moore_capital54
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Posts posted by moore_capital54
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The posters focusing on disputing religion and a higher being as hogwash with so much energy and enthusiasm are the same ones that do not have the ability to think outside of the constraints of the centrally planned economy.
Building a strawman are ye?
A belief in gold is simply the belief that what has functioned as money since the beginning of time will continue to provide its owner with the preservation of purchasing power without having to rely on politically motivated human beings who seek to manipulate the value of money for the electorate.I'm actually really sympathetic to the argument for gold, and think there's a very high chance that it will "work", probably partly because enough people believe that it will work. It might be a self-fulfilling prophecy because of that critical mass. I'm just not sure if it's the best use of my capital.
The same feelings that drive some of you to not want to believe in a world where gold is necessary drive you to believe in a world where there is no higher being. Everything can be explained by science! Gold is irrelevant as long as I buy shares in Fairfax! It is merely a lack of life experience as well as historical context that fuels such behaviour.Now that's going off the deep end. Blind faith in gold is one thing, but the price of gold is entirely set by human actions. The nature of reality and the universe isn't like that. If you have blind faith in something and it works, it doesn't mean that everything you have blind faith in will work too. That's logic 101.
Back to the strawman: I dislike how you seem to put words in my mouth and ascribe financial beliefs to me. You have no idea what my opinions are about monetary policy, governments, or whether I can think outside the box of whatever. Speak for yourself, and I'll speak for myself.
Who are you to say I have blind faith in gold? Why don't you spend more time learning about the history of your civilization and the importance gold played in it before making such stupid accusations. I have spent decades learning about gold and central banking and the knowledge I share with you and others is based on the wealth of knowledge that I have accumulated. Read Murray Rothbard and Ludwig Von Mises spend a little time doing it and see if you feel any different.
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He's young enough to know that investing in gold is probably not a good idea.
Ha! Honestly, I'm really attracted by gold, and even more by silver (which has more industrial uses). But that attraction is partly irrational, as I can't really give myself an argument in favor of buying some that is tight enough to allow me to do it. I really wish I could better value precious metals (though cash cost of production + exploration might be a good start, but what about on the demand side?)... I don't know. I'm still learning about them.
Anyway, I still prefer productive businesses :)
An intelligent selection of productive businesses either directly or passively (securities) should outperform the price of gold bullion over time. Unfortunately if you have significant liquidity and keep it in cash or treasuries you will underperform gold. What you want is leverage to the gold price and the best way to achieve that is through the securities of businesses that are positively exposed to a rising gold price environment: Think Franco Nevada or Silver Wheaton (for silver).
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I can think of a very good analogy between some of the posters understanding of gold and religion.
The posters focusing on disputing religion and a higher being as hogwash with so much energy and enthusiasm are the same ones that do not have the ability to think outside of the constraints of the centrally planned economy. A belief in gold is simply the belief that what has functioned as money since the beginning of time will continue to provide its owner with the preservation of purchasing power without having to rely on politically motivated human beings who seek to manipulate the value of money for the electorate.
The same feelings that drive some of you to not want to believe in a world where gold is necessary drive you to believe in a world where there is no higher being. Everything can be explained by science! Gold is irrelevant as long as I buy shares in Fairfax! It is merely a lack of life experience as well as historical context that fuels such behaviour.
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And how old are you Liberty? I say 35 or less..
I'm 30. Is this an attempt to pull rank on me or something? An appeal to authority or some other logical fallacy that has absolutely nothing to do with the validity of my reasoning? A way to put me in the "young" bucket so you can more easily dismiss anything I say? Not that it matters; if I happened to be 50, you'd probably find some other way...
Next you'll say: "Oh, I was just like you when I was your age, but I grew out of it..." *sigh*
It's ok Liberty. As you get older, it will get much easier to be cynical, introverted, dismissive and stubborn in your ideas. You'll realize that liberal values and capitalism cannot co-exist...Buffett and Steve Jobs were a figment of capitalism's imagination. ;D Cheers!
