Residential solar makes little sense

Residential solar makes little sense compared to larger forms of solar energy such as utility-scale solar (building solar farms in non-urban areas) and commercial solar (solar panels on the roof of commercial buildings).  The economics are inferior for various reasons:

  1. Economies of scale in labour costs (engineering, installation) and in equipment costs.
  2. Larger scale solar tends to place solar panels in areas with the best sunlight conditions and other economic factors.  Some residential roofs are obscured by trees or are not strong enough to support solar panels.  There are some frictional costs when people waste time figuring out that a particular residential roof is not a good place to place solar panels on (e.g. customer service, engineering).

Larger scale solar projects have inherent advantages over residential solar.

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AAMC update Aug 2015

I previously described AAMC as a “royalty on yield chasing“.  AAMC’s economics can potentially be extremely attractive because asset managers can generate extremely high returns on capital.  Currently, the stock is trading at very depressed levels.  Two explanations for the share price:

  1. Luxor capital and other major shareholders may be liquidating.  Luxor suffered a lot of losses on the Bill Erbey family of stocks.
  2. AAMC generated close to no fees in the past quarter.  Either you think that management screwed up or that there is a temporary hiccup in revenue recognition.  Rental revenue, selling the home/mortgage, and marking the asset to BPO value all generate GAAP profits.  There is a time period after a BPO (broker price opinion) and before a home is rented out (or sold) where the home will not generate any GAAP profits, which can result in less fees for AAMC.

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My approach to diversified shorting

The investing strategy I understand the best and feel most comfortable with is diversified shorting- taking a large number of very small positions in common shares of crappy stocks.  I mainly short stock promotions and pump and dumps, where I think I have a sizable edge over other market participants.  The performance of my strategy backtests to ~15% from May 2014 to August 2015.

The key to making this strategy work is being able to quickly find a large number of awful stocks.  This is possible because stock fraud is an industry.  Scumbags network and share knowledge with each other.  Fortunately for me, this makes them really easy to find.

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Ignore the cloud / the future is cloudy

In my opinion, investors should mostly ignore the hype around “cloud” computing.

There are different definitions of so-called “cloud” computing.  In a literal sense, cloud computing refers to computers attached to a network.  Such technology has been around since the 1960s.  The current interest in cloud computing largely has to do with the pervasiveness of fast Internet connections.  “Cloud” software can be thought of as “software that requires a fast Internet connection”.  The widespread adoption of broadband Internet allows certain forms of cloud technology to become more viable.  For example, backing up large amounts of data over an Internet connection now makes sense.

However, all software companies are largely on the same footing when it comes to cloud computing.  If cloud computing makes sense for a particular market segment, anybody can (re-)design their applications to take advantage of fast Internet connections.  Software has always been an arms race between competitors improving their product with new features.  Cloud computing is simply part of that arms race.  Personally, I don’t see cloud computing as being a paradigm shift like the Internet was.

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Ever-Glory (EVK) – Domain registration + web footprint

EVK’s English/investor website is at everglorygroup.com.  The site’s domain registration shows the Registrant Organization as “JIANGSU EVER-GLORY INTERNATIONAL GROUP CORPORATION” and “JiangSu Ever-glory Group Co., Ltd.”.

According to EVK’s 10-K, this does not seem to correspond to any of EVK’s subsidiaries or the parent company (see the subsidiary diagram in the 10-K).

image21i subsidiary chartevk-domain-registration

It does seem to correspond to Jiangsu Ever-Glory International Group Corporation (“Jiangsu Ever-Glory”) [emphasis mine].  The 10-K describes this related-party entity as follows:

Jiangsu Ever-Glory International Group Corporation (“Jiangsu Ever-Glory”)

[…]

Jiangsu Ever-Glory is an entity engaged in importing/exporting, apparel-manufacture, real-estate development, car sales and other activities. Jiangsu Ever-Glory is controlled by Mr. Kang.

This is a little strange.  Normally companies put their own information in their own domain registrations.  (To be fair, you can put in whatever you want for a domain registration.  One benefit of accurate domain registration information is that following ICANN rules can help companies in ownership and trademark disputes over a domain name.)

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