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Latest Comments18 Comments
Battling the Doomsday Machine
Digging into Shipping
Digging into Shipping
It's just a big game for the players in the market, let's see how low we can drive shares, cover our shorts, and then hopefully time the bottom correclty. It seems the entire market has completely stopped trading on fundamentals. It's all a mass panic.
The SEC's 'Sacred Cow' List: Where Are WaMu and Wachovia?
The SEC Panics
I think if you're trading with a mainstream broker you're fine. If not I would just give them a call. I think it's impossible to know where exactly the shares come from.
And selling short has IMMENSE value to it. If you can't sell short, the only position you could take in equities (excluding options, etc. I'm just talking purely equities) is that they will appreciate. Equities are mispriced all the time, and causing people to only be able to make one-sided bets will cause them to be even more mispriced. It would really screw up the pricing and cause even worse bubbles than what we see now. It's naked shorting that is ridiculous and should have been banned a long time ago.
The SEC Panics
I remember a day last week where there were 300+ million shares of FRE traded. There are only about 650 million shares in the company available and institutional ownership is about 95%. What is basically going on is that people are just rapid fire short selling the stocks dozens of times in a day, covering, and then shorting again. All the while they don't have any of the shares they are selling.
And the Ackman plan, give me a friggin break. The guy is short the stock! His plan for the companies will make him a fortune, if I were a news editor I would be embarrassed to publish the plan. It's ridiculous. I hope Ackman gets taken out to the woodshed on his short positions. These companies have problems (and they should given this is the worst housing bust EVER) but they aren't insolvent.
Visa Estimates Upped Through 2010
The Frankmeister buyin the overprice stock, gonna make the big buck. Go Frankoramaaaaa!
Lehman Brothers: The Much Feared Shorts
General Discussion on V
Talk about cutting edge analysis. I don't know what I would do without the brilliant people at seeking alpha. Nine, you're the man!
Visa Estimates Upped Through 2010
General Discussion on V
1. Visa's initial IPO price was $44. It has almost doubled in about two months. IPO date was March 16 I believe. Is there any rational way that the largest processer of debit/credit transactions could be re-valued at twice the price they originally sold for in 2 months? No, there isn't. Either the investment bank that set the price is idiotic, or people are monkeying with the stock.
2. The PE is extremely HIGH. I think it is over 50, but it is subject to speculation because it is new and you have to project a forward PE. Let's say you project EPS growth of 40% for this stock, which would be the absolute best case scenario. 1st quarter earnings were .39, if you project 40% growth over a year for EPS you get 1.77. Stock price is roughly 81, so PE is 81/1.77=45.5. I can't imagine an argument where you could say that the largest processor of debit/credit transactions in the world would grow more than 40%, so the PE is most likely higher.
3. Mastercard's PE is close to 30, by the math above you could consider Visa overpriced by 50%. The companies are very similar and yes I understand that Visa has the advantage in growth, Asia, etc. But let's be realistic, a 50% premium? Give me a break.
You're argument about future growth being priced into a stock is EXACTLY what drove the dot com mania. The argument was always that this or that company one day would be making X per share, and therefore it should be value at some insane price. 10 years later the NASDAQ is 50% of it's high back in 1999-2000. If you want to use that logic at what point do you cut off the date for earnings. Why not use 2010 earnings, or 2011, or 2012? And an even better question, how reliable are earnings forecasts several years out?
Visa is a great company and will make money, so in a way it is very different than the dot-com types that were hyped 10 years ago, but a similar argument is being used to hype the stock. The reason all of this is important is because in the end the stock price is almost entirely driven by earnings, regardless of the short speculative waves that occur from time to time. And if you can't make some sense out of the price of the stock based on earnings, then you're gambling, not investing. It seems like Vegas would be a lot more fun than this.
If you don't agree Frankie that's fine with me. If you made a ton of money off of the stock that is also fine with me. If you want to call me a bunch of middle school names because you have nothing to counter my facts or my logic don't waste your friggin time.
If you have something meaningful to say that uses facts and or logic to support why Visa's earnings would grow by so much in such a short period of time I want to hear it (and I think everyone else here wants to hear it too).
General Discussion on V
General Discussion on V
But, anyways, I've been told not to worry about that here. After all the value of a stock doesn't depend on how much they make, it depends on how many other greater fools are willing to bid it up to an even more ridiculous level. Don't get me wrong, I think Visa is a great company, but I agree that the price makes no sense.
As for your last question, they actually made .52 per share when you consider the whole 817 million shares. The .39 you mention is only on the 400 million or so common class A shares. I guess the general idea here is that about half of the company was sold to private interests before the IPO. That's the impression that I get, but I've never seen that explicitly stated. This still puts them way behind Matercard, and I have no idea why.
But that doesn't matter! Just keep buying the damn stock!!!
Visa Keeps Charging Ahead
General Discussion on V
With all due respect you're missing my point. The 39 cents per share I mentioned in my post are on the shares that WILL NOT be redeemed (class A shares, you can look this up if you wish). I think overall they made 52 cents per share.
And Visa is saying themselves that they will grow by 20% over the next year, who has a better idea of how fast Visa will grow, you or the company? I mean come on here, give me a break.
If you make more on this stock good for you, reason doesn't dictate that it is properly valued at all though. And you're right, the P/E will adjust, just by a different mechanism than you suppose. I'm just saying be careful, I'd at least lay off the calls until it is more clear that the stock will continue to defy reason and gravity.