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  • Server Acceleration: Altera FPGAs Vs. Nvidia GPUs [View article]
    First, I'm grateful for any explanation of the technicalities that I can understand.

    About research the marketing department hasn't figured out yet, from examples I can think of that seems to be the main problem, although it could also be management at the top. One classic example is Kodak, who according to Forbes invented the first digital camera in 1975. Kodak didn't want to cannibalize their film sales, so others did it for them. Then there's Nokia, who's shareholders didn't like them wasting money on smartphones that few could afford. A company can do inappropriate research, but I can only think of a highly obscure example. That's Zenergy plc who burned cash for years on high temperature superconducting technology. A new CEO said the R&D dept was like a university department, implying blue-sky research beyond the tiny company's resources to commercialize. I think they do something else entirely now. It might have been great research, for someone else.

    I don't have professional experience, I've just done some reading like this 18 page PDF "Proven Paths to Innovation Success" (864KB)

    One arguable case is memristors, which Hewlett-Packard claim to have invented. Anyone who bought when science columns were running stories of memristor-based simulated cats-brains would have seen the shares tank and still have a long wait for any benefit. HP have plans, but possibly because of development failures up to now they don't say much about it. They envisage a memristor-based server called 'The Machine', which will need a completely new OS, and a sort of Unix-based stepping-stone OS to let developers try things out on. HP's latest CC transcript has 'The Machine' mentioned in a list, with no elaboration, and no analyst asked about it. Anyway it has me wondering how that would affect Altera if it worked out, although there'll be nothing on the market in quantity for a few years at least. HP farmed out the actual memristor development to Hynix who have been slow, probably because they don't want to cannibalize their own sales, but there's a startup that claims faster progress. I have questions like, could Altera 'just' make FPGAs with memristor-based gates, or would memristor machines be inherently reconfigurable with no need for FPGAs. They might look like silly questions to anyone familiar with the tech.
    Jan 24, 2015. 12:44 AM | Likes Like |Link to Comment
  • Server Acceleration: Altera FPGAs Vs. Nvidia GPUs [View article]
    The hardened floating point sounds good. I'm reassured when R&D produces something innovative and commercial, because I recently read of a study about the R&D spend not being correlated with a return through innovation. I've strained my brain trying to think if the hardware floating point and the 'two sides of the "if" ' make a dent in the argument that anything wanted in volume can be done better by purpose designed hardware than by an FPGA. I'm guessing that at least it increases the required volume, depending on the application.

    Probably not useful -

    This is just one of my oddball amateur thoughts - a lot of AI in games seems to involve minimax or tree searches (I'm not expert and could be wrong or out of date). I'm thinking maybe FPGA's could search the trees faster, just like executing both sides of an 'if' statement. So why aren't there PCs and things for gamers with FPGAs for running that? Maybe powerful enough FPGAs cost too much, or that kind of game isn't popular enough, or it needed the hardened floating point, or it's too hard to get the games and the software available at the same time. If it happened and it was popular enough, maybe someone would design a chip specifically for the application. I don't suppose that helps, except to express my difficulty in getting some handle on the potential of FPGAs.
    Jan 23, 2015. 06:59 AM | Likes Like |Link to Comment
  • One Encouraging And Overlooked Metric From Verizon's Q4 Earnings Report [View article]
    The way I see it, a given growth rate for data usage does not nail down a rate of revenue growth without some info about the price, and a given growth rate for revenue does not nail down earnings growth without some info about how the cost will move.

    What I think matters is if competitors' promotional budgets really run out, and when, how long for, etc. Then, data growth means that Verizon and AT&T can keep their existing pricing plans and let growth have its effect, rather than have to hike prices to earn more. Long term, what matters is how much capital flows into the industry (relative to other factors) to finance capacity and promotion. About other industries, some companies have tiny returns on investment but it doesn't stop them from investing. Other industries are like graveyards where capital goes to die, for much of the time (I'm guessing no-one wants me to go on about the insurance industry here). A high growth rate for data usage could just attract more capital. That isn't a definite problem for VZ, it's just I think people sometimes get surprised because they don't consider a wide enough range of possibilities. Maybe in the future, there won't be much earned from the current kind of devices, but there'll be big earnings from the Internet of Things, just as earnings moved from voice to data.

    I'm willing to be educated if I'm wrong about anything there.
    Jan 23, 2015. 06:01 AM | 1 Like Like |Link to Comment
  • Leucadia Is An Undervalued 'Baby Berkshire' Trading At A 20% Discount To Book Value [View article]
    Good point. I'm not attempting any more inferences because I don't know much about beef and I should have stayed in ask-mode. Here's some facts that might or might not help:

    The article mentions "Irish beef production systems" and "in a position to approve individual beef plants". Every version of the article I've found uses the same terms and does not spell out exactly how the beef is exported, even on ( ).

