Seeking Alpha

biobat

biobat
Send Message
View as an RSS Feed
View biobat's Comments BY TICKER:
Latest  |  Highest rated
  • BlackBerry: Will It Really Be A Transitional Quarter? [View article]
    Consumers generally don't care about security so it doesn't matter how secure BBRY is and how insecure iOS or Android are. BBRY has lost that market and there is virtually no chance they'll ever get it back.

    Businesses who manage fleets of phones care about security as as 3rd party vendors fail, BBRY can come in and win some accounts. That's where they will make or break themselves. BES12 customer gains and BES12 conversions to paying customers will be what drives the company from here on out.
    Mar 1, 2015. 04:30 PM | 2 Likes Like |Link to Comment
  • BlackBerry: Will It Really Be A Transitional Quarter? [View article]
    BBRY's FY16 started today (March 1, 2015).
    Mar 1, 2015. 04:21 PM | 3 Likes Like |Link to Comment
  • The GoPro Media Business That Never Was [View article]
    The problem with that thinking is you're comparing GPRO to a whole host of stocks that should be (and many will be) trading for pennies or out of business altogether because they don't and never will make money (see the stories of Webvan and Pets.com from 2000). That's the kind of comparison that can get you killed in the long run.

    A P/E of 50 is extremely expensive even if you consider growth. Getting return on a P/E of 50 vs buying in when a P/E is close to or below 20 is a lot harder, even with a growth company. GPRO is a great brand but it's on a march to well below $40/share. More attractive buying opportunities will present themselves in the coming weeks/months.
    Feb 28, 2015. 08:14 AM | Likes Like |Link to Comment
  • Don't Over Think It, Buy Johnson & Johnson [View article]
    No Archman,

    I understand just fine. The rate of return doesn't keep declining. The rate of return is a function of your purchase price. If you buy a well run company at a fair valuation (or a cheap one), you're going to get a strong rate of return. JNJ has already returned over 100% since it's 2009 market lows.

    If you want to make the argument that continuing the rate of earnings growth is more difficult as you get bigger, I'll agree but it's not a set in stone fact that the rate declines. So yes, a $200B company will have to exert more effort to double in today's dollars than a $50B one. But the good thing about long term investing is that I don't have to worry about today's dollars. I'm looking 30 or 40 years down the road. Given dividends, buybacks, earnings growth and time - a fairly valued, well run, financially sound, innovative $200B company today (provided they stay financially sound and innovative and well run) should not have any problem hitting massive returns in that time frame.
    Feb 26, 2015. 06:28 AM | 1 Like Like |Link to Comment
  • Don't Over Think It, Buy Johnson & Johnson [View article]
    The_Hammer,

    I picked Apple because it was easy to illustrate the point that a company can blow past $200B and still grow. Google is another. $200B is just what the ceiling is viewed at today. It won't be the ceiling 5 years from now or 10 years from now.

    The top 10 S&P companies by market cap in 1980 (i.e. the 1980 mega caps) had some imaginary ceiling that was much lower than $200B (given that their market cap was only $236B) and yet they grew earnings over time earning investors 1000s of % in returns since proving that yes, it can be done.
    Feb 25, 2015. 07:07 AM | 1 Like Like |Link to Comment
  • Don't Over Think It, Buy Johnson & Johnson [View article]
    The_Hammer.

    If you want to make the argument that a $50B company today with a solid balance sheet should have an easier time doubling than a $250B stock today, the odds are in your favor but you can't just put some arbitrary ceiling on where growth stops with a mega cap because it changes over time. In 1980, the perceived ceiling of a mega cap where growth would stop was in the range of $30-50B. 10 years ago, it was $200B. 2 years ago it was $500B. Today Apple stands at $750B and is still growing (and has already doubled from a $375B market cap 2 years ago). MSFT has grown 20-25% over the last year to a $400B+ company....I could go on and on.
    Feb 24, 2015. 05:06 AM | 1 Like Like |Link to Comment
  • Don't Over Think It, Buy Johnson & Johnson [View article]
    Archer,

    Thanks for the response but you completely misinterpreted the point. Adding $35B market cap to XOM in 1980 wasn't an easy thing to do because it was one of the biggest companies on the planet. The 1980 version of you would repeat the same fallacy you're repeating now - adding a lot of market cap is impossible because the company's already one of the biggest on the planet and there's no more investment to be had from the public because there's a finite amount of capital to be had. The 1980 version of you was wrong, just like the 2015 version is.
    Feb 24, 2015. 05:04 AM | 1 Like Like |Link to Comment
  • Don't Over Think It, Buy Johnson & Johnson [View article]
    Archman,
    This is a ridiculous exercise because when you invest in a company, you never know it's chances of success up front. And not knowing the chances of success up front, I would go with a well capitalized company because they have the balance sheet to withstand major market corrections even if the better return would be on the smaller cap stock.

