***Official*** 2011 Stock Market Thread

[lothar]

PDLI:
Also, I'm reading more about PDLI. They have exited manufaccturing and no longer have commercial assets. This has elminated capex it seems. Since they simply collect royalties now, they turn over half of revenues into cash flow from operations. So, most of the revenues generated, it seems, correlate directly to FCF. On top of this, they have said that they intend to do share repurchases and possibly doing dividends to the tune of $1 each year going forward What I don't know (yet) is why the share count went from 120 million to 140 million in the recent quarter. Still reading.

Even though it seems that patents expire in 2013 and 2014, any agreements that have been made will continue on. The contracts do not seem to terminate at patent expiration.

Oh, they intend to sell the patents and royalties assets when the economy gets better. So, this is turning into a matter of determining what those are worth (future cash flows discounted to todays dollars plus profit margin for the acquirer). So, the formula should be simple. FCF is about $200M each year (should be going up for a few years). If you take those FCFs for 3 years that's $600 million but the royalties assets go beyond 2014 (if I am understanding correctly). So this is a $700M market cap that is probably going to return over $600 million to shareholders. It seems like this is some sort of arbitrage. This company is planning to shut down operations and give the net proceeds to the shareholders.

EDIT: The revenues from royalties: In 2009, 2008 and 2007, we received approximately $305.0 million, $278.7 million and $224.7 million,
respectively, of royalty revenues under the license agreements. Those are some nice numbers going forward, especially if this company intends to sell off this off and shut down operations.

Right now, I will continue to hold and dollar cost average if the opportunity presents itself.

Medimune patents .... As of the 2008 annual report, that seems to be the only litigation onoging. Still reading of course.

Yep.
Seems like people are trying to shake the pinata on this one all the way until 2014.

That would be interesting if true. However I will for now assuming nothing after 2014 and the company would be shut down or barely non-existent...Safer for me to assume so.

If what you say about them still collecting royalties after 2014 is true, then all the better. :thumbsup:

I thought I remembered seeing at least one more litigation on royalties 2 days ago but I will have to double check.
I'm off to bed now...Thursdays are my long days. I have a 12 hour shift.

 

[thepd7]

Holy crow - what's going on? In the past 3 months, our company stock [semiconductor industry] increased to a price where most of my stock options are actually worth something again.

columb,

Tell us more!

It's anybody really. I've been talking semi for months, check my posts.

WFR - I bought at $12ish, sold at $16, bought again at $11ish, holding for $15.50 or $16 again. Very solid company, lots of available cash.

TQNT - All time highs, great company. I don't buy that not being in the new iphone matters that much, they are doing plenty well without it.

 

[IHateMyJob2004]

Never said it was a value trap.
It doesn't fit any "value" metrics anyway so I don't think the definition of value trap holds water. "value traps" fit the value part through low ratios (P/B, P/E, etc...) that look appealing on paper, until you dig further and discover the traps included such as rapidly declining cashflows, sales, revenues, etc...

I simply think we all need to look at the company a little differently than using our "traditional" valuation methods.

Don't think I advised buying or selling either way. I am simply trying to get more information in case I missed something.
I did buy the stock this afternoon BTW.

Everybody has been buying ABH...Have we missed the boat?

Yes, but their Cash from Ops is goin up up up. Has been for the past 3 years. And CapEx has been zero. So, FCF is bacsially equal to Cash From Ops, so it is going up up up to the tune of $200-300 million. Not sure what the exact numbers are but hte market cap is at about $700 million right now. P/FCF = 3 or so.

 

[fisheerman]

SD running again today. Guess they are getting a little help from the turmoil in the middle east. Also alot of volume. This thing picking up steam.......

starting to think about some profit taking but this volume is insane

Thanks again IHATE. biggest winner so far in '11.

NTE is my second.

sold out of VZ before the iphone announce.

Looking for something else may just sit for a while and see if we get a pullback.

 

[IHateMyJob2004]

SD is just doing the inevitable. A move to natural gas will occur within a few years. It will probably be the trucking industry to start. This is al going to be casued by higher oil prices.

I'm not sure how much higher SD will go though. It's a tough cookie to value. More visibility can be had in a year or two since they stated taht htey are slowing/stopping aquisitions. That could provide time for fianncials to normalize.

 

[IHateMyJob2004]

Yep.
Seems like people are trying to shake the pinata on this one all the way until 2014.

That would be interesting if true. However I will for now assuming nothing after 2014 and the company would be shut down or barely non-existent...Safer for me to assume so.

