Research Intensive Investing

15 Comments

    • Monster's Guidance is Not Guidance [view article]
      4truth,

      Thanks for addressing the substance of my write-up. I apologize if my typo offended you.       Mar 19 11:32 AM
    • LoopNet Management Can Handle Tough Times [view article]
      This company has a lot of headwinds. CoStar is coming out with their own product to compete with Loopnet’s which could impact business. Also, page views are clearly trending downwards, and monthly churn rates are phenomenally high. Most of its advertising base are smaller speculators or brokers who may not be able to weather this downturn. The stock has already been hit hard, but I do think it’s got some more room to fall as news flow should continue to be negative for at least the next year. I doubt they will be able to hit their revenue estimates. For disclosures sake I’ve been short LOOP for some time, though I’ve recently reduced my position some on the latest downtick.

      Eric
      researchinvesting.blog...
       Feb 06 03:36 PM
    • WSFS Financial: The Perfect Short [view article]
      Do you know what the geographic exposure is of their loans? At first glance, they actually seem in good shape, which is probably why this has held up relatively well. They have relatively high reserves, and probably have low exposure to trouble spots and more "creative" loans. Jan 16 06:04 PM
    • Smith Micro: Profit from a Fallen Wall Street Story [view article]
      Thanks for the comments. I omitted discussion of the Device Management group due to its currently small revenue; IMS has big potential but its still about a year off from meaningful revenue. Also, my impression is that the StuffIt revenue is booked under Consumer and Compression, but I could be wrong on that one. Suffice to say, there are tremendous growth opportunities, both now and in the future; I just chose to focus on those that are likely to drive growth in the near term.

      As for taxes, management has guided to a 30% cash tax rate in 08'. I also could see this coming in lower, but I wanted to use the higher rate to be conservative.

      Anyhow, sounds like we are generally both in agreement that there is a lot of growth here.

       Jan 14 03:07 PM
    • Noah Education: Profit from a Busted Chinese IPO [view article]
      I used the post IPO share count. You are correct that the financials, and most popular free stock sites, like Yahoo, do not have the right share counts (they also don't reflect the cash balance, since the last 10q was filed for a period ending before the IPO took place. This should resolve itself when earnings are announced next quarter. Jan 12 09:46 PM
    • Simon Property Group: My Kind of Dividend Growth [view article]
      Agreed on the lousy call. Though not exactly the same, this is somewhat akin to taking a look at the graph of internet stocks in mid 2000 and justifying continued stock appreciation based on the past share price appreciation. I'm curious how the NOI would look if the occupancy rates dropped a few points...

      Eric
      researchinvesting.blog...       Dec 28 05:23 PM
    • Korn Ferry, Monster, Heidrick & Struggles: Recession Risk Not Priced In [view article]
      Hi Dave,

      Thanks for the comments. In response:

      1) Though the stocks have already been hit hard, this is not much unlike the trend that occurred in 2000-2001; these stocks get marked down in 2 stages. The first (which has already occurs) happens when the market stops treating them a growth stories and begins to have more of a flattish outlook. The 2nd stage occurs when the businesses show clear signs of cylicality, and operating performance falls. Check my prior write-up on KFY why for I think there is still more room for these to fall.

      2) This is a long debate, but I will say that the fed's impact has been negligible so far (LIBOR spreads have continued to increase, etc.), and that there are many arguments put forth by many smart people supporting serious recession risks.

      3) I'm glad you brought this up. On an income basis, it gets ~ 61% from North America. Also, most of its international exposure is to multi-nationals, which have relatively greater exposure to the US than local companies (this is why in the last recession revenues and income abroad also dropped off a cliff, and will likely happen again this time around, though perhaps to a lesser extent).

      4) The cash number is misleading. They have $112M in bonus payments due in Q1, and $15M they still have to pay for the Highland Partners acquisition, so lets say the current number is more like $150M. On top of that they are using most that money for buybacks, which are succeeding only to keep the share count basically flat, because of the generous share grants to employees. And they are also buying their stock on peak earnings, which in the long term I believe is destroying--not adding--shareholder value. Buybacks are not good when you are buying your own overvalued stock.

      5) This will take some time to play out. But given HSII's sector concentration, I think its more likely than not that we'll see significant pressure in Q1 of next year, if not next quarter.       Dec 24 10:48 PM
    • Will Monster be Murdoch's Next Acquisition? [view article]
      I agree completely on MNST. Funny thing is analysts aren't talking about this at all--they're projections are still for growth. Also, if you take a look at permanent staffing businesses--KFY and HSII--which are similarly impacted by the economy, their international businesses actually went negative more then their NA business in the last recession. It's also interesting to see MNST waste tons of money on buybacks at peak earnings.

