Monday, February 20, 2012
Bullish on auto and energy industries
I am really bullish on auto and energy industries. Households in the US spend anywhere between 3000 - 4500 USD on gas per year per 2 cars. That is a lot!!! When I categorize my expenses for the year, it is our biggest expense. There has to be a way of reducing our dependence on expensive energy sources. Auto companies ought to be able to make the changes needed in their assembly lines to move in that direction. Prices are still very high but they will come down every year. TSLA might be a great buy.
So still bullish on solar and very bullish on auto industry as well.
So still bullish on solar and very bullish on auto industry as well.
Wednesday, September 28, 2011
Buy Solar stocks
Solar is incredibly pressured downwards right now so if you buy, know that all these companies are down big over the last 2 months. It's a combination of excess inventory, Europe backing off incentives due to the financial turmoil and what analysts see as forecasts that need to be brought down. Governments are very interested to support their companies when solar achieves grid parity and there is a huge ramp up in production. Solar will see a hockey stick effect at some point. You want to be into the solar play ONLY if you believe in this story.
Bought FSLR close to market lows in the low 60's. It is an excellent buy at these prices. These guys have the most predictable earnings due to the large utility projects and have some of the best margins.
TSL is the only other stocks I'd recommend from the China angle. China stocks count on Europe sales which are very low right now. Expect it to survive a harsh climate in the short term.
I expect to see a few more solar companies to go bankrupt. So buy low cost producers with enough money on their balance sheet to avoid this situation.
Labels: solar stocks FSLR TSL Bullish
Saturday, October 30, 2010
GRMN and MWW are fundamental shorts, NFLX is a valuation and market sizing short
Also, may I add that both GRMN and MWW are fundamental shorts. Means something is wrong or outdated in their business models.
NFLX on the other hand is a valuation and market sizing short.
NFLX on the other hand is a valuation and market sizing short.
Labels: fundamental short vs valuation short
Monster WorldWide stock (MWW) is overpriced
So Monster Worldwide, the company we all started posting our resumes to when we started our careers, is back with a bang or so it seems as per the last trading session. One look at their revenues and its a sad story. Stock peaked in 2007 and has been down ever since. Monster in it's best days made revenues of 1.35 Billion and profits of 146 million. They some how kept up the act in 2008 but made lesser profit and in 2009 they collapsed due to the poor job market and poor demand. Q3 has been good and Q4 has been another 25% growth yoy.
Recovery looks good but is expected. What I don't expect is for Monster to have the same growth rate as they once did after all their business recovers this year. Next year will continue to be challenging because of the tight competition that LinkedIn is offering. So while monster's stock collapsed, linked in more than doubled to 2.4 billion in the secondary pre-ipo markets because it is straight up a better product, a more web 2.0 experience and is a fantastic site to browse and navigate. While monster has tried to bring a web 2.0 look and feel, their website is still unfriendly to users, their products seem all over the place without any focus and they will continue to lose market share to companies such as LinkedIn. At a recent conference I went to for Payments companies, almost each recruiting head said Monster is passe and LinkedIn is the way to go.
Let's do some numbers. Say MWW recovers the business they lost in 2009, they will be at a 1.2 Billion run rate for next year given they aren't fully recovering and job market is still weak. Profitability is still off. There is no way to price the stock if you remove the 25% growth they got this year from next year's expectations. I don't understand why expenses have to be so high quite frankly so I guess that will need some more research. The short ratio is at 17% and so you can't really expect some great short covering rally.
My 2 cents is get in with a short or a put after waiting for three days. Why? Because I like to see big moves play out and you are always too early on a short after a big move where you were convinced this will head back down. If it goes below 17, wait for it to come back up. If it any time it goes back to mid 18's or 19, short it. The reward on this will be next year more so than this year. Also, MWW short can be a great part of your hedging strategy, so keep that angle in mind.
Recovery looks good but is expected. What I don't expect is for Monster to have the same growth rate as they once did after all their business recovers this year. Next year will continue to be challenging because of the tight competition that LinkedIn is offering. So while monster's stock collapsed, linked in more than doubled to 2.4 billion in the secondary pre-ipo markets because it is straight up a better product, a more web 2.0 experience and is a fantastic site to browse and navigate. While monster has tried to bring a web 2.0 look and feel, their website is still unfriendly to users, their products seem all over the place without any focus and they will continue to lose market share to companies such as LinkedIn. At a recent conference I went to for Payments companies, almost each recruiting head said Monster is passe and LinkedIn is the way to go.
Let's do some numbers. Say MWW recovers the business they lost in 2009, they will be at a 1.2 Billion run rate for next year given they aren't fully recovering and job market is still weak. Profitability is still off. There is no way to price the stock if you remove the 25% growth they got this year from next year's expectations. I don't understand why expenses have to be so high quite frankly so I guess that will need some more research. The short ratio is at 17% and so you can't really expect some great short covering rally.
My 2 cents is get in with a short or a put after waiting for three days. Why? Because I like to see big moves play out and you are always too early on a short after a big move where you were convinced this will head back down. If it goes below 17, wait for it to come back up. If it any time it goes back to mid 18's or 19, short it. The reward on this will be next year more so than this year. Also, MWW short can be a great part of your hedging strategy, so keep that angle in mind.
Labels: fundamental short, hedge, Monster, MWW, overpriced
Monday, October 25, 2010
GRMN is a short on fundamentals
Garmin has a fundamental flaw in it's business model. It has another company that offers a big part of it's service free of cost and is constantly working on innovating in the GPS area. It gets scarier when the company offers that service for free. Just go online and read about the services that Google is offering. There are several articles that tell you exactly how you can use this service.
