The Iran Scenario

February 2, 2011

Seems that the Mubarak regime has unleashed the thugs/goons. The street battle in the square is likely going to be used as a pretext for a broad crack down.

Today’s chaos, started by pro-government forces, should permanently discredit the Mubarak regime and should lead to the immediate end of the regime. The world should not stand by and watch a re-run of the Iran scenario.

Hitchens states what everyone is missing (re: Food Inflation Revolution):

“One of Francis Fukuyama’s better observations, drawing on his study of Hegel and Nietzsche, was that history shows people just as prepared to fight for honor and recognition as they are for less abstract concepts like food or territory”

#Egypt

January 28, 2011

Protests in Egypt appear to be reaching critical mass. Following in Tunisia’s footsteps, the youth are empowered and seem bent on taking down the Mubarak regime. The govt has cut off all mobile and internet access.

These are monumental days. The Iranians gave people hope, the Tunisians changed their own country and now the Egyptians are on the verge of changing the whole region.

We all hope for the best in Egypt (specifically that the people can head down a liberal democratic road and avoid the temptation of radicalism).

Huntington wrote the 3rd wave and now it seems we are witnessing the fourth.

SOTU

January 26, 2011

“we do big things”
Very impressive speech tonight. The pro business pivot is on.
Felt like I was re-reading The World is Flat. He hit on all the key issues: fix schools, keep free trading, build an info economy etc.

The campaign slogan ought to be “we do big things”.

A team of ex-investment bankers quits and forms a startup.
The result: Trefis.com

The team at trefis has been building robust financial models for a wide variety of companies (initially tech focused but has been built out to many verticals). The twist here is that the mdels are built around products and are operated in a visual manner.

Both are key reasons why this project will suceed. By building around products (i.e. each companies valuation is the sum of the value assigned to each of its key product categories. These valuations are driven by a number of assumptions which can be manipulated by a user. Visitors to the site drag trend lines up or down based on their view vs. Trefis’ analysts. The variables are easy to understand ex. how many apps will Apple sell, what will be Google’s click through rate etc…

By building around products, unlike most research which tends to be built top down, Trefis is more accessible and understandable than most research.

These guys are taking what research analyst do and demistifying it by hiding the financial plumbing and prominently displaying the assumptions whereas most analysts do the exact opposite.

This seems like it would be very valuable to one of the larger financial data supplier like S&P (which owns CapIQ) or Bloomberg or Thomson etc…

The site also has substantial community features so that a user can compare and contrast their own estimates vs. the crowd.

Finally, does this service make anyone a better investor? On its own no. That still requires having a view of the future that turns out to be accurate but trefis does let you easily test those ideas and see what the valuation impact would be.

Media reports have been freaking out recently if $50bn valuation for FB signals the return of the a much fearer tech bubble 2.0. The answer is no. There is almost no money being thrown at tech companies this time around vs 1999. Right now its all risk capital from institutional and VC investors whereas last time it was that plus huge amounts of money from average investors investing in IPOs and public companies.

The bigger story here is that FB is likely to become the worlds largest company by valuation. Yes, we said it. FB has more revenue opportunities than any other company in the world and it appears to be executing on them. More details to follow in another post but remember that you heard it hear first, FB will be the worlds largest company in a relatively short period of time.

ANT hasn’t done a ton of research on this idea. That being said, we can all agree that tablets are exploding and that they are a touchscreen device, no mouse/keyboard needed. We can also agree that smartphones are exploding and again no keyboard/mouse needed. Finally we can all agree that laptops have stolen massive share from desktops, again, no mouse/keboard needed. Given the clear consumer preference for new innovative input methods (touch, gesture, Wii motion control), who is likely to be negative affected most by these trends: LOGITECH, the leading computer peripheral maker.

The stock trades at 12.5x LTM EBITDA and on an LTM basis revenue is up 18% (after falling in FYE March 2010). Here are the scary bullet points:

1. 27% of Revenue from “Pointing Devices” (re: Mice) and 15% from “Keyboards & Desktops” (unsure what “Desktops” means). So that 42% of revenue from categories that are likely to be in secular decline over the coming years.

2. The investor day presentation says to expect 10% long run growth in PC/Mobile, 25% in LifeSize and 25% in Digital Home. We will need to do more research into the the latter two segments but it seems the company is betting big on video conferencing (a feature that Apple/Android are building into devices) and GoogleTV (a product that to date has been flop and will remain as such until Google purchases content.

Much research still to do but seems like a compelling short opportunity based on the broad themes.

The stock is trading at $18 per share