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' date='10.03.2006, 21:00' post='2132251']
а что Вам запомнилось в той статье?
Спор с Евросоюзом относительно поставок товаров, не помню правда каких. Ну и общий портрет
Almaty Stock Madness IIбиржевой симулятор
Автор [Narim], 29.07.2005, 17:50
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Отправлено 11.03.2006, 05:16:22
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At Home In the World
By LAUREN R. RUBLIN
GO WEST, INVESTOR. And east and north and south. Peter Lynch, the fabled former manager of Fidelity Magellan and a distinguished Barron's Roundtable member himself, famously advised that the best stock ideas can be found right in your own backyard. That still is true, but in today's global market your backyard might stretch from Abilene to Zanzibar.
Just ask the five money managers featured in the second installment of this year's Roundtable, as worldly a bunch as ever you'll meet, who scoured the globe in search of compelling portfolio picks -- and a few pans -- for 2006.
Meryl Witmer of New York's Eagle Capital Management leads off this week with a look at several infrastructure plays; an Australian food producer; Rolls-Royce, of airplane-engine fame, and the footwear company that makes UGGs. (You don't know from UGGs? Time for a fashion makeover!)
Oscar Schafer, proprietor of O.S.S. Capital Management, just a few blocks uptown, follows with his usual trenchant observations -- about CBS, a Canadian miner and a pair of drug-related issues. He also had some prescient thoughts on Tyco, before the company's recent decision to split.
DOW JONES REPRINTSThis copy is for your personal, non-commercial use only. To order presentation-ready copies for distribution to your colleagues, clients or customers, use the Order Reprints tool at the bottom of any article or visit: www.djreprints.com. ? See a sample reprint in PDF format ? Order a reprint of this article now.
Fred Hickey, editor of the High-Tech Strategist in Nashua, N.H., is a balanced sort of guy. And just to prove it, he's got three shorts, all tech-related, and an equal number of longs, including the Canadian dollar, a gold ETF and a computer-networking company with a red-hot China connection.
Mario Gabelli of Rye, N.Y.-based Gamco Investors brought us no fewer -- and, for once, no more -- than 11 intriguing investment ideas, including a mobile-home maker, a Midwest utility and a bet on gambling in Britain. He also passed 'round many cups of yogurt -- "so convenient, so healthy" -- to illustrate his fondness for France's Groupe Danone.
Swiss-born and Hong-Kong based, Marc Faber rounds out this week's stockpicking quintet with a pitch for five Asian real-estate plays -- against which he's shorting an index of U.S. homebuilders. Faber also is keen on airlines and volatility, but he's decidedly cool toward Treasury bonds and the U.S. dollar.
Witmer is bullish on infrastructure plays, including Chaparral Steel and Walter.
For the record, the Roundtable met Jan. 9 in Manhattan, and last week's issue featured our guests' "macro" views. In the right-hand column you'll find the full list of this year's participants, most of whom you'll hear from, again, in the story that follows.
Meryl, your '05 picks all were winners. How about a rerun?
Witmer: I'll try. The U.S. has neglected its infrastructure. Spending in this area has to increase. Two stocks that could benefit are Chaparral Steel and Walter Industries. Chaparral sells for $30 and has 23 million shares. It was spun out of Texas Industries in July and is the second-largest producer of structural steel in North America. Following a period of consolidation, with high-cost players shutting down, the structural-steel industry in the U.S. is now made up of three low-cost, profit-driven players.
Nucor [ticker: NUE] has 45% of the market. Chaparral has 30% and Steel Dynamics [STLD] 15%. Imports make up the rest. I have especially high regard for Chaparral's management, led by Tommy Valenta. The three big players have raised base prices and returned margins to appropriate levels, despite overcapacity in the nonresidential construction market. Hurricane Katrina led to increased demand for structural steel, and steel intensity per square foot built is increasing.
How vulnerable is Chaparral to imports?
Witmer: The industry has kept its prices at world prices. And steel service centers prefer to buy from a Chaparral or a Nucor, which have short time horizons and pass through the market price. Chaparral is diversifying its product offerings. In addition, it implemented a scrap-surcharge mechanism in January '04. When the cost of scrap goes up $10 per ton, the price of structural steel goes up $10. The outlook is extremely bright.
What do earnings look like?
Witmer: This year Chaparral will earn about $4 a share. It should generate another $1.50 in free cash due to the excess of depreciation over capital spending. Looking ahead, the company will pay down its debt. In two years it will generate $6.25 of free cash flow, be debt-free and trade at $50 to $60 a share.
Meryl Witmer's Picks
Company Ticker Price
1/6/06
Chaparral Steel CHAP $29.67
Walter Industries WLT 50.64
Deckers Outdoor DECK 30.95
Rolls-Royce RR/ LN 443 pence
Goodman Fielder GFF AU A$2.09
Source: Bloomberg
My next pick, Walter Industries, also will benefit from infrastructure spending. It's a $50 stock, and there are 50 million shares outstanding. Walter is extremely cheap on a sum-of-the-parts basis, and unlike many companies in that position, it has a new CEO who is doing something about it. The company has little Street coverage, always a plus. Walter has two main divisions. Mueller Water Products produces infrastructure and flow-control products for water- and gas-distribution networks and waste-water facilities. Jim Walter Resources has 20 years of proven reserves of high-quality metallurgical coal, or met coal. It also produces natural gas. The company also has a home-building and finance unit, for which it may be best known.
Mueller, acquired in October from DLJ's leveraged-buyout group, has become a powerhouse in the water-infrastructure market. Walter is planning an IPO [initial public offering] of Mueller, and later will spin off the remaining shares. Mueller is one of the three largest manufacturers of ductile iron pipe, preferred by most municipalities. It also makes valves, hydrants and fittings considered the Cadillac of the industry. The prospects for the business are fantastic for one reason: Water pipe installed in the U.S. over the past 100 years is beginning to fail. A large portion of America's water pipes and valves will need to be replaced in the next 25 years.
Bad for taxpayers, good for Mueller.
Witmer: Mueller had pro forma Ebitda [earnings before interest, taxes, depreciation and amortization] of about $285 million last year. Assuming 8% growth and $50 million of cost savings, Ebitda could grow to $390 million in 2007, which would equate to after-tax free cash flow of $2.58 a share. This segment is growing, and should sell for 15 to 18 times free cash flow, and trade for $38 to $46 a share.
Walter's natural-resources segment next year should produce at least seven million tons of high quality met coal and eight billion cubic feet of natural gas. Met coal is an irreplaceable ingredient in the steel-making process. Walter's sulfur content is less than 1%, making it worth $30 a ton more than typical steam coal at today's prices for S02 [sulfur dioxide] emission credits. As world steel markets develop, demand should rise.
What is the going price?
Witmer: Walter has contracted all of its coal through June '06 for about $107 a ton. While this price may not be sustained indefinitely, prices will remain firm. Using $70 per ton for coal and $8 per mmBTU for natural gas, we get "normalized" earnings of $2.50 a share. Based on current coal and gas prices -- $100 for coal, $10 for gas -- the segment would earn $5.50. Others are trading for about 14 times projected '06 earnings. We value Walter's coal segment at $35 per share, at least. The other segments are worth $2 to $3 a share. In all, Walter Industries should trade for $75 to $85 per share.
How about another name?
Witmer: Deckers Outdoor sells for $30 a share. It is a shoe company whose principal brands are UGG, Teva and Simple. UGG makes terrific boots and slippers, typically of shearling. Deckers was one of the most heavily shorted stocks last year because many believed UGG was a fad that would burn out. The naysayers have been proven wrong this season, with inventory at most channels all but sold out.
Consumers love UGG's spring line. I brought a few pairs, just to show you. [Holds up a shearling moccasin and sandal and passes them around.] These are already beginning to sell out on Websites. The brand could grow from $150 million-plus in current sales to about $400 million within four years. UGG is an "affordable luxury" brand, along the lines of Coach [COH], which Abby recommended a few years ago.
Is Teva a hot seller, too?
Witmer: It is a well-known sandal brand that has lacked innovation and suffered from competitors taking market share. Deckers' new CEO, Angel Martinez, was one of the masterminds of Teva's best competitor, Keen. Now he's on Deckers' team. We see him rejuvenating Teva and growing sales to at least $100 million within a couple of years from $80 million now. Deckers' third brand, Simple, offers shoes with the comfort of sneakers without the flashy labels. It has generated a following among celebrities, typically a precursor to a brand taking off. Simple sales are only $10 million now, but some think it could be Deckers' biggest brand.
Martinez began his career at Reebok and built Rockport into a very large brand. He is one of the best, most driven and product-savvy executives in the footwear industry. Deckers could have $500 million to $700 million of sales within four years. Assuming a 16% margin, it could have earnings of $4 to $5.50 a share. Using a P/E of 14, we see the stock rising to $56-$77 a share in a few years. Near-term results should be in the $2 to $2.50 range. You have to be a long-term shareholder.
What else do you like?
Witmer: Rolls-Royce -- the airplane-engine company, not the luxury-car company -- has become one of the two main engine players, sharing the field with General Electric [GE]. It has the wonderfully efficient Trent engine and an intelligent management team, led by Sir John Rose. As Rolls-Royce has gained share in the new-engine market, its installed base has grown significantly. The revenue Rolls receives from selling an engine is equivalent to the amount it will receive in aftermarket revenues over the engine's 25 years. Profit on the engine's sale is minimal, but the profit on aftermarket parts and service revenue is a significant and highly predictable annuity stream.
Rolls is winning 25% to 50% of new-engine competitions. It should win more than 50% as more new planes are introduced with dual-engine options. In contrast, only 10% of aircraft being retired bear the Rolls-Royce name. The company expects its installed base to grow by more than 40% through 2009. To capture the profitable aftermarket business, Rolls has developed Power-by-the-Hour service plans.
What do they involve?
Witmer: They tie together sales of new engines and 12-year aftermarket contracts. The airlines love them because their costs are well defined, and they pay by hours flown. Power plans also allow them to eliminate their spare-parts inventories, freeing up capital. Rolls loves the plans because they lock in high-margin business. Currently, 60% of all new engines are sold with these contracts.
Also, there is little copy-catting of spare parts with Rolls engines, because there is risk of voiding the warranty. Finally, Rolls has moved to reduce the capital intensity of the engine business by teaming with suppliers. As a result, internally funded new-engine development costs have declined by 40%. Over time Rolls will become more profitable, less cyclical, less capital-intensive and worthy of a higher valuation. By 2009 it will generate 35 to 40 pence in EPS [earnings per share]. It will have net cash of 30p and trade for about 17 times earnings, yielding a stock-price target by mid-'08 of 600p to 700p. The stock trades for 440p now.
Table: 2005 Roundtable Report Card3
That's decent upside.
Witmer: My last pick is also international. Goodman Fielder is an Australian food company in the milk, yogurt, bread and spreadable-oil businesses. It sells into Australia, New Zealand and some Southeast Asian markets. Friends down under say it's virtually impossible to get through a week without eating or drinking a Goodman product. It also supplies commercial customers. The company has a market share of 30% to 70% in almost all its product categories. It was IPOed in December at A$2 a share by Burns Philp which is controlled by Graeme Hart, famed for his investment track record. Bain Capital reportedly offered Hart what amounts to $2 a share, but he elected to IPO the business in order to keep an interest.
How large is his stake?
Witmer: He controls 20%, or $500 million, though he has handed over the reins to a new CEO, Peter Margin, who is a superstar in the Australian food industry. Under Australian law, Goodman is required to publish earnings expectations for the fiscal years ending June 2006 and 2007. It sees earnings driven higher by merger synergies (it recently purchased a dairy company in New Zealand), operational improvements and some topline growth. Goodman thinks it can deliver earnings per share of A18 cents, and after-tax free cash flow of A20 cents per share in the year ending June '08. We think they can do better and deliver A22 cents a share.
Schafer: Where is the stock priced?
Witmer: At about A$2.10 a share. Goodman is positioned to do more acquisitions. It intends to pay out 80% of its net income in dividends, so Archie might like this stock. The semi-annual dividend should be at least A5 cents in June and A6 cents thereafter. Goodman currently yields about 5%. We expect the stock to trade for 12 to 13 times free cash at the end of '07. That plus dividends would yield a holder about A$3 a share in two years. The downside seems limited at A$2.10.
That sounds promising. Oscar?
Schafer: CBS was spun out of Viacom [VIA] earlier this month. The company has TV, radio, outdoor advertising, amusement parks and publishing. It is the cheapest large media stock, despite terrific assets, potential growth engines and a superior management team led by Les Moonves. Moonves is unique in the media business, as comfortable with the analytical side of the business as the creative side. There is a lot of opportunity to improve profitability. Moonves turned around the CBS network, making it No. 1 in primetime ratings and profitability. Now he'll focus on news.
Marc Faber's Picks
Company Country Ticker Price
1/6/06
ASIAN REAL ESTATE
IOI Properties Berhad Malaysia IOIP MK 7.60 ringgit
Suntec REIT Singapore SUN SP S$1.10
Macquarie MEAG Prime REIT Singapore MMP SP S$0.95
Rojana Industrial Park Thailand ROJANA TB 9.80 baht
Ticon Industrial Connection Thailand TICON TB 12.80 baht
SHORT
Philadelphia Housing Sector Idx U.S. HGX 534.87
VOLATILITY
CBOE Volatility Index U.S. VIX 11.00
TAIWAN
iShares MSCI Taiwan Index Fd. U.S. EWT $13.21
MALAYSIA
iShares MSCI Malaysia Index Fd. U.S. EWM $6.97
U.S. PHARMACEUTICALS
Merck U.S. MRK $33.12
Schering-Plough U.S. SGP 20.56
Pfizer U.S. PFE 24.85
AIRLINES
Deutsche Lufthansa Germany LHA GR ?12.99
TURNAROUND
KarstadtQuelle Germany KAR GR ?15.45
SHORT
U.S. Dollar Index DXY 88.91
30-year Treasury bond price: 112-02 yield: 4.56%
Source: Bloomberg
CBS' news business has far lower ratings and earns much less than NBC. Sean McManus, who led the resurgences of CBS Sports, is now running the news group. CBS' TV stations have room to expand operating margins by eight to 10 percentage points over the next few years. Moonves also is determined to grow Showtime, which was not a focus of Viacom management and is now part of CBS. Showtime has a third of the profits of HBO, so there's plenty of room for upside. But the greatest opportunity for CBS lies in its ability to extract additional revenue streams from advertisers and other content providers. Moonves believes CBS can get paid a per-subscriber, per-month fee from cable operators to retransmit the CBS signal on their systems. If he is successful, this revenue stream will be almost pure profit. If CBS gets only 20 to 40 cents per sub, that would translate into $175 million to $350 million per year in incremental profits.
