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Friday, November 29, 2013

$yhoo - near 10yr high

At some point, a push back will be seen. The above chart can give a reasonable excuse berween 40-mid 42.

Regardless of the technicals, if Yahoo's new lay-out and interest-graph produces better quality ads, higher ad rates and higher revenue, even around 40, the US property is grossly undervalued.

Tuesday, November 26, 2013

$goog trailing multiple north of 30

It's trailing multiple is well north of 30 from a GAAP and non-GAAP perspective. 

At what point does the market realize it's the 3rd largest US company, by market cap, trading at +30 multiple?

Monday, November 25, 2013

$goog guide to switch is only 14 steps

Android OS is so intuitive it takes 14 steps, as per Schmidt, to convert.

I guess that is better than:

1. Buy a new iPhone
2. Sign in via iTunes/iCloud

Good to go. 14 vs 2. Google math (or Schmidt math) seems awesome.  

Oh, and remember, chrome saves your passwords, so it can be extracted from a third party using your device. 

Also remember that while your logged into your google+ (or gmail) anything you +1, Google can use your prolifle pic in an advertisement across their networks. 

Shit like this that makes me dislike google more and more. 

Thursday, November 21, 2013

$yhoo ooooooo

The general consensus on Yahoo's rise remains to be Alibaba and continued aggressive buyback of shares. 

The problem with the consensus is that Yahoo, as a core internet and mobile property, is grossly undervalued. For those who say the valuation is merited because of the stagnation in the properties are not paying attention. 

The ratings on there iOS mobile apps have been steadily improving.

The one app I think they can totally kick ass on is Finance. Especially given their push to advance their data science side of their business. Unfortunately, Yahoo Finance app is lagging. (Although I like the new web design.)

The revamped web properties performance remain to be seen, but I like them. And especially encouraging is the fact that they are set up to produce an interest graph. With known interest, ads will be at a premium, ad rates rise and higher revenues. 

It's hard ignore what Yahoo is doing. It's also become a pure play on internet and mobile advertising. No concerns about being dragged down by non-core businesses.

The higher demand in non-interest baring convertible offerings this morning is nice indication I am not alone in the above thesis. Probably the most bullish of all investors is Yahoo itself. They have backed up the truck, and have purchased a ton of share. The new announcement maybe their final buy back in a while, given this could be the start of the arbitrage.

Monday, November 18, 2013

2:30? $spy

Wonder what collective decision was forced upon at 2:30pm.

Or did the big guns decide 1800 is too rich right now.

Thursday, November 14, 2013

Market Thought... Final Countdown, updated

The market numbers were updated based on the recent employment numbers and actual Oct unemployment rate.

Projecting an 18 trailing multiple through the end of the year, and trickling lower through 2014. (17.5, 17, 16.5 and 16.5)

Tuesday, November 12, 2013

$goog - losing focus chatter

Increased chatter about Google slipping in core functions.

- poor local results
- Google Maps loosing share

The obvious concern is that the chatter is highlighting poor performance in search related functions. Google is not suppose to suck at search. It is what affords them the luxury of being a hardware manufacturer and compete with pretty much every industry.

To make matters worse, as core functions decline, new initiatives are not picking up the slack. The Motorola acquisition is proving to be a $7b flop. No profits, declining revenue and a patent chest that is not worth $7b. And with the Moto X declining in price, continues to suggest weak demand, Motorola is not going to pick up the slack anytime soon.

Gone are the days of Google as a pure play to internet advertising.

If core functions fade, their 'moon shot' initiatives, failed experiments and luxurious builds will be punished by the street. These initiative will no longer be viewed as 'innovation'. They will be viewed as distractions.

The street is already pricing the stock as a master-of-the-universe-that-conquers their field of entry. But once the street realizes they have stretch themselves out too thin, the stock will be punished.

Negative sentiment can take the stock between 850-925. (Even this move allows for a pretty elevated trailing PE.)

If the stock is to be priced as a company loosing focus, then the trailing PE has plenty of justification to decline below 20.

Monday, November 11, 2013

$FB dynamic

With FB easing, it is approaching interesting SMAs via the weekly chart. 

The 14 and 20 SMA acted as resistance, and may start to act as support. (There is very strong support around 35, but not sure there will be enough negativity to get it there.)

The VC selling has kicked in, with the most firm of supporters selling 30% of their position.  There is also some negative chatter re-forming on the fundamentals.  Not sure yet if the chatter will continue, but Business Insider with their bullshit titles are always entertaining. (A bit of a caveat on the negative chatter, its author is Benedict Evens, and is/was a big proponent of the "unbundling" bearish thesis on Facebook. Needless to say the unbundling thesis has been wrong, and will continue to be wrong.)

If negative chatter keeps up, the 20 SMA may be seen. May provide a nice trade for an oversold bounce.

Wednesday, November 6, 2013

$aapl has leverage

A lot of chatter regarding "deferred revenue" lately.  Mostly because Apple highlighted the potential benefits to be seen in later quarters in the recent conference call.  The gross margin forecast for Q1 was not as high as some analysts were expecting, so obviously questions were asked.  The answer: it will be seen in the March quarter. The degree of benefit was not answered.

As highlighted from a recent Daniel Eran Dilger article, Apple now has a lot of deferred revenue.

With the share buy backs, and now this, Apple has created a potential 50cent swing in earnings power and partial lever on revenue. Its a nice position to be in. (Google used their ability to manipulate their tax rate, Apple now has the above.)

IMO, the current street estimates are already a bit low, and the above levers will help Apple to handle the street.

Also a quick take home:

Another positive sign on gross margin is the cost of the iPad Air. Margins for the device should come in at least 45% (excluding the mini), and given the jump in perceived sales (here, here, and here), Apple has more wind on its back.

$tsla potential trading dynamic

Good numbers coming out of Tesla last night. Free cash flow positive, and margins increasing. Of course the illusion of greatness is now fading, and the reality of "pretty-damn-good" is kicking in, so the market must sell it off. (AMZN will have a cluster-fuck day when it's time comes.)

Tesla' valuation is only limited by ones imagination, but now that it is declining, let's look at a realistic trading pattern. Last time tesla broke its weekly 50sma, it saw about a peak 15% decline from the moving average. 

Assuming the same can take place, if the 20sma is broken from near-term declines, tsla may approach $80-90.

Looking to play tsla on the long side at those levels. Until then, will still look to trade on the short.

Friday, November 1, 2013

$fb to focus the ads

One of the more interesting take aways from Facebook's blowout was the acknowledgement that an increased level of ads played a role in the strong performance. This explained the blowout, and also shows the power of their ability to leverage their properties. Management then proceeded to tell investors they will ease up on the level of ads, and focus on ad quality.

This puts the focus on Facebook's ability for organic growth-per-current ad site. Can Facebook maintain the acceleration, while it removed an earnings lever? (Looks like they have plenty of leverage in their tax rate *like Google*, to manipulate. FB tax rate was 41%!)

Below is q-to-q revenue growth rate.

Regardless to the perception, as a business, we saw a more dynamic Facebook this quarter. Setting itself up well as more ads become programmable and utilizing real-time bidding. Facebook Exchange will really shine over the next few years, and the incorporation to mobile streamlines the process for marketers. 

What's good for the company, may not be good for the stock, short term. The stock is a high-flier. Tough to argue value when it's Market Capitalization is +$100B, and the dynamic of the business was just revealed.

FB broke from its recent sma trend, and shares are due to be for sale.

May lead to a consolidation here. Not sure by how much just yet. An argument can be made around 45. (Looking to re-enter on oversold conditions.)