rmitz
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Posts posted by rmitz
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I live near a Sonic and visit there pretty frequently. A drive in, like Sonic, benefits from not having a place to sit and eat inside. Even though we refer to other restaurants as drive thrus, almost all of them have dine in areas. The Sonic located near my house has competition from McDonalds, Jack in the Box, KFC, Taco Bell, and Burger King. So there definitely is potential for a drive in to have higher margins than a drive thru, just on the basis of not having the expenses required to have a dine in area.
The way Sonic works is, there is a small box of a restaurant and on the left and right sides are parking spaces. About 8-10 per side. You pull into the parking space and on your left will be a menu board. When you wish to order, you press a button on the menu board and give your order. Someone comes out with your food, you pay them, and usually leave - some people stay and eat in their cars.
Just for the record, I HATE these kinds of places. I'm the guy that always parks the car and gets out to eat inside a fast food joint, because I can't stand to have food in my car...also, it's just so much more convenient and comfortable to be sitting at a *table* and relaxing somewhat.
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Pof,
What I would suggest is try to start at simple but useful apps.
For example, a watchlist app could be cool. It would mostly consist of entering text (Company name, Ticker, exchange, your intrinsic value estimate, notes on the company) and then storing it.
Then you could start implementing some higher level functions such as using javascript and the Google Finance API to call price checks on every stock on your watch list. This is all stuff that can be done in a Google Docs spreadsheet, but the idea here would be to come up with something a little more slick.
I gotta say, I wouldn't touch this with a 10-foot pole, for privacy concerns. I don't like mint for the same reason.
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The long-term risk is competition from companies like Paypal (more than other credit card processors, IMO), and an increase in the ability for direct bank-to-bank transfers that could bypas the CC processors. For example, being able to pay through your smart phone and having money transferred from your bank (the credit card companies could still potentially be involved in those transactions though).
I think there's another risk in the regulation of fees (or competition in general) resulting in lower fees and lower margins over time. That very benefit of cheaper technology doesn't just apply to Visa, it applies to everyone.
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<i> Not that I'd buy Microsoft, but frankly I wouldn't buy Wal Mart either. They've not really had any success internationally, margins are extremely thin, competition is fierce...it wouldn't take very long with lackluster management for Wal Mart to start looking a lot more like Kmart. </i>
Walmart has 25 billion dollar/quarter business internationally which is growing 25% YoY. 100 billion/year business internationally with huge presence in Canada, Mexico, Brazil and growing presence in China. The margins are stable or are increasing. The current weakness in WMT is because of Yuan appreciation.
Seems like my knowledge of the international situation is somewhat dated. However, I still don't think that an idiot can run that business for long without significant negative consequences.
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Why buy Microsoft when you can buy something as dominant, as cheap, and it will be around for the next fifty years...Walmart! I would not be surprised to see Berkshire take another big chunk in this company at current prices. Cheers!
Not that I'd buy Microsoft, but frankly I wouldn't buy Wal Mart either. They've not really had any success internationally, margins are extremely thin, competition is fierce...it wouldn't take very long with lackluster management for Wal Mart to start looking a lot more like Kmart.
Microsoft's moat (and profit margins, for that matter) is much, much larger in my view, even though it is deteriorating.
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But of course, we're just going in circles. If you want to discuss specifics, as I have with Packer, I leave the door open to you. You can step into the world I live in. Combined ratios, reserving, etc. I leave you an open invitation.
Perhaps once you stop writing in a style which is like a holier-than-thou guru, other people will be more likely to want to have a conversation.
(On a different note, you and SD are talking past each other; you're referring to giving more weight to the *very* latest numbers, and he is saying that you should underweight the most recent few years which have been very profitable. Both actually lead in the same direction.)
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"Akamai is most valuable for people with content that gets viewed lots of times in lots of places. hulu is an example of exactly this opposite effect, where akamai would be helpful."
rmitz, if Akamai would be helpful to someone like hulu, why is it that hulu is handling traffic to LVLT and Limelight instead of AKAM?
Again, I'm talking about the technology, not the business. That article demonstrates exactly my point; hulu *can* use Akamai's technology. The fact that they're moving away from Akamai presumably means that at the moment, the other options are cheaper. That won't necessarily always be the case.
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"It's not that the video content is longer or larger, but that the content itself is mostly on the long-tail side of things. Sure, it'd be great for those video clips that are being watched by everyone a ton, but Akamai isn't going to help much with reading your email, since it's (hopefully for you) not being read by tons of people."
rmitz, I am very confused by your statements above. On one hand, you say that AKAM has a small moat. On the other hand, you say that "content itself is mostly on the long-tail side of things". Can you elaborate? At the end of the day, I think it is much more valuable to be the owner of a network than an owner of a ton of servers that depreciate a lot faster than fiber.