How likely is this?
Schafer: Some cable networks should start to pay this year. There are other opportunities to leverage CBS' content, such as video-on-demand and Internet advertising. In March CBS will simultaneously broadcast the NCAA tournament over TV and stream it over the Internet. It will be targeting an entirely different base of advertisers for the Internet. Moonves and his team are competitive and passionate about the business. CBS will earn $1.85 a share in 2006. At less than 8.5 times 2006 Ebitda and 12.5 times after-tax free cash flow, the stock is inexpensive at $27.
Radio and television are not exactly stable businesses.
Gabelli: The media pie will grow by 6% to 8% over the next three years, in part because of a tsunami of political advertising in 2008, when we'll have two wild cards running for president. Earnings are going to go up for three years in a row. This is a huge cash generator.
Schafer: My next pick is Tyco International. The stock is about $29. The company has 2.1 billion shares and $40 billion of sales. It will earn close to $1.90 in the fiscal year ending Sept. 30. Investors are missing two things. First is the enormous cash-generating power of the company, which results in free cash flow of 15 to 25 cents more than reported earnings per share. Second is the value of the company's $10 billion health-care business, which earns close to a dollar a share and would be valued near $20 as a stand-alone company. You're paying only 10 times earnings for the remaining businesses.
When Tyco stock was at $36 last January, there was little incentive to split up the company. But, at 29, there is a serious disconnect between the price and intrinsic value. In November, CEO Ed Breen said that if "the valuation disconnect persists," he was prepared to take additional action besides repurchasing shares. When asked, he said "the full range of options" was being considered. One would be a spinoff or IPO or sale of the health-care division.
Meanwhile, Tyco has reduced net debt from $9.3 billion at the end of September to $6.3 billion now. With $4.5 billion of free cash flow, the company can simultaneously reduce debt, buy back stock and make acquisitions. [Subsequent to the Roundtable, Tyco announced it would split into three separate publicly traded companies specializing in its various business lines. Oscar, who applauded the split, said in a follow-up conversation, "This split aligns three shareholder constituencies in a tax-efficient manner, and allows each company more flexibility to pursue strategies unique to that business."]
Oscar, how about another stock?
Schafer: My third pick is FNX Mining, a nickel, copper and precious-metals miner in the Sudbury Basin in Ontario, Canada. The Sudbury Basin was formed after a meteorite hit the earth about 1.9 billion years ago, before the Roundtable started.
You mean, before you got on it.
Schafer: Just. It has two distinct geological areas: the area of direct impact, or contact zone, and a large fractured area outside this zone called the foot wall. International Nickel and Falconbridge [FAL], the largest producers in Sudbury, have developed the contact zone, but largely ignored the foot wall. It is hypothesized there is a major foot-wall deposit that could be as large and valuable as the contact zone.
In 2002 FNX acquired noncore properties, as well as some prospective exploration areas, including the right to explore the foot wall behind the Levack contact-zone mine from Inco [N]. It also gained access to Inco's existing infrastructure, to explore for and produce nickel. In February, FNX reported it had found two massive high-grade copper and nickel veins. Geophysical tests indicated the discovery was open in every direction and the resource could be large. It was then we started buying the stock, at about C$7.
You've done well, we take it.
Schafer: The stock is now C$13.50. FNX has continued to prove up the discovery. Drilling results indicate there are at least 2.5 million tons of high-grade resources present in the Levack foot-wall zone. The foot wall could hold more than five million tons. FNX properties currently in production or soon to be in production are worth between C$5 and C$6 a share. Assuming 2.5 million to 4.5 million tons are in place, the foot wall should be worth C$9 to C$13. Using conservative commodity prices, and including FNX's C$2 a share in cash and securities, I estimate the value of the company's assets is between C$15 and C$20 a share. At current prices, you're paying nothing for upside potential. In another zone behind the Levack foot wall, the geophysics are also promising.
FNX bought Aurora Platinum in the third quarter of 2005. Netting out the cash and current market value of the securities acquired, it paid nothing for the Aurora properties. Yet Aurora increased FNX's Sudbury land holdings eightfold.
Why was Aurora so cheap?
Schafer: Its management believed FNX was far more likely to achieve exploration success. FNX is currently drilling on the Aurora properties behind Falconbridge. The foot-wall discovery could prove larger than five million tons. Indeed, it is possible the various zones FNX has delineated could be connected, and that the ore body could be three to five times as large as is currently thought. It would mean the foot-wall discovery alone is worth far more than FNX's C$1.1 billion market capitalization.
For your sake, we hope so.
Schafer: In June 2003 I recommended Flamel Technologies at $11.65. Since then, there have been several positive developments only partially reflected in the stock at $19.72. A world-class board has been put in place. A new CFO has joined from Aventis. The company is financially stronger and has nearly $4 a share in cash. Its two technologies have completed additional human clinical trials, and the first major product is expected to launch later this year.
Remind us, what does Flamel do?
Schafer: It has two ways of modifying drugs. The large pharmaceutical companies' are facing patent expirations on major drugs. Anything they can do to minimize generic competition is money in the bank. One strategy is to modify existing drugs and switch patients to the new formulation, so that when the old drug's patent expires, there are no patients on it. Flamel's most important partnership is with GlaxoSmithKline [GSK], which manufactures Coreg. The drug has sales of $1 billion in the U.S. alone. The patent expires in late 2007, and Glaxo's CEO has predicted the company will launch once-a-day Coreg CR in late 2006, a new formulation that uses Flamel's technology.
Royalties in this type of arrangement usually are 5% to 10%. We think Flamel will earn close to $2 a share from this partnership. Assuming the company is successful in obtaining R&D milestones to cover its overhead, royalties and potential revenue streams from future partnerships will be all profit. Although the timing is always uncertain in this industry, within two or three years the company will earn $3 to $5 a share and could be two to three times its current price. It will be cash-flow positive.
Any more picks, Oscar?
Schafer: Schwarz Pharma has $1 billion in sales and is based in Monheim, Germany. But 78% of its sales are outside Germany. In 1999 the company sold its generic drug business and used the proceeds to fund research and development in neurology and urology. Because of it large R&D expense, close to $4.50 a share, and competition, the company will break even in 2005 and 2006. But it should begin to see the fruits of its research in the next two-three years.
Oscar Schafer's Picks
Company Ticker Price 1/6/06
CBS CBS $27.23
Tyco International TYC 29.98
FNX Mining FNX CN C$14.79
Flamel Technologies FLML 19.72
Schwarz Pharma SRZ GR ?53.10
Source: Bloomberg
At 2.8 times enterprise value, the shares sell at the low end of industry valuations. Schwarz's pipeline has three new drugs. The first is Neupro, a once-a-day patch for Parkinson's disease. It has been approved in the European Union, and I hope it will soon be approved by the Food and Drug Administration.
Black: Is this a dopamine-based drug?
Schafer: Yes. A patch has a huge advantage over pills, as many patients with Parkinson's have trouble swallowing. Neupro also has an additional indication in restless-leg syndrome. The company's second product, Lacosamide, is an anti-convulsive. Its first indication is for epilepsy, though it can be used to treat diseases such as depression, bipolar disorder and migraine headache. The biggest potential for the product is diabetic neuropathic pain. Recently Pfizer [PFE] launched Lyrica for this pain, and analysts estimate sales of $4 billion in five years. But Lyrica has side effects, including weight gain and in some cases muscle injury. So far, Lacosamide has shown no evidence of either. If its Phase III trial is successful -- the outcome will be reported the second quarter -- the product will be introduced late next year, and could have a billion dollars of sales.
Does Schwarz trade in the U.S.?
Schafer: Management said it will consider an ADR [American depositary receipt] when its products become better known in the U.S. Schwarz is reasonably valued at 2.8 times enterprise value to sales. If one of the company's new products is successful, the stock is underpriced. If more than one works, you get the pipeline for free. And, if all five work, the stock will be a home run and the company will earn more than ?10 and sell at more than ?200 in the next few years. It sells for ?55 now.
Thanks. Fred, want to take over?
Hickey: Sure. I have three shorts and three longs, just to show I'm a balanced guy. I'll start with the shorts because they are more fun. The first is NetLogic Microsystems, priced around $29. It is a favorite of momentum players, chart gazers and "get shorty" types that ran up this and a lot of other tech stocks at the end of the year. The stock is up 60% since October, 140% since it came public in July 2004. The company makes TCAMs, ternary content-addressable memory chips. They go into networking equipment. When NetLogic's products came out they had an early lead, but that is lead is diminishing. This is a commodity product. Cisco [CSCO] accounts for 70% of NetLogic's business. IDTI [Integrated Device Technology], the market leader, has a stronger product and NetLogic is going to lose share.
How expensive is NetLogic stock?
Hickey: The P/E on trailing earnings is 39. The P/E for this year's earnings is 30, yet the forecast EPS growth rate is just 12% in 2006. The stock sells for seven times sales and 8.4 times book value. There has been a lot of insider selling -- half a million shares in the past six months. My second short is SanDisk, which Barron's wrote about negatively last year. I think my timing will be a little better.
Thanks for the compliment.
Hickey: SanDisk has been tough to short. It's running up on rumors it will have blowout earnings when it reports Jan. 26. The stock was up 152% last year, to 63, and 18% in the first week of January, to 74. It is the world's largest supplier of flash storage cards. It sells primarily NAND flash, used in MP3 players and digital cameras. The stock sells for six times book value, six times sales, 42 times trailing earnings and 32 times '06 estimates.
If the consumer slows in 2006, the whole industry will be under pressure. Many NAND flash players in Asia, including Samsung, are expanding production. We are seeing a slowdown in the retail flash-card growth rate. Some traders of memory are dumping their flash products now. There is a chance we'll see a blood bath. SanDisk, too, has had insider selling. There were 23 insider sales in the past six months, of nearly a million shares. Also, the company is involved in a number of lawsuits involving threats to its patents. Royalties account for 40% of profits, and that royalty stream might not stay intact. The company lost a recent court case, and the stock got hammered after running up wildly in anticipation.
What is your third short?
Hickey: Intel. Some people see it as a value stock. I don't. Intel's profits come from the mature PC [personal computer] market, which has seen three years of double-digit unit growth. This was the replacement cycle. With pricing pressure intense, PC revenue growth has been in the single digits. A slowdown will put the industry in the red.
Black: Intel sells for around 15 times earnings. Dell [DELL] sells at a higher P/E. If you think the PC business is going to crater, why don't you short Dell as opposed to Intel?
Hickey: I am short Dell, too. Intel is being beaten badly by AMD [Advanced Micro Devices], a stock I have owned for some years. Even Intel fans know it is going to lag this year, and maybe longer. [Last week Intel reported fourth-quarter results below expectations, and issued a downbeat outlook. AMD, on the other hand, turned profitable and reported a 45% jump in revenues.] Intel still has 80% of the business and used to be able to overwhelm competitors, primarily AMD, when AMD was only a low-end chip maker. Now, AMD has the better products. Dell is the world's largest PC vendor. It is the only Intel-only shop, which is a problem. Dell had a pretty terrible quarter and may be forced to consider using AMD chips. It would be a terrible blow for Intel if Dell announced a switch. Michael Dell made some interesting comments at the Consumer Electronics Show, alluding to the use of AMD chips. It was the company's strongest wording yet. Intel is expanding capacity, as is AMD. Even if there isn't a slowdown, there could be a 20%-25% oversupply of processors.
Black: What is your estimate for server growth? That drives demand for Intel, too.
Hickey: Competition from AMD is pressing Intel on the server side. Server revenue growth isn't all that great.
Gross: Isn't China the ultimate producer?
Hickey: China has its own chips, but they are low-end. AMD is hitting Intel in high-margin servers and notebooks. Interestingly, AMD is making moves to license its technology to the Chinese and to India. It may develop a joint facility with a company called SemIndia. It is looking to Asia for potential help in manufacturing. This market has been controlled by Intel for a long, long time, which is why Intel's gross margins are so high. Slowly but surely, AMD is becoming a threat. Intel's market cap is $160 billion. It sells for four times sales. For many years, in the mid-'Eighties to 'Nineties, it sold nearer to two times sales. Now it's pretty pricey.
Tell us about your longs.
Hickey: I'm buying streetTRACKS Gold Shares ETF. It sells for one-tenth the price of gold. It's very liquid. Expenses are low. You don't have to store the gold; they store it in London for you. HSBC is the custodian. I expect the dollar to decline for a lot of reasons: The repatriation flow is ending [companies received tax breaks last year on profits earned overseas]. Bernanke replacing Greenspan at the Fed. The record trade deficit, $69 billion in October. The end of interest-rate hikes. The large budget deficits during an economic recovery. The government asking to raise the debt ceiling again.
