Archive for April, 2010

Closing trade

By: ispeculatornew | Date posted: 04.25.2010 (4:23 pm)

Good news as I am now able to close out a new successful trade, Apple (AAPL) vs Amazon (AMZN), with Apple’s incredible rise since the launch of the Ipad as well as the continued success of the Iphone. The trade is currently +25.82% and will be closed Monday morning.

Financial Ramblings

By: ispeculatornew | Date posted: 04.24.2010 (3:40 pm)

We had not done financial ramblings for a few weeks but are now ready to get back into it. Before starting, I have been hearing more and more about a new but very popular new player in the social field, Foursquare, which brings local to the web. Have any of you heard about FourSquare? I will try to do some research and discuss the potential investment in the next few days/weeks. Here are some of the better articles that I enjoyed this week:

Some guy in London is claiming the “credit” for causing the credit crisis @ Clusterstock
What young investors should do @ CanadianCapitalist
What now for Europe? @ MacroMan
S&P500 video analysis @ AlphaTrends
Hard evidence of Goldman’s corrup intent @ ZeroHedge
-A look at socially responsible investing
@ MomsMakingaMillion
Real return on real estate investments @ FourPillars
Avoid the 5 year fixed mortgage trap @ MillionDollarJourney

US more “socialist” than Europe in at least one regard…

By: ispeculatornew | Date posted: 04.23.2010 (5:00 am)

Tonight, as many of you know, is the start of the NFL entry draft, the way the most promising football (American football that is) get access to the league. This reminded me of a comparison I always like to make on both sides of the Socialism vs Capitalism debate. First off, for Americans who do not believe that socialism and equality are important. Sure, it’s only a sport, but it is a good example. And then of course to all those Europeans who think that America does not care about equality or helping the “less fortunate”. Just to point out, all major American sports have similar features (maybe less for baseball but still) but I decided to use the NFL in this example.

Draft

For those who do not know how it works, here is a brief intro. The teams are ranked according to how well they did last year during the regular season. Then, all players who become eligible to play in the NFL next year are made available in the draft. The worst team has the first pick and will generally take the best player. This usually explains why very poor teams can become great ones. Getting the best player might not get you a Super Bowl the next year but it will give you a good start and a reason to believe in the team for both fans and players.

Compare this to European soccer leagues where the best teams can simply go sign young players when they see enough talent. Of course, richer and better teams will have a major advantage when trying to sign young players. They will have more scouts to find them, will offer a more attractive proposition to young players and of course will generally be able to offer more money than a poor team.

Salary Cap

In European soccer, certain teams such as Real Madrid, Barcelona and Manchester United are able to play several hundred million dollars each year for players while less fortunate teams pay many times less. Compare that to the NFL, where teams are limited in the amount of money that they can spend each for players. This ensures that each team has more or less an equal opportunity to put up a decent team and offers the opportunity for smaller teams in cities such as Green Bay to compete with teams like the New York Giants.

Revenue sharing

In Europe, the best soccer teams set events such as the Championship league where the best and richest teams compete and can make very important sums of money. Smaller teams have a mathematical chance of playing in such events but let’s just say that the chances are slim and that results in consistent revenue shortfalls for these teams.

In the NFL, with most of the money being made in television contracts and merchandise, the major portion of the revenues are split between teams, giving a better chance at smaller and poorer teams of putting up solid teams. This ensures that a team in a small market will have comparable revenue to the richest teams.

Not buying players

I always wonder when I hear about these superstars being bought out in European soccer. Wonder why the best players never play for long for a smaller team? Because each time a small team is able to have such a player, it will do its best to sell the player at the highest price. It certainly makes it exciting for the top teams as they can easily buy the best and most exciting players. But what about those fans of smaller teams. They do not even have a hope of seeing one of the best in the world on their team, it simply will not happen.

In the NFL, players cannot be purchased in such a way. They can be traded of course but for all of the reasons listed above, players are rarely traded because they are too expensive. They might have a large contract compared to their performance on the field of course. But trading a player just to make a few $ or because a team cannot afford to pay the player? I don’t remember it happening.

Is it all that bad?

I’m not saying we should have a socialist economy. But like almost everything, it is not white or black. I doubt US fans would like the NFL to be entirely capitalist where a market like Green Bay could never compete with the richer and more powerful teams. Just some food for thought…

Is this too far stretched or does it make some sense?