My meaning was that a lot of the content itself is not duplicated. On youtube, for example, a lot of bandwidth gets used up by videos only watched a few times...but there are many of those videos. Akamai is most valuable for people with content that gets viewed lots of times in lots of places. hulu is an example of exactly this opposite effect, where akamai would be helpful. The "long tail" phrase does not refer to the business of akamai at all.
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I think the Akamai effect will be a short-lived one. Akamai is good at handling small packets and short contents. Long video content is a totally different animal that requires lots of fiber. So, whether one wants to take on debt to duplicate the network scale of LVLT or lease from LVLT, fiber still has an economics advantage in the long run.
I have to disagree with your assessment of Akamai. Not the company, but the technology in general. The company itself I believe has a very small moat, but in general the technology involved isn't so much about size of the data as it is about the repetition of the data. It's not that the video content is longer or larger, but that the content itself is mostly on the long-tail side of things. Sure, it'd be great for those video clips that are being watched by everyone a ton, but Akamai isn't going to help much with reading your email, since it's (hopefully for you) not being read by tons of people.
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I'm not sure why I keep involving myself in this conversation, because I really don't have a clue here, but considering the demographics, there are a lot of people retiring that are almost certain never to consider anything but Microsoft. Struggling to learn a new OS I don't think is an option for most people 55 and up. They didn't grow up with computers and don't care to understand them beyond what they already know. I'm not saying it's really that hard to switch, but the perception is that it is hard. I suppose my point is that I don't see Microsoft's revenue going away anytime soon.
Your point works both ways. Younger people (who are becoming the decision makers) are going to be more open to non-microsoft operating systems in the enterprise as well. Office is a tougher nut, but it's still possible.
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I don't agree with the statements that Apple only supports it's software and hardware for 2-3 years, and that everyone upgrades every 2-3 years. Much of Apple's current software and OS will run on somewhat old Macs (a caveat is that Leopard generally won't run on the older computers that do not have Intel hardware). People do not upgrade their mac computers every 2-3 years. I've personally owned only Mac's for the last 10 or so years and am only on my second computer, which I don't plan on replacing any time soon. As far as products like phones, people usually get new phones every 2 years, regardless of what type of phone they have and what company manufactures them. I'd argue that if people upgrade Windows products less frequently, it's because the products aren't innovated very often, and people are even afraid of upgrading Windows OS due to problems.
Agreed. Even applecare lasts for 3 years. Apple users tend to upgrade more often for, I think, two reasons:
1) Apple makes stuff worth buying to upgrade (techno-lust)
2) Target market is people who have the extra cash to spend on a higher quality product (easier to use or simply more sexy)
That said, my mother still emails and does some web browsing just fine on her 6 year old mac.
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So I get a fair value of around $325M - 23M - 4M - 15M = around $282M which is about $200 per share. A "value" or "bargain" would be something significantly less than that. I think it has a long way to fall before it is an interesting buy.
Huh, interesting. My SWAG was that it would have to fall below $200 for me to actually start looking at it, so I'm glad to learn that it's in the ballpark.
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Is everyone else just sitting on there hands like me, right now? Haven't added anything in past 2 days, other than a tiny bit of SD. May begin to start closing 10-15% of my hedges if we get another 4% drop. I hate it that nothing is screaming "buy me" right now, that i can find, other than a few positions i already own enough of.
I had pretty recently de-leveraged completely and today I took a nibble at a small issue. I'm not comfortable using leverage at this point, but if it goes down enough I hope I will be.
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Just to clarify my comment, I respect Mohnish's accomplishments. However in these checklist talks, all he seems to be doing is state the obvious: learn from your and other mistakes and reduce the number of future mistakes.
The obvious is what most people don't get.
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They had a good rationale against the buyback. They have to pay DHL 20 cents on the dollar for every share they buy back, or they can retain the cash and the debt owed to DHL will be amortized over 5 years cashless.
In addition, the call alluded to other debt covenants they have that would prevent buybacks. We'd have to look at the exact debt terms, but honestly the planes might not be an entirely bad idea. I would hope that all the debt gets converted to longer term with better covenants. I trimmed my position very slightly recently just to take my leverage to 0.
