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CCM Blog For The Week Ended February 2, 2018


Tesla Short Interest.

Seagate Earnings.

Amazon, JPM, and BRK healthcare announcement.

Raising Prices Strategy.

  • Tesla (TSLA) Short Interest and Asset Raise. As of January 12, the NASDAQ reported short interest in Tesla was 30.7 million shares. With 168.9 million shares outstanding, or about 18% of the company. However, as a percentage of free float, Tesla’s short interest is 28.7%. This week Tesla raised an ABS facility to inject cash into the company for $500 million. This ABS facility is not a traditional borrowing facility, but instead, Tesla sold the auto loans from cars sold in exchange for the $500 million today.
  • Seagate (STX) Earnings. $850 million in quarterly CFO. $1.48 Adj EPS. Seagate’s trailing PE is about 12x with a dividend yield is nearly 5%. On a P/FCF multiple, STX is 11.1x. It is managing margins well, reducing operating expenses, slowly repurchasing shares, and reducing debt. No additional information was disclosed by STX on the size or value of its investment In Ripple XRP.
  • “Amazon, Berkshire Hathaway and JP Morgan Chase join forces to tackle employees' health-care costs” Amazon, Berkshire Hathaway and JP Morgan Chase join forces to tackle employees' health-care costs This announcement comes as a surprise to some, but given 1) Buffett’s vocal opinion that US healthcare spending is significantly higher than other countries, with healthcare reaching 17% of US GDP and 2) healthcare is often the third biggest expense for businesses after the cost of goods/inputs and salaries.
  • Raising Prices: A Powerful Indicator and Strategy I shared a blog on businesses raising prices. It is an indicator of valuable products, an easy way to improve financials, and is moving up my investment checklist. Apple's (AAPL) iPhone ASP reached $796 in the most recent quarter, its the highest ever. The iPhone X is part of this of course, but by raising the price on this model, it also lifted the price for the iPhone 8 model. Apple’s additional gross profit from selling the plus models (larger screen) and extra GB storage capacity is essential to its strong margins.
  • Super Bowl Sunday is one of my favorite holidays of the year. Family, football, sports betting, and the commercials make for a fun evening. The Patriots are 4.5 pt favorites. They have started out slow without scoring in the first quarter in the Brady/Belichick era. Multiple million dollar bets on the Eagles have been reported from Vegas casinos. I expect a stingy game favoring low scoring and a narrow Patriots victory.

Thanks for reading. Carlos Sava, CFA, CPA