    3) YHOO has not communicated anything specific about their plans for Yahoo Japan. They have not indicated that it is part of SpinCo, so it is highly unlikely that it will be included. This is likely by design, because otherwise it makes it less attractive (or clean) for BABA to acquire the shares, and shareholders still have kind of a muddled mess.

    4) Yahoo Japan could be made into a separate spin off, sold on the open market (which would incur approximately 35% tax), or held as part of Yahoo core. There is no strategic reason for YHOO to hold it long term, so they probably won't.

    5) Softbank holds a significant number of shares in Yahoo Japan and Alibaba. It is reasonable to believe that they may want to acquire more shares, and either buy buying YHOO after the SpinCo event, in order to get the Yahoo Japan shares, buying YHOO before the SpinCo event, in order to get both more Japan and BABA shares. Or, enticing YHOO to create a tax free spin off of Japan so that Softbank can acquire in that manner.

    6) YHOO as a corporation gets nothing in return for SpinCo (cash or otherwise). The company is owned by shareholders, and after the spin off, shareholders will own exactly what they owned before the event, but it will be separated into two distinct buckets that can be owned or sold independently. It is a shareholder friendly event that avoids corporate taxes and lets shareholders monetize their BABA share, while unlocking the value in core YHOO, which is (stupidly) currently assigned a negative market value. After the spin off is complete, YHOO will continue to own its core assets, and possibly Yahoo Japan.

    7) While the premise of the article is misleading, because YHOO will NOT get tens of billions of dollars from the spin off (they get zero), there is one angle which could potentially be true. If we, for example, assign a value of $10/share to core Yahoo, and if they retain the approximately $5 billion in cash that they currently have, then a significant number of shares could be repurchased at that time. Compared to the current price of YHOO, they could purchase more than 4x as many shares in the future with the same cash. If you want to assign a smaller PPS, then the ratio gets larger. In theory, they could buy themselves out with their cash position and go private. That is not to say that this is their plan.

    8) Since we are playing guessing games here, my guess is that if Softbank doesn't take the whole thing during the year, they will buy it right after SpinCo. It's not improbable that this conversation has been had, which is why YHOO has chosen to hold onto Yahoo Japan for now, because Softbank wants it tax free. After they buy YHOO, they will either use the core as part of their other conglomeration of pieces in the US, or they will take the cash and sell the company to the highest bidder. If Softbank doesn't do this, it will still be much the same scenario. Yahoo Japan will be spun off in 2015 or 2016, and Yahoo core will be sold for maybe $15+ billion. If both BABA and Japan get spun out and the core Yahoo shares do not immediately jump to a reasonable level, private equity will swoop in and make a bundle.
    Feb 22, 2015. 11:28 PM | 6 Likes Like |Link to Comment
  • What Yahoo Investors Should Expect In 2015 And 2016 From The Stock [View article]
    jhesr, as has been explained by others here, YHOO is not just BABA. You get Yahoo Japan, a ton of cash, and a core Yahoo that generates quite a lot of free cash flow. We can debate all day as to whether the core business is growing, or going to grow, or who is going to buy it. What is not debatable is whether or not they are making money, because the FCF is tremendous.

    You comment about AOL surprises me. If you strip out the money they make from people who are unwittingly paying $11/month for just-in-case dial up service, they are operating in the red and have been for years. They are a flailing company that will not survive too much longer as a standalone. Unfortunately for Starboard, who owns a stake in AOL, Yahoo is not stupid enough to buy them.
    Feb 22, 2015. 10:58 PM | 5 Likes Like |Link to Comment
  • What Yahoo Investors Should Expect In 2015 And 2016 From The Stock [View article]
    kgfd1980, you've got the right idea here. The biggest variable right now is the value of BABA. But, it would have to drop quite a bit further to erode the sum-of-the-parts to a point that is below current PPS for YHOO. Nobody is certain how to value the Yahoy piece, because we don't know if it is going to be monetized tax free or not. Based on cash flow, YHOO core should be worth maybe $6 to $10 billion, plus cash. This is really just a sit and wait situation, and as some others have suggested, the surge should probably come later in 2015. Anything sooner would be a product of a rise in BABA.
    Feb 22, 2015. 10:53 PM | 1 Like Like |Link to Comment
  • Report: Yahoo to announce further job cuts [View news story]
    Peter P., those are all reasonable points. Any of the mega-techs can enjoy doing business with Yahoo, if for no other reason, then spite. No love lost between Apple and Google, that's for sure. Yahoo core does seem to be turning the corner here. But, for this all to work out profitably, they pretty much just need to not step in front of an oncoming train. I'm going to stick my neck out here and call for $55 by early October.
    Feb 20, 2015. 02:46 AM | Likes Like |Link to Comment
  • Seadrill Partner, LLC Declared Today It Raised Its 4th Quarter Dividend To $0.5675 Per Unit [View article]
    Comments here seem to ignore (or misunderstand) the difference between a LP that owns finite long-term leased assets and companies, such as SDRL, RIG, that are continually scrapping old rigs and purchasing new ones. I also see a bias with respect to how "renegotiation" is being interpreted by readers of conference call transcripts.

    Negotiation is a two way street, as is renegotiation. Contracts are contracts, and nobody gets to break them just because they don't like the terms, unless they are in bankruptcy. If you look at who has contracts with SDLP, you will have to agree that the BK argument is off the table.

    There are many elements to an oil rig contract. But, the biggest pieces are price and longevity. So, if for example someone wants a lower day rate, they could potentially get one in return for an early contract extension. For SDLP, it's all about DCF and financing. If someone wants to pay a little less up front and extend a lease an extra 3 years, that may be a wash for them. Bottom line, if they don't like the deal, they don't have to renegotiate a contract. Anyone who says otherwise is not well versed in contract law. We are not talking about how things work in a market stall in Bangkok.

    If you are SDRL or RIG, on the other hand, you have more rigs coming out of build and others that are idled, and because there are a lot of moving parts, then the negotiations could look different. Yes, someone could say "if you lower my daily rate on X, then I am willing to lease Y and Z from you rather than your competitor". That could very well happen, if these drill rig companies see it as beneficial from their end. But, you can't equate that situation for SDLP, because they do not have any new rigs to worry about. Anything that gets dropped down to them will already have a long-term lease on it. They have exactly ONE rig that is coming off lease this year, assuming that it is not renewed. So, that one rig could get renewed (which is NOT a renegotiation) at a lower daily rate. That's about the extent of it.
    Feb 19, 2015. 08:45 PM | Likes Like |Link to Comment
  • Samsung jumps deep into mobile payments [View news story]
    People have been paying with their phones in other parts of the world (not the US), particularly Asia, for a couple of years. In other words. Apple Pay is not a new idea, just their version of what others were already doing. So, it's one thing to comment on whether or not the Samsung approach will be better or worse or the same. But, the "copying rather than innovating" comments are absurd if they purport to characterize Apple as the innovator. And who cares, anyway?

    Let's talk about what matters here, which is adoption. The Android installed base is far larger than the iPhone installed base. Assuming that retailers in the US begin wide acceptance of either of these solutions (because right now, they are digging in their heals due to the credit card fees), it seems reasonable to consider that the Android version is going to have legs, and it really doesn't matter if Apple Pay is "better" or not. Sony's Betamax video system was indisputably better than VHS. It didn't matter.

    For now, I am much happier using a credit card with a chip. Why? Because it is smaller and lighter than any phone, I can get it for free, it doesn't shatter if I drop it, and I won't look like a retard with a phone at the checkout.
    Feb 19, 2015. 03:39 AM | 23 Likes Like |Link to Comment
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