09/13/11 (Drinking Topics) The Ultimate Non-Steroidal Anti-Inflammatory
I spent too much time weeding last weekend, and ended up with a sore back. So I headed to the bar last night, when my orthopedic surgeon walked in. What happened next? It's all on the tape above. Cured.
Yeah, best off just staying away from situations like SVM unless you really are on the inside and know something, because otherwise, you are just gambling.
Guys- If this is the best the bears can do with 'Europe,' we're done going down. Sure, I can agree with jesse about a possible pullback tomorrow- but so what? We're more or less DONE with the downside. JMHO.
The fear around the Chinese stocks is insane now -- CADC has been pushed down to 1/3 of the liquidation value of the company! How crazy is that? Why play SVM -- just buy CADC, which already has a buy offer outstanding at $2.65!
David - How do we know the liquidation value is what the company says it is? isn't that the problem?
Any of you guys follow CYTX? They're based out by me in San Diego...a friend of mine that is a good pharma investor has a large stake in them at higher prices. He was big on SMTS in part because of its razor/blade model and says CYTX has the same model.
I own Chinese company DSWL. I've kept the position small, because it is China, but it is very cheap assuming the numbers are real and I do believe they are for this one as they have been on the Nasdaq for over 10 years and pay a generous dividend. I think once the China fears blow over and we can see most of the companies are real, there is good upside in this one.
David, That is not a real offer, but a pump and dump tactic that many of these companies do to temporarily unload their stock before the big dump. Notice the "preliminary, non-binding" language. Legally that means there is no real offer. Translate. "If I can get some suckers to finance me i will sell them my stock at 2.65 and file BR in private.
China Advanced Const. Mat. Grp Inc announced that its Board of Directors has received a preliminary, non-binding offer from its Chairman and Chief Executive Officer, Mr. Xianfu Han (Mr. Han), and Weili He, Vice Chairman and Chief Operating Officer, to acquire all of the outstanding shares of common stock not owned by them in a going private transaction at a proposed price of $2.65 per share in cash
The thing about Greece is it is so well known and I'm sure every country has figured out exactly which of it's banks have exposure to Greece and how much, that if they do default or whatever, governments will step in, deal with the issues and move forward. There's going to be no Lehman surprises here.
I do think we are pretty much done going down for the year (although we could see more weakness through September and into October until earnings start coming out) and will see a lot of buying in Q4.
A stock I follow in Canada (Wescast WCS.A in Toronto) has a buyout offer from a Chinese company. To prove they were legit, they put down a $2 million deposit while they pursue financing. It's a $180 million deal, so not a lot and the stock is not trading near the buyout because of that, but it is at least some "skin in the game".
Is anyone following the absurdity of the european debt crisis. Now the Bric countries are going to bail out europe! After raping, pillaging and enslaving these people for over 400 years they have the balls to ask countries where half their population make under $10 a day to bail out their oppressors, so they can retire at 55 and have 3 hour lunches. It must be nice to be civilized.
More european debt crisis. The Greek default is more than a writedown for the actual loss. If that was so this would of been over a year ago. This is like lehman in that you can bet your bottom dollar the banks leveraged up using greek and other pigs debt as collateral. The DELEVERGING is the fear. Greek debt is 500 billion if only levered up 4 times thats 2 trillion and a lehman situation. What if they are levered up 10 times? This is not going away by people buying bonds. Some big banks are going down.
LOL thats funny. Nasdaq looked real strong. New tech is the cats meow. The degenerate high growth high debt names are strong. I think 250 points in the nasdaq is more likely than a proportional 1000 in the DOW.
SVM - Well, I don't see anything in the smear campaign that holds water but that doesn't mean it's not a Chinese stock under attack that will recover.
It's well known what happens to these companies with operations in China, even though this one is as legit as any of them. I thought it might be so transparently legit it would be a hard target, but guilt by association has an exceptionally long arm.
All the mining equities analysts have been arguing in defense of SVM.
Assuming the mining equities gang is correct as I'm convinced they are, maybe this time the authorities will step up to the plate and rule no fraud exists.
I don't know 2nd. One the one hand I agree because there are way too many people short this market. But on the other hand I watch things like the banks, which have more or less been leading this market, the overseas markets, which were all making news lows for the year, and a bunch of stocks that i consider leading stocks for the global economy like GE and DOW and some others that are right at their lows and it makes me worried to commit money to the long side just yet. I'm currently about 98% cash and just not really ready to jump in. If I see MMYT at $15 then I will be 100% long.
"David - How do we know the liquidation value is what the company says it is? isn't that the problem?"
TOF, I got that liquidation value from a hedge fund that invested into CADC and said that they know their finances very well. That hedge fund urges the board to reject CEO's offer precisely because it estimates the liquidation value of the company to be much larger than the $2.65 buyout offer.
"If I can get some suckers to finance me i will sell them my stock at 2.65 and file BR in private."
RB, I think it's the other way around: "If I can buy all shares of this company for only $2.65 per share, then I can take it private and enjoy alone the great annual return on my cash investment."
I see that over the past few sessions, the futures were down 200-300 points on at least 2 occasions, yet in the grand scheme of things, the market really hasn't gone anywhere. Typically, clustered together, these big "fear events" usually mark some sort of bottom.
If these fear events couldn't drive the market lower, what will? Especially with Europe as oversold as it is. Heck, Italy is down nearly 50%.
If the market is to go substantially lower, we would probably need one hell of a bullish rally to make people temporarily forget about all of our problems.
Since NFLX announced their new price structure (in part triggering the massive decline), CSFB has continued to raise their estimates going forward.
"Feeding through our income statement forecasts through our cash flow statement, we project free cash flow will ramp up over time as well. We expect NFLX to generate about $278 million in free cash flow in 2011, up from $119 million in 2010 and grow to $1.6 billion by 2016, or grow at a 41% CAGR.
This is from 7/25 when NFLX was $280.
