topofeaturellc
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Posts posted by topofeaturellc
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Interesting posts. I semi-agree about Heebner. I like his investing style and he's a good manager overall. His long term performance is still pretty good. But, I remember back in the day when people were jumping into his funds after a string of stellar performance. It just reminds me of the obligatory caveat emptor: past performance is not indicative of future performance.
Agreed.
I remember reading that his investors had bad performance even when his funds were doing well.
Since his funds were so volatile, they perfectly bought high and sold low.
:'(
That's pretty much a characteristic of every high performing manager. People tend to invest at the end of the run, not the beginning, and tend to pull assets out up until the underperformance ends.
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in theory two competing essentially fungible commodities with zero marginal cost should mean both entities go bankrupt.
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I don't think VZ has ever shown numbers, but the general supposition has been that it isn't a reasonable ROI - even in places with decent pop densities. Look at how much VZ has slowed down the rollout. I live in Manhattan and we don't have it where I live. The Cable guys who have existing infrastructure basically buy enough people back. Think about it - It is very hard to have two zero marginal cost commodities competing with one another
It’s probably true that it hasn’t been as profitable as they’d like, but I’d not go so far as to say it isn’t profitable. I would expect they are using the capital elsewhere, but that doesn’t mean it’s not economic. Of course it’s all speculation. I’m happier with FiOS than I ever was with Comcast, but if Google Fiber were available, I’d switch in a heartbeat. Verizon doesn’t run their network to keep their customers happy, they run it with greatest extraction of rents in mind.
Absolute profitability is pretty meaningless for something as capital intense as a broadband network.
Its not like VZ has all these other tremendous internal investment opportunities they are pursuing instead.
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I have DSL at my house and it works great for Netflix at a slower bandwidth speed option.
Google has said they expect to make a profit on their Google Fiber venture. From the numbers I saw I would guess 10-12% ROIC. Verizon Fios apparently did not earn a decent ROIC. I think the main difference was significantly lower customer premise equipment at Google fiber and lower Fiber cost per home passed. The other major difference is that Google's pricing was low so they may have taken ~50% market share in Kansas city. The will limit the long term pricing power of cable and DSL internet.
Great article on the subject.
http://www.cnet.com/news/google-fiber-on-track-to-become-major-broadband-competitor/
Verizon Coming out with a Virtual Cable service for wireless
At the end of the day the cable co's and Satellite providers lose a big chunk of their profitability to a virtual cable service so too risky for me.
do you have a cite for the GOOG fiber numbers? It doesn't really make sense given the FIOS outcome
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Verizon Fios wasn't economic, so assuming they are going to expand over a huge footprint including rural areas is dubious. Also, where are you getting your numbers with respect to the profitability of Google Fiber. I don't believe Google has ever provided hard data on the economics of this project.
FiOS Wasn’t economic? How so? Do you mean they aren’t economic for rural areas? That may be true, but the cities have always subsidized the rural areas for these kinds of things.
I don't think VZ has ever shown numbers, but the general supposition has been that it isn't a reasonable ROI - even in places with decent pop densities. Look at how much VZ has slowed down the rollout. I live in Manhattan and we don't have it where I live. The Cable guys who have existing infrastructure basically buy enough people back. Think about it - It is very hard to have two zero marginal cost commodities competing with one another
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I would like to just be able to buy a bundle of virtual channels on my Apple TV.
Then (if they had it in my area) run my Apple TV over Google Fiber.
Comcast/Cox/etc... are just an internet provider that offers a bundle of channels...
So they are easily replaceable if a company like Google or Verizon is willing to offer you an internet connection... and they are!. The cable companies offer nothing that can't be bundled virtually over one of these other pipelines. In fact, the cable companies offer a pretty crappy user experience.
And the content guys are willing to sell you content.
I suspect that ends up being the issue.
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If you think about it once cable companies are all converted to IPTV - they are all really just virtual cable companies bundled together with last mile infrastructure. Its just 1 and 0s sent over a line on a common protocol. In theory you could just change the box at your end and get some new provider.
I think its an interesting point however I think a few things would need to happen. For starters I think you'd need to see the forced unbundling of TV and broadband with some kind of rate of return regulation on broadband - its a utility - treat it like one. Competition is mutually assured destruction for the pipes.
