I think that investors should pay attention to all of the costs being capitalized in the latest 10-Q.
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Month: September 2014
Book summary: A Curious Discovery
John Hendricks, the founder of the Discovery Channel (DISCA/B/K), wrote a book on his life story. Here are my key takeaways from the book.
I’m on Twitter @glennchanWordpr
https://twitter.com/glennchanWordpr
My Twitter will have more of my half-baked ideas and random observations.
Homebuilders revisited
In the past, I’ve written various posts about shorting US homebuilders. This post look at lessons that could be learned from the experience. I was largely right about which companies were the worst. However, I was hurt by the favorable macroeconomic environment for homebuilders.
Beating Wall Street in oil and gas
For whatever reason, it seems that many institutional investors analyze this sector poorly. This creates wonderful opportunities for short sellers. To recap, this sector has attractive shorts because:
- It seems that many institutional investors don’t understand how oil and gas companies inflate their reserves.
- Inflated reserves are very common among oil and gas companies.
- Institutional ownership is high enough that there are reasonable borrows on these stocks.
- Many management teams use the company as their piggy bank to pay for corporate jets, expensive meals, etc.
- Valuations are high.
- A few of these companies are pump and dumps.
Mining: who are the sharks and who are the fish?
In general, I think that the underwriters are the sharks and investors are the fish. As I have written elsewhere on this blog, too much of the industry is focused on mining investors rather than mining ore.
Avid: Starting to burn through cash
On August 13, Avid issued a press release that provided a timeline for the release of its restated financial results. Comparing the figures with a past press release, it is possible to guestimate Avid’s cash burn.
- On Dec 31, 2014 Avid’s cash balance was $48M.
- On June 30, 2014 Avid’s cash balance was $23.0M with $5.0M of debt. So $18M after subtracting debt.
In the 2 quarters, Avid burned through $30M of cash. It may need to start drawing down its line of credit with Wells Fargo by the end of the year.
