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Jescamillo

Jescamillo
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  • Buffett's IBM Stake Surpasses 7% With Strong Upside To Fair Value [View article]
    You almost changed my mind on IBM, until I realized that Buffett's time horizon is much longer than mine..
    Aug 18 03:21 PM | Likes Like |Link to Comment
  • Bellatrix Exploration: Deeply Undervalued And Likely To Achieve Significant Price Appreciation [View article]
    Very nice analysis. The only point it doesn't address is:
    WHAT WILL BE THE PRICE OF OIL?
    To remind us all, the Marginal Cost of Production of oil is about $25 - 30 / barrel. The price of every commodity-- every one-- goes down to the MCoP when there is a glut.
    A glut?
    Yes, a glut.
    At present, oil price keeps coming down, despite the turmoil in Iraq and Kurdistan-- both oil producers-- despite the turmoil at & sanctions on in oil-producing Russia, despite the sanctions on Iran...
    So, if with all these restrictions on oil production, and even in the teeth of a fairly strong world economy, even with all this, oil price is coming down... What will happen to oil price if / when some of these problems are alleviated?
    In short, oil price may come down a lot. Indeed, the only way for the West to solve its debt problems is to suqeeze its suppliers for price cuts-- as every indebted company and indebted empire have ever done.
    If oil price indeed comes down, BXE may suffer less than, say, Athabasca. Belatrix produces sweet oil (and gas), which cost less to produce. Athabasca and other heavy oil producers have a higher MCoP, and so are more like options or warrants on the price of oil. So while heavy oil producers may go bust, BXE may just go down-- if the price of oil goes down.
    So, to conclude:
    That BXE is among the cheapest is nice to know. But if you think-- like me-- that oil price will go down, together with all resources, then choosing which oil stock to buy is like choosing the least drunk of the revellers to drive you home.
    You don't have to have a drunk drive you. You can take a cab.
    In sum, BXE is okay if you think oil price is staying level and may even be going up. If, like me, you think it is coming down, you should be in another market segment.
    If you still insist on owning BXE, at least go and short oil against it, to hedge. Say long BXE short USO, or, if you can usee futures, short the $WTIC. But don't buy BXE naked, or when the oil tide goes out, you will be left poorer.
    That's it.
    Aug 16 01:26 PM | 2 Likes Like |Link to Comment
  • Why I Bought Ebix Ahead Of Earnings [View article]
    EBIX will one day become a buy. But it must clean up a few things that may be more than trivial.
    Here they are:
    1. The "goodwill" due to acquisitions keeps rising. It is not sure whether all these will work out well. And adding to them may only compound the problem.
    2. EBIX started as a CRM for insurance agents. Lovely biz. Now they also want to expand into CRM for advisors. Similar, but crowded.
    3. Worse, they want to become a med ins for pets! The biz was partly acquired, didn't do too well, so they took it all in. More goodwill. I'm not sure it'll work out
    4. Worst, and imponderable: The buy who started them is a great entrepreneur, and even was recognized for this. But now EBIX is large, and he has to become a manager. Can he? Not sure.
    *
    On the good side, strong financials, except for the goodwill, and analysts' est going up. Could work against them, though, if the pet biz or something else disappoints.
    *
    Bottom line: I wont' buy it just because of the seeming cheapness and the potential short squeeze. I want to see the CEO prove he can manage, besides just start things and grow them.
    Aug 11 01:31 PM | Likes Like |Link to Comment
  • I Feel Like A Thief Buying IBM At Today's Low Valuation [View article]
    I wouldn't touch IBM so long as they have the current CEO. Ginny Romerty is a terrific sales leader, but she is the wrong CEO for IBM now. They need a turnaround / tech operator-- the kind that HPQ has. There is a time and a season for everything-- and for everyone. IBM needs another CEO type now.
    Aug 8 02:03 PM | 1 Like Like |Link to Comment
  • Herbalife: Most Anticipated Earnings Report Of The Year [View article]
    There are two enormous flashing red lights on HLF:
    -
    1. Is no one bothered by the DOUBLING of the long term debt in one quarter?
    From Dec 31, 2013, to March 31, 2014, LTD soared from $850 mil to 1.76 billion!
    -
    2. At the same time, shareholders' equity was decimated (literally), from 551 million to $42 million during the same period, due to a huge write-off.
    If earnings matter, surely book value-- the accumulation of all past earnings (less dividends)-- matter?
    And if this is so, then the company MADE NO MONEY AT ALL OVER THE LAST FEW YEARS! Since its book value has been written down to 2 month's income...
    -
    Bill Ackman must be on to something.
    In an hour we'll know.
    Jul 28 02:56 PM | Likes Like |Link to Comment
  • Voxeljet Will Benefit From Growth In The 3-D Printing Sector [View article]
    The most important analysis here is missing:
    What is the sale cycle, and the sale process?
    Unless the ultimate buyer has a direct personal interest in buying the product, and especially if he has to ask the opinion of a technical bureaucracy, the time from first contact to receiving checks will be l-o-o-o-o-ng...
    And in the meantime, the company must raise equity-- not to finance R&D, but to finance the bureaucratic decision making of the slow-poke customer...