Fred Hickey's Picks
Company Ticker Price 1/6/06
SHORT
NetLogic Microsystems NETL $28.75
SanDisk SNDK 73.95
Intel INTC 26.31
LONG
streetTRACKS Gold Shares GLD 53.72
Canadian Dollar $1=C$1.17
Canada 3.75% Price Yield
Gov't Bond 99.96 3.77%
3Com COMS $4.03
Source: Bloomberg
The Indians, Chinese and Middle Easterners have an affinity for gold, and wealth is moving in their direction. Gold production is falling, particularly in South Africa. There has been a long period of underinvestment in gold[?]. Also, I'm leery about mining stocks. Some mines are located in South America, where there is a leftist tilt and talk of confiscation or the renegotiation of contracts. It would be great for gold. It might not be so good for mining companies. People in Russia, Argentina, South Africa and China are talking about diversifying their reserve base. In many cases they are talking about increasing their gold positions. For all those reasons, I like GLD as well as the metal.
Do you have a price for gold?
Hickey: It depends what happens to the economy and what Mr. Bernanke does as a result. It also depends on the dollar. At $500-plus an ounce, gold doesn't look high relative to what it traditionally is valued against, whether that be oil or the Dow.
Zulauf: Last year was the first year in a long time in which gold went up against virtually all currencies. It went up despite the fact that the dollar also went up against most other major currencies.
Hickey: My next pick is a way to protect against the decline of the dollar. You can own all the major currencies and do better than the U.S. dollar in 2006. Sometimes it's hard for people in the U.S. to buy Asian currencies, so I'm recommending the Canadian dollar through ownership of short-term government bonds. There's a two-year that yields 3.75%. You get interest plus the currency swing. The Canadian dollar has been strong for four years against the dollar. Canada has had eight consecutive annual budget surpluses. Debt as a percentage of GDP has fallen from 68% in 1996 to 38%. That's more progress than any other G7 country. Canada has a resource-based economy, which is more likely than the U.S. to hold up in a slowdown. The Chinese are very interested in Canadian assets. Canada runs massive trade surpluses, nearly $50 billion in 2004 and 2005. The Canadian dollar used to sell at parity with the U.S. dollar. It will again soon.
Gross: One negative is the North American connection, to the extent the U.S. economy goes down, Canada is connected.
Zulauf: It crushes all their industries outside of natural resources. Canada's main trading partner is the U.S.[?]
Hickey: They will do better than we will. Those resources will hold up better than the things our economy is based on.
My last long is a tech name. It's pretty hard these days to find value stocks in tech. 3Com is a highly speculative long, a turnaround story. The company has lost out to networking-industry gorilla Cisco in recent years. It was as high as $25 a share in 2000, and it's now $4. Revenues have stabilized after declining for some time. The company has had four consecutive quarters of sequential revenue growth. The last was 22%, year over year. Again, they make routers and switches, just as Cisco does. They have a strong Voice-over-Internet Protocol [VoIP] product line, which is a hot category. They sell security products, due to the recent acquisition of TippingPoint. Their connectivity-product line has depressed overall results, and is nearly gone. 3Com has a $1.56 billion market cap, and $754 million in cash. The enterprise value is around $800 million, or about one times sales. The company burned through $28 million of cash in the latest quarter, but that's been improving. At this price it is intriguing, especially when you consider the hidden jewel.
The hidden jewel?
Hickey: A few years ago 3Com set up a joint venture with Huawei, the largest networking company in China. Huawei-3Com is growing rapidly, and it's causing Cisco great grief. Cisco talks about the Chinese threat in every conference call. The joint venture has grown to a run rate of $500 million in sales, based on the last quarter and the current one. It has had four sequential quarters of double-digit revenue growth. There are 3,400 employees at this joint venture. Half are Chinese engineers, at an estimated cost of one-fifth of 3Com's engineering talent in the U.S. 3Com owns 49% of the company, with an option to buy another 2%. That option has just come up, and Huawei has approved it. If 3Com buys it, it gains controlling interest. It is awaiting approval by the local Chinese authorities as well as Beijing. Once it buys the 2%, all these fast-growing revenues start showing up on its P&L [profit and loss statement].
Is the joint venture profitable?
Hickey: It's near breakeven, and in the current quarter 3Com expects it to be profitable. It has an estimated 20% share of the networking market in China. 3Com can leverage the cost savings by selling products at significantly lower prices than Cisco. 3Com has the potential to be a massive winner or a bust, but for now there's a lot of cash and no debt.
Black: Fred, 3Com blew through more than $3 billion of cash at the top of the bubble.
Hickey: It went from $25 to $4 for a reason.
Black: They haven't earned a return on capital in this decade. They've got nominal earnings, not enough to support a $4 stock.
Hickey: It's $2 net of cash, and a play on the Chinese networking market. The joint venture is growing like Topsy. Your risk right now is $2 a share.
Samberg: Huawei is a world-class company. It's privately held.
Thanks, Fred. Mario, you've been quiet.
Gabelli: The domestic consumer will have less resources to spend, due to the energy tax and less mortgage equity. But the global consumer -- Goldman Sachs calls Brazil, Russia, India and China "BRIC," I'll call them "CRIB" so Abby won't sue me -- is going to pick up the slack.
Cohen: BRICS is a Goldman Sachs trademark. You need an S for South Korea in there.
Gabelli: And CRIB is now a Gabelli trademark. Jobs and wages in the U.S. will increase. Capital spending will be terrific. The economy will be strong in the first half, slowing by the second. Earnings will be OK. Interest rates will come down at the end of the year as Bernanke blinks. The market will be characterized by dividends and deals.
Now that I've set the stage, my first stock is Skyline. It's $38 a share, and there are 8.4 million shares outstanding. The company has approximately $20 a share in cash. It is in the manufactured-housing business, which is benefiting from the absence of repossessions and a reduction of inventory over four years. The company also is benefiting from industry consolidation. Warren Buffett's Berkshire Hathaway [BRKA] has bought several manufactured-housing companies in recent years. Skyline will earn $1.50 a share in the year ending May 2006, and $1.75 next year. They just cleaned out their inventory of travel trailers. The three sisters from Neptune -- Katrina, Rita and Wilma -- helped with that.
What is your second name?
Gabelli: It deals with utilities. After Enron, the industry has gone back to basics. It has stable earnings, some growth, rising payout ratios and now, the repeal of PUCHA, the Public Utility Holding Company Act, that takes effect next month. A lot of companies have merged recently, and now, with the removal of PUCHA, there will be more deals. Also, we'll see the removal of the 10% cap on institutional owners of a given stock. You want to buy the companies with unregulated coal and nukes. We own a bunch, but I'll talk about Westar Energy, which trades for $21.50. It's got a $1.9 billion market cap on 86.7 million shares; $1.7 billion of debt and $3.7 billion of enterprise value. We think they'll do $1.60 this year, $1.70-$1.75 next.
What do they do, Mario?
Gabelli: This is an electric company, primarily in Kansas. They also have a half-interest in Wolf Creek, a nuclear plant. The balance sheet is in good shape. They get a 4.3% current return, and 85% is excluded from taxable income under this administration.
My next stock is the subject of this bag. [Holds up a large insulated cooler.] It deals with convenience, wellness, health care. [Removes small yogurt containers from the bag and walks around the table, handing them out.] This is a $50 billion industry around the world. In the U.S. it's only $5 billion.
Did you bring any spoons?
Gabelli: The company I like is Groupe Danone. It is introducing in the U.S. a probiotic product popular in Europe. Yes, bacteria can help you. Danone sells for ?89. It will report earnings Feb. 15. For the year ending '05, we estimate it will report ?12.6 billion of revenues, ?2.3 billion of Ebitda. They dominate the yogurt market globally. They own 20% of a Japanese company in this business. They own Stonyfield Farm. They also have biscuits in France, and a water company that bottles Evian and Volvic. That market doesn't sound interesting, but they are No. 1 in China in water. And 400 million people are drinking water in China that is less than par. Danone has a $25 billion market cap. They'll earn about ?4 per share for 2006 and are growing about 12% a year. So, think bacteria, and include Danone in your portfolio.
[Black]
Black: "3Com blew through more than $3 billion of cash at the top of the bubble."
My next pick is controversial. It's called Flowserve, and our clients have a sizable position [about 4.5 million shares]. The company has a new CEO, Lewis Kling. It has 56 million shares. We have to guess a bit at the numbers, because they haven't issued a 10K or 10Qs for a year and a half. Revenues for 2005 were about $2.6 billion, and Ebitda was about $285 million. On an EPS basis, they will go from $1 to $5 within three-four years. The company makes pumps, valves and flow solutions.
Gross: Why don't we have numbers for the past year and a half?
Gabelli: Because of a change in CEOs and some accounting issues, which are being worked out. That's what keeps the stock down. The stock is about $41.50, but you're not buying current earnings. You're buying the earnings power.
My next company is located in Connecticut. There are 23.9 million shares outstanding. The stock is selling at 20. The company is Kaman. This company has a division, its crown jewel, that will benefit from the growth of commercial aircraft-engine production over the next five years. Boeing [BA] and Airbus will deliver 660 aircraft in '05, and close to 1,000 by 2010. The Kamatics division makes a self-lubricating roller bearing which has a longer life than competitive products. It is a market leader. Second, the company is getting orders from Sikorsky. Another business delivers retrofit helicopters, the SH2G, with orders from Egypt and Australia. They make small helicopters used for lifting logs, but they're phasing it out. They have an industrial-distribution business, and a guitar and music-distribution business.
In other words, it's a unified company.
Gabelli: It's no different than General Electric or Tyco. Kaman's market cap is about $450 million. Earnings this year will be about $1.25, and next year, $1.50-$2. They had no vote for shareholders like us until recently. They just bought out the voting stock, and now there's only one class of stock.
Next, I want to talk about "some like it hot." The hot part of an airline engine has to go through multiple repair cycles. There are 12,000 commercial aircraft in the world. There are three companies in the repair business. One is Sequa. It sells for $74. There are 11 million shares and the enterprise value is $1.5 billion. The company's crown jewel is a division called Chromalloy. They are also in the parts-manufacturing-authority business, where they provide repair parts. This is a global company with '05 revenues of $2 billion and earnings of $3.15 a share. We think they go $4.60, $6.30, $8. The chairman, Norman Alexander, just celebrated a birthday that makes him older than Kirk Kerkorian. But I was privileged to see him on the dance floor at 12:30 the other night, and he was going strong.
What were you doing on the dance floor at 12:30 at night?
Gabelli: I was going home. Helping the waiters clean up. Let me echo Meryl's endorsement of Rolls-Royce. This is a fabulous five-year play. You've got 1.7 billion shares at 443 pence, £6.6 billion of revenues for '05, £7 billion for '06, and they grow earnings at about 30% over the next three-four years.
Next, gambling. Hilton Group, in the U.K., has been a favorite of mine, because I thought Barron Hilton and Hilton Hotels CEO Steve Bollenbach, eventually would put Hilton U.K. and Hilton U.S. together. The companies announced that recently. Hilton U.K. is selling all its hotels to Hilton U.S. It will get £3.7 billion and be left with a business, Ladbrokes, the premier gambling establishment in the U.K. Ladbrokes has more online betters than anyone else. The U.K. gambling industry is going through a restructuring. They are going to allow mega-casinos. This company is lined up for that. You buy Hilton Group for 365p today. You get a distribution of about 250p from the sale of the hotels and some leveraging up at Ladbrokes. You wind up creating a company at 119p that will earn 9.9p in 2006 from various forms of gambling. Electronic gaming is growing by 50% a year. It's an intriguing company.
Is that it, Mario?
Gabelli: No. Next I want to talk about Ameriprise Financial. Last September American Express [AXP] spun off one share of Ameriprise for every five shares of American Express. Ameriprise has 250 million shares, and had $425 billion of assets under management at the end of September. We all remember IDS. We remember it being called American Express Financial Advisors. Now the company is called Ameriprise, but the mutual-fund brand is RiverSource. It bought a British money manager, Threadneedle Investments, and has 10,000-plus advisors. Is this a money manager or an insurance company? Most analysts on the Street are valuing it as an insurance company. If they start viewing it as a money manager, it will get a significantly higher valuation. GAAP book is $7.8 billion, or about $33 per share. Last year's earnings are probably around $3. Earnings can grow at a high double-digit rate for the next several years. The stock came out at 36, fell to 32 and now trades around 44. The beauty of the business is its inherent cash generation. Very few investors know about the company, in a sense, though we all know about IDS.
Finally, a word about water, to echo Meryl. Watts Water Technologies trades for 31.50 and ITT Industries is 107, with 90 million shares outstanding. It will earn $8 a share in two-three years, splitting 2-for-1. Watts will have $2.20 in earnings next year, up from $1.90.
Thanks. Marc, have you eaten your yogurt? Let's talk about your portfolio.
Faber: I'm glad Fred pointed to the threat to Cisco by 3Com. This is a theme I've been following for the last few years, the huge shift of wealth occurring in the world. Ray Dalio [founder of Bridgewater Associates] recently wrote, "The current shift in wealth from the U.S. is unprecedented and will go down in history as one of the great financial events." In this environment, you have to emphasize international investments, largely in Asia. To give you an example, the market cap today of General Motors [GM] is $12 billion, Ford [F] is $15 billion, Honda is $55 billion and Toyota is $172 billion. In 1970, IBM alone had a bigger market cap than the entire Japanese stock market. Over the next 10-20 years Asian markets, including Japan, could have 25% to possibly 50% of the world market cap, from 14% currently.
How do you capitalize on this?
Faber: One way is through real estate. In Malaysia, IOI Properties Berhad is a small stock, with a market cap of about $700 million. The P/E is 10 and it yields 6.5%. Singapore has REITs, including Suntec Real Estate. The yield is 5.8% and the market cap is close to $900 million. Another REIT, with properties being redeveloped in a prime location on Orchard Road, is Macquarie MEAG Prime Real Estate Investment Trust, or MMP Prime REIT, for short. It came public at 98 cents Singapore and now trades around S$0.95. It yields about 5.6%. I would also buy a basket of real-estate-related stocks in Thailand, where industrial-park developers buy huge tracts of land and develop the necessary infrastructure. There are two companies in the business. Rojana Industrial Park yields 6.4% and has a P/E of 8. Ticon Industrial has a P/E of 10 and yields 6.4%. I would hedge these stocks by shorting the Philadelphia Housing Sector Index, the HGX, in the U.S.
