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scchan.2009

scchan.2009
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  • AutoZone's Stealth Dividend Is Great For Taxable Investing [View article]
    Depends how you see "expensive": the free cash flow yield of Autozone is actually quite reasonable (about 4.5% right now). There are things P/E ratios cannot tell you. And there goes the saying that "Cash is king". (I love companies that can produce great cash flows without too much cap ex).

    I do think one should be more careful about the leverage. Generally retail companies real leverage is much higher than what the quick and debt-to-equity ratio indicates due to way to operating leases work.

    Anyway, I am not trying to recommend or criticise Tim's opinion on Autozone as Autozone is not a company that I am familiar with. I am sure there are plenty of good companies out there to own shares for, and Autozone, on a quick look, looks like a reasonable pick (there are far far worse picks out there, yet they are highly popular for reasons that I don't understand).
    Mar 17, 2015. 08:21 PM | 1 Like Like |Link to Comment
  • IBM: Buffett Inexplicably Doubles Down [View article]
    And Buffett and Munger have also the number one confident on the issue - Bill Gates - on their side. To get Bill Gates nod despite his relationship with Microsoft is huge endorsement - it can't get better than "I like what my competitor is doing".

    Secondly, Buffett likes IBM for their ability to manage themselves financially. While a lot of big names (Stanley Druckenmiller and Terry Smith) are highly critical IBM's buybacks, but sometimes when you really are generating excess cash that you have no new ideas in how to spend it (one is already maximizing R&D efficiency with strong pipe line in what is coming out), it makes sense to return them to shareholders in the form of buybacks and dividends. IBM's cashflow despite what the critics say, can fully support their dividend and buyback policy. There are many companies around tech and other sectors that are notorious in keeping money in (off-shore) bank accounts, which lead to short-term-thinking activists attacks (like Apple and Keyence). If the critics have an idea in how to spend their excessive free cash flow and bank account figures, they should make a suggestion instead of just throwing criticisms.

    That said, I do personally think that $20 EPS target was stupid, and I am glad that it is gone now. I am pleased in how IBM team manage themselves in how they see the future. I will be EVEN happier that they are willing to take the step that Coke and Unilever by stop issuing EPS or other earning guidance - they are rubbish anyway, why bother to do it?
    Feb 22, 2015. 09:10 AM | 2 Likes Like |Link to Comment
  • The Relevance Of Gilead's Dividend [View article]
    Looking at GILD recent free cash flow (and how much that is over recent capex), it should not be too surprising that there will be dividends and buybacks. If a company cannot find good reason to increase capex or to make acquisitions, then excess cash should be returned to investors. Last thing you want is the company to hold on too much cash in a bank account, use those cash to buy treasuries, or making reckless acquisitions just for the sake of spending the money...
    Feb 9, 2015. 11:53 AM | 3 Likes Like |Link to Comment
  • Bill Gross: Games People Play [View article]
    I think it is a combination of poor bad monetary and fiscal policies that put us in the hole - the politics of spend/tax-on-votes-won and the religion of monetarism as according our "great prophet" Milton Friedman. However, I do think the Feds has a somewhat better job in recognising mistakes than the folks in Washington. In the end, Feds doesn't need to worry about the election.

    Even if interest rate to go back up slowly, it is still much better than never going up. In fact, it has go back up slowly because politics is still ugly - not just in US but also across Europe as well.
    Jan 29, 2015. 01:14 PM | 2 Likes Like |Link to Comment
  • Cigars part of U.S./Cuba deal [View news story]
    I think this is a victory for both sides - really what keeps us so long from a win-win outcome is just silly southern Florida local politics. This is perfect timing too as Cuba is witnessing how vulnerable Russia - their long time ally - is; it just takes some US-Saudi engineering the oil price, and there is a financial crisis in Russia.
    Dec 17, 2014. 02:01 PM | 3 Likes Like |Link to Comment
  • PetSmart to be acquired by BC Partners-led group for $8.7B [View news story]
    Remember this also kind of depends when the deal will complete as I think this still needs to get voted by shareholders. This will drag on at least a couple of weeks if not months. Just because it is announced now, does not mean you will get taxed short-term capital gain; chances are... you wont even need to worry about this for 1040 for 2014.

