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  • A Bear Case For Ford [View article]
    Unfortunately, your analysis on Ford's net debt position seems misguided.

    Ford Motor Company fully consolidates their captive financing arm, Ford Motor Credit onto their balance sheet. Hence, Ford presents its Automotive Debt separately.

    Ford Motor Credit issues Debt collateralized by Auto Loan Receivables it makes when it lends customers money to buy cars. But for some odd reason you seem to include this Debt in your calculation of Net Debt to the common shareholder but leave out the value per share of those Receivables.

    Ford's true Net cash position is $9B or $2.40 per share in cash. While Ford does assume the credit quality of the loans it writes, if Ford wished to reduce its credit exposure in Ford Credit, they could bundle up their financial receivables, sell them as ABS and pay off the Debt on its balance sheet. Most investing analysts and more importantly, the credit agencies, look at the AUTOMOTIVE net debt measure when calculating various leverage ratios and credit ratings. (Ford has been upgraded twice this year, btw)

    Anyway, the knock on Ford right now would be a recession in Europe. However, NA continues to rock and roll and Ford is currently running on all cylinders. Ford reported an 8% EBIT margin in NA this year, one of the best in the industry. Charts that I have looked at on operating leverage suggest Ford would be profitable at a US SAAR of JUST 9M. We barely hit 9M during the depths of the 08-09 recession!! Add to that a solidly improving balance sheet and the fact that you are likely paying just $8/share in earnings power at Ford, the shares look like a good bet until about $16-$18 per share.

    For those interested in the bullish argument for owning Ford I think I will publish it eventually, in the hopes of clearing out all the misinformation that is so prevalent on SA regarding Ford.
    Nov 16 04:50 PM | 6 Likes Like |Link to Comment
  • The Buffett bounce has little staying power, as IBM (IBM +0.1%) shares now meander near the flatline after Warren Buffett's disclosure of a 5.5% stake. But Buffett seems a bit late to the party; IBM has traded in a range of 11x-13x forward earnings, vs. 10x-12x during 2010. Therese Poletti asks: Is the investing king losing his Midas Touch?  [View news story]
    to quote Buffet: its better to buy a terrific company at a mediocre price than a mediocre company at a terrific price.

    Looks like he's putting that quote to work.
    Nov 14 03:29 PM | Likes Like |Link to Comment
  • With 2 hours before the close, European shares have halted their freefall and bounced hard, with most of the indices about 2-3% off of their lows. Stoxx 50 -4.3%, Germany -3.7%, Italy -5.6%, U.K. -2.3%. The euro is recovering as well, -1% at $1.37. American stocks following suit, the S&P 500 down just 1.8%. Plum out of rumors as far as rescues go, could the float of an ECB rate cut be far off?  [View news story]
    With inflation tumbling across major PMIs we might get rate cuts and QE
    Nov 1 10:46 AM | Likes Like |Link to Comment
  • A Response To Whitney Tilson's Netflix Flip-Flop [View article]
    Still pains me to see people struggle with what conceptually I and many other people on SA (including Rocco and this author) have so eloquently said about NFLX.

    The business model is just not sustainable at NFLX. They don't own the content and they don't own the pipe. All they have is a nice little app and maybe some brand recognition. But what is going to stop AMZN from going to DIS and Time Warner and CBS, etc. and establishing deals with them directly to stream through an AMZN video app??? Why even bother with Netflix??

    I've tried to drive this point home to SA readers on previous posts before (check my posts if you like.)

