Summer Infant is a profitable company that trades at a quarter of book value.
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writeups – longs
Intel’s moat
Historically, semiconductor manufacturing has been a brutal industry yet Intel has outperformed its peers by a wide margin. Here’s what I think is going on…
Digital River (DRIV) and payment processing (V, MA, GOOG, EBAY)
Digital River is a company that offers:
- Payment processing. For (very) small software vendors such as myself, Digital River competes with Paypal (owned by Ebay), Google Checkout (now Google Commerce), and others.
- E-commerce / online store. This relates to automatically letting the user download the product once payment is received, product updates, etc. etc. I use E-Junkie for this service.
Digital River has a lot of unhappy customers because it was upselling its customers’ customers. The software vendors are unhappy since they can’t opt out of the upselling (nor do they profit from it) and some of their customers are turned off by the upselling practices. Digital River doesn’t seem to understand its software vendors and has a terrible reputation among them (Google around… here is one example). I will never do business with Digital River as a software vendor. And I wouldn’t go long the stock.
Baja Mining (TSX:BAJ)… dodged that bullet
I wrote a post on Baja Mining on Sept 8, 2011 but never published it because I didn’t really understand the mysterious cost inflation of the project. Around a year later, the stock has gotten crushed as it has revealed that its mine is not as economic as originally expected. Here is my original post:
Quick notes on Monument Mining (CVE:MMY)
In brief, Monument Mining goes into the “too hard” pile due to title issues that I don’t understand and a CEO I don’t trust. Continue reading
Premier Exhibitions (PRXI) update
Premier Exhibitions closed up 18% after earnings. (I have a very small short position so I have a very small loss.) I believe that the two most important factors for the gain are as follows:
- Premier reported a very profitable quarter. They announced a profit of $2.76M for the quarter.
- They announced that they have a non-binding letter of intent to buy the Titanic artifacts for $189M.
On closer examination of these two points, I am not worried. (But again, I may be a little biased.)
Google (GOOG)
In my opinion, the most important points about Google are as follows:
- Google has an amazing franchise in its Adwords (search advertising) and Adsense (banner/text ads) businesses. These business are likely to continue to grow earnings at very high rates for the foreseeable future.
- At a P/E ratio of roughly 22 and with a high growth rate, Google is somewhat cheap.
- The biggest risk to Google is that of a competitor developing a better search engine. In the history of technology companies, small startups like Google can quickly dethrone the market leader in the span of only a few years. Google did this to the former market leaders such as Yahoo and Altavista. Another company may do the same to Google. I do not see Google as having a moat against a higher quality product. It is not like the soft drink business where Classic Coke has a moat against better tasting products such as New Coke (now defunct) and Pepsi. The technology industry is littered with corpses. Not even network effects protected services such as ICQ and Myspace.
I believe that Google call options are compelling since the options minimize the tail risk and they aren’t expensive.
