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Philip Marlowe

Philip Marlowe
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  • Sell Greenbrier; It's Best Days Are Long Gone [View article]
    Sorry but this is a terrible article. Honestly, I am not asking you to agree with me, but can you at least put in an hour's thought before you write something.

    Let's think about your central thesis for a second. Your rather brief and barely thought out thesis is that if the price of something drops, then there will be lower demand for moving that thing on the railroads.

    Is this true? Well lets look at the association for american railroads weekly statistics, shall we (the last available statistics are for the week that ended Sep 26).

    It seems like your thesis might be true for coal, oil and metals and metallic ores, which all fell in comparison with last year, it certainly does not seem true for grain which shot up 30% from last year. Transportation of farm products other than grain also rose from last year. Yet you confidently say that Greenbriar is in trouble because the prices of sugar and wheat fell.

    Fact of the matter is that there isn't such a simple correlation between price of the commodity and railroad demand. Some commodities require more railroad transportation when they become cheaper, because the lower prices indicate producers can make and sell more of that commodity for a lower price, and thus need to move more of the stuff over the railroads.

    You talk a lot about oil, but you fail to mention one of the most important factors of the oil car business. There is a new regulation that would require that most existing oil cars be replaced or upgraded. The new car requirements are an exact copy of the features of Greenbriar's "tank car of the future" and Greenbriar specializes in upgrading old cars to comply to the new standards.

    You dismiss GBX's enormous backlog by saying that "it may help revenues for a few more quarters". In fact the backlog is enough to sustain last quarter's production for about TWO YEARS even if no-one orders a single car for the next two years. Sorry but in two years we will be in an entirely different cycle and there is no guarantee that any of the things you write about in your article will still hold true.

    You do not mention anything about valuation. If your article was merely about the GBX business, rather than about the stock price, you may have been excused not talking about valuation. But that is not the case. You recommend selling the stock. Well, if you make a recommendation about the stock value you should talk about valuation. And even if it were true that GBX best days are behind it business wise, it is entirely possible that the stock is a good value still. I need not remind people that some of the richest people in this nation have cut their teeth on buying declining businesses at a good valuation.

    For those curious, GBX trades nowadays for 6.5% trailing P/E, 5.5% forward P/E, less than 0.5 PEG ratio, 3.5 EV/EBITDA (!!), 0.4 price/revenue. This is for a company that has 20% yoy revenue growth, 27% yoy income growth and has the next two years' revenue already booked in contractual obligations.

    So now in 20 minuted of rage, I have already provided more useful information about GBX than your entire article. Well, I suppose this is a good thing, after all people come here to learn about GBX.
    Oct 5, 2015. 04:57 PM | 12 Likes Like |Link to Comment
  • AutoZone upgraded after strong read on U.S. car sales [View news story]
    MPAA is also flying. Nice.
    Oct 5, 2015. 12:57 PM | Likes Like |Link to Comment
  • Saudi Arabia reduces prices on oil sales [View news story]
    They say it is $1.6 bellow the Dubai benchmark. Current October futures for Dubai are at 45.344, so it seems that the Saudi's new price for Asia is 43.744.
    Oct 4, 2015. 03:42 PM | 3 Likes Like |Link to Comment
  • Amazon enlists GE, Samsung, others for automatic-reordering service [View news story]
    That is not very smart of Amazon. They do not want to remind people that they are a scary monopoly yet. It would have been better to wait until they are absolutely unavoidable, (like, say, a cable company) before they start with the scary monopolistic actions.

    And Google and Apple were absolutely the wrong companies to piss off. Especially if you piss them both off at the same time.
    Oct 1, 2015. 08:56 PM | 5 Likes Like |Link to Comment
  • Chip stocks underperform amid market drop, iPhone order report [View news story]
    At this point, I think that someone with a lot of trading capital at their disposal is just yanking the semiconductor index up and down for their own profit, and the financial press is helping them.

    That story about iphone suppliers worrying about slight order cuts for q4 actually came out before the market opened yesterday.* And after the market opened yesterday, the Phila Semi index shot up by 3 percent! Why is this a story today and not yesterday?

    Semiconductor investors are scared and jittery, which is a good environment to have large swings up and down in semi stocks. Some trader has figured this out and decided to take the semi stocks on a little rollercoaster ride for their own benefit.

    * The story has the october 1 date on it, but digitimes stories come out 24 hours earlier to subscribers.
    Oct 1, 2015. 03:32 PM | 2 Likes Like |Link to Comment
  • Avago sells optical module unit to Foxconn [View news story]
    This seems to be inline with the AVGO strategy of selling businesses in order to be laser focused on various niche areas where they have a significant technological advantage.

    The optical module unit is mostly about assembling things. Now it is high value assembling work, because with optics everything has to be precisely aligned, but nevertheless. The optical components, i.e., the various chips within the optical modules, is where the really high value high margin stuff is. And AVGO is keeping that part.
    Oct 1, 2015. 12:10 PM | 3 Likes Like |Link to Comment
  • Icahn thinking of upping Apple stake; Cook states enterprise sales hit $25B [View news story]
    So, in summary, he won't be buying more.
    Sep 30, 2015. 01:18 PM | 12 Likes Like |Link to Comment
  • Synaptics reportedly rejected $110/share buyout offer; shares +22.5% (updated) [View news story]
    Well I am glad someone in China shares my positive opinion of Synaptics' future. This is very significant because several Chinese companies are investing heavily in the touch sensor/fingerprint sensor technology SYNA makes.

