FinanceRAWR

[financerawr-blog]

Intangible Assets

The Coka-Cola name is worth $12,219,000,000, 15% - of the company's total assets. This is an intangible asset. According to the 10-K form that KO submitted late December 2011, their "Goodwill" was over $12 billion, a rose by any other name... would in this case, probably smell horrible. 

It is important when to consider branding evaluating an intangible asset like Goodwill. I just watched a documentary about the bottling process of Coke, they not only guard their secret recipe, they have patented their brand's COLOR!

The name is everything to Coka-Cola, it IS the product! If the name suffers, so do profits.

Stay Hungry, Stay Liquid.

[financerawr-blog]

The offering price is based on Facebook's current BVPS (book-value per share). According to form S-1 in the SEC's online database, the company mentions a 2012 Equity Incentive Plan no less than 4 times within the document stating,

"Share Reserve. We have reserved 25,000,000 shares of our Class A common stock for issuance under our 2012 Equity Incentive Plan"

Twenty-five million shares you say? A coincidence? - I think not.

All I have to do is divide Facebook's equity by 25M and there you have it! - $209.12 per share.

Here are the numbers based on Facebook's S-1 filing today:

ROIC Growth Rate = me gusta!

BVPS Growth Rate = kill it with fire!

EPS Growth Rate = fire the harpoons!

Sales Growth Rate = this is something I can fap to!

Cash Flow Growth Rate = I have the weirdest boner..

Bottom line: Stay the fuck away from this EXPENSIVE IPO! Wait until Facebook has a bit of time in the exchange. 

Stay Hungry, Stay Liquid.

[financerawr-blog]

Don't be surprised by a company's cash-flow growth rate slowing this next quarter. A companies are going to be increasing current liabilities and debts to cultivate long term equity.

They have already dipped into cash reserves to do this. Look for growth in book value but expect a reduction of cash-flow growth rate and/or debt to cash-flow ratio.

Remember to -

Stay Hungry, Stay Liquid.

[financerawr-blog]

It's okay to put all of your eggs in one basket. Just watch the basket. - Phil Town, Rule #1

Diversification (sector/industry) is dumb, all it does is dilute your portfolio; dilution of losses is not the same as limiting losses by defining risk and protecting profits. Instead please, have a deep knowledge and respect for your security, then employ the use of a trailing stop-loss. Diversification can be expensive - it can also inhibit your discretionary portfolio. If you choose to diversify, do so in terms of asset-class, this will help you to -

Stay Hungry, Stay Liquid.

[financerawr-blog]

YHOO About to Break Support!

Gentleman, I have just set my alert for $15.60 on YHOO stock. Like I told you before, we are looking at bearish times for the shaky company, so I shorted 1000 shares @ $16.00. I am going to buy to cover, and short more if it breaks support; trading at a healthy ~17M per day, methinks it will. :)

Need binoculars to see the bottom.

Folks, remember -

Stay Hungry, Stay Liquid.

[financerawr-blog]

I just saw that Forbes has (rightly) compared Zuck to Ben Bernanke (head of the Federal Reserve), claiming that Facebook is analogous to a central bank. The reason being: Facebook Credits. They are $5 for 50 with which you can buy all sorts of wonderful things.

The basis of the story is that Facebook Credits have a variable exchange rate and drive a virtual economy. Facebook is estimated to make roughly half a billion dollars in 2011 from the currency, this is 11% of Facebook revenues that year. The point that Forbes makes is that Facebook creates and controls currency values within it's own environment, much akin to the Federal Reserve.

This is yet another example of why Virtual Goods are Good. These are the new paradigms for the coming wealth revolution. A virtual economy trading with virtual currency and virtual goods is exactly the same as the information revolution, i.e.: when the printing press made it affordable and profitable for the masses to read. This is simply the next step of that momentum.

Facebook's virtual economy is probably a little smaller than Barbados's economy. If they were to cut down on transaction fees, the currency will likely be valued by more online merchants, stemming it's growth.

Stay Hungry, Stay Liquid.