If what you say about them still collecting royalties after 2014 is true, then all the better. :thumbsup:

I thought I remembered seeing at least one more litigation on royalties 2 days ago but I will have to double check.
I'm off to bed now...Thursdays are my long days. I have a 12 hour shift.

From reading, it sounds like this is true. it is implied though (not stated clearly) which kinda bothers me. It might require digging into the reports from the comapnies involved in the royalties to see if there is any mention.

 

[IHateMyJob2004]

PDLI: read more...
Ya, those royalty payments seem to stop once the patents expire in 2014 unless I am misreading things which I don't think I am. Knowing that, I am kinda confused as to why Seth Klarman of all people bought in. he was paying atleast $5.15 per share. PDLI is now at $4.95.

EDIT:
Oh, that's why Klarman is buying .....
http://seekingalpha.com/article/252801-seth-klarman-re-opens-position-in-pdl-biopharma

As you would expect with a special situation investment like this, PDL vigorously defends its patents. There are two main legal matters to highlight. The first involves communications received from Genentech regarding Avastin, Herceptin, Lucentis and Xolair. Without going into too many legal details, PDL took the offensive and sued Genentech asserting a violation of their 2003 agreement which limits Genentech’s ability to challenge the validity of PDL’s patent rights. A court case is currently pending, but if PDL were to win, there would be a substantial windfall for shareholders potentially on the order of $1 billion. I won’t speculate on the chances of success, but I will say that PDL’s aggressive response should limit any future communications from Genentech, which would be a positive for PDL.

$1 billion handed out to 140 million shareholders is just over $7 per share as a special one time dividend. This would be in addition to about $3 in dividends over the next 3 or so years depending on how much is paid out. So, $10 in dividends if things go well. That is taxable though. Is Klarman really that convinced that the $7 payout will come?

Man, I think $5 is simply a fair price. I am going to try and break even. I'd say taht $3/share would be very attractive though.

 

[InverseOfNeo]

What do you guys think of PDC as an alternative to SD?

 

[IHateMyJob2004]

What do you guys think of PDC as an alternative to SD?

The financials look horrible. Lots of debt, capital expense intensive.

That's at a glance. I'll try to read up on it later. What is your thesis?

 

[InverseOfNeo]

The financials look horrible. Lots of debt, capital expense intensive.

That's at a glance. I'll try to read up on it later. What is your thesis?

I don't have much of a thesis. I may be wrong about this but I think some analysts like it better (on average, moderate buy vs sell).

 

[InverseOfNeo]

DP

 

[FelixDeCat]

I just want to go on record VERY EARLY here - Facebook will be a terrible investment if it debuts with a 10B market cap. They barely made $200m last year and they already have 500m accounts (not necessarily users). Its the internet bubble all over again.

Also, puts.

 

[cheezy321]

I just want to go on record VERY EARLY here - Facebook will be a terrible investment if it debuts with a 10B market cap. They barely made $200m last year and they already have 500m accounts (not necessarily users). Its the internet bubble all over again.

Also, puts.

Ummm.....

http://techcrunch.com/2010/06/22/facebook-revenues/

Zuckerberg said that estimates that Facebook would make between $1 and $1.1 billion this year “are not so far off in either direction that it’s causing us any pain…”

 

[FelixDeCat]

Ummm.....

http://techcrunch.com/2010/06/22/facebook-revenues/

Still overhyped. I plan on shorting Facebook just before the 6th month when insiders will be dumping shares en masse. They know its fully valued. Im going all in to the downside on that one.

Facebook is a fad. And like all fads, it will die or fade away. And I will come in here to say - I told you so.

 

[cheezy321]

Still overhyped. I plan on shorting Facebook just before the 6th month when insiders will be dumping shares en masse. They know its fully valued. Im going all in to the downside on that one.

Facebook is a fad. And like all fads, it will die or fade away. And I will come in here to say - I told you so.

lol, facebook is as much of a 'fad' as google and smart phones.

Not saying it might be overvalued, but you just undervalued them by 5X.

Social networking is NOT going to die away. Its not going anywhere. Facebook serves up 1 in 4 pageviews in the US. Thats astonishing.

 

[FelixDeCat]

lol, facebook is as much of a 'fad' as google and smart phones.

Not saying it might be overvalued, but you just undervalued them by 5X.

Social networking is NOT going to die away. Its not going anywhere. Facebook serves up 1 in 4 pageviews in the US. Thats astonishing.

Go long if you like. Not me, Im going short close to the 6 month mark.

The end.

 

[cheezy321]

Go long if you like. Not me, Im going short close to the 6 month mark.