There are differing political risks in each of these countries. How will an investor know when to sell?
Faber: These stocks are to be held for the long term, five-10 years. If you have a diversified basket of companies, in the long run you will do well. Meanwhile, the dividend yield on these investments is higher than the bond yield in the U.S.
Gabelli: Marc, there is a major intellectual disconnect between what you said at the start of this meeting and the stocks you're recommending now. You talked about a war scenario.
Faber: Just wait.
Zulauf: How about real estate in China? Can foreigners buy real estate in China today and be assured of property rights?
Faber: In the former Communist countries, property rights are improving dramatically because everything that can be stolen has already been stolen. The people who stole it want to have property rights so they can keep it. Property rights are much better than they used to be, but I am not suggesting you buy properties in China now. I'm talking about a prolonged event, a slowdown or recession in China, along with a pandemic and international tensions and war. That leads to my prime recommendation: buy volatility. You can buy VIX [CBOE Volatility Index] futures, or puts and calls on various stocks. I'm not necessarily predicting a war in 2006, but rising commodity prices will lead to a shift in global power and a significant increase in tensions, which will lead to more volatility in financial markets.
My next recommendation is the Taiwan stock exchange, which you can buy via the iShares MSCI Taiwan Index, the EWT. This index offers a basket of stocks that yield approximately 4%, compared to the Taiwan bond yield of 2%. The Taiwan market hasn't done anything in the last year. Malaysia was down, and I would also buy the EWM, or the iShares MSCI Malaysia Index.
Zulauf: Why didn't Taiwan move last year? Was there a particular problem?
Faber: It's all about momentum. When Japan and Korea and India began to move, a lot of money rushed into those markets. As an aside, this is the first time India has become a recognized asset class. It is overbought today, but from a long-term perspective it's an interesting market.
Mario Gabelli's Picks
Company Ticker Price 1/6/06
Skyline SKY $38.05
Westar Energy WR 21.29
Groupe Danone BN FP ?88.25
Flowserve FLS $41.58
Kaman KAMN 19.82
Sequa SQA/A 74.20
Rolls-Royce RR/ LN 443 pence
Hilton Group HG/ LN 363 pence
Ameriprise Financial AMP $43.60
Watts Water Technologies WTS 31.59
ITT Industries ITT 106.87
Source: Bloomberg
Next, short the U.S. dollar. It is pegged to asset inflation, namely the U.S. housing market. The Fed will stop tightening when the housing market no longer goes up. Until then, it will be willing to increase interest rates by baby steps. When the housing market and the Dow Jones Industrials decline by 10%, the Fed will flood the system with liquidity. The dollar will become very weak. Some sectors of the global economy, such as PCs and cellular phones, are in oversupply. But the biggest oversupply in the world is the U.S. dollar. It will lose value against hard assets such as gold and silver.
If the dollar weakens seriously, what will happen to the huge amount of dollars in foreign hands?
Faber: Once the dollar begins to weaken in earnest, consumer-price inflation will pick up. I doubt foreigners will be enthused about owning fixed-income assets in a currency that is going down.
Will worries about a run on the dollar prompt the Fed to go slow in lowering rates?
Faber: That is the view of the optimists. Abby argued this morning that the Fed will be more responsible than it was in the 1970s about printing money. I think it will be less responsible. In 1980, total credit-market debt in the U.S. as a percentage of GDP was 130%. Now it is over 300%. The Fed has much less leeway to let asset prices fall.
Gross: The Fed has always viewed the currency as a third or a fourth priority. Its first priority is to support the economy, and if the dollar tanks because of that, so be it.
Faber: In addition to shorting the dollar, I would short 30-year Treasury bonds. In 1980, people were worried about consumer price inflation. No one dreamed the Dow, at the time around 900, would approach 12,000 or so, or that home prices would explode upward. However, consumer-price inflation gave way to asset-price inflation for the next 20-25 years. Now, if you look around the world, everybody believes asset inflation will continue. The Dow will continue going up, and home prices will keep rising. Nobody is concerned about consumer-price inflation. That's why bond yields are so low.
You're concerned, obviously.
Faber: The Bank Credit Analyst recently published some interesting figures. From 1960 to 1980, oil prices rose. The yield on the 10-year bond went from 4% to more than 15% in 1981. Thereafter, oil and bond yields fell until 1999, when oil suddenly went through the roof. The subsequent divergence between soaring oil prices and declining bond yields will be corrected massively one day, either by oil prices collapsing or interest rates rising substantially. Both could happen. The second set of figures compares nominal GDP and the 10-year bond yield from 1960 until recently. From 1960 through 1980, nominal GDP was higher than government bond yields. From 1981 until 2001, 10-year yields were higher than GDP. Since then, GDP has been higher again. The point is, consumer-price inflation accelerated from 1960 to 1980. From 1980 to 2001, it decelerated. Now we're looking at higher inflation rates again. So, for the next five-10 years, you need to be short U.S. government bonds.
In other words, the cycle is turning.
Faber: For people who are bullish on the U.S., pharmaceutical companies on a relative basis are interesting. Look at a basket containing Merck [MRK], Schering-Plough [SGP] and Pfizer [PFE], all relatively high-yielding stocks. They are particularly attractive if you compare them to European pharmaceutical companies.
Zulauf: U.S. pharmaceuticals trade at a discount of about 30%.
Neff: Aren't you concerned about poor product pipelines and legislation against price increases? These are not the growth stocks of yesteryear.
MacAllaster: They aren't priced the same way, either. There is value here at 12 times earnings and 4% yields.
Neff: Not unless earnings are going to improve.
Faber: If their pipelines were highly promising, these stocks would sell for more than they do now. Next, I've got some contrarian plays. About nine months ago I recommended AMR [AMR], the parent of American Airlines, which was difficult for me, given the service I get on American Airlines. But it almost doubled. The entire airline industry is not going to go bankrupt. Germany's Deutsche Lufthansa is a good play on airlines. The traffic between western and eastern Europe is increasing dramatically. Last year the company took over Swiss International Air Lines. In the near term it probably will generate a loss, but over the long run it is an interesting play on consumer travel. It's going to be huge -- out of India and China, and also in domestic markets.
Gabelli: You can't have a pandemic and travel. You've got to have one or the other. This must be a hedge against pandemics.
Schafer: Marc, what is the impact, if any, on the big carriers from low-cost airlines like Ryanair?
Faber: It is huge. Ryanair [RYAAY] now has more traffic than British Airways [BAB]. But low-cost airlines carry one segment of the market. They don't carry you and me when we travel on business. OK, maybe you. Both can survive. In Asia, low-cost airlines have not had a big impact on Singapore Airlines [SPAAF]. But cheap tickets have changed the world. You can fly between Bangkok and Hong Kong for $100, which has led to an enormous increase in traffic.
Zulauf: The same is true in Europe. Fares on Lufthansa and British Airways have fallen to levels close to where the cheap airlines are. If you want to have a little more comfort, you go with Lufthansa.
Faber: In Germany, KarstadtQuelle, the nation's largest department store, is a turnaround play. The company has a new CEO, and Germany is healthier economically than statistics would suggest. The German market could continue to perform reasonably well. Karstadt is a play on asset sales.
Thank you, Marc.
By LAUREN R. RUBLIN
GO WEST, INVESTOR. And east and north and south. Peter Lynch, the fabled former manager of Fidelity Magellan and a distinguished Barron's Roundtable member himself, famously advised that the best stock ideas can be found right in your own backyard. That still is true, but in today's global market your backyard might stretch from Abilene to Zanzibar.
Just ask the five money managers featured in the second installment of this year's Roundtable, as worldly a bunch as ever you'll meet, who scoured the globe in search of compelling portfolio picks -- and a few pans -- for 2006.
Meryl Witmer of New York's Eagle Capital Management leads off this week with a look at several infrastructure plays; an Australian food producer; Rolls-Royce, of airplane-engine fame, and the footwear company that makes UGGs. (You don't know from UGGs? Time for a fashion makeover!)
Oscar Schafer, proprietor of O.S.S. Capital Management, just a few blocks uptown, follows with his usual trenchant observations -- about CBS, a Canadian miner and a pair of drug-related issues. He also had some prescient thoughts on Tyco, before the company's recent decision to split.
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Fred Hickey, editor of the High-Tech Strategist in Nashua, N.H., is a balanced sort of guy. And just to prove it, he's got three shorts, all tech-related, and an equal number of longs, including the Canadian dollar, a gold ETF and a computer-networking company with a red-hot China connection.
Mario Gabelli of Rye, N.Y.-based Gamco Investors brought us no fewer -- and, for once, no more -- than 11 intriguing investment ideas, including a mobile-home maker, a Midwest utility and a bet on gambling in Britain. He also passed 'round many cups of yogurt -- "so convenient, so healthy" -- to illustrate his fondness for France's Groupe Danone.
Swiss-born and Hong-Kong based, Marc Faber rounds out this week's stockpicking quintet with a pitch for five Asian real-estate plays -- against which he's shorting an index of U.S. homebuilders. Faber also is keen on airlines and volatility, but he's decidedly cool toward Treasury bonds and the U.S. dollar.
Witmer is bullish on infrastructure plays, including Chaparral Steel and Walter.
For the record, the Roundtable met Jan. 9 in Manhattan, and last week's issue featured our guests' "macro" views. In the right-hand column you'll find the full list of this year's participants, most of whom you'll hear from, again, in the story that follows.
Meryl, your '05 picks all were winners. How about a rerun?
Witmer: I'll try. The U.S. has neglected its infrastructure. Spending in this area has to increase. Two stocks that could benefit are Chaparral Steel and Walter Industries. Chaparral sells for $30 and has 23 million shares. It was spun out of Texas Industries in July and is the second-largest producer of structural steel in North America. Following a period of consolidation, with high-cost players shutting down, the structural-steel industry in the U.S. is now made up of three low-cost, profit-driven players.
Nucor [ticker: NUE] has 45% of the market. Chaparral has 30% and Steel Dynamics [STLD] 15%. Imports make up the rest. I have especially high regard for Chaparral's management, led by Tommy Valenta. The three big players have raised base prices and returned margins to appropriate levels, despite overcapacity in the nonresidential construction market. Hurricane Katrina led to increased demand for structural steel, and steel intensity per square foot built is increasing.
How vulnerable is Chaparral to imports?
Witmer: The industry has kept its prices at world prices. And steel service centers prefer to buy from a Chaparral or a Nucor, which have short time horizons and pass through the market price. Chaparral is diversifying its product offerings. In addition, it implemented a scrap-surcharge mechanism in January '04. When the cost of scrap goes up $10 per ton, the price of structural steel goes up $10. The outlook is extremely bright.
What do earnings look like?
Witmer: This year Chaparral will earn about $4 a share. It should generate another $1.50 in free cash due to the excess of depreciation over capital spending. Looking ahead, the company will pay down its debt. In two years it will generate $6.25 of free cash flow, be debt-free and trade at $50 to $60 a share.
Meryl Witmer's Picks
Company Ticker Price
1/6/06
Chaparral Steel CHAP $29.67
Walter Industries WLT 50.64
Deckers Outdoor DECK 30.95
Rolls-Royce RR/ LN 443 pence
Goodman Fielder GFF AU A$2.09
Source: Bloomberg
My next pick, Walter Industries, also will benefit from infrastructure spending. It's a $50 stock, and there are 50 million shares outstanding. Walter is extremely cheap on a sum-of-the-parts basis, and unlike many companies in that position, it has a new CEO who is doing something about it. The company has little Street coverage, always a plus. Walter has two main divisions. Mueller Water Products produces infrastructure and flow-control products for water- and gas-distribution networks and waste-water facilities. Jim Walter Resources has 20 years of proven reserves of high-quality metallurgical coal, or met coal. It also produces natural gas. The company also has a home-building and finance unit, for which it may be best known.
Mueller, acquired in October from DLJ's leveraged-buyout group, has become a powerhouse in the water-infrastructure market. Walter is planning an IPO [initial public offering] of Mueller, and later will spin off the remaining shares. Mueller is one of the three largest manufacturers of ductile iron pipe, preferred by most municipalities. It also makes valves, hydrants and fittings considered the Cadillac of the industry. The prospects for the business are fantastic for one reason: Water pipe installed in the U.S. over the past 100 years is beginning to fail. A large portion of America's water pipes and valves will need to be replaced in the next 25 years.
Bad for taxpayers, good for Mueller.
Witmer: Mueller had pro forma Ebitda [earnings before interest, taxes, depreciation and amortization] of about $285 million last year. Assuming 8% growth and $50 million of cost savings, Ebitda could grow to $390 million in 2007, which would equate to after-tax free cash flow of $2.58 a share. This segment is growing, and should sell for 15 to 18 times free cash flow, and trade for $38 to $46 a share.
Walter's natural-resources segment next year should produce at least seven million tons of high quality met coal and eight billion cubic feet of natural gas. Met coal is an irreplaceable ingredient in the steel-making process. Walter's sulfur content is less than 1%, making it worth $30 a ton more than typical steam coal at today's prices for S02 [sulfur dioxide] emission credits. As world steel markets develop, demand should rise.
What is the going price?
Witmer: Walter has contracted all of its coal through June '06 for about $107 a ton. While this price may not be sustained indefinitely, prices will remain firm. Using $70 per ton for coal and $8 per mmBTU for natural gas, we get "normalized" earnings of $2.50 a share. Based on current coal and gas prices -- $100 for coal, $10 for gas -- the segment would earn $5.50. Others are trading for about 14 times projected '06 earnings. We value Walter's coal segment at $35 per share, at least. The other segments are worth $2 to $3 a share. In all, Walter Industries should trade for $75 to $85 per share.
