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ConservativeOutperformer

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  • Take The Mulligan On Callaway Golf While You Can [View article]
    Callaway sucks, but TopGolf is the best investment around. If this were a public company, it would have a 35-50 multiple. There's room for 10-20x more facilities nation wide. With a few adjustments to the business model, they could scale up and double sales in certain markets pushing margins to the limit. They just need more capital. I talked with an Asian investor about it the other day and he thought it would be killer in his country. Hell, I even want to open one up. Chicks love this place, non-golfers love this place, corporate outings make this place, people like me love this place. The author is correct, TopGolf is what will bring people into the game of golf...... Callaway has done nothing forever. Still long my Steelhead Plus 3-wood though, that thing is a monster 15 years later.

    Good luck!
    May 28, 2014. 10:57 AM | Likes Like |Link to Comment
  • Blucora: A Heavily Discounted Portfolio Of High-Growth Assets [View article]
    Found BCOR on the MagicFormula screen and came to all the same conclusions you did. In fact, I just assumed the Search business was going to zero and it still didn't look like a bad deal..... TaxAct is a really good business, Monoprice is OK and the cash + NOL's are there. I simplified it, but if you just do some rudimentary math the total value > $800m.

    In order for the valuation to not make sense, one would have to assume that management is going to squander the current cash and all of the future cash flows. As you correctly pointed out, after reading the CC transcript, the annual reports and some other filings I don't think this is going to happen.

    Good luck!

    P.S. Don't care about the thing in February
    May 20, 2014. 10:59 AM | 1 Like Like |Link to Comment
  • World Wrestling Entertainment Inc.: The WWE Bears Are Missing The Forest For The Trees [View article]
    Lesson to be learned here..... When a company's valuation rests so heavily on one event, the easiest and safest thing to do is speculate around that event.

    WWE is a garbage company. There's no reason to 'hold out', hoping and waiting for the price to go up. Someone could have just as easily bought a call, a put or, if you think the price is really going to move, a straddle and made a lot of money or lost a little.....

    Good luck!
    May 17, 2014. 11:53 PM | Likes Like |Link to Comment
  • Tracking Donald Yacktman's Yacktman Asset Management Portfolio - Q1 2014 Update [View article]
    The key here is to recognize when these positions were increased by significant amounts.... The majority of people on these boards hold some of these companies. But, the whole point of investing is to make as much money as possible with the lowest risk. Buying MSFT in 2011 around $24, or WMT in 2011 at $50, or JNJ under $60 in 2011, or PEP around $60 is very smart (I made big investments in all of those companies at those prices). Aside from PEP at $60, these names have done very well against the S&P. Going forward, they will probably do better than the S&P.

    Starting MSFT at $40 right now, or WMT at $75 in mid 2012, or JNJ at $100 right now, or PEP at $86 in mid 2013 isn't going to generate substantial returns. In fact, relative to other names out there, the investment outlook for these companies at these prices isn't really attractive at all. Just because 'they're great businesses', that doesn't guarantee investment success. The key, as Yacktman has shown, is following a few terrific companies and being prepared to deploy large amounts of capital when the price is attractive. This is the easiest way to make money in the stock market. It just requires patience, which very few investors truly possess.

    This is one of those things where everyone replies 'I know that, duh!'.... And then they turn around and never do it. And then wonder why they underperform the market.... It's not rocket science.

    Good luck!
    May 12, 2014. 08:36 PM | 3 Likes Like |Link to Comment
  • Lindsay: An Attractive Proposition For Growth In The Irrigation Industry Across Emerging Markets [View article]
    What do you think LNN will earn this year?
    May 11, 2014. 01:58 PM | Likes Like |Link to Comment
  • Apple Depends On Strong Demand For The iPhone 6 [View article]
    Right, and what is the percentage of market share for Macs vs PC's? You're making my point for me. Having double the margins of your competitor is great. The problem is (from a business valuation standpoint) they do 33% less business than HPQ alone. There's only so many people (hint, a very small percentage of the overall pie) willing to pay significantly more for a Mac than for a PC....... All your groupthink can't avoid the problem facing AAPL; they are going to either have to take a margin hit or a sales hit in their primary business (iPhones) going forward. That's an enormous problem for a $500+b company. The thought that should be entering your head after a significant move over more than a decade is whether it's a better time to hold 'em or fold 'em.....

