davcnslt

http://www.davisasia.com

19 Comments

    • Our Coming Depression [view article]
      Meticulously researched, passionately composed, and compellingly presented. Perhaps the most resonant part of the above is your belief that the "me generation" is showing signs of accepting the end of the "Cigar afficiando - tubs of iced Kristal" days. In my view they were not happy days. Nor are these. However, I want to believe that we are correcting course, and setting our sights on immutable values that are awaiting our return. Oct 07 12:43 PM
    • Wall Street, 1792 - 2008? [view article]
      OK, I'll ask the obvious: What was the information value of this post ?(other then to spur several interesting comments). If reads like a proxy for the Paulson/Bernanke bailout pitch., complete with the ubiquitous overly bubbleized FEAR factor. (Insert "hyperbole" if you wish).
      In my opinion, opinion is heavily tilted to a NO vote on Paulson's plan as submitted, undergoing substantice changes as we write these comments. For my own small part: I will never support a package that doesn't address systemic change that prevents the unabashed greed that has driven our wisest to bring us to a brink of catastrophe. Nor would I ever support a package that doesn't redress most, if not all, the absurd executive pay packages of those involved, and institutes recovery. Finally, those firms wishing to sell assets to the government bail-out program must relinquish equity above and beyond the toxic waste it wishes to sell, and that eq       Sep 27 11:55 PM
    • Where We Should Be Investing: The Paradox of Thrift [view article]
      Thank you for a particularly eloquent springboard piece from McCulley's essay. I had already read his article when I stumbled onto your post. It is spartanly simple and elegant, particularly so in that we have all around an increasing "tragedy of the commons" in almost all things vital to us. I could not agree with you more. The siren songs of the goldbugs and their opposite, the entitlement & consumption dupes, have all along made little sense to me. I enjoyed your post as much as any I have seen here. Aug 02 05:08 AM
    • Long Ideas for an Upcoming Crash [view article]
      Thanks for the post, I am with you on a couple of your picks and would like your view of SLW's warrant issue. I see it as bullish insofar as what might be management's expectations for rising silver prices. I suspect they are moving to re-fill the war chest for acceleration of acquisitions. Interesting though, how much of a chip off the old block they really are. This is very much like former parent goldcorp. Incidentally, while I understand your subdued rant about indivisdual investors posting here I think for may of us it isn't neccessary. I weigh all I read here, some more meticulously then others. If you stick to your rationale and you have calculated right, all eyes and ears will follow. Jun 27 06:53 AM
    • Multinational Corporations Step Up the Search for the Next China [view article]
      Intersting article in a general way, however, the evaluation of expansion sites for MNC foreign investment is considerably more complex then the author would suggest. I agree, however, it is reasonably easy to determine that Vitenam has been attracting much attention from foreign investors. Vietnam has had some notable wins in attracting technology based, foreign investment which is a trend I expect to see continue. One of the more notable is the Japanese company, Nidec. Nidec has invested in new factories in Saigon Hi-Tech Park (Nidec Tosok Vietnam) to build 8m fan motors per month for example. Nidec embarked on new expansion plans in 2006 that have brought their cumulative investment in Viet Nam to close to $1 billion. They have also expanded into building fluid dynamic bearing disk drive motors, the first of it's type in Viet Nam. In late 2006 Intel announced it would raise its investment in Vietnam to $1B for expansion of its test & assembly capability in the Hanoi area. Production is expected to start in 2009, and it will be the largest facility of it's type in Intel's history.

      The patterns of FIT in Vietnam have been well established for the past several years, and will likley continue, at least near term. As I write this, Prime Minister Nguyen Tan Dung is traveling in the United States with senior memebrs of his country's trade delegation and Deputy Prime Minister and Minister of Foreign Affairs Pham Gia Khiem. The US and Vitenam have already signed economic agreements of note, including free trade, garment and textile, and aviation agreements. Most notable, perhaps, is that on 9 December 2006, the US Congress adopted the permanent normal trade relations status for Vietnam, and on 21 June 2007 the two countries signed Trade and Investment Framework Agreement (TIFA). There has been bilateral cooperation in scientific, technological, cultural, educational, medical and labor sectors, with many deals signed, including a joint communiqué on medical cooperation, and agreements on sports, labor, and education.