Quick news – April 22 2010

By: ispeculatornew | Date posted: 04.22.2010 (6:58 pm)


Amazon (AMZN) announced solid earnings and revenues, a 0.66$ profit vs 0.61$ estimates but is lower because of disapointing guidance
Microsoft (MSFT) beat estimates with a 0.45$ estimate vs 0.42$ estimate but was also lower because of lower sales than expected
Hulu fears ABC’s Ipad App will hurt its business
Ebay (EBAY) cut to sell by MKM partners
Netflix (NFLX) stock surged after reporting earnings

Ishares holding on… but for how long?

By: ispeculatornew | Date posted: 04.22.2010 (5:00 am)

I’ve written about this a few times, but I’m still surprised every day to see that Ishares is not reacting. EEM and VWO are two ETF’s that track the same index, the MSCI Emerging Markets Index. This is a broad index and while they both use different ways to track it, their return has been almost identical in recent years. EEM is the older of the two and in the ETF business, that does mean a lot.


If you take a look at ETF’s on US markets, you will notice that in almost all cases, the first ETF to hit the market has the advantage and even if they charge a bit more fees, they remain on top. A good example is SPY, which tracks the S&P500. It is one of many ETF’s that tracks the index and even though it is not the cheapest or even the best at tracking, it is by very very far, the most used and has the most assets under management. Why? Because it is the biggest, the most liquid, the most active. And for most investors, that has tremendous value.

Ishares however is testing that theory and perhaps taking things a bit too far. It was the first mover for the emerging markets launching EEM almost 7 years ago to the day. Because of that, it had a huge advantage and newcomers had a major hill to climb. It is even more true for EEM which is a lot more complex to manage because of all of the markets and currencies involved. But when Vanguard launched VWO, with fees almost 3 times less than EEM, Ishares did not react.

Every month since then, Ishares has stood aside, seeing all the new investors (as well as many current ones) take their money to Vanguard’s fund. I don’t remember the last time EEM had bigger asset growth in a month than VWO. Of course Ishares is scared of losing the 0.72% it charges annually for all EEM shareholders, but if VWO reaches the point where it is as big or even bigger than EEM, will it be too late for Ishares to react?

Here are the current numbers:

EEM: $ 35,935,310,000.00
VWO: $ 24,284,510,000.00

They are now about 11,5$ billion apart but that is changing fast. How long do you think it will take for VWO to catch up? And when that happens, will EEM be able to recover?

Quick News – April 21 2010

By: ispeculatornew | Date posted: 04.21.2010 (8:31 pm)


Netflix (NFLX) announced profits of .59$ vs .54$ estimates
Ebay (EBAY) announced profits of .42$ vs .41$ estimates but forecasts were lower than expected
Despite strong earnings, Yahoo’s (YHOO) slow growth ended up costing Yahoo shareholders
Amazon (AMZN) has secured an agreement with Target stores which will now offer the Kindle

How serious was the attack on Google (GOOG) ?

By: ispeculatornew | Date posted: 04.21.2010 (5:00 am)

Today I read an excellent article from the NY Times (link below) about what seems to have happened back in December that caused Google to end up more or less getting out of China. We knew it was serious but it’s probably a lot worse than most of us could have even imagined. The problem of course is that if the Chinese government is involved, you can imagine how they would not be helping Google prosecute such attacks, giving incentives for these hackers to keep it going until they have what they need. Needless to say that the costs involved are incredibly high.

Vulnerabality…

This article is focused on Google but it’s easy to imagine any other target as well as any type of data being vulnerable to such attacks, something that remains very scary. I’ve been reading over and over about the threat of cyber-attacks and cyber-warfare and when you read about attacks like this, it becomes very clear that these methods are far from being science fiction. It has probably already been happening but not on a big enough scale or not with enough success to make it in the mainstream news.Of course, the US government has no interest in making it clear how vulnerable it is or what its weaknesses are and we will probably not have an accurate idea until something serious happens. Hopefully never but that is doubtful of course.

So what to do now?

Obviously, Google has tons of data, probably the largest set of data of any institution right now. And that is where much of the company’s value resides. So having Chinese hackers gain access to Google’s networks through Google’s Chinese operations was a major threat. There seems to have been two obvious solutions:

-Separating Google China’s network entirely from all other operations to give no opportunity for hackers that would succeed in attacks to gain access to US or other servers. Of course, that would be very expensive as it would mean duplicating all activities, security, administation, etc. Google decided instead to basically get out of China.

