SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

   Strategies & Market TrendsValue Investing


Previous 10 Next 10 
To: hoyasaxa who wrote (21043)4/7/2005 7:08:47 PM
From: Brinks
   of 70385
 
$ 100 potential for every $ 1 invested says newsletter writer Ron Struthers on my recent Scientigo or Market Central pick last week. Ron saw my summary I posted here and liked it so much he picked up the stock after talking with CEO. I did not talk with CEO.

I had no input in Struthers report on MKTE below. I call this my value play--$ 100 to $ 1 per Struthers. I purchased shares today, yesterday, last week and probably tomorrow.

My research summarized here became the basis for the newsletter coverage below:

Message 21114117

The stock has not moved at all since the newsletter came out last week.

Newsletter promo:

Imagine Buying Google at $ 2.00 !

How about a stock that a Newsletter writer feels has a potential of $ 100 for every $ 1 invested.

Read the following:

Newsletter writer Ron Struthers just came out with the report that says: "The Next Big Thing In Search Technology." And the outside counsel of GOOGLE is part of the intellectual property team at Market Central or Scientigo (MKTE). Ultimate Disruptive Search Technology…...

Struthers Newsletter REPORT March 29, 2005:

"The potential here is enormous because this company has a tiny market cap of just US$14.0 million and the market could put a value on this of $1 or $2 billion when it finds out about them. This means we have a chance to make $100 for every $1 invested, it is like being a seed investor in Google."

See Ron Struthers complete Newsletter REPORT here on Market Central:

playstocks.net

Share RecommendKeepReplyMark as Last Read


To: Spekulatius who wrote (21059)4/7/2005 10:27:18 PM
From: Mark Marcellus
   of 70385
 
I'm starting to look at WMT and one thing that really leaps out from their balance sheet is the negative working capital, which was negative $3 Billion as of January 31, 2004. Part of this can be attributed to their aggressive management of AP, and I'm sort of okay with that. However, Accrued Liabilities at $10 Billion and counting is also a huge piece of it, and I'm having trouble understanding the accounting. A small part of it is accrued membership fees, which is fine, but the bulk of it seems to be hedges. Here's how they describe it in the 2004 AR:

The Company entered into cross-currency interest rate swaps to hedge the foreign currency risk of certain foreign-denominated debt. These swaps are designated as cash flow hedges of foreign currency exchange risk. The agreements are contracts to exchange fixed-rate payments in one currency for fixed-rate payments in another currency. Changes in the foreign currency spot exchange rate result in reclassification of amounts from other accumulated comprehensive income to earnings to offset transaction gains or losses on foreigndenominated debt. These instruments mature in fiscal 2007 and 2009.

The Company entered into an interest rate swap to lock in the interest rate on floating debt. Under the swap agreement, the Company pays a fixed interest rate and receives variable interest payments periodically over the life of the instrument. The notional, or contractual amount is used to measure interest to be paid or received and does not represent the exposure due to credit loss. As the specific terms and notional amounts of the derivative instruments exactly match those of the instruments being hedged, we have applied the “short-cut” method of accounting provided under FAS 133 and FAS 138. As such, the derivative instrument as assumed to be a perfect hedge and all changes in fair value of the hedges were recorded on the balance sheet in other comprehensive income

The Company expects that the amount of gain or loss existing in other accumulated comprehensive income to be reclassified into earnings within the next 12 months will not be significant.

Hedging instruments with a favorable fair value are classified as other assets and deferred charges in the Consolidated Balance Sheets Those instruments with an unfavorable fair value are classified as accrued liabilities.


I'm confused. If this is treated as a "perfect hedge" and any gains and losses are handled in comprehensive income, shouldn't this be B/S neutral? Does the last paragraph mean that if a $1 Billion hedge has a fair value of one dollar it's a $1 Billion asset, but if it has a fair value of minus one dollar it's a $1 Billion liability? If that's true, it's insane.

I've looked around and I can't find any source that even mentions the negative working capital issue. Maybe it's just me, but I'm having trouble understanding why this isn't at least worth an explanation, especially for a company whose net profit margins run around 3%.

Any thoughts on this would be greatly appreciated.

Share RecommendKeepReplyMark as Last ReadRead Replies (1)


To: - with a K who wrote (21076)4/7/2005 11:06:18 PM
From: Madharry
   of 70385
 
That seems true for the entire biotech universe with a couple of notable exceptions- DNA, AMGN and the like.