"While the changes will result in lower sub growth in 3Q11, we expect this will be more than offset in 4Q11 by a full quarter of positive 8% uplift to ARPU. NFLX guided to $1B in domestic sub revenue in 4Q11 given the expected positive ARPU impact and net sub addition re-acceleration. ■ (2) Our analysis of the changes coupled with new disclosure on the price plan impact suggest double-digit upside to adjusted gross margins. ■ (3) In addition, we believe that domestic operating margins could exceed expectations because NFLX may be unable to spend down to its 14% nearterm target, similar to 1H11, when op income margins exceeded 16%. ■ Catalysts: Taking the pricing plan change impact and higher expected int’l sub growth, we have raised our 2012 and longer-term estimates. We now expect ’12 revenue of $4.8B (vs. $4.3B prior), up 45% y/y and operating income of $775M (vs. $735M), up 74% y/y. ■ Valuation: NFLX is trading at 20x EV/EBITDA based on our ‘12 est. Flowing through our estimate changes, we are raising our target price to $310 from $280 prior. As a result, we view weakness on the results as a buying oppty."
NFLX still very cheap at $11 or so per month which leads me to believe that future price increases could ramp margins big time.
Don't let anybody fool you, Wall Street is 100% a game of margins. Increasing margins, funds need in. Decreasing margins (even a hint of a .2% decrease in margins 3 quarters out) and institutions want out.
Nice updated NFLX chart analysis here: (Stop at $202.50-$203?)
RB: " the Bric countries are going to bail out europe! After raping, pillaging and enslaving these people for over 400 years they have the balls to ask countries where half their population make under $10 a day to bail out their oppressors, so they can retire at 55 and have 3 hour lunches. It must be nice to be civilized."
Yea mon, I don't see the sense either, for Brazil in particular. Is there no justice or even sanity?
Brazil has lots of oil and ethanol. Maybe they are just willing to help support the older consuming economies for a while to keep the game going. Maybe they know it's only with their funny money.
Judging by how much those Italy - German spreads and the CDS spreads on Italy are blowing out, those Italian sausages could very well bring the world's markets to their knees. We're not talking about Greece here...we're talking about the 3rd largest bond market in the world. And they're pricing Italy as if its on the fast track to Greece's status. CDS spreads on Italy are at 500:
http://www.cnbc.com/id/38451750
This is above the level Greece was at BEFORE the flash crash last year. http://calculatedriskimages.blogspot.com/2010/06/euro-bond-spreads-june-3-2010.html
Risks on the long side are very high in my opinion. I'd rather be in cash with about 1% in SPY puts...hopefully if the bottom falls out I will be completely ready to load the boat on the best high growth companies in the world, like MMYT, NFLX, etc....
And if not and we are able to skate through this debacle unharmed, then I'll surely have plenty of opportunities available...even if it means i get back in at above the 200 DMA...
I'm too old to deal with the NFLX streaming crap. That makes me very bullish on it. My kids will grow up with it like we (I) did with 9 channels and HBO.
Mark you didn't watch the video did you? The horror of Italian austerity is in the link below.Why should germany or anyone bail out these MOFOS? Also how in the hell did italy become the the 5th largest bond market in the world? Is Ponzi italian? http://www.telegraph.co.uk/news/worldnews/europe/italy/6645297/Italian-minister-calls-for-ban-on-long-lunch-breaks.html
Mark if you like eating Italy is the place. Everything is quality. There is no bad crap food like at a 7-11 in the entire country. No frozen microwave shit. I remember a truck stop near Venice was stocked like the finest deli in the world.One of the best meals I have ever had at a truck stop! Unbelievable. I surmised that people will not buy or eat the garbage that we do. I have a feeling YUM does very poorly in Italy.Hell I would take a three hour lunch also as long as i could borrow a couple Real's and Deutchmark's
This story was from this summer on leverage. Hopefully euro banks have been unwinding. I believe that france has the largest greek exposure. http://finance.fortune.cnn.com/2011/06/20/europes-sickly-banks/
Mark, Pretty sure the kids won't pay $11 a month to watch old TV shows when they can go the torrent sites and get up-to-date, high-def programming for free.
Or got to Project Free TV www.free-tv-video-online.me and you can stream up-to-date shows and movies for free (not high-def yet, but coming as bandwidths improve).
Perhaps we are at the beginning of the end of the Greek fiasco. I think, in private, the costs of the Greek bankruptcy have been accounted for and the plans are place around this. Just a matter of how much can the creditors actually get out of Greece.
======================================== The cost of insuring debt issued by euro-zone governments other than Greece declined Wednesday. The spread on five-year Italian credit default swaps, or CDS, narrowed by 27 basis points to 480 basis points, according to data provider Markit. That means it would now cost $480,000 annually to insure $10 million of Italian debt for five years, down from $507,000 on Tuesday. Ireland's CDS spread narrowed 24 basis points to 870, while Portugal narrowed 27 basis points to 1,170 and Spain narrowed to 405 basis points from 423 on Tuesday. Insuring $10 million of Greek debt for five years using CDS, meanwhile, would cost $5.75 million up front and $100,000 per year, up from $5.6 million up front on Wednesday, according to Markit data.
AND
The EC reduces the interest rate and extends the maturities of Ireland's and Portugal's bailout loans. With the EC cutting the margin over cost of funds to 0, Ireland receives a reduction of 292.5 bps and Portugal a cut of 215 bps. Any yet-to-be-released tranches of the rescue funds will have maturities bumped from 15 to 30 years.
The Investors Intelligence readings are out this morning and the bears are now the highest they have been since the March 2009 lows. They are not as high a they were then. They are however few percentage points over last summer's peak reading.
I was up most of the night as I have severe jetlag. I was bracing for an all-out crash today given another -200 futures scenario. I figured there was zero chance we could withstand another panic.
Is anybody else in utter disbelief watching the pre-market?
Was just looking at monthly chart going back to the 90's. We now have 5 down months in a row creating some pretty high levels of bearishness.
In bears, markets generally continue to test and hug their 10 month moving averages. In the current "bear", we haven't tested it. It stands at 1291 at the moment.
