Also, what is your explanation for the "low" price to sales ratio of Endicia if your view of the company is correct?

Why after every "jump" in the price chart has the company traded down after the earnings release if it is steadily growing?

Why the high P/B ratio?

Why the high ratios relative to competitors?

As said in the article, I am not short yet but will wait for an opportune moment.

BTW, acquisition costs are an investing cash flow. The amount of receivables might increase, which is an operating cash flow, and could decrease operating cash flow. However, receivables should be reflected in the price to sales ratio.]]>

Also, what is your explanation for the "low" price to sales ratio of Endicia if your view of the company is correct?

Why after every "jump" in the price chart has the company traded down after the earnings release if it is steadily growing?

Why the high P/B ratio?

Why the high ratios relative to competitors?

As said in the article, I am not short yet but will wait for an opportune moment.

BTW, acquisition costs are an investing cash flow. The amount of receivables might increase, which is an operating cash flow, and could decrease operating cash flow. However, receivables should be reflected in the price to sales ratio.]]>

See the interviews of the option traders in the book, "New Market Wizards" by Jack Schwager.

Amazon Link: http://amzn.to/1otDdNu

Do a QQ plot of the daily returns of SolarCity and you will find it is NOT normally distributed. Sorry, but I can't put a snapshot in the comments.

However, here is the data for testing normality in the daily returns, since SCTY started trading in 2012, from Gretl software:

Test for normality of SCTY:

Doornik-Hansen test = 769.137, with p-value 9.63888e-168

Shapiro-Wilk W = 0.90155, with p-value 3.56087e-22

Lilliefors test = 0.0817018, with p-value ~= 0

Jarque-Bera test = 2876.42, with p-value 0

Hence, that is why experienced market makers back off when an extremely large move happens and they are in the fat tail of the distribution; their "expectation" is much more fuzzy.

The distribution now has these non-normal characteristics

Skewness -0.031543

Ex. kurtosis 9.3242

Before today's trading it had these non-normal characteristics

Skewness 0.53886

Ex. kurtosis 6.5398

Skewness went from + to - and Kurtosis also had a large jump

Results also reject normality if today's return is taken away from the sample.

Daily stock data is from Yahoo finance:

http://yhoo.it/1otDdNw]]>

See the interviews of the option traders in the book, "New Market Wizards" by Jack Schwager.

Amazon Link: http://amzn.to/1otDdNu

Do a QQ plot of the daily returns of SolarCity and you will find it is NOT normally distributed. Sorry, but I can't put a snapshot in the comments.

However, here is the data for testing normality in the daily returns, since SCTY started trading in 2012, from Gretl software:

Test for normality of SCTY:

Doornik-Hansen test = 769.137, with p-value 9.63888e-168

Shapiro-Wilk W = 0.90155, with p-value 3.56087e-22

Lilliefors test = 0.0817018, with p-value ~= 0

Jarque-Bera test = 2876.42, with p-value 0

Hence, that is why experienced market makers back off when an extremely large move happens and they are in the fat tail of the distribution; their "expectation" is much more fuzzy.

The distribution now has these non-normal characteristics

Skewness -0.031543

Ex. kurtosis 9.3242

Before today's trading it had these non-normal characteristics

Skewness 0.53886

Ex. kurtosis 6.5398

Skewness went from + to - and Kurtosis also had a large jump

Results also reject normality if today's return is taken away from the sample.

Daily stock data is from Yahoo finance:

http://yhoo.it/1otDdNw]]>

We are dealing with one case of SCTY today, there was no mention of selling OTM, covered puts over time. This is a straw man fallacy.]]>

We are dealing with one case of SCTY today, there was no mention of selling OTM, covered puts over time. This is a straw man fallacy.]]>

You are assuming among all readers there are not any institutional investors. The first article was published for "Seeking Alpha Pro" readers...]]>

You are assuming among all readers there are not any institutional investors. The first article was published for "Seeking Alpha Pro" readers...]]>

For all of CAPM's flaws it is still widely followed, and the calculation methodology understood.

What is your cost of equity for SCTY, and the method used to arrive at that figure?]]>

For all of CAPM's flaws it is still widely followed, and the calculation methodology understood.