[financerawr-blog]

These are a number of stock in which I have gathered that shall be known as the Black-Listed. They show some great numbers but they also show some horrible numbers; they are my underdogs.

They are labeled for my purposes as: 

Primary/Multiple-Secondary Financial Deficiency (Black)

Enjoy this picture of the aftermath of a massive black hole:

These are the Black-listed:

FLIR VALE DCI CMI CTXS ADBE MIDD MCRS APH ACN NTAP JOY NVS AHGP SYNA MSFT XLNX QCOM BCPC FFIV BBL CUB MCRS SNP

Don't confuse it with Black-lable! Also, please remember to - 

Stay Hungry, Stay Liquid.

[financerawr-blog]

This week was rather nice. Made around 5% on paper off of GOOG; QSII; and CUB. My SPDR is up a bit this week; I'm having very high hopes for Q1 2012. I can hardly wait to lock down my excellent equities this year.

My short selling experiment with YHOO is covering at 1% :) It's going to drop, just watch!

Stay Hungry, Stay Liquid.

[financerawr-blog]

The Airbus A380 is plagued with evaporating integrity. Every time there is movement toward a better tomorrow in Europe, entropy kicks it two steps back.

These hairline cracks are the result of pushed deadlines and inefficient manufacturing. This technology is infant, it's amazing that Airbus would squeeze the margins on its tolerance protocol at such a critical point of its existence. 

Looks like there's a long road ahead for Euromarkets. I hope they pull it together...

Stay Hungry, Stay Liquid.

[financerawr-blog]

Kodak has delisted itself from the NYSE

Its fall wasn't entirely due to the brand's obsolescence. They have an incredible and robust brand-moat, as Kodak is a household name. When they were still an equitable player, they should have gobbled-up a few digital based companies whose growth was promising. 

A great example of learn to swim. Some of us just need to learn to learn. Remember -

Stay Hungry, Stay Liquid.

[financerawr-blog]

YHOO:

These are some strange momentum indications. Right out the gate this morning, volume EXPLODED hitting 6M! I also saw the MACD blast-up through the signal. Near closing bell however, it started converging toward the zero line and so on.. 

Yesterday I predicted YHOO would fall fall fall... well tomorrow is a new day and I shorted 1000 shares before closing bell. Be patient.

C'mon, 1st Yahoo took down their historical neon sign, now Jerry Yang resigns... you just wait.. come at me bro..

Stay Hungry, Stay Liquid.

[financerawr-blog]

You probably remember that story from a couple weeks back of the guy who paid $16K for a virtual sword for MMORPG, Age of Wulan. I bet you were thinking how much of a tool he must be, right? About that... he purchased what is known as a virtual good, m'kay.. projected to be a $2.9B industry this year! - Not such a tool after all!

In-stat reports the industry's staggering 3-year revenue growth-rate composite of 52% (2007-2010) is expected to double by 2014. I mean really, virtual goods is just as big as sporting goods! If this makes you uncomfortable, let me reassure you that virtual goods have intrinsic value in the natural world:

Virtual goods exist only as information; not real you say, two words for you: Maxwell's Demon. This thought experiment, devised by James Maxwell in the mid-19th century, introduced the notion that information could be treated as energy. Well guys, Nature published an experiment, confirming this to be true. Virtual goods = Information = E = mc² = Tangible goods. Hope that makes you feel better.

Besides, if you hold Zynga (NYSE: ZNGA) you are profiting from the revenues of virtual goods already. Don't hate on virtual goods and remember -

Stay Hungry, Stay Liquid.

[financerawr-blog]

Take a look at Google Inc. IPO - starting at $85 per share in August 2004, people could not wait to get a hold of it, I don't blame them because my reptilian brain is screaming to buy Facebook's IPO as soon as it hits the market - bad call.