Jesse, why would you expect another crash? There was no unexpected bad news since the close yesterday/ If news is expected, it is always priced into the market. It is the unexpected that drives market dramatically up or down.
well i closed ,my spy puts just now for a solid $1,000 loss. however, i think the market is setting up for a disappointment. Why are the world's leaders scrambling to contain the mess in Europe? Why is Geithner on TV saying all is fine? It reminds me of that scene in Animal House:
I was thinking we might dip because we had 2 recent bounces from overnight futures "crashes". My thinking was the market couldn't do it 3 times in a row. Well, it did. Now we're seeing some weakness in the regular session.
Last week, I was saying that suckers were buying CVV near 20 as the smart money over the past year has been buying it on pullbacks to its 10 week moving average.
It hit its 10 week on Monday. It stands at 15.59 currently. So probably a good entry.
I LOVE the story. The only drawbacks to the play are the insider selling, the increased expected expenses going forward expected by ThinkEquity, the lack of recent pr's regarding increasing backlog (3 month backlog increase was only $8 million the last time they updated), and the doubling in size of its facility (I know- counter-intuitive, but I could go on and on about how similar expansions have affected the stock performance).
All in all, I still love the story, but am much more cautious than I was when I was buying it in the 12's.
The reason I'm thinking NFLX should be bought here is really simple: there is no alternative to the average person. I'm not talking about the people that are getting movies from the internet. I'm talking about people that used to go to Blockbuster and now are being forced to use Red Box. From my own experience, Red Box sucks. The selection is pathetic.
In an effort to catch up with modern times, I have purchased a few movies from the Wal-Mart $5 bin, last good find was "Jaws". The ending scene battle on the boat was awesome!
"PRESS RELEASE Trading Symbol: TSX: SVM September 14, 2011 NYSE: SVM SILVERCORP RESPONDS TO SECOND ANONYMOUS ALLEGATION AND PROVIDES GOVERNMENT CERTIFICATION OF TAXES PAID VANCOUVER, British Columbia – September 14, 2011 – Silvercorp Metals Inc. (“Silvercorp” or the “Company”) advises that a second set of anonymous allegations against the Company has been made, which was published on the internet (the “2nd Anonymous Report”). The Company refutes the substance of all allegations in the 2nd Anonymous Report, and believes it has been published in furtherance of concerted efforts by a group of short sellers to drive down the Company’s share price through false, selective or ignorant statements and rumors. Investigations are ongoing by the RCMP, the BC Securities Commission, the SEC and the FBI to determine the identity of the anonymous authors. The Independent Committee, in keeping with its duty, has retained independent legal counsel to examine the anonymous allegations. In addition, KPMG Forensic Inc. was engaged on September 6th by legal counsel to the Independent Committee to assist the Independent Committee by completing a report on certain aspects of revenue, cash balances and income tax and VAT payments in China, and to perform certain reconciliations of the Company’s filings in China with those filed with North American regulators.... "
Today is basically the all clear for a short/intermediate term rally. We got downgrades of French banks and what does the French market do? It rallies. That's all you need for confirmation we're going higher.
TOF, WSJ blames copper weakness on worries about Europe (how's that for some good reporting?). Think your find is much more likley. Plus with some strikes starting, prcie should be going up
Raising stops a bit higher....thinking about actually taking off my longs which are up nicely but will give it til the end of the day...i'm worried that copper and the financials are not joining the party.
if we continue to follow the markets like we did back in the beginning of 2008 then this rally should bring us to 1,225 and then we should see a drop to below 1,120 which would mark a medium term bottom.
"The $300 Million Cable That Will Save Traders Milliseconds September 13th, 2011
Via: Telegraph:
In the high-speed world of automated financial trading, milliseconds matter. So much so, in fact, that a saving of just six milliseconds in transmission time is all that is required to justify the laying of the first transatlantic communications cable for 10 years at a cost of more than $300m."
Guys, take a look at the 1-year CAAS chart: doesn't it seem ready to rally now? SORL has exactly the same chart, and also looks ready to rally -- the Chinese auto parts sector is rising up from the dead? After all, the auto production is still increasing there, regardless of whether S&P goes up or down...
"Not a chance"...so says Timmy Geithner when responding to a question about Lehman like issue in Europe. That's part of the reason we rallied today right?
So that I don't have too much risk on the table, I decided to sell my EWG and EWQ at the close and after hours at $18.8-18.77 and $19.85...I had about 40% of port in it. I'm now sitting with about 60% cash and still scanning for beaten down growth companies that I want to hold longer term...
Is there arsenic in your apple juice? My safety training taught me that organic arsenic does not present the same level of health hazard as inorganic arsenic does:
"The problem is that even though you can run a test doesn't mean that you can interpret the test correctly. For example, The Dr. Oz Show tested apple juice for total arsenic, while it is inorganic arsenic that is the form that is dangerous to people. The FDA states that organic arsenic is essentially harmless."
Mark - Yes, I like them too. The arsenic source in question involves fruit sourced from foreign countries that still use arsenic as an agricultural pesticide. Many foreign country's also use DDT, I've read.
Anyway, I guess the question isn't so much if, but which type they're using. I don't believe conventional tests can differentiate.
Holy shit man...I can't believe how cheap some of these companies are:
GCI - I know, I know, old media. But the company generated $700 Million in free cash flow last year and trades at 3 times that amount. It's trading at 4.5 times earnings. They just upped their dividend to a payout of over 3% now. They have about $1.5 Billion in net debt, but that will be paid off in 2.5 years if free cash flow is $600 Million per year.
DELL - Mkt cap is $27 Billion. They have $11 Billion in net cash. Back that out and get $16 Billion. Last year they generated $3.5 Billion in Free Cash Flow. They're trading at 4.5 times free cash flow excluding cash on their books and 4.4 times earnings excluding cash.
MSFT - Value is $20 ex cash. Trades at 7 times earnings and 7 times free cash flow ex cash.
HPQ could be a value trap given the change in biz model.
It will be interesting to see if the dollar can hold at these levels. When the dollar surged from its low the first week of May, I was saying that analysts would slowly start cutting earnings estimates over the ensuing weeks which would put pressure on the market. The end result was a sell-off.
We may be in a different situation now, but continued dollar strength will be something to keep an eye on.
SVM? I came this close to opening a position the same day I opened TZOO, basically just for the hell of it.
ReplyDeleteSo I see it's come down to the hell of it.
Yeah, best off just staying away from situations like SVM unless you really are on the inside and know something, because otherwise, you are just gambling.
ReplyDeleteHoly cow- how many people in the 'community' own it?
ReplyDeleteIMHO, when it comes to Chinese companies, or stocks with exposure to China, the kind of transparency you need just isn't there yet.
ReplyDeleteGuys- If this is the best the bears can do with 'Europe,' we're done going down. Sure, I can agree with jesse about a possible pullback tomorrow- but so what? We're more or less DONE with the downside. JMHO.
ReplyDeleteThe fear around the Chinese stocks is insane now -- CADC has been pushed down to 1/3 of the liquidation value of the company! How crazy is that? Why play SVM -- just buy CADC, which already has a buy offer outstanding at $2.65!
ReplyDeleteDavid - How do we know the liquidation value is what the company says it is? isn't that the problem?
ReplyDeleteAny of you guys follow CYTX? They're based out by me in San Diego...a friend of mine that is a good pharma investor has a large stake in them at higher prices. He was big on SMTS in part because of its razor/blade model and says CYTX has the same model.
DJIA +1000.
ReplyDeleteI own Chinese company DSWL. I've kept the position small, because it is China, but it is very cheap assuming the numbers are real and I do believe they are for this one as they have been on the Nasdaq for over 10 years and pay a generous dividend. I think once the China fears blow over and we can see most of the companies are real, there is good upside in this one.
ReplyDeleteDavid,
ReplyDeleteThat is not a real offer, but a pump and dump tactic that many of these companies do to temporarily unload their stock before the big dump. Notice the "preliminary, non-binding" language. Legally that means there is no real offer. Translate. "If I can get some suckers to finance me i will sell them my stock at 2.65 and file BR in private.
China Advanced Const. Mat. Grp Inc announced that its Board of Directors has received a preliminary, non-binding offer from its Chairman and Chief Executive Officer, Mr. Xianfu Han (Mr. Han), and Weili He, Vice Chairman and Chief Operating Officer, to acquire all of the outstanding shares of common stock not owned by them in a going private transaction at a proposed price of $2.65 per share in cash
The thing about Greece is it is so well known and I'm sure every country has figured out exactly which of it's banks have exposure to Greece and how much, that if they do default or whatever, governments will step in, deal with the issues and move forward. There's going to be no Lehman surprises here.
ReplyDeleteI do think we are pretty much done going down for the year (although we could see more weakness through September and into October until earnings start coming out) and will see a lot of buying in Q4.
2nd - what's the time frame on that +1000? Tomorrow?
ReplyDeletehttp://www.bloomberg.com/news/2011-09-13/porat-says-3q-fixed-income-trading-market-was-worse-than-4q-2010.html
ReplyDeleteI take it this was the reason why BAC/C/JPM didn't do too well today.
David,
ReplyDeleteA stock I follow in Canada (Wescast WCS.A in Toronto) has a buyout offer from a Chinese company. To prove they were legit, they put down a $2 million deposit while they pursue financing. It's a $180 million deal, so not a lot and the stock is not trading near the buyout because of that, but it is at least some "skin in the game".
http://www.thespec.com/news/business/article/590418--wescast-agrees-to-buyout-deal-for-180m
Is anyone following the absurdity of the european debt crisis. Now the Bric countries are going to bail out europe! After raping, pillaging and enslaving these people for over 400 years they have the balls to ask countries where half their population make under $10 a day to bail out their oppressors, so they can retire at 55 and have 3 hour lunches. It must be nice to be civilized.
ReplyDeleteI think we'll see +1000 by the end of September. Outside chance we see it by end of week.
ReplyDeleteMore european debt crisis. The Greek default is more than a writedown for the actual loss. If that was so this would of been over a year ago. This is like lehman in that you can bet your bottom dollar the banks leveraged up using greek and other pigs debt as collateral. The DELEVERGING is the fear. Greek debt is 500 billion if only levered up 4 times thats 2 trillion and a lehman situation. What if they are levered up 10 times? This is not going away by people buying bonds. Some big banks are going down.
ReplyDeleteI'm already beyond European retirement age? 3 hour lunches?
ReplyDeleteHow do they do it?
The Greeks need to sacrifice one or two of the big banks to appease global creditors. They know all about sacrificial rites.
ReplyDeleteLOL thats funny. Nasdaq looked real strong. New tech is the cats meow. The degenerate high growth high debt names are strong. I think 250 points in the nasdaq is more likely than a proportional 1000 in the DOW.
ReplyDeleteSure, I'll take +250 NDQ.
ReplyDeleteSVM - Well, I don't see anything in the smear campaign that holds water but that doesn't mean it's not a Chinese stock under attack that will recover.
ReplyDeleteIt's well known what happens to these companies with operations in China, even though this one is as legit as any of them. I thought it might be so transparently legit it would be a hard target, but guilt by association has an exceptionally long arm.
All the mining equities analysts have been arguing in defense of SVM.
Assuming the mining equities gang is correct as I'm convinced they are, maybe this time the authorities will step up to the plate and rule no fraud exists.
I don't know 2nd. One the one hand I agree because there are way too many people short this market. But on the other hand I watch things like the banks, which have more or less been leading this market, the overseas markets, which were all making news lows for the year, and a bunch of stocks that i consider leading stocks for the global economy like GE and DOW and some others that are right at their lows and it makes me worried to commit money to the long side just yet. I'm currently about 98% cash and just not really ready to jump in. If I see MMYT at $15 then I will be 100% long.
ReplyDelete"David - How do we know the liquidation value is what the company says it is? isn't that the problem?"