    As for Mr. Know-it-all, TimmiesRegular, I'm not sure what you're talking about. My only AAPL post in Jan, was Jan of '13..... And the shares have significantly underperformed the S&P from then. I've acknowledged at various times that AAPL has been cheap (like late 2011 when I had friends that bought it after they talked with me about it and I suggested it to them), while simultaneously speaking about the risks of the business. If you'd like to seriously analyze my comments, you'd see that I was calling for slow growth very early on when the entire world thought 30% was the norm. You know what? Who cares.... I made a lot of money in AAPL many years ago and have abstained since. Even still, if my logic were sound (hint, it is) and I was wrong (hint, I wasn't) it doesn't mean anything. Everyone participating in the stock market will be wrong at some point.

    The point here is the ridiculousness people use in their reasoning. All of a sudden everyone is a technology expert 5 and 10 years into the future.... In a market that wasn't even around 10 years ago....

    Since you think you're so clever (hint, you're not) I'll go ahead and use your own horrific reasoning skills in this iteration of my '4 PowerPoint slides that obliterate any AAPL bullish scenario'. Except it won't be 4 slides, it will be 4 questions that you can't answer.

    In a post dated May 5, 2014 you claim that AAPL has the potential to sell 700,000,000 phones, or 15% of the total cell phone market worldwide. Where on earth is the manufacturing capacity going to come from to ensure even half that amount of phones (not just iPhones) can be built in a year? Let's even assume for a minute that hon-hai, Samsung and all the other suppliers start building plants to support that amount of construction. What happened to the last consumer electronic device that was immensely popular for a few years, where early movers made a lot of money and competitors emerged? Is it really difficult to envision a scenario where the phone market follows the exact same trajectory as every new market that has developed before it, just like the last consumer electronics market (PC's) I referenced in the previous question? How has Compaq, HPQ or any one of the many other PC companies worked out as an investment over the past 15 years?

    Your posts only leave 2 possible scenarios as they relate to AAPL, it's long-term investment outlook and the consumer electronics business. Either you are being dishonest about the history of (consumer electronics) businesses in a capitalistic society, or you haven't examined the history of businesses who participated in new markets and, subsequently, don't understand their economic implications. Either way I don't find it necessary to debate a liar or uneducated individual.....

    All the experience and age in the world don't trump common sense and individual thought.... In the words of Calvin Coolidge, 'You lose'.

    Good luck!
    May 6, 2014. 09:06 PM | 4 Likes Like |Link to Comment
  • Apple Depends On Strong Demand For The iPhone 6 [View article]
    I forgot how uneducated the replies were in AAPL articles......

    There's some good stuff in this article. The slowing of growth was very easy to spot the first time. After the move down from $700, the cash position really supported the valuation. After the last earnings call, and the actions to disburse a boatload of capital to shareholders, we've come back above $600 and rightfully so due to a somewhat cheap valuation. I have no idea where the share price will go, but I doubt it's 20% higher.

    However, once this long overdue 'shareholder friendy action' runs it's course, there are some facts that will start to reveal themselves.... AAPL is a fantastic company that is fraught with risk from a long-term investment standpoint. No one knows what this market will look like in 10 years and with new entrants undercutting Samsung/AAPL on price, the only certainty these companies are facing is decreased margins or sales (they'll have to choose). It's already started to happen and I would argue that today above $600, the risks are greater than they were 18 months ago at $700. They can support the stock all they want by loading up on debt against an international cash position earning 1-3%. That won't solve the long-term problem of 'how do I sell more products'.

    People can throw around names like David Einhorn and Carl Icahn as reasons to be long the stock, but the kind of 5 minute analysis that's been done regarding AAPL doesn't hold weight against serious thought..... As I mentioned in a post a very long time ago, there isn't even enough manufacturing capacity to grow the business in the manner the analysts were expecting AAPL to grow back in '12. They've had supply problems for years and due to the amount of product they (and all the other cell phone companies) are trying to move, they can't meet demand. Great problem to have..... Unless your stock price relies on selling 'premium' products at 'premium' prices that will be outdated in less than a year. Now throw in some replacement cycle analysis, some Michael Porter and an honest, historical understanding of the market they compete in and you can see why it would be better to look elsewhere for serious risk-adjusted investment gains. I can destroy any AAPL bullish thesis in 4 PowerPoint slides.