How about another name?
Witmer: Deckers Outdoor sells for $30 a share. It is a shoe company whose principal brands are UGG, Teva and Simple. UGG makes terrific boots and slippers, typically of shearling. Deckers was one of the most heavily shorted stocks last year because many believed UGG was a fad that would burn out. The naysayers have been proven wrong this season, with inventory at most channels all but sold out.
Consumers love UGG's spring line. I brought a few pairs, just to show you. [Holds up a shearling moccasin and sandal and passes them around.] These are already beginning to sell out on Websites. The brand could grow from $150 million-plus in current sales to about $400 million within four years. UGG is an "affordable luxury" brand, along the lines of Coach [COH], which Abby recommended a few years ago.
Is Teva a hot seller, too?
Witmer: It is a well-known sandal brand that has lacked innovation and suffered from competitors taking market share. Deckers' new CEO, Angel Martinez, was one of the masterminds of Teva's best competitor, Keen. Now he's on Deckers' team. We see him rejuvenating Teva and growing sales to at least $100 million within a couple of years from $80 million now. Deckers' third brand, Simple, offers shoes with the comfort of sneakers without the flashy labels. It has generated a following among celebrities, typically a precursor to a brand taking off. Simple sales are only $10 million now, but some think it could be Deckers' biggest brand.
Martinez began his career at Reebok and built Rockport into a very large brand. He is one of the best, most driven and product-savvy executives in the footwear industry. Deckers could have $500 million to $700 million of sales within four years. Assuming a 16% margin, it could have earnings of $4 to $5.50 a share. Using a P/E of 14, we see the stock rising to $56-$77 a share in a few years. Near-term results should be in the $2 to $2.50 range. You have to be a long-term shareholder.
What else do you like?
Witmer: Rolls-Royce -- the airplane-engine company, not the luxury-car company -- has become one of the two main engine players, sharing the field with General Electric [GE]. It has the wonderfully efficient Trent engine and an intelligent management team, led by Sir John Rose. As Rolls-Royce has gained share in the new-engine market, its installed base has grown significantly. The revenue Rolls receives from selling an engine is equivalent to the amount it will receive in aftermarket revenues over the engine's 25 years. Profit on the engine's sale is minimal, but the profit on aftermarket parts and service revenue is a significant and highly predictable annuity stream.
Rolls is winning 25% to 50% of new-engine competitions. It should win more than 50% as more new planes are introduced with dual-engine options. In contrast, only 10% of aircraft being retired bear the Rolls-Royce name. The company expects its installed base to grow by more than 40% through 2009. To capture the profitable aftermarket business, Rolls has developed Power-by-the-Hour service plans.
What do they involve?
Witmer: They tie together sales of new engines and 12-year aftermarket contracts. The airlines love them because their costs are well defined, and they pay by hours flown. Power plans also allow them to eliminate their spare-parts inventories, freeing up capital. Rolls loves the plans because they lock in high-margin business. Currently, 60% of all new engines are sold with these contracts.
Also, there is little copy-catting of spare parts with Rolls engines, because there is risk of voiding the warranty. Finally, Rolls has moved to reduce the capital intensity of the engine business by teaming with suppliers. As a result, internally funded new-engine development costs have declined by 40%. Over time Rolls will become more profitable, less cyclical, less capital-intensive and worthy of a higher valuation. By 2009 it will generate 35 to 40 pence in EPS [earnings per share]. It will have net cash of 30p and trade for about 17 times earnings, yielding a stock-price target by mid-'08 of 600p to 700p. The stock trades for 440p now.
Table: 2005 Roundtable Report Card3
That's decent upside.
Witmer: My last pick is also international. Goodman Fielder is an Australian food company in the milk, yogurt, bread and spreadable-oil businesses. It sells into Australia, New Zealand and some Southeast Asian markets. Friends down under say it's virtually impossible to get through a week without eating or drinking a Goodman product. It also supplies commercial customers. The company has a market share of 30% to 70% in almost all its product categories. It was IPOed in December at A$2 a share by Burns Philp which is controlled by Graeme Hart, famed for his investment track record. Bain Capital reportedly offered Hart what amounts to $2 a share, but he elected to IPO the business in order to keep an interest.
How large is his stake?
Witmer: He controls 20%, or $500 million, though he has handed over the reins to a new CEO, Peter Margin, who is a superstar in the Australian food industry. Under Australian law, Goodman is required to publish earnings expectations for the fiscal years ending June 2006 and 2007. It sees earnings driven higher by merger synergies (it recently purchased a dairy company in New Zealand), operational improvements and some topline growth. Goodman thinks it can deliver earnings per share of A18 cents, and after-tax free cash flow of A20 cents per share in the year ending June '08. We think they can do better and deliver A22 cents a share.
Schafer: Where is the stock priced?
Witmer: At about A$2.10 a share. Goodman is positioned to do more acquisitions. It intends to pay out 80% of its net income in dividends, so Archie might like this stock. The semi-annual dividend should be at least A5 cents in June and A6 cents thereafter. Goodman currently yields about 5%. We expect the stock to trade for 12 to 13 times free cash at the end of '07. That plus dividends would yield a holder about A$3 a share in two years. The downside seems limited at A$2.10.
That sounds promising. Oscar?
Schafer: CBS was spun out of Viacom [VIA] earlier this month. The company has TV, radio, outdoor advertising, amusement parks and publishing. It is the cheapest large media stock, despite terrific assets, potential growth engines and a superior management team led by Les Moonves. Moonves is unique in the media business, as comfortable with the analytical side of the business as the creative side. There is a lot of opportunity to improve profitability. Moonves turned around the CBS network, making it No. 1 in primetime ratings and profitability. Now he'll focus on news.
Marc Faber's Picks
Company Country Ticker Price
1/6/06
ASIAN REAL ESTATE
IOI Properties Berhad Malaysia IOIP MK 7.60 ringgit
Suntec REIT Singapore SUN SP S$1.10
Macquarie MEAG Prime REIT Singapore MMP SP S$0.95
Rojana Industrial Park Thailand ROJANA TB 9.80 baht
Ticon Industrial Connection Thailand TICON TB 12.80 baht
SHORT
Philadelphia Housing Sector Idx U.S. HGX 534.87
VOLATILITY
CBOE Volatility Index U.S. VIX 11.00
TAIWAN
iShares MSCI Taiwan Index Fd. U.S. EWT $13.21
MALAYSIA
iShares MSCI Malaysia Index Fd. U.S. EWM $6.97
U.S. PHARMACEUTICALS
Merck U.S. MRK $33.12
Schering-Plough U.S. SGP 20.56
Pfizer U.S. PFE 24.85
AIRLINES
Deutsche Lufthansa Germany LHA GR ?12.99
TURNAROUND
KarstadtQuelle Germany KAR GR ?15.45
SHORT
U.S. Dollar Index DXY 88.91
30-year Treasury bond price: 112-02 yield: 4.56%
Source: Bloomberg
CBS' news business has far lower ratings and earns much less than NBC. Sean McManus, who led the resurgences of CBS Sports, is now running the news group. CBS' TV stations have room to expand operating margins by eight to 10 percentage points over the next few years. Moonves also is determined to grow Showtime, which was not a focus of Viacom management and is now part of CBS. Showtime has a third of the profits of HBO, so there's plenty of room for upside. But the greatest opportunity for CBS lies in its ability to extract additional revenue streams from advertisers and other content providers. Moonves believes CBS can get paid a per-subscriber, per-month fee from cable operators to retransmit the CBS signal on their systems. If he is successful, this revenue stream will be almost pure profit. If CBS gets only 20 to 40 cents per sub, that would translate into $175 million to $350 million per year in incremental profits.
How likely is this?
Schafer: Some cable networks should start to pay this year. There are other opportunities to leverage CBS' content, such as video-on-demand and Internet advertising. In March CBS will simultaneously broadcast the NCAA tournament over TV and stream it over the Internet. It will be targeting an entirely different base of advertisers for the Internet. Moonves and his team are competitive and passionate about the business. CBS will earn $1.85 a share in 2006. At less than 8.5 times 2006 Ebitda and 12.5 times after-tax free cash flow, the stock is inexpensive at $27.
Radio and television are not exactly stable businesses.
Gabelli: The media pie will grow by 6% to 8% over the next three years, in part because of a tsunami of political advertising in 2008, when we'll have two wild cards running for president. Earnings are going to go up for three years in a row. This is a huge cash generator.
Schafer: My next pick is Tyco International. The stock is about $29. The company has 2.1 billion shares and $40 billion of sales. It will earn close to $1.90 in the fiscal year ending Sept. 30. Investors are missing two things. First is the enormous cash-generating power of the company, which results in free cash flow of 15 to 25 cents more than reported earnings per share. Second is the value of the company's $10 billion health-care business, which earns close to a dollar a share and would be valued near $20 as a stand-alone company. You're paying only 10 times earnings for the remaining businesses.
When Tyco stock was at $36 last January, there was little incentive to split up the company. But, at 29, there is a serious disconnect between the price and intrinsic value. In November, CEO Ed Breen said that if "the valuation disconnect persists," he was prepared to take additional action besides repurchasing shares. When asked, he said "the full range of options" was being considered. One would be a spinoff or IPO or sale of the health-care division.
Meanwhile, Tyco has reduced net debt from $9.3 billion at the end of September to $6.3 billion now. With $4.5 billion of free cash flow, the company can simultaneously reduce debt, buy back stock and make acquisitions. [Subsequent to the Roundtable, Tyco announced it would split into three separate publicly traded companies specializing in its various business lines. Oscar, who applauded the split, said in a follow-up conversation, "This split aligns three shareholder constituencies in a tax-efficient manner, and allows each company more flexibility to pursue strategies unique to that business."]
Oscar, how about another stock?
Schafer: My third pick is FNX Mining, a nickel, copper and precious-metals miner in the Sudbury Basin in Ontario, Canada. The Sudbury Basin was formed after a meteorite hit the earth about 1.9 billion years ago, before the Roundtable started.
You mean, before you got on it.
Schafer: Just. It has two distinct geological areas: the area of direct impact, or contact zone, and a large fractured area outside this zone called the foot wall. International Nickel and Falconbridge [FAL], the largest producers in Sudbury, have developed the contact zone, but largely ignored the foot wall. It is hypothesized there is a major foot-wall deposit that could be as large and valuable as the contact zone.
In 2002 FNX acquired noncore properties, as well as some prospective exploration areas, including the right to explore the foot wall behind the Levack contact-zone mine from Inco [N]. It also gained access to Inco's existing infrastructure, to explore for and produce nickel. In February, FNX reported it had found two massive high-grade copper and nickel veins. Geophysical tests indicated the discovery was open in every direction and the resource could be large. It was then we started buying the stock, at about C$7.
You've done well, we take it.
Schafer: The stock is now C$13.50. FNX has continued to prove up the discovery. Drilling results indicate there are at least 2.5 million tons of high-grade resources present in the Levack foot-wall zone. The foot wall could hold more than five million tons. FNX properties currently in production or soon to be in production are worth between C$5 and C$6 a share. Assuming 2.5 million to 4.5 million tons are in place, the foot wall should be worth C$9 to C$13. Using conservative commodity prices, and including FNX's C$2 a share in cash and securities, I estimate the value of the company's assets is between C$15 and C$20 a share. At current prices, you're paying nothing for upside potential. In another zone behind the Levack foot wall, the geophysics are also promising.
FNX bought Aurora Platinum in the third quarter of 2005. Netting out the cash and current market value of the securities acquired, it paid nothing for the Aurora properties. Yet Aurora increased FNX's Sudbury land holdings eightfold.
Why was Aurora so cheap?
Schafer: Its management believed FNX was far more likely to achieve exploration success. FNX is currently drilling on the Aurora properties behind Falconbridge. The foot-wall discovery could prove larger than five million tons. Indeed, it is possible the various zones FNX has delineated could be connected, and that the ore body could be three to five times as large as is currently thought. It would mean the foot-wall discovery alone is worth far more than FNX's C$1.1 billion market capitalization.
For your sake, we hope so.
Schafer: In June 2003 I recommended Flamel Technologies at $11.65. Since then, there have been several positive developments only partially reflected in the stock at $19.72. A world-class board has been put in place. A new CFO has joined from Aventis. The company is financially stronger and has nearly $4 a share in cash. Its two technologies have completed additional human clinical trials, and the first major product is expected to launch later this year.
Remind us, what does Flamel do?
Schafer: It has two ways of modifying drugs. The large pharmaceutical companies' are facing patent expirations on major drugs. Anything they can do to minimize generic competition is money in the bank. One strategy is to modify existing drugs and switch patients to the new formulation, so that when the old drug's patent expires, there are no patients on it. Flamel's most important partnership is with GlaxoSmithKline [GSK], which manufactures Coreg. The drug has sales of $1 billion in the U.S. alone. The patent expires in late 2007, and Glaxo's CEO has predicted the company will launch once-a-day Coreg CR in late 2006, a new formulation that uses Flamel's technology.
Royalties in this type of arrangement usually are 5% to 10%. We think Flamel will earn close to $2 a share from this partnership. Assuming the company is successful in obtaining R&D milestones to cover its overhead, royalties and potential revenue streams from future partnerships will be all profit. Although the timing is always uncertain in this industry, within two or three years the company will earn $3 to $5 a share and could be two to three times its current price. It will be cash-flow positive.
Any more picks, Oscar?
Schafer: Schwarz Pharma has $1 billion in sales and is based in Monheim, Germany. But 78% of its sales are outside Germany. In 1999 the company sold its generic drug business and used the proceeds to fund research and development in neurology and urology. Because of it large R&D expense, close to $4.50 a share, and competition, the company will break even in 2005 and 2006. But it should begin to see the fruits of its research in the next two-three years.
