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General Discussion / Re: Robert Rodriguez Article
« Last post by kiwing100 on Today at 09:41:46 PM »
While now in retirement, I hope he keeps offering up his opinions:


Quote
FEBRUARY 13, 2017
Bob Rodriguez: Trump Might Be Acting; Huge Financial Crisis Still Looming
The legendary money manager, recently retired, is as candid as ever in an interview with ThinkAdvisor



"...

In 2009, you said that if nothing was done about the fiscal situation, weíd be facing a huge crisis with total debt outstanding of about $20 trillion to $24 trillion by 2018. Still think so?

Well, weíre at $20 trillion right now; and by the time the presidential election of 2020 occurs, current budget estimates say the U.S. debt is going to be at least $23 trillion ó without anything that Trump does. Over the next five to 10 years, if deficits continue to rise and the debt continues to expand, will that lead to the 4% GDP growth that he envisions? I think itís a low-odds outcome. This is a ticking time bomb.

The president says he wants to spend money on upgrading the nationís infrastructure. If he does, how can he keep the deficit down?

If you donít have sufficient money in your family budget, you make choices about what youíre going to spend and not spend on. Thatís whatís going to happen [regarding the U.S. deficit]. If not, the debt will explode beyond what it already is.

Whatís your take on the Federal Reserve?

I wouldnít give [chair] Janet Yellen the responsibility of managing a hot dog stand! Sheís as clueless as [chairs Ben Bernanke and Alan Greenspan] were. With the Fedís insane monetary policy and distortion of the financial system for the last eight years, they havenít accomplished any real economic growth.

What have they done?
Repression of interest rates has helped the budget in the sense that itís keeping rates low and has driven the financial markets. But itís going to end with many unintended consequences. Is this a sustainable outcome as youíre quadrupling the debt of the United States? The odds are..."


http://www.thinkadvisor.com/2017/02/13/bob-rodriguez-trump-might-be-acting-huge-financial?page_all=1&slreturn=1487276341




Is anyone else having difficulty accessing the full article?
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Investment Ideas / Re: VRSN - Verisign
« Last post by glorysk87 on Today at 08:26:30 PM »
I went to their site.  They advertise two products, domain names and internet security.  I clicked domain names and created a made up name, they had it available.  I clicked to buy it and was presented with a page of partners I should finish the transaction with.  The page had maybe 16 names or so, with no indication who I should select.  It was weird, if this is their business they don't even sell the names.

Then I went to their internet security pages.  I had to click around for a while until I could find something with a "Request a Quote" button.  I'm not exactly sure what they sell, but buying from them is very hard.

interesting - this here displays the common and deep misunderstanding of what VRSN actually does.
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Investment Ideas / Re: LUK - Leucadia
« Last post by Scunny Bunny on Today at 08:13:33 PM »
Folger Hill's Kumin - "I am truly sorry that we have not delivered better results thus far to our investors who put their faith in me...."

http://uk.businessinsider.com/sol-kumins-folger-hill-year-end-hedge-fund-letter-2017-2?r=US&IR=T

Seems kind of odd to say that they were investing in "out of favor" companies as opposed to energy and financials as "sectors with greater momentum".  Where was he in February?  The only momentum energy and financials had was straight down...

I couldn't have put it better myself. Where were all these guys when banks were trading at 0.6-0.7x BV?
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Investment Ideas / Re: LUK - Leucadia
« Last post by scorpioncapital on Today at 07:17:20 PM »
Very funny! I believe Ackman wrote such a letter when the Target deal went South (LUK was in on that and lost most of their money).
Of course these managers have nothing to lose when things go south, all upside no downside.
Just the way they write the letter, the words they use, the talk they talk it's almost self evident to a kindergarten kid that they have no discipline of thought, no common sense, and no idea what game they are even playing. Scratch that, they are very aware that the game they are playing is segregate out our fees from the lump of capital the suckers gave us!
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Investment Ideas / Re: 9984 - Softbank
« Last post by villainx on Today at 06:57:16 PM »
I wonder if BABA was sold as a favor to Jack Ma or Alibaba.  Just not to constantly have it being owned by other entities.  Which might also lessen Alibaba doing structural maneuvers to get out of those entities (SoftBank and Yahoo).