      One attraction to foreign investors and diplomats alike has been Vietnam's history of continuity and centralized decision making. Unlike in China where provencial governments and civil leaders often change the rules as they go, Vietnam boasts a strong, centralized, federal policy making process. Stability in the regulations is a key point to investors. Employment has been stable, the largely Buddhist influenced population treasuring education, peace, and progress.

      Still, like all opportunities, there are some risks to be weighed when contemplating a Vietnam linked investment. Property values there have more then tripled in some cases giving rise to questions among some investors about a possible bubble building. Saavy local investors have been plowing money into the property market, with a favorite tilt towards the sq. miles of condomenium space being built along many of Vietnam's more attractive shore lines. Many of these units have been flipped for a doubling or tripling of original investment with no end in sight of the investors flocking there from Hong Kong, China, Singapore and elsewhere.

      However, Vietnam's step into the global economy has been a two edged sword. Inflation, like everywhere else, has reared it's ugly head. CPI has grown by 15%+, so far this year, though it hasn't prompted demonstrations or strikes as it has in other countries, perhaps a testement to the population's steady resolve and faith in their government. Hand in hand with the rising consumer prices is Vietnam's continuance as a net importer with a growing trade deficit which rose to $14B+ in May, compared to $12B in all of 2007, pressuring the Dong which now is at 18,500 per dollar on the blackmarket versus the official rate at 16,000 per dollar. Local investors have shied away from the bourse, driving it down from last year's regional star to this year's worst performing, and are likely among those driving the price of a gold, a revered holding among traditional Vietnamese people.

      Tight bank liquidity, investor flight to gold, rising CPI, rising trade deficits, non-performing loans amidst the hangover's from last year's mania -- sound familiar? All investors should proceed with much caution IMHO.

      Vietnam's entry into the WTO last year makes them fair game for the IMF, which is urging the government to ease off the throttle and slow their growth before inflation runs away with the prize. Concern's have driven the local stock markets down and

      Vietnam's GDP grew 8.5% in 2007. The economy, on the whole, grew 7.4% in Q1,08. Notably, in today's commodity driven investment scenario, Vietnam is expected to export 8m tons of rice while other nation's struggle to meet domestic demand. FIT is running at a pace that is 2.5 times last year's $15.3B so far.