Oscar Schafer's Picks
Company Ticker Price 1/6/06
CBS CBS $27.23
Tyco International TYC 29.98
FNX Mining FNX CN C$14.79
Flamel Technologies FLML 19.72
Schwarz Pharma SRZ GR ?53.10
Source: Bloomberg
At 2.8 times enterprise value, the shares sell at the low end of industry valuations. Schwarz's pipeline has three new drugs. The first is Neupro, a once-a-day patch for Parkinson's disease. It has been approved in the European Union, and I hope it will soon be approved by the Food and Drug Administration.
Black: Is this a dopamine-based drug?
Schafer: Yes. A patch has a huge advantage over pills, as many patients with Parkinson's have trouble swallowing. Neupro also has an additional indication in restless-leg syndrome. The company's second product, Lacosamide, is an anti-convulsive. Its first indication is for epilepsy, though it can be used to treat diseases such as depression, bipolar disorder and migraine headache. The biggest potential for the product is diabetic neuropathic pain. Recently Pfizer [PFE] launched Lyrica for this pain, and analysts estimate sales of $4 billion in five years. But Lyrica has side effects, including weight gain and in some cases muscle injury. So far, Lacosamide has shown no evidence of either. If its Phase III trial is successful -- the outcome will be reported the second quarter -- the product will be introduced late next year, and could have a billion dollars of sales.
Does Schwarz trade in the U.S.?
Schafer: Management said it will consider an ADR [American depositary receipt] when its products become better known in the U.S. Schwarz is reasonably valued at 2.8 times enterprise value to sales. If one of the company's new products is successful, the stock is underpriced. If more than one works, you get the pipeline for free. And, if all five work, the stock will be a home run and the company will earn more than ?10 and sell at more than ?200 in the next few years. It sells for ?55 now.
Thanks. Fred, want to take over?
Hickey: Sure. I have three shorts and three longs, just to show I'm a balanced guy. I'll start with the shorts because they are more fun. The first is NetLogic Microsystems, priced around $29. It is a favorite of momentum players, chart gazers and "get shorty" types that ran up this and a lot of other tech stocks at the end of the year. The stock is up 60% since October, 140% since it came public in July 2004. The company makes TCAMs, ternary content-addressable memory chips. They go into networking equipment. When NetLogic's products came out they had an early lead, but that is lead is diminishing. This is a commodity product. Cisco [CSCO] accounts for 70% of NetLogic's business. IDTI [Integrated Device Technology], the market leader, has a stronger product and NetLogic is going to lose share.
How expensive is NetLogic stock?
Hickey: The P/E on trailing earnings is 39. The P/E for this year's earnings is 30, yet the forecast EPS growth rate is just 12% in 2006. The stock sells for seven times sales and 8.4 times book value. There has been a lot of insider selling -- half a million shares in the past six months. My second short is SanDisk, which Barron's wrote about negatively last year. I think my timing will be a little better.
Thanks for the compliment.
Hickey: SanDisk has been tough to short. It's running up on rumors it will have blowout earnings when it reports Jan. 26. The stock was up 152% last year, to 63, and 18% in the first week of January, to 74. It is the world's largest supplier of flash storage cards. It sells primarily NAND flash, used in MP3 players and digital cameras. The stock sells for six times book value, six times sales, 42 times trailing earnings and 32 times '06 estimates.
If the consumer slows in 2006, the whole industry will be under pressure. Many NAND flash players in Asia, including Samsung, are expanding production. We are seeing a slowdown in the retail flash-card growth rate. Some traders of memory are dumping their flash products now. There is a chance we'll see a blood bath. SanDisk, too, has had insider selling. There were 23 insider sales in the past six months, of nearly a million shares. Also, the company is involved in a number of lawsuits involving threats to its patents. Royalties account for 40% of profits, and that royalty stream might not stay intact. The company lost a recent court case, and the stock got hammered after running up wildly in anticipation.
What is your third short?
Hickey: Intel. Some people see it as a value stock. I don't. Intel's profits come from the mature PC [personal computer] market, which has seen three years of double-digit unit growth. This was the replacement cycle. With pricing pressure intense, PC revenue growth has been in the single digits. A slowdown will put the industry in the red.
Black: Intel sells for around 15 times earnings. Dell [DELL] sells at a higher P/E. If you think the PC business is going to crater, why don't you short Dell as opposed to Intel?
Hickey: I am short Dell, too. Intel is being beaten badly by AMD [Advanced Micro Devices], a stock I have owned for some years. Even Intel fans know it is going to lag this year, and maybe longer. [Last week Intel reported fourth-quarter results below expectations, and issued a downbeat outlook. AMD, on the other hand, turned profitable and reported a 45% jump in revenues.] Intel still has 80% of the business and used to be able to overwhelm competitors, primarily AMD, when AMD was only a low-end chip maker. Now, AMD has the better products. Dell is the world's largest PC vendor. It is the only Intel-only shop, which is a problem. Dell had a pretty terrible quarter and may be forced to consider using AMD chips. It would be a terrible blow for Intel if Dell announced a switch. Michael Dell made some interesting comments at the Consumer Electronics Show, alluding to the use of AMD chips. It was the company's strongest wording yet. Intel is expanding capacity, as is AMD. Even if there isn't a slowdown, there could be a 20%-25% oversupply of processors.
Black: What is your estimate for server growth? That drives demand for Intel, too.
Hickey: Competition from AMD is pressing Intel on the server side. Server revenue growth isn't all that great.
Gross: Isn't China the ultimate producer?
Hickey: China has its own chips, but they are low-end. AMD is hitting Intel in high-margin servers and notebooks. Interestingly, AMD is making moves to license its technology to the Chinese and to India. It may develop a joint facility with a company called SemIndia. It is looking to Asia for potential help in manufacturing. This market has been controlled by Intel for a long, long time, which is why Intel's gross margins are so high. Slowly but surely, AMD is becoming a threat. Intel's market cap is $160 billion. It sells for four times sales. For many years, in the mid-'Eighties to 'Nineties, it sold nearer to two times sales. Now it's pretty pricey.
Tell us about your longs.
Hickey: I'm buying streetTRACKS Gold Shares ETF. It sells for one-tenth the price of gold. It's very liquid. Expenses are low. You don't have to store the gold; they store it in London for you. HSBC is the custodian. I expect the dollar to decline for a lot of reasons: The repatriation flow is ending [companies received tax breaks last year on profits earned overseas]. Bernanke replacing Greenspan at the Fed. The record trade deficit, $69 billion in October. The end of interest-rate hikes. The large budget deficits during an economic recovery. The government asking to raise the debt ceiling again.
Fred Hickey's Picks
Company Ticker Price 1/6/06
SHORT
NetLogic Microsystems NETL $28.75
SanDisk SNDK 73.95
Intel INTC 26.31
LONG
streetTRACKS Gold Shares GLD 53.72
Canadian Dollar $1=C$1.17
Canada 3.75% Price Yield
Gov't Bond 99.96 3.77%
3Com COMS $4.03
Source: Bloomberg
The Indians, Chinese and Middle Easterners have an affinity for gold, and wealth is moving in their direction. Gold production is falling, particularly in South Africa. There has been a long period of underinvestment in gold[?]. Also, I'm leery about mining stocks. Some mines are located in South America, where there is a leftist tilt and talk of confiscation or the renegotiation of contracts. It would be great for gold. It might not be so good for mining companies. People in Russia, Argentina, South Africa and China are talking about diversifying their reserve base. In many cases they are talking about increasing their gold positions. For all those reasons, I like GLD as well as the metal.
Do you have a price for gold?
Hickey: It depends what happens to the economy and what Mr. Bernanke does as a result. It also depends on the dollar. At $500-plus an ounce, gold doesn't look high relative to what it traditionally is valued against, whether that be oil or the Dow.
Zulauf: Last year was the first year in a long time in which gold went up against virtually all currencies. It went up despite the fact that the dollar also went up against most other major currencies.
Hickey: My next pick is a way to protect against the decline of the dollar. You can own all the major currencies and do better than the U.S. dollar in 2006. Sometimes it's hard for people in the U.S. to buy Asian currencies, so I'm recommending the Canadian dollar through ownership of short-term government bonds. There's a two-year that yields 3.75%. You get interest plus the currency swing. The Canadian dollar has been strong for four years against the dollar. Canada has had eight consecutive annual budget surpluses. Debt as a percentage of GDP has fallen from 68% in 1996 to 38%. That's more progress than any other G7 country. Canada has a resource-based economy, which is more likely than the U.S. to hold up in a slowdown. The Chinese are very interested in Canadian assets. Canada runs massive trade surpluses, nearly $50 billion in 2004 and 2005. The Canadian dollar used to sell at parity with the U.S. dollar. It will again soon.
Gross: One negative is the North American connection, to the extent the U.S. economy goes down, Canada is connected.
Zulauf: It crushes all their industries outside of natural resources. Canada's main trading partner is the U.S.[?]
Hickey: They will do better than we will. Those resources will hold up better than the things our economy is based on.
My last long is a tech name. It's pretty hard these days to find value stocks in tech. 3Com is a highly speculative long, a turnaround story. The company has lost out to networking-industry gorilla Cisco in recent years. It was as high as $25 a share in 2000, and it's now $4. Revenues have stabilized after declining for some time. The company has had four consecutive quarters of sequential revenue growth. The last was 22%, year over year. Again, they make routers and switches, just as Cisco does. They have a strong Voice-over-Internet Protocol [VoIP] product line, which is a hot category. They sell security products, due to the recent acquisition of TippingPoint. Their connectivity-product line has depressed overall results, and is nearly gone. 3Com has a $1.56 billion market cap, and $754 million in cash. The enterprise value is around $800 million, or about one times sales. The company burned through $28 million of cash in the latest quarter, but that's been improving. At this price it is intriguing, especially when you consider the hidden jewel.
The hidden jewel?
Hickey: A few years ago 3Com set up a joint venture with Huawei, the largest networking company in China. Huawei-3Com is growing rapidly, and it's causing Cisco great grief. Cisco talks about the Chinese threat in every conference call. The joint venture has grown to a run rate of $500 million in sales, based on the last quarter and the current one. It has had four sequential quarters of double-digit revenue growth. There are 3,400 employees at this joint venture. Half are Chinese engineers, at an estimated cost of one-fifth of 3Com's engineering talent in the U.S. 3Com owns 49% of the company, with an option to buy another 2%. That option has just come up, and Huawei has approved it. If 3Com buys it, it gains controlling interest. It is awaiting approval by the local Chinese authorities as well as Beijing. Once it buys the 2%, all these fast-growing revenues start showing up on its P&L [profit and loss statement].
Is the joint venture profitable?
Hickey: It's near breakeven, and in the current quarter 3Com expects it to be profitable. It has an estimated 20% share of the networking market in China. 3Com can leverage the cost savings by selling products at significantly lower prices than Cisco. 3Com has the potential to be a massive winner or a bust, but for now there's a lot of cash and no debt.
Black: Fred, 3Com blew through more than $3 billion of cash at the top of the bubble.
Hickey: It went from $25 to $4 for a reason.
Black: They haven't earned a return on capital in this decade. They've got nominal earnings, not enough to support a $4 stock.
Hickey: It's $2 net of cash, and a play on the Chinese networking market. The joint venture is growing like Topsy. Your risk right now is $2 a share.
Samberg: Huawei is a world-class company. It's privately held.
Thanks, Fred. Mario, you've been quiet.
Gabelli: The domestic consumer will have less resources to spend, due to the energy tax and less mortgage equity. But the global consumer -- Goldman Sachs calls Brazil, Russia, India and China "BRIC," I'll call them "CRIB" so Abby won't sue me -- is going to pick up the slack.
Cohen: BRICS is a Goldman Sachs trademark. You need an S for South Korea in there.
Gabelli: And CRIB is now a Gabelli trademark. Jobs and wages in the U.S. will increase. Capital spending will be terrific. The economy will be strong in the first half, slowing by the second. Earnings will be OK. Interest rates will come down at the end of the year as Bernanke blinks. The market will be characterized by dividends and deals.
Now that I've set the stage, my first stock is Skyline. It's $38 a share, and there are 8.4 million shares outstanding. The company has approximately $20 a share in cash. It is in the manufactured-housing business, which is benefiting from the absence of repossessions and a reduction of inventory over four years. The company also is benefiting from industry consolidation. Warren Buffett's Berkshire Hathaway [BRKA] has bought several manufactured-housing companies in recent years. Skyline will earn $1.50 a share in the year ending May 2006, and $1.75 next year. They just cleaned out their inventory of travel trailers. The three sisters from Neptune -- Katrina, Rita and Wilma -- helped with that.
What is your second name?
Gabelli: It deals with utilities. After Enron, the industry has gone back to basics. It has stable earnings, some growth, rising payout ratios and now, the repeal of PUCHA, the Public Utility Holding Company Act, that takes effect next month. A lot of companies have merged recently, and now, with the removal of PUCHA, there will be more deals. Also, we'll see the removal of the 10% cap on institutional owners of a given stock. You want to buy the companies with unregulated coal and nukes. We own a bunch, but I'll talk about Westar Energy, which trades for $21.50. It's got a $1.9 billion market cap on 86.7 million shares; $1.7 billion of debt and $3.7 billion of enterprise value. We think they'll do $1.60 this year, $1.70-$1.75 next.
What do they do, Mario?
Gabelli: This is an electric company, primarily in Kansas. They also have a half-interest in Wolf Creek, a nuclear plant. The balance sheet is in good shape. They get a 4.3% current return, and 85% is excluded from taxable income under this administration.
My next stock is the subject of this bag. [Holds up a large insulated cooler.] It deals with convenience, wellness, health care. [Removes small yogurt containers from the bag and walks around the table, handing them out.] This is a $50 billion industry around the world. In the U.S. it's only $5 billion.