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I think the rule you bumped into w/ Etrade is that brokers are not allowed to run IRAs as margin accounts. Because IRAs are distinctly American, the brokers typically run them exclusively as USD accounts. Thus if you were to buy CAD-denominated stocks, Etrade would have to lend you the CAD for the purchase. I could be wrong but I think that may be what is going on. Previously I had a similar issue re: managing an IRA with IB - at the time they only allowed one to hold USD assets in IRAs. Not sure if things have changed there ...
I wrote in another thread, that IB will let you trade foreign positions in IRAs at this point if you do a manual forex trade to get the target currency, first. They also allow you to set up your account as "margin" so that you can trade positions without waiting for the previous trade to formally settle.
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On the 80's networks, you need relays every 40 km and need to switch back from light (optical) to electric signal. On Level 3's network, you stay with light all the way and relays are 100 km apart. Also, stations are 160 km apart on the 80's networks while 600 km apart on Level 3's network.
I can't disagree with your statement here, since I don't know what was deployed, but there's really no reason you can't upgrade the cables, or even splice older ones together. There also exist optical-only switches and other mechanisms now.
The 80's networks are also not fully optimized in terms of route: sometimes you use your competitor to transmit your signal, sometimes you travel more distance for nothing.
All together, the operating cost is about double. If they could have resolved these issues to drive their costs down they would have, but they can't.
Not really sure on the cost issue. Unless you're traveling over 1000 miles, the time delay in your route is pretty minimal, given that it's based on a factor very close to the speed of light. This becomes significant over planetary distances, but it'd have to be a pretty bad route for most situations to matter. If I did the math right, it would take about 5.3ms for light to go that 1000 miles. Your times are swamped by the optical conversion and other hops. Now, the one issue you bring up here which is critical is the idea that you use capacity from your competitor. If this means you don't have any physical way to get from point A to point B, this is very significant indeed.
I need to reiterate that I don't really know what was done in terms of the technical deployment at the time, I'm thinking about what can be done given the resources available (plus cash).
If I was to speculate as to why certain changes aren't being made, it's probably that they aren't yet worth the capital investment.
Roman.
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Was mono-mode (fastest type) fibers even deployed in the 80's?
BeerBaron
I can't answer this question definitively. The standard for the first type of single-mode fiber (Nondispersion-Shifted Fiber (ITU-T G.652)) was released in 1984. I don't want to stress the fiber part too strongly; the biggest and most difficult part to put together is the rights-of-way.
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With Qwest being acquired by CenturyTel, there are now very few options available to carriers to upgrade their national network unless they want to build from scratch and spend 10's of billions. Level 3 network is the most recent with completion in 2001, Qwest was in 1996 and Verizon (MCI), AT&T and Sprint were completed in the 80's. Some others were completed at the same time as Level 3, but they are not national.
In the 80's! Just imagine how out dated that is and how much retrofits have been made to keep this running. There was no internet for everyone back then. It must be a mess, unreliable and must take very knowledgeable technicians and engineers just to understand and keep running.
It's probably not really that bad. The most important things in building these networks are having the physical places (rights-of-way) to actually put your cables. Once you have those, rewiring specific sections isn't that bad. In addition, most of the network upgrades since fiber was introduced (though there are different kinds of fiber) happen at the device level. That is, you don't necessarily even need to replace your cables, but you can have an enormous increase in capacity by upgrading the electronics.
Change happens extremely rapidly at that level. Level 3 would have had to make significant upgrades along the way to keep up with the other providers, even though their network was built comparatively recently.
The long term stable money is in leasing physical fiber to other companies, or just leasing particular rights-of-way themselves. This would provide a reasonable return on capital without requiring huge and continuing capital expenses. I say this without going into any company's particular business model.
Roman.
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Guys, it's time to stop fighting. Apple is a religion for the those who trust and an Anti-Christ for the ones who believe in open technologies. We would be on a geek's web site and the debate would be the same. The only difference is that Moat would be replace by GUI, PE by GHz and Growth by MegaBytes.
Apple makes perfect products for the believers and crappy overpriced products for the non believers.
For me, Apple's fan base is more of an insanity then anything else... but then again I can tell you about a few other organizations that sound insane to me but still lasted 2000 years or 6000 years.
In my opinion, food is a better moat then technology. Our brains are made to react to stimulus. Food is a very strong stimulus as it is a direct part of our survival.
It is also true that the more product creations you make the more you can make mistakes. Toyota has been the leader of Quality Control for the last 30 years and apparently they still made some mistakes...
