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Allen A

Allen A
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  • Tesla And The Dilution Misconception [View article]
    I enjoy reading fact based articles on both sides and it takes a certain amount of bravery to write about such a battleground stock. Whether you agree or disagree, the discourse is useful.

    Without picking sides, just wanted to say thanks for putting yourself out there Paul.
    Aug 30, 2014. 03:57 PM | 11 Likes Like |Link to Comment
  • Einhorn's Greenlight Wins Injunction Against Apple, Making A March Dividend Increase More Probable [View article]
    Amazon would need profits to pay dividends.
    Feb 23, 2013. 07:11 AM | 9 Likes Like |Link to Comment
  • American Realty Capital Properties: Digital Realty Deja Vu [View article]
    Couple points I haven't noticed mentioned yet:

    - Putting aside the RL acquisition for a minute, the 2B sale of the retail multi-tenant segment was not the act of an empire-building, ego-maniac. It shed exposure to traditional brick & mortar, small scale retailing while focusing the company on triple net and improving the balance sheet. Quite a rational act in my opinion.

    - ARCP's Cole unit has launched two new, non-traded REITs that are likely to raise 2.5B each over the next 12-18 months. That's 5B of external, private capital that will be managed by Cole. These two vehicles will need to be fed 5B in properties. Although not yet stated explicitly, it's no great stretch to assume that a portion of the RL acquisition will be dropped down into the Cole private REITs. As luck would have it, the RL acquisition was conveniently structured in 10 tranches. Coincidence? At the end of the drop downs, ARCP will likely hold many fewer RL properties, they will likely be the best of the bunch, Cole will still own the profitable management stream from the shed properties, and the company will have even more cash to pursue the next large scale sale-leaseback.

    Amassing high quality properties at 8% cap rates with ~4% fixed & preferred debt is what a great REIT should be doing while rates are generationally low... as long as they don't over extend. The equity raise reduced leverage from 9x to 6x EBITDA. RL drop downs will raise additional cash.

    When management slows down and digests the acquisitions, ARCP should eventually trade on par with O and NNN (yes, this may take a few years). At peer yields (5% vs 8%) the stock is up over 50% not accounting for growth or property appreciation. And you're paid 8% while you wait.

    If they don't slow down, Marcato (activist hedge fund and one of their largest holders) will certainly launch a proxy contest. With ARCP appearing in Goldman's Q1 list of stocks most widely held by hedge funds, Marcato would have plenty of support.

    I didn't own the stock before the dilutive equity raise. I do now. And lots of it.
    Jun 15, 2014. 11:29 AM | 8 Likes Like |Link to Comment
  • Update: Yelp Reports Q314 Earnings [View article]
    Average unique monthly users 139m up 19% year over year... but up less than 1% sequentially compared to Q2's 138m average unique monthly users.

    New user growth has plateaued. Big problem.

    Reminds me of Angie's List. For a while revenue continued to grow even as new users plateaued. The stock however correctly saw new user growth as a leading indicator and has sold down ever since.

    Consider yourself warned
    Oct 23, 2014. 12:50 PM | 2 Likes Like |Link to Comment
  • LinkedIn - Analysts See More Upside, As I Am Cautious About The Timing Of The Upgrade [View article]
    A few years ago, when Facebook had revenues of around 2B, its operating margin was around 50% (and still is today).

    LinkedIn's current run-rate is around 2B for the past two quarters. It's operating margin is slightly negative.

    Although both are superficialy similar (ie, social networks) there are structural differences that make them very different when it comes to dropping top-line to the bottom-line.

    Paying >10x revenues for what is likely to be an average margin business is insanity.

    LinkedIn is no Facebook.
    Sep 30, 2014. 11:18 PM | 2 Likes Like |Link to Comment
  • Montage Technology: The SoC You Can't See [View article]
    Jonas,

    Read Flash Boys. What you are experiencing is high frequency traders front running your orders. Rigged yes, but not by MONT.
    May 10, 2014. 09:06 PM | 2 Likes Like |Link to Comment
  • How Does Monish Pabrai's Position In Chesapeake Energy Qualify As 'Dhandho' Investing? [View article]
    Excellent article.

    A few points commonly overlooked by many writeups on CHK:

    1) They have a crazy amount of unproven reserves that do not appear on the balance sheet. They've stopped displaying the figure in recent prsentations, but if you look back about a year ago, they list unproven reserves around 300 tcfe. That figure is from memory so don't hold me to it. And for the uninitiated, the T in tcfe stands for "trillion". That's a big number. And lots of that is oil and lng.

    2) Unlike many land plays that can sit unsold on balance sheets for decades, in this case CHK moves billions of dollars onto the balance sheet each quarter "through the drillbit." As they drill unproven reserves, they become probable/proven and go from zero to billions. Again, from memory, they added 8b to the balance sheet through the drillbit just last quarter.