      As a MNST short, my main worry in a buyout, but I hope that the negative macro news will keep potential investors on the sidelines. Also, for what its worth, I think MNST becomes a very interesting long in 2-3 years once things pick up again.

      Eric
      researchinvesting.blog...       Dec 18 06:02 PM
    • Jarden Remains a Compelling Short [view article]
      Thanks for the nice write-up, Amit. I'd taken a look at this at some point as a short and passed, but it definitely does seem like a catalyst is potentially in sight with an oncoming consumer slowdown and tighter debt markets. The negative tangible book value also makes this a potential zero, which is always a great thing in a short.

      Have you taken a look at all at the debt schedule? Will they be forced to refinance some debt at higher rates anytime soon? Have you done any stress testing to see at what EBIDTA levels they begin to run into significantly trouble covering interest payments?

      Thanks,
      Eric       Dec 18 05:57 PM
    • Noah Education: Profit from a Busted Chinese IPO [view article]
      Hi,

      Yes, they are relatively expensive. I probably should have called this out more clearly in my write-up. Estimated average disposable income per capita in China is about $800/year. For urban households, it's more like $1,500 a year. Noah's DLD's cost between $160-$240. Keep in mind that average disposable include includes millions of incredibly poor people, and hides the earnings power of China's rapidly growing middle class. I do not have numbers for that subsegment, but I would not be surprised if there is a relatively large segment of the population with $5-10k+ in income per year (and that this group is growing rapidly). Even if only 10% of China's population falls into that range, that is an addressable market of about 20M people.

      Also, 85% of DLDs costs are input costs (flash memory, etc.) which should come down in price and make the DLD's more affordable over time. NED's content distribution through cell phones, etc. will also be more affordably priced for a larger segment of the population.       Dec 18 12:09 PM
    • Risk May Outweigh Reward for Newly Public Deltek [view article]
      Interesting write-up. I started doing some work on this: looks like they are basically the are one of only two companies out of ~20 in their space that carries a net debt position. Also, much of that growth came from acquisitions: they had nice organic growth in 06', but in first 6 months of 07' about 80% of license revenue growth came from acquisitions. Maintenance revenue seems safe, but Licensing revenue depends on new sales, and consulting revenue is highly tied to implementation levels. They also are tied directly to government contractors, who could be facing some serious issues going forward as the government presumably clamps down some on spending. Thanks again--I plan to keep an eye on this one.

      Eric
      researchinvesting.blog...       Nov 26 10:13 PM
    • The Long Case for Sinoenergy [view article]
      ChinaMart,

      My impression with SNEN is that they are to a degree winding down their outsourced construction business to build their own filling stations, which means you can't really rely on those estimates as meaning too much. Also, with 29mil shares vs. 14mil last year, the correct P/E looks like its closer to 20.       Aug 06 12:17 PM
    • The Long Case for Sinoenergy [view article]
      Great write-up. I'd been looking at this and CNHG as well. Have you done any work to validate managements guidance? Also, what do you think about SNEN compared with CHNG, which is already profitable? Aug 04 11:02 AM
    • Amazon.com: Why Now Might Be the Time to Short [view article]
      Thank you for the comments. I think a lot of the things you mention are far enough out that I am not worried about them having a large financial impact in the near term, as discussed in my write-up. Despite what some people may be saying about Unbox, it hasn't generated any revenue to speak of, and unless you see a big surge of sales in Apple TV or something else that allows the computer to better connect with the TV, I am not worried about digital downloads anytime soon.

      There is a difference between investing in a stock based on valuation and expected financial performance, and investing it in because you like the company and think they are doing some neat things. This is exactly the kind of thing that helped fuel the internet boom, and will continue to allow for profitable opportunities to short companies like AMZN that get ahead of themselves. Though this is not something I plan to be short for 10 years plus, I do believe its jumping 70% on not much meaningful news is not a sustainable outcome, and that the risk/reward of a correction in the near future is a profitable opportunity.       Jun 15 05:24 AM
    • Amazon.com: Why Now Might Be the Time to Short [view article]
      Thanks for the feedback--I should probably not try writing the bulk of a post like this at 3am again :).

      I agree to that they have a great retail business and are doing some interesting things. This is one of those instances where I generally like the company, but think the stock is both a poor investment and has some near term catalysts that could drive the share price lower. I considered puts, but I don't feel comfortable trying to time this, and they are a bit expensive after the recent volatility. Also, I generally believe the upside at these levels is limited (I don't see this running much further, given that even many higher growth, lower market-cap runners like CROX, etc. are not trading for the same forward valuations that AMZN currently does.       Jun 14 06:27 AM
Loading...
Symbols:
Authors:
Quick Links:
Contribute an Article Become a Seeking Alpha Contributor

Transcripts

More Transcripts»