BeerBaron
Apple does some things organizationally very well that other companies just don't do. The fanatical care about design, and fit and finish, *do* make a difference in the quality of the end product. (The lack of these things is exactly what caused the company to start tanking in the early 90s.) Fit and finish (ease of use, etc.) is what people pay money for, not because they're a bunch of fanatics.
MP3 players were around for a long time before the iPod; why did the iPod become popular? Simplicity. It was simply much easier to use, and wasn't *huge* like so many of the other player products with a reasonable capacity at the time. Personally, I felt it was a flash in the pan at the time and hated it because it didn't have all the options I wanted. Turns out, Apple knows how to sell products to the masses better than I do. :)
Simplify, Simplify, Simplify. Another aspect is that Apple will simply refuse to release certain products. If they worked on it internally and it doesn't meet their standards, and they don't know how to make it meet those standards, the project gets canned. There's a lot more concepts along these lines.
Now, none of this is a moat (except in the case of corporate culture -- when Jobs is not in charge we will see how much of the culture sticks) or rocket science. But it is a real difference, and to copy it, Microsoft will have to change their entire outlook and culture.
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We have people on this forum who worked in the private sector, invested wisely and retired in their 30s. Nobody has ever cast aspersions on their decisions (and IMO, nor should we!). They made their choices thoughtfully and courageously, and super-early retirement is their reward for having saved money while others were spending and for having been value investors while others chasing the flavour of the day.
The grass always appears greener on the other side of the fence!
SJ
Sure, that's their choice. I won't begrudge anyone that; personally, my goal is similar: to not have to work. I'd probably continue to work at a reduced level. But at any rate, it is certainly wasteful from a societal point of view. The people who have the best skills and experience exiting the system at or even before their prime? Doesn't make sense. Now, I will say that it does seem that really stopping contributing when you "retire" is also going the way of the dodo, so I think that's a good thing.
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"Personally, I do not begrudge their pensions in the broader context of their total remuneration package."
To me, the really offensive thing, and the really expensive thing, is that public employees are allowed to retire in their 50's with full pensions on taxpayer dollars. The annuity values of these packages at that age are very often worth millions.
Increase the retirement age to 65-67 for all public employees and most of my objections go away.
I am less concerned about the money (which as some people pointed out, you do trade off money for future pension and other benefits), but it's a waste of human capital for people to stop contributing so early. There's really no reason for people to be retired so early in general.
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Yeah, that's a good point. You're right that a lot of operations are housed abroad in jurisdictions with low tax rates. Actually, I'm not even sure how multinational corporations really figure out how much of their income is subject to US corporate income tax.
Perhaps there should be some combination of a VAT and corporate income tax. This is complicated stuff.
Yep, that's exactly why this is hard. There's a reason sound bites don't cut it, and politicians aren't actually stupid; they just have a very different set of constraints.
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I will be working for a former manager of mine who started his own company with a few other partners. He lives in Montana, his company is based out of Florida.
I will not be traveling or going onsite anywhere. I will be doing programming and code reviews out of the office that I rent here on Bainbridge which I maintain anyway -- this office is cheap space I rent to get out of the house when I want to research investments.
I will not be working with any other companies. This is a specific thing. It's a bit like being a loosely coupled employee, only I don't have to be bored when there are no projects to work on.
Regardless, I will be making $65 an hour and I think it's an excellent wage. Full time, it's $130k a year but it won't be full time because the work won't be continuous. Just like a plumber... I'm not so different from a plumber. A plumber can make $100+ per hour if he has his own business (mine is a sole-proprieter)... it was his fathers' business (he was the sole proprieter too). My wife's family has been using them for a couple of generations (her family has been here on the island in the same house for four generations). Point being, he doesn't work for anybody else, he only does plumbing work, and for every hour that he spends fixing my sink I will need to work nearly 2 hours. It is what it is.
Yeah, actually, in this scenario it's not that bad. My numbers are what I'd estimate one would need to switch from a base salary to "make a living" as a consultant. In this case, you're really an adjunct part-time employee, so that seems pretty reasonable. Hope it'll be fun for you.
ATSG 2Q earnings
in General Discussion
Posted
I agree. I would say that the earnings were not as good as I had hoped, but about what I expected. I feel that holding right now has a pretty good margin of safety. I am somewhat hesitant to sell since this is also a massive position for me, and the capital gains bite will be huge. That said, if we lose the 15% LT capital gains at the end of the year, I will trim quite a lot. Maybe keep some around to use as donations.
I was looking at the March options to do something similar as what you did, but I wasn't as comfortable with the margin of safety on them.