***Official*** 2012 Stock Market Thread

[Corporate Thug]

Motley Fool is just awful. I'm a fan of SA; articles there are much higher quality and are great starting points for further research. The comments/discussions on articles are also incredibly helpful.

SA is better quality I agree. But there are too many pumpers.

 

[chusteczka]

With USG, look at normalized free cash flows

Also, there is shareholder dilution coming due to convertable debt.

Also,berkshire will eventually buy out the company.

I was able to find:

• free cash flow of (- $35million), and
• 105 million shares that will be increased to 135 million shares to cover debt.

Could you tell me where you found the normalized free cash flow? Is that in their financial statements or is it a feature on a stock analysis website?

I am still not seeing anything positive for now, except maybe that they are a solid company that will do very well when the housing market recovers.

However, from my limited understanding, they are already overpriced with a Price/Book of 13.

It seems that I am missing something you and possibly others find to be obvious. Thanks for the tips, I am just not seeing it.

Maybe my lack of hope is entirely based on not seeing a housing recovery in the next ten years. Although, even if the housing market did recover, how high can the share price grow when current Price/Book is 13 and we can expect share price to drop another 20% due to another 30 million shares being issued to cover debt?

1 - (105M / 130M) shares = 20%

 

[The-Noid]

I was able to find:

• free cash flow of (- $35million), and
• 105 million shares that will be increased to 135 million shares to cover debt.

Could you tell me where you found the normalized free cash flow? Is that in their financial statements or is it a feature on a stock analysis website?

I am still not seeing anything positive for now, except maybe that they are a solid company that will do very well when the housing market recovers.

However, from my limited understanding, they are already overpriced with a Price/Book of 13.

It seems that I am missing something you and possibly others find to be obvious. Thanks for the tips, I am just not seeing it.

Maybe my lack of hope is entirely based on not seeing a housing recovery in the next ten years. Although, even if the housing market did recover, how high can the share price grow when current Price/Book is 13 and we can expect share price to drop another 20% due to another 30 million shares being issued to cover debt?

1 - (105M / 130M) shares = 20%

There is no textbook definition of normalized. It is something that comes out of sell-side research.

Generally normalized attempts to take out the year that you want to paint as the outlier.

Some will use simple mean, median, etc. Others will use weighted averages putting more emphasis on the current year.

I would very much caution against ever using the idea of normalized earnings/cash flow unless there is an extremely specific and objective reason for normalizing. Most recently MSFT comes to mind with the goodwill write down. Obviously earnings should be normalized based on not having taken the Non-cash charge.

Use your own judgement whenever you hear the term normalized.

 

[chusteczka]

There is no textbook definition of normalized. It is something that comes out of sell-side research.

Generally normalized attempts to take out the year that you want to paint as the outlier.

Some will use simple mean, median, etc. Others will use weighted averages putting more emphasis on the current year.

I would very much caution against ever using the idea of normalized earnings/cash flow unless there is an extremely specific and objective reason for normalizing. Most recently MSFT comes to mind with the goodwill write down. Obviously earnings should be normalized based on not having taken the Non-cash charge.

Use your own judgement whenever you hear the term normalized.

Thank you. That makes complete sense and confirms my suspicions on the subject.

Certainly, clear outliers may be logically removed from consideration but we need to be careful of the analyzer's assumptions. The most relevant data could easily be misunderstood and ignored as an outlier.

 

[The-Noid]

Certainly, clear outliers may be logically removed from consideration but we need to be careful of the analyzer's assumptions. The most relevant data could easily be misunderstood and ignored as an outlier.

Very eloquently put.

Generally value traps are formed by not realizing the outlier is really the trend.

 

[Arachnotronic]

SA is better quality I agree. But there are too many pumpers.

It's hard to "pump" any non-microcap. Retail action is simply not going to move the stock.

 

[chusteczka]

Going along with the drop in Apple's share price, although it was only 4%, there was an article today stating that AAPL's price drop is a warning sign of the market as a whole. This article confirms my belief in a bear market with the possibility the jumps due to the market volatility may be ending soon with another crash similar to that in 2008.

I am just passing this on because it mirrors my thoughts.

fool.com - 1 Huge Warning Sign You Need to Notice Now

BTW, I agree the article quality of Motley Fool leaves something to be desired, especially with their repeated email spam.

I do prefer the Seeking Alpha website and have similarly considered the possibility of the authors sometimes pumping stocks.

 

[The-Noid]

Going along with the drop in Apple's share price, although it was only 4%, there was an article today stating that AAPL's price drop is a warning sign of the market as a whole. This article confirms my belief in a bear market with the possibility the jumps due to the market volatility may be ending soon with another crash similar to that in 2008.

I am just passing this on because it mirrors my thoughts.

fool.com - 1 Huge Warning Sign You Need to Notice Now

BTW, I agree the article quality of Motley Fool leaves something to be desired, especially with their repeated email spam.

I do prefer the Seeking Alpha website and have similarly considered the possibility of the authors sometimes pumping stocks.