The end.

Im not going to invest in facebook one way or the other.

To invest based on your idea that facebook is just a 'fad' is extremely misguided. Facebook is 25% of the internet in the US right now. That's no fad at all. That's dominating the internet. Will they turn that into boatloads of cash? That is the real question.

 

[JS80]

I just want to go on record VERY EARLY here - Facebook will be a terrible investment if it debuts with a 10B market cap. They barely made $200m last year and they already have 500m accounts (not necessarily users). Its the internet bubble all over again.

Also, puts.

You will lose your shirt if you short FB at $10B valuation. FB is going to be worth $100B eventually.

 

[FelixDeCat]

Im not going to invest in facebook one way or the other.

To invest based on your idea that facebook is just a 'fad' is extremely misguided. Facebook is 25% of the internet in the US right now. That's no fad at all. That's dominating the internet. Will they turn that into boatloads of cash? That is the real question.

We apparently disagree, so lets agree to disagree.

And I believe theyve reached maximum penetration already. Everybody and their brother has joined and created 50 accounts each to boot! Theyve monitized the crap out of it as well. All thats left is to charge a monthly fee to use it. That will be the death of Facebook. Turn off the lights and go home. Game over. Ill bet they lose 2/3rds of their accounts on the mere proposition. So because of the outrageous hype - INCLUDING A MOVIE!!! - all growth will be factored in at debut, and then some.

This stock will be one of the best shorts of the year when they finally foist this joke on the market and the insiders are able to legally dump their shares on the hopefull and gullible (NOT AT THE DEBUT, BUT ALMOST 6 MONTHS LATER WHEN NOBODY CARES).

This is my last post on the subject for now. ()

 

[JS80]

We apparently disagree, so lets agree to disagree.

And I believe theyve reached maximum penetration already. Everybody and their brother has joined and created 50 accounts each to boot! Theyve monitized the crap out of it as well. All thats left is to charge a monthly fee to use it. That will be the death of Facebook. Turn off the lights and go home. Game over. Ill bet they lose 2/3rds of their accounts on the mere proposition. So because of the outrageous hype - INCLUDING A MOVIE!!! - all growth will be factored in at debut, and then some.

This stock will be one of the best shorts of the year when they finally foist this joke on the market and the insiders are able to legally dump their shares on the hopefull and gullible (NOT AT THE DEBUT, BUT ALMOST 6 MONTHS LATER WHEN NOBODY CARES).

This is my last post on the subject for now. ()

Facebook has passed Google in terms of traffic. FB has barely tapped into their potential monetization model. They will have crazy CAGR for the next 5 years while they roll out ad products, hence FB is priced the way it is.

There's no agreeing or disagreeing. You are just plain wrong.

 

[SSSnail]

The only reason FB passes Google in traffic is because they lace themselves in EVERY. SINGLE. FREAKING. PAGE on the internet. That includes a few icons on a single web page. Sometimes, you just increased FB traffic count without even realizing it. I never had an actual FB account.

That, and I myself have 6 fake FB accounts just for the one time that I was hooked on Zenga Poker, which I no longer used because I don't care for Zenga Poker anymore.

Another reason is that the overtly twitchy tweens keep refreshing their status 10 times every second, do you really want to count that as a page visit? Really?

If time is telling, a lot of people on this forum DO NOT like FB. Take it for what that's worth.

 

[thepd7]

I just want to go on record VERY EARLY here - Facebook will be a terrible investment if it debuts with a 10B market cap. They barely made $200m last year and they already have 500m accounts (not necessarily users). Its the internet bubble all over again.

Also, puts.

Still overhyped. I plan on shorting Facebook just before the 6th month when insiders will be dumping shares en masse. They know its fully valued. Im going all in to the downside on that one.

Facebook is a fad. And like all fads, it will die or fade away. And I will come in here to say - I told you so.

I'm glad you're on record, I'll be coming back to call you a moron when you're wrong.

 

[FelixDeCat]

I'm glad you're on record, I'll be coming back to call you a moron when you're wrong.

Sticks and stones, but my puts before insiders can sell will make me rich. Facebook is pure, unadulterated hype. I will short the ever living crap out of it and laugh all the way to the ATM machine.

YEAH BABY! :awe:

 

[coloumb]

FEIC
KLAC
RTEC

all have increased in value significantly since January of this year.

 

[IHateMyJob2004]

Facebook might go public in 2012. it's not even definite. The only thing that is known is that they might have to start reporting more financial data.

For the record, Facebook will probably be a distant memory in 2020. Shorting is a timing game that is hard to play.