    In other words:
    Before deciding whether the technology is worth developing, check to see if the customer is worth serving. If you don't do this, you'll end up wasting your time, equity, and human capital, serving customers who may indeed benefit from your product, but will not be able to pay you for it appropriately-- and you'll only have yourself to blame.
    Nearly all entrants in large industrial machinery fall into that category. Selling to a committee of mid level engineers with next to no decision making power is often financial and business suicide.
    Jul 28 02:49 PM | Likes Like |Link to Comment
  • Is Hewlett-Packard A Better Buy Than This Tech Rival? [View article]
    This is a "nice" but standard analysis. However, this is like comparing the French and the British armies before Waterloo, in terms of number of soldiers, number of cannons, etc., without even trying to compare the quality of the generals, Napoleon on one side, Wellington on the other.
    Yes, there was also Blucher, the Prussian general, but he joined the fight in time, only because he had given his word of honor to Wellington to hurry up, and so drove his soldiers mercilessly. If Wellington was not a man who inspired such desire to fulfill one's word to him, would Waterloo have ended differently? Probably.
    So: Did Wellington's character matter? Evidently.
    Re ACN and HPQ:
    What are the characters of those who lead ACN and HPQ? What do their troops think of them?
    Can you perhaps try to compare the timber of those who lead ACN to the top leaders of HPQ in such terms? This is perhaps the MOST important comparison.
    Remember:
    Chrysler without Le Iacocca was a bankruptcy. With Lee Iacocca, it was a $2.5 billion asset. One person. If you had analyzed GM when Iacocca had just joined, and done it strictly on the numbers, as you do above-- do you think you'd arrived at the right conclusion?...
    Jul 28 02:19 PM | Likes Like |Link to Comment
  • Growth-Centrism Is Flawed [View article]
    Not bad. You should be looking at the Magic Formula Investing companies-- they are companies with large ROIC, that temporarily stumbled. Some, however, will be companies without any debt-- your point re optimal debt level is a good one: Some companies with stable cash flow and high return, should be using debt, to raise their ROIC prudently.
    Jul 16 03:28 PM | Likes Like |Link to Comment
  • USEC Inc. - Stock Price Disconnected From Reality [View article]
    Before you short it:
    How many of the outstanding float is already borrowed to short?
    What is the RATE you are paying to short it?
    Some of the most popular shorts you can pay 50% - 80% p.a.!!! Which means that you have to be ABSOLUTELY right both on price AND on time, AND keep your fingers crossed that the short will not be called...
    I.e.: Shorting is not a theoretical mouse click. There are rascally cats at the other side who would gladly take your money if you don't know what you are doing.
    This stock is rising most probably NOT because of insane day-traders, but because careless short sellers shorted it, are now paying 80% interest, and so rush to cover-- only to find that no stock is available...
    It had happened once before to this stock-- but short-sellers' memories are apparently short...
    Jul 3 10:25 AM | Likes Like |Link to Comment
  • Novatel Wireless' (NVTL) Peter Leparulo on Q1 2014 Results - Earnings [View article]
    How come no one asked the obvious question: IS THIS A VIABLE BUSINESS?
    They have a HUGE r&d spending, HUGE sg&a, and customers who take ages to decide and ages to pay.
    And meantime the company is bleeding cash...
    I mean, aren't they doing a favor to the customers? With all the talent in the company, and the technology, their ONLY criterion should be: Serve ONLY worthwhile customers-- who decide fast, on their own, not by committees, and pay fast. Otherwise, don't just fire people in the company. Fire some customers, before the company goes belly up.
    To make a good business, you need good customers. It's simple. And, oh, yes, the execs should speak (and think) in short words and simple terms. Not buzz words. They will make better decisions this way.
    Bottom line: The company should be cut down by half. Until it makes money RIGHT NOW. Then grow from there. First, positive cash flow. Fast. Fast!
    You can't base a turnaround on hope for growth. It fails every time.
    Jun 27 11:31 AM | Likes Like |Link to Comment
  • Microsoft (MSFT) Management Presents at 42nd Annual JPMorgan Global Technology, Media and Telecom Conference (Transcript) [View article]
    Why can't speaker cut down on the fluff? Like "kind of," "I guess," "sort of," and other verbal barnacles.
    And the same goes for "excited," "thrilled," etc.
    Just speak plainly and to the point. Like Bill Gates and Steve Jobs used to.
    Jun 27 10:35 AM | Likes Like |Link to Comment
  • Who Is Buying Gold At $1,290 And Why? [View article]
    FYI:
    `Tyler Durden of Zero Hedge` is the son of a Bulgarian security agent,and is really a Disinformation Agent of the Russians. Do not take my word for it: Check it out.
    Nearly anything that `Tyler Durden`writes, is intended to lower the US and defend Russia. Of course it is legal to do so. But just like investing based on recommendations of AFL/CIO, listening to Agents of Influence will eventually cause you to lose money.
    -