I can see why SoftBank sold just to get liquidity or lock in gains, but yeah, it seems out of character.
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Investment Ideas / Re: VRSN - Verisign
« Last post by siddharth18 on Today at 05:36:58 PM »
I did some reading on VRSN yesterday and I think it's fairly simple to understand. So VRSN operates two root servers along with an authoritative registry of .com/.net gTLDs. The value of the company doesn't come from their operation of root servers, but from their contract making them the sole authoritative registry on .com & .net and allowing them to collect fee for each domain registration and renewal. So whenever a new .com is registered, the registrar (Godaddy for instance) will notify the actual server IPs that belong to the domain registrant of that specific .com domain.




Two big points here:

One is their negotiating leverage is going to continuously decrease over time.

Two is growth. I agree it will only come from developing countries. But will the .com domain really that important as these countries start up? I don't know. I wouldn't be surprised another domain became more popular.


Re: negotiating leverage - IMO it will only go up over time. Look at it from VRSN's point of view - 10 years from now, they can say "we have successfully maintained and managed the .com registry for ~30 years."  Who else can say that? Who else has that track record?

Look at risk/reward from ICANN's perspective. ICANN could save a few hundred million dollars (few hundred million dollars being quite insignificant in the context of total ecommerce transaction value) and risk a nightmare.


This may be a weird analogy but Verisign is kind of like a Carbon monoxide alarm manufacturer that has a government granted monopoly on making CO alarms, has been making them since they were invented, and has a 100% CO detection rate in all studies and not a single false alarm since inception. CO alarms cost only $10-$20 and are the cheapest gadget in a home, but without it, your home worth 6-figure home+ isn't safe to live in. Over time, the developing world will start building more homes and will demand CO alarms as well. Maybe the government or a non-profit CO alarm regulating authority will complain about your 60% operating margins and how the alarm itself cost only $2 to make and maybe the government has a point. But will the government want to risk deaths and bad publicity if a newer company sells them for $6 but, due to a rough transition, messed up the earlier batch of alarms that won't detect CO properly?
For any legit person/business (ie - non domainer/hoarders) - the cost of a .com/.net is negligible. However, that domain name is the single most important piece of their brand value and real estate on the web. Once you acquire a domain, it begins to have its own separate identity and equity in that all the time and effort invested in promoting/ranking your business will be associated with that domain. For instance, in SEO, each domain has its own pagerank (sort of a credit score/reputation) and the business can lose its competitive edge/traffic if it has to start fresh from a new domain.

The long term risk from outside is that if we enter a future where somehow your computer/phone/app can take you to a site or a page without needing a domain. But then that computer/phone/app would have to know the coordinates of that server and I don't see how that would work uniformly across all computers/phones/apps without an authoritative registry. If you say "Take me to North Pole" without punching in the coordinates the responsibility of figuring out the exact coordinates of north-pole would fall on that computer/phone/app. It'd have to know that the Northernmost tip of the Earth is located at Latitude: 90.0000 Longitude: 0.0000. And without a central record keeper like Verisign, there would be instances of the computer/phone/app guessing the coordinates wrong and taking you somewhere.

I see little risk fromother TLDs (like .attorney or .lawyer) simply because the .com has had a first mover advantage, and, over the last 2 decades has acquired significant mind-share. I can't imagine a single company or business wanting to abandon their .com in favor of .attorney or .lawyer simply to save $10. Also, people are now used to websites ending in .com. If you're opening a review site - Austin Plumber Reviews and had a choice - .com or .biz or .info - which would you choose? Of course you'd go with .com because your customer are used to the notion that websites usually end in ".com" and they'd only have to remember one phrase "AustinPlumberReviews" rather than "AustinPlumberReviews" and ".biz" separately. There's also a risk that if you only open AustinPlumberReviews.biz then a domain squatter will snap up AustinPlumberReviews.com, clone your site and gain from all those that forgot that your site ended in .biz instead of .com

If snapchat/instagram were to start today with a domain http://www.snapch.at or http://instagr.am they would still make every effort to acquire snapchat.com and instagram.com simply because it's only $10/year and the value of the traffic they would capture from people typing in "instagram.com" in their address bar would be in far excess of $10/year.

Regarding growth -

So about 40% of the world's population is online, and 60% isn't. The 40% that is already online, has collectively chased, treasured and valued .com over all other TLDs for the last 2 decades and .coms have a significant mindshare of this 40% of the population. If you assume that the remaining 60% of world that will eventually come online will follow/adopt/imitate the products/services/brands/best practices of the developed world (Google, Facebook, etc) then they too will treasure .com over other TLDs.


