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beinnow

beinnow
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  • FedEx Heading Higher Despite Challenges [View article]
    FedEx would normally pass the cost of higher fuel prices on to customers through the fuel surcharge. Therefore an increase in oil price should not be a huge problem. A bigger problem is how to stop the trend that customers down trade from air to ground products. This is certain drag on margins. FedEx can to a certain extend off set this development by keep stealing market share from UPS on the ground. Good news for investors is that the pricing disciplin in the industry seems as strong as ever. UPS demonstrated this by following FedEx's lead on dim weight pricing on ground products. The perhaps biggest opportunity for FedEx is to increase its presence in Europe where they have been underperforming for decades. They will have to strenghten their ability to compete against especially DHL and to a certain extent UPS, although UPS seems to have lost traction in Europe over the last few years.
    Jun 29 05:32 AM | 1 Like Like |Link to Comment
  • Europe Will Turn Into A Growth Driver For United Parcel Service [View article]
    The challenge for UPS in Europe is that DHL has been allowed to regain former strength and has a lot of tailwind from recent years improved results. DHL's better Network in Europe will make it difficult for UPS to take share. TNT will also be dangerous as they will concentrate on Europe after having abandoned adventures in other continents. On the other hand is FedEx not a real danger in Europe as little indicates that they will change their niche player strategy in this continent. UPS' recent acquisitions in Europe do not appear to be significant and will most likely not move growth numbers. Future growth from UPS will continue to come from the US market where the competitive situation is more favorable.
    Feb 22 02:41 AM | 1 Like Like |Link to Comment
  • How High Can U.S. Stocks Go This Year? [View article]
    It is a very nice article with some interesting stats. I am also increasingly worried about what raising interest rates will do to stock prices. Will a normalized interest rate level mean that PE Ratios will go back to historical average and drive a stock sell off? I guess this would be the logical conclusion.

    In terms of betting on Europe at this point, I am not so sure. Still huge challenges with current account deficits in Spain, Italy and France. If just one of these countries sees a worseing in the economy, it could mean that debt crises will come back. Furthermore some of the big banks like Santander and BBVA have bought mountains of government bonds using cheap ECB funding. This is a dangerous mix.
    Jan 4 04:08 AM | 1 Like Like |Link to Comment
  • The Pricing Power Tell [View article]
    It has been exceptionally good for UPS and FDX shareholders that Airborne and DHL disappeared from the US domestic market. This has allowed for the above inflation rate increase you mention, increases that are even higher if you include new surcharges and changes to calculation of dim weight etc.

    One important note is that UPS and Fedex also are competing in markets where there is real competition such as freight, logistics, as well as many package delivery markets outside of the US.