Your analysis of Virtual vs Traditional is a little weird right - because implicit in that $70 fee is some portion of the return on capital for the historic investments made in the network. The Broadband price you pay is also something like that. The ROC for the historic cable investments isn't great IIRC.
The other thing that you would need to figure out is what is in the content owners best interests - fundamentally they need to figure out what maximizes revenues for them and then they will promote that. I have no idea what that answer is. Do they want "virtual MSOs"? Or something more a la carte? I honestly have no idea.
I'd guess that in aggregate the status quo will make the content industry the most money. For some of the players tho a la carte would be much better.
I suspect that's why you only see high cost channels like ESPN, Disney, HBO, trying to do the "TV Everywhere" thing outside of the MSOs.
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Pretty much any long-only manager of any style who has good ten year plus numbers has a 1,3, and 5 period where they meaningfully underperformed. Many managers who had great 1, 3 and even 5 year numbers when looked at on a ten year basis were nothing more than coin flippers.
This is basically because no process works all of the time. No style or philosophy.
Why should the mutual fund manager's lack of process or performance become the fund investee's problem? Buffett is exactly correct in suggesting that the average investor who does not have the time or inclination to pick investments would be best served by putting most of their money in a low cost index fund. Again, excessive fee avoidance is the soundest, simplest strategy for most.
Huh? I'm not sure what point you think I'm trying to make? When you are looking at active managers you've already made the decision to invest actively.
And that fact that BRK itself has trailed the market for certain periods of time is itself evidence of what I am trying to say.
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Could some of the reason for the Morningstar downgrades be because the funds attracted flows, got bigger, and they had to change the sorts of stocks they were in?
some of that. Also the star ratings care a lot about vol.
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Pretty much any long-only manager of any style who has good ten year plus numbers has a 1,3, and 5 period where they meaningfully underperformed. Many managers who had great 1, 3 and even 5 year numbers when looked at on a ten year basis were nothing more than coin flippers.
This is basically because no process works all of the time. No style or philosophy.
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Its a cyclical industry, pricing has come down, but that's not reflected in earnings yet.
That's why most of the smarter ones are reducing their new business.
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You might want to consider that a deal was deliberately not offered - to raise the ante on the remainder.
With this kind of organization it is far easier, & more reliable, for some people to meet with a permanent accident.
SD
I'm pretty confident a deal was offered. The offered deals for much smaller fish than SC, and PB wasn't very discrete in telling folks that SC was who he wanted.
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Oh. No I think we are talking past one another.
I think most of us believe he had the goods on SC, was offered a deal by the Government, and for some reason chose not to take it.
I thought you were suggesting its possible he didn't have anything concrete he could offer on SC - and I guess that's plausible. Tho there is evidence of them having out of office 1:1 meetings after the DR. told him the bad study data and just before SAC blew out of the long position and got short.
Yes, I guess that is what I am saying. I find it hard to believe that he would willingly go to prison instead of just taking the deal. It is possible he simply has no material info that implicates SC, which I think is likely, or perhaps he is being threatened.
Obviously - this is a totally possible thing.
But lets think through the scenarios
Set the scene: Dude had been long Elan because he expected a drug approval to happen. I think like a week before he had been pushing SC to buy the name in his portfolio. SC had even overruled longer-tenured better performing HC PMs on the position. Then on like a Friday that Doctor email him and tells him he got the results. The Doctor emails him a pword protected doc that explicitly says its private, material info and the DR def has a fiduciary relationship to Elan shareholders. Over that weekend we know MM and SC speak and that following week SAC blows out of all of the long position and gets short the name.
So thus three plausible scenarios in my mind:
1)No one at SAC asked to see MM's research or ask where he got his info from. There was a pervasive culture of don't ask don't tell outside of each of the individual pods. If this is the case then pretty much everyone in a supervisory role at SAC should be banned for life from the securities industry for failure to supervise. Even then this doesn't pass the smell test as SAC is noted for having an extremely robust compliance apparatus post some unpleasantness in like the dot.com times. Not to mention SAC was actually paying this Doctor on MM's behalf, and it was public knowledge the guy was an insider on this particular drug that was key to the thesis on what was one of the firms larger investments. At a minimum someone in compliance knew there was a relationship.
