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  • beltrancaceres 2013-01-09 20:26
    Ry, how's the analysis of LOTO. took a tentative look at it, and it looks very promising. have you initiated a position?
  • Bill Smith 2012-08-10 13:42
    ry.zamora: Re: First reply:

    I see. I've seen Jae Jun's spreadsheets before, though I still prefer to construct the valuation models myself, as I estimate owner
    Ry:  I've seen growth estimates of 8%, 13%, and 14% (Morningstar, S&P, and Yahoo, respectively).  So there's some difference of opinion out there. The DCF #s I listed weren't intended as a replacement for any deep level of analysis wrt shipments and the like, just a "what if" to see where fair value might land given the opinions out there.  As far as talking to IR, I follow the "haircut" rule--never ask a barber if you need a haircut :D  

    But, I'll be working on a DLB article soon.  Thanks for "waking me up."  I just have to figure out which angle to take with it.  It seems DLB has a lot of haters out there beyond this short-term quarterly miss.  Their sentiment seems rooted in the the point of view that DLB is dead b/c of the cloud.  However, I disagree with a draconian position like that.  Anyway, I'm muddling through that thought process right now.

    Oh, almost forgot--I do have a LinkedIn acct, but really haven't used it.

    Cheers, have a good weekend!

    v/r
    Bill
  • Bill Smith 2012-08-08 06:09
    ry.zamora: Hey Bill!

    Thanks for your reply.

    Well, I haven't written as much as I'd like either. I've already got a backlog of two companies for my write-ups (D
    Ry:  I can't figure it out either.  Maybe people are concerned about patent expiration, PC sales, etc?  I remember reducing consensus growth estimates from 15% to 11%, b/c I figured growth would start slowing the bigger they got (and I find analysts overly optimistic)

    On your questions:
    (1) I use 9% for all my discount rates (w/ margins of safety between 25%-50% depending on how stable I think the company is).  I know alot of folks on the site prefer 12%.

    (2) EPV rose to $38.  At a 12% discount rate, EPV is $31.  (My recent purchase before earnings release was at $38.)

    (3) I'll have to look at this more deeply; however, if I use the same model from the article, using 2011 owner earnings of $373M as the base (numbers in parentheses are at 12% discount rate)...
    @ 7% growth = $58 ($48)
    @11% growth = $70 ($57)
    @15% growth = $86 ($69)

    My DCF model slows initial growth every few years by 10% during the first decade.  Growth in the second decade is 3%.  If you assign 0% growth in the 2nd decade, it'll drop fair value around $2-$4 on each figure.  Hell, even if they only grow at 3% the next 10 yrs, and 0% for 10 years after that, fair value would be $46 ($40) (at 9% and 12%, respectively).  

    Hope this helps.

    I suppose I should get off my tail and write an update for the site
  • Bill Smith 2012-08-06 17:11
    ry.zamora: Bill, I followed your buy recommendation on Dolby Labs. It's been roughly a year since your Sep 2011 article, and DLB's most recent financial status i
    Ry:  Thx for the note.  It's been pretty hectic around here the last few months; haven't written as much as I'd like.  The single day price drop reminded me of last August on the Win8 news.  The spreadsheet I use to number crunch, now has the financial info available from this qtr, so I can take a look at it, and look to write something up.  What do I think?  I added to the position (unfortunately before the drop) when price dipped below EPV (the zero growth price as you'll recall), which is about $39-40.  I remain bullish on the long-term thesis, it seems the reaction was from short-term softness in consumer sales.  I'd be interested in your thoughts as well.  Cheers!

    v/r
    Bill
  • cdubey 2012-07-17 03:15
    ry.zamora: Chandan,

    I've been reading the few articles you've written on Holcim, Ltd., and I've liked it enough that I have begun a full-blown analysis of its b
    Here you go !

    http://minerals.usgs.gov/minerals/pubs/commodity/cement/mcs-2011-cemen.pdf
  • John Emerson 2012-01-18 16:14
    ry.zamora: Ahhh all different levels, huh?

    I see, I see.

    I've been thinking of whipping up articles for newbs myself. :P Of course, I've been wasting my time r
    Lewis is good, read a bit of Moneyball when I was on my last vacation since I am a big baseball fan.  My favorite macro guy is Russell Napier, he publishes a quarterly letter.  I became interested in his view after reading Anatomy of the Bear.  It is extremely difficult reading but worth the time if one wishes to analyze the four great bear markets of the 20th century.  I literally read the book 10 to 20 pages at a time.

