Seeking Alpha

DanielHolzman

DanielHolzman
Send Message
View as an RSS Feed
View DanielHolzman's Comments BY TICKER:
Latest  |  Highest rated
  • Southern Company Will Be Teaming Up With The U.S. Navy And Air Force [View article]
    A P/E of 21 seems unusually high for a low growth utility company, especially one with high debt. I would think a P/E of 15 or lower would be more appropriate for such a company. Perhaps the investment community is willing to pay such a P/E ratio because of the high dividend, but does the author believe it is reasonable to expect Southern to hold to such a P/E ratio?
    Jan 24, 2015. 04:26 PM | Likes Like |Link to Comment
  • Examining The Current Conditions In The Offshore Drilling Industry [View article]
    Your article provides an interesting look at the last year or so of activity. What do your project going forward? If oil stays at $50 - $60 per barrel, how do you see the market for deepwater and ultradeepwater rigs?
    Jan 9, 2015. 07:22 PM | 2 Likes Like |Link to Comment
  • Peabody Energy Has Major Competitive Advantages [View article]
    The only sentence on profitability in the article seemed to be the comment that Peabody has a 28% margin on Powder River Basin coal. Perhaps a link to the source of that critical piece of data would be in order. In evaluating a coal mining company, it would seem crucial to evaluate the cost of doing business versus the revenue, which would presumably include cost of material, labor, equipment, and capital. Perhaps the author can comment on the costs for Peabody to do business, and offer some insight into how the costs and revenue are likely to change with different prices for coal.
    Jan 4, 2015. 10:41 AM | 3 Likes Like |Link to Comment
  • Plug Power: Forklifts, Hydrogen Fueling, And Growth In The Fuel Cell Market Are Catalysts [View article]
    I don't really understand the author's thesis. He reports that PLUG has consistently missed revenue and profit targets. He notes that the stock has fallen 35 percent in the last year. He argues that new bookings will somehow increase profitability for PLUG, without offering any hard evidence that the bookings will translate into sales, and the sales will translate into profit. He argues that hydrogen fueling is going to increase profitability for PLUG, without offering any evidence that PLUG is going to profit from delivery of hydrogen (maybe Praxair will earn the profits?)

    He presents a graph showing rapid growth for fuel cells, without noting that the source of the graph is an industry paid article on fuel cells, which could have built in bias. I would love to believe that PLUG and other fuel cell companies are poised for rapid growth and increased profitability, but there is nothing in this article I can grab onto that leads me in that direction. Isn't it possible that the fuel cell industry is brutally competitive, capital intensive, and hard to earn profits in? Maybe the sharp drop in PLUG is due to the tough business environment for fuel cells, and not just temporary, short term issues as the author seems to think.
    Dec 30, 2014. 06:13 PM | 4 Likes Like |Link to Comment
  • Cameco Has Significant Upside In The Long Term [View article]
    I don't really understand the fundamental thesis of this article. The author points out that in the next year or so, there are few who believe that uranium spot pricing will increase significantly from its current low value. The author does not point out that Cameco sells most of its uranium forward at pricing that is related in a complex way to the spot price at the time the contract is agreed to. The problem for Cameco is that long term contracts that expire over the next year are likely to be renewed at lower long term pricing (since uranium spot price is so low), which will put Cameco in a very tough position.

    Either they agree to new long term contracts at low prices (probably below cost to produce), or they allow competitors to lock up the market. This could be brutal for Cameco over the next year. Long term, Cameco may be fine after 2016, but is the author seriously suggesting that individuals buy Cameco now in order to profit from potential stock appreciation in 2016? Surely there are better investments right now. I suggest oil or natural gas stocks as a superior alternative over the next year.
    Dec 25, 2014. 06:54 PM | 5 Likes Like |Link to Comment
  • Despite High Volatility, The Stock Market Continues To Move Higher [View article]
    "The key takeaway for investors is that markets always go higher despite short-term volatility. "

