The Capital Series Australia is deceitful. The cost is the yield which they don't even mention. Depending on the future yield that is a 17-31% cost! and that's just one of many bad points.
Read more here Analysis of Capital Series Australia from Commonwealth Bank | Fusion Investing Musings
Buy STW or another index instead, if you want to keep it simple.
Thursday, November 13, 2008
Sunday, November 02, 2008
Biota Pipeline - Part 4 BTA.AX Analysis
down at around cash is an even better price. BTA looks good to me as I continue to dig deeper. Biota's pipeline looks good.
Some questions about management over on hot copper and an issue at the AGM.
There are a lot of possible catalysts and risks, but risk/reward profile looks good.
A cash flow positive first half is among one of many possible catalysts which include a good quarter for Relenza, no reported problems on LANI, good LANI results, HRV and RSV results. The reverse are all risks. It's biotech some will fail.
Some questions about management over on hot copper and an issue at the AGM.
There are a lot of possible catalysts and risks, but risk/reward profile looks good.
A cash flow positive first half is among one of many possible catalysts which include a good quarter for Relenza, no reported problems on LANI, good LANI results, HRV and RSV results. The reverse are all risks. It's biotech some will fail.
Saturday, November 01, 2008
It's Never different this time
Cycles are a key to investing. Fusion Investing commentary on cycles that is worth reading.
Tuesday, October 28, 2008
Foreign Tax Credits
The Ruling on Foreign Tax Credits has changed and should be considered for the 2008-09 tax year.
Monday, October 13, 2008
CVTX and MMA Analysis
There is an excellent analysis and valuation of CVTX on the Fusion Investing site.
They have also posted a review of the MMC Contrarian (MMA) Share Buy Back.
They have also posted a review of the MMC Contrarian (MMA) Share Buy Back.
Saturday, May 24, 2008
Investing Wisdom from the Vault - 10 of the best investing ebooks and articles
Fusion Investing and Analysis has started a great ten day investment series. Going by the first days fascinating insights and shared wisdom this will be a great investing series. Day One features an eclectic compilation of investing wisdom, fusing fundamental analysis, Mark Sellers, Warren Buffett, Phantom of the Pits, Turtle Traders, Elliot Waves, Philosophy, Charlie Munger, options and economics. Fusion Investing tips
Tuesday, March 04, 2008
Motley Fool Posts of the Day
I reposted a couple recent Posts of the Day (PODs) from Motley Fool below, now I thought I'd simply provide links for other PODs and appearances on the Fool.
April 2007 Akamai Perspective
Portfolio Management and Kelly Formula
On SM&A WINS
DTS Sitting on a cliff
I post regularly on the Motley Fool on boards like the
BMW Method
Falling Knives
and I used to post extensively in the Fools subscriber only boards Hidden Gems, Stock Advisor and Rule Breakers.
Cheers
Dean
April 2007 Akamai Perspective
Portfolio Management and Kelly Formula
On SM&A WINS
DTS Sitting on a cliff
I post regularly on the Motley Fool on boards like the
BMW Method
Falling Knives
and I used to post extensively in the Fools subscriber only boards Hidden Gems, Stock Advisor and Rule Breakers.
Cheers
Dean
AKAM Post of the Day
The following was first posted on The Motley Fool Akamai board.
It was then selected as Post of the Day
http://www.fool.com/community/pod/2008/080220.htm
I like Akamai even more after their legal win against LLNW.
Akamai
http://au.finance.yahoo.com/q/ae?s=AKAM
Thoughts:
Analysts will be raising estimates .
When we spoke with you last fall, we guided to 25% to 30% growth for 2008. Given our strong fourth quarter, this implies a higher revenue number so we are raising our 2008 full year revenue guidance to between $800 million and $825 million, or 26% to 30% annual growth. We expect our normalized net income to grow in line with or slightly faster than our revenue growth, or 27% to 31% on a year-over-year basis. This implies normalized EPS in 2008 of $1.65 to $1.70, or 25% to 29% annual growth.
Previous earnings http://www.earnings.com/company.asp?client=cb&ticker=akam
No seasonality, good consistent growth. Occasional flat quarter
.41 .43 .47 .49 - 1.80 * p/e 30 =$54
Sell at 40 p/e - $72
Using cp's 20 p/e then $36 would be fair, so current price only offers small mos.
Here are some old thoughts I posted on the Akam Rule breaker board. They were part of a fun discussion.