ReplyDeleteTOF, I got that liquidation value from a hedge fund that invested into CADC and said that they know their finances very well. That hedge fund urges the board to reject CEO's offer precisely because it estimates the liquidation value of the company to be much larger than the $2.65 buyout offer.
"If I can get some suckers to finance me i will sell them my stock at 2.65 and file BR in private."
ReplyDeleteRB, I think it's the other way around: "If I can buy all shares of this company for only $2.65 per share, then I can take it private and enjoy alone the great annual return on my cash investment."
I see that over the past few sessions, the futures were down 200-300 points on at least 2 occasions, yet in the grand scheme of things, the market really hasn't gone anywhere. Typically, clustered together, these big "fear events" usually mark some sort of bottom.
ReplyDeleteIf these fear events couldn't drive the market lower, what will? Especially with Europe as oversold as it is. Heck, Italy is down nearly 50%.
If the market is to go substantially lower, we would probably need one hell of a bullish rally to make people temporarily forget about all of our problems.
Interesting NFLX note from CSFB from Sep. 8th.
ReplyDeleteSince NFLX announced their new price structure (in part triggering the massive decline), CSFB has continued to raise their estimates going forward.
"Feeding through our income statement forecasts through our cash flow statement, we
project free cash flow will ramp up over time as well. We expect NFLX to generate about
$278 million in free cash flow in 2011, up from $119 million in 2010 and grow to $1.6 billion
by 2016, or grow at a 41% CAGR.
This is from 7/25 when NFLX was $280.
"While the changes will
result in lower sub growth in 3Q11, we expect this will be more than offset in
4Q11 by a full quarter of positive 8% uplift to ARPU. NFLX guided to $1B in
domestic sub revenue in 4Q11 given the expected positive ARPU impact
and net sub addition re-acceleration.
■ (2) Our analysis of the changes coupled with new disclosure on the price
plan impact suggest double-digit upside to adjusted gross margins.
■ (3) In addition, we believe that domestic operating margins could exceed
expectations because NFLX may be unable to spend down to its 14% nearterm target, similar to 1H11, when op income margins exceeded 16%.
■ Catalysts: Taking the pricing plan change impact and higher expected int’l
sub growth, we have raised our 2012 and longer-term estimates. We now
expect ’12 revenue of $4.8B (vs. $4.3B prior), up 45% y/y and operating
income of $775M (vs. $735M), up 74% y/y.
■ Valuation: NFLX is trading at 20x EV/EBITDA based on our ‘12 est. Flowing
through our estimate changes, we are raising our target price to $310 from
$280 prior. As a result, we view weakness on the results as a buying oppty."
NFLX is the only game in town man...I would have to completely agree with CFSB
ReplyDeleteNFLX still very cheap at $11 or so per month which leads me to believe that future price increases could ramp margins big time.
ReplyDeleteDon't let anybody fool you, Wall Street is 100% a game of margins. Increasing margins, funds need in. Decreasing margins (even a hint of a .2% decrease in margins 3 quarters out) and institutions want out.
Nice updated NFLX chart analysis here:
(Stop at $202.50-$203?)
http://chart.ly/ffv37dk
RB: " the Bric countries are going to bail out europe! After raping, pillaging and enslaving these people for over 400 years they have the balls to ask countries where half their population make under $10 a day to bail out their oppressors, so they can retire at 55 and have 3 hour lunches. It must be nice to be civilized."
ReplyDeleteYea mon, I don't see the sense either, for Brazil in particular. Is there no justice or even sanity?
Brazil has lots of oil and ethanol. Maybe they are just willing to help support the older consuming economies for a while to keep the game going. Maybe they know it's only with their funny money.
ReplyDeleteMargins...Yes sir Jesse James...Just see CSCO.
ReplyDeleteThis is a link to the speaker cable I'm working with right now...10' for 2 cables.
ReplyDeletehttp://www.mitcables.com/available-in-stores/oracle-ma-x-hd-speaker-cable.html
Crap...Call 911...China is choking on the Italian sausage!!
ReplyDeletehttp://www.bloomberg.com/news/2011-09-14/asia-stocks-gain-on-easing-europe-credit-freeze-concern-south-korea-falls.html
'Asia Stocks Fall as China Says World Must Get ‘Houses in Order’ Before Aid'
ReplyDeleteAm I the only one who finds this Fing funny?!!
You've given us thousands of 'fake' Co. listed in the US and at last count have 3.7M fake AAPL stores!
F you. Your T-bills are now worthless.
Cheers,
Big Jim.
And forget any more of our food...And I don't mean KFC.
ReplyDeleteJudging by how much those Italy - German spreads and the CDS spreads on Italy are blowing out, those Italian sausages could very well bring the world's markets to their knees. We're not talking about Greece here...we're talking about the 3rd largest bond market in the world. And they're pricing Italy as if its on the fast track to Greece's status. CDS spreads on Italy are at 500:
ReplyDeletehttp://www.cnbc.com/id/38451750
This is above the level Greece was at BEFORE the flash crash last year.
http://calculatedriskimages.blogspot.com/2010/06/euro-bond-spreads-june-3-2010.html
Risks on the long side are very high in my opinion. I'd rather be in cash with about 1% in SPY puts...hopefully if the bottom falls out I will be completely ready to load the boat on the best high growth companies in the world, like MMYT, NFLX, etc....
And if not and we are able to skate through this debacle unharmed, then I'll surely have plenty of opportunities available...even if it means i get back in at above the 200 DMA...
ReplyDeleteBut the key is to have cash just in case we do see a crash...which in my mind the odds are at least 50%.
ReplyDeleteI'm too old to deal with the NFLX streaming crap. That makes me very bullish on it. My kids will grow up with it like we (I) did with 9 channels and HBO.
ReplyDeleteIf it crashes you just have two more, two more, two more, Two more.
ReplyDeleteI wouldn't be surprised if we see 1,120 very soon.
ReplyDeleteMan, I was just going to point out how important RB's comment was about leverage and then we get this??