    Whereas RT TV is known to be a Russian Agent of Influence (e.g.: anti-fracking, because it lowers the demand for Russian oil), Zero Hedge is still not known as such. There are others, too, but go and find them for yourself-- I will be happy to short to you what you buy on their recommendations, and vice versa...
    -
    Now, every now and then Zero Hedge comes up with accurate stuff, like exposing high frequency trading at Goldman Sachs, but it is always meant to show the U.S. in a bad light. (Of course, it cleans out the U.S., which is good). But other times it feeds selective info straight out of the FSB, in the best tradition of giving out some good stuff, so they`ll swallow the bad stuff too... For example, see their `info` after the Russian invasion of Ukraine, and further back, after the Russian invasion of Georgia...
    Or for example now: "...bypasses the need for US Dollars..."
    -
    When Zero Hedge pushes the zany idea that the currency of two dictatorships like China and Russia, will supplant the U.S. dollar, they are spouting utter, tendentious nonsense straight out of the FSB, or the GRU`s Aqvarium. And if you invest based on this, you will lose your shirt, and I will happily take it off you.
    -
    My own specialty in investing is `physical due diligence-- checking out companies and people PHYSICALLY--,`and I am surprised every day again and again at how credulous many investors are, when taking the word of someone on the internet, without checking who is behind it. In details: Name and phone number an address, and who is paying his salary.
    -
    I mean, even those who know that most Wall Street analysts are Agents of Influence to Corporate Finance, still have not glommed on to the fact that many other info sources are similarly tendentious, for other reasons-- which can lose you money just the same. Check it out-- by getting out of your home or office and doing some REAL, PHYSICAL due diligence for a change. You will make lots of money off those who don`t do it.
    -
    And btw ,for what it is worth: IMHO gold may spike here a bit, but afterwards it is going down, down, down, as will oil.
    This you will never hear from Zero Hedge, who sings the song of its Russian master-- which needs high revenues from both to keep its empire.
    Jun 23 02:35 PM | Likes Like |Link to Comment
  • Why The NeuStar Bears May Be Proven Wrong [View article]
    The $600mm+ in debt of the company, kept rising over the last 4 quarters. In essence, the company blew out all its cash flow, and borrowed hundred of millions, to buy a huge chunk of stock.
    Why?
    Was there a large (outside) shareholder who wanted out, and there was no demand for the stock, so that the company had to buy it itself? Or something else?
    And btw, if the contract, which expires mid 2015, is not renewed, the revenue won`t be there...
    So yup, the numbers look okay, but the debt doesn`t. Buying an indebted company who took on so much debt so fast, is always risky.
    May 23 03:43 PM | Likes Like |Link to Comment
  • China Turns Japanese? [View article]
    There is one more argument for China crumbling: It tweaked the tail of the dragon. It is clear that the US has been awakened. When China began to drill in Vietnamese waters one week after Obama's visit in the Far East, it wsa a clear challenge. But what the Chinese miss, is that the answer will come not from the President, who indeed is a weakling, but from the Empire, a vast, amorphous behemoth with interests of its own. Therefore, if before the U.S. has a COMMERCIAL interest in propping China up (loans, trade, and all that), now it has a NATIONAL SECURITY interest in slapping down the threatening pup before it becomes a big dawg. This will of course be couched in bureaucratese and diplomatese, but if you could peek today into American embassy cables from the Far East, I betcha you would hear the above. "We got to act and help China tumble, even if it costs us something, because in the future it would cost much more."
    Whatever the U.S. has done to Iran, and is now doing to Russia, it will also do (on a wider, shallower scale) to China. Those in the upper echelons of Foggy Bottom will know exactly of what I speak.
    The Rmn is a short. So is the Chinese market. So are nearly all commodities.
    May 15 12:14 PM | Likes Like |Link to Comment
  • Why We Like Dex Media Into Q2 Results And Expect Visibility To Improve Throughout 2014 [View article]
    As I mentioned four times before:

    * The analysis needed here is not the static kind that CFA/MBAs do, but the dynamic kind, that you do in poker.

    * The time to buy is when the company scares the bankers into giving it a debt haircut-- and thereby also scares the common shareholders too. The value comes partly from improved oerations, but mainly from the debt haircut.

    * It is NOT the time to buy once the company reports good results (such as now) on the hope that the bankers may deign to "refinance globally," giving the company "flexibility" (whatever this means). You want to buy not when there's enthusiasm in the market, and holders such as Wavelength (who btw do good analysis), heat you up into buying, so that maybe they can sell into it (as Bass did at 20+, after speaking in a conference), to buy again cheaper.

    In other words, wait for the stock to sink slowly into 6 - 7, as the summer doldrums creep in, everyone sells in May and goes away, only to come and buy after Labor Day.

    Yes, DXM is a good turnaround story, but you should wait for the froth to settle.

    As in poker, if you can't identify the sucker around the table...

    Cheers.
    May 11 04:41 PM | 1 Like Like |Link to Comment
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