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  • The Time Is Right For Investors To Buy PetSmart [View article]
    Anyone concerned with the new management team? I've owned this stock since 2001 and really thought management was top notch. Bob Moran and Chip Malloy always left me with a very good impression that they had things under control. Almost always overdelivered. I've been less impressed with the new team, I've felt like there's been execution issues we hadn't seen in the recent past (cat promotion that didn't go well, live fish supply issue that they couldn't even diagnose correctly). And then they also said they'd be giving less information to the analysts than in the past. Love the business, just no longer as sure as I was. Anyone else feel this way?
    Jan 22 12:46 PM | Likes Like |Link to Comment
  • JPMorgan reaches tentative $13B settlement with DOJ [View news story]
    That was in the numbers already deercreek. The legal accrual was $23b at the end of Q3.
    Oct 19 09:25 PM | Likes Like |Link to Comment
  • Why I Am Short ARM Holdings Inc. [View article]
    Michael - I'd also argue that the 24% is far too conservative on a LT view. If you look at the past 5-6 years, you see that NI to sales ratio steadily climbing from the mid teens in 2007-2009 to the high 20s recently (TTM from Q2' 12 to Q1 '13). Now the company took that hit in Q2 to settle the patent issues - a real cash drain to be sure - and an always looming issue for a patent company. But if you can put that to the side and expect that to continue to expand because of the significant royalty component that is expected to outpace license revenues and assume a 35% NI to sales ratio, that target goes way up with $2.65 EPS. When Warren East was at the helm, he always talked about where that op ex margin would be on a long term basis once the royalty revenue started really flowing. He couldn't pin it down, but I always got the impression that 50-60% was in the realm of possibility from the mid to high 30s it was running in recent quarters.

    Then I'd argue I'm not ready to put a no growth multiple on this baby quite yet (I'm not sure what you're using to get to $25) and that would get you in the ballpark of where it trades now. Now who knows where that revenue number will actually come in three years down the line (I'm actually more interested in 5-10 years), so a lot of assumptions to be sure.

    A valuation criticism has always been valid, but tweaking the assumptions of that valuation is what makes it interesting. I'm obviously long ARM but I can't blame anyone for thinking it's overvalued. It's all about the assumptions and that is, of course, subjective. I just happen to be of the opinion that the market growth drives those assumptions higher.
    Sep 30 07:55 AM | 1 Like Like |Link to Comment
  • ARM Holdings: Learning From My Mistakes [View article]
    Great article. You could be proven right over time - I happen to think not. But I love honest assessments when you've taken a very public stance. I still believe ARM may be too far ahead of itself, but it's extremely difficult to value with the royalty based business model accounting for a faster growing part of its revenue base (at almost all margin).

    I'm long ARM, but if I wasn't concerned about valuation I wouldn't have sold at 18 (25% of original stake), 24 (another 25%), and 40 (10%). Regretting those sales now, but ARM still remains my largest position.
    May 14 08:34 AM | 3 Likes Like |Link to Comment
  • Intel Drops An Atomic Bomb On ARM's 'Abomination' [View article]
    Actually it's closer to 5 unless it's a leading edge partner.

    If anyone wants to track the real trajectory of royalty for ARM, check out the 1) Chips sold by partners, and mix of Cortex (especially A) versus the early ARM designs 7, 9, 11). THEN compare that with the mix of licenses sold over the past couple years.

    They actually gave us enough information to calc the Cortex A royalties back in Q3...and decided that they didn't want to keep doing that in the latest quarter. But the cat is already out of the bag.

    I wonder how many of you that talk valuation really understand how the royalties are expected to flow over the next several years. Something tells me you're just looking at a current valuation ratio (or one a year into the future) and passing judgment. There's endless debate over speed and power efficiency for chips that aren't even rolling off the shelves yet, yet all you have to do track a few metrics for licenses and chips already sold, do some math and you'll see that the answer isn't as simple as you think.

    Too many engineers, not enough investors.
    May 10 08:08 AM | 1 Like Like |Link to Comment
  • Intel Drops An Atomic Bomb On ARM's 'Abomination' [View article]
    I'll just show you the stock chart slide for ARMH. That's the only one that matters.
    May 8 12:40 PM | Likes Like |Link to Comment
  • PetSmart's Earnings: Oops [View article]
    "Still, PetSmart sports a 20 PE. You have to keep proving your worth when you have a high valuation. PetSmart inserted serious doubt about its ability to deliver."