ReplyDeleteMark you didn't watch the video did you?
ReplyDeleteThe horror of Italian austerity is in the link below.Why should germany or anyone bail out these MOFOS? Also how in the hell did italy become the the 5th largest bond market in the world? Is Ponzi italian?
http://www.telegraph.co.uk/news/worldnews/europe/italy/6645297/Italian-minister-calls-for-ban-on-long-lunch-breaks.html
RB, ah, no..I never really did believe in homework. But I did read your link. Wow. We really suck here. Too caught up in work and all it would seem.
ReplyDeleteMark if you like eating Italy is the place. Everything is quality. There is no bad crap food like at a 7-11 in the entire country. No frozen microwave shit. I remember a truck stop near Venice was stocked like the finest deli in the world.One of the best meals I have ever had at a truck stop! Unbelievable. I surmised that people will not buy or eat the garbage that we do. I have a feeling YUM does very poorly in Italy.Hell I would take a three hour lunch also as long as i could borrow a couple Real's and Deutchmark's
ReplyDeleteThis story was from this summer on leverage. Hopefully euro banks have been unwinding. I believe that france has the largest greek exposure.
ReplyDeletehttp://finance.fortune.cnn.com/2011/06/20/europes-sickly-banks/
Mark, no WPRT at the moment. Just a few positions and some in and out, plus Buddha.
ReplyDeleteIMO the markets are in text book chart digestion phases that are classic continuation patterns. They are hard to trade due to whip-saw behavior.
BTW, SVM equals SOAS.
ReplyDeleteIt is good no one on this board bought this stock like the lemmings and clowns over there following there leader Jim Jones.
SOAS?
ReplyDeleteDavid gets paid to think outside the box. So it's no surprise to find so many of his posts taking the 'other side' of conventional arguments.
ReplyDeleteIn fact, while most of us slave away at our jobs, he often gets paid to do nothing, or not to show up.
Mark,
ReplyDeletePretty sure the kids won't pay $11 a month to watch old TV shows when they can go the torrent sites and get up-to-date, high-def programming for free.
Or got to Project Free TV www.free-tv-video-online.me and you can stream up-to-date shows and movies for free (not high-def yet, but coming as bandwidths improve).
Perhaps we are at the beginning of the end of the Greek fiasco. I think, in private, the costs of the Greek bankruptcy have been accounted for and the plans are place around this. Just a matter of how much can the creditors actually get out of Greece.
ReplyDelete========================================
The cost of insuring debt issued by euro-zone governments other than Greece declined Wednesday. The spread on five-year Italian credit default swaps, or CDS, narrowed by 27 basis points to 480 basis points, according to data provider Markit. That means it would now cost $480,000 annually to insure $10 million of Italian debt for five years, down from $507,000 on Tuesday. Ireland's CDS spread narrowed 24 basis points to 870, while Portugal narrowed 27 basis points to 1,170 and Spain narrowed to 405 basis points from 423 on Tuesday. Insuring $10 million of Greek debt for five years using CDS, meanwhile, would cost $5.75 million up front and $100,000 per year, up from $5.6 million up front on Wednesday, according to Markit data.
AND
The EC reduces the interest rate and extends the maturities of Ireland's and Portugal's bailout loans. With the EC cutting the margin over cost of funds to 0, Ireland receives a reduction of 292.5 bps and Portugal a cut of 215 bps. Any yet-to-be-released tranches of the rescue funds will have maturities bumped from 15 to 30 years.
The Investors Intelligence readings are out this morning and the bears are now the highest they have been since the March 2009 lows. They are not as high a they were then. They are however few percentage points over last summer's peak reading.
ReplyDeleteI was up most of the night as I have severe jetlag. I was bracing for an all-out crash today given another -200 futures scenario. I figured there was zero chance we could withstand another panic.
ReplyDeleteIs anybody else in utter disbelief watching the pre-market?
Was just looking at monthly chart going back to the 90's. We now have 5 down months in a row creating some pretty high levels of bearishness.
ReplyDeleteIn bears, markets generally continue to test and hug their 10 month moving averages. In the current "bear", we haven't tested it. It stands at 1291 at the moment.
http://stockcharts.com/c-sc/sc?s=$SPX&p=M&yr=15&mn=0&dy=5&i=p66869412863&a=202363337&r=476
Jesse, why would you expect another crash? There was no unexpected bad news since the close yesterday/ If news is expected, it is always priced into the market. It is the unexpected that drives market dramatically up or down.
ReplyDeleteBB - I think Jesse is implying we will test the 10 month moving average....which would imply a solid rally.
ReplyDeleteI'm eyeing NFLX to be honest. Can't believe it but it looks good to me.
I think BB was referring to jesse's comment re his take last night with DJIA futes down -200.
ReplyDeleteA lot of those bear flags we have been watching are now forming little H&S patterns within.
ReplyDeleteSOAS
ReplyDeleteshit on a shingle
well i closed ,my spy puts just now for a solid $1,000 loss. however, i think the market is setting up for a disappointment. Why are the world's leaders scrambling to contain the mess in Europe? Why is Geithner on TV saying all is fine? It reminds me of that scene in Animal House:
ReplyDeletehttp://www.youtube.com/watch?v=zDAmPIq29ro
Two more gems:
ReplyDeleteSEED FEED
QE3 26 SEP 11
ReplyDeleteLong CVV at $16.24. Small position
ReplyDeleteWhy is copper so weak?
ReplyDeleteLong BGZ at $42.05
ReplyDeletelarge position in BGZ
ReplyDeleteIf copper gets to 3.80 it will confirm a worldwide recession.
ReplyDeleteLooking at MITK chart, I have to say you played it like a Stradivarius Mark.
Did I miss some news? We're moving much faster here.
ReplyDeleteBB-
ReplyDeleteI was thinking we might dip because we had 2 recent bounces from overnight futures "crashes". My thinking was the market couldn't do it 3 times in a row. Well, it did. Now we're seeing some weakness in the regular session.
T3D- Thanks man. It did get a little hairy for a few days there.