    AAPL is a fantastic company that combined a new product and first mover advantage into one of the most successful business the world has ever seen. It's a certainty it will not stay there. In order to justify adequate returns going forward, one would have to assume a brand new line of business will not only supplant the iPhone in terms of mind-boggling sales numbers, but it would also have to assume that this business is just as profitable. Once that business starts from zero and makes it to $500b, it then has to find a way to grow..... Yea......

    Good luck!
    May 6, 2014. 06:28 PM | 1 Like Like |Link to Comment
  • The St. Joe Company: Special Situation With Potential Significant Capital Return [View article]
    JOE really comes down to how long you've followed it. These are all of the same arguments that were made from 2009-2011 and the stock has gone down while the S&P is up triple digits. The more sensible people here have come to the same conclusion as I did the first time I dug into the statements..... There are much better long term investments.

    I am very familiar with the area. I've been there multiple times, I've played St. Joe Bay golf course multiple times (fun, but higher handicaps need to bring tons of balls), I've seen comparable developments. There is no sudden acceleration of value around the corner. This is an almost $2b company that owns a lot of land, doesn't distribute any proceeds to the common shareholder and promises a lot. A lot of 'experts' will disagree. 5 years of significant underperformance doesn't agree with those 'experts'. The people mentioning 'the time value of money' get it......

    This really is just a situation where people are digging, trying to find value and there simply isn't that much..... I can point to a hundred companies with more 'hidden' value, much higher earnings prospects, taking more friendly shareholder actions and priced cheaper.

    Good luck!
    May 1, 2014. 02:25 PM | 2 Likes Like |Link to Comment
  • IBM's Culture Is Its Best Long-Term Investment Metric [View article]
    Very well written, I'll check out the book.

    Good luck!
    May 1, 2014. 09:53 AM | Likes Like |Link to Comment
  • 30 And Under Portfolio: Q1 2014 Update [View article]
    I would try and learn a lot more about investing before you do anything else.... Allocating large portions of your portfolio to 1 stock is dangerous if you don't have the requisite knowledge.... I held a third of my equity portfolio in WMT at one point, but I had read 10-k's, proxy statements and other filings. I understood the risks very well. I also knew a lot about the business and acquired it around $50. It outperformed the S&P by an enormous margin over the next year and a half.

    A lot of your selections look like they were made purely on a yield basis, or because someone else thought it was a good idea.... There's some risk in doing that. I make my decisions because I understand the implications and I believe I know the business. I would make sure you understand that before doing something you end up regretting.

    Also, it's important to note that there are wonderful businesses out there that people don't know about or aren't covered much on websites such as this. They are boring, $700m - $5b businesses that are absolutely fantastic. This site tends to concentrate on a few mega cap ideas (AAPL) and sub $300m ideas that authors can pump to make a few bucks. I think it's a good idea to check your assumptions about investing once you have acquired more knowledge on the subject........

    Good luck!
    Apr 24, 2014. 10:11 AM | 1 Like Like |Link to Comment
  • Danger Zone: Value Investors [View article]
    I was just reading GE's AR, lol..... After trying to figure out what the true operating numbers are going to look like going forward without SYS, I just gave up. Decreased Tax Rate, SBC, Asset disposals/additions, etc etc. I find just about every large financial company is really tough. I looked through hundreds of pages on SAN one time and wondered why I was doing it.... Now I stick with the smaller banks.

    It is important to note, however, that you don't need to get the picture 100% right, close enough will do. In general, knowing what the important things are, where they are and skipping to them in every report reduces the overall time. If you're buying stocks when they are really cheap (hint: you should be) the price disparity between true value and perceived value usually makes up for complete accuracy.

    Investors definitely have to go the extra mile though if they want to understand how a company is really doing and all the risks associated with it. If they aren't willing to do so, I agree with the poster above.... Stay away from purchasing individual equities.

    Good luck!
    Apr 8, 2014. 07:07 PM | Likes Like |Link to Comment
  • Maybe I'll wait a bit before buying [View news story]
    Here are some highlights from the filing....

    'Our cash balance is $100 as of April 7, 2014. Our cash balance is not sufficient to fund our limited levels of operations for any period of time.'