    This is an extraordinary statement. To paraphrase Albert Einstein, extraordinary claims should be backed up by extraordinary evidence. If markets always go higher despite short term volatility, investment would be pretty simple, just buy a market ETF and hold it forever. Is that your approach?
    Dec 23, 2014. 05:00 PM | 4 Likes Like |Link to Comment
  • Seadrill And North Atlantic Drilling Discuss The Conditions In The Offshore Drilling Industry [View article]
    Isn't the real issue for offshore drillers whether they can compete on a price per recovered barrel with alternatives such as on shore fracking of tight shale oil? I don't really understand the origin of the graph that seems to show that deep oil is less expensive to recover than fracked oil, without a really detailed analysis of the total costs to recover by deposit, it is hard to validate the curve. It seems to me that a highly leveraged company like Seadrill is vulnerable to reductions in day rate and utilization rate, and if the price of oil remains low, or deteriorates further, the capital position of Seadrill could force bankruptcy reorganization. That might not be a bad thing from the Seadrill perspective, get rid of debt, continue operating with reduced costs. Of course it wipes out investors, but GTAT did it recently, as did Patriot Coal, it is a well proven technique for starting over when the market gets difficult.
    Dec 9, 2014. 08:46 PM | 5 Likes Like |Link to Comment
  • Can Albert Einstein's Math Get You To The Finish Line? Retirement Portfolio Quarterly Review [View article]
    Unfortunately the discussion about the wonderful properties of dividend growth investing fails to discuss the fact that inflation is also a compounding investment, unfortunately in the wrong direction. Any claim that dividend growth investing will yield superior results over the long run must discount the returns by the rate of inflation. If the discounted rate of return is negative, it means that the investment is not keeping up with inflation, and by most standards this would be a poor investment. To discuss any particular dividend yielding investment over the long term requires a full discussion about anticipated inflation over the same period of time. Unfortunately I saw nothing in this article discussing this unfortunate problem, so there is really no way to evaluate whether a particular investment will outperform inflation or underperform over the period of discussion.
    Dec 4, 2014. 06:26 PM | 1 Like Like |Link to Comment
  • Spot U3O8 And Uranium Miners Rebound And Retrace As Japan Readies Nuclear Reactor Restarts [View article]
    I would be extremely cautious in extrapolating from an increase in the spot price of uranium to the assumption that miners will follow. Major mining companies like CCJ sell the majority of their uranium under long term contracts. This makes them slow to react to spot price changes. Over time, as the long term contracts turn over, the negotiated long term pricing is sensitive to spot pricing, but the relationship is far from clear, and there is little evidence that a short term change in spot prices will have an immediate effect on the profitability of a major miner. There may be a greater impact on junior miners, but again this is a complex issue, since junior miners may have financing issues that are difficult to overcome, even if the spot price of uranium goes up.
    Dec 4, 2014. 06:18 PM | Likes Like |Link to Comment
  • The Coal Market Will Improve In The Long Term [View article]
    I am puzzled by your article. You show a table in which the coal companies continue to lose money for two years. Then you jump to the conclusion that they are good long term plays because the price of coal is expected to improve, and the companies in question are closing high cost mines. But there is little or nothing in the article that discusses how much money, if any, the companies are actually saving by closing high cost mines.