Some quick bearish retorts.
There is lots of room for many players in the CDN space.
Yeah right, ‘cos technological companies all play so nicely in the same pit...not. They will throw sand in each others eyes, cry out to daddy and then get out and eat others lunch. Unfortunately due to all the sand throwing and competition for the best area of the sandpit their lunches will have a lot of sand on them and only half will be edible. All the excitement will attract other kids to the action. Result: Growth in content delivery will require continued high capital expenditures while revenues will not grow at the same pace. Margins will fall and thus net income will grow slower than hoped.
Akamai is the 800lb gorilla.
How many times has a technology innovator been overtaken by an imitator? As I don't have enough fingers or toes to count that high, maybe I should ask how many times as the innovator actually gone on to dominate long term? Thinking...thinking...ummm still thinking...you guys and gals will have to help me here as I can't think of one...hold that thought I've got one Dell.
To make this easier for myself I think I'll just use Karl's excellent post as a starting point.
1 - They're the one with the reputation.
Yeah the reputation for gouging a huge fees from their customers.
2 - They ARE the 800lb gorilla of CDN's
See above
3 - They've got that globally distributed network of servers that can't be beat. Talk about a barrier of entry for a business that wants to take on Akamai!
Yes they do have what Limelight's centralized network has shown to be an outdated model. Distributed simply means harder to maintain and more costly to update, which they'll need to continuously do. Companies like Google continuously demonstrate that the next best model is just around the corner.
4 - They've got an entrenched client base. (We need to explore how difficult it really is for those clients to switch though.)
There hasn't been a lot of competition up to now and their long term contracts have protected them from churn. Watch this space.
5 - They've got a big pile of banana's to let them get through a price war/margin crunch.
True, but how's that working out for Netflix? Being an owner of a company is a price war is not a good place to be. Tech CEO's and boards really need to read Sun Tzu's Art of War. They need to find ways to defeat their competition without the wars.
5a - That big pile of banana's lets them build out their capabilities as needed, whether by R&D, acquisitions (eating the minkeys that taste good!), or just building out the number of servers when/where needed.
Acquisitions are seldom accretive to owners. Yes they will continue to spend a fortune on both R&D and capital; however, ROI from these activities is far from assured.
6 - Patents to protect the tech that's the source of those bananas.
They really need to prove this by winning the Limelight lawsuit. Until then all bets are off.
6a - Remember that big pile of banana's? That means they can afford to protect the patents by tossing a lawsuit at any minkey that gets too annoying, and they're not afraid to do it!
I haven't seen any minkeys showing much fear yet. Venture capitalists have continued to give Limelight more capital despite the lawsuits.
Best
Dean
Long AKAM
It was then selected as Post of the Day
http://www.fool.com/community/pod/2008/080220.htm
I like Akamai even more after their legal win against LLNW.
Akamai
Past Margins
Transcript
In the fourth quarter, we earned $0.41 per diluted share on a normalized basis. That's a 52% increase year over year and a $0.07 increase over the prior quarter. Our normalized weighted average diluted share count for the fourth quarter was 186.7 million shares.
Big Charts with EPS and P/E: http://tinyurl.com/yqhk6l
| Earnings Est | Current | Qtr | ||
| 7-Dec | 8-Mar | 7-Dec | 8-Dec | |
| Avg. Estimate | 0.37 | 0.38 | 1.29 | 1.66 |
| Low Estimate | 0.36 | 0.37 | 1.26 | 1.57 |
| High Estimate | 0.38 | 0.39 | 1.3 | 1.76 |
| Year Ago EPS | 0.27 | 0.28 | 0.88 | 1.29 |
http://au.finance.yahoo.com/q/ae?s=AKAM
Thoughts:
Analysts will be raising estimates .
When we spoke with you last fall, we guided to 25% to 30% growth for 2008. Given our strong fourth quarter, this implies a higher revenue number so we are raising our 2008 full year revenue guidance to between $800 million and $825 million, or 26% to 30% annual growth. We expect our normalized net income to grow in line with or slightly faster than our revenue growth, or 27% to 31% on a year-over-year basis. This implies normalized EPS in 2008 of $1.65 to $1.70, or 25% to 29% annual growth.
Previous earnings http://www.earnings.com/company.asp?client=cb&ticker=akam
No seasonality, good consistent growth. Occasional flat quarter
.41 .43 .47 .49 - 1.80 * p/e 30 =$54
Sell at 40 p/e - $72
Using cp's 20 p/e then $36 would be fair, so current price only offers small mos.