    The Irish beef is premium grass-fed beef according to There's some scepticism from Irish farmers about price and volume, near the end of this article: "After Ban on Beef From Europe, U.S. Gives Green Light to Ireland" by DOUGLAS DALBY, JAN. 5, 2015 (

    National Beef's "Who we are" page has - "by producing and delivering high-quality fresh, chilled, and further processed beef and beef by-products. And through the expansion of our branded boxed beef, case ready beef, portion control beef and wet blue leather business ... "
    Jan 6, 2015. 01:56 PM | 1 Like Like |Link to Comment
  • Leucadia Is An Undervalued 'Baby Berkshire' Trading At A 20% Discount To Book Value [View article]
    It looks like it.

    "Irish beef granted access to US market after 15-year ban lifted " (

    I got the link from the SA news story "Beef imports from EU back on the menu" Jan 5 2015 (
    Jan 5, 2015. 05:57 PM | Likes Like |Link to Comment
  • Leucadia Is An Undervalued 'Baby Berkshire' Trading At A 20% Discount To Book Value [View article]
    Have I got this right? The more successful class-actions are, the more shareholders will feel they have to sign up for them to compensate for the hit to their shareholding if the company loses.

    I've never been involved in a class-action so I'm just surmising about the consequences.
    Jan 5, 2015. 05:48 PM | Likes Like |Link to Comment
  • Ubiquiti Networks: Take Advantage Of A Pullback To Buy At An Attractive Entry Point [View article]
    About R&D quality vs quantity: "Advice: R&D investment does not equal innovation" Mar 5, 2014

    An annual study finds no significant correlation between R&D spend and financial performance. Each company's R&D spend was indexed relative to the average for its industry (in the PDF below, page 15).

    The problem is claimed to be that R&D is not targeted toward the needs of customers. I expect that's mostly true, but Henry Ford is supposed to have said that if he'd asked customers what they wanted, they'd have asked for faster horses.

    There's more detail in the 18 page PDF "Proven Paths to Innovation Success" (864KB).

    The top 20 by R&D spend includes Cisco, in at number 20. There are some general conclusions under "Alignment and Insight" on page 8. Page 10 has a piece about the fast growth of R&D in China.

    I have three rules, just based on stuff I've read.

    1) The R&D should have genuine commercial potential and the company needs the resources to commercialize it.
    I can mention Xerox PARC who developed the first commercial GUI, and HP's development of memristors, as possible failures, but I'm not certain that investors lost out in those cases.

    2) Lines of research need to be reviewed, and stopped when they no longer look like a good use of resources.

    3) It's no good just sitting on the results.
    This article claims that Nokia's problem was not the R&D dept, but the failure to bring innovations to market: "Nokia's Bad Call on Smartphones" by Anton Troianovski and Sven Grundberg, July 18, 2012 (

    I'd say that's the major problem, but that's just my overall impression.

    Ubiquiti look good regarding quality of the staff, relevance of R&D, and commercialization of results. They aren't perfect as there have been glitches with new products.
    Jan 2, 2015. 09:40 PM | 1 Like Like |Link to Comment
  • Ubiquiti Networks: Take Advantage Of A Pullback To Buy At An Attractive Entry Point [View article]
    Matthew, I agree with Pera that emerging markets are a great opportunity, but when you say "short-term issues with emerging markets", why do you expect the issues to be short term? There are trillions in dollar-denominated debt in emerging markets (I think the Bank for International Settlements gave some figures). That kind of debt is often harder to repay when the dollar is strong (with exceptions, such as some companies that export to the US). They're having currency problems in Russia, Nigeria and Venezuela. Maybe it won't spread from there. Maybe China will make themselves the new world bank and bail countries out when needed. But, just maybe, things will get worse in emerging markets and it won't all be over by next Christmas.

    Apart from that, the article was a useful update for me. I also would like to see more about how competing products compared.

