LawNYC88

Shorting AAPL and V seems like one of the worst ideas of heard in quite some time. It’d take awhile to explain why it’s silly to do so.

Gold doesn't produce any passive income. I can cherry pick time tables as well - if I had bought only gold when I began investing back in 2012, I would be sitting on negative overall returns; however, since I have focused on high quality equities my net worth has increased substantially and as you can see in the passive income chart provided in the article, the size of my passive income stream has grown by roughly 4x.

Exactly.

With a stock price so inflated, why not take advantage of it! The size of the offering is very modest.

Only car company that can raise money at 10x fair value (instead of 1/10), another competitive advantage;)

You should read some articles from Electric Phred and William Tidwell. This article is like me playing basketball with LeBron James and Steph Curry.

beats on all metric!! 60s here we come

LawNYC, thanks!! Glad you agree. Excellent move re the AGN/PFE arb - wish I had thought of that.

Amazing. This article only repeats some of the points made by DrRx just yesterday. It could have been better served as a long comment to DrRx's string.

Rohit,
I appreciate your article but I always have to look for supporting evidence when an analyst makes statements that are contrary to the investor guidance that a company provides.

DAL just hosted an investor day one week ago and a number of your statements are either not supported by what DAL said at that conference or contain only one side of an issue:

https://tinyurl.com/j9a...

1. DAL's margin is expected to be reduced in the CURRENT quarter because of a new contract with its pilots that involves retro pay but they specifically state that their long-term non-fuel unit cost growth is expected to be at or below 2%. DAL's margin is still expected to be considerably higher than AAL UAL and LUV for the 4th quarter.

2. DAL says it is will realize non-fuel cost savings of $1.5 billion that will mitigate increased labor costs.

3. DAL as well as AAL, UAL and LUV are all upgauging aircraft because newer aircraft are more cost efficient than the aircraft they are replacing and non-labor, non-fuel costs for those airlines are lower based on upgauging. DAL as well as AAL and UAL all operate multiple hubs as well use multiple aircraft types so increased size of some aircraft types does not necessarily mean more capacity because they can increase the gauge of one flight while reducing the number of flights or downgauge the size of a different flight even while all of the flights use more efficient aircraft than in the past. DAL's increased gauge is heavily being driven by the reduction of capacity being flown by regional jet carriers.

4. DAL has specifically said it is reducing capacity growth in 2017 specifically in the international market where yields have been the most difficult for all of the big 3.

5. Labor cost increases throughout the industry are being driven heavily by the growing pilot labor shortage which means that carriers such as ALK and JBLU which have not increased the pay of their pilots could very well face increasing staffing difficulties which could increase cancellations and reduce revenue. ALK also has to settle merger-related labor contracts which almost always result in labor cost increases that are above industry average. The regional jet carriers are increasing pilot pay which makes that capacity more and more expensive. DAL has the lowest percentage of its capacity flown by regional carriers among AAL DAL and UAL.

6. The US airline industry is largely unhedged regarding fuel which means that if DAL sees fuel cost increases, so will other carriers. Analysts generally see higher fuel costs as helping to push up fares because it makes low yield capacity less sustainable. DAL also specifically states that it has a fuel cost advantage to its peers in part due to its refinery and its supply chain initiatives and it expects that advantage to grow in 2017.

7. Deliveries of DAL’s new Airbus A330-900s don’t begin for two years and they have provided no guidance on international 767ER retirements; their 2017 deliveries include the A350 which will replace larger, more costly 747s.

8. Your comparison to ALK is based on them as a standalone airline; they are in the process of digesting Virgin America which will increase their costs. DAL and other carriers have already announced increased capacity in Boston, a major JBLU market and is likely to add significant amounts of capacity at both Seattle and Los Angeles as a result of the termination of the ALK-DAL codesharing agreement and DAL's terminal expansions at its two west coast hubs.

9. DAL has several new revenue initiatives that should positively impact 2017 revenue including its just-approved joint venture of AeroMexico.

While your analysis is interesting, it seems speculative and not based on company-provided data as well as current, known events in the industry and at DAL.

OMG. Michael Blair positive on Apple. Next thing you know Cubs win WS & Trump wins presidency.

Totally expected. An irrelevancy to the stock. Good news, of course. Let's see how Rx'es go for this vs Viread.

Excellent. I've been waiting for this. Am buying CELG (again). Patience on the buy price rewarded.

Guidance and outlook will be the primary catalyst. Wait for the conference call.

Jeremy

Law, you're welcome!

No comment today from me on BMY, didn't comment on CELG or REGN either. No special reason for it - I just didn't turn the article into one over-focused on biotech yet again.