Here are some old thoughts I posted on the Akam Rule breaker board. They were part of a fun discussion.
Some quick bearish retorts.
There is lots of room for many players in the CDN space.
Yeah right, ‘cos technological companies all play so nicely in the same pit...not. They will throw sand in each others eyes, cry out to daddy and then get out and eat others lunch. Unfortunately due to all the sand throwing and competition for the best area of the sandpit their lunches will have a lot of sand on them and only half will be edible. All the excitement will attract other kids to the action. Result: Growth in content delivery will require continued high capital expenditures while revenues will not grow at the same pace. Margins will fall and thus net income will grow slower than hoped.
Akamai is the 800lb gorilla.
How many times has a technology innovator been overtaken by an imitator? As I don't have enough fingers or toes to count that high, maybe I should ask how many times as the innovator actually gone on to dominate long term? Thinking...thinking...ummm still thinking...you guys and gals will have to help me here as I can't think of one...hold that thought I've got one Dell.
To make this easier for myself I think I'll just use Karl's excellent post as a starting point.
1 - They're the one with the reputation.
Yeah the reputation for gouging a huge fees from their customers.
2 - They ARE the 800lb gorilla of CDN's
See above
3 - They've got that globally distributed network of servers that can't be beat. Talk about a barrier of entry for a business that wants to take on Akamai!
Yes they do have what Limelight's centralized network has shown to be an outdated model. Distributed simply means harder to maintain and more costly to update, which they'll need to continuously do. Companies like Google continuously demonstrate that the next best model is just around the corner.
4 - They've got an entrenched client base. (We need to explore how difficult it really is for those clients to switch though.)
There hasn't been a lot of competition up to now and their long term contracts have protected them from churn. Watch this space.
5 - They've got a big pile of banana's to let them get through a price war/margin crunch.
True, but how's that working out for Netflix? Being an owner of a company is a price war is not a good place to be. Tech CEO's and boards really need to read Sun Tzu's Art of War. They need to find ways to defeat their competition without the wars.
5a - That big pile of banana's lets them build out their capabilities as needed, whether by R&D, acquisitions (eating the minkeys that taste good!), or just building out the number of servers when/where needed.
Acquisitions are seldom accretive to owners. Yes they will continue to spend a fortune on both R&D and capital; however, ROI from these activities is far from assured.
6 - Patents to protect the tech that's the source of those bananas.
They really need to prove this by winning the Limelight lawsuit. Until then all bets are off.
6a - Remember that big pile of banana's? That means they can afford to protect the patents by tossing a lawsuit at any minkey that gets too annoying, and they're not afraid to do it!
I haven't seen any minkeys showing much fear yet. Venture capitalists have continued to give Limelight more capital despite the lawsuits.
Best
Dean
Long AKAM
This first appeared as a post on Motley Fool board Falling Knives.
It was then selected as a Post of the Day
http://www.fool.com/community/pod/2008/080227.htm
I am still looking at Crocs.
Falling Knives
Dangers of Crocs
General Thoughts
I used to sit in the CROX is a fad and overpriced stock camp. Unless I turn up something rotten it now looks underpriced and about six months ago I stopped thinking they are a fad. Footwear is surprisingly important to a lot of people and not just women. CROX have carved out a great niche and appear to be expanding it nicely. Management seem to have made all the right moves in expanding their brand, so I am left wondering why it is now available at such a seemingly cheap price. Personally, after years of mocking Birkenstock wearers, I am slightly embarrassed to report that I am a convert to the German way, but please don't hold that against me. From talking to Croc wearers they feel the same about their Crocs.
Here in Australia the market has expanded very rapidly. First the groovers and practical people like nurses wore Crocs. Then the wanna-be trendsetters, then their kids, then the early majority and their kids and then they all went and bought a new colour.
That Kiwi guy on the Fab15 board has followed Crocs for a while, but he appears to be on holiday.