What is your cost of equity for SCTY, and the method used to arrive at that figure?]]>

http://bit.ly/1klImFi]]>

http://bit.ly/1klImFi]]>

Let's see what IBM took in and spent over 2010-2014.

Cash Flow from Operations + $93.3 Billion

Capital Expenditures - $19.7 Billion

Net Share Repurchases - $60.4 Billion

Dividends Paid - $18.7 Billion

Total - $5.5 Billion

That is why I will have to side with the bears in this argument. IBM has to grow revenues, and not rely on cost cuts and share buybacks. Since 2010 Cash, Cash Equivalents, & Marketable Securities has dropped by over $3.1 Billion. Until revenues grow, holders of IBM stock are counting on a greater fool to buy their shares; right now the debt market is allowing IBM to be that fool, but one can not continually spend more than cash flow from operations!"

This is at the end of an article I wrote before this one on IBM (published June 4, 2015) "IBM Quality Of Earnings: A Quick Rebuttal"

http://seekingalpha.co...]]>

Let's see what IBM took in and spent over 2010-2014.

Cash Flow from Operations + $93.3 Billion

Capital Expenditures - $19.7 Billion

Net Share Repurchases - $60.4 Billion

Dividends Paid - $18.7 Billion

Total - $5.5 Billion

That is why I will have to side with the bears in this argument. IBM has to grow revenues, and not rely on cost cuts and share buybacks. Since 2010 Cash, Cash Equivalents, & Marketable Securities has dropped by over $3.1 Billion. Until revenues grow, holders of IBM stock are counting on a greater fool to buy their shares; right now the debt market is allowing IBM to be that fool, but one can not continually spend more than cash flow from operations!"

This is at the end of an article I wrote before this one on IBM (published June 4, 2015) "IBM Quality Of Earnings: A Quick Rebuttal"

http://seekingalpha.co...]]>

from this Zero Hedge article:

http://bit.ly/1CMafPa]]>

from this Zero Hedge article:

http://bit.ly/1CMafPa]]>

"IBM posts mixed second-quarter results: Profits beat, but sales fall short"

http://yhoo.it/1ecDwXk]]>

"IBM posts mixed second-quarter results: Profits beat, but sales fall short"

http://yhoo.it/1ecDwXk]]>

COGS = Beg. Inv. + Purchases (Manufacturing Costs) - End Inv.

Since COGS is on the Income Statement and Inventories is in the formula for COGS, it follows that the level of inventory can influence EPS.

You can watch this youtube video that explains inventory analysis:

http://bit.ly/1eacakL

Or search for "CFA® Level I Lesson Financial Reporting and Analysis (2013) " if the link does not work.

Watch from 3 hours 23 minutes 6 seconds to 4 hours

Financial Statement Analysis should also included, in my opinion, aggregate accruals analysis using the cash flow method.

http://bit.ly/1eacakN

This will be possible when Intel files its full 10-Q instead of just the 8-K released last week. ]]>

COGS = Beg. Inv. + Purchases (Manufacturing Costs) - End Inv.

Since COGS is on the Income Statement and Inventories is in the formula for COGS, it follows that the level of inventory can influence EPS.

You can watch this youtube video that explains inventory analysis:

http://bit.ly/1eacakL

Or search for "CFA® Level I Lesson Financial Reporting and Analysis (2013) " if the link does not work.

Watch from 3 hours 23 minutes 6 seconds to 4 hours

Financial Statement Analysis should also included, in my opinion, aggregate accruals analysis using the cash flow method.

http://bit.ly/1eacakN

This will be possible when Intel files its full 10-Q instead of just the 8-K released last week. ]]>

In Q4 2014 ending inventory was 4,273. Today it's 4,818. In dollars inventory would grow by 12.75% YoY, if this Intel executive is correct.

Analysts, currently expect Q4 revenue growth of only 1.15%

http://yhoo.it/QzPIV0

A compression of gross margin in Q4 is very possible depending upon Q3's ending inventory and purchases (cost of manufacturing). ]]>

In Q4 2014 ending inventory was 4,273. Today it's 4,818. In dollars inventory would grow by 12.75% YoY, if this Intel executive is correct.

Analysts, currently expect Q4 revenue growth of only 1.15%

http://yhoo.it/QzPIV0

A compression of gross margin in Q4 is very possible depending upon Q3's ending inventory and purchases (cost of manufacturing). ]]>