Also things like having browser shortcuts favoring .com (Pressing CTRL + ENTER after entering a word in address bar will automatically attach .com) and that mobile keyboards have a separate button allocated to .com but not other TLDs only proves that .com is more valuable than other TLDs.
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Investment Ideas / Re: 9984 - Softbank
« Last post by abyli on Today at 03:12:41 PM »
I don't like SOTP here because Masa is borrowing at something like 2% to buy assets compounding 20-30%.  You can say it trades for some 30% discount to a fully-taxed NAV but NAV could easily jump 20-30% next year and so what if it trades at that NAV?  You can't just sell it because it might continue to compound some crazy NAV.  So if it works out you'll always be thinking you have some fully valued stock even though it might be earning $20 billion of underlying earnings in several years.  The underlying earnings are constantly being reinvested in all kinds of crazy situations (like S or BABA purchases or some $100 billion hedge fund) making it too hard to keep calculating a SOTP.

Plus I think there is some chance that BABA blows up  Why else would they sell any of their position?  It always seemed so against them to part with any of it.  The Arora situation was simply bizarre (I guess he spearheaded the effort to sell down that stake as well as Supercell?).

I'd rather just figure out what the underlying earnings are behind all the business segments, throw some 10x multiple as "normal" and assume it will always be a 10x business because he'll be levered up his eyeballs until the end of time.  Then it's just a matter of looking at how earnings will grow and that's a hard question to answer... I'd probably still own shares if I hadn't found something more to my liking.

I am curious to know why you think BABA might blow up. Can you explain a little bit more? Are you Chinese?

Thanks.
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Investment Ideas / Re: 9984 - Softbank
« Last post by awindenberger on Today at 02:36:43 PM »
I don't like SOTP here because Masa is borrowing at something like 2% to buy assets compounding 20-30%.  You can say it trades for some 30% discount to a fully-taxed NAV but NAV could easily jump 20-30% next year and so what if it trades at that NAV?  You can't just sell it because it might continue to compound some crazy NAV.  So if it works out you'll always be thinking you have some fully valued stock even though it might be earning $20 billion of underlying earnings in several years.  The underlying earnings are constantly being reinvested in all kinds of crazy situations (like S or BABA purchases or some $100 billion hedge fund) making it too hard to keep calculating a SOTP.

Plus I think there is some chance that BABA blows up  Why else would they sell any of their position?  It always seemed so against them to part with any of it.  The Arora situation was simply bizarre (I guess he spearheaded the effort to sell down that stake as well as Supercell?).

I'd rather just figure out what the underlying earnings are behind all the business segments, throw some 10x multiple as "normal" and assume it will always be a 10x business because he'll be levered up his eyeballs until the end of time.  Then it's just a matter of looking at how earnings will grow and that's a hard question to answer... I'd probably still own shares if I hadn't found something more to my liking.

It's very interesting going through your thinking here Picasso.

On one hand you see the 20-30% long term compounding going on, but then on the other you see the potential for an Alibaba blowup. I guess maybe when FELP finishes playing out you'll need a new investment again.
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Investment Ideas / Re: 9984 - Softbank
« Last post by giofranchi on Today at 01:48:03 PM »
I don't like SOTP here because Masa is borrowing at something like 2% to buy assets compounding 20-30%.  You can say it trades for some 30% discount to a fully-taxed NAV but NAV could easily jump 20-30% next year and so what if it trades at that NAV?  You can't just sell it because it might continue to compound some crazy NAV.  So if it works out you'll always be thinking you have some fully valued stock even though it might be earning $20 billion of underlying earnings in several years.  The underlying earnings are constantly being reinvested in all kinds of crazy situations (like S or BABA purchases or some $100 billion hedge fund) making it too hard to keep calculating a SOTP.

Plus I think there is some chance that BABA blows up  Why else would they sell any of their position?  It always seemed so against them to part with any of it.  The Arora situation was simply bizarre (I guess he spearheaded the effort to sell down that stake as well as Supercell?).

I'd rather just figure out what the underlying earnings are behind all the business segments, throw some 10x multiple as "normal" and assume it will always be a 10x business because he'll be levered up his eyeballs until the end of time.  Then it's just a matter of looking at how earnings will grow and that's a hard question to answer... I'd probably still own shares if I hadn't found something more to my liking.

Thank you again!

Cheers,

Gio
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