I’m staying away from oil and drilling

Lately, independent E&Ps have been beaten down due to lower commodity prices.  Drilling stocks (e.g. NADL) have been beaten down due to US sanctions on Russia and lower oil prices.  Some shipping stocks (e.g. DRYS, PANL) are beaten down.  In these situations, I will not be greedy when others are fearful.

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Thoughts on media stocks (CHTR, LBTYA, DISCA, VZ, WWE, NFLX)

Overall, I think that cable companies are extremely well positioned going forward.  The value of the information carried over their pipes will naturally get better due to better content on the Internet, Internet TV getting better, and illegal downloading getting better.  Going forward, I think that video content will be increasingly higher quality and cost less.  This will give cable companies more pricing power.  The cable companies that may do the best are the ones that can raise prices without fear of competition.

Altisource and being greedy when others are fearful

Let me clarify how I feel about Altisource… I am extremely bullish on it.  It has everything I want in an investment:

1. Wonderful economics.  Historical growth over 30%/year with very high high returns on capital.
2. Low valuation.  P/E less than 10.  As a bonus, Altisource has gone crazy buying back shares after the share price fell.  It has bought back more than its free cash flow.
3. Talented management (see #1).
4. Ethical management.

In general, I always try to look at both sides of an argument.  To figure out if I am right about something, I try to prove myself wrong (e.g. to figure out the short thesis and to consider it).  That being said, I think that the fears over Altisource have been overdone.

Is now the time to be greedy when others are fearful?  I don’t like being promotional on this blog but I will say that I have been buying more Altisource.

Risks to Ocwen and Altisource

I apologize for the high volume of Altisource posts.  Altisource is by far my biggest position so I need to make sure that I’m not goofing this one up (especially because I have been doubling down on Altisource).

As far as the risks go:

•  Ocwen’s future earnings will likely be hurt as I do not see it taking kickbacks on force-placed insurance.
• Regulation can theoretically be very ugly for Ocwen and Altisource.
• Declining delinquencies could slow or reverse growth at either company.

Notes on cable – Part 5 – The future winners of Internet TV

The future winners of Internet TV will likely be the companies that can:

1. Intelligently buy undervalued content.
2. Achieve scale (or have scale).
3. Create good software

Are mortgage servicers evil?

This post will take a look at situations where mortgage servicers screw up and why they screw up.  I’ll let you decide whether or not they are “evil” and whether or not they deserve their bad press and regulatory attention.

Notes on cable – Part 4 – Billing for Internet

There are different approaches to billing users for Internet usage.  This post looks at the ways in which ISPs might raise prices and implement price tiering for its customers.