Here's why:

Although Facebook's IPO is already rewriting history, it only ensures: volatility and overvaluation. Lets look at Google vs Facebook IPO: Google - $1.67B, Facebook -$10B (bit too close to Fibonacci's ratio for me, fucking weird..), about six-fold, these huge numbers freak me out! Overvaluation comes to mind. The stock is going to go through a volatile torrent in the months following the IPO. Facebook's employees are talking about paying off student loans, buying yachts and spending money for space-bound-joy-rides. Zuck, your employees are going to piss-off a lot of shareholders if your stock is pumped and dumped (figuratively speaking of course, wouldn't want to accidentally defame ya Zuck - please don't kill me). Don't get me wrong, I hope that the stock remains healthy, liquid and grows 15% a year or more, however, I am particularly afraid of the IPO's overvaluation - worse than blue balls. Remember: Proverbs 16:18 - Pride goeth before the fall. Don't be a dummy, sit on your hands!

Wait for the market to settle down. Early rumors during Google's IPO had plenty of excited, emotional language which lead to market hype and volatility. Granted that the anticipated volume will protect against market swings, speculators will be speculators. Now Gmail was a sure to be a big thing from the start right? Pundits put the spotlight on the service in the months leading up to the big IPO, talk about shaky foundation. You're going to hear a lot about Facebook's "skeletons" in the coming months. (More hype)

I'll leave you with this, but first, remember -

Stay Hungry, Stay Liquid.

[financerawr-blog]

Pull out of YHOO while you can!! CO-FOUNDER announces resignation!

[financerawr-blog]

When looking for a mutual fund, (which I wouldn't recommend) please find out a little bit of background info when it comes to the management protocol. Is the fund passively or actively managed?

To find out if your mutual fund is passively managed, please go to finance.yahoo.com and search for a quote of your mutual fund (in my case SCEAX). Now click on Basic Chart, select S&P 500 and then click Compare.

Take a look at the chart:

As you can see, this fund correlates too... lock-step with the market index; why pay extra for a passive strategy index funds?

If you are paying your mutual fund manager premium commissions and fees for a passive strategy, you are an idiot.

I would seriously look into SPDR or Diamond ETFs, they usually out preform the index using passive strategy... at bottom dollar. 

Take a look at XLE, the fees and commission cost are abysmal compared to almost any mutual fund:

Not too bad huh?

Just think before you pay for something you don't need, that's all..

Stay Hungry, Stay Liquid.

[financerawr-blog]

SECTOR-RAWR!

1st thing's 1st... below is my method for finding excellent equities to add to your market watch-list. Step by step simple and easy to do.

Now let's choose an attractive sector. We'll do it based on the criteria set forth by Phil Town's Rule #1.

Let's do Technology. The reason I choose this particular sector is because not only do the industries within fuckin rock, the market cap is HUGE! 

Step 1 - go to biz.yahoo.com/ic

Step 2 - click on Industry Browser

Step 3 - click on the Market Cap column until you have the sectors sorted in descending order

Step 4 - click on your favorite sector (in this case Technology), the list will be sorted already for you in market cap descending order. Cool huh?

Step 5 - click on your favorite industry (let's go with the first one, Wireless Communication), these will also be in descending order.

Step 6 - copy all of the companies with $1 Billion market cap or more to your clipboard.

Step 7 - paste in excel, highlight all the cells in the ROE % column, right click and sort Largest to Smallest (you will have to agree to Expand Selection). Bingo! You have skinned the bull - proceed by cutting all the fat off. Delete all values less than 10% (and values like NA, etc.)

Step 8 - go to money.msn.com, enter ticker symbols (E.g.,QSII) 1 by 1 in the Get Quote field. (I prefer to open Pandora.com and tune to deadmau5 to maintain sanity during this process).

Step 9 - click on Key Ratios, then INV RETURNS. Look at Return On Capital (5-Year Avg.) and Return On Capital, the numbers for both need to be above 10% and what's more, Return On Capital should be the same or bigger than Return On Capital (5-Year Avg.).

By now, you should have a very short list of potential companies that show promise! 

Next time I'll show you how to deduce even more financial indicators, resulting in more refined companies!

Stay Hungry, Stay Liquid.