      Jun 22 09:18 PM
    • Long-Term Ugliness [view article]
      Why does anyone post an article like this? It is completely void of contributive information. Jun 13 01:35 PM
    • Western Digital: Time to Sell? [view article]
      Hi mark,
      many thanks for your notes on WDC. First I wanted to correct a misuse of terms:
      "solid state drives would be a thing of the past as flash drives would overtake the market"
      Actually solid state drives and NAND flash drives are similarly used. An exception is that the term "solid state drives" would also refer to "drives" that consist of RAM memory as well. In addition, with regard to your thesis, today there is little sign of WD growing inventory, nor is there any reason to believe that inventories would grow in the prime buying time normally associated with the back half of the year. In fact, since mid year last year the HDD industry has been markedly restrained in terms of controlling inventories and prices. During the stronger buying season of the back half, we could expect pricing to remain solid. For my money it is too soon to sell WDC. The stock still sells at attractive multiples, guidance is solid, and WD has been banging on all cylinders. With recent updated forecasts from both Gartner and IDC reflecting PC growth of 10% with the more brisk buying still to come, I believe shareholders are better served holding or even chasing a little. WD's execution in the fastest growing segment of the HDD business, the 2.5 inch mobile sector is really quite phenomenal.       Jun 05 08:53 AM
    • Peyto Energy Trust: A Truly Unique Energy Investment [view article]
      Still own it. One of my strongest picks, even with recent softness. High oil is with us for good. Demand for Natural Gas in the sand fields will continue to grow as that oil stay profitable. This is a great hold and is frankly one I never worry about unless oil goes to $70 per barrel. That just isn''t going to happen, perhaps ever. May 29 09:47 AM
    • Metalline Mining's Silver Lining [view article]
      Well researched and well presented article. many thanks & kudos. May 08 12:28 AM
    • NetApp: New Name, Better Prospects? [view article]
      Alan, you timed your note on NetApp perfectly. I had recently added it back to my watch list. Yours is an excellent report and I appreciate the thorough review. I agree with the baseline formation of $19 and suspect we will see opportunities approaching that line over the next few months, as technology in general enters it's C2Q doldrums. Investors should note that global data volume is growing by almost 60 per cent per year(1) and NetApp has a well established solid position in the space. Like you, I admire their willingness to invest in technology during the current climate. I especially like their devlopments in de-duplication technology, a key to complete storage virtualization. See today's article [hyperlink] www.foxbusiness.com/ma...
      Another play that your readers may want to consider is a major supplier to NetApp. Xyratex (NASDAQ: XRTX) depends on NetApp for 72% of their $187.8 million networked storage business. So why buy Xyratex when it seems to be a direct proxy for NetApp? A big change for Xyratex during the last quarter was a new relationship with Dell thanks to the latter's acquisition of EqualLogic. During their conference call last week, the company's CEO, Steve Barber said ""We were fortuitous in that Dell acquired a company we previously engaged with. We're in dialog with them on other technology."
      Prospective investors should note, however, that any contemplation of Xyratex as a candidate for your portfolio must include some diligence in another area of their business. Xyratex is the leading supplier of "infrastructure&q... to hard drive (HDD) manufacturers. By "infrastructure&q... the company refers to the highly specialized capital equipment that HDD manufacturers require to make and test their products. In this segment, Xyratex has seen revenues fall 60% year over year, as HDD manufacturers tempered their plans in favor of supply/demand balance after a brutal price war in the first half of 2007. While caution due to macro considerations continues to weigh on capital spending, the HDD makers all have expansion plans targeted for the back half of this year. Xyratex's key customers in this space are the two leaders, Western Digital and Seagate Technology. Given the inexorable demand for storage, I believe that Xyratex, NetApp, Western Digital, and Seagate Technology offer potential for patient investors willing to measure their entry point and who are seeking a solid middle ground for a technology recovery in the back half of this year. At the moment, we believe that these companies have seen C1Q exiting with a slowing of ship rates and minor increases in inventory. As this becomes apparent, with possible revisions over the next few weeks, we expect multiple opportunity points to present themselves.
      Thank you again for a well researched and thought-out article.

      (1) See article on the recent IDC report: money.cnn.com/news/new...

      Disclosure: We do not currently own any of the stocks mentioned in this reply
      Apr 01 12:03 AM
    • Sell the News, Buy the Rally [view article]
      I have to join the thumbs down crowd here and ask how it is we landed on this kind of article in the first place? I believe it is better suited for Yahoo threads. Mar 13 10:35 AM
    • Seagate, Western Digital: Expecting Seasonal Updrafts in Volume and Earnings [view article]
      Update: Following comments from Avian Research today:
      "We expect STX to report upside to estimates this quarter, with margins in particular likely to benefit from the more rational pricing environment. Since ’02, during strong back half drive environments, margins at STX have advanced by between 240 bps to 400+ bps from CQ2 to CQ4. Assuming we see similar margin trends this time around, STX would report upside of $0.14 to $0.25 to consensus quarterly earnings by CQ4.
      We see STX and WD sellside conference presentations early in September as the next potential positive catalysts for the stock as we expect both companies will provide very positive commentary about the current environment.       Aug 17 09:22 AM
    • Gold's Value In the 21st Century: About As Real As the Myth of El Dorado [view article]
      No simplke answer here. However, I think your gold=currency=value is, as you probably intended, false. At one time we could say currency=gold=value but again, you are correct, that is gone.

      The answer comes at least partially from Robert Bohrer's comments as to the vaue of Gold in jewelry, especially in Asia. (Gold sees little use as a manufacturing material other than in jewelry). It is a defactor currency, or wealth asset to millions here.

