JadedConsumer

Cash Position Best for Apple Investor

Cash is obviously safer in this market for anyone with leverage than a security whose price is subject to irrational depression, and Apple doesn't have a safety net any more than other good companies that are being hammered.

However, the author of this piece misses the substance of the federal government's stabilization transactions. This isn't throwing $85Billion and $200Billion and now $700Billion into the wind to stop a storm as he suggests. I've discussed both Apple's "safety net" and this author's position on the bailout at The Jaded Consumer.

Tom B's comment is definitely on the right track for unlevered long-term investors: people aren't going back to typewriters. Or LP records. Or The Walkman. Or land-line telephones. Apple's margins advantage is sustainable in a way Dell's wasn't, and Apple's cash flow seems to make the idea of sudden failure a distant fiction.

American Capital Strategies Illustrates Private Equity Risks in Merisel Pull Out

Onlookers likely overestimate the litigation cost and liability risk of ACAS in the transaction, or they read bad news about Merisel (which ACAS didn't buy) and conclude there must be more cockroaches in the ACAS kitchen. I think the deal collapse represents an indication that ACAS takes due diligence seriously and really doesn't want to own duds if it can be helped -- and it's willing to take short-term lumps to achieve this.
I've commented on this previously here:
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I don't think the take-home story on Merisel is that at ACAS, Homer nodded -- but that someone at ACAS was awake at the wheel and averted a disaster that actually materialized later on.

Good show, I say.

American Capital Agency: Making Money the Old-Fashioned Way

You can't suffer realized losses waiting for information on making a more confident buy decision. Whether AGNC has something strange in its revenue stream that produces unexpected lumpiness is something we will definitely have to wait to see. Being conservative is a way to avoid losing money, and avoiding losing money is a key to building more of it.

American Capital Q2 2008 Earnings Update

Some of these questions hit good points.

Rocknob: the dividend is based on taxable income, not adjustments to current valuations of investments ACAS isn't exiting. Big Al45: I made the same mistake, confusing ACAS' SEC-reportable earnings with the taxable income on which ACAS is required to calculate the minimum dividends it must pay to retain its tax status:
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peachbery_tea: I don't think ACAS discloses IN ADVANCE the specific exits it anticipates; this would give counterparties leverage in negotiation by threatening to hold up predicted results by declining to sign documents. ACAS DOES disclose exits after the fact. ACAS also discloses current holdings.

Johnathan Christopher: yes, ACAS' holdings are illiquid. This isn't reason to hate ACAS, though; it's part of the reason ACAS can expect the returns it produces -- there are few competitors for these deals, and ACAS has no reason to hurry into poor deals or rush out of deals that are paying good money. My overview of ACAS is given here:
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ACAS' ability to raise new funds without diluting its existing shareholders is a testament both to its cleverness and to its dedication to protecting existing shareholders. The new-in-April AGNC deal adds 4¢/share per quarter to ACAS' earnings while doing three interesting things at once: (a) raising funds non-dilutively, (b) creating a new pool of funds under management, and (c) creating 8x+ leverage in a new investment without impacting the 1:1 debt:equity ratio required by its tax status.
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As demonstrated by the quarter's cash flow (which was positive despite an expected closing transaction being pushed to 3Q), ACAS' liquidity seems to be adequate, as management promises -- and the exit flow allows ACAS to delever (by slowing redeployment) as conditions continue to worsen, so the 1:1 leverage limit should not push ACAS into regulatorily-mandated liquidations with timing not of ACAS' choosing.
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I label my ACAS posts with a tag:
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Best regards,
--J

Disney's Animation Moat Stays as Wide as Ever

I'm not averse to hearing a DIS pitch, but let's be honest: the pitch for DIS can't be that digital animation gives DIS a moat against competition.
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Look at the new competitors, including Pixar, which so overtook the field DIS had to buy it to remain credible. Brother Bear? Please!

As I read your piece, I see you describing a trade thesis to $40-$50, not an investment thesis for the decades. You might have a trade, but I don't think you have an investment with a moat against competition.