2) There was someone between MM and SC who did the quality control and knew where the info was coming from. The compliance apparatus protected SC. I actually think this is the most plausible - but then MM could have rolled on that guy as well as the compliance people. AFAIK he did not.
3) SC explicitly knew what was going on. I actually doubt this was the case.
Implictily he had to know. I think he had built an apparatus that encouraged insider trading, but he had insulated himself from the criminality. So when a guy like MM showed up with a thesis like this, he knew what was going on, but he never saw any proof.
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Oh. No I think we are talking past one another.
I think most of us believe he had the goods on SC, was offered a deal by the Government, and for some reason chose not to take it.
I thought you were suggesting its possible he didn't have anything concrete he could offer on SC - and I guess that's plausible. Tho there is evidence of them having out of office 1:1 meetings after the DR. told him the bad study data and just before SAC blew out of the long position and got short.
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I wonder which one of the PBs was Stevies button man.
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How do you know he had a choice?
to roll on Steve Cohen? I guess its plausible that he was never asked why all of a sudden he had gone from loving to hating a stock for a drug approval literally over night. But doesn't that seem unlikely to you? Or that at least someone asked him?
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well unless he's a fool there's been cash in vanuatu or namibia for the last few years.
I sort of understood how the other guys could construct a mental model that allowed them to honestly believe they were not guilty, and therefore refuse to roll, but this guy appeared to be dead to rights from the jump.
Of course now there are rumors out there Cohen's plan is to evenutally open up his family office to outsiders. Which blows my mind.
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I suspect that if you implement a very diverse portfolio the data errors to the good and the bad balance out.
Its when you try to reduce the portfolio size that it matters.
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right. It would seem inevitable.
If you check out insolation maps even places like New Hampshire are better candidates for solar than anywhere in Europe
North of like a like drawn through somewhere in Northern Spain.
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Yeah no he's absolutely right. And you are absolutely right about utility scale solar. But the solarcity stuff is distributed so it's a zero sum game. The T&D network has to be remunerated.
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I realize a lot of people on these boards believe the future is solar and believe in new battery technologies. I don't. And the people who actually run power systems don't. Like for instance the people who mathematically model supply and demand at OPG.
this. utilities bosses speaking off the record(liquored up) don't seem really enthusiastic about these new technologies. it's just PR/marketing.
nah - they've ALWAYS said this. ALWAYS. I bet if you had asked them if Nat Gas would ever matter back in the 70's they would have scoffed.
The one valid point they make - although I think they overstate it by a magnitude is the extra costs associated with balancing a grid filled with small generators who want to sell into the market.
That's really the biggest problem, but its totally solvable - how to remunerate capital spent on assets that barely run but are required to keep things from breaking.
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well first off - that price quoted above is wrong. That's delivered. The generation price is 8.5c kwh. That's sort of a blended average of what plants run when - as its regulated generation so the cost is something like energy*efficiency+ opex+capital*roe
Whereas fortum's generation is mostly deregulated and purchased sorta via nordpool - where spot is like 38EUR Mwh or 3.8 eurcents Kwh
But the difference is that (and I don't have the data in front of me ) there are lots of times during the day when hydro or wind are the marginal producer so prices are something like 0. If you look at the underlying data you can see hydro producing regions offering power for negative prices (because of how the market clears you can't get < 0, it just tells the market you will generate at any price). So even though there are parts of the day where much more expensive than US gas might be the marginal producer, in aggregate costs are a lot lower.
If you are as dull as me and this actually interest you, Nordpool's website is hands down the most user friendly of any of the power pools I've looked at.
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I meant just generation wise.
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if electricity costs 49 cents per kWh, it makes sense to build your own power plants yes.
it's hard for me to understand that number. i'm paying around 10 cents and it used to be less. makes me look at solar and wind differently.
If you look at the actual generation component of the bill it makes more sense. But SoCal is structurally more expensive than Finland. Fortum owns a lot of hydro
Virtual Cable – the Disruptive threat to cable and Satellite TV companies
in General Discussion
Posted
I'd love to see some math on that. It seems really hard to believe.