    By the way I about getting ready to write the next installment of Greenwald, specifically about valuing companies by replacement value.  I think you might like it but I intend to just loosely use Greenwald's teachings.  I prefer to write my own opinions rather than regurgitate Columbia business school  text.  I am sure that you will take me to task if I stray too far from the Greenwald's methodology.  Feel free to comment if you wish.

    I am not writing much since I have been subbing in the school system on a daily basis.  I am working with troubled kids as a paraeducator.  Those 7 hour shifts can sometimes kick my ass  mentally, but it is getting easier.   I Thought it was time to do something to help the community before I get to old and lose all my patience   If I like the job, I will probably try to get on permanently so I can get some reasonably priced health insurance and quit jumping about.  Such a job leaves me plenty of time to write, do stock research and manage my investment accounts.

    Anyway, the replacement value piece is already in the works.  Lastly, I think some real opportunity exists in the niche players in the home builder suppliers.  I have been buying a little company in Florida, PGTI will have some big earnings power once the housing market rebounds.  Now is the time to buy down and out companies in that sector with the caveat being they must be able to survive.  Cyclical companies can really be multibaggers if one has the savvy to buy them at the correct time and if they actually return to profitability of course.
  • John Emerson 2012-01-16 18:11
    ry.zamora: Hey John, question.

    How many newbs do you think are in GuruFocus? Out of curiosity. :D

    Hehehehehehe. XD

    ~ Ry
    I think that Gurufocus has all different levels of investors and I try to write articles for beginners as well as finance grads.  Lately, I have been attemping to write more articles that might benefit investors who are starting to learn the ropes.

    I have been extremely busy lately and not been writing much.  I still look forward to continuing on with more complex articles in the future which might appeal more to sophisticated investors such as yourself.
  • Margin of Safet 2011-09-27 07:34
    Ry.zamora, excellent report on Autoliv and congratulations on the contest results!-Dan Hennessy
  • ken_hoang 2011-09-24 11:54
    ry.zamora: Your comments DID help, no doubt about that!

    Anyway, I'm going to focus on the loss reserves since it's apparently the biggest item in their operatin
    Hi Zamora,

    The loss reserves is the estimation of the future probable losses, and it's subject to management's view and "manipulation" as well. Recently, there are quite a lot of disasters happening, that is why it's quite common to see the level of loss reserves increases. The ratio of current year charges/net premium increase because of 1. more loss reserves taken or 2. lower net premium or 3. combined of the two.

    We should compare the loss reserve ratio with the insurers' historical performance and the loss reserve of its comparable firms in the industry. In the boom of 06, 07, banks show little loss reserve , that have artificially pushed up the level of its earnings a lot.

    For the % reserve paid out on total loss reserve, if any event hits and insurer has to pay claims, it has to pay no matter what, even it didn't have the reserves, it still have to pay as well. In 2001, please look further in what type of events make that paid out so high?

    looking at the % reserve paid out will affect the level of cash outflow in the business. Many businesses book the loss reserves but it can pay gradually off all the loss events for even as long as 10 years.

    On the investment holdings, the best if you can look at the concentration in its holding and analyze individual position. That is the best.

    On CFA topic, they suggested to look at the variance/standard deviation of the returns as well as Sharpe Ratio (which relates strongly to Std.Dev), but normally i don't think the Std. Dev represents the risk. It is just the swing away from the mean. Long term investors and insurers such as Berkshire Hathaway often welcome the high beta, high Std. Dev positions as Buffett can purchase the stock at ridiculously cheap price.

    Feel free to bounce back and forth, hope that helps.

    Anh
  • ken_hoang 2011-09-01 12:07
    ry.zamora: Hey Ken,

    I just noticed that you post a LOT of stuff here on Gurufocus, and also saw you've tackled insurance companies before.

    As I'm currently goi
    Hi Zamora,

    Thanks for your messages. Insurance actually is quite special field for analysis, and sometimes the quality and integrity of management plays an important role in investment success.

    Regarding to your question
    1. The loss reserves can be roughly viewed as the percentage of the total premium written over time to see shot up or down of the special rate and how the rate compares to its competitors, Sometimes you would see the rate would be low, so those companies are actually under reserved to boost the earnings. As loss reserves are the management's estimation of future probable losses, so the actual write offs should be compared with the reserves for several years before, not current loss reserves.

    2. Analyzing investment holding, the fact is we have to analyze the big items in their holdings. We do not care much about the investments got small % of their portfolio. In addition, looking at the investment return historically over the years and how they have invested across different asset classes can be helpful.

    Hope that helps somehow, feel free to exchange the ideas back and forth.

    Anh
  • Rommel Acosta 2011-09-01 03:20
    Glad to meet another value guys from the Phils. Let's keep in touch via email. My address is [email protected]

    Any companies you're interested in now?
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