Go Palantir Go!!!!

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FrankArabia's picture

official tradng thread of Palantir.

Spill your ideas here and let us know what you think.

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Palantir's picture

You are too kind. Let me know if you want to trade ideas offline as well.

Right now if it weren’t for CFA Level 3 I would be digging into US defense plans for the next 10 years. This is likely to be a sector out of favor due to future cuts. However, my suspicion is that the defense budget will not really drop that much, as a huge US military is a central part of US foreign policy. So I’m looking at large defense stocks that aren’t tied to big mega projects. Case in point - Northrop Grumman (NOC), it is a well diversified defense supplier that doesn’t make any big tanks or planes or boats, it in fact spun off its shipbuilding division this year. Haven’t looked too deeply into it, it is kind of an embryonic idea, to determine fair value, we’d need to have an estimate of what income will look like the next decade or so.

On a more macro note, is this the next stage of credit crisis? Infrastructure in emerging markets. : http://www.economist.com/node/21542184

Cities teem with evil and decay, let’s give it a good shake and see what falls out!!

FrankArabia's picture

already got in on US Defense. yes, they’re cheap, but watch out for the pension funding liabilities on some, its huge (NOC included if i remember correctly). i personally like the space though it is not the best in terms of growth overall but given its valuation,i think i can make 15% on them. I’m also up on the generics markets pimping out pills.

i read that article and have seen some stuff on emerging infrastructure. personally, i don’t trust emerging markets by and large as a lot of them lack the laws to implement capitalism effectively, or at least for passive shareholders.

Sweep the Leg's picture

I like micro/small caps that don’t have much in the way of analyst coverage. Combine that with a company that makes high quality products, has a strong balance sheet, shows good sales growth, and has a strong management team in place and we’ve got a winner. Check out Black Diamond, Inc.(BDE). They mapped out a five year plan that sounds reasonable, and so far have exceeded growth projections. If/when it dips below $7 I think it’s a good buy. The major risk is they get a little over half their revenue from Europe. So far they haven’t been effected, but it’s definitely a risk.

I also like TTWO if you can get in under $12.50. Great games…some of the best talent in the industry. Major risk is management. They’re more concerned about making good games than creating shareholder value. I find that both attractive and worrisome. But, even bad management will make a killing with GTA V and RDR 2 over the next two years. It’ll either hit $25 on its own, or get bought by someone at a similar price in the next 2-3 years.

FrankArabia's picture

TTWO is a no go immediately. selling games is not a great business, we can do better. i’m no good at picking which games will do well etc.

Europe is not a problem.
BDE is basically a restructuring operation. They will manage down the expectations.

I will easily buy businesses with exposure to Europe, to me, its a lot better than trying to run a business in India.

Sweep the Leg's picture

FrankArabia wrote:
i’m no good at picking which games will do well etc.

We all have our areas of expertise. If only there was a way to commoditize hot classy babes, you’d corner the market.
FrankArabia's picture

its not just about picking games, fact of the matter is, the gaming industry has been a poor industry…..

i wish i can get hot classy babes, but its not happening……impotence is setting in with all this work…

Sweep the Leg's picture

If I was picking industries then I’d go with oil and PMs (which I am). But, top down isn’t as fun as bottom up. On the whole, I wouldn’t entirely disagree with you on the video game industry. Costs are high and earnings are irregular at best. But, picking a good company in a less than stellar industry is still rewarding.

Anyway, you started this thread. How about throwing a couple of your favorites out here?

Palantir's picture

FrankArabia wrote:
already got in on US Defense. yes, they’re cheap, but watch out for the pension funding liabilities on some, its huge (NOC included if i remember correctly). i personally like the space though it is not the best in terms of growth overall but given its valuation,i think i can make 15% on them. I’m also up on the generics markets pimping out pills.

This is a good point. I haven’t looked at pension liabilities at all for them. I think it’s best to just quietly research this sector for a few months and build up a view while the budget shakes out in Washington, and buy when the opportunity presents itself.

Cities teem with evil and decay, let’s give it a good shake and see what falls out!!

bchad's picture

FrankArabia wrote:
its not just about picking games, fact of the matter is, the gaming industry has been a poor industry…..

i wish i can get hot classy babes, but its not happening……impotence is setting in with all this work…

Clearly, you need to up your games…

You want a quote?  Haven’t I written enough already???