    PS: On the quoted news release, it states:
    "The transaction is expected to close in the first half of 2015". If you buy Petsmart shares on Q1 in 2014, I don't think you will get taxed for short term capital gains.
    Dec 14, 2014. 07:29 PM | 1 Like Like |Link to Comment
  • Report: Sony Pictures suspends film shoots [View news story]
    It would be 10 times worse if the breach is on IBM, Goldman or ADP. Don't laugh as that has probably been tried, and just IBM, Goldman or ADP are still a step ahead.
    Dec 14, 2014. 11:34 AM | Likes Like |Link to Comment
  • Report: Sony Pictures suspends film shoots [View news story]
    I fear this may just be the beginning, and there will be worse incidents in the future. No matter how secure you are, you are always vulnerable to who will try all effort to breach. All IT networks are, in principle, hackable unless you pull all the jacks and cables (laugh). So best you can do is to your best to hope convince those jerks that breaching won't worth their effort and time.
    It is sad that Sony got picked on over this consider Sony is already in a tough financial situation. It may be possible Sony got picked on because of its "high" profile among younger folks (i.e. the films and Playstations etc).
    That said, the computer security industry is fragmented and competitive. I don't think that sector will make easy investment.
    Dec 14, 2014. 11:32 AM | 1 Like Like |Link to Comment
  • Why Investors Should Worry About Titan's Cancellation [View article]
    From a business point of view, the MMO market has gotten highly competitive and hard to innovate. It is hard to make a MMO that can stand out, and then to get and retain new customers. MMO has high up-front cost due to need of initial infrastructure (game servers) to support the game. It is probably a better idea just to cut the project if there is no reason to think the game would do well; it is just cheaper that way. It is better to spend money on projects that sell reasonably well with lower upfront and maintenance cost.
    That said, I am not so sure what is the future of video game industry will be. ATVI does not enjoy the branding to monetise its product pipelines outside of selling games or collecting subscription. Look at how Lego transforms itself from a toy company to something a lot larger and grand.
    Oct 4, 2014. 03:01 PM | Likes Like |Link to Comment
  • Warren Buffett Is Missing Red Flags At IBM [View article]
    With Amazon share price trading extremely large multiples, the share price becomes arbitrary to the extent that is meaningless. One may not like IBM as a company, but at least I think I can understand why IBM shares are priced the way they are - at least IBM shares are within reasonable ballpark range. 10 to may be even up to 50 PE I can understand, a company that has never made money or with 100s of PEs all the time... I am not sure I understand that.

    I also want to concur what 3wallpaul said: Rommety had given an interview with to the UK Financial Times last month - she said specifically that IBM clients will not be satisfied by normal regular service. People come to IBM because they are expecting premium service, hence IBM should focus on that premium added value service.
    Jun 12, 2014. 05:26 AM | 1 Like Like |Link to Comment
  • The Wal-Mart Economy [View article]
    I do think US does need some infrastructural investment, but yes it ain't happening because of politics. I used to live in DC, Anatcostia Expressway made me feel depressed (and that is only a few miles from the Capitol Hill!?!?).

    In the longer term, we need education and career training investment. You know what, one day Walmart will be doing the registers and shelving with machines. Those Walmart low pay jobs will be lost. People better have their physics, biology, engineering training, so they will be designing the future iPads, insulin, Boeing 787 instead of hoping Walmart still hiring staff for checking out customers groceries.
    Mar 6, 2014. 02:30 PM | 2 Likes Like |Link to Comment
  • The Wal-Mart Economy [View article]
    Bertrand Russell and JM Keynes had argued the future technology and science are more advanced that we enjoy higher wages and shorter work times as individual time needed for silly ('Walmart-like") work are reduced. Ford did something similar by raising wages to keep his better skilled staff with cutting edge efficient manufacturing, and proclaimed his staff had the right enjoy the higher pay they earned.

    The victory of the Ford model over the past took a long time. The Industrial Revolution was an event took a full century to complete. Like the Industrial Revolution, we had too much people around in the developed world don't have the right skill to become the modern equliavent of Ford assembly line staff (like skill in computers and sciences) and we have a large fraction of the world still quite poor yet they are capable in producing these new generation of skilled worker.

    I am at my late 30s. I wonder will the modern tech revolution will even be complete when I retire in 30 years.
    Mar 6, 2014. 01:51 PM | Likes Like |Link to Comment
  • Our Thoughts On Warren Buffett's Thoughts [View article]
    It is Warren and Charlie's goal to make Berkshire to live forever. Even the death of both are inevitable, their legacies are eternal.
    Mar 4, 2014. 12:11 PM | Likes Like |Link to Comment
  • Intel's Compensation: A Wake-Up Call For Corporate America [View article]
    Thank you for this article. Now I am on a rush to check the outstanding stock options outstanding of the investments that I have (laugh).
    Feb 15, 2014. 05:41 PM | Likes Like |Link to Comment
  • Activision: Sell-Through Vs. Sell-In [View article]
    Indeed this is a nice catch, and similar warning can apply to other consumer good makers as well against accountancy tricks and word plays.
    Historically when ATVI still owned mostly by the French, it is very conservative in its profit and sales figures. The big story in 2012 is the leveraged buyout from the French, and I wonder how much that will effect the management culture and ethics (negatively). There is clearly incentive to inflate figures in short/medium term during a leverage buyout (especially if the buyout occur at a lower price).
    Now what is the inventory conditions in the downstream businesses. Generally, most retailers (on a broad sense) don't do too well this last Christmas (you can look at Walmart figures).
    Jan 29, 2014. 01:35 PM | Likes Like |Link to Comment
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