- Sometimes whole sectors are sold off without much discrimination between the different names. This opens up opportunities for the rational investor.
- For instance, the optical networking sector has sold off, multiple times on news of a slowdown in Chinese demand.
- However, by no means all of these networking stocks have comparable exposure to China; some don’t even have any.
- There are also valuation anomalies at work which are tradable, in our view.
May 8th, 2017 · Comments Off on Optical Networking Stocks: Death By A Thousand Cuts
May 8th, 2017 · Comments Off on PayPal – Mind The Gap
- PayPal came out with good Q1 figures and very good news about its P2P service Venmo.
- It looks increasingly likely they have one of the major payments platforms for the digital age and worries about the fintech revolution might be overblown.
- While we have little doubt the future contains significant leverage in the business model, this is less apparent at present than management wants you to believe.
- We would buy the shares if the gap fills in the graph.
Comments Off on PayPal – Mind The GapTags: PYPL
May 6th, 2017 · Comments Off on Wall Street Vs. Main Street
- The uproar of financial analysts over a wage hike at American Airlines is really illustrative of what has gone wrong with the economy.
- The details of this case are particularly stunning.
- But it’s only the logical outcome of how companies have been hardwired the last 4-5 decades, and the negative consequences for the economy are clear.
Comments Off on Wall Street Vs. Main StreetTags: Economy
May 3rd, 2017 · Comments Off on Western Digital: What’s Not To Like?
- Western Digital caught analysts by surprise with a very bullish guidance for the coming quarters.
- The near future is good with substantial amounts of synergies from recent acquisitions, and a strong NAND market will produce substantial free cash flow.
- With the help of that cash flow, the company can deleverage.
- Longer-term worries about the secular decline in hard disks and a possible turn in flash memory are not gone though.
Comments Off on Western Digital: What’s Not To Like?Tags: WDC
May 3rd, 2017 · Comments Off on What To Look For In Shopify’s Earnings
- The shares of Shopify, already tremendously valued, rallied another 50% in the past three months.
- We fear this sets us up for an earnings disappointment.
- We provide some pointers in what to look for.
Comments Off on What To Look For In Shopify’s EarningsTags: SHOP
May 1st, 2017 · Comments Off on Ellie Mae Is Too Expensive
- Ellie Mae has one of the best business models we have come across.
- But the law of big numbers and some headwinds in the mortgage market is slowing growth and exposing a valuation that is too rich.
- This could change if they land a big bank as a customer, which would be a breakthrough.
Comments Off on Ellie Mae Is Too ExpensiveTags: ELLI
May 1st, 2017 · Comments Off on Texas Instruments Is Highly Profitable
- The beauty of Texas instrument is that even with moderate growth it produces a considerable amount of leverage.
- This is a company that is really impressive on numerous financial metrics, like free cash flow, margins, dividend, buybacks.
- There is a good deal of leverage left in the model.
Comments Off on Texas Instruments Is Highly ProfitableTags: TXN
April 29th, 2017 · Comments Off on Will Trump Be The Next Ronald Reagan?
- Can Trump do a Reagan? We have to wait for further details of his tax plan and see what survives Congress.
- However, we have to point out that there are some important historical differences which makes a repeat of the Reagan years much less likely.
- And this is even if you believe that tax cuts have a strong effect on business investment, for which there isn’t much support.
April 29th, 2017 · Comments Off on The Limits Of Free Money
- Investors have been much more savvy about how economies behave under excess savings than many policy makers and observers.
- While investors piled on and made a killing, many policy makers have overly worried about the risks of accelerating inflation and the state of public finances.
- That doesn’t mean the near free money that a savings glut brings is without risk though.
April 29th, 2017 · Comments Off on Boom Time For Liberals
- The existence of excess savings over investment produces an economy that works differently.
- It basically enables the public sector to increase spending for free.
- This is most visible in the deleveraging stage after the burst of an asset bubble, where policy vice becomes virtue and public releveraging needs to compensate private deleveraging.
- But some of the same mechanisms are operative even in the absence of bursting bubbles, caused by a global savings glut.