Did you bring any spoons?
Gabelli: The company I like is Groupe Danone. It is introducing in the U.S. a probiotic product popular in Europe. Yes, bacteria can help you. Danone sells for ?89. It will report earnings Feb. 15. For the year ending '05, we estimate it will report ?12.6 billion of revenues, ?2.3 billion of Ebitda. They dominate the yogurt market globally. They own 20% of a Japanese company in this business. They own Stonyfield Farm. They also have biscuits in France, and a water company that bottles Evian and Volvic. That market doesn't sound interesting, but they are No. 1 in China in water. And 400 million people are drinking water in China that is less than par. Danone has a $25 billion market cap. They'll earn about ?4 per share for 2006 and are growing about 12% a year. So, think bacteria, and include Danone in your portfolio.
[Black]
Black: "3Com blew through more than $3 billion of cash at the top of the bubble."
My next pick is controversial. It's called Flowserve, and our clients have a sizable position [about 4.5 million shares]. The company has a new CEO, Lewis Kling. It has 56 million shares. We have to guess a bit at the numbers, because they haven't issued a 10K or 10Qs for a year and a half. Revenues for 2005 were about $2.6 billion, and Ebitda was about $285 million. On an EPS basis, they will go from $1 to $5 within three-four years. The company makes pumps, valves and flow solutions.
Gross: Why don't we have numbers for the past year and a half?
Gabelli: Because of a change in CEOs and some accounting issues, which are being worked out. That's what keeps the stock down. The stock is about $41.50, but you're not buying current earnings. You're buying the earnings power.
My next company is located in Connecticut. There are 23.9 million shares outstanding. The stock is selling at 20. The company is Kaman. This company has a division, its crown jewel, that will benefit from the growth of commercial aircraft-engine production over the next five years. Boeing [BA] and Airbus will deliver 660 aircraft in '05, and close to 1,000 by 2010. The Kamatics division makes a self-lubricating roller bearing which has a longer life than competitive products. It is a market leader. Second, the company is getting orders from Sikorsky. Another business delivers retrofit helicopters, the SH2G, with orders from Egypt and Australia. They make small helicopters used for lifting logs, but they're phasing it out. They have an industrial-distribution business, and a guitar and music-distribution business.
In other words, it's a unified company.
Gabelli: It's no different than General Electric or Tyco. Kaman's market cap is about $450 million. Earnings this year will be about $1.25, and next year, $1.50-$2. They had no vote for shareholders like us until recently. They just bought out the voting stock, and now there's only one class of stock.
Next, I want to talk about "some like it hot." The hot part of an airline engine has to go through multiple repair cycles. There are 12,000 commercial aircraft in the world. There are three companies in the repair business. One is Sequa. It sells for $74. There are 11 million shares and the enterprise value is $1.5 billion. The company's crown jewel is a division called Chromalloy. They are also in the parts-manufacturing-authority business, where they provide repair parts. This is a global company with '05 revenues of $2 billion and earnings of $3.15 a share. We think they go $4.60, $6.30, $8. The chairman, Norman Alexander, just celebrated a birthday that makes him older than Kirk Kerkorian. But I was privileged to see him on the dance floor at 12:30 the other night, and he was going strong.
What were you doing on the dance floor at 12:30 at night?
Gabelli: I was going home. Helping the waiters clean up. Let me echo Meryl's endorsement of Rolls-Royce. This is a fabulous five-year play. You've got 1.7 billion shares at 443 pence, £6.6 billion of revenues for '05, £7 billion for '06, and they grow earnings at about 30% over the next three-four years.
Next, gambling. Hilton Group, in the U.K., has been a favorite of mine, because I thought Barron Hilton and Hilton Hotels CEO Steve Bollenbach, eventually would put Hilton U.K. and Hilton U.S. together. The companies announced that recently. Hilton U.K. is selling all its hotels to Hilton U.S. It will get £3.7 billion and be left with a business, Ladbrokes, the premier gambling establishment in the U.K. Ladbrokes has more online betters than anyone else. The U.K. gambling industry is going through a restructuring. They are going to allow mega-casinos. This company is lined up for that. You buy Hilton Group for 365p today. You get a distribution of about 250p from the sale of the hotels and some leveraging up at Ladbrokes. You wind up creating a company at 119p that will earn 9.9p in 2006 from various forms of gambling. Electronic gaming is growing by 50% a year. It's an intriguing company.
Is that it, Mario?
Gabelli: No. Next I want to talk about Ameriprise Financial. Last September American Express [AXP] spun off one share of Ameriprise for every five shares of American Express. Ameriprise has 250 million shares, and had $425 billion of assets under management at the end of September. We all remember IDS. We remember it being called American Express Financial Advisors. Now the company is called Ameriprise, but the mutual-fund brand is RiverSource. It bought a British money manager, Threadneedle Investments, and has 10,000-plus advisors. Is this a money manager or an insurance company? Most analysts on the Street are valuing it as an insurance company. If they start viewing it as a money manager, it will get a significantly higher valuation. GAAP book is $7.8 billion, or about $33 per share. Last year's earnings are probably around $3. Earnings can grow at a high double-digit rate for the next several years. The stock came out at 36, fell to 32 and now trades around 44. The beauty of the business is its inherent cash generation. Very few investors know about the company, in a sense, though we all know about IDS.
Finally, a word about water, to echo Meryl. Watts Water Technologies trades for 31.50 and ITT Industries is 107, with 90 million shares outstanding. It will earn $8 a share in two-three years, splitting 2-for-1. Watts will have $2.20 in earnings next year, up from $1.90.
Thanks. Marc, have you eaten your yogurt? Let's talk about your portfolio.
Faber: I'm glad Fred pointed to the threat to Cisco by 3Com. This is a theme I've been following for the last few years, the huge shift of wealth occurring in the world. Ray Dalio [founder of Bridgewater Associates] recently wrote, "The current shift in wealth from the U.S. is unprecedented and will go down in history as one of the great financial events." In this environment, you have to emphasize international investments, largely in Asia. To give you an example, the market cap today of General Motors [GM] is $12 billion, Ford [F] is $15 billion, Honda is $55 billion and Toyota is $172 billion. In 1970, IBM alone had a bigger market cap than the entire Japanese stock market. Over the next 10-20 years Asian markets, including Japan, could have 25% to possibly 50% of the world market cap, from 14% currently.
How do you capitalize on this?
Faber: One way is through real estate. In Malaysia, IOI Properties Berhad is a small stock, with a market cap of about $700 million. The P/E is 10 and it yields 6.5%. Singapore has REITs, including Suntec Real Estate. The yield is 5.8% and the market cap is close to $900 million. Another REIT, with properties being redeveloped in a prime location on Orchard Road, is Macquarie MEAG Prime Real Estate Investment Trust, or MMP Prime REIT, for short. It came public at 98 cents Singapore and now trades around S$0.95. It yields about 5.6%. I would also buy a basket of real-estate-related stocks in Thailand, where industrial-park developers buy huge tracts of land and develop the necessary infrastructure. There are two companies in the business. Rojana Industrial Park yields 6.4% and has a P/E of 8. Ticon Industrial has a P/E of 10 and yields 6.4%. I would hedge these stocks by shorting the Philadelphia Housing Sector Index, the HGX, in the U.S.
There are differing political risks in each of these countries. How will an investor know when to sell?
Faber: These stocks are to be held for the long term, five-10 years. If you have a diversified basket of companies, in the long run you will do well. Meanwhile, the dividend yield on these investments is higher than the bond yield in the U.S.
Gabelli: Marc, there is a major intellectual disconnect between what you said at the start of this meeting and the stocks you're recommending now. You talked about a war scenario.
Faber: Just wait.
Zulauf: How about real estate in China? Can foreigners buy real estate in China today and be assured of property rights?
Faber: In the former Communist countries, property rights are improving dramatically because everything that can be stolen has already been stolen. The people who stole it want to have property rights so they can keep it. Property rights are much better than they used to be, but I am not suggesting you buy properties in China now. I'm talking about a prolonged event, a slowdown or recession in China, along with a pandemic and international tensions and war. That leads to my prime recommendation: buy volatility. You can buy VIX [CBOE Volatility Index] futures, or puts and calls on various stocks. I'm not necessarily predicting a war in 2006, but rising commodity prices will lead to a shift in global power and a significant increase in tensions, which will lead to more volatility in financial markets.
My next recommendation is the Taiwan stock exchange, which you can buy via the iShares MSCI Taiwan Index, the EWT. This index offers a basket of stocks that yield approximately 4%, compared to the Taiwan bond yield of 2%. The Taiwan market hasn't done anything in the last year. Malaysia was down, and I would also buy the EWM, or the iShares MSCI Malaysia Index.
Zulauf: Why didn't Taiwan move last year? Was there a particular problem?
Faber: It's all about momentum. When Japan and Korea and India began to move, a lot of money rushed into those markets. As an aside, this is the first time India has become a recognized asset class. It is overbought today, but from a long-term perspective it's an interesting market.
Mario Gabelli's Picks
Company Ticker Price 1/6/06
Skyline SKY $38.05
Westar Energy WR 21.29
Groupe Danone BN FP ?88.25
Flowserve FLS $41.58
Kaman KAMN 19.82
Sequa SQA/A 74.20
Rolls-Royce RR/ LN 443 pence
Hilton Group HG/ LN 363 pence
Ameriprise Financial AMP $43.60
Watts Water Technologies WTS 31.59
ITT Industries ITT 106.87
Source: Bloomberg
Next, short the U.S. dollar. It is pegged to asset inflation, namely the U.S. housing market. The Fed will stop tightening when the housing market no longer goes up. Until then, it will be willing to increase interest rates by baby steps. When the housing market and the Dow Jones Industrials decline by 10%, the Fed will flood the system with liquidity. The dollar will become very weak. Some sectors of the global economy, such as PCs and cellular phones, are in oversupply. But the biggest oversupply in the world is the U.S. dollar. It will lose value against hard assets such as gold and silver.
If the dollar weakens seriously, what will happen to the huge amount of dollars in foreign hands?
Faber: Once the dollar begins to weaken in earnest, consumer-price inflation will pick up. I doubt foreigners will be enthused about owning fixed-income assets in a currency that is going down.
Will worries about a run on the dollar prompt the Fed to go slow in lowering rates?
Faber: That is the view of the optimists. Abby argued this morning that the Fed will be more responsible than it was in the 1970s about printing money. I think it will be less responsible. In 1980, total credit-market debt in the U.S. as a percentage of GDP was 130%. Now it is over 300%. The Fed has much less leeway to let asset prices fall.
Gross: The Fed has always viewed the currency as a third or a fourth priority. Its first priority is to support the economy, and if the dollar tanks because of that, so be it.
Faber: In addition to shorting the dollar, I would short 30-year Treasury bonds. In 1980, people were worried about consumer price inflation. No one dreamed the Dow, at the time around 900, would approach 12,000 or so, or that home prices would explode upward. However, consumer-price inflation gave way to asset-price inflation for the next 20-25 years. Now, if you look around the world, everybody believes asset inflation will continue. The Dow will continue going up, and home prices will keep rising. Nobody is concerned about consumer-price inflation. That's why bond yields are so low.
You're concerned, obviously.
Faber: The Bank Credit Analyst recently published some interesting figures. From 1960 to 1980, oil prices rose. The yield on the 10-year bond went from 4% to more than 15% in 1981. Thereafter, oil and bond yields fell until 1999, when oil suddenly went through the roof. The subsequent divergence between soaring oil prices and declining bond yields will be corrected massively one day, either by oil prices collapsing or interest rates rising substantially. Both could happen. The second set of figures compares nominal GDP and the 10-year bond yield from 1960 until recently. From 1960 through 1980, nominal GDP was higher than government bond yields. From 1981 until 2001, 10-year yields were higher than GDP. Since then, GDP has been higher again. The point is, consumer-price inflation accelerated from 1960 to 1980. From 1980 to 2001, it decelerated. Now we're looking at higher inflation rates again. So, for the next five-10 years, you need to be short U.S. government bonds.
In other words, the cycle is turning.
Faber: For people who are bullish on the U.S., pharmaceutical companies on a relative basis are interesting. Look at a basket containing Merck [MRK], Schering-Plough [SGP] and Pfizer [PFE], all relatively high-yielding stocks. They are particularly attractive if you compare them to European pharmaceutical companies.
Zulauf: U.S. pharmaceuticals trade at a discount of about 30%.
Neff: Aren't you concerned about poor product pipelines and legislation against price increases? These are not the growth stocks of yesteryear.
MacAllaster: They aren't priced the same way, either. There is value here at 12 times earnings and 4% yields.
Neff: Not unless earnings are going to improve.
Faber: If their pipelines were highly promising, these stocks would sell for more than they do now. Next, I've got some contrarian plays. About nine months ago I recommended AMR [AMR], the parent of American Airlines, which was difficult for me, given the service I get on American Airlines. But it almost doubled. The entire airline industry is not going to go bankrupt. Germany's Deutsche Lufthansa is a good play on airlines. The traffic between western and eastern Europe is increasing dramatically. Last year the company took over Swiss International Air Lines. In the near term it probably will generate a loss, but over the long run it is an interesting play on consumer travel. It's going to be huge -- out of India and China, and also in domestic markets.
Gabelli: You can't have a pandemic and travel. You've got to have one or the other. This must be a hedge against pandemics.
Schafer: Marc, what is the impact, if any, on the big carriers from low-cost airlines like Ryanair?
Faber: It is huge. Ryanair [RYAAY] now has more traffic than British Airways [BAB]. But low-cost airlines carry one segment of the market. They don't carry you and me when we travel on business. OK, maybe you. Both can survive. In Asia, low-cost airlines have not had a big impact on Singapore Airlines [SPAAF]. But cheap tickets have changed the world. You can fly between Bangkok and Hong Kong for $100, which has led to an enormous increase in traffic.