    I'm willing to give them a break on this one. They have certainly proved their ability to deliver over the past few years. Beat and raise has almost become the standard, which is probably why the stock took such a beating after hours.

    As a lontime PETM sharehoder, I think they got a little too far ahead of themselves on valuation. Compared to their historical metrics, it was tough to justify the stock price without baking in a decent beat of the earnings. I guess that wasn't in the cards this quarter.

    Still my favorite company in a growing sector.
    Mar 7 07:17 AM | Likes Like |Link to Comment
  • 61% Downside Ahead For ARM Holdings As Lofty Expectations Meet Harsh Reality [View article]
    Is that 61% downside from when you started shorting in the mid 30s or starting now? Or maybe when others posted the same drivel in the mid 20s?

    Smart on technology, but clearly a novice when it comes to investing.
    Feb 15 12:39 PM | 2 Likes Like |Link to Comment
  • The Fish Rots From The Head Down, And Arm Holdings Is Starting To Smell [View article]
    Ashraf - READ the article. It is littered with inaccuracies and errors. Look at the comments above correcting a number of them, especially the atrocities related to royalty rates.

    Anyone can make a valuation argument on ARM. The funny thing is, investing isn't only about simple ratios that anyone can calculate. I love fundamentals, but you have to understand how they work in companies that have a significant amount of their current value tied in royalties that may not come to fruition for a few years. That's not easy to do, I'm not sure there's a right answer on how you value it. But how is that factored into your P/E? Is it even considered that you should take a simple calc and adjust it? Or is everything at one number overvalued, and everything at another undervalued. They don't sell widgets, so don't treat them like they do. You seem to have a graet understanding of the technology, but clearly when it comes to investing you're inexperienced and it shows.

    The point regarding the article is not the valuation thesis, it's everything else.
    Jan 19 01:21 PM | 2 Likes Like |Link to Comment
  • ARM Holdings: Future Growth Drivers Abound [View article]
    Silly comment Ashraf - you're better than that. Doesn't it all depend on when you bought both?

    I bought ARM just above 6 in 2009 and I see plenty of split and dividend adjusted prices in Intel's "growth phase" that are a lot higher than $3-4 per share.

    In the only categoy that counts - investment return - ARM has crushed Intel over the last 5 years. It's not even close.
    Dec 28 07:18 AM | Likes Like |Link to Comment
  • ARM Holdings: Future Growth Drivers Abound [View article]
    Ron is the best thing that happened to ARM since the smartphone. When he writes an article shorting ARM, there's usually a 10-20% move the other direction within three months. Still waiting for that next piece, Ron. Hopefully after reading this article you finally have an understanding that the Internet of Things is not just talking about Al Gore's internet.
    Dec 24 08:38 AM | Likes Like |Link to Comment
  • Eli Lilly's Brave Alzheimer's Talk [View article]
    Derek - what's your take on Baxter's Phase III, knowing that we're not exactly talking apples to apples? My understanding - and this is certainly a laymen's take - is that the Lilly drug is a synthetic while the Baxter solution is a "natural" plasma based treatment that can also be supplied by competitors (Octapharma, Grifolis). Any thoughts?

    I'd be interested in the opinion of someone with your background.
    Thanks
    Dec 12 12:37 PM | Likes Like |Link to Comment
  • ARM Holdings: Buyout Rumor Fuels Lucrative Short Opportunity [View article]
    Don't forget the long INTC part as well. That doesn't help either.
    Nov 29 07:30 AM | Likes Like |Link to Comment
  • ARM Holdings: Buyout Rumor Fuels Lucrative Short Opportunity [View article]
    When Ron is commenting on and agreeing with your article, you know you're in trouble.

    Problem is, he wrote this exact article at $25. Never short on valuation. It's a bad, bad idea.

    That said, I'd be shocked if ARM sold to Intel. That's a little too much for a technology purchase given that ARM's customers are generally direct competitors of Intel.
    Nov 29 07:28 AM | 2 Likes Like |Link to Comment
  • Intel's Dividend Safe, Even If It Seems Too Good To Be True [View article]
    "Now, something that many people miss when analyzing dividend stocks is that at capital-intensive companies, depreciation charges take a significant bite out of net income."

    So then don't you have to consider cap ex as well in this equation (by usuig free cash flow rather than OCF)? When you do that, the company has paid $3.2b of its $4.3b of FCF in dividends. Doesn't mean that they'll cut the divy (I doubt they will), just means that it's not nearly as much of a slam dunk as you make it sound.
    Nov 19 04:27 PM | 4 Likes Like |Link to Comment
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