Tag Archives: Bill Miller

Business, Finance, Occupation & Industry

Here's Why Legg Mason Likes Groupon

Leave a comment

By Tim Brugger, The Motley Fool

Filed under:

The ouster of Groupon founder and former CEO Andrew Mason wasn’t a surprise. Nor was its timing, following a disappointing Q4 and fiscal 2012 earnings report. With Groupon’s search for a new CEO in full swing, now’s a good time to sit back and watch it from the sidelines, right? According to the chairman of Legg Mason‘s Capital Management unit, Bill Miller, there’s no sense waiting: Groupon’s an attractive alternative right now.

What’s there to like?
Even as Groupon posts negative quarterly earnings — it’s lost about $723 million the past three years alone — an already impressive horde of cash continues to grow, and now stands at about $1.2 billion. Thankfully, Groupon’s solid cash from operations results are adequate to cover the costs associated with conducting business. And all that cash is especially impressive when you consider Groupon carries absolutely no debt.

Too often, analysts forget Groupon’s strong balance sheet, and focus instead on the growing competitive environment of the daily deals business, the new but low-margin Goods unit, and Mason’s inability to drive shareholder value. These are legitimate concerns, and they’re also why Miller’s comments are so refreshing. Finally, an analyst has awakened to the fact that $1.2 billion in cash can buy Groupon what it needs most: time.

In a recent CNBC interview, Miller summed up Groupon this way:

They have no debt; they have an enormous addressable market. Expectations are low. The stock is cheap.

And Miller isn’t some fresh-faced junior analyst just out of school: His track record of beating the S&P makes him the envy of his peers.

Competition’s tough, but so is Groupon
It’s easy to blame Mason for Groupon’s woes, and his aloofness and seeming lack of concern for Groupon’s share-price troubles gave investors plenty of reasons to gripe. But Mason initiated several strategic steps that make a lot of sense for Groupon going forward, even if some analysts choose to ignore them.

Some Groupon analysts have bemoaned what they call “daily deal fatigue” — the notion that Groupon’s bread-and-butter market is becoming saturated. When Mason conceived of the online coupon concept, Groupon didn’t have to compete with the many major players who now crowd the deals space. Amazon.com decided to invest $175 million in deals provider LivingSocial a couple of years ago, in addition its own AmazonLocal service. Even with recent losses on its LivingSocial investment, Amazon’s online deals aren’t going away.

Google quietly followed with its own Offers service about a year ago. Though a bit slower to the deals game, Google Offers gives customers discounts on an assortment of goodies, just like Groupon and Amazon. But Google has effectively woven Offers it into its world-dominating Android OS, and provides users with a host of free offers, too.

Facebook is another heavy hitter new to the online deals game, introducing its own Deals service a couple of years ago. Facebook’s need to generate revenues from its 1 billion users is well-documented. Like …read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

First Dip in Weeks: The Dow Finally Slips

Leave a comment

By John Divine, The Motley Fool

Filed under:

All good things must come to an end, and it took a surprising hit to consumer confidence to finally end the Dow Jones Industrial Average‘s fairy tale-esque 10-day run. Thankfully, the fall was mild, tempered by February industrial production numbers that exceeded expectations. The index ended only slightly lower, dropping 25 points, or about 0.2%, to close at 14,514.

Friday was a big day for financial stocks, with eagerly anticipated results from the annual Federal Reserve “stress tests” coming in. Bank of America emerged as fairly anxiety free, receiving permission to buy back over $10 billion worth of preferred and common stock, just as the company planned. Rising 3.8%, shares of the Charlotte-based bank traded at nearly two-year highs.

But, while Bank of America enjoyed the limelight atop the Dow, JPMorgan Chase had no such luck with the Fed, which told the bank to alter and resubmit its plans to return capital to shareholders. Clearly, JPMorgan and the Fed don’t use the same accountant; the bank estimated it would only need $200 million to stay afloat in a worst-case scenario, while the Fed went with a higher estimate: $32.3 billion. With Senate hearings about the notorious “London whale” also happening today, the stock lost 1.9%.

Shares in online deals site Groupon rallied 6.1% on some uncharacteristic praise from someone who knows a thing or two about stocks. Legendary investor Bill Miller, best known as the portfolio manager who beat the S&P 500 for 15 straight years, called the stock cheap, citing its lack of debt and the low expectations of the market. Best of all, Miller’s putting his money where his mouth is: His group, Legg Mason Capital Management, is one of the largest institutional Groupon shareholders.

Last but not least, Apple shares spiked 2.6% in counterintuitive fashion. The gains actually came following the release of a competitor’s product: Samsung’s Galaxy S4 was unveiled, and will launch globally late next month. Competing head-to-head with the iPhone, Samsung already sells more smartphones than Apple does. Analyst opinion on the new device was split, but that alone was enough to instill confidence in the Cupertino, CA giant’s competitive future.

There’s no doubt that Apple is at the center of technology’s largest revolution ever, and that longtime shareholders have been handsomely rewarded with over 1,000% gains. However, there is a debate raging as to whether Apple remains a buy. The Motley Fool’s senior technology analyst and managing bureau chief, Eric Bleeker, is prepared to fill you in on both reasons to buy and reasons to sell Apple, and what opportunities are left for the company (and your portfolio) going forward. To get instant access to his latest thinking on Apple, simply click here now.

…read more
Source: FULL ARTICLE at DailyFinance

News, Politics, Government

Apple's Cash Return Options: Pay Tax Man Or Raise Debt

Leave a comment

By Eric Savitz, Forbes Staff

It is safe to say that no one disagrees with the proposition that Apple’s $137.1 billion cash position is more money that the company needs to operate its business. Last week, the simmering issue of what the company should do with the massive cash pile heated up last week after both Greenlight Capital’s David Einhorn and Legg Mason portfolio manager Bill Miller asserted that there is the potential for Apple’s stock to appreciate considerably with a creative distribution of its cash to holders in one form or another. …read more
Source: FULL ARTICLE at Forbes Latest