When the author was in technology consulting, the premier delivery firm was Anderson Consulting, now called Accenture. The people all looked the same. The delivery tools were always canned and consistent. It was so uniform it was like the Star Trek community called the Borg. And they always delivered. That is right, I started a sentence with 'and'.
I have no idea why one of the largest US government contract technology firms in the US can move their headquarters offshore to Ireland to avoid taxes and have any repercussions. In fact, their revenues have just compounded.
The author is buying ACN at $62.45.
Wednesday, March 14, 2012
Friday, March 2, 2012
Apple should be $600 / share
Apple is a steamroller. Unstoppable. It should be trading at $600/share right now. Plus the Ipad 3 is coming out and the author sees Ipads becoming an executive "must have".
The author has entered the following position.
Buy Apple Oct $555 Call $47.65
Sell Apple Oct $560 Call $45.30
Let me show you what has made me go crazy about Apple.
Here is the deal, all last year it was making $6B a quarter for a total of $27B revenue (average) / $6B in earnings growing at 40% rate.
Then came the new Iphone 4S last quarter, and then in one quarter it went to $46B revenue / $13B in earnings in one quarter. That blew the hinges off of any previous valuation. Assuming no growth and continued earnings they will make $52B in earnings this year and thus with a $470B market cap sell at less than 10 X earnings. Now think of the fact that they have $80B in cash on the balance sheet and they are selling at 8 X earnings.
If we get into normal valuations of 20 X earnings against 40% growth this is a $1T stock.
All this and the iPhone is still limited to 10% of the population in China because they have only one carrier, like the AT&T deal from two years ago.
This said, the stock has run really far really fast and should plateau for a bit. But it is going up from here.
The author has entered the following position.
Buy Apple Oct $555 Call $47.65
Sell Apple Oct $560 Call $45.30
Let me show you what has made me go crazy about Apple.
Here is the deal, all last year it was making $6B a quarter for a total of $27B revenue (average) / $6B in earnings growing at 40% rate.
Then came the new Iphone 4S last quarter, and then in one quarter it went to $46B revenue / $13B in earnings in one quarter. That blew the hinges off of any previous valuation. Assuming no growth and continued earnings they will make $52B in earnings this year and thus with a $470B market cap sell at less than 10 X earnings. Now think of the fact that they have $80B in cash on the balance sheet and they are selling at 8 X earnings.
If we get into normal valuations of 20 X earnings against 40% growth this is a $1T stock.
All this and the iPhone is still limited to 10% of the population in China because they have only one carrier, like the AT&T deal from two years ago.
This said, the stock has run really far really fast and should plateau for a bit. But it is going up from here.
Monday, January 30, 2012
Regeneron : Great portfolio of molecules
Tuesday, January 24, 2012
Ecopetrol: The Petrobras of the future
Ecopetrol is a buy. The Colombian state owned energy company found massive, easily recoverable reserves. The earnings growth rate is tremendous for this company and it can actually increase as more wells come online.
Moreover, Colombia is a much more attractive place to invest than just a few years ago.
"Per capita GDP in Columbia has doubled since 2002, largely due to increased investor confidence in the country’s political stability. Columbia has seen a 90% drop in kidnappings and a 46% decline in murders over the past ten years."
What better pitch for a company is that?
The author bought at $50.50.
Moreover, Colombia is a much more attractive place to invest than just a few years ago.
"Per capita GDP in Columbia has doubled since 2002, largely due to increased investor confidence in the country’s political stability. Columbia has seen a 90% drop in kidnappings and a 46% decline in murders over the past ten years."
What better pitch for a company is that?
The author bought at $50.50.
Sunday, January 1, 2012
Sherwin Williams: First step of a housing recovery
When home maintenance is done, the first major improvement to the cosmetic appeal is a can of paint. Thus with the bottoming of housing starts and a spike in remodeling permits (see graph below), it may be time to buy a paint company.
Sherwin Williams is the top paint supplier in the US. The sales at their paint stores are growing at a 7.8% rate and margins are expanding. The dividend is stable and should have room for growth with new sales growth.
The author will buy Sherwin Williams at $87/share.
Sherwin Williams is the top paint supplier in the US. The sales at their paint stores are growing at a 7.8% rate and margins are expanding. The dividend is stable and should have room for growth with new sales growth.
The author will buy Sherwin Williams at $87/share.
