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Jescamillo

Jescamillo
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  • How Commodity Traders Are Making One Big Bet [View article]
    Well written, well thought out, well done. I agree almost entirely.
    JE
    Sep 25, 2014. 02:58 PM | Likes Like |Link to Comment
  • How To Survive A Secular Stagnation [View article]
    The solution to secular stagnation is simple:
    Export it to our enemies.
    This is what empires have done for thousands of years.
    Export how?
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    The US's biggest expense is oil-- about $1 trillion per year, out of GDP of $15 tril.
    If oil price drops by 50%, it'll be savings of $500 billions a year for the U.S., and something like $350 bil a year for Europe.
    This would have a multiple beneficial effect:
    It would boost corporate earnings due to lower costs,
    It would boost consumer spending due to more cash in consumer's pockets,
    It would boost government's tax revenues due to higher corporate profits,
    It would make the stock market zoom-- to to higher corporate earnings...
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    At the same time-- lower oil price would weaken Russia, Saudi Arabia, Iran, Venezuela, et al, and this would leave them with less money to foment mischief with. All to the good.
    Which would of course lower global risk-- and which, in turn, would raise the market's PE. Which would make the market zoom even higher--
    And which of course would allow companies to sell stock to the public (with more cash in its pocket), and so alleviate the debt problem...
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    Of course: At the same time, Russia, Saudi Arabia, Iran, Venezuela, et al, would have very high unemployment, and may even have to restructure politically: Give their citizens more freedom, and beg for money from the West...
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    The only issue: How to get oil price to fall?
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    This is a military question more than political. But it had been tackled before:
    In 1814, Britain was bankrupt following the Napoleonic wars. (As evidenced by the interest rates on its bonds, aka "consoles," which had a higher yield than those of the East India Company.)
    So Britain took over the East India Company, conquered India, robbed it, and in 10 years was flush again (as evidenced by the consoles' yield crossing back, in 1823.).
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    Well before then, when Rome was bankrupt it conquered Gaul; and Spain conquered half of South America...
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    What of today?
    In 1991 the US did Gulf War 1, and as a result had a 10 year bull market, to 2000.
    Gulf 2 in 2003 led to a 5 year bull market.
    Is Gulf 3 in the offing?-- or perhaps already even in progress?...

    I think it is inevitable. If not under Obama, then under his successor. Events have a logic of their own, and empires always robbed their enemies of their assets-- by various pretexts-- and so exported their own troubles to them.
    If the U.S. did the same now, it would be exporting its stagnation to the enemy, by lowering the price of oil, and reducing the global risk of terror.
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    In other words, El Erian's solution to the "stagnation" is one of a high level financial clerk, who can only see bureaucratic solutions of central bank actions, rules, regulations, and soon.
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    But empires are not run by clerks and bureaucrats with mere pens and pencils as tools. Empires are run by ruthless men and women who have destroyers and bombers and armed men at their disposal, and often use them for political ends. I.e.: to improve their own chances of getting reelected-- often by improving the economy. And as shown above, cutting the price of oil drastically by robbing it from the enemy is the surest way of doing this.
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    IMO, the West is bound to use these military tool to get out of its stagnation, if all else fails-- as it seems to be. My forecast is that the West will act militarily to lower the price of oil drastically, and so export its stagnation to its oil producing enemies.
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    Note: The above is not prescriptive, just descriptive. That is: I am not recommending a course of action. I am merely saying it is nearly inevitable. No empire has ever cinched its own belt when it could force its enemy to cinch his. And so will be the case now.
    Aug 28, 2014. 03:50 PM | 26 Likes Like |Link to Comment
  • Marvell shrugs off guidance; bulls focus on non-wireless growth [View news story]
    The most important item is this:
    http://yhoo.it/1tJ7MeU
    A HUGE wave of insider selling, by both officers and directors. This is not some trivial selling in the orderly course of insiders diversifying their holdings. This is massive, and doubtlessly significant.
    As a side comment:
    I find it especially significant that none of the craven Wall Street analysts (no other word for it) asked about it, or even raised the topic.
    All in all, 2.97 million shares were sold, at about $15/share, or about $45 million worth. This is not chopped liver. This is real money.
    Now, I know that some of this came from exercising of options, and shares are sodl to pay tax that such exercise generates. But in my long experience, such selling is nearly ALWAYS significant.
    The last such wave I've seen was at CONN, where the controlling family sold massively, 3 months before the stock blew up due to bad receivables.
    Let's wait and see here. I betchat a similar thing will happen here.
    BTW:
    The ruling that the judge came up with, took big swipes at management. The jodge basically called the management brazen for copying the patents.
    BTW2: Years ago, the same company had an issue of stuffing the channels. There was also lawsuits then, if I recall.
    The issue therefore is not doubt about markets and operations, but rather doubts about management itself. Do re-read what the judge just said.
    Aug 24, 2014. 08:16 PM | 1 Like Like |Link to Comment
  • 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, 2014. 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, 2014. 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, 2014. 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, 2014. 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:
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    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!
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    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...
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    Bill Ackman must be on to something.
    In an hour we'll know.
    Jul 28, 2014. 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, 2014. 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, 2014. 02:19 PM | 1 Like 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, 2014. 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, 2014. 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, 2014. 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, 2014. 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.
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    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...
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    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..."
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    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.
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    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.
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    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.
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    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, 2014. 02:35 PM | Likes Like |Link to Comment
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