As devices get more connected, everything from refrigerators to cars will be connected to the internet. Cars in the next year or two will be fully connected to the internet. Apps on these cars will be everything from navigation to gas station finders to making payments from your car for the pizza you are about to pick up. Marine and aviation can easily be covered as well but will be a little delayed. An "ipod runner" or something can easily come with a gps system to track your workout specifics. Garmin has everything to lose here.
GRMN will have a tough time to stay ahead of that curve. Short GRMN on any big pop. It's market cap is 6.25 billion that will someday go into everyone else's pocket.
As devices get more connected, everything from refrigerators to cars will be connected to the internet. Cars in the next year or two will be fully connected to the internet. Apps on these cars will be everything from navigation to gas station finders to making payments from your car for the pizza you are about to pick up. Marine and aviation can easily be covered as well but will be a little delayed. An "ipod runner" or something can easily come with a gps system to track your workout specifics. Garmin has everything to lose here.
GRMN will have a tough time to stay ahead of that curve. Short GRMN on any big pop. It's market cap is 6.25 billion that will someday go into everyone else's pocket.
Labels: fundamental short, garmin, gps maker, GRMN, short stock
Sunday, October 24, 2010
Short NFLX
I think Reed Hastings did a fabulous job building this company and I recommended this stock on this blog several years back when it was at 10.
A hedgie friend once said, never short a stock because of how expensive it is. Agreed and lesson learned :) That said, I do think that if you combine how pricey a stock is with market sizing you have a good short opportunity.
How many households in the US:115 Million
How many households in the US have televisions?112.8 million
Given Netflix's current price $172, what percentage of households should have Netflix to justify current price: 50 million: THIS IS CRAZY. This is where market sizing comes up. To think Netflix will be in every 2nd household is nuts in my opinion. Can they eventually improve margins by saving postage? Yes but content deals are expensive. They would be really underestimating their competition.
For streaming service NFLX can quickly rollout worldwide: Marketing efforts will need to expand. Plus there is initial resistance and numbers will be slow.
They are expected to strike great deals and win against content creators, Apple, Amazon and every cable service out there.
31.6% shares are short
A hedgie friend once said, never short a stock because of how expensive it is. Agreed and lesson learned :) That said, I do think that if you combine how pricey a stock is with market sizing you have a good short opportunity.
How many households in the US:115 Million
How many households in the US have televisions?112.8 million
Given Netflix's current price $172, what percentage of households should have Netflix to justify current price: 50 million: THIS IS CRAZY. This is where market sizing comes up. To think Netflix will be in every 2nd household is nuts in my opinion. Can they eventually improve margins by saving postage? Yes but content deals are expensive. They would be really underestimating their competition.
For streaming service NFLX can quickly rollout worldwide: Marketing efforts will need to expand. Plus there is initial resistance and numbers will be slow.
They are expected to strike great deals and win against content creators, Apple, Amazon and every cable service out there.
31.6% shares are short
Labels: netflix, NFLX, overpriced, short
Sunday, February 24, 2008
Quote by Alex Jacobsen
"Good traders think of ways not to lose money. Bad traders think of ways to make money."
Sunday, January 06, 2008
Conuntrywide (CFC) financials
It is an interesting time in the markets what with the major correction last week. Sectors that are clearly in trouble are financials and retailers. Oil and technology have done quite well again in 2007. At this point we start wondering what sectors would do well for 2008. Hell you wonder if you had only invested in emerging markets you wouldn't have to rack your brains for 2008. I haven't given a lot of thought to what sectors would do well but I have been thinking about individual companies.
Countrywide (CFC) comes to mind. The stock is trading at 8.42 down from around 40 it was trading at last year. This company is trading at a third of it's book value. They claim they will be profitable in their fourth quarter and for the year 2008. If the market only believed this, these guys would be at 3 times their current stock price. The mortgage mess hasn't cleared but if people think that there is hope it will clear in the next 6 months to a year, then this stock is an excellent buy. An argument put forth is "there is no reason to catch a falling knife". Just get the stock on it's way up. True - You will limit your gains but it feels more sure. Besides who is to say it won't dip further. This is where your analysis of the company's financials will come into play. The stock is hit such a low that the financials are creaming buy. Just go to Yahoo Finance and look at their revenues and profits for the past few years. Revenues for 05 - 15.6 Bil (profit 2.5 Bil), 06 - 24.9 Bil (profit 2.6 Bil) and 07 (first 3 quarters) - 18 Bil.
Company's market cap - 4.87 Bil.
Fed is making an increasing amount of money available to being auctioned off. Stock feels like a buy.
Countrywide (CFC) comes to mind. The stock is trading at 8.42 down from around 40 it was trading at last year. This company is trading at a third of it's book value. They claim they will be profitable in their fourth quarter and for the year 2008. If the market only believed this, these guys would be at 3 times their current stock price. The mortgage mess hasn't cleared but if people think that there is hope it will clear in the next 6 months to a year, then this stock is an excellent buy. An argument put forth is "there is no reason to catch a falling knife". Just get the stock on it's way up. True - You will limit your gains but it feels more sure. Besides who is to say it won't dip further. This is where your analysis of the company's financials will come into play. The stock is hit such a low that the financials are creaming buy. Just go to Yahoo Finance and look at their revenues and profits for the past few years. Revenues for 05 - 15.6 Bil (profit 2.5 Bil), 06 - 24.9 Bil (profit 2.6 Bil) and 07 (first 3 quarters) - 18 Bil.
Company's market cap - 4.87 Bil.
Fed is making an increasing amount of money available to being auctioned off. Stock feels like a buy.
