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PredominantlyWary

PredominantlyWary
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  • How Easy Is It To Create A Scandal? [View article]
    Yeah there are countless examples like it. Until there is a real extradition treaty between China and other countries to punish fraudsters like this, there is an enormous incentive for company management to perpetrate frauds, in fact, as the arcticle I linked to above suggests, there were 20 that were discovered in Singapore after the financial crisis alone. So the point that I saw someone make above that MW should have already caught this this one... I think it takes a lot of time to do the necessary research to prove a fraud and for every one you find you will probably find several that aren't frauds... by that logic it takes MW a long time to build a case against a new company. I say Kudos to MW for exposing criminals, they should be encouraged rather than attacked.
    Oct 30 03:43 PM | Likes Like |Link to Comment
  • How Easy Is It To Create A Scandal? [View article]
    Actually, just furthermore to my point, Lin Yu has only about $12mm of stock at current prices, which is peanuts compared to the $165mm sitting in an account in HK from the recent convert issue. He just has to buy enough time to get that to some on-shore bank accounts under an alias and he'll be resigning pretty promptly, never to be heard of again. If you've lived in Asia like I have you've unfortunately seen this numerous times. Do some reading on Singapore-listed China Sun Biochem Technology for an example where the management basically decided to steal convertible investors' money because they frankly couldn't be held accountable.
    Oct 30 02:17 PM | Likes Like |Link to Comment
  • How Easy Is It To Create A Scandal? [View article]
    My 2cents, which aren't worth much... It seems pretty clear that there is some degree of fraud going on at NQ (the easiest one to point out is that NQ's story of YDT changed between their last explanation that I have seen posted on a blog here and the recent one to MW). I'm not sure it should matter whether it is a small fraud or a "massive fraud" because at the end of the day, can you really believe anything you hear from a company like this in the future? There is a *huge* incentive for the management of the company to misappropriate funds in a situation like this, because quite frankly there is not a lot that anyone can do to prosecute the perpetrators of a fraud across borders in China. What is stopping NQ from selling the whole business to YDT for $1 before doing that?
    Just read this article about some of the problems they were having in Singapore with fradulent Chinese companies listed there:

    http://bloom.bg/17xsYMw

    If NQ executives are smart, they will steal all convertible money and delist the company, it would be a lot easier than trying to regain investors' trust. Omar Khan can probably claim ignorance in the US and find a way to get some money moved out of China to get his cut.
    Oct 30 01:35 PM | 1 Like Like |Link to Comment
  • GM CEO Dan Akerson has created a small team to study Tesla (TSLA) and the potential threat it poses to the auto giant. Vice chairman Steve Girsky: "[Akerson] thinks Tesla could be a big disrupter if we’re not careful ... History is littered with big companies that ignored innovation that was coming their way." Akerson has been busy trying to speed up the pace at GM implements new technologies, and promised in March GM would launch an EV with a 200-mile range. Meanwhile, Tesla is working on lowering charging times at its supercharging stations to 5-10 minutes from 20. CTO J.B. Straubel cautions "it’s not going to happen in a year from now." [View news story]
    "the only reason that Tesla "isn't making money" is because they are plowing their profit right back into the infrastructure"

    Cassina, you obviously don't understand the difference between capital expenditure and operating expenses on a company's financial statements. Infrastructure spending does not immediately affect a company's profits, it only shows up over time as an expense via depreciation.
    Jul 18 05:16 PM | Likes Like |Link to Comment
  • Shorting U.S. Steel [View article]
    They did the convertible deal to prepay a portion of their existing convertible, I don't think they raised a lot of additional money from that.

    I personally think that the market is overall far too bearish on US Steel right now.

    If you want to be bearish on the US steel market, short AK Steel as they and Thyssen Krupp will be the next ones on the chopping block after RG Steel folded. Thyssen is desperately trying to sell their Alabama plant and of course is finding no buyer for it. My guess is that will shut down soon and relieve a bit of the oversupply problem as according to this weekend's WSJ they are undercutting everyone else in order to run at as high a utilization rate as possible. Moreover, AK Steel is crippled by their enormous annual cash pension payments and their high production costs. The credit markets are pricing AKS as the next to go in the US, which would ultimately be a huge benefit to US Steel.

    As for Chinese producers, yes they produce cheaply, but in order to send their goods to the US there is about a $100 / metric ton (= 1.1 short tons) slippage cost they need to make up for, which includes shipping, fees, timing risks, etc. Almost all Chinese producers are operating at a loss currently and the prices over there aren't too different than in the US, i.e. imports are not the problem currently. The government will force a good deal of consolidation in China soon as well, that will hopefully eliminate a lot of the oversupply problem in that country.

    Moreover, I do believe in the coming commerical construction upswing, corporate earnings have been outgrowing the economy, and the business cycle is finally reaching the point where companies have the confidence to invest in their businesses.

    Beyond that, natural gas prices have rebounded nicely, which should benefit steel demand from the oil and gas sector which was supposedly much lower than expected in the first quarter. US Steel's tubular business is one of its biggest contributors to earnings and it is directly positioned to benefit as the US continues to expand its annual output of oil and gas.

