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FP: Stock Analysis

Exxon Mobil Think Again

in FP: Stock Analysis

General Electric’s collapse should have served as a reminder that buying a company based solely on past reputation and dividend yield is a dangerous endeavor. GE is also a great example that dividends are not paid out of earnings, especially massaged-to-death non-GAAP earnings, but from free cash flows. GE’s non-GAAP earnings were double its dividend payment. This brings us to another American icon…

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Welch vs Bezos

in FP: Stock Analysis

A lot of times I won’t have an insight into a business because I don’t understand it or because it’s too complex. General Electric is a great example. As a value investor I should be all over this iconic stock, which is making a generational low. Not at all. I have looked at GE at least…

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How Amazon could lose its health-care bid while drug distributor stocks win

in FP: Stock Analysis

Amazon.com has been one of the most innovative and disruptive companies of this century, with incredible success in areas that lie outside of what has been historically perceived as its core business (book selling). Thus every announcement or speculation that Amazon will enter into a particular industry sends stocks of that industry into a tailspin. Investors…

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What will the stock market do next?

in FP: Latest/FP: Stock Analysis

I’ve been asked to comment on the most recent market decline. My initial reaction was, markets go up and they go down. America is a great country but the US Constitution doesn’t guarantee always-rising markets. I sat down and I wanted to write a reassuring message. I wanted to express my empathy. Somehow, I found that my reservoir of empathy was empty: After…

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Apple – Not Saying Goodbye

in FP: Stock Analysis

I’ve written more articles about Apple than any other company we’ve ever owned. If I were to lie on Dr. Freud’s couch, then you’d find there were two Vitaliys writing these articles. First, there was Vitaliy the contrarian. Despite Apple’s ginormous size and the several dozen Wall Street analysts following the company, I felt it…

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SoftBank’s big plan for a smarter internet is brilliant

in FP: Latest/FP: Stock Analysis/Stock Analysis

Masayoshi Son doesn’t do anything small nor does he do things in a simple way. A few months ago SoftBank Group announced that it would be raising $100 billion to invest in Son’s vision of the singularity. (That is more than the capital of the entire venture capital industry.) Singularity is the point when computer intelligence…

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Why Amazon Will Not Kill This Business

in FP: Latest/FP: Stock Analysis/Stock Analysis

Tesco is a great example of how one should be very careful judging a company’s fundamental performance by looking solely at the performance of its stock. The company reported another great quarter with a lot of “increases”: total sales increased 4.3%; same stores increased 0.9%; store traffic increased (it has been increasing for many quarters…

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It’s not just Amazon’s fault

in FP: Featured/FP: Latest/FP: Stock Analysis/Stock Analysis

Retail stocks have been annihilated recently, despite the economy eking out growth. The fundamentals of the retail business look horrible: Sales are stagnating and profitability is getting worse with every passing quarter. Jeff Bezos and Amazon get most of the credit, but this credit is misplaced. Today, online sales represent only 8.5 percent of total…

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Trump Hates Them – We Love Them

in FP: Stock Analysis

A few weeks after Donald Trump was elected president of the United States, he was asked about pharmaceuticals prices. With typical rhetorical gusto, he declared, “Pharmaceutical companies are getting away with murder.” Well, my firm has been increasing our allocation to those “murderers,” and despite Mr. Trump’s comments, we are very comfortable with our positions in the…

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Amgen – Biology vs. Chemistry

in FP: Latest/FP: Stock Analysis/Stock Analysis

June 22, 2016 – Excerpt from Q2 2016 letter to IMA’s clients Purchase of Amgen: First we need to explain a peculiar difference between pharmaceutical and biotechnology companies.  A simplistic explanation would point to the sciences they pursue – chemistry vs. biology.   Pharmaceutical companies work with chemical compounds (some of which are derived from…

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