Friday, August 28, 2009

Apple -- The New Asian Stock

Apple (APPL) is going to China and will make a gazillion dollars selling the iPhone. Anyway that’s what everyone seems to think right now. China Unicom will not participate in ongoing recurring fees, which should concern investors. Where is the loyalty? China has always been a complex market. Communications is the new commodity much like aluminum, copper or oil is now.

The Chinese government tends to want to control the game when it gets large enough. They may want to pick the winners. Our Western tendency where investors look at a company’s prospects and ignore government will not serve us well. How will Apple fare?

In the meantime looking at the huge China numbers Apple will become a significant Asian stock with substantial income in Yuan. That is if you believe the hype. Will Apple be looking to sell Yuan and buy US$. Small for China. Small for Uncle Sam. Big for Apple.

Apple will need to acquire new skills beyond just coming out with new technology.

Thursday, August 27, 2009

TD Bank Check Out Off Balance Sheet Issues

Toronto Dominion Bank Financial Group (TD) announced some great results and the stock popped 2.5% by mid day. Imagine a financial institution that has some good news. The press release is long and elaborate. Banks of this size are wondrous complicated beasts. So if you want to climb the wall of worry read this quote and plan your ascent.


The Bank carries out certain business activities via arrangements with special purpose entities (SPEs). We use SPEs to obtain sources of liquidity by securitizing certain of the Bank's financial assets, to assist our clients in securitizing their financial assets and to create investment products for our clients. SPEs may be organized as trusts, partnerships or corporations and they may be formed as qualifying special purpose entities (QSPEs) or variable interest entities (VIEs). When an entity is deemed a VIE, the entity must be consolidated by the primary beneficiary. Consolidated SPEs have been presented in the Bank's Consolidated Balance Sheet.

No numbers are presented to illustrate the situation. Difficult if not impossible to truly assess.

Wednesday, August 26, 2009

Document Capture Technologies Posts Transcript??

Document Capture Technologies, Inc. (OTCBB:DCMT) posted an interesting press release today. They filed their 8-K including the conference call transcripts just recently held. This seems unusual as most companies just run the replay for several weeks and then make it disappear. Clearly this is an OTCBB company trying to gain traction with investors and I bet the conference call makes the company sound really good.

But it does try to set a standard and let investors know where they can find the transcript. Of Course look at the name of the company and you’ll know why they did it.

Disturbing complication for those few services that provide conference call transcripts. What if the SEC mandated this behaviour and made it cost efficient for investors to get the transcript? That would help transparency.

Tuesday, August 25, 2009

Medtronics Under Explains

Medtronics (MDT) reported Q1 results and had the disturbing habit of relying on something called constant currency. They have substantial international operations and every division experienced foreign exchange losses when converted back to US$.

Medtronics has demonstrated that they do not understand operating in foreign currency or the uses of hedges. This is a critical skill set if you want to maximize shareholder wealth as a global company.

Next point. They report on a variety of product lines and just through some number up. No discussion about competing products, potential lawsuits, potential new applications. Essentially no information suitable for analysis. This sounds like a company that is not used to explaining itself. They just talk about wondrously complicated products, confuse most investors and go from there.

Monday, August 24, 2009

Goldman Sachs - Smartest Guy's Stupidest Guy's

Goldman Sachs (GS) seems to be in a PR quandary about bonuses. Main street wants someone to pay and Goldman Sachs is a good enough victim. Solution: Take the big bonus producing area’s and go private and stop reporting the numbers publicly. Everyone will know enough but the public will not have official access. Side partnerships, joint ventures there are lots of ways to structure that one. Financial engineering at its best.

Then the Wall Street Journal nails them with a story about stock trading tips and how some customers have a country mile advantage on trading idea’s. Goldman Sachs retorts back that some customers are long term and short term stuff is not for them. Goldman if you do not watch it the politicians will re-structure you. Politicians have no problem with killing the goose that lays the golden egg.

Perception is reality. Goldman is working for itself first and clients a distant second. Of course it depends what kind of client you are. Watch for the law suits and regulatory investigations.

The smartest guys in the room may just become the stupidest guys because they cannot figure out the political game.