-Since China is not the only government to create such problems, Google has decided to be more vocal about the governments that are making such requests. A few weeks ago, the company publicly complained about Vietnam’s censorship And today, Google launched a website that will help track governments that are censoring the web.

Is Google doing the right thing?

There is no clear answer to that question but I think anyone who was judging Google’s response against the Chinese government should really take a look at the NY Times’ article. If such attacks can go on every day without punishment (because they occur on China’s soil), it becomes very expensive to secure the company against such attacks and the potential of losing important data is probably a lot more expensive to Google than the revenue it anticipates in China. Difficult to believe perhaps for many, but after reading this article, I’m a believer. Are you?

You can read the NY Times article here

Quick news – April 20 2010

By: ispeculatornew | Date posted: 04.20.2010 (6:05 pm)


Apple (AAPL) crushed estimates with 3.33$ EPS vs estimates of 2.46$, a 90% increase year over year
MonsterWorldWide (MWW) raised to Outperform by CSFB
Google (GOOG) rebrands its local business center
Yahoo (YHOO) announced .22$ EPS for Q1 beating estimates of .09$

Apple (AAPL) crushed estimates with 3.33$ EPS vs estimates of 2.46$, a 90% increase year over year
MonsterWorldWide (MWW) raised to Outperform by CSFB
Google rebrands its local business center
Yahoo announced .22$ EPS for Q1 beating estimates of .09$

QuinStreet Inc (QNST) a new potential investment

By: ispeculatornew | Date posted: 04.20.2010 (5:00 am)

Recently, 4 new tech stocks did their IPO and this weekend I took more time to look into them to see if one of them could be added to my dashboard. It does turn out that QuinStreet seems to fit the profile. They are an online advertising company that seems to have a similar business model to Valueclick (VCLK). It is not a terribly crowded arena but anytime you are competing with a player like Google (GOOG), it quickly becomes a challenging business.

Financial Statements?

Even though the company has just gone public, it does have a fair amount of financial history available for investors. You can take a look on Google Finance here. The major thing missing is more background on what has happened since the company used to be private. In general, QuinStreet seems to be growing although not at the pace you would usually expect from a tech IPO. But growth is growth and that is already more than what Valueclick can show off to its shareholders. The main question of course is how the company intends to keep up and accelerate its growth. I did not find much from the company’s website or press releases so I needed to do additional research .

Like any other new company, the amount of information available is fairly limited but I would say that what I found is that QuinStreet seems to be concentrated on a few specific niches, namely education and finances. That would seem like a smart decision but perhaps not one that warrants it current high P/E ratio.

Will I go long or short?

As I had discussed when I wrote about AOL, I usually tend to wait a bit before getting involved to get more information about the company, but I will be following up news and press releases from QuinStreet so you can expect to start seeing more written about it in the upcoming weeks and months with a trade perhaps coming late in the year if the opportunity presents itself. The most obvious trade would be against Valueclick which has a similar model, although it is far more broad in its business (not a positive in my opinion for such a small company).

Top 100 performing commodity ETF’s for 2010 – no they are not all leveraged

By: ispeculatornew | Date posted: 04.19.2010 (5:00 am)

With close to a third of the year already gone by, it is time to take a look at the better performing commodity ETF’s so far in 2010 and while I usually only took the largest commodity ETF’s, I took all those that have existed since the start of the year for this report. You will see that the number one position (by far) is held by JJN, a one time nickel ETF. Who said we needed to hold leveraged ETF’s to compete in the best results category?

However, the runner-up so far is leveraged, in fact it is 2 x short agriculture. A surprise to many, including myself. There is so much hype about the growing world population that will eventually lead to a lack of agriculture resources. Anyone else surprised?

You can see the full results of the Top 100 Performing Commodity ETF’s so far in 2010:

TickerNamePricePE RatioPE Next YearReturn YTDSales GrowthAnalyst ratingBook ValueBetaRevenue/ShareSales 5Y Avg GrowthEPS 5Y Avg GrowthSales 5Y Avg GrowthEPS 5Y Avg Growth
PPandora Media Inc15.44N/A27.5-15.9344.3542.791.414.49N/AN/AN/AN/A
TRIPTripAdvisor Inc84.8152.8227.9310.3731.93.368.651.558.7129.4N/A31.39N/A