A VC - Latest Comments in What To Look For Next

Re: What To Look For Next

Ralph Parks — Sun, 02 Nov 2008 15:07:58 -0000

Why are you using 'cash flow' to make your point that these companies could buy back shares?

They cant eat their own body and survive. Maybe they know their expenses and plans will use most of it..

Re: What To Look For Next

Margaret Mountains — Sun, 12 Oct 2008 10:00:49 -0000

Valuation has nothing to do with it at this point.

Re: What To Look For Next

Dror Gill — Sat, 11 Oct 2008 16:10:44 -0000

Thanks! Music is the next step, of course...

I already wrote music to some of these songs (for example, http://blog2song.blogspot.c..., and http://blog2song.blogspot.c... is next. I'm performing these songs with my "hi-tech rock band" called Beta (http://www.facebook.com/bus....

Dror.

Re: What To Look For Next

fredwilson — Sat, 11 Oct 2008 10:10:11 -0000

I love it

Just left a comment

Re: What To Look For Next

Dror Gill — Sat, 11 Oct 2008 06:32:37 -0000

Hi Fred,

Great post - in fact, I liked it so much, I wrote a song about it. See http://blog2song.blogspot.c...

Bye,

Dror.

Re: What To Look For Next

fredwilson — Fri, 10 Oct 2008 07:18:09 -0000

Or buy more

Which I am doing this morning via a limit order I just placed

Re: What To Look For Next

anon — Thu, 09 Oct 2008 20:22:43 -0000

Thanks, and I understand.

I just think that operating cash flow is problematic for companies like Comcast, for example. It's a large effect that would strongly impact even a back of the envelope calc.

Re: What To Look For Next

Jamie Lin — Thu, 09 Oct 2008 17:48:59 -0000

there's 1 risk though -- yhoo might get acquired. so i'd long some cheap way out-of-money call options to cover that up!

Re: What To Look For Next

fredwilson — Thu, 09 Oct 2008 17:18:16 -0000

Short yahoo, long goog

Hmm?

Re: What To Look For Next

je — Thu, 09 Oct 2008 15:48:34 -0000

GOOG at 300, coming up --- sell and take the loss

I'm waiting this one out a bit more.

Yikes.

Re: What To Look For Next

Jamie Lin — Thu, 09 Oct 2008 12:00:02 -0000

thank you! the beauty of his site is you don't need to go to nyu at all to learn (almost) everything he has to offer!

Re: What To Look For Next

Jamie Lin — Thu, 09 Oct 2008 11:57:47 -0000

Yeah! I never get the idea of accrued earning and asset amortization. It brings more uncertainty than predictability, while most valuation models require backing these non-cash items out of the picture. What's wrong with straight up cash-basis reporting?

One interesting fact is that if you pull out 1-mo chart of goog yhoo and nasdaq:
http://finance.google.com/f...

They've basically moved together, which means the market has beaten them down indifferently out of fear. But I do believe goog is going to do better than its peer like Fred said. That's the case, shorting yhoo to long goog might be an even better move than betting on goog alone?

Re: What To Look For Next

Damon — Thu, 09 Oct 2008 10:43:36 -0000

+1 to the Damodaran books and site. Best practical finance stuff that I've seen. Makes me wish I went to NYU.

Re: What To Look For Next

fredwilson — Thu, 09 Oct 2008 06:58:08 -0000

Good point

Re: What To Look For Next

fredwilson — Thu, 09 Oct 2008 06:55:08 -0000

Yup and plan to buy more when I get around to it

Re: What To Look For Next

Mark — Thu, 09 Oct 2008 00:09:19 -0000

You should read Greg Mankiw's post from today. He addresses the idea of "more Warren Buffetts" stepping in. The idea of more Buffetts has nothing to do with what the economy needs.

http://gregmankiw.blogspot....

Re: What To Look For Next

Tom Krieglstein — Thu, 09 Oct 2008 00:05:00 -0000

Didn't you just stock up on Google > http://twitter.com/fredwils...