    To me this means that they have recognized that SYNA's incell and TDDI technology is crucial for the future of the industry. The Chinese will not pay good money for a company if they can compete with it.

    I am not sure SYNA should sell, but I urge my Chinese friends to not give up and continue their bid even if they have to go hostile. $110 is not that good of a price (SYNA was at $101 this past june) but it is a start.

    Hopefully, a bidding war develops urged on by some activist investors (which is what happened with ISSI earlier this year). If a US company buys SYNA for about $150, I would be for it.
    Sep 30, 2015. 10:53 AM | 6 Likes Like |Link to Comment
  • Anheuser-Busch starts lining up financing for SABMiller [View news story]
    This is just crazy amounts of debt. Just to get a monopoly on cheap beer. If I were a billionaire I would start a national low cost beer brand after the merger. It should not be too hard to compete with someone with 70 billion dollars of debt on their books.

    This merger may have a negative effect on broadcasters. Budweiser and Miller/Coors mostly compete based on TV advertising. There will be definitely fewer beer ads in the US after the merger.
    Sep 29, 2015. 01:57 PM | 1 Like Like |Link to Comment
  • SWKS, AVGO, TXN seen growing dollar content with iPhone 6S/6S+ [View news story]
    I own them both too. SWKS is a more pure play on wireless. AVGO owns a lot of other businesses. That being said, AVGO seems to run their other businesses very well too. Avgo is much larger and will get larger still after they take over Broadcom. But they seem to do very well with acquisitions, their previous large acquisition (LSI) was quite successful.

    Within wireless SWKS is actually more diversified. AVGO makes mostly one type of filter. But on the other hand AVGO has near monopoly on that type of filter, and they cannot make enough of them and have to turn customers away.

    Regarding Qorvo. One of the major trend in the wireless analog business, is that it becomes more and more complex, as communications standards become more complex, and the large number of wireless devices out there increases interference. Thus, as the market opportunity increases the difficulty of creating a solution also increases and the number of competitors actually decreases, as many companies are just not capable of designing something that satisfies the requirements. Qorvo seems to be slowly falling by the wayside by virtue of not being able to meet the technological challenges.
    Sep 29, 2015. 11:08 AM | 1 Like Like |Link to Comment
  • SWKS, AVGO, TXN seen growing dollar content with iPhone 6S/6S+ [View news story]
    While it is not exactly clear what is inside all of these plastic chip packages, it is not at all surprising to see SWKS and AVGO content rising. There are more bands out there all over the world, and each one needs filters and amplifiers that can handle it. There is more data being sent, encoding standards are getting more complex, and there is more interference that one has to deal with. All of these are problems for cell phone designers and revenue opportunities for SWKS and AVGO.

    This trend will continue for the foreseeable future.
    Sep 28, 2015. 07:56 PM | 6 Likes Like |Link to Comment
  • Yellen: Rate hike appropriate this year [View news story]
    I have to strongly disagree with Yellen here. Sure there is a lag of monetary policy, but that does not explain why inflation is low. We have been at ZIRP for many years now. Even if you consider a year or two year lag, inflation should be rising now. But it is going the other way.

    We have to recognize that something is happening in today's world that makes it a little bit different than the world 20 years ago. The world can produce vast amounts of more stuff for ever lower prices. This is probably due to vast improvements in technology combined with globalization and international competition. If you look at any of the multiple things that are going down in price, be it laptops, cellphones, oil, iron ore, aluminum, clothes, etc., and carefully analyze the companies that are making them, you will notice that most of those companies say they can make these things at lower prices.

    If you do not recognize this change and just blindly believe that the world will simply snap back to its old ways in the near future, you are deluded, and you are likely to shoot the US economy in the foot.
    Sep 24, 2015. 05:42 PM | 9 Likes Like |Link to Comment
  • Jabil Circuit beats by $0.08, beats on revenue [View news story]
    Yes! Hit it out of the park! Will be listening carefully to the conference call to see if the Chinese have finally started buying networking gear again. This could be a bellwether for an industry turnaround.

    P.S. Their forwards guidance is a solid beat as well.
    Sep 24, 2015. 04:08 PM | Likes Like |Link to Comment
  • France to randomly test vehicles for emissions compliance [View news story]
    I am sure the french regulators checked with Peugeot and Renault before announcing this. This is just their way to stick it to the Germans.
    Sep 24, 2015. 12:37 PM | Likes Like |Link to Comment
  • Shell, BHP, GE to advise governments on climate change [View news story]
    In other news, a committee of wolves, foxes and hawks was formed to advise farmers how to best protect their chickens.
    Sep 24, 2015. 12:34 PM | 18 Likes Like |Link to Comment