    There is by the way an interesting lawsuit underway in Europe against the major container shipping lines. The EU commission is accusing the shipping lines of coordinating rate increases by signaling rate increases using for example press releases. It will be interesting to see where that will end, and if it will have implications for other industries.
    Nov 28 12:15 PM | 1 Like Like |Link to Comment
  • UPS To Increase Its Dividend By 10% And Reduce Its Shares By 5% [View article]
    As long as the interest rates are low paying 3-4% dividend yield is a good way of keeping a stock floating. When interest rates at some point rise, UPS needs to find some real growth to keep investors from selling the stock.
    Feb 4 03:45 PM | 1 Like Like |Link to Comment
  • UPS: How Well Can Brown Deliver For Investors? [View article]
    I consider UPS a buy long term, because of the pricing power that the US duopoly with FedEx gives them. However I would be careful with buying it at this point. There are some significant roadblocks coming up, that can derail them short term.
    Firstly it looks like there are significant problems with the TNT acquisition. One indicator is that the TNT share is traded 15% below the offer that UPS made. It looks like UPS has not been able to make a convincing case to the European Commission. The Commission seems to think that UPS/TNT will achieve too high of a combined market share in the segment of long distance air deliveries. Their point is that there is only one other real competitor in this segment, DHL (Fedex is weak in Europe). UPS will most likely have to sell off parts of the air delivery network to get the EU to approve the deal. The question is if selling off assets erodes the entire business case. If the deal somehow falls through, I imagine there will be a short term drop in the share price (that may be a buying opportunity)
    The second thing to look out for is the Teamsters contract. The current deal expires next year, but the negotiations are starting now. It would be a surprise if UPS can close this quickly. If they can close quickly, and the terms agreed are reasonable, the stock may get a lift. In the scenario, where the negotiations drags out, I would expect both shareholders and customers to get anxious and the stock to suffer.
    If UPS is able to navigate these roadblocks reasonably well, I would consider buying, if the stock is still below 75.
    Oct 28 03:16 AM | 1 Like Like |Link to Comment
  • Update: Be Cautious Of UPS [View article]
    I think you are right that it is a long term buy. UPS has got significant pricing power in the US (which is why Buffet likes it) and can raise rates 5-6% every year. If the deal with TNT goes through, they may get the same pricing power in the rest of the world. This would be a huge profit driver in the long run.
    Sep 6 06:25 AM | 1 Like Like |Link to Comment
  • Manchester United: It Takes A Brit To Explain Why America Has Been Fooled [View article]
    Man U should have a good platform for improving their results this year. They have landed some excellent sponsor contracts, which will drive revenue. Secondly last season they did not get out of the champ league group play. It will be a big surprise if they fail to qualify again. Getting into the last stages of the champ league will boost rev comparison with last year. On the cost site will the reduction of the debt mean a significant reduction in financial cost. Lastly and not to be forgotten, they will get a money injection from the japanese market after buying Kagawa.
    Aug 27 01:13 PM | 1 Like Like |Link to Comment
  • J.P. Morgan sees downside risk for Joy Global [View news story]
    Sometimes you get the feeling that the banks are trying to depress the sector with all their damanging reports about future development of prices etc.
    Jul 2 01:51 AM | Likes Like |Link to Comment
  • Earnings Coma: Digesting The Gains [View article]
    The problem is that you have nowhere to go if you sell stocks! The increase in shareprices has much more to do with low interest rate than improvement in companies and better prospects for the economy. As long as the interest rate stays low, stocks will most likely do fine.
    Jan 20 02:10 AM | Likes Like |Link to Comment
  • Novo In Need Of A Booster Shot [View article]
    Novo's growth driver Victoza is furthermore under threat from Sanofi's new GLP 1 agonist, Lyxumia, that shows significant advantages over Victoza. Lyxumia was launched in Germany in March and has already reached 8% market share.
    Jul 8 01:19 PM | Likes Like |Link to Comment
  • Comparing FedEx With United Parcel Service [View article]
    It will be interesting to see how the new trend of offering same day delivery options will impact the 2 companies. As far as I am aware none of the companies have an effective set up for same day delivery. E.g has Amazon, as a result of the change in sales tax strategy, chosen to open warehouses decentrally, which opens for the same day option.. If the trend is going towards same day deliveries managed from local warehouses, it could mean that local delivery companies, that are not in play for long distance deliveries, will be a larger part of the mix of e-tailers.
    Feb 22 05:32 AM | Likes Like |Link to Comment
  • Can Anything Stop Novo Nordisk? [View article]
    Novo Nordisk has build the foundation of growth for years to come, in a market that just keeps growing. They have an impressive pipeline that may be the best in the business. However given the high valuation of the stock there are some risk for investors. If Tresiba is not approved in the US, it will be a disaster for the share price. Furthermore are several related mix products tied to Tresiba. I imagine the approval will come - despite the cardio vascular risk - but investors need to be aware of the risk of FDA rejecting it - or requesting a warning text on the label. In terms of Victoza, that already has been successfully launched, there are still concerncs about thyroid cancer. If those concerns grow, that could be a problem for Novo. In terms of pricing of the products, Novo has a big challenge. The share price is based on expectations to margin expansion. Novo has just announced that there long term EBIT margin goal is 40%. This goal can come back to haunt them at a later point. Even though they have good products, it may be difficult for them to hold the line on prices and at the same time keep growing. An interesting fact that I heard the Novo CFO mention is that Novo gets 3 times as much for their products in the US as in Europe. This is due to different negotiation models. However the end result is that the user of e.g. Victoza in the US have to pay up to 400 USD per month. Needless to say that will limit growth. I imagine that Novo at some point will have to compromise on their pricing policy (and thereby margins) in the US to secure further growth in their most important market.
    Feb 6 01:42 AM | Likes Like |Link to Comment
  • UPS To Increase Its Dividend By 10% And Reduce Its Shares By 5% [View article]
    Didn't the teamsters force a strike that completely paralized the company for weeks about 15 years ago?
    Feb 4 07:06 AM | Likes Like |Link to Comment
  • Novo Nordisk's CEO Discusses Q4 2012 Results - Earnings Call Transcript [View article]
    Anyone that have any thoughts on the risk of Tresiba not being approved by the FDA?
    Feb 1 11:57 AM | Likes Like |Link to Comment
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