Update - whoops reading further and saw you mentioned it below and will buy some more at current levels.

Re: What To Look For Next

Mayson — Wed, 08 Oct 2008 22:17:20 -0000

$MSFT doesn't have the chance of a snowball in hell of taking over $GOOG, unless Schmidt, Brin, and Page agree to it.

"By their ownership of 86,753,907 shares of Class B common stock, three of the company's executives (Eric E. Schmidt, Larry Page and Sergey Brin) controlled 66.2 percent of the total voting power of all the company's shares...even though they owned only 31.3 percent of the total shares outstanding," the proposal says, according to Google's filing with the U.S. Securities and Exchange Commission.

Re: What To Look For Next

curmudgeonly troll — Wed, 08 Oct 2008 21:26:24 -0000

Indeed the root of our recent malaise is that the market cannot discount unforeseeable events such as elections, bailouts, etc.

Fortunately Congress is hearing daily from many concerned citizens like yourself urging them to desist from such unseemly activities, and to do absolutely nothing.

God bless them, God bless the perfect free market, and God bless America!

Re: What To Look For Next

Tom Evslin — Wed, 08 Oct 2008 18:15:28 -0000

Good point about the cash but buybacks are boring and uncreative. Is this the time when the nouveau cash rich high tech industry supplants traditional indebted smokestack industries even though the two aren't usually direct competitors? Does Google become AT&T's banker? Does Intel make the guts of eco-cars while MSFT develops operating systems for them?

Your post got me thinking which means blogging of course http://blog.tomevslin.com/2...

Re: What To Look For Next

Tom Evslin — Wed, 08 Oct 2008 18:10:40 -0000

When cash is king, the question is what is cash? If it's not stuff in a mattress and it's not gold(because we have deflation) and it's not bank deposits and it's not money funds, for the moment at least the world seems to have decided that it's Uncle Sam's IOUs despite the fact that this has sometimes been touted as the final crisis of American strength. With real short-term treasury bill yields below zero, we're being paid to hold the world's cash. More at http://blog.tomevslin.com/2... in a post inspired by this one.

Re: What To Look For Next

fredwilson — Wed, 08 Oct 2008 17:28:25 -0000

That's a good point

Re: What To Look For Next

Dave Olverson — Wed, 08 Oct 2008 16:32:15 -0000

The fact that Google has 2 voting share classes might explain why they aren't defending their market cap. The shares held by the founders and CEO have 10 voter per share if I remember correctly. I suspect they feel they have all the votes necessary to defend any hostile takeover bid.

Re: What To Look For Next

gruvr music map — Wed, 08 Oct 2008 12:30:11 -0000

GOOG will announce on Oct 16th, here's a webcast link:

http://www.businesswire.com...

The way GOOG is moving down heading into a news cycle can indicate either apprehension about earnings, or that 'smart money' already knows something the public doesn't.
Investor relations will often compose a few positive-souding 'news releases' heading into earnings to shake out shorts as well. The absence of such IR activity could indicate confidence internally. The risk-averse individual will be covering any shorts a week in advance, and not holding GOOG long OR short over earnings.

Re: What To Look For Next

gruvr music map — Wed, 08 Oct 2008 12:07:04 -0000

sure, I can see how cashflow EBITDA matters more to an angel or VC ; they can envision taking an unprofitable co and via M&A scaling the infrastructure costs etc.

But when I read 'this is value territory' - for the stock investor in the street or institution, is still thinking of the traditional P/E ratio, yes? http://en.wikipedia.org/wik...

From that point of view, GOOG is still 22 P/E vs historical average where 15 (avg) and below is 'value territory'. After the 99 bubble, investors returned to this definition of 'value', from what I recall, for a while. But financial memory is short.

GOOG is 60% institution owned, but it's regularly 'gapping down at open', e.g. opened at 330 today, a -10 drop overnight. This can mean institutions are selling overnight or at least not supporting it. Institutions (big blocks) don't seem to be supporting on the Level II trading view, either. Anyway the important thing is not to *lose* money, that's what stop-losses are for!