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Archive for January, 2013

An Old Interview with Carl Icahn – Notes

January 24th, 2013 No comments

“I’m just a guy looking to make money”

“I think I was great at making money, somehow I’m not too good at much else”

-went to Princeton University from Far Rockaway High School
-mother a school teacher wanted Carl to be a doctor, so he went to medical school
-quit medical school because he was hypochondriac couldn’t handle having sick people around him
-joined the Army. Won $10,000 from Army buddies playing poker. Quit after 6 months
-joined Dreyfus in 1961, started investing the $10,000
-made money buying convertible bonds on margin. Jack Dreyfus told him you’re going to lose it all
-1962 market cleaned him out, lost everything. Had to sell his car to eat. Making $100 a week at Dreyfus
-Decided “no more trading the market” “there is nobody who can tell you what the market’s going to do” “in long run there’s no question that we’re going to see a big drop, a big blowup”
-Learned options “always a workaholic” “really am obsessive in nature” “back then no computers” wrote options newsletter pricing options. Made $500,000 a year for a few years
-Bought a seat on the exchange and learned arbitrage. Buy convertible bond and short the stock on 90% margin. Made tremendous amount of money for 7-8 years
-What I do today is same kind of arbitrage. “What I do is buy stocks out there that are cheaper than what the underlying values of the assets” “You have to know what you’re doing; you have to do some analysis”
-Reason you have disconnect is management. “management is screwing up the company”
-CEO of most companies are the social guys, not the smartest or brightest, but likeable and reliable. “He makes very few waves.. just moves up (the ladder)” One skill “he’s a good survivor”
-CEO doesn’t want anyone under him who is smarter than him, why should he feel threatened? So he puts a likeable person little dumber than him under him, who becomes the next CEO
-I buy stock in these companies and I threaten them, hopefully they do something to narrow the value gap

Categories: Life

FA Notes Wednesday January 23, 2013

January 23rd, 2013 Comments off

S&P 500 +15bps

COH reports –2% U.S. comps vs. 3.1% est.
NFLX beats and raises subscription numbers
AAPL misses Mac 4.1M vs. 5.2M est., iPhone 47.8M vs. 48.3M est., and iPad 22.9M vs. 23.2M est. unit numbers. Tells investors they will no longer sand-bag guidance. Guides to $41-43B March quarter sales vs. $45.6B est. Gross margin guidance of 37.5-38.5% vs. 40.6% est.

Categories: News

FA Notes Tuesday January 22, 2013

January 22nd, 2013 No comments

S&P 500 +44bps

Macro
Richmond Fed –12 vs. 5 est., 5 prior
Existing home sales 4.94M vs. 5.1M est., prior 4.99M. +12.8% y/y
Bank of Japan targets 2% inflation and new $145 billion a month QE starting 2014 Link

Market sold off on weak economic data, but then rallied after David Tepper repeatedly said “buy equities” during a Bloomberg TV interview mid-day.

TXN guided Q1 EPS to 28c mid-point vs. 34c est.
IBM sales 29.3B vs. 23.1B est., EPS 5.39 (lower tax rate) vs. 5.25 est. Services signings 17.9B (-12% y/y) vs. 20.16B est.
ISRG 4.25 EPS vs. 4.04 est. Sales $609M vs. $584M est.
GOOG paid clicks 24% vs. 33% prior quarter, CPC –6% vs. –15% prior quarter

gallup

Investors are less negative about the euro zone and its periphery economies, in part because of ECB support

Categories: News

FA Notes Friday January 18, 2013

January 18th, 2013 Comments off

S&P +0.34%

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Macro
University Michigan consumer sentiment 71.3 vs. 75.0 est, 72.9 prior
One year inflation expectations 3.4% vs. 3.2% prior month
China GDP 7.9% vs. 7.8% est., 7.4% prior

Market faded off the open in the morning on a weak sentiment number and a poor reaction to mixed INTC/COF earnings reports. Around mid-day news leaked out that the House Republicans would kick the debt ceiling can another 3 months with a vote next week, which rallied the market rest of the day.

housing

Kyle Bass: long U.S. housing, still hates Japan

Key events next week: Bank of Japan decision January 22nd, EU manufacturing PMIs January 24th
Earnings: GOOG IBM ISRG TXN COH AAPL NFLX SNDK WDC

Investor sentiment: 9

Categories: News

@firstadopter Top 10 Predictions for 2013

January 4th, 2013 7 comments

It’s that time of year again. Take a look at my top 10 predictions for 2012 for a fun read (Link).