    'To showcase just how valuable and useful hempcrete can be, and thus encourage buyers and future investors to take the idea and value of hempcrete seriously, the company plans to build and create a house made entirely out of hemp-based materials. This property is owned by the company’s sole officer and director Salvador Rosillo and located at 30 Vernon Avenue, Brooklyn NY 11206. This structure will be made entirely out of hempcrete while the interior will be furnished using products that have all been created through the use of hemp. The company has no definitive timeline, at this point, for the completion of this project or has even taken steps to begin the project. The company also must first level the existing structure on this land. There will be no costs or associated fees to the company from the acquisition of this property. Our sole officer and director, Salvador Rosillo owns this property and is providing it at no cost to the company. However, any modifications and alterations to this property will be at the expense of HempAmericana.'

    'Currently, Mr. Rosillo has the flexibility to work on our business up to 25 to 30 hours per week, but is prepared to devote more time if necessary'

    'NAME AGE POSITION
    Salvador Rosillo 77 President, Chief Executive Officer, and Director'

    That was fun....
    Apr 7, 2014. 03:08 PM | 3 Likes Like |Link to Comment
  • Johnson & Johnson Is A Safe Pick In A Dangerous Market [View article]
    I guess my point is, what 'mean' are we talking about? If JNJ continues acquiring businesses as large as Synthes, which is a ripe legal target based on the nature of the work they do, how can we use an average over the last 10 years? No doubt there are some legit 'one-time charges', but when you buy a >$20B operation doesn't that change the average you use to account for future potential liabilities?

    Again, I think the prudent way to account for these items is to take some percentage of each settlement. So let's say all the Risperdal stuff ends up costing $2B over 3 years. JNJ will say, 'one-time charges'. I say, that is a 'cost of doing business' and one I can expect to incur as a common shareholder every 4 or 5 years. So, maybe I take 1/2 or 1/3 of that and call $1b 'one-time charges' and the other $1b a 'cost of doing business'. With the Synthes acquisition, I'm saying the average over the last 10 years is no longer applicable and I can now expect a larger legal expense going forward.

    It's really up to each person how they want to account for these things and to decide for themselves what makes the most sense for these items going forward. I think strictly calling them 'one-time' or 'unusual charges' is not accurate...... The term unusual can't be applied if the charges happen every year (like a large settlement where legal bills are dragged out over several years).

    Anyways, still long a reduced position in JNJ. Good luck!
    Apr 7, 2014. 12:48 PM | Likes Like |Link to Comment
  • Johnson & Johnson Is A Safe Pick In A Dangerous Market [View article]
    I agree that JNJ is cheaper than it looks and your analysis, David, is much better than the majority of authors on this site..... However, the 'one-time charges' that JNJ is claiming are 'one-time charges' don't seem like 'one-time charges' to me. When you run a highly diversified, yet medically concentrated, conglomerate it seems that things like the Risperdal fiasco, Depuy settlement and many others sure to come down the road are truly a 'cost of doing business'. Whether or not the company or financial community chooses to call these 'one-time charges' they will certainly impact the financial statements over time.

    With the enormous acquisition of Synthes, there seems to be a good chance that more (and potentially larger) 'one-time charges' will surface. Maybe the best thing to do is take a percentage of those (like 50% of all 'one-time charges') and then use that in your calculations.

    Just my opinion... Good luck!
    Apr 7, 2014. 12:22 PM | 1 Like Like |Link to Comment
  • PepsiCo: Historically Cheap Due To Investor Worries [View article]
    Agreed, although the snack business outlook isn't as bad as that for soft drinks.... Diet soda sales are cratering. This stuff really is toxic, whereas an occasional bag of chips isn't really that bad. I would love to see PEP buy an almond operation or commit to gluten-free / lactose free products. Most of the problems at PEP have been self inflicted and eventually they will get sorted out. Agree with magi on the smaller returns statement though.......

    The real question that needs to be answered is how will KO/PEP diversify away from their serious money makers (soda in the U.S. market) and will the new products carry the same margins? I'm guessing it will be a struggle to do so and, no, those products will not carry the same margins.....

    Long PEP though. Good luck!
    Apr 6, 2014. 01:23 PM | Likes Like |Link to Comment
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