    Closing a mine does not immediately produce reduction in costs. There are continuing cost obligations, such as payment of unemployment insurance, costs to close in the mine, costs to maintain equipment (unless the company sells the equipment, perhaps at a loss to "book" value). Perhaps the author can discuss the potential scenario of one or more coal companies declaring bankruptcy in an effort to reduce costs, eliminate long term pension obligations, reduce debt, and all the other derivative benefits of bankruptcy under US law. I see bankruptcy as a potentially viable scenario for many of the marginal coal producers, of course this will wipe out any "long term" investors, but bankruptcy has occurred already in the coal industry, and certainly needs to be discussed in any serious article about investing hard earned money in a money losing industry.
    Nov 26, 2014. 09:38 AM | 3 Likes Like |Link to Comment
  • As Uranium Prices Grow, The Global X Uranium ETF Will Follow [View article]
    I a a bit curious about the ETF you discuss. According to your chart, URA went from a high of about 65 in May 2011 to a low of about 10 in May 2014, which obviously represents a catastrophic loss of value for anyone unfortunate enough to have invested near the top. Is this a leveraged fund? Certainly the spot price of uranium dropped during this period, but not by a factor of 6 I don't believe.
    Nov 25, 2014. 06:52 PM | Likes Like |Link to Comment
  • Production Cuts Can Boost Oil Prices [View article]
    I heard a recent radio piece examining the strength of the OPEC cartel. The piece suggested that OPEC was a weak alliance prone to cheating by individual nations that have strong financial incentives to overproduce to maintain economic growth, bolster military dictatorships, or maintain a standard of living to suppress domestic insurrection. The gist of the article was that "production cuts" announced by OPEC were difficult or impossible to verify, and could not be used as a useful predictor of future oil prices due to lack of transparency in the production, shipping and storage of oil. Perhaps the author has some thoughts on this topic?
    Nov 25, 2014. 10:41 AM | Likes Like |Link to Comment
  • Risk Versus Reward: Measuring Alpha [View article]
    You have a very unusual definition of risk, specifically "The smaller the deviation, the less risky, and the greater the deviation, the more risky it is."

    Let me illustrate. By your definition, a stock that was expected to lose 1% of its value per day, and in fact did lose exactly 1 percent per day, would be LESS RISKY than a stock that was expected to gain 1 percent per day, but in fact gained on average 2 percent per day, but in a very ragged fashion (up a lot one day, down a lot the next day). This is the case because you have elected to define risk in terms of the standard deviation of the rate of return, and as you are certainly aware, standard deviation does not distinguish between values that fall below the mean versus above the mean.

    I suspect most people, myself included, think of risk as the potential for losing money, either in the form of a decline in the value of the stock, or a reduction in dividends or interest. So a stock that is expected to gain value over the long run, even if MORE VOLATILE than a stock that is expected to lose value over the long run, is certainly less risky by most people's standards. You have elected to equate volatility with risk.

    I certainly understand why you do this, after all actual measurement of real risk is very difficult, whereas measurement of volatility is pretty simple, so it is tempting, although completely incorrect in my opinion, to equate volatility and risk. In fact, I like volatility since it offers the opportunity for profit. I try to measure risk by the potential for losing money, and while a volatile stock may be volatile because it is risky, it may also exhibit volatility for a lot of other reasons unrelated to risk.
    Nov 18, 2014. 10:18 PM | 3 Likes Like |Link to Comment
  • The One Sector You Must Own Today (Part I) [View article]
    "According to the International Energy Agency (IEA), producers in the Marcellus Shale can make a 20% pre-tax return on investment in the Marcellus even if oil goes below $40 a barrel."

    This is pretty remarkable, I have seen other articles on SA claiming that the break even price for frac oil is a minimum of $60 per barrel. I would be interested in the exact citation from the IEA, and the author's opinion as to the accuracy of this claim. Other recent SA articles, a Barron's article I read, and several other articles have noted wide variability in the break even price for shale derived oil, depending on the depth, location, cost of lease, required frac technique, availability of water, availability of transport, and some other less important factors. It would seem that the viability of a given company would depend heavily on its cost to extract, process and ship product versus price received, yet there seems to be little discussion in this article about what would seem to be the critical question.
    Nov 16, 2014. 10:09 AM | 2 Likes Like |Link to Comment
  • Will Gold Fall Towards $800-$900 Level? [View article]
    I do not understand why the author believes that gold mining stocks are a good investment, given his thesis that gold prices are trading in a range that is barely profitable for the majority of miners. Does the author seriously believe that gold mining companies are going to be successful in cutting costs? Where is the evidence, certainly there is nothing in the article that cites any credible reports that would indicate that the cost to mine gold is likely to decrease over the next few years. I have no idea where the price of gold itself is going, but I know from experience that the cost of mining is very difficult to bring down, short of bankruptcy and reorganization, which may prove to be an attractive option for a number of miners. I would stay far away from gold mining stocks unless you have a deep understanding of the specific economics of the specific miner you are interested in.
    Nov 11, 2014. 06:35 PM | 3 Likes Like |Link to Comment
COMMENTS STATS
524 Comments
1,434 Likes