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Wednesday, September 16, 2009

Media Pricing and Anti-Piracy

Mark Cuban raises an interesting point in his TV everywhere post.

While anti-piracy proponents have a valid point of view, there is other side that needs to be fixed as well. We pay for the same content multiple times. I have bought same song (as part of same or various albums) multiple times.

Anti-piracy movement has one idea to sort out. What are customers paying for? Is it media (CD or DVD or tape or flash drive etc) or the song/serial/movie etc. Then we can ask why same movie can be priced differently on blue-ray disc, CD, or from the web or cable TV. This part is almost never part of the debate.

Tuesday, September 15, 2009

A question on Currency Crisis

One of the most intriguing phenomenons during this recent slow-down has been the strengthen shown by non-dollar developed world currencies like GBP, AUD, Yen, EUR etc. I mean there has been correction, in Yen particularly. But it has not been of worrisome magnitude as anticipated.

Most of the developed world currencies are facing very similar problems like US. Consumption driven economy is fed by low-cost debt. Significant percentage of population is old. As the credit crisis struck the demand for good plummeted. The over-all economic model seems weakened just like the US. The only thing stopping a dollar collapse is USD's world currency status. But then why have these other currencies not fallen. Is the USD holding these up?

Tuesday, September 08, 2009

Some ideas on analysing Real Estate Developers

Real estate developers have been a significant part of value creation for investors. And they will continue to be. However, as times get difficult, it is important to pick the right developers to invest in. While these are logical, they are often ignored in my experience. I present an idea-Book looking into some key ideas while selecting successful real estate developers. Key points include:

  • I believe first thing a developer must be sensitive to is business cycle. Irrational optimism leads to a fatal failure in preparing for eventual slowdown.
  • Similarly, land bank quantity, quality and cost determine the future earning potential and growth of the developer.
  • Developers’ also need an ability to manage through-cycle earnings for the company. In search of quick profits, developers often condemn the company to future revenue de-growth and lower or negative profitability.
  • Cash flow management and debt structuring is other critical part of real estate business that can make or break the company.
  • Lastly, I mention some ways in which real estate developers prevent value realisations for the listed entity.
  • I hope these learning’s will be helpful. These do not comprise the complete list and must be used in conjunction with standard investment and valuation procedures and practices.

Please find the ebook enclosed below.

IdeaBook on Investing in Real Estate Developers