Valuation
There must be something seriously wrong with CROX or Mr. Market has forgotten to take his Cymbalta.
http://tinyurl.com/yt5b9x
It was then selected as a Post of the Day
http://www.fool.com/community/pod/2008/080227.htm
Falling Knives
Dangers of Crocs
General Thoughts
I used to sit in the CROX is a fad and overpriced stock camp. Unless I turn up something rotten it now looks underpriced and about six months ago I stopped thinking they are a fad. Footwear is surprisingly important to a lot of people and not just women. CROX have carved out a great niche and appear to be expanding it nicely. Management seem to have made all the right moves in expanding their brand, so I am left wondering why it is now available at such a seemingly cheap price. Personally, after years of mocking Birkenstock wearers, I am slightly embarrassed to report that I am a convert to the German way, but please don't hold that against me. From talking to Croc wearers they feel the same about their Crocs.
Here in Australia the market has expanded very rapidly. First the groovers and practical people like nurses wore Crocs. Then the wanna-be trendsetters, then their kids, then the early majority and their kids and then they all went and bought a new colour.
That Kiwi guy on the Fab15 board has followed Crocs for a while, but he appears to be on holiday.
Valuation
There must be something seriously wrong with CROX or Mr. Market has forgotten to take his Cymbalta.
My earnings based intrinsic value spreadsheet spits out a weighted IV of $70 pricing CROX at over a 60% discount. So if ttm eps of $2 and analysts growth of 24% can be believed CROX is a screaming buy. My spreadsheet is based on Hewitt Heiserman's and weights the growth rates from 12% (half estimates) to 24%.
Trailing P/E: 14.46
Forward P/E: 8.11
PEG Ratio: 0.43
Price/Sales: 3.08
Enterprise Value/Revenue: 2.98
Enterprise Value/EBITDA: 9.503
So where is the hidden danger? Where is the risk at buying at this level?
Cash flows have been decimated by twin perils of rising inventory and rising A/R. Inventory has been blamed on distribution problems, which is totally plausible considering the growth. Rising A/R is not surprising considering the international growth; however, within the current retail environment this deserves a closer look.
Recent Recap
CROX peaked at $75 in October 2007. The sell-off began when they reported Q3 earnings http://www.crocs.com/company/press/2007/4/ I was not following CROX at the time so am not sure why it was punished so much for meeting/just beating estimates and issuing good forward guidance. My guess is that it could simply be the old high priced normally over delivering company getting slaughtered for not hitting the ball out of the park. CROX did have an incredibly high short level prior to earnings. They were also an overpriced momentum stock at that point so had to stumble at some point to let earnings catch up with expectations.
Q4 release appears similar, they failed to crush estimates and have been further sold off by now what is surely worried owners and people who have been trying to catch this falling knife.
Great post on CROX board with some history and addressing the whole fad question http://boards.fool.com/Message.asp?mid=26243849
A good take on rising inventory levels http://boards.fool.com/Message.asp?mid=26263464
Issues
Rising A/R
Fad
Rising Inventories
Looking Forward
I have not seen any academic or other studies on fallen growth stocks, but it would have to be very strong evidence to shake me from my anecdotal position. My experience leads me to believe once a high flying growth stock has been tossed aside it is unlikely to explode higher again in the near term. There is too much resistance from owners looking to get out at break even, too much supply around at higher prices. This is reinforced as once fallen, everyone starts believing the bears whose arguments are lent the credibility of recent price action. The crowing of I told you so is very disconcerting.
However, looking forward 1and 3 years out I see the following:
- Growth continues. Even if Crocs are a fad they still have a few more years left in them.
- The inventory issues are resolved, but expensive enterprise software solution impacts on net margins (total WAG)
- A/R continues to be a problem as growth continues.
- company continues to expand range, reducing likelihood of fad.
- Earnings increase and the market pays a fair price for those earnings.
2008 earnings of $2.70, still growing over 20%, target $50
2010 earnings of $3.50, still growing 20%, target $70
Conclusion
I have not seen anything yet to make this a less compelling investment; however, I have only looked for an hour or so. The greatest long term danger is the durability of the brand, but I have seen no real signs of slowing growth so that is fancy rather than fact. With such a compelling opportunity now I would be surprised if more people here are not looking closely at CROX and I look forward to hearing their views.
Resources
Q4 Transcript http://seekingalpha.com/article/65233-crocs-inc-q4-2007-earnings-call-transcript
Q4 Release http://www.crocs.com/company/press/2007/4/
Q3 10Q http://tinyurl.com/3bcvw2
12 month short interest http://tinyurl.com/327834 still peaking
Big Charts 2 year P/E and eps http://tinyurl.com/3ccq6w
Reuters ratios http://stocks.us.reuters.com/stocks/ratios.asp?rpc=66&symbol=CROX
http://tinyurl.com/yt5b9x
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