Buffet is a product of conservatism not liberalism. Jobs, while socially liberal exemplified typical Ayn Rand qualities as a business person and I assure you that even he is against the deficit.
As for your bashing of gold I can now count several years of you bashing gold (as with Ericopoly) meanwhile in those years gold continues to set new highs and act as the perfect money. Eventually people like you will catch on about gold and at that point I will be selling it to you!
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And how old are you Liberty? I say 35 or less..
I'm 30. Is this an attempt to pull rank on me or something? An appeal to authority or some other logical fallacy that has absolutely nothing to do with the validity of my reasoning? A way to put me in the "young" bucket so you can more easily dismiss anything I say? Not that it matters; if I happened to be 50, you'd probably find some other way...
Next you'll say: "Oh, I was just like you when I was your age, but I grew out of it..." *sigh*
You clearly didn't read my post or if you did you certainly didn't comprehend it. Fermat's Theory and the Theory of Relativity and any other theory that has been developed and proven by humans tells us how to get to the pooper at the mall. That's it. You're at the mall and you need to take a really bad crap, and you don't know how to find the crapper. Then a very brilliant scientist sets up an information booth with a map that tells you how to get there. That's what those theories are. They are meaningless in the grand scheme of things.How did you get to the mall? Why are you in the mall? What is the mall? Who built the Mall? Are you really in the Mall? - According to physics the mall just appeared as did you from nothing.... but hey we can tell you how to operate within the mall so thats all that matters stop wasting your time thinking about anything else! That is where modern theoretical physics is.
Indeed, I did not fully comprehend what you meant in your first paragraph because it wasn't clearly stated. But now with this elaboration which clarifies your meaning, I can say:
Not knowing why there is something instead of nothing or how it happened or why (if there's a why - some things just happen without any entity that has a reason for them) just tells you that you don't know. It's not a license to fill that blank with anything pulled out of thin air anymore than not knowing how the sun worked was a license to call it a god. Fact is that all the evidence that we have access to is part of the observable universe, limited by the speed of light, and that anything inside that system probably can't tell you about whatever happened before the big bang. But there doesn't have to be something 'before' the big bang. Our intuitive grasp of time comes from our evolved past. Reality can be a lot more counter-intuitive than that. It is possible that the big bang was the beginning of time, or that it is one of many universes running in cycles, or that there's a meta-verse, or whatever.. Not knowing which of these or other possible hypotheses is the correct one doesn't mean there's a god behind it all, it means that we don't know. When we find evidence for a god, then that'll be something else entirely. It also doesn't mean that there needs to be a reason or a plan behind how things happen. Why is gravity what it is? How about it just is.
Questions about the origins of our universe are fascinating. But I don't like when mysteries are used to justify stuff for which there's no evidence (a compounding of mysteries).
Good then you agree with what I am saying which is that nobody can say with certainty that a higher being does not exist and the theoretical physicists have done nothing to dispute that.
And no its obvious that you are young and bursting with knowledge but the degree to which you try to dismantle every argument that is pro religion simply projects to me a naivete that will dissipate over time as you gain more life experience.
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I bet if we did a poll the non believers are 40 or younger (the majority) while the believers are 40 or above. As someone that has spent a lot of time studying the teachings of Hawkings and Mlodinow, I find theoretical physics to be a complete joke, something like a map that tells you how to get to the bathroom at the mall. It's totally logical but irrelevant in the grand scheme of things.
Age doesn't change facts, being old or young doesn't have anything to do with it. But being older and having grown up during a time in which it was more common to indoctrinate children before they were old enough to think critically probably has something to do with more older people believing certain things...
Go ahead and tell Hawkings and all the other physicists that they don't know what they're doing... Next you can tell Andrew Wiles that his proof of Fermat's Last Theorem was flawed :o
Our brains haven't evolved to intuitively grasp thinks like quantum mechanics or general relativity, and that's why they seem so weird and nonsensical to us (same reason why we can't think in 7 dimensions or about objects moving at relativistic speeds or whatever). But the math provides predictions that are testable with instruments and experiments, and at very very very very high levels of precision. This isn't just made up sh*t, we know a lot about how the universe works even if it doesn't make sense to you.
