Seeking Alpha by Adding Beta

I recommended Evergreen Solar ( ESLR ) on May 18 in my post with target price of $14 - that was pretty timely call since 3 days later ESLR announced contracts worth of $1B and stock jumped by 20%. Hope some of you made some money on my call:-) So should one take profits from this 20% jump or hold and wait for another run. Let's do some analysis. Evergreen Solar has an enterprise value of $1.3 B with forecast revenue of $120 M in 2008 and $400 M in 2009. With new contracts of about $1B on top of already existing backlog of $850M, it has confirmed orders up to 2013. In comparison, First Solar ( FSLR ), Suntech Power ( STP ) have EV/Sales of about 10 or more. If we apply same EV/Sales for 2009, ESLR would be worth about $3B giving it target price about $20 or more. So if you want to get additional 80-100% return on ESLR , hold onto your position and do not sell just because you got 20% in less than 4 days. Most of the other solar stocks like CSIQ , SOLF , SPWR returned 80-100% i

Interest in Internet /web companies is back with so much activity in Internet stocks. Here are some highlights: - Yahoo and Microsoft talking again bringing Yahoo stock to almost same level as before the previous talks failed. Not bad for someone like Carl Icahn who already made over $120 M in just two week - Amazon being added to Goldman Sachs focus list. I am strong believer in Amazon model and loyal customer. No wonder it is on my Model Portfolio 2008 - Google jumping by 20% in one day ($90) - biggest ever gain since it went public after Q1CY08 results - CBS buying CNET for $1.8 B - Chinese Internet companies ( BIDU , SINA , SOHU ) all near their highs Looks like Internet stocks are back in favor. So is all the upside already priced in or are there any more gains to be made. My prediction is that there are still about 20% gains to be made in AMZN , BIDU and even Google. However since this market is so volatile and fortunes for these companies change so fast (remember Ebay , Yah

With oil prices hovering above $125 and energy demand not slowing down as expected, solar stocks are hot again. There are quite a few macro reasons for this: Oil prices above $125 since new supplies not coming to market. Expected gap in supply and demand could be 1 to 2 million barrels per day. With Saudi Arabia thumbing their nose on President Bush's request and Goldman Sachs predicting oil to go above $141 very soon, looks like oil prices are going to remain frothy Solar companies reporting growth of over 50% in revenues and profits Government credits in Germany and other European countries US congress considering extending solar tax credits Overall pro-environment awareness Economies of scale reducing cost of solar power Prices of solar stocks picked in Nov 07 only to fall hard in Jan/Feb 08. Some of them came down more than 50-70%. However last few weeks they have been on tear. Check out following: CSIQ up by 100% (this is part of my model portfolio 2008) SOLF up by 100% fro

Since I published model portfolio 2008 in my Jan post Model Portfolio 2008 for last couple of months it has been in negative territory. Today is the first day after long time that this model portfolio has turned positive. Here are the details and highlights: Highest return: CSIQ at 57.5% Lowest return: Radian at -41.0% (no surprise here) Surprising fact that despite all the talk, real estate mutual funds are doing pretty good with Vanguard real estate return at 17.2% (and we are not even half-way in the year) The portfolio is beating S&P by about 1% (compared to S&P on Jan 14). Overall not bad record considering the volatility in the market. Investment Name 1/14/2008 5/12/2008 Amount Amount %Gain CSCO Cisco Sytems $5,000 $4,909 -1.8% AMZN Amazon $5,000 $4,471 -10.6% RDN Radian $5,000 $2,952 -41.0% PAY Verifone $5,000 $3,980 -

I am in my final class of Haas MBA at UC Berkeley. We just finished our presentation about a business plan in Entrepreneurship class. Almost all teams have come up with very interesting ideas. Without disclosing to much about the ideas (to honor the privacy of my class-mates), here are the names/ideas: vLearn (this is our idea) DreamAgent Everest Academy IntelliSocial i2want2learn.com KnowMe OmniPod Bizcounts MyLifeFuel UnfinishedGame .com HealthyMom The business plans are targeting variety of target markets. Here are some highlights - please take with a pinch of salt since this is MBA class work (may not survive real VC scrutiny) 8 targeting individuals, 1 B2B and 1 big companies Revenues from $9 M to $ 500 M Net profit ranges from 20% to 65% Funding requirements: $1 Million to $ 10 Million (we are asking for highest money) Not sure how many of these would result in real companies - at this moment we are not planning to pursue it If I am investing as VC , I would invest in about

Normally I have limited myself to blog on markets and stocks. However this week's events could be historic in terms of next presidential elections. With North Carolina and Indiana's primary results in favor of Obama and super-delegates finally declaring their support to Obama , looks like he is all but set to seal this nomination. With May 20 primaries, Obama would become democratic party nomination and potentially make an history since winning elections in Nov should be relatively easy (considering that majority of country has been fed up with Iraq war and associated policies) At home front, myself and my son Yash are supporting "Yes, we can" Obama while my wife and daughter Isha are supporting "Yes, we will" Hillary. I like both candidates but Hillary sounds too much like same type of politician while Obama sounds inspirational and we need leader like him to pull country out of current mess. I don't know what people felt during Kennedy campaign b

