A conservative way go play Facebook

Nobody knows what's the fair value of Facebook. There is certainly potential to go up but downside risk is real as well. I will buy stock at 33 and immediately sell a Jan. 2014 33 call at $9. If FB is above 33 on Jan. 2014. Your stock will be called and you pocket the $9, which is about 28% return. If stock is below 33, you will still hold you stock but your cost has been reduced by $9. Only the stock is below 24, then you will lose money. Take advantage of high option premium and it will not last long.

why both bulls and bears are wrong on Apple

There are strong arguments for both bears and bulls on Apple. But unfortunately, they are both wrong.
The bulls arguments are Apple can continue current margin and keep the growth rate. They project that Iphone is going to have a run rate over 300 million units and Ipad over 120 million. The Itv is going to be a big winner.

The bears think that there is no way Apple can sustain IPhone at 150 million units, Ipad at 70 million and the competition will sure bring the margin down. When this happens, Apple will become another Nokia or Cisco.

I do agree that the Iphone and Ipad can not sustain the margin and 20% growth rate for long (at most another 2 years). However, the App. store will become a stable revenue source. Currently, Apple get 70% revenue without costs. eventually, I see total app sales of 10-20 billion annually which translate 7-14 billion profit. I think in 3-5 years, Apple should have eps at 50-60 dollar. given its cash position, the stock should trade around 650 to 800.

Facebook IPO

It opened at 42.90 AND NOW TRADES at 40. I think the price is ok if you want to buy. My expectation is facebook will grow to today's google size in about 5 years. Which means in 5 year the stock can trade around 72.

Apple's price is getting interesting. I will buy if it trades below 515.

The european turmoil is good for U.S. Consumers and bad for business profits

The Greek is in the process of going bankrupt and leaving euro, which will have a huge implication for Europe. It will be difficult to large global companies, such as IBM, JPM, SAP and resources companies to generate profits in Europe. The strong U.S dollar will also make oversea profits smaller in U.S dollar term. On the other hand, the lower prices for oil, base metal, agriculture products will be good for U.S consumers. Over the last few years, the real inflation experienced by consumers is much higher than the official number (2%).

msg

MSG reported earnings and it well ahead estimates. Just as I told you three months ago when Lin first emerged, I predited his impact will be way higher than analysts estemates. Now the stock has risen to fully valued, I will take profit and move the money to LGF.

MSG, LGFand Apple

MSG is around $35, which is my target. I will take profit. But over long run, it has some unique assets and should perform well. I will buy back around 33.

Lionsgate has dropped 15% since I wrote the blog. The negatives are 1. insider are selling. 2. Ender's Game has been pushed back 6 months. 3. Ross did not renew contract for Hunger Game. But the fundamental of the business did not change. Hunger Game is better than expected. The sale of non-core assets will start soon. The debt will be reduced. The earnings for next few years will be over $1.5/share. It bodes well for the company. I still believe it should trade at 17-20 range.

Apple is everyone's favorite. I have questions about its long term perspective. I will not be surpriced it Apple is trade lower 5 years from now. Both the smartphone market and Ipad market are maturing fast.

Why I like LGF

Lionsgate is a company I like for the following reasons:
1. It is a content provider. In the age of live streaming, the content providers have lots of leverages. Its library has accumulated thousands of titles and is going to make stable cash flow.
2. The Huger Game's box office is flying. The serial will make at least 1.2 billion dollar for LGF in next four years. The last Twillight coming out in Nov. will bring another 300 million dollar.
3. The sale of TV guilder network will reduce the debt load by about 150 million. Given the cashflow from HG, I expect by the end of this year, the debt level will be around 600 million which is more comfortable for investors.
My target for LGF is 19-20 dollar in 6 months.