Positive NPV

I Just Don't Get These New Claymore ETFs

I haven't read the Claymore material, so I don't claim to understand their intention. However I can see the point of an ETF that tries to capture the totality of the capital markets.

If one believes in some form of the efficient market hypothesis, then one rational approach would be to construct a portfolio with exposure to all asset classes that exist in the world. And, depending on how strong one believes in the EMH, one might desire a capitalization-weighte... exposure to the asset classes.

The Claymore product, if constructed appropriately, could be the proxy for the capital markets assets. (I don't know if they've constructed it to represent the world, just the US, the US and EU, etc.) That could be the end of the job for some people.

However, if you want true exposure to all the assets in the world, then that would leave a portfolio builder the the job of filling in the holes with securities that provide exposure to all the remaining asset classes (commodities, RE, collectibles, currency, capital markets that may not be in the Claymore ETFs such as certain emerging markets, etc.).

Ben Stein, Global ETFs and The Dollar

Reynold's interpretation of Stein's meaning is the same one I made when reading the column. Stein would have been more clear had he said the ETF's aren't currency hedged.

Mispriced Securities: If Hedge Funds, Then Investment Banks

Disseminating ideas that that are not wholly original but nevertheless deserve wider dissemination is a worthwhile effort. This post qualifies.

Just a little positive to go along with the negative.

Communications Systems: One Cheap Stock

I suggest focusing most intently on the potential for growth, because if the future looks flat for them, then the price is currently priced about right. The FCF for the firm for the last three years has been flat yet steady. As a quick valuation, use $4.5mm as a FCF number. Assume that grows at 2% per year, which seems reasonable in a flat growth valuation scenario. Assume an equity cost of capital of 10%. Assume the stream lasts forever. Using a basic perpetuity valuation you get a NPV of the FCF streem of $56.25 mm. Add on the excess cash and you've got a firm that is probably fairly valued if the future for them is flat to mildly up.

For there to be upside on this one, growth in FCF will need to happen. If in your digging you see strong evidence of growth prospects, I'd like to hear about it. It could be a great play with lots of current safety.

A Paradigm Shift for Hedge Funds?

What a hoot! Please write more.

The Sky's the Limit For Allegiant Travel

This is nothing more than an advertisement. No substantive information from which to judge the financial prospects of this firm.

Jones Soda: The Long Case, and a Threat to Coke and Pepsi

How do you determine that JSDA gets $0.50 in net earnings per case? What data do you use to substantiate that?

Disclosure: I hold the July 12.5 puts with a partial long stock hedge.