Month: February 2014

http://www.businessinsider.com/most-intense-ski-slopes-2013-11

Value investors like to buy at a discount.  They want to buy a stock for less than they perceive it to be worth.  Value investors buy more when the stock goes down. It’s a better deal.  The value trap is an investment in a company that gets cheaper not because of irrational behavior of the investing public but because the business fundamentals are deteriorating.   Or worse yet the investor is being duped by a financial fraud.  That’s tantamount to what Barron’s accused Kinder Morgan of over the weekend.  They accused them of aggressive accounting designed to boost distributable cash … Read more

This is interesting as the bullish cheerleaders for FaceBook have been touting how WhatsApp  has 99.9% uptime and handles more messages than the entire global telecom community combined.    Somehow that justifies the insane price ($19 billion) paid for a company with $20 million in revenues . It seems according to this article, blackouts at WhatsApp are not uncommon.  Then there is the excuse it could  have been overwhelmed by the Facebook acquisition  That’s odd too,one of the main reasons FaceBook gave to investors that this company was adding 1 million accounts per day.  Why then would they be overwhelmed by … Read more

I think Barron’s brings ups an interesting arcane accounting point. There seems to be a lot of flexibility in the way these MLPs classify expenses between operating, maintaining, and future expansion buckets. If KMI is robbing Peter to pay Paul, it makes no sense as the value of their goose that lays the golden egg is in KMP not KMI. Sure KMI on the surface looks like a better deal. KInder gives you different ways to invest. You can invest in the limited partner, ex. a hedge fund or KMP itself or the general partner, the management group which is … Read more

The Barron’s piece has a clever title but that is the last bit that is. The lack of journalism integrity is stunning. While I always want to hear the bear opinion on any investment idea, especially one that I am long in, the bull and bear sides both demand coverage. That’s just good manners for a writer and for an investor it should be required reading. Barron’s cites in their “research” as one of the negatives of Kinder Morgan that less than half of the 19 analysts covering it have a buy on the name. Thompson First call’s service polled … Read more

It’s very frustrating for value investors such as ourselves to watch our largest holding, Apple decline,  almost precisely the absurd amount of money that FaceBook paid for messaging app, Whatsapp.  Whatsapp reportedly had $20 million in revenue and Facebook has paid $16-19 billion depending on how you count it.  I’ve heard all the silly valuation analysis of how Facebook got a good deal at $40 per user, etc when their stock is worth and other social media stocks are trading for much higher valuations per user.  You can’t use one ridiculous valuation to justify another unless you are in a bubble … Read more

Yes, it’s a bold statement but Apple stock is already worth far more than its trading it based on discounted cash flow analysis with very modest projections of near zero revenue growth.  Any product category that Apple pursues that generates new scale and vigor will likely push the stock much higher.  On that note, it’s almost a certainity that Apple is readying the relase of iWatch or some wearbable device on your wrist that will do far more than anything people are expecting. According to this following article from Business Insider, Apple is pioneering a product in the health/fitness category … Read more

Almost all investment ideas related to the growing legalization of marijuana are making money for their investors. I expect this one to do so as well. http://www.businessinsider.com/silicon-valley-vape-marijuana-tobacco-tesla-firefly-2014-2

Interesting chart but Business Insider’s comments show their lack any understanding of Apple’s customer base or the company’s busines strategy. Churn is actually upgrade and there is a wide swath of people that are willing to pay for a product that is well tested and designed, done right from the start out of the gate. As a long time customer of Microsoft, I became frustrated over the years by poor quality of hardware vendors, bugs and software that wasn’t right until the first major upgrade pack and needless GUI changes for the sake of change alone. There must be a … Read more

Small positive – the Fund is now positive for the year. Enjoy your long weekend. Harvey Sax harvey@saxangle.com www.saxangle.com “the insider’s fund”

http://www.cnbc.com/id/101405322 The FXI was up over 3.5% Tuesday. That’s a big move for the equivalent of China’s Dow Jones Industrial Average.

An interesting investment idea but one that has yet to be profitable for us is long dated in the money call option on the FXI.  The large cap China ETF is where it was in 2007 while US markets have nearly doubled.  “The China growth story is going to be the story of the next 30-40 years,” Blankfein said in an interview with Bloomberg Television’s John Dawson from Hong Kong while attending the Goldman Sachs Global Macro conference. “We really need that growth in China to occur.” via Blankfein Says China’s Expansion to Have ‘Huge Consequences’ – Bloomberg.

How much do you pay for liquidity?  This is a question I’ve often asked myself.  I know at our Fund, Sax Angle Partners, we like to tell ourselves and our investors, that our exceptional liquidity (we have no lock-ups just 30 day notice) is worth something.  Now we know what the world’s largest endowment thinks liquidity is worth. How much added return do you need in private equity, in return for tying up your money for five or 10 years?We should be getting an incremental return for that illiquidity—and we call that our illiquidity premium—of at least 300 basis points … Read more