Zulauf: The same is true in Europe. Fares on Lufthansa and British Airways have fallen to levels close to where the cheap airlines are. If you want to have a little more comfort, you go with Lufthansa.
Faber: In Germany, KarstadtQuelle, the nation's largest department store, is a turnaround play. The company has a new CEO, and Germany is healthier economically than statistics would suggest. The German market could continue to perform reasonably well. Karstadt is a play on asset sales.
Thank you, Marc.
#565
Отправлено 13.03.2006, 16:56:19
[Narim]
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Pooh, еле дочитал. Поражаюсь кол-ву инфо что ты переварил за год существования игры 
Инвестопедия не стоит на месте - запустили систему комментов, теперь при покупке/продаже бумаги можно делать заметки - покупаю потому что первое, третье, десятое... и все могут смотреть эти комменты в trade history геймера.
Захожу в Answerthink ANSR - нравится контора в целом.
Инвестопедия не стоит на месте - запустили систему комментов, теперь при покупке/продаже бумаги можно делать заметки - покупаю потому что первое, третье, десятое... и все могут смотреть эти комменты в trade history геймера.
Захожу в Answerthink ANSR - нравится контора в целом.
Сообщение отредактировал [Narim]: 13.03.2006, 17:01:19
#567
Отправлено 14.03.2006, 11:54:51
Dimkaumnik
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Intel is being beaten badly by AMD [Advanced Micro Devices], a stock I have owned for some years. Even Intel fans know it is going to lag this year, and maybe longer.
BS, по крайней мере если он говорит о 2006. Фаны Интел как раз ждут выхода новых чипов этим летом.
Dell is the world's largest PC vendor. It is the only Intel-only shop, which is a problem.
Not at all. INTC по прежнему лидирует на рынке (доля - 80%) и если Делл начнет выпускать 5% компов на АМД, принципиально ничего не изменится. А выход удачной линейки процессоров от интел позволит поднять планку обратно до 85%+.
AMD is making moves to license its technology to the Chinese and to India. It may develop a joint facility with a company called SemIndia. It is looking to Asia for potential help in manufacturing. This market has been controlled by Intel for a long, long time, which is why Intel's gross margins are so high. Slowly but surely, AMD is becoming a threat.
Ключевое слово slowly. Фабрику чипов построить, эт не пи@#ки на заборе рисовать. Согласен, построят, но в лучшем случае в 2008. А пока АМД испытывает значительные проблемы с производственными мощностями.
Intel's market cap is $160 billion. It sells for four times sales. For many years, in the mid-'Eighties to 'Nineties, it sold nearer to two times sales. Now it's pretty pricey.
One more BS, с чего бы hi-tech вдруг стали мерять по P/S, чай не ретейлер, барьеры для входа - ой какие высокие. И вообще исходя из той же логики, в 1999-2000 Intel торговался по 25 сейлз, значит сейчас он крейзи чип, EV/S уже 2,75.
В общем Hickey, молодец, если даже он не может придумать адекватных аргументов, Интел надо брать пачками (точнее LEAPsами). Основной объем правда брать буду через месяц примерно, после очередного квартального отчета (надеюсь, отвратительного )))
При этом хочу отметить что:
а) Хики младес, покоротил интел с уровней 25 (я бы не решился)
б) я расцениваю интел как короткий ход (год, максимум полтора), потом буду сливать, и до уровней 27-28 (там тоже буду сливать)
в) возможно на длинную - АМД лучший вариант, чем Интел, но в связи с ограниченным апсайдом (думаю 10-12% с горизонтом 5 лет с текущих уровней), брать все равно не буду.
#568
Отправлено 14.03.2006, 12:12:07
Dimkaumnik
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И обратно на 69.
http://finance.yahoo.../bc?s=BIDU&t=5d
P.S. "И это еще не лимит"Следующие пару недель обещают быть еще более интересными.
Насчёт Байды, я бы сейчас прикупил для спекулятивной игры, может запросто прыгнуть баксов до 75.
Не вышло. По крайней мере пока.
Закрыл шорт дней 10 назад в районе 52+. Надо было канеш по 44.44 бай лимит выставить. Сижу, думаю, что делать с лонгами Тазера, открытым прошлым летом около 8+. Насчёт Palm позволю не согласиться. PALMу до Blackberry как запорожцу до BMW. Не тот продукт. RIMM я покупаю со спекулятивной целью и ставку делаю на сеттлмент, так как на данный момент у них похоже, другой альтернативы нет. После сеттлмента, я думаю рынок сполна вознаградит компанию не смотря на то, что в краткосрочной перспективе их кэш позишн сильно пострадает.
Пока по итогам 3 месяцев Палм outperforms RIMM, несмотря на их сеттлмент. Поглядим-с где будем к концу 2006 года.
http://finance.yahoo...&z=m&q=l&c=palm
Справедливости ради, надо отметить, что барсук очточно предсказал уровень RIMM после сеттлмента - 80.
#569
Отправлено 14.03.2006, 12:26:35
Dimkaumnik
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' date='13.03.2006, 16:56' post='2137076']
Pooh, еле дочитал. Поражаюсь кол-ву инфо что ты переварил за год существования игры
Инвестопедия не стоит на месте - запустили систему комментов, теперь при покупке/продаже бумаги можно делать заметки - покупаю потому что первое, третье, десятое... и все могут смотреть эти комменты в trade history геймера.
Захожу в Answerthink ANSR - нравится контора в целом.
Как то вяло продажи растут у них в 2005 - 157M (со 143M в 2004 - всего +10%). Консалтинговый бизнес, слабые барьеры для входа (потенциально смертельно для small cap), EV/EBITDA - около 21, немало, однако, чистый доход около нуля, абсолютного (в 2005 67% EBIT - interest income).
Ждешь значительного улучшения рентабельности? Спекульнуть зашел или на длинную?
#572
Отправлено 14.03.2006, 21:56:32
[Narim]
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Взял акции (опционов нет в принципе) на несколько месяцев в рамках нашей игры, если нормально будет расти, как JDSU и AMT, то буду держать и дальше.
Answerthink - это консалтинг в области IDS - Information Data Solutions - это направление сейчас активно развивается по всему миру. IDS-ники не занимаются программированием как таковым, хотя безусловно представление о технической стороне они имеют. Они ищут, с помощью каких технологических решений можно усовершенствовать тот или иной бизнес-процесс. Друган работает в местном офисе одной большой FMCG корпорации, в IDS депте, рассказал как и что у них устроено, и оч. понравилось само направление. Ну а у ANSR - куча публикаций по теме и дешевый сток
Answerthink - это консалтинг в области IDS - Information Data Solutions - это направление сейчас активно развивается по всему миру. IDS-ники не занимаются программированием как таковым, хотя безусловно представление о технической стороне они имеют. Они ищут, с помощью каких технологических решений можно усовершенствовать тот или иной бизнес-процесс. Друган работает в местном офисе одной большой FMCG корпорации, в IDS депте, рассказал как и что у них устроено, и оч. понравилось само направление. Ну а у ANSR - куча публикаций по теме и дешевый сток
Сообщение отредактировал [Narim]: 14.03.2006, 21:58:43
#574
Отправлено 15.03.2006, 04:34:49
barsuk
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Хе-хе, пока мой новый портфель изучает глубины ASM II (83 000), старый стремится к вершинам (90 000)...
скорее, восстанавливает утраченные позиции.
покупайте GOOG опционы на апрель-май, 350 - 360 страйк. ГУГЛ по ходу дела намылился обратно к 380 вернутся.
#575
Отправлено 15.03.2006, 10:13:29
Dimkaumnik
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' date='14.03.2006, 21:56' post='2141956']
... Ну а у ANSR - куча публикаций по теме и дешевый сток
Не вижу дешевизны. Ни разу.
Поподробнее плз. Я могу покупать слаборентабельную (ADBL) или нерентабельную (OSTK) компанию, лидирующую в своем секторе, с прицелом на ощутимый рост top-line, платить же дикую (по моему мнению) цену за медленно растущую компанию третьего эшелона - не представляется логичным.
#576
Отправлено 15.03.2006, 10:53:25
Pooh
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BS, по крайней мере если он говорит о 2006. Фаны Интел как раз ждут выхода новых чипов этим летом.
Я не Хикки но выражу пару дилетантских мыслей.
Кстати прикольная фамилия. Ессно, речь о 2005/нач. 2006 шла. Насчет фанов - товарищи с IXBT погоды не делают. Погоду делают CIOs/CTOs с толстыми IT бюджетами, которым в принципе плевать насколько там герц последние процы выигрывают у конкурентов. Тут существующие отношения с вендорами рулят. Я видел каких аффигительных сейлс-вуманш вендоры присылают CIOs на ужин водить.
Потом, я уже говорил насчет т.н. technology replacement cycle - не знаю где он сейчас находится, но стоило бы исследовать. Также погоду делают серые консьюмеры которые слабо отличают гигабайт от гигагерц.
Not at all. INTC по прежнему лидирует на рынке (доля - 80%) и если Делл начнет выпускать 5% компов на АМД, принципиально ничего не изменится. А выход удачной линейки процессоров от интел позволит поднять планку обратно до 85%+.
Интересно откуда взялась цифра 5%. Почему не больше?
В общем Hickey, молодец, если даже он не может придумать адекватных аргументов, Интел надо брать пачками (точнее LEAPsами). Основной объем правда брать буду через месяц примерно, после очередного квартального отчета (надеюсь, отвратительного )))
Согласен! И ваще я тут самый первый тему INTC поднял.
Насчет покупки в апреле, это только из-за отчета что-ли? До какого уровня думаешь упадет? Фишер на эту тему неплохо писал - "don't quibble over eights and quarters".
Пара невоспитанных вопросов на которые ответов не ожидаю - это ессно не виртуальные планы? скока у тебя AUM?
#577
Отправлено 15.03.2006, 11:20:15
Pooh
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Кстати насчет переваривания информации - у меня с этим в последнее время проблемки до такой степени что всерьез думал купить курсы ускоренного чтения. Кто что читает на регулярной основе? Не только по финансам в принципе. Я обожаю Fortune и еле перевариваю Forbes, но как ёжики часто читаю. Экономиста читаю когда попадется, но у них или статьи нудные ужасно, или я такой тупой. После этого всего остаются блоги и в итоге на отчеты времени нет. У меня их щас штук десять лежит непрочитанных. 
Ну и раз мы на этой теме ловите:
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1. Очень прикольная статья аж от ноября 2004-го. За что я люблю американских журналистов - за такие статьи. Узнал новый термин "турист". Барсук - прочитай, потом скажешь так ли всё на самом деле.
http://nymag.com/nym...0426/index.html
2. Отрывок из годового отчета Сеса Клармана - того самого чувака который написал "Margin of Safety". Очень сильно, особенно если читать сразу же после первой статьи. Как будет время я оттуда процитирую куски с дилетантскими комментариями. Особенно про макро - вместе с комментариями из баффеттского последнего отчета, есть о чем подумать.
http://www.designs.v...Klarman2005.pdf
3. Bill Nygren profile, not bad at all:
http://www.oakmark.c...WCN_pdf4web.pdf
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Ну и раз мы на этой теме ловите:
------------
1. Очень прикольная статья аж от ноября 2004-го. За что я люблю американских журналистов - за такие статьи. Узнал новый термин "турист".
Барсук - прочитай, потом скажешь так ли всё на самом деле. http://nymag.com/nym...0426/index.html
2. Отрывок из годового отчета Сеса Клармана - того самого чувака который написал "Margin of Safety". Очень сильно, особенно если читать сразу же после первой статьи.
Как будет время я оттуда процитирую куски с дилетантскими комментариями. Особенно про макро - вместе с комментариями из баффеттского последнего отчета, есть о чем подумать.http://www.designs.v...Klarman2005.pdf
3. Bill Nygren profile, not bad at all:
http://www.oakmark.c...WCN_pdf4web.pdf
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#578
Отправлено 15.03.2006, 15:32:39
Dimkaumnik
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Ессно, речь о 2005/нач. 2006 шла. Насчет фанов - товарищи с IXBT погоды не делают. Погоду делают CIOs/CTOs с толстыми IT бюджетами, которым в принципе плевать насколько там герц последние процы выигрывают у конкурентов.
Тэкс, стоп! Речь у Хики шла именно о фанах, а не о СИО. Я есессно понимаю, что ixbt.com не является мажорным клиентом интела.
Интересно откуда взялась цифра 5%. Почему не больше?
Потому что production bottleneck у АМД. 5% у делла - это +1% рынка в целом, очсомнительно, что будет больший рост доли.
Насчет покупки в апреле, это только из-за отчета что-ли? До какого уровня думаешь упадет? Фишер на эту тему неплохо писал - "don't quibble over eights and quarters".
Думаю 18-18.5. Если повезет, то 17-17.5, но энто все мечты, мечты.
Пара невоспитанных вопросов на которые ответов не ожидаю - это ессно не виртуальные планы? скока у тебя AUM?
Есессно, я вообще о чем тут пишу - все реал. Эт я на инвестопедии только развлекаюсь.
Другой вопрос что далеко не все идеи я на фонды беру (АУМ - много по кз меркам и мало по амеровским меркам), там значительно более консервативный подход.
Сообщение отредактировал Dimkaumnik: 15.03.2006, 17:15:22
#579
Отправлено 15.03.2006, 15:43:05
bigfan05
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Отец благодетель ©
Хе-хе, пока мой новый портфель изучает глубины ASM II (83 000), старый стремится к вершинам (90 000)...
скорее, восстанавливает утраченные позиции.
покупайте GOOG опционы на апрель-май, 350 - 360 страйк. ГУГЛ по ходу дела намылился обратно к 380 вернутся.
Откуда такие подсчёты, что 380 достигнет?
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