    While NFLX offers what you deem as a terrific service, once the move towards streaming is complete, what is the point of the media middleman anymore? Blockbuster thrived because is put up capital to built up an inventory asset base of DVDs and videos that customers could rent from. Now that the marginal cost of capital needed for streaming is so small it might as well be zero, why do you need the middleman???
    Oct 27 10:01 PM | 4 Likes Like |Link to Comment
  • More on Netflix's (NFLX) Q3: Total U.S. subscribers declined by 810K, international subs grew by 510K. 20M-21.5M U.S. streaming subs expected in Q4, compared with 21.45M in Q3. U.S. DVD subs expected to fall to 10.3M-11.3M from Q3's 13.9M. International subs expected to grow to 1.6M-2M from Q3's 1.48M. NFLX -18.5% AH. (.pdf)  [View news story]
    i dunno about 7x. They still can grow decently maybe midteens multiple tops. But not really much higher than that.
    Oct 24 05:57 PM | Likes Like |Link to Comment
  • U.S. Banks Have Less Greek Risk Than Europe's Banks For 3 Important Reasons [View article]
    Yea i know that C has about $178B in tangible common equity
    Oct 22 03:06 PM | Likes Like |Link to Comment
  • "An interest rate is a price ... attempting to manipulate (it) is as destructive as any other government price control," writes Ron Paul, laying every boom/bust cycle since 1913 at the Fed's feet. "The pretense of knowledge," the illusion that having an army of PhDs allows it to guide a vast economy as it wishes, makes Fed thinking little different from that of the leaders of the former Soviet Union.  [View news story]
    too bad there were boom/busts way before the Fed. Fed doesnt cause them. Irrational, greedy people do.
    Oct 20 05:51 PM | 2 Likes Like |Link to Comment
  • The housing market is going to recover sooner than many think, according to Pershing Square's Ali Namvar, and he's positioning the firm's $10B portfolio now to take advantage of it. One of his favorite picks: Fortune Brands Home & Security (FBHS), the recent home remodeling and security business spin off of Fortune Brands (FO). The company's current valuation assumes almost no housing recovery in the next five years, Namvar says, making it a great low-risk play.  [View news story]
    Did you know Ackman read 140,000 pages worth of documentation regarding MBIA when he shorted it in 2007-08?????

    I wouldn't be so sure that he has no idea what's going on.
    Oct 19 08:31 PM | 2 Likes Like |Link to Comment
  • The Guardian reports France and Germany have reached agreement to boost the EFSF to €2T, part of a "comprehensive plan" to drive a stake through the continent's debt crisis. Officials hope to get endorsement of the deal this weekend. Stocks and the "risk" currencies are shooting higher on the news.  [View news story]
    That explains this move
    Oct 18 03:10 PM | Likes Like |Link to Comment
  • Credit unions try to pick up disgruntled banking customers, promoting their services as a far better and cheaper alternative to pawn brokers, payday loans, and online lenders. NCUA data showed a 52% increase in demand for small-dollar loans at member credit unions for Q2, and the agency says Q3 is expected to see another significant jump. "We want consumers to know they can fight back against big banks by saying 'no' to more fees."  [View news story]
    Then people will realize that if they go anywhere outside of their own town, they will need to use ATMs that are out of network and get charged fees.

    I'm all about regulating the banks, but people should temper their optimism that a huge shift will occur away from them.
    Oct 17 02:31 PM | Likes Like |Link to Comment
  • Prof. Shiller And CAPE May Be Correct Generally, But The Market Is Currently Cheap [View article]
    A lot of people don't realize that CAPE uses GAAP earnings which includes writedowns (such as AIG and C in 2008) which the above poster noted correctly.

    To assume those write downs would occur again is imprudent analysis.

    I have been saying that CAPE has been junk for years. If you want to know whether a company is cheap, do a bottoms up analysis yourself. Just that simple.
    Oct 17 10:07 AM | 4 Likes Like |Link to Comment
  • Why Ford Is A Strong Buy [View article]
    eh i doubt that. Have you seen the prices for used cars? Through the roof. Supply for used is tight because of the lack of new cars sold from 2008 and 2009. You can find examples where late model used is actually MORE expensive than new.

    We are still selling less cars than are scrapped per year. Auto loans were one the TOP performance asset classes during the downturn. People need their cars to get to work, etc. These all bode well for future demand.
    Oct 14 03:42 PM | Likes Like |Link to Comment
  • Why Ford Is A Strong Buy [View article]
    How will people get to work???
    Oct 13 01:34 PM | Likes Like |Link to Comment
  • 8 Stocks Trading At Their Prices 20-Years Ago [View article]
    I think the more appropriate thing would be to for the author to first consider dilution and how it effects bank share prices.
    Oct 13 01:33 PM | Likes Like |Link to Comment
  • The usually gloomy Jim the Realtor is back, and he's changing his tune. "The market is a buzz currently. The action is incredible. Offers flying everywhere. I think buyers are scrambling, knowing that these rates are incredible right now... If rates are still this low (in the Spring), it's going to be a real frenzy."  [View news story]
    San Diego. The market is not going well there, especially from $1.5M and up.
    Oct 12 08:31 AM | Likes Like |Link to Comment