      The lustre of gold is not going to go away, perhaps because of it;s illogic rather than in spite of it's illogic.. I would add gold to the wisdom of Robert Lichello's observation that in nuclear winters only cigarettes, soap, booze, and chocolate have investment value. (as reiterated above by Malkiel). There will always be those that will sell you these things if you have gold in my opinion. Incidentally, I also would have added condoms to Lichello's list.       Aug 16 11:18 PM
    • Time to Buy Gold Stocks: A Vicious Circle Turns Virtuous [view article]
      Justice, I am compelled to write that of all the insightful, literate comment that Seeking Alpha is awash in, I enjoyed this single piece more than any in a long time. I find myself in that position of being an "early one", and haven't wavered. Your piece articualtes the "why" of this better than I might have ever penned for myself, though the basic thrust of my reasoning is there. I suspect everyone has a natural desire to hear echoes of out thoughts from our peers. In fact, so much so that we sometimes alter those echoes so that they fit what we think we thought. It is a basic emotion. As such, it is one best suppressed when it comes to things financial. However, I cannot resist that "sated" feeling. Many thanks for a superb post. Aug 16 10:53 PM
    • Continued Pricing Power in Store For Data Storage? [view article]
      Unit pricing and shipment volumes in the HDD industry is largely cyclical. that of course is no secret. That cyclicity, simply stated, is that unit growth rates Q over Q (and ASPs as well) decline in the first half of the calendar year and increase in the second half. This has led to more intense competitive price inititiatives during the softer first half, sometimes excessively so. Those initiatives lose their attraction as the second half buying winds up and more market is available. Trend Focus (trendfocus.com) recently provided a study to it's clients, based on reviewing quarterly unit shipments (across all models) since 1998, by quarter. The swings can be quite pronounced. For example, shipments rose 22% in CQ3 of 2003, and fell 8.2% (QoQ) in CQ1,04. In CQ1-2007 shipments declined %5.11 from the previous quarter. In CQ2-2007 the decline softened to -%1.26. The mean forecast for CQ3 (from several forecasters) is that unit demand will grow 17%. Mobile units are expected to outpace that at 23% Q over Q. We would have expected to see some aggressive pricing in 2.5 ich drives, expecially those at the higher capacity points (250GB). That hasn't happened norappeared to have happened, at least yet. We would also have expected to see continued aggressive pricing in 3.5 inch desktop and CE (DVR) Models. That also does not appear to have happened. In fact certain capacity points in the 3.5 inch sector are getting hard to find and in at least one mfr's case they are currently on allocaton. In the excerpts from conference calls you used above, we would note that WD seems to be saying that they expect the heat on pricing to cool off somewhat in CQ3 as buyers opt for assured and steady supply so as not to threaten their time critical build plans. Seagates comments are, while admittedly more circumspect, suggest that they are planning for continued price pressure from the competition as a matter being conservative, as they have no control over competitor';''s behavior in pricing. Since both those statements were made however, it has been pretty clear in the channels that pricing has not been as aggressive in CQ2. In their most recent pricing survey, Avian Research notes that pricing for 100GB 7200 RPM mobile drives has risen .4% week over week. TYhe 160GB 5400 RPM SATA 2.5 inch has risen 1.2% in the same period. I agree that in general, pricing in the hard drive market is always competitive. However, recent consolidation, coupled with the commencement of seasonal higher demand, suggests that, contrary to any imminent decline in pricing power, the industry should be poised for near term strengthening in pricing power, at least through the next two quarters. To draw any real conclusions from this one would have to review and understand operating efficiencies especially opex, time-to-volume on new products, and product mix shipped. Two brands of HDD targeting the same performace and capacity, have little in the way of differentiation. Yields in the factory, COGS, time-to-volume, and ROI on Capex is what will set apart a particular vendor. Aug 16 12:14 AM
Loading...
Symbols:
Authors:
Quick Links:
Contribute an Article Become a Seeking Alpha Contributor

Transcripts

More Transcripts»