The Fed is much more apt to pump excess reserves drawing bond supply than they were in 2008.

Deposits come in via excess reserves increasing leverage meaning banks and bond holders now need a place to balance out their liabilities. Agency Mortgages, MBS, CMBS, Corporate Debt, Loans and Equities are the benefactors.

The Fed even on a down 200 tape get's their mouthpieces out talking about more QE, what happens in a flush like 2008? Emergency meetings?

Bernanke for good or bad, very much believes in the wealth effect and he will have the entire Treasury real rate curve negative before he is done. What are the alternatives then?

 

[Corporate Thug]

It's hard to "pump" any non-microcap. Retail action is simply not going to move the stock.

Large part of my portfolio is micro-cap, that's why I'm "meh" about SA.

 

[Arachnotronic]

Ah. Makes sense.

BTW, this is just a rumor, but the word on the OCZ acquisition is that it's a cash + stock deal valued @ >$1B. The corpse of my former AMD position is now into OCZ. Really hoping for an FDA-approval like pop.

 

[KB]

Going along with the drop in Apple's share price, although it was only 4%, there was an article today stating that AAPL's price drop is a warning sign of the market as a whole. This article confirms my belief in a bear market with the possibility the jumps due to the market volatility may be ending soon with another crash similar to that in 2008.

I am just passing this on because it mirrors my thoughts.

fool.com - 1 Huge Warning Sign You Need to Notice Now

BTW, I agree the article quality of Motley Fool leaves something to be desired, especially with their repeated email spam.

I do prefer the Seeking Alpha website and have similarly considered the possibility of the authors sometimes pumping stocks.

Profit misses certainly can speak to possible recessions, and the likelihood of a bear market is looking high, but I don't think we will see another 2008 unless we start getting job losses of 500,000+ per month like we did. Not sure there are enough jobs left to lose.

 

[JTsyo]

Ah. Makes sense.

BTW, this is just a rumor, but the word on the OCZ acquisition is that it's a cash + stock deal valued @ >$1B. The corpse of my former AMD position is now into OCZ. Really hoping for an FDA-approval like pop.

Shares outstanding is 67,327,000 so if we take a round value of 1 billion dollars that works out to a price of $14.85/stock, better than 50% of the last offer at $9 something.

 

[Aharami]

Large part of my portfolio is micro-cap, that's why I'm "meh" about SA.

where else do you go for research besides SA?

 

[Arachnotronic]

Shares outstanding is 67,327,000 so if we take a round value of 1 billion dollars that works out to a price of $14.85/stock, better than 50% of the last offer at $9 something.

I would assume in the deal, the share count would actually be higher due to the proposed executive compensation dilution of about 4M shares.

But yeah, if this deal goes through, there's a lot of upside to be had.

 

[Arachnotronic]

also...LOL @ ZNGA.

 

[SunnyD]

also...LOL @ ZNGA.

Wow, them and FB both are getting raped in after-hours trading.

 

[Arachnotronic]

Wow, them and FB both are getting raped in after-hours trading.

ZNGA is getting raped hard. FB is just getting slapped.

 

[Imp]

ZNGA is getting raped hard. FB is just getting slapped.

lol... 36% drop aftermarket.

FB only down 7.3%.

 

[Aharami]

anyone long VRNG?

 

[SunnyD]

OCZ falling off a cliff today? I can't find any news... :hmm:

 

[Aharami]

a trader in a chat who has nailed pretty much all his short and long calls (that I've seen) just said "OCZ was a planted story while i was out last weeek, total bs"

 

[SunnyD]

a trader in a chat who has nailed pretty much all his short and long calls (that I've seen) just said "OCZ was a planted story while i was out last weeek, total bs"

Gee, if there's any sort of proof that the internet, media and wall street should be decoupled (and this itself isn't a bs tidbit)... it's no wonder the economy is in the shitter.

 

[Corporate Thug]

where else do you go for research besides SA?

Honestly, the quarterly reports are the most important thing to me. Once I see a company I think, I'll pour over the financials...if it looks good, I'll look at the analyst reports (not because I put much weight in them, but looking to see if there is something I missed in the financials that they caught).

I agree with I7 - SA is ok for non-microcaps stocks. I would definitely look there as well if I was investing in the non-micros.

 

[Corporate Thug]

lol... 36% drop aftermarket.

FB only down 7.3%.

Only 7.3%? That's a pretty steep fall considering they didn't release anything yet.

 

[chusteczka]

OCZ falling off a cliff today? I can't find any news... :hmm:

The drop may be due to boredom and saturation. The company does not have many followers since they are just breaking out of a niche market, they are not widely known. All the interested people may have purchased, leaving no one left interested to buy. Or, it might not have been a true rumor as Aharami mentioned.

I feel bad that I missed Seagate and Western Digital. I have been considering them these last few months but thought their profit was already played out after the floods through their manufacturing centers, which still makes no sense to me. They somehow turned the loss of their manufacturing facilities into a profit. Damn.