Turkcell is still a buy: Doubling down
Turkcell fundamentals and balance sheet are even better than before, and the price even cheaper. Turkcell has seen significant growth in Central Asia and Eastern Europe. Due to a currency collapse, the Belarus subsidiary has been written down to a negligible value. Growth of profits from smart phones has been increasing on track to bring new growth. All of these items make Turkcell more and more attractive.
The Achillies Heel of TKC is the foreign shareholder versus domestic shareholder power struggle that has been ongoing since TeliaSonara bought a controlling share of the company in 2005. Collateral damage to shareholder occurred in 2011 with the foregoing of the dividend payment due to the inability to agree between the two major shareholder factions.
Who knows when these issues will resolve? But the deep value of Turkcell makes this investment worth the wait. Thus the author is doubling down on the Turkcell investment at $11.78.
The Achillies Heel of TKC is the foreign shareholder versus domestic shareholder power struggle that has been ongoing since TeliaSonara bought a controlling share of the company in 2005. Collateral damage to shareholder occurred in 2011 with the foregoing of the dividend payment due to the inability to agree between the two major shareholder factions.
Who knows when these issues will resolve? But the deep value of Turkcell makes this investment worth the wait. Thus the author is doubling down on the Turkcell investment at $11.78.
Friday, December 23, 2011
RusHydro: Consolidating assets
RusHydro is rolling up power generating assets in Russia. It issued shares at one ruble to RAO ES of East Group for company shares worth 1.65 Rubles.
"On June 30, 2011, the AGM of RusHydro passed a resolution to increase RusHydro's authorized capital by issuing 89,000,000,000 additional ordinary shares with a par value of RUR 1 each. Monetary value of the property transferred to pay for additional shares of RusHydro was determined by an independent appraiser- LLC Institute for Enterprise Issues (the City of Saint Petersburg). In addition, JPMorgan and Morgan Stanley presented their fairness opinions to the Board. The valuations as well as the offering price of shares of in the amount of RUR 1.65 per share were approved by the Board of Directors of RusHydro."
Consolidation provides lots of opportunity for economies of scale for these power generation assets.
"Thus, the first stage of the placement is now complete. As a result, RusHydro consolidated a number of energy assets and became the controlling shareholder of the RAO ES of the East Group and the dominant player in the power sector of the Far East of Russia. This acquisition is fully inline with the development strategy of RusHydro to consolidate undervalued generating assets in Russia to create additional shareholder value through realization of synergies with existing generating, retail, engineering and R&D assets of RusHydro Group.
RusHydro is developing into the preeminent power generation company of Russia with the consolidation of the Far East assets.
"The strategy of RusHydro on development of the Far Eastern power sector shall include substitution of economically inefficient thermal plants with efficient low-cost generation, conclusion of bilateral power-purchasing agreements with consumers both for existing capacities and generation assets under construction, realization of opportunities of electricity export to neighboring countries and carrying out of investment projects using instruments of private-public partnerships and project financing."
"On June 30, 2011, the AGM of RusHydro passed a resolution to increase RusHydro's authorized capital by issuing 89,000,000,000 additional ordinary shares with a par value of RUR 1 each. Monetary value of the property transferred to pay for additional shares of RusHydro was determined by an independent appraiser- LLC Institute for Enterprise Issues (the City of Saint Petersburg). In addition, JPMorgan and Morgan Stanley presented their fairness opinions to the Board. The valuations as well as the offering price of shares of in the amount of RUR 1.65 per share were approved by the Board of Directors of RusHydro."
Consolidation provides lots of opportunity for economies of scale for these power generation assets.
"Thus, the first stage of the placement is now complete. As a result, RusHydro consolidated a number of energy assets and became the controlling shareholder of the RAO ES of the East Group and the dominant player in the power sector of the Far East of Russia. This acquisition is fully inline with the development strategy of RusHydro to consolidate undervalued generating assets in Russia to create additional shareholder value through realization of synergies with existing generating, retail, engineering and R&D assets of RusHydro Group.
RusHydro is developing into the preeminent power generation company of Russia with the consolidation of the Far East assets.
"The strategy of RusHydro on development of the Far Eastern power sector shall include substitution of economically inefficient thermal plants with efficient low-cost generation, conclusion of bilateral power-purchasing agreements with consumers both for existing capacities and generation assets under construction, realization of opportunities of electricity export to neighboring countries and carrying out of investment projects using instruments of private-public partnerships and project financing."
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