Monday, May 11, 2015

Zillow deserves a higher valuation than $100

As the housing market shows signs of revival, perhaps due to jobs or low rates, the biggest bargain is not in home builders, probably not in housing-related services such as HD/LOWS, but in the newly enlarged and dominant online real estate information site Zillow (Z).

Suntrust has come out today to upgrade the stock from neutral to buy and raised its target from 110 to 130. It listed six key positives:

1) Secular shift – growing trend of researching and discovering properties online, enabled by greater information, data and attribution, esp. in the younger generations;

2) Mobile usage increasing – smaller brokers and MLSs will have a tough time justifying continued tech spending to keep up;

3) Dominant position – Z/Trulia combination creates a scale that is unmatched and creates a “must buy” for agent advertisers and a “must be on” for home sellers;

4) Strong ROI – we believe that as the better performing agents get more leads, conversion rate and ROIs will rise, creating significant pricing power for Z;

5) Optionality - around Rentals, mortgages, and digs are underappreciated;

6) Margin leverage – we think the margin profile is misunderstood and can approach levels >45%.

When the merger with Trulia was announced last July, the stock promptly jumped from 125 to over 160. But as the merger was finally completed with most potential in tact, the stock was punished to below 85 at one point on January 27. We couldn't resist and bought into it in a big way. As the stock recovered somewhat, the short interest rose to 50% of float according to Yahoo Finance. Short-covering can make this stock soar like any hot dot-com high flyer.

When Zillow reports tomorrow we'll have a chance to see how much program it has made since the merger with Trulia in terms of numbers. It could still be a transition story, but as long as the size points above are in tact, we should be unfazed by any short-term negative.

And then there is the threat of Realtor.com and Murdoch. But judging from the spectacular failure of MySpace, how much credibility would you give Murdoch this time?

Thursday, January 29, 2015

End of my landlordship

Today marks the end of my endeavor of being a landlord as I sold the last piece of my investment properties.

I got into this in early 2008. Nice timing! But I picked Dallas as the spot. The rent-to-price ratio have been high. On paper, things should work out in terms of cash flow.

But it wasn't nearly as profitably as expected. The maintenance costs ate up all potential profits and then some.

Plus, you get to deal with all sorts of tenant issues, weather issues, insurance issues, repair this and repair that, ...... and, the tedious tax reporting issues... I have to say I hated it.

The only upside, I guess, is I get to learn more about property markets, and why I should stay away from ever engaging directly in this business. Way too much hassle for my time.

There are better ways, more liquid ways, such as investing in home builders and related housing businesses, REITS, and home furnishing businesses...

It took me a couple of years to realize it's not my cup of tea. It took me another five years or so to get rid of the investment properties.

Bye bye. Thank you very much. I don't want to be a freaking landlord!   

Tuesday, September 16, 2014

Charlie Rose Interview of Tim Cook

There are two parts.

PART I



PART II



Tuesday, August 19, 2014

Wars

Paul Krugman has an interesting piece on why we fight wars. The analysis on Putin sounds on target: the macho guy is set on exerting his influence not by economic means but via military prowess. But I think his take on China left something to be desired: China's main focus remains to be on economic growth. There is much to be gained on economic reform and trade. Not much on military actions, even against Japan. There is a crucial difference between China and Russia, and between China and Japan. China has never in her long history invaded a sovereign country in order to occupy and annex. Russia and Japan are different stories.

Thursday, January 30, 2014

Where is AAPL headed?

Higher in a year!

After the recent earnings beat but soft iPhone sales & guidance, AAPL tanked by over 8%. It's now back to $500/shr.

Market and investors are having doubts again on the prospect of the Apple story. I'm collecting some useful analyses here for reference.

What is it worth?
        (good comment)

Carl Icahn's thesis.


Big-screen iPhone may arrive and dominate.

Wireless/solar charging, health apps, CDN, AT&T plan



iTunes now nearly half Google's core business, and growing fast.

iAnywhere


(Self-convincing arguments at their worst. It's the Law of Large Numbers, mind you! The last time I checked, Microsoft had monopoly positions in Windows and Offices around 2000. And they managed to missed three tech sea changes in Search, Mobile and Social-networking that were led by Google, Apple and Facebook. )
Apple acting more like microsoft (the Barclay downgrade).

Sunday, January 12, 2014

Apple knows what it's doing with iPhone

Last year was tough for Apple and for Tim Cook. The stock had a nosedive but came roaring back as new iPhones were launched and new deals were signed. 2014 is looking brighter. This is perhaps the year that AAPL retakes its historical high of $705.

Apple knew what it's doing.



Apple devices flow into the business world.