And how old are you Liberty? I say 35 or less..
You clearly didn't read my post or if you did you certainly didn't comprehend it. Fermat's Theory and the Theory of Relativity and any other theory that has been developed and proven by humans tells us how to get to the pooper at the mall. That's it. You're at the mall and you need to take a really bad crap, and you don't know how to find the crapper. Then a very brilliant scientist sets up an information booth with a map that tells you how to get there. That's what those theories are. They are meaningless in the grand scheme of things.
How did you get to the mall? Why are you in the mall? What is the mall? Who built the Mall? Are you really in the Mall? - According to physics the mall just appeared as did you from nothing.... but hey we can tell you how to operate within the mall so thats all that matters stop wasting your time thinking about anything else! That is where modern theoretical physics is.
Don't get me wrong, science has done a fantastic job at teaching us almost everything there is to know about the physical mechanics of our existence (very good maps of how everything in the mall works) but has been extremely arrogant at assuming that this tiny little piece of the existence puzzle means they know with certainty that a higher being does not exist.
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I bet if we did a poll the non believers are 40 or younger (the majority) while the believers are 40 or above. As someone that has spent a lot of time studying the teachings of Hawkings and Mlodinow, I find theoretical physics to be a complete joke, something like a map that tells you how to get to the bathroom at the mall. It's totally logical but irrelevant in the grand scheme of things.
For those that are open to more of an understanding of consciousness and how it may contradict the viewpoint that the universe is just a big nothing I suggest the documentary "The Quantum Activist" by Dr. Amit Goswami. I will keep my thoughts on religion to myself but I think that the intellectuals on this board have now shown their age twice, first with their support of the democratic party blindly while pretending to be capitalists (this is an investment board) and secondly by blindly subscribing to the logic that the world is flat (physics explanation of the universe).
I have been asked by a few other posters (the italian guy) and others in PMS for my thoughts on Gold and I truly cannot find the time to respond at length but I was recently emailed a very good presentation by Dr. Martin Murenbeeld given a few days ago in Colorado. I just finished watching it and believe all the posters supporting the democrats should watch (as well as those that asked for my opinion on gold) the presentation is long but does an almost perfect job at codifying my views on gold, central banking, and the fiscal dangers ahead due the structural flaws in the democratic platform:
Specifically watch the section that starts @ 9:50 this is very relevant for the posters supporting the democratic party.
Finally I want to direct this question at Ericopoly the intellectual par excellence of this thread. Correct me of I am wrong but hadn't you previously mentioned you are originally an Aussie? Please clarify this fact for me as I think that would explain a lot..
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Where are parsed and all the posters who exclaimed with such confidence the end of the euro... Look through my post history and you will see clear and concise predictions of today's ecb decision. You either get how a fiat money system works or you don't..
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This is a sad sad video and merely highlights how dangerous the situation currently is... All while we have the intellectuals od the corner board defending a party who's base theynhave no relation to. Vote democratic because your pro gay marriage while we cross 120 % debt to GDP ... Brilliant!
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Parsad I think it was you who once said better to not discuss politics on this board and I think I now can say I agree. I have great respect for you and all members of this forum and do not want to develop any animosity that could in the future impede on us collaborating to discover fantastic investment ideas as we have in the past so I will end this nonsense with this post.
I just want everyone on this board who is American and planning to vote for Obama again to fully be aware that mathematically the fiscal situation cannot be reconciled unless significant spending cuts occur (in which case after several tough quarters prosperity shall return along the same historical trajectry the US has always experienced) or and this is the path we are being led by the democrats we continue to sacrifice the savers by monetizing the debt. Now at some point the experiment of monetizing the debt will reach the point where we experience hyperinflation not seen since the days of Weimar and when it hits we will see a complete reset of priorities (think 200 dollar oil and food shortages) this will be followed by two obvious but guaranteed developments. The world will lose faithin the us dollar as a reserve currency and more importantly there will be civil unrest as the saving class will continue to afford the basic necessities of life while the lower classes will truly feel the wrath of socialism.
Only a free market deregulated society allows for upward mobility. When Michelle Obama says every American deserves a house,healthcare and food... I cringe as the house food and healthcare she thinks they deserve are a product of capitalism, yet if you subsidize everything the result is bolshivik housing, communist food, and healthcare.
I don't care what any of you say , only the republicans will be serious about going down the first route I proposed. The demo da tics areso oblivious to history they will continue to push the envelope of big government until it is too late.
I have never been pessimistic about the future of humanity until this election. I truly hope I am misreading the situation but it is coming across to me as though the democrats have no freking clue about history, monetary debasement, and the founding principles that made the usa the engine of the world. Don't buy the hype , read the recommendations of the Simpson Bowles commission and see how Obama did nothing to implement them.
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Parsad, I usually like your comments but you are totally offbase here I think.
Tim Eriksen, you are the man!
++1 parsed comes off as a left wing extremist moreover his infatuation with Clinton is naive and typical of the younger generation clinging to sentimentality driven logic - ie times were good when I was 23 and Clinton was president. The guy got a freaking blow job in the oval office, he not only disrespected the presidency he set a sexual tone that has since metastasized. Finally I am so disappointed in how nobody on this board can see through the political bs and how clean and straight Romney is. Nobody has been able to find any dirt on Romney he's exactly what the world needs right now.
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Must say I am sick to my stomach from the Marathon time incident. I completely disagree on the other topics but the Marathon time just keeps jumping into my head. If I were Romney I would let him go based on that.. OR I want a transparent and honest discussion about wtf was going through his head. If he fudged the number accidentally I would like to see a discussion about that. As a Marathon runner I can tell you that your best time is something you never forget!
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I understand the frustration with Obama, and the disagreement on various policies, actions, etc, but is Paul Ryan going to be any better as Vice-President to Romney? This guy loves twisting facts to fit his agenda. I trust Romney far more than I trust Ryan!
http://news.yahoo.com/fact-check-ryan-takes-factual-shortcuts-speech-070905927.html
Cheers!
That is one of the poorest fact check articles ever written.
1. Ryan claims Obama siphons $716 billion out of Medicare. This is TRUE. That some prior House budgets largely written by Ryan proposed siphoning it for deficit reduction doesn't change the fact.
2. Ryan says stimulus was patronage, corporate welfare, etc. This is TRUE. That Ryan asked for some funds for his district doesn't change the fact.
3. Ryan said Obama said the plant would be there another 100 years if his policies are enacted. TRUE that he said it and the plant apparently closed after not before Obama took office.
4. Ryan says Obama did nothing with Simpson Bowles commission report. Also TRUE. That Ryan fought against tax increases such that there was no consensus doesn't change the fact.
IBD ran an editorial noting how "fact check" articles need to be fact checked themselves. They are right. Ryan is not talking out of his arse.
++++++1 thank goodness for you because I simply do not have time to engage in these political debates, I am just appalled at some of the kids on this board. Just because Buffet supports Obama doesn't mean you should use your intelligent minds to convince yourselves hes good. Hes been the most divisive president in the nations history and hes had enough time to make things happen. The comments he made about success were the straw for me and other self-made successful people who create the jobs in the world! The randian heroes that most of you work for are all anti-Obama I assure you this. And for those of you that started your own businssess (that are actually successful and generate $500k+ or millions in revenue) I am sure you too can clearly see the stark contrast of an Obama led US.
The US was always the beacon of upward mobility and success stories, Obama turned it into society where success is frowned upon or expected to lead a redistribution of wealth bailing out folly and sloth at the lower levels of society. All the arguments about rich people not doing this or not doing that are just so empty and lack perspective. Every time we hear about private equity this and carried interest that were talking about 1-4,000 people that make much more of a good impact on society than what the 15% delta on what they don't pay in taxes would accomplish if the treasury got to spend it on more nanny state programs.
How many of the students on here look up to an Ackman or a Loeb, how many of you will purchase investment books and travel to conferences because of these people. That is what is so great about the US or what used to be, that in the US businessmen were like rockstars. No other place on earth was that true.
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Romney and Ryan, or Obama and Biden, will all continue their rhetoric. They will have very little influence on what actually happens going forward. The system will eventually work it's way through the process, and things they do may speed the process or impede it...think Japan! But they have no idea what to do, and neither does anyone else. They are simply capitalizing on Obama's vulnerability, just like he did with Bush (not too hard), and none of them will make an ounce of difference. If things improve in the next four years, whichever party wins will get the credit, but in reality they would have done little. The U.S. succeeds in spite of their politicians, not because of them...the system works because capitalism is self-correcting. Cheers!
This is where you are totally wrong. The US of today is simply not the US it was in 2008 when Obama was elected. That is why I hope he is displaced. You CAN screw it up just as the japanese did and just how Obama has been doing.. Normally the system would correct itself as you said because there would be a process of delevering in conjunction with a process of levering on the governmental level, then so the theory goes the private sector would recover and through tax revenues the public sector would follow.
But when you have someone trying to implement major changes to the fundamentals of the US economy and social fabric such as Obama the engine does not necessarily have to work. And then Bernanke comes in pouring more fuel and yet it does nothing.. We are not growing as fast as we should be at this point in the recovery.
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It is the debt load that is crippling the economy.
It's not the debt load that is causing the problem. The economy wasn't suffering when everyone was acquiring debt, nor when debt had reached proportions slightly less than they are now. Corporations are achieving record profit margins.
It was a credit crunch that led the economy to slow down, and then the subsequent deleveraging which slowed it further. You then had asset prices deteriorate and consumers naturally decreased their level of consumption...in other words the engine stalled. The government then tried to prime the pump and fire up the engine, but it's not working very well because you have engines stalling all over the world. And how did all this come about? Because of various levels of past stimulus, either through tax cuts, interest rate cuts, lax lending policies to appease various groups and inordinate amounts of capital flowing through the hands of idiots! Both democratic and conservative!
Romney and Ryan, or Obama and Biden, will all continue their rhetoric. They will have very little influence on what actually happens going forward. The system will eventually work it's way through the process, and things they do may speed the process or impede it...think Japan! But they have no idea what to do, and neither does anyone else. They are simply capitalizing on Obama's vulnerability, just like he did with Bush (not too hard), and none of them will make an ounce of difference. If things improve in the next four years, whichever party wins will get the credit, but in reality they would have done little. The U.S. succeeds in spite of their politicians, not because of them...the system works because capitalism is self-correcting. Cheers!
Sorry Parsad but I just don't have the time to debate this tonight but I vehemently disagree with you here. There is over $5 trillion in new debt in the last 4 years... when the base is rising the debt means little and is even supportive of growth in aggregate demand but only when it comes due is it felt in the economy at which point a delevering is required.. But the Obama administration has been relevering which is what they are supposed to do under the keynsian doctrine only they relevered in the absolute worst ways demonstrating they know nothing about how jobs are created or how business works.
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I'd rather Romney have picked Portman to reinforce his economic strengths. Portman has a good reputation for working with Dems, whereas Ryan seems an ideologue - see his behavior on the Simpson-Bowles commission, for example.
http://www.politico.com/news/stories/0812/79724.html
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Now the saintly, do-good aura that surrounds Simpson-Bowles presents an awkward challenge for Mitt Romney and his running mate. Romney is pitching Ryan as a problem solver who wants to use his command of the budget to forge bipartisan deals to solve the nation’s fiscal crisis.
But in reality, Ryan, according to the recollection of some commission members and staffers, was a key part of the dynamic that undermined the commission and allowed the triumph of partisan and ideological loyalties over a budget deal.
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Karl Denninger, a libertarian financial blogger, really dislikes Ryan:
http://market-ticker.org/akcs-www?post=210028
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And Ryan is one of the liars-in-chief in the House. If you need your memory refreshed may I recommend you read the following links:
(discretionary budget, welfare reform, retirement security and more)
(voted for and supported TARP)
(Medicare, cost-shifting at gunpoint and more)
(more Medicare lies)
(Ryan's fraudulent -- for the second time -- budget proposal) and of course
(Ryan's lies about the sequester ex-post-facto creating exemptions to it)
The problem with Ryan is that he's not a "conservative" at all. Beyond the fiscal mess documented up above -- a mess he not only helped create but is promulgating and continuing, along with the explicit and implicit support of frauds up and down the line in our financial system via TARP and other schemes he also supports blatantly unconstitutional laws on top of it, including The Patriot Act, warrantless wiretaps, retroactive immunity for telecommunications firms that broke the law on warrant requirements and more.
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Are you seriously quoting Denninger? I recommend you actually watch the TARP debate video on his site and see what Ryan and Boehner and other republicans were saying. They explicitly stated their objection to the bill but the need to pass it to avert a disaster. Congress passed TARP , Obamas incoming government deployed it...
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In addition to Reagan's tax cuts what about Clinton's cap gains tax cut and Kennedy's? By lowering the tax rate it encouraged sales and new re-investment. Is it a coincidence that large economic growth occurred after these tax declines?
I already pointed out that the Kennedy tax cut was aimed at the demand side. (unlike the Romney proposal)
As for the Clinton cap gains tax cut of 1997... (note the timing of the cuts relative to the largest bubble ever in the stock market, and how the bubble was growing in hyperdrive)
well, what have we learned about the spending habits of Americans when their assets are in a sky high bubble and they feel rich from the easy wealth? I'm talking about the mother of all stock bubbles -- that huge stock bubble that grew like a beast in the late 1990s and made people giddy and spend freely as if the good times would last forever...
Nah, that wouldn't be relevant, never mind :D
It is the debt load that is crippling the economy. Highly recommend Marc Fabers new essay this week: http://www.acting-man.com/?p=19036
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Somewhat disappointed by the extent to which some of the posters here have no idea how bad the situation is in the US right now. I highly recommend the following interview with Wilbur Ross:
Paul Ryan is exactly what is required to get the US back on track.
Also recommend the following video:
http://www.youtube.com/watch?v=MNKfbO_PvkI
Ryan is the only politician who has an encyclopaedic knowledge of the debt and has actually put a sensible plan forward.
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We bought fmcc common as we felt that was the best "perpetuity option" luckily we only started building our position a few days before I posted moreover we averaged down today buying some common at .16 or nearly 400mm equity valuation. The thesis is impaired but some would say this way the treasury gets paid even quicker...
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Fellow board members, after reviewing FMCC's figures today I can't help but ask for your opinion on buying FNMA and FMCC here. These two may be 10-20 baggers if we have more quarters like reported today by FMCC.
FMCC is now back to positive net worth and could be in a position to fully repay the treasury by 2013 on the outstanding $50B~ due.
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I don't know how you can claim a HFT algo won't cause a six-sigma event; they already have. It's just the exchanges and US regulators keep coming through and fixing the outcome. If two algos go crazy and trade Apple to each other for 1 penny, the exchanges and regulators basically show up and say they weren't real trades. Let those trades stick and I promise a six-sigma event would have happened by now.
I wish I were allowed to cancel my bad trades.
Technically you are correct, but I think you lack some perspective. Of course it is ridiculous that apple trades at 1 ct, but it is definitely not a world-changing event. Somebody wrote a bugged program and lost money. Same thing happened before algorithmic trading was around: countless examples of fat finger trades. Fortunately exchanges have rules in place to prevent and cancel idiotic trading. If you piss away a couple of million manually your trades will be cancelled as well.
I am not saying HFT is the holy grail, but I believe it receives too much (negative) attention. I guess we need a scapegoat because the market has been flat for 15 years and the evil anonymous robot is perfect for that. IMO, option backdating, corporate fraud, stock pumping, government deficits, and countless other things are far more harmful for investors, but nobody is going to write a nice Reuters blog article about it. Who would read it?!?
Wide spreads are more consistent with what we want as Value Investors, and what WatsaBuffet thinks he wants in more volatility.