    But let's leave that aside for a minute. I want to point out to you using actual math, not some voodoo math you state, that the law of large numbers is complete horse s###.

    In 1980, the top 10 companies in the S&P had a market cap of $250B. The law of large numbers says the biggest company should not grow tremendously because it's already big (I'm paraphrasing). Taking any one of those - I'll use XOM as an example - it's market cap at the time was $35B (just behind IBM and ATT). Using the fallacious law of large numbers argument in 1980, you would say XOM couldn't thousands of percent growth to investors over 35 years because it was already too big and therefore couldn't grow earnings, and you would have missed on a 10-fold increase in market cap, missed out on dividends compounded over 35 years and missed out on a 2000+% return on your investment of a major market cap company that shouldn't see growth because of a ridiculous law of large numbers argument.

    You can check it out for yourself here (I used Feb. 20, 1980 as my starting position): http://exxonmobil.co/1...
    Feb 23, 2015. 07:09 AM | 2 Likes Like |Link to Comment
  • Apple's Electric Vehicle Opportunity [View article]
    ArnieW,

    The median age is also around 11 years - as the sales per year don't vary too much and typically fall in a seasonalized 15-17M per year range (dropping and recovering quickly during recessions).

    It's generally believed the luxury upgrade cycle is shorter but I don't think there's anything definitive on it. What is certain is that luxury car owners tend to be old white guys. Not quite Apple's core demographic.
    Feb 22, 2015. 05:41 PM | Likes Like |Link to Comment
  • Apple's Electric Vehicle Opportunity [View article]
    Exactly. And this is where the money is in cars. Infotainment upgrades are highly profitable but are lucky to ever have an OS update during the lifespan of the vehicle (good luck with that navigation system and it's maps from 2005). You're left with a landscape of makes and models all running different versions of different OS's making servicing a nightmare. If Apple can come in and simplify that, by providing timed software updates, they will own the infotainment market.
    Feb 22, 2015. 05:24 PM | 1 Like Like |Link to Comment
  • Apple's Electric Vehicle Opportunity [View article]
    You're assuming that Apple can build and sell in large enough volume to actually have a margin. America is littered with car companies that didn't make it because they didn't have volumes or margins.
    Feb 22, 2015. 05:20 PM | Likes Like |Link to Comment
  • Don't Over Think It, Buy Johnson & Johnson [View article]
    The law of large numbers applied to investing isn't an actual law, it's a theory and it the generally notion was that a company could not support a $500B valuation and continue to grow. Apple's recently blown that notion out of the water now sitting at a $750B market cap, is relatively cheap valuation-wise compared to the rest of the market and continues to grow.

    I agree that it's unlikely that a $250B market cap company will grow 1000% or 10000% in 30 or 40 years, it's theoretically not impossible. Buybacks reduce market cap, the bigger the better to increase investor returns. Dividends increase an investor's overall returns and inflation can make $250B number you see today into a completely meaningless number ($2B - the valuation of JNJ in 1970 is $12B in 2014 dollars).
    Feb 22, 2015. 09:51 AM | 9 Likes Like |Link to Comment
  • Don't Over Think It, Buy Johnson & Johnson [View article]
    The law of large numbers applied to investing isn't an actual law, it's a theory and it the generally notion was that a company could not support a $500B valuation and continue to grow. Apple's recently blown that notion out of the water now sitting at a $750B market cap, is relatively cheap valuation-wise compared to the rest of the market and continues to grow.

    I agree that it's unlikely that a $250B market cap company will grow 1000% or 10000% in 30 or 40 years, it's theoretically not impossible. Buybacks reduce market cap, the bigger the better to increase investor returns. Dividends increase an investor's overall returns and inflation can make $250B number you see today into a completely meaningless number ($2B - the valuation of JNJ in 1970 is $12B in 2014 dollars - or a xx).
    Feb 22, 2015. 09:51 AM | 2 Likes Like |Link to Comment
  • Apple's Electric Vehicle Opportunity [View article]
    ArnieW,
    The auto has a short replacement cycle? Let's dispense with the opinions and stick with facts.

    The AVERAGE auto on US roads today is over 11 years old (US department of transportation stats). So for every new car sold last year, there was one on the road that was 22 years old. Apple is struggling with tablet replacement cycles of 3-4 years, and now they're going to go into a low margin business that has a replacement cycle of 11 years?

    I'm going to call a spade a spade. This isn't going to happen.
    Feb 22, 2015. 08:54 AM | 1 Like Like |Link to Comment
  • Apple's Electric Vehicle Opportunity [View article]
    I put this in the realm of not going to happen. They're hiring people to do R&D and then see if it's feasible from a margin standpoint. It won't be but Apple will gain valuable IP in the process that they can license to others or use to promote Apple as the in dashboard vendor of choice for the auto industry.
    Feb 22, 2015. 08:44 AM | Likes Like |Link to Comment
COMMENTS STATS
3,407 Comments
2,974 Likes