Share RecommendKeepReplyMark as Last Read


To: Mark Marcellus who wrote (21079)4/7/2005 11:56:55 PM
From: Spekulatius
   of 70385
 
re WMT - the negative working capital is really a good thing since it means that WMT collects it's money faster than it pays it's suppliers. Regarding the accrued liabilities, you are right that most of them are due to interest rate (around 8B$) and currency (2B$). Since WMT has about 20B$ in LT debt, it means that about 50% of that debt is hedged against currency and interest rates moves. Sounds OK to me. The 12B$ sounds like a huge number but WMT has about 50B$ in revenue abroad which puts that number in perspective.

Share RecommendKeepReplyMark as Last ReadRead Replies (1)


To: Paul Senior who wrote (21015)4/8/2005 12:03:58 AM
From: Spekulatius
   of 70385
 
AIG , bought back into AIG ( at a higher price - sigh) after it appears unlikely that Spitzer will press criminal charges against AIG. That was the biggest concern regarding AIG since criminal charges are very damaging to any financial business. So i hope that Hank just massaged the numbers a little (2B$ is little for a giant like AIG) rather than cooked the books a la Worldcom. Going forward, this won't the the old AIG any more but still a very strong insurer, at least that's what I am betting on.

Share RecommendKeepReplyMark as Last ReadRead Replies (2)


To: Spekulatius who wrote (21081)4/8/2005 7:54:45 AM
From: Mark Marcellus
   of 70385
 
Thanks for the reply Spekulatius. I think I'm going to be struggling with this one for a while.

the negative working capital is really a good thing since it means that WMT collects it's money faster than it pays it's suppliers.

I understand that, and as I said I'm sort of okay with the Accounts Payable piece of it. I do worry about what would happen if their suppliers (especially their foreign suppliers) become more stringent in their terms, particularly if this were to happen at a time of slowing demand that puts pressure on inventories.

That being said, it's the Accrued Liabilities piece that really has me flummoxed. I don't understand why, based on the way they are described, those hedges are carried as liabilities. If they are real liabilities, I need to understand what they are and how they are structured. If they are not, I need to understand the accounting, because it sounds crazy.

The 12B$ sounds like a huge number but WMT has about 50B$ in revenue abroad which puts that number in perspective.

At the end of the day (c.p.) the $50B turns into about $1.5B on the bottom line, which puts the $50B in perspective.

I agree that if current conditions continue, WMT is a great business and a great buy. However, if one believes (as I do) that we could face severe dislocations as the U.S. Current Account deficit unwinds, it is important to understand the worst case scenarios.

Share RecommendKeepReplyMark as Last Read


To: Spekulatius who wrote (21082)4/8/2005 9:00:00 AM
From: Madharry
   of 70385
 
I read a front page article in wall street journal on line and I was pretty shocked by what I read. apparently hank had a big interest in a bermuda insurer that did 47% of its business with AIG. I am getting this sense of having seen something like this in the past that did not turn out well for shareholders. the sec got a court order to prevent interested parties from removing 87 boxes of documents from this company premises. Caveat Emptor!

Share RecommendKeepReplyMark as Last Read


From: Suma4/8/2005 2:37:24 PM
   of 70385
 
Paul and company.

I think this is a value stock... PLL....

I had the children in school. The company is in Roslyn NY..

Also, FCX.. These are my two suggestions...

Share RecommendKeepReplyMark as Last ReadRead Replies (1)


To: Suma who wrote (21085)4/8/2005 3:02:53 PM
From: Paul Senior
   of 70385
 
Thanks for the suggestions,SUMA. eom.

Share RecommendKeepReplyMark as Last Read


To: Paul Senior who wrote (19756)4/8/2005 3:10:55 PM
From: Paul Senior
   of 70385
 
Added a few shares of homebuilder CTX to my position.

Homebuilders --- ah, what really low pride:shame stocks.

Let's see, from what I can tell there are about four people on SI who have admitted they own any homebuilder stocks recently. Three of 'em are on this thread. Everywhere else, as I see it, when people mention the homebuilder stocks, not only are they avoiding them as buys, they are actively shorting them or considering shorting them.

Oh to admit one owns and is buying more of these stocks. How embarrassing it is -g-

Share RecommendKeepReplyMark as Last ReadRead Replies (1)
Previous 10 Next 10