    I'm long UBNT.
    Jan 1, 2015. 12:37 AM | Likes Like |Link to Comment
  • Leucadia Is An Undervalued 'Baby Berkshire' Trading At A 20% Discount To Book Value [View article]
    Are the beef sales affected by the strength of the US dollar?
    Dec 31, 2014. 11:17 PM | 1 Like Like |Link to Comment
  • Top 10 BDC Issues For 2015: Part 2 [View article]
    I said "so far as I know Consumer Finance is not much of a problem at present". There's a lot of debt, see "Consumer Debt Hits an All-Time High" by Allison Schrager, September 30, 2014 (

    but, household debt is a lower proportion of disposable income, according to "Americans’ Debt-Cutting Levels Off" by Neil Shah, Dec 11, 2014 (
    Dec 29, 2014. 02:48 PM | Likes Like |Link to Comment
  • Top 10 BDC Issues For 2015: Part 2 [View article]
    I bought some MAIN today, though not much because BDCs are complicated and I'm not sure I understand them well enough. One of the things I checked before buying was the exposure to sectors I'm wary of, including this info from the Q3 10-Q (my own selection, addition and formating):

    September 30, 2014 ~ December 31, 2013


    Energy Equipment & Services
    8.4% ~ 10.7%
    Oil, Gas & Consumable Fuels
    1.9% ~ 3.2%
    Specialty Retail
    5.1% ~ 7.2%
    15.4% ~ 21.1%

    Fair value

    Energy Equipment & Services
    7.9% ~ 10.2%
    Oil, Gas & Consumable Fuels
    1.7% ~ 2.9%
    Specialty Retail
    4.7% ~ 6.5%
    14.3% ~ 19.6%

    I'm also wary of the financial sector, but MAIN only list:
    Consumer Finance 1.0% ~ 1.1% (under 'Cost')
    and so far as I know Consumer Finance is not much of a problem at present.

    There's enough debate elsewhere about how quickly oil will bounce back. In the latest CC transcript on Seeking Alpha an officer (I forget which) was reassuring about midstream, and said something about Houston being more gas than oil.

    About retail, Warren Buffett warned about it, before there was much effect from online sales. He mentioned the 'shooting star' phenomenon, and that retailers need good ideas all the time, while other businesses can profit for a long time with just one good idea. He still invested in retail, though not always successfully.

    I'm wary of the financial sector because it could be affected by oil through bad loans or being on the wrong end of hedges. The strong dollar and the level of dollar-debt in emerging markets could also give the finance sector a problem. I can't call the timing, if any of that hits the sector. Any such problems are likely to at least postpone interest rate rises.

    Big companies are more likely to have international exposure and overseas competition, and could disappoint due to the strong dollar or problems in emerging markets.

    Consumers will benefit from cheaper oil, and from the strong dollar (apart from unemployed oil workers). The lower and middle market probably have relatively high exposure to the US consumer, directly or indirectly, or at least have domestic rather than international exposure. I've read that the Russell 2000 index (which excludes the biggest companies) has much less international exposure than most indexes, which are usually based on the biggest companies. That might be obvious but it confirms my expectation about the lower and middle market which MAIN are exposed to (and it's fairly likely to be true for their 'private loan' investments).

    That's mostly macro-related, and I realize that many investors believe 'the macro' is too hard to call and prefer the 'bottom up' approach.
    Dec 29, 2014. 01:36 PM | 2 Likes Like |Link to Comment
  • Verizon Trading At A Discount: 20% Upside [View article]
    In my opinion, the author's calculation of 61.32 for Average EV to EBIT is meaningless, even if the arithmetic is correct. A more meaningful average can be calculated like this:

    Average EV = 122,623.9
    Average EBIT = 10,829.7
    Average EV to EBIT
    = Average EV / Average EBIT
    = 122,623.9 / 10,829.7
    = 11.32

    To illustrate the problem with simply averaging the ratios, I'll use a simple but extreme case. Suppose two businesses have these figures:



    That gives:

    EV / EBIT


    If the second business happened to have an EBIT of 2 instead of 1:

    EV / EBIT


    A difference of only 1 in the second company's EBIT has nearly halved the average, while a difference of 1 in the first company's EBIT would make very little difference.

    Another problem with simply averaging ratios is that it ignores differences in scale. The error is more clear in this kind of case: if you want the average margin for retail outlets in a street, you don't want to give a massive store the same weighting as a kiosk.

    I'll be a bit embarrassed if I copied a number wrongly or got the arithmetic wrong, which is always possible, but it's knowing the method that's important. I don't mean to give the author a hard time, but it seems fairly common to apply math without thinking about the meaning, and I can only point that out when I see an example.
    Dec 28, 2014. 09:40 AM | 1 Like Like |Link to Comment
  • American Superconductor: Too Cheap To Ignore With Emerging Energy Grid Security Catalysts [View article]
    AMSC are high-risk, high reward, with reasons for hope as the author has described. I commented about two or three quarters ago that it was too early to tip AMSC. I had plenty of doubt about that, because AMSC always has potential, and I was mostly relying on their record for disappointing shareholders. I would not repeat my comment now, although there's still plenty of risk.