Don't feed the troll

The simple answer to the title of your article is "no"

For details
- The airline industry as a whole has seen its valuation cut since the beginning of the year because of overcapacity and decreased unit revenue (RASM) performance even though some airlines including DAL have reported stronger bottom line results. DAL has the highest market cap among all US airlines but is still subject to the same valuation concerns from analysts and investors that affect the entire industry.

- DAL has transformed itself from being a trading stock to being a long-term investment which is rare among airlines; LUV is one of the best examples. Trading stocks always are subject to ups and downs in the market. DAL's market cap and stock price has grown steadily and significantly in the 9 years since it emerged from bankruptcy and the 8 years since it merged with Northwest Airlines to create the first of the US global megacarriers.

- The IT failure is not going to significantly hurt DAL's brand any more than LUV's IT failure will affect its brand. Other carriers regularly cancel more flights over the course of a month than DAL did during the course of the IT failure and recovery. DAL's operational reliability was clearly challenged but strong brands can and often do sustain one-time shocks. If this was a repeated occurrence, then there would be concern among investors and customers. Weather, air traffic control and maintenance delays are daily occurrences that US airlines face and Delta manages them far better than most carriers.

- DAL didn't adjust its Tokyo network because of weakness but because the Japanese government is in the process of moving all international longhaul flights from Narita to Haneda airport. Delta acquired from NW, a hub at Narita airport which DAL cannot move to Haneda because of slot restrictions. The Japanese government has so far opened up just 6 daily flights for US carriers at Haneda compared to more than 2 dozen to the US mainland alone at Narita. Delta and HA were awarded 2 of those 6 flights by the US DOT because they don't have a Japanese partner. AAL and UAL each got one flight each using the same policy that the DOT used when Haneda was first reopened to US carrier flights. The irony is that AAL and UAL supported the Japanese government's move to slowly open up flights at Haneda but DAL has been awarded and will continue to be awarded a disproportionate number of flights than AAL and UAL because they have Japanese partners under joint venture agreements so the DOT considers the total capacity by US carriers and their JV partners. The Japanese government will either have to fully open up Haneda airport for any US carrier to add as many flights as it wants in order for AAL and UAL to regain parity in the US-Tokyo market with DAL or Delta will continue to be awarded more flights to close-in Haneda airport than AAL and UAL. DAL will continue to add flights to other destinations in Asia outside of Japan to replace its Narita hub just as it has been doing for 8 years and as AAL and UAL have done and will continue to do.
- Delta's growth at BOS is part of its larger strategy of growing into key business markets. Boston is a market that has been divided among multiple carriers with only a few points of share dividing the global carriers AAL DAL and UAL. DAL is focusing on growing BOS just as it is committed to growing Los Angeles, where it has entered into an agreement with the airport operator to move terminals and gain more space.
- Delta is engaged in outstanding litigation with LUV to remain at and gain access to Dallas Love Field where DAL wants to be the only global carrier operating at LUV's hometown airport just as DAL does at Chicago Midway airport which is LUV's largest hub or focus city.. Midway, Love Field, and Houston Hobby are all mid-continent airports in dual airport cities where DAL has a presence but AAL and UAL have largely chosen not to serve. Delta gets a revenue premium from those 3 metro areas on the routes it serves from those cities because it has a presence at both airports from the city.

- AAL has engaged in some of the largest stock buybacks in the US airline industry in order to bolster its stock price but has taken on debt to fund capex while nearly all other US airlines have used record amounts of cash flow to reduce debt levels. There are regular discussions on here about which strategy is best but it is hard to argue that DAL's strategy of fleet renewal with reducing debt and doing more moderated levels of stock buybacks is not in the better long-term interests of investors.
UAL still has the lowest market cap of the big 4 US airlines and is strengthening because of its previously depressed performance. China Eastern is partially owned by DAL and works in partnership with DAL in China.

The airline industry as a whole has taken a beating because of external shocks including terrorism, Brexit and exchange issues. The IT issue anymore than other single event issues are likely to depress airline industry performance while larger macro issues such as industry capacity and pricing have a larger effect - but the industry as a whole and DAL are addressing those concerns.

A number of analysts expect airline stocks to stabilize and regain altitude in the 2nd half of the year.

DAL is expected to report higher margins in the 3rd quarter than AAL or UAL just as it did in the 2nd quarter and DAL's margins will be more in line with what low cost carriers that have not faced the international pressures that have been a drag on the global carrier sector.

DAL looks fine for the medium and long-term and its valuations will continue to grow based on success at its long-term strategies which have fueled the company so far.
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Buy high, sell low?

The Q1 miss was largely the result of the Merck litigation that went against GILD ($200M) and was later over-turned. We should see the reversal with Q2, so add $200M to the net income line.

Must you resort to tabloid journalism? Those interested in GILD will read the article, without teasing them with possible bad news.

it's basically been in recession for years. who cares about that corpse

Blah, blah, nonsense. Nice downgrade at the low typical of analysts playing the rearview mirror.