ReplyDeleteNice whoosh to flush out weak hands. All good.
ReplyDeletePretty tough to trade this news driven market. Maybe enough traders will say F it, and that might mark a bottom??
ReplyDeleteTOF-
ReplyDeleteLast week, I was saying that suckers were buying CVV near 20 as the smart money over the past year has been buying it on pullbacks to its 10 week moving average.
It hit its 10 week on Monday. It stands at 15.59 currently. So probably a good entry.
I LOVE the story. The only drawbacks to the play are the insider selling, the increased expected expenses going forward expected by ThinkEquity, the lack of recent pr's regarding increasing backlog (3 month backlog increase was only $8 million the last time they updated), and the doubling in size of its facility (I know- counter-intuitive, but I could go on and on about how similar expansions have affected the stock performance).
All in all, I still love the story, but am much more cautious than I was when I was buying it in the 12's.
Sorry, meant to post the "map syntax" chart of CVV and its buy points:
ReplyDeletehttp://stockcharts.com/c-sc/sc?s=CVV&p=W&yr=2&mn=0&dy=0&i=p07776904748&a=235509790&r=107
Sold BGZ position at $42.83...made $3k
ReplyDeleteJesse - The story has gotten better since you bought at $12.
ReplyDeleteLong NFLX at $207.5
ReplyDeleteThe reason I'm thinking NFLX should be bought here is really simple: there is no alternative to the average person. I'm not talking about the people that are getting movies from the internet. I'm talking about people that used to go to Blockbuster and now are being forced to use Red Box. From my own experience, Red Box sucks. The selection is pathetic.
ReplyDeleteNFLX- fwiw, I log on almost every day. Great service, fast downloads, and pretty decent user reviews of most films.
ReplyDeleteWe kind of need a sell off today, to pave the way for an end-of-week rally.
ReplyDeleteAnyone know why copper is so weak?
ReplyDeleteSOAS - Silvercorp responds to latest accusations:
ReplyDeletehttp://silvercorpmetals.com/_resources/news/PR_and_schedule_1_to_4.pdf
http://www.theglobeandmail.com/report-on-business/industry-news/energy-and-resources/ground-shifts-under-coppers-price-as-codelco-says-orders-cancelled/article2163294/
ReplyDeleteI found the reason why copper is weak...
"Red Box sucks. The selection is pathetic."
ReplyDeleteThat's good to know, I've never used them.
In an effort to catch up with modern times, I have purchased a few movies from the Wal-Mart $5 bin, last good find was "Jaws". The ending scene battle on the boat was awesome!
MITK, man, what a sloppy exit. Or did the MM just want to hit some stops? Either way, sorry I missed it.
ReplyDeleteGot to run!!
SOAS - Silvercorp:
ReplyDelete"PRESS RELEASE
Trading Symbol: TSX: SVM September 14, 2011
NYSE: SVM
SILVERCORP RESPONDS TO SECOND ANONYMOUS ALLEGATION AND PROVIDES
GOVERNMENT CERTIFICATION OF TAXES PAID
VANCOUVER, British Columbia – September 14, 2011 – Silvercorp Metals Inc. (“Silvercorp”
or the “Company”) advises that a second set of anonymous allegations against the Company has
been made, which was published on the internet (the “2nd Anonymous Report”). The Company
refutes the substance of all allegations in the 2nd Anonymous Report, and believes it has been
published in furtherance of concerted efforts by a group of short sellers to drive down the
Company’s share price through false, selective or ignorant statements and rumors. Investigations
are ongoing by the RCMP, the BC Securities Commission, the SEC and the FBI to determine the
identity of the anonymous authors.
The Independent Committee, in keeping with its duty, has retained independent legal counsel to
examine the anonymous allegations. In addition, KPMG Forensic Inc. was engaged on September
6th by legal counsel to the Independent Committee to assist the Independent Committee by
completing a report on certain aspects of revenue, cash balances and income tax and VAT
payments in China, and to perform certain reconciliations of the Company’s filings in China with
those filed with North American regulators.... "
Nice scalp TOF!
ReplyDeleteToday is basically the all clear for a short/intermediate term rally. We got downgrades of French banks and what does the French market do? It rallies. That's all you need for confirmation we're going higher.
ReplyDeletePicked up some 'flix $208. Summer is over. Transition into darkness, dampness, and depression.
ReplyDeleteBack to movies and popcorn.
Long EWQ at $19.55. Long EWG at $18.47
ReplyDeleteOK. Thanks Jesse.
ReplyDeleteTOF, WSJ blames copper weakness on worries about Europe (how's that for some good reporting?). Think your find is much more likley. Plus with some strikes starting, prcie should be going up
Dudes - what's your take on NOK?
ReplyDelete"For the first time in three and a half years... you can begin to invest fundamentally and make money," Meredith Whitney says
ReplyDelete=> Don't know if she is right, but would sure make things a lot easier than trying to guess what Greece or Finland or Austria might do tonight!
SVM - I've got R1 as $7.42, this target was reached.
ReplyDeleteMoved my stops up to breakeven on all longs except NFLX.
ReplyDeletewe had a downgrade of french banks, bad retail sales...yet the market is much higher. umm...selloff is over for now.
ReplyDeleteRaising stops a bit higher....thinking about actually taking off my longs which are up nicely but will give it til the end of the day...i'm worried that copper and the financials are not joining the party.
ReplyDeleteif we continue to follow the markets like we did back in the beginning of 2008 then this rally should bring us to 1,225 and then we should see a drop to below 1,120 which would mark a medium term bottom.
ReplyDeleteHFT - It must all be worth it for some reason:
ReplyDelete"The $300 Million Cable That Will Save Traders Milliseconds
September 13th, 2011
Via: Telegraph:
In the high-speed world of automated financial trading, milliseconds matter. So much so, in fact, that a saving of just six milliseconds in transmission time is all that is required to justify the laying of the first transatlantic communications cable for 10 years at a cost of more than $300m."
http://www.telegraph.co.uk/technology/news/8753784/The-300m-cable-that-will-save-traders-milliseconds.html
CTCT just might be the best trading stock out ther...you can pick up 15% swings on a weekly basis with that sucker.