Since I recommended Sprint in my blog, the stock is up by nearly 15% (from 8 to 9.20) and would be up by about 5% tomorrow based on news about new pact with Clearwire and other companies on WiMax. Is Sprint back on track ? Looking at market reaction in last couple of days, it looks like. Here are some of the catalyst which would keep Sprint stock in limelight and would keep its upward trajectory reaching to my target price of $12 Announcement about WiMax venture which would be majority owned by Sprint with $3B investments by Comcast, Google, Intel and others Possible spin-off of Nexttel Possible buy-out of Sprint by Deutsch Telecom Results better than expected (since expectations are so low now) So now it is well over $9.50, is it still a good buy. I think even at $9.50, Sprint provides an excellent opportunity to get 25% returns in next 12-18 months. So my recommendation is still BUY /Shyam

Finally Jerry and Yahoo realized that Steve has called their bluff and they better start behaving like mature company. After seeing the reaction to stock price (to my surprise it was less punishing - I was ready to buy at $22) and public comments by Gordie Crawford and Bill Miller about their willingness to accept price of $34, Jerry got wise and started saying that "we are willing to listen". Come on Jerry, just pick up a phone and request an offer of $34 from Steve and get this saga over with. As far as Microsoft goes, they should cash in on today's events, offer $1 extra (which by the way would be equal to 20 cents increase in Microsoft stock price) and get the deal done. Microsoft needs this deal as much as Yahoo needs it and while iron is hot, Microsoft should strike it. As far as me, I hope it happens in next few days so some of the May 30 options I bought last week are worth something:-) It would be interesting to know what happens in Yahoo employee meeting which J

There was a news item about D. Telecom is looking at possible takeover or merger with Sprint Nextel. I am sure lot of you may have missed this item in the flood-gate of news (and blogs) on Yahoo Microsoft. However if you are interested in next takeover saga, start looking at Sprint for following reasons: Stock is down from above $20 to $8. It went all the way down below $6 when I noticed the stock (and took a small position) It is # 3 in US wireless market with over 40 million subscribers Have excellent service provider network Have a good but tired brand In last few quarters, it has been struggling and hence stock got crushed Provides an excellent opportunity as merger or takeover target Now let's see what price Sprint could get sold: It has enterprise value of $42-44 B with debt at $22 B With revenues of $40B and revenue multiple of about 2, it can command enterprise valuation of $80B (ATT has EV/revenue multiple of 2.5 and Verizon has 1.5). At 1.5 multiple, it can command valuat

Steve called Jerry's bluff and stayed to his word that he is not going to pay a dime about what's Yahoo is worth to Microsoft. As I wrote in previous post, accordingly to our calculations, Microsoft's walk-away price for Yahoo is $36 (after which it becomes dilutive for Microsoft for more than 3 years). Of course Jerry or his advisers did not know the concept of "not a dime above" or they wanted this negotiation to fail. I am sure there would be quite a few un-happy Yahoo employees (and shareholders and call option holders) when Yahoo opens below $25 on Monday. In particular many employees were looking for $1.5 Billion retention bonus Microsoft was planning to allocate (which works out on an average to over $100 K per Yahoo employee) I think the game is still not over - Yahoo will fall below $25 - big Yahoo shareholders would start putting pressure on Yahoo board. I was very surprised that Jerry Yang was doing all the negotiations and Roy Bostock , chairman of t

As part of our M&A class for MBA, we did project on Yahoo and Microsoft merger. Since this game is entering final innings this weekend and our class is over, here are the highlights: Initial offer: $31 Recommended deal price: $34 Walk-away price ("not a dime above" price): $36 No other serious contender Deal will be completed For complete details of in-depth analysis, check it out at: Microsoft Yahoo Merger Analysis Let's see how close is our analysis - we will know on Monday Have a good weekend! /Shyam

Another week is over - quite exciting week and I was glad that quite a few of my predictions were correct. Dow is over 13000 (would cross 13500 by Summer 08) Yahoo/Microsoft deal is getting finalized close to 35 ( would most probably get done over weekend) - I was surprised to find out that May 30 calls were selling for 60-70 cents on Friday session. Upside-to-downside reward/risk was nearly 4:1 ( potential reward of 400% vs risk of losing all money) - we know that markets are not efficient in short term Financials had one of their best week in last few months (8% weekly return in UYG ) Emerging markets came in very strongly especially India, China and Latin America (7% weekly return on UUPIX ) GDP came in at 0.6% Fed rate was cut by 25 basis points Next week's predictions: Yahoo agrees to friendly merger with Microsoft between $35 to $36. Since it may happen over weekend, there would not be any opportunity to play call option strategy on Monday. Dow, Nasdaq goes sideways and rem