Avid’s restated financials

There’s some interesting stuff in the latest 10-K that Avid has filed.  While some of these details are good for the short thesis, I still think that there are better shorts out there.

Restoration Hardware Q2 2014 notes

I think that investors should pay attention to all of the costs being capitalized in the latest 10-Q.

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:

1. It seems that many institutional investors don’t understand how oil and gas companies inflate their reserves.
2. Inflated reserves are very common among oil and gas companies.
3. Institutional ownership is high enough that there are reasonable borrows on these stocks.
4. Many management teams use the company as their piggy bank to pay for corporate jets, expensive meals, etc.
5. Valuations are high.
6. 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.

Is Google’s management out of touch with how Google makes money?

I’ve never been blown away by the way Google’s management communicates with shareholders.

1. The 10-K presents “Cost-per-click” and “aggregate paid clicks”, both of which are terrible metrics.
2. The shareholder letters largely gloss over Google’s cash cows: its search advertising and display advertising businesses.

The TSX Venture explained

The TSX Venture exchange is filled with stocks designed to enrich insiders and brokers.  Interestingly enough, institutional investors own some of these stocks and don’t seem to have figured out the game.  Here are some of the patterns: