Here’s the transcript to this week’s Live Q&A Chat. I’m always happy to answer your questions individually too, so just shoot me an email or open up the Chat Room on the app or the site if you are ever confused or need help. And finally, if you’re interested in getting some detailed help for your finances and a personalized playbook for your portfolio, ask us for more details on the Cody Willard “Deep Dive” services.
Q. Do you feel at this point $TWTR is a buyout target for a $FB or $GOOGL or will those companies develop their own $TWTR like platforms / systems that we have already seen a periscope like product from $FB?
A. Periscope is bigger than just adding streaming live video to the Facebook app. I do think $TWTR is a potential target as an acquisition, but rather than $FB or $GOOG, both of whom would probably face some anti-trust scrutiny for such a deal, maybe it’ll be an old world media or tech company — how about $FOXA or $IBM or $MSFT
A. I’m not looking to buy $BABA, but with it crashed like it is from the IPO, I’m at least looking at it and just pondering if there’s anything to do with it…which lead me to look at$YHOO this morning… Yahoo market cap is $29BB, but their stake in $BABA is worth $24BB (before taxes) and they have $6BB in net cash too. The Yahoo company itself makes less than 70 cents per share or about $600MM per year with little topline growth. Throw a conservative 5 or 6 multiple on the $600MM earnings and you get $3BB in value there. So adding it all up, you get Yahoo $6BB in cash plus $3BB in earnings valuation and subtract that from the $29BB market cap, and you see that: $YHOO‘s valuation right now is probably discounting at least a 20% tax haircut or that $BABA itself falls another 20% in valuation or something along those lines. All of this makes Yahoo interesting as a deep value kind of play.
Q. Is $ICON still on penalty box ? DId you get a chance to reevaluate it ?
A. $ICON is definitely still in the penalty box — the questions about the accounting there are killer and I’m always angry when management creates problems with the SEC/accounting issues.
Q. I was wondering what do you think of best buy as a short idea for the next 2-3 yrs, I feel that they won’t be able to survive with Amazon become the defacto shopping retailer, thanks for you input
A. I think $BBY is likely to be a good short (speaking of which did you guys see that$BKS is down 15% today?! @$(*&@$#) as the company gets squeezed by $AMZN. That said, the management there is doing a good job of trying to navigate the competition — but I don’ think there’s much upside to the Best Buystock over the next 3-5 years, that’s for sure.
Q. I was wondering also what’s your opinion about COVS (covisint), I know u don’t like small ( below $5) companies
A. I’d not heard of COVS but just took a glance at it and here’s what I see: $50MM in net cash, a $100MM market cap, revenues declined this year but are supposed to grow again next year and the stock is in the middle of its year-range. It says its a cloud company, and I’d want to know much more about why the company’s revenues weren’t growing this year.
A. Yes, I’m thinking about nibbling on some $YHOO but Robert Marcin nailed exactly the reasons that I’m not buying any Yahoo when I asked him about it earlier today on Scutify: “yhoo’s investment portfolio ceratinly supports the value of the shares. but i tend not to like these trades. first, you need to want to own the stocks in the investment port and i’ dont trust chinese stocks. and secondly, the core biz has very little growth and seems stale. ask the kids how often they use yahoo and let me know what they say.”
Q. Can you give your opinion on $RUBI ? I am a big fan of its revolutionary CEO and entered and exited this stock multiple times.
A. $RUBI is in the Internet Ads business and that’s a tough place to compete against the biggest tech companies in the world including first and foremost $GOOG. The company has a $600MM market cap, $100MM in net cash and trades at 28x next year’s earnings estimates on topline growth that was 90% this year and is supposed to come in at 30% next year. It’s growing fast enough that if it can keep its margins and sustain that growth, the stock is quitecheap on the out years earnings potential. It’d be something I might consider nibbling on if it got down into the single digits or about 30% lower than here.
Q. Cody do you have an opinion on sune after its recent slide?
A. I just looked at $SUNE‘s balance sheet and I don’t like what I see — $1.2BB in cash but $6BB+ in debt. Compare that to $FSLR which has $1BB in cash and $250MM in debt. That balance sheet at $SUNE is enough of a deterrent that it keeps me from even digging any further.
Q. Any thoughts on $AMBA?
A. $AMBA‘s getting very cheap and if I hadn’t just nibbled on some $GPRO this morning and didn’t already have a decent-sized position with big gains in $AMBA, I might be tempted to nibble some more here.