ReplyDeleteCP- That's WILD!!
ReplyDeleteLook at that volume bar in BEXP.
ReplyDeleteWhat volume anywhere.
ReplyDeleteNYSE 700K
wow what a day! we might get half way to your +1000 this week 2nd.
ReplyDeleteVol Fade Away
ReplyDeletehttp://www.youtube.com/watch?v=qLTFKt0qtog&feature=related
Great "pancake flip" today, TOF!
ReplyDeleteWTF is TLT doing in the green on such a day???
ReplyDeleteGuys, take a look at the 1-year CAAS chart: doesn't it seem ready to rally now? SORL has exactly the same chart, and also looks ready to rally -- the Chinese auto parts sector is rising up from the dead? After all, the auto production is still increasing there, regardless of whether S&P goes up or down...
ReplyDeleteTotally confused here.
ReplyDeleteLook at the 5-year GMO chart, guys: it looks like another higher low has been made and a huge rally is just around the corner.
ReplyDeleteSo many stocks are great buys now -- too bad I have no spare cash left, and TLT is eating away whatever few shekels I did have...
Damn...GTFO.
ReplyDeletewow, what a day. I'm not sure I have the stamina required to trade full time.
ReplyDeletecocktails, please!
the ES is stalling out here at an important fib line, wouldn't be surprised to see a decent collapse here at the end of the day.
ReplyDeletethere goes 5 es pts. should have played the es/tf short here, but seriously ran out of gas.
ReplyDeletehttp://www.marketwatch.com/story/tech-ceos-forced-to-go-begging-for-workers-2011-09-14?link=MW_story_investinginsight
ReplyDeleteAdded to gold through GTU.
ReplyDeleteclosed MSFT
ReplyDeleteBest set up for today that I missed is KKR, if we had a stronger mkt, I would go here. Prob still right.
ReplyDeletelooks like a typical tree shake to me
ReplyDeleteMark, no daze and confused. We are in a whippy mkt in about a 150 point range. The action is bearish IMO, But lots of price movement if nimble.
ReplyDeleteGo TOF
http://www.youtube.com/watch?v=auDv6cf2PBM
ReplyDeletef*ing TLT...
ReplyDelete"Not a chance"...so says Timmy Geithner when responding to a question about Lehman like issue in Europe. That's part of the reason we rallied today right?
ReplyDeleteHe's a good source of truth.
http://www.youtube.com/watch?v=q7Z0L-NYFlE
Also:
http://www.reuters.com/article/2010/10/19/us-usa-dollar-geithner-idUSTRE69H4VO20101019
This is the same guy:
http://online.wsj.com/article/SB123187503629378119.html
http://www.huffingtonpost.com/2009/01/13/treasury-nominee-timothy-_n_157610.html
So that I don't have too much risk on the table, I decided to sell my EWG and EWQ at the close and after hours at $18.8-18.77 and $19.85...I had about 40% of port in it. I'm now sitting with about 60% cash and still scanning for beaten down growth companies that I want to hold longer term...
ReplyDeleteHEK- 1M share transaction at the close. Might be worth keeping an eye on...Could be an insider sale.
ReplyDeleteIs there arsenic in your apple juice? My safety training taught me that organic arsenic does not present the same level of health hazard as inorganic arsenic does:
ReplyDelete"The problem is that even though you can run a test doesn't mean that you can interpret the test correctly. For example, The Dr. Oz Show tested apple juice for total arsenic, while it is inorganic arsenic that is the form that is dangerous to people. The FDA states that organic arsenic is essentially harmless."
http://pediatrics.about.com/b/2011/09/14/dr-oz-warns-about-arsenic-in-apple-juice.htm
I eat an apple or two each day and still kicking!! Well, kinda.
ReplyDeleteJB- Good call on the close. I saw it also and would have traded it, but I have to pick up the kids every wed. @ 12:45.
Copper low was $3.885, closed down 1.8% Looks like MACD crossed over yesterday, not sure what to think at the moment:
ReplyDeletehttp://stockcharts.com/c-sc/sc?s=$copper&p=D&yr=0&mn=7&dy=0&i=p99295968853&a=217994610&r=7 736
Mark - Yes, I like them too. The arsenic source in question involves fruit sourced from foreign countries that still use arsenic as an agricultural pesticide. Many foreign country's also use DDT, I've read.
ReplyDeleteAnyway, I guess the question isn't so much if, but which type they're using. I don't believe conventional tests can differentiate.
Requires more DD, it seems...
Holy shit man...I can't believe how cheap some of these companies are:
ReplyDeleteGCI - I know, I know, old media. But the company generated $700 Million in free cash flow last year and trades at 3 times that amount. It's trading at 4.5 times earnings. They just upped their dividend to a payout of over 3% now. They have about $1.5 Billion in net debt, but that will be paid off in 2.5 years if free cash flow is $600 Million per year.
DELL - Mkt cap is $27 Billion. They have $11 Billion in net cash. Back that out and get $16 Billion. Last year they generated $3.5 Billion in Free Cash Flow. They're trading at 4.5 times free cash flow excluding cash on their books and 4.4 times earnings excluding cash.
MSFT - Value is $20 ex cash. Trades at 7 times earnings and 7 times free cash flow ex cash.
HPQ could be a value trap given the change in biz model.
The Nasdaq is up close to 300 points from the lows, yet just about all of the stuff on my watch list are sitting at or very close to their lows.
ReplyDeleteNot sure what to make of this.
It will be interesting to see if the dollar can hold at these levels. When the dollar surged from its low the first week of May, I was saying that analysts would slowly start cutting earnings estimates over the ensuing weeks which would put pressure on the market. The end result was a sell-off.
ReplyDeleteWe may be in a different situation now, but continued dollar strength will be something to keep an eye on.
NFLX - Yes, but do they offer the new LSD-TV format?
ReplyDelete