    3) Thanks to Carl Icahn and Southwestern, CHK has one of the best boards in America, including Archie Dunham and Lou Simpson. And of course Icahn and Southwestern helping guide to shareholder value. Heck, Icahn could personally lend them 10B if it came to that.

    With such valuable, fungible assets it may be that Pabrai views his downside even in a bankruptcy at around $10. I believe the stock as an oil play has around $10 upside (50% return from $20) and you get a massive, free call on any upside to nat gas.

    Assign probabilities to the various scenarios and you get a very high expected return even if there is some non-zero chance of a loss.
    Apr 19, 2013. 01:27 AM | 2 Likes Like |Link to Comment
  • Kate Upton And Seth Klarman [View instapost]
    You are cracking me up. Between this story and the one about seat bumping, you are well on your way to becoming my favorite alternative investor.

    Keep up the good work.
    Jan 19, 2013. 09:00 PM | 2 Likes Like |Link to Comment
  • Update: Yelp Reports Q314 Earnings [View article]
    In fact, you can already see the revenue slowdown coming in management's guidance for 107m-108m Q4 revenue. At the mid-point this represents <5% sequential revenue growth when compared to this quarter's just reported 102.5m revenue number.

    By comparison, Q4 2013 saw 15% sequential revenue growth when compared to Q3 2013. The company is projecting next quarter's sequential growth to be 1/3 of last year's.

    Yes revenues are still growing, but the rate at which they are growing is rapidly decelerating.

    With no user growth and RAPIDLY decelerating revenue growth, trading at ~10x enterprise value to run-rate-sales, it's no surprise the stock is plunging. Without a re-acceleration in growth of revenues and/or new users, this might be the inflection point that begins a long decline.
    Oct 23, 2014. 01:26 PM | 1 Like Like |Link to Comment
  • Zillow Acquires Trulia, Creating A +$10 Billion Online Real Estate Player [View article]
    Just curious where you get the 66m share count for the combined entity?

    I show Zillow current shares around 39.5m (Yahoo Finance) or fully diluted as of last quarter's earnings release at 39.3m (CapIQ). Add the 22m from the Trulia acquisition gets a post merger total of around 61.3m.

    I'm sure I'm missing a convertible or RSUs or something.
    Jul 29, 2014. 05:09 PM | 1 Like Like |Link to Comment
  • SolarCity Earnings: Great Growth, Funny Math [View article]
    Not saying yes or no. Just pointing out that when companies trade at valuations that are wildly disconnected from traditional value metrics, things eventually end badly.

    But I'll concede that this one might be different. Only time will tell.
    May 10, 2014. 09:47 AM | 1 Like Like |Link to Comment
  • SolarCity Earnings: Great Growth, Funny Math [View article]
    I'm no expert on solar but I can't help but make a general comment:

    Every time the street comes up with a new metric to justify a stock's price (rev growth, user growth, page views, installs, etc) while ignoring time tested basics like price to earnings, price to free cash flow, and price to sales, things nearly always end badly. Kinda feeling like retained value may be the newest gimmick.

    No earnings, no free cash flow, trading at 22x sales.

    Elon Musk is an absolute genius and this is a wonderful company with a world changing business... but I'll pass.

    Then again I could be totally wrong. Maybe this time it's different.
    May 9, 2014. 12:48 AM | 1 Like Like |Link to Comment
  • Netflix Is Ready To Buy On Underestimated Market Power [View article]
    I came here looking to confirm my desire to short this stock despite the fact that I love the service.

    But your article does an excellent job of presenting a plausible, profitable future that would suggest the company isn't as wildly overvalued as it at first seems. Very nice article.
    Mar 26, 2014. 11:21 PM | 1 Like Like |Link to Comment
  • Every Little Thing Gonna Be All Right? [View instapost]
    Care to elaborate on what kind of event driven opportunities might profit from increased vol?
    Aug 8, 2013. 01:37 AM | 1 Like Like |Link to Comment
  • My Growth Portfolio: Yelp's Strong Quarter Indicates Solid Momentum [View article]
    The statistic that worries me the most is their business repeat rate, which they proudly tout at 75%! This metric covers businesses that advertised last quarter and then advertised again this quarter.

    Now turn that around. So 25% of the businesses that advertised last quarter DID NOT advertise this quarter. Sure, some of them may skip a quarter and then resume advertising, but any business that has 25% of its customers halting (or slowing) engagement each quarter will eventually have trouble growing.

    And just to be clear, that 25% rate is a sequential quarterly rate. It sort of implies an annual churn among paying business advertisers approaching 100%. Gulp.
    Aug 15, 2014. 04:25 PM | Likes Like |Link to Comment
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