Archive for July, 2004

Google IPO

Tuesday, July 27th, 2004

It probably would have been hard to miss, but just in case here are the details for Google’s planned IPO.

At these prices, Google is the type of company I get nervous about investing in:

Assuming Google just duplicates its first-half performance, the company would have net income of $286 million on revenues of $2.7 billion. That would give the company a price-to-earnings ratio of 114 and a price-to-sales ratio of 12. Yahoo, by comparison, trades at a P/E of 110 and a P/S of 15. The S&P 500 trades at 22 times earnings and three times sales, according to Reuters data.

Vanguard Index funds & expenses

Tuesday, July 27th, 2004

So I just wrote about why index funds make sense. The idea then becomes to track the market at the least cost. Enter Vanguard whose total market fund has an expense ratio of .20% and whose Vanguard 500 index fund has a ratio of .18%. Pretty cheap.

Now add on a $10/year fee for an IRA with less than $5,000 and a $2.50/quarter fee for accounts with less than $10,000 invested. All of a sudden things are not so cheap for small investors like me. While holding ETFs in a ROTH IRA doesn’t take full advantage of the tax benefits, it may still be the way to go.

Index funds and expenses

Tuesday, July 27th, 2004

I’ve been reading The Great Mutual Fund Trap which argues that since fund managers don’t beat the indexes over time, there’s no reason to pay the higher expense ratios associated with actively managed mutual funds. Sure people can argue that some magers beat the indexes for a while, but I plan to retire in 35 years. How many funds have beaten the index over the past 35 years? How many have gone bust? I bet many more have gone bust than have beaten thetotal market over the past 35 years. And how do I know which (if any) fund will beat the market over the next 35 years? I don’t. Index funds it is, although I still plan to hold individual stocks, particularly REITs and precious metals.

USTarcom: Chinese market makes no sense

Monday, July 19th, 2004

Motley Fool is talking about how some companies in China are being pounded undeservedly, specificlally UTStarcom. With the Chinese economy growing so quickly, I don’t think investors can ignore it. However the risks of investing in a developing country are compounded by concerns about human rights (the Government is planning to monitor text messaging on cell phones to look for criminals, including political diissidents) as well as issues with Taiwan and to a lesser extent Hong Kong.

Anyway, back to UTStarcomm. They apparently do some business with CHA or China Telecom (a company I’ve invested in). Naturally I hope that the text message monitoring won’t adversely effect CHA. Meanwhile this other company is buying back shares, entering new markets and making acquisitions while it trades at 15 times earnings. It may be worth looking into for anyone who wants more exposure to China.

FDP acquisition

Saturday, July 17th, 2004

FDP has little debt and lots of cash so when the opportunity arose to buy the assets of Del Monte Foods Europe, they had the means. Motley Fool is very bullish on FDP and they love both the company and this deal.

I also like FDP. Despite a nice run up in the past 5 days (25.50 to 26.17), there seems to be plenty of room forward considering the PE of just over 8 (PEG = 1.04) and the yield of over 3%.

Pure silver play – Silver Wheaton

Saturday, July 17th, 2004

I wrote a while back about people who are bullish on silver. I would also like to invest in silver, but so few silver companies have financials I like; most are not profitable or just barely profitable. Anyway, it seems that another option is coming – Silver Wheaton.

You may know that Wheaton and IAG had been planning a merger which fell through. CDE is still trying to acquire WHT, but by getting rid of its silver WHT does two things:

1. They may convince CDE to leave them alone.
2. They create “the world’s only pure silver play”.

OVTI undervalued?

Friday, July 16th, 2004

Forbes is reporting that JP Morgan likes OVTI. They’ve set a December 2004 traget price of 19.00, about 70% higher than the current share price. The analysts think thay investors are overestimating the competition and that a new product is going to boost sales in the near future. As you may know from reading, I’ve invested a little in OVTI because I see a stock that has fallen dramatically even though the restatement increased profits. I’ve invested only a little because I think there is some risk with OVTI.

OVTI reminds me of the Tech Bubble

Wednesday, July 14th, 2004

OVTI is down to 12.35 with a PE under 14 and PEG around 0.64 according to the Yahoo Finance quote. Remember that this is a market leader in a fast growing field. I started investing in 1999, picking companies like Sun Microsystems and losing most of my money. Recently I’ve been writing about OVTI and all the bad news which is making the stock cheap. I thought it was a good time ot buy, but the stock is still getting cheaper. There doesn’t seem to be any news, but the stock falls (hard) anyway. It remindes me of the bad old days and makes me question why I bothertrying to find individual stocks when most stock pickers (including mutual fund managers) don’t beat the indexes long term.

Marvel (MVL) is nice and cheap

Wednesday, July 14th, 2004

Despite the insider selling, MVL looks good. Ivestors like the lack of long term debt, the share buy backs, and the valuation. I bought not long ago at 19 or so. MVL is currently trading around 16.

IAG jumps 10%

Thursday, July 8th, 2004

IAG has rejected a merger with WHT and the stock jumped 10% on the news. Some analysts feel that the merger with Golden Star Resources may fail but that other bidders could emerge.