Remember I’m a bigger fan of reacting to important fundamental inflection point news AFTER the fact rather than making decisions from far off in the future predictions. I do however find it useful to crystallize my current leanings and thoughts with this top 10 list. I reserve the right to change my mind at any time as new data-points are released. Here it goes:

1. Amazon will print poor results with decelerating revenue growth and horrible earnings due to greater price competition from Google/Apple/Best Buy/Walmart/Target, higher effective end-user pricing from new states sales tax collection, the secular shift in the media business from physical to digital, and the imploding Kindle business (Shhh, no-one talks about how Kindle hardware units were down around 50% y/y in 2012) as Apple’s iOS and Google’s Android full mobile OS eco-systems dominate tablets and smart-phones. Investors will also realize that the AWS cloud business is a commodity utility with no pricing power. The result of all this is the stock will finally go down a lot.

2. The current $85 billion-a-month QE infinity program by the Federal Reserve will stop by the end of 2013 as even Bernanke realizes the costs/benefits of QE at this stage aren’t worth it.

3. The secular shift from PCs to mobile computing (tablets and smart-phones) will even accelerate from here. ARMH/QCOM/SNDK/GOOG/AAPL/Samsung/Imagination will continue to benefit, while HPQ/DELL/INTC/MSFT/WDC/STX/LXK will continue to hurt.

4. RIMM’s Blackberry 10 launch will fail due to lack of app support just like the Microsoft Surface tablet.

5. Barnes & Noble’s Nook HD hardware business will continue to disappoint along with the Amazon Kindle Fire. Consumers will realize getting a full tablet operating system features/functionality with 16 times more apps, faster processor, and snappier user interface at around the same price with a Google Android tablet or iPad Mini is by far the smarter option.

6. Amazon will launch a Kindle Fire smart-phone and lose hundreds of millions if not billions on it trying to compete with Apple and Google. Good thing they raised the $3 billion in debt recently.

7. Housing will improve. Zillow will benefit by becoming the predominant way house buyers access real estate information with its mobile tablet and smart-phone apps. The company will really hit its stride in the back half of 2013 as its business model shift to focus on B2B instead of consumer display ads bears fruit.

8. J.C. Penney will disappoint and become Borders Group Part 2 for Bill Ackman. The company will need to raise capital by the end of the year. If they can’t raise capital, bankruptcy will occur.

9. Green Mountain Coffee Roasters will miss its 15-20% sales growth target for 2013 as the company stuffed the channel, pulled forward both brewer and K-cup business through massive rebates/discounting in late 2012, and from rising competition on both K-cups (patent expiration) and brewer hardware.

10. The Dallas Cowboys will surprise everyone and make the playoffs next season on its way to the Super Bowl. The defense will be in the top 5 in the NFL led by Sean Lee and a lock-down secondary. Tony Romo will actually come through in the clutch and Dez Bryant will improve and become the best receiver in the league.

Categories: News

The Story of Chris Camillo: Turning $20,000 into $2 million in 3 years

January 3rd, 2013 1 comment

-1 or 2 big trades a year

-$20,000 to $2 million 2007 to 2010

-retrain my mind, to identify game-changing things in real life that were having game-changing impacts on public companies

-see something in your life that Wall Street hasn’t picked up on yet, opportunity to make information arbitrage investment

-moment that Wall Street starts talking about that thing you picked up on, exit the investment

-what you notice around you, what people are adapting too

-LGF doubled on Hunger Games in 6 months

-20-40% position size into next trade. "invest with conviction" 1-2 investments a year. "material" "big game-changing event" for whatever reason Wall Street has missed

-8 or 9 investments in 3 years. 1 miss, 7-8 all hits triple digit returns 300-500% returns in short period of time

-no stocks at moment, may wait 8-9 months, all about patience

-continue to live my life, read lots of magazines, go to movies, go to restaurants, observe the world around me, "continue to hone my sense of critical observation"

-"when you see something game-changing if Wall Street hasn’t picked up on it, that’s your opportunity to make a game-changing big trade"

Other Past Chris’ “Game-Changing” Stock Ideas

DECK on Uggs
CROX on Crocs
AAPL on iPhone
TRLG on True Religion Jeans
JCG on Michelle Obama pumping J. Crew clothes
ATVI on Guitar Hero
IMAX on Avatar 3D movie 
TGT on Missoni launch

Sources: Bloomberg video, internet sites

Categories: News