    I bought AMSC and Ubiquiti Networks at about the same time. Both looked cheap after big IP problems. Since then, Ubiquiti's share price has multiplied a few times, while AMSC went the other way. Maybe recoveries usually take a few years. In any case, AMSC has shown they are vulnerable to setbacks and can't recover quickly. When I bought, I was hoping for grid to develop, reducing the dependence on wind. That was a few years ago and the pace has been disappointing.

    According to Wikipedia , "American Superconductor installed a test of a superconducting electric power transmission power cable in the Detroit Edison Frisbee substation in 2001". AMSC has had 13 years since then to grow cable into a substantial cash generating business.

    I'll be less critical if and when they have more earnings outside of wind, as well as low customer concentration and positive cash flow. The obvious problem for investors is that by the time AMSC are safe, they won't be cheap.

    In short, the author has made valid points, but so do the comments about the company's track record.
    Dec 24, 2014. 04:10 AM | 2 Likes Like |Link to Comment
  • Why We're Poorer: Inflation And Deflation Are Now Globalized [View article]
    I looked into shadow banking and found three pieces drawing on different sources and arriving at different conclusions.

    "IMF warning over shadow banking risks" by Angela Monaghan, The Guardian, October 1, 2014
    According to the IMF, shadow banking has been rising in the US. It accounts for 30% of systemic risk, the same as for conventional banking, but it's also said to have more assets than conventional banking (which seems to me to imply that it's safer per dollar of assets). Shadow banking hasn't quite reached pre-crisis levels.

    According to "Fed's Stanley Fischer: We still need to deal with the shadow banks" by Stephen Gandel, December 2, 2014
    shadow banks are 80% of the US banking sector. The Fed's version seems to be the most widely reported.

    "Shrinking Shadow Banking Sector Hurting US Economy" by Administrator, December 01, 2014
    The main source is the Center for Financial Stability, "an independent, nonpartisan, and nonprofit think tank ...". The tank seems reasonably eminent, but won't have the weight of the Fed or the IMF.

    The "Shrinking" article mentions "access to market finance", and the sources might be using different definitions. My guess is that there's plenty of debt likely to go bad at some point, wherever the money came from.

    Also about the supply of credit, mortgages are easier to get, with the minimum down payment reduced from 5% to 3%. "Fannie Mae, Freddie Mac reach deal to ease mortgage lending" October 17, 2014 (

    About things going wrong, it's been widely reported that the Russian central bank has had to bail out Trust Bank. I've heard less about the problem in Nigeria. They've been Africa's fastest growing economy, and not on anyone's list of fragile economies that I know of. Now - "The Nigerian Currency Has Been Getting Absolutely Demolished" by Shane Ferro, Dec. 18, 2014 (

    XLF (a financial sector ETF) was up today. Given the risk factors I've written about, I wouldn't like to be holding a big chunk of XLF or most of its constituents.
    Dec 22, 2014. 05:39 PM | Likes Like |Link to Comment
  • Why We're Poorer: Inflation And Deflation Are Now Globalized [View article]
    It's claimed that if you take away oil & gas, employment has fallen since 2007 (if you also take away the associated employment not actually in the sector). See "Houston, You Have A Problem" - Texas Is Headed For A Recession Due To Oil Crash, JPM Warns
    by Tyler Durden, 12/21/2014 (

    On Seeking Alpha, there's "How The Collapse In Energy Prices Will Affect U.S. Growth And Inflation And What That Means For Stocks" by Colin Lloyd, Dec. 22, 2014

    Employment in exploration takes an early hit. Development won't be halted immediately when it's underway, but new wells are less likely to go ahead unless they are very low cost.

    There are some positive signs for the economy, such as rising employment in manufacturing and "Wages are finally rising, but America still needs a big raise" by Matt O'Brien, December 5 (

    It's possible that O&G growth has masked an old problem: automation creates unemployment. That view used to be easily debunked: if a mechanical excavator makes men with spades unemployed, think how much work there'd be if all the digging had to be done using teaspoons (and, unemployment has not risen inexorably since the industrial revolution created it). It's possible that technological advance has recently started a tendency for only the most intelligent or talented workers to make much of a positive contribution to the economy. That's a complicated topic and I'm not capable of proving the point.

    Cheap oil will still benefit consumers, but with less investment and employment in O&G a net benefit may not materialize at all or not for a few years. US industry will have cheaper O&G, but cheap oil from Saudi benefits the overseas competition more, and the strong dollar works against it. The prospect reminds me of "Chimerica", when US consumers enjoyed cheap goods from China. Americans opened nail salons while industry suffered. "Chimerica"s are not sustainable as they come to depend on growing credit at the same time as a strong currency and cheap imports, and the system becomes vulnerable to shocks as in the financial crisis.
    Dec 22, 2014. 04:56 PM | Likes Like |Link to Comment