    Yes, 1Q will suck, but the expectations are sooo tremendously low at this point that it's priced into the stock. I think it's a very tough short here. Best trade? Sell long-term puts on X to buy puts on AKS. The credit market's are telling you there's a very different likelihood of these 2 making it through the cycle and if AKS defaults while Thyssen Krupp exits the US, it's sure to benefit the remaining players like X.
    Apr 28 09:29 PM | 2 Likes Like |Link to Comment
  • Sirius XM: 390 Million Shorts Should Join The Long Side [View article]
    Hi Stephen, thanks for publishing another useless observation on Sirius short interest.
    Apr 9 06:30 PM | Likes Like |Link to Comment
  • Sirius XM: 400 Million Shorts Still Playing With Fire [View article]
    The buy back is just offsetting Liberty's sales into the market. Agree I don't see a point in being massively short Sirius because the busines works but I don't see anything in your analysis that suggests it's a tremendous value proposition to investors either.
    Mar 26 05:51 PM | Likes Like |Link to Comment
  • Sirius XM 406 Million Shorts Are Only Fooling Themselves [View article]
    A lot of the short is associated with the convertible bonds and the arbitrage investors that hold them. They convert into 300mm shares. As bonds change hands between investors that hedge and don't it can explain some of the variation. Additionally, some investors are short SIRI and long LMCA to play for the Liberty monetization. Clearly it doesn't explain it all, but I fail to see any conspiracy or imminent short covering rally here when probably outside of the convertibles the short interest is somewhere around 5% of float. To give you an idea, the short interest in Coinstar (CSTR) had to rise to around 50% of float before borrow became impossible and short sellers were forced to cover positions.
    Feb 27 05:37 PM | Likes Like |Link to Comment
  • Not All Data Center Stocks Are Created Equal [View article]
    This is a very detailed analysis and thoughtful to provide us with a different angle.

    I am ignorant about this space, so I was hoping you could explain how maintenance cap ex can be so low when technology in most cases requires substantial ongoing updating and investment to stay relevant. Won't much of the current data center hardware be obsolete within 5 years and require reinvestment?

    Could you also explain in better detail how Equinix locations provide it such huge advantage with high barriers to entry? Is this location in the virtual sense or in the physical sense and why aren't competitors able to replicate it? Why does it make sense for these businesses to be converted into REITs?

    According to what I see, EQIX is priced at 13x EV to forward EBITDA based on analyst estimates for 2013. That seems high but not as high as some other growth stocks I've seen people gushing over in articles here, like Sirius, for example. Or, of course, the nose bleed valuations for Amazon. I'd be curious to hear what other readers think about it.
    Feb 26 05:37 PM | 1 Like Like |Link to Comment
  • Sirius XM: Explaining The Share Price [View article]
    I would comment that a lot of the increase in short interest and indeed a large portion of overall short interest of 379mm shares is due to the delta of the options embedded in the convertible bonds which convert into a total of 300mm shares. Any hedge fund that owns the convertible will be short stock against it and will sell more when the share price rises to adjust delta exposure. Also, when the company did a dividend in December, that increased the shares attributable to the convertible by over 5mm due to a conversion price refix. From the June share price of 1.85 to the current price of 3.13, I estimate that delta for the convertible increased from about 60% to 90%. This would account for an increase in delta exposure of about 90mm shares. Of course the convertibles can't all be owned by hedge funds so maybe only 50% of that was actually shorted, but still, it shouldn't be ignored considering short interest has increased by about the same 90mm shares over the same time period.
    Jan 30 08:37 AM | Likes Like |Link to Comment
  • Liberty Media Takes Hard Control Of Sirius XM, Dominates Board [View article]
    Hey Crunch, do you think there is potential for more dividend payments out of Sirius or was that a one-time payment before year end?

    Thanks,
    Wary
    Jan 23 03:31 PM | Likes Like |Link to Comment
  • Liberty Media Takes Hard Control Of Sirius XM, Dominates Board [View article]
    Hey Crunch, do you think there is potential for more dividend payments at Sirius or was that strictly a one-timer before the year-end tax change?
    Jan 23 03:29 PM | Likes Like |Link to Comment
  • Sirius XM Is Facing Its Own Cliff [View article]
    Hey Crunch,

    Yet again another thoughtfully researched article. I'm sorry that the comments you receive here are lacking of any real analysis and intentionally disregard the useful research you do. *Cue further angry responses*

    I have a couple questions for you here:
    1) It seems your net add forecast is about 500k for next year based on the math presented: (4.6mm new auto adds - 4.5mm churn + 0.4mm used auto adds). Could you please break down the same math for 2011 and how you expect it has played out this year for comparison sake?
    2) Why do you think churn is so high? At this rate Sirius loses almost a quarter of its existing customers every year...
    3) Relating to that: do you think some of this churn is synthetic as customers trade in old vehicles for new ones and choose to take advantage of a free trial period in the new car? If so, could not the real churn rate be lower?
    4) It seems to me that over time the churn rate should start to slow since 25% is such an enormous number to lose every year. What do you think?
    Dec 26 04:27 PM | Likes Like |Link to Comment
  • Casino stocks trade higher after Zynga files initial paperwork to enter the real money gambling game. Traders may be betting that the entry of a well-known tech company into the mix could increase the chances politicians in DC may have to take up the issue of regulating the industry. Advancers: LVS +1.1%, MGM +4.1%, WYNN +1.4%[View news story]
    Yeah Clark is right, has nothing to do with Zynga.
    Dec 6 11:18 AM | Likes Like |Link to Comment
  • Sirius XM And Pandora: The Great Race To $5 Per Share [View article]
    The buyback has been well anticipated by analysts... not sure 1.25bn really surprises anyone. Buyback is needed just to sop up some of the dilution from when LMCA converts its pref into stock. We worked out on another thread that Sirius's EV on a diluted basis is about 21.5bn, 19.5bn of which is equity. To be honest, I think Sirius would be better served leveraging up to make an acquisition or reinvest in the business than buying stock here, it would be more accretive to EPS, considering that Total assets on balance sheet are only 7.5bn vs an almost 3x higher EV. So I'd prefer to see smaller share buyback.
    Dec 5 02:34 PM | Likes Like |Link to Comment
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