Wide spreads are VERY healthy for markets, I don't subscribe to this Chicago School efficient market theory that spreads have to be tight. My best investments were made on equities with very wide spreads. Wide spreads lead to more organic buying and selling, a buyer of a stock with a wide spread generally has longer term intentions, same with a seller...
What some of you may be missing is that the HFT Exchange relationship is no different than the Issuer Rating Agency relationship we had in 2003-2008.. This is a very big issue.
I remember when NDAQ was trading on the OTC Bulletin Board and nobody even cared about valuing an exchange, all of a sudden the ex goldman guys realized an exchange is a toll road and began to consolidate and extract fees. This for profit mentality of an exchange is not good as it leads to them harbouring HFT and encouraging rapid fire trading in the casino.
Exchanges used to be partnerships with seats, now they are pubcos that try to grow regardless of what their underlying business is doing. They lower listing requirements and sell data to some parties while they don't others, the list goes on and on and on.
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higher volume = higher volatility
higher volatility = greater opportunity
Volatility is a value investor's friend.
This volatility is not the value investors best friend, this volatility is the type that could derail markets for months of not years and only end in disaster.
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Good call Moore capital.
Looks like the company has a net cash position of $1.5 billion and a market cap of $2.3 billion. So the market is valuing Zynga's operating business at $800 million.
http://investor.zynga.com/releasedetail.cfm?ReleaseID=695419
"Net loss for the second quarter of 2012 included $95.5 million of stock-based expense compared to $33.1 million of stock-based expense included in the second quarter of 2011."
"Stock-based expense is projected to be in the range of $410 million to $430 million."
"Free cash flow was ($204.4) million for the second quarter of 2012 as reported or $29.3 million excluding the purchase of the company's headquarters, compared to ($0.4) million for the second quarter of 2011."
"Capital expenditures are projected to be in the range of $370 million to $380 million, which includes the purchase of our corporate headquarters building in April 2012. "
"Non-GAAP weighted-average diluted shares outstanding are projected to be approximately 845 million shares in the fourth quarter of 2012"
-up from 736 million currently
"Adjusted EBITDA is projected to be in the range of $180 million to $250 million."
-Still trading at 12.8-9.2X Adjusted EBITDA
What a disaster company
BV = Bazaar Voice...
Joshua, I get chills down my spine when I think how Mark Pincus sold 46mm shares of ZNGA pre IPO to Pension Funds and Institutions @ between $.46-$13.00 (No disclosure as to what the VWAP was which is also ridiculous) in addition he also sold $106mm worth of shares back to the company in a PRE IPO Tender... THEN on top of those two pre-exit exits, he sold 16.5mm shares for $11.65 in March 28th.
Why isn't Mark Pincus being sued? He has extracted at a minimum $300mm and probably closer to $600-700mm in cash from this company while issuing strong guidance etc. I urge some of you to listen to Rich Greenfield tear him a new one on the conference call last night.
These web 2.0 Silicon Valley guys, they think theyre so smart, but I have yet to see anything more than a dog and pony show from: OPEN, Z, ZNGA, TSLA, FB, LNKD, YELP, etc... It's all smoke and mirrors, there is not a business there worth anywhere near the current multiples awarded by Mr. Market.
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Just finished reading the Zynga S1 here are my thoughts:
At first glance, Zynga looks more like a business than LinkedIn, but then they start with all this Adjusted EBITDA nonsense. I really believe that when it comes to valuing a business, there is nothing new under the sun. But that doesn't stop these new tech co's trying to re-educate the investing public with these adjusted metrics to make their financials look that much better.
The crux of the Zynga business model are these virtual goods. Under US GAAP you can only book these virtual goods as revenue when they are used. This makes sense, as when I fund my Zynga account I may only use the virtual good next month or next year, or I may even decide to "cash out" and not buy anything. There may be a proper formula to better understanding how to project what percentage of the virtual goods will be cashed or used and when, but Zynga did not offer that in their S1.
If we strip apart Zynga's belief that every 1$ coming in as "deferred revenue" will eventuall be cold hard profit, the business is unimpressive:
http://sec.gov/Archives/edgar/data/1439404/000119312511180285/ds1.htm (Page 42)
For 2010, The great Zynga generated $597mm in revenue and US GAAP Net Income of $90MM. For the first quarter of 2011, those numbers are $235mm and $11mm respectively.
The current valuation under Sharepost is $15.5B but rumors on pricing in the range of $20-25B. Under US GAAP, this indicates an EV Multiple (Zynga has raised $1B in cash and will have another $1B more from the IPO) of 100x Net Income on the lowside, and as high as 300x Net Income on the high side.
Now under this scenario, I may be a little aggressive because a portion of those deferred revenues will in fact translate into profits. That being said, I don't agree with the Zynga methodology of adding back ALL The deferred revenue to come up with an Adjusted EBITDA as there is clearly a cost for every dollar in the system. The best way to figure out just how much cash ends up in Zynga's pockets is to look at the Cash flow Statement. FCF never lies.
The Cash flow statement provides a lot more insight into the potential earnings power of this business. Its definitely interesting.
For 2010, I would estimate the true FCF to be roughly $150mm-200mm when adding back what appear to be truly one-time items. However there is not enough clarity to truly understand what will be recurring and what will in fact be one time expenses.
If you listen to Zynga and buy their argument for "Bookings" + Adjusted Ebitda, you are still going to be paying up a high valuation for this business. Lets assume that their EBITDA was in fact $392mm, that still indicates an EV/EBITDA multiple of between 40-50x on day 1.
Google is currently trading at an EV/EBITDA multiple of 12.
My gut feeling is that Zynga most probably has a fair FCF of $150-200mm per year which makes for a great business but not one worth $15-20B. I think the insiders know that as well.
Since inception Zynga has raised $833mm from investors and has spent $265mm repurchasing common stock from employees and CEO Marc Pincus.
From our inception in October 2007 to date, Mr. Pincus, our Chief Executive Officer, Chief Product Officer and the Chairman of our Board of Directors, has purchased an aggregate of 149,197,328 shares of our common stock. To date, Mr. Pincus has sold an aggregate of 43,629,310 shares of our common stock at prices ranging from $0.42 to $13.96. In addition to sales by Mr. Pincus, our other current and former executive officers and employees have sold an aggregate of 51,192,501 shares of our capital stock at prices ranging from $0.25 to $17.09 per share, including, 6,717,161 shares we repurchased from our other executive officers and employees. These sales include two tender offers in 2010 by third parties in which 383 employees were eligible to participate and 298 employees decided to participate and sell shares.
These businesses never grow forever, we saw it with Open table recently. At some point the Zynga growth will slow and only then will we really see if this is an EFAX type online business that spins out cash every quarter consistently, or benefitted from some temporary social craze. One thing is for sure, investors buying in at the IPO price are not getting a bargain.
I would take Google @ 12x EV/EBITDA over Zynga @ 40-50x any day.
Cheers!
This was my second post ever on the CoBF Board. For those wondering, we were short and partially covered our position after hours for a gain of over 70%. I expect BV a company we are short in a very big way to follow...
I Miss This Guy!
in General Discussion
Posted
I agree with everything you say here but remember that gold is idiot proof, whereas you have to be right about your selection of securities. With that being said at your age you should be heavily weighted towards equities anyways making gold a less attractive option.
Remember gold only makes sense as an alternative to money when we are in a negative real interest rate environment. Since gold has been freely floating (since 1971) there has never been a period where one would have lost money holding gold instead of fiat money as long as real interest rates were negative. Many idiots like to point to 1980-1985 or 1987-1991 when gold declined by 50% and 30% respectively but forget that in those periods real interest rates were 5-12% and so any monetary gold investor was actually buying treasuries and money funds. With that said gold prices were still up over 200% from the 1970's.
Right now real interest rates are not only negative our central banks are printing money at a pace never been seen while fiscal policies continue to be geared towards more entitlements banking on even more central bank monetisation as debt levels exceed levels which are sustainable based on the arithmetic. This all bodes very well for gold.