FrankArabia's picture

this is palantir’s thread….i’m munger….palantir is buffet…..

chad17's picture

Blue Horseshoe Loves Annacot Steel.

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‘08, ‘09, ‘11 - 3/3

Palantir's picture

Investing in small videogame makers is no different from investing in a speculative biotech, or a junior miner, or LULU or something. If it catches on, great, if not, oopsie. We need companies with entrenched positions that can run on autopilot. Something like HSY or WDFC.

Cities teem with evil and decay, let’s give it a good shake and see what falls out!!

FrankArabia's picture

agree on HSY/WDFC on quality, though not anxious to buy due to value……one day perhaps….

Palantir's picture

Yeah they’re too expensive.

GLW and Siemens look to have some attractive characteristics as well. Pricing is the issue though with both…

Cities teem with evil and decay, let’s give it a good shake and see what falls out!!

FrankArabia's picture

haha, we have similar screening techniques….i was looking at GLW for a bit and was going to pull the trigger on that one……at the end of the day, selling glass is a great business as their high margins indicate, however, as recently disclosed, having a single party to over 50% (if not that, its very high) of your sales comes with a lot of risk…..i decided against it so far and problably won’t jump in due to qualitative reasons….

Palantir's picture

Wanna buy Cisco? I can’t tell for the life of me what they do. But it’s cheap…..even after a 20% rise over the past year.

Cities teem with evil and decay, let’s give it a good shake and see what falls out!!

chad17's picture

Palantir wrote:
Wanna buy Cisco? I can’t tell for the life of me what they do. But it’s cheap…..even after a 20% rise over the past year.

How did you deduce after a 20% rise they’re still cheap when you claim you can’t figure out their business?

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‘08, ‘09, ‘11 - 3/3

FrankArabia's picture

yeah palantir, that makes no sense at all…..

…you can’t just call a stock cheap cause it trades on a low multiple….i mean, unless it was trading below net cash idk……

Palantir's picture

Well they have like 50B in cash (-16.853 debt) = 33.147 Net, plus they have like roughly 7B in FCF. Yielding a FCF multiple of like 10. Sound pretty cheap.

Cities teem with evil and decay, let’s give it a good shake and see what falls out!!

FrankArabia's picture

i think you might like RIM….

Palantir's picture

Seriously?

Cities teem with evil and decay, let’s give it a good shake and see what falls out!!

FrankArabia's picture

well, it has a FCF yield of under 5, no debt, cash of like 1.5B……substitute that with CSCO and well, its cheap…..really cheap…..

Palantir's picture

Yeah but does RIMM have any switching costs? Is it nearly as entrenched as Cisco is? Is their clientele risk-averse corporate customers that have a lot invested in their infra?

Cities teem with evil and decay, let’s give it a good shake and see what falls out!!

FrankArabia's picture

i don’t think i know that but I don’t own the stock….but it appears you might…..

Palantir's picture

I dont own the stock either. I’m just posting here if anyone more knowledgeable about routers has any insights.

Cities teem with evil and decay, let’s give it a good shake and see what falls out!!

FrankArabia's picture

i once asked our IT guy about routers and Cisco…….it doesn’t appear it matters who makes the routers, but seriously, i’m not sure what a router actually is lol……there is this girl at my work, one day she looks good with her high heels and stuff, the next, not so good when its just normal…what gives?

Palantir's picture

I’m so sad I missed out on SAM when it was at 72. I stared at it for like a week but didn’t buy. T.T

Cities teem with evil and decay, let’s give it a good shake and see what falls out!!

ubermensch's picture

Guys,
Remember I discussed OSG when I first started posting back in later November, its now up 21% since that time. Although I do expect shorts will come back in with more pressure. The short interest in the stock is 30% of the free float, thats insane!

chad17's picture

@ubermensch
They’re barely breaking even. Very slim margins, revenues have tanked, they’ve got a crap load of debt. I haven’t seen what you posted back in November, but I’d imagine even a Level 1 candidate will tell you this is a crap stock!

@Palantir
SAM looks a great bet! Or would’ve been at 72 anyway.

Do you guys create models for your analysis?

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‘08, ‘09, ‘11 - 3/3

FrankArabia's picture

models are in my head………….got to do models for work but for my own investments, not anymore…..i think the mistakes come from big qualitative things or just plain misunderstanding….or worst, psychological biases like thinking you understand something when you don’t…..models can’t prevent that but in fact I think puts you into false comfort…..

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