Goodbye, Castro

Solar Wakes Up

We have been slowly buying shares of our favorite solar companies in the last few weeks after prices came down substantially in January after an amazing 2007. We were actually disappointed last year because we couldn't continue accumulation of many of our favorite solar companies because they spent most of the year above their fair value according to our proprietary metrics. However, we got a green light in late January and were able to get favorable prices for companies like WFR and STP. Since I posted about solar on February 6th (5 trading days ago), our favorite holdings are all up over 10%. Most of that gain came after First Solar reported an amazing quarter before the bell this morning:


Sun Tech Power has its earnings call next Wednesday and we are expecting another strong quarter. I have learned in my short amount of time blogging that it is usually not a good idea to gloat in a blog post because the post stays up forever and you will probably end up with egg on your face, so please allow me to hedge my bets a bit. While we believe that solar continues to be one of the most exciting parts of the alternative energy space these stocks are not for the faint of heart. Not unlike my Google recommendation several weeks ago I feel that solar stocks may endure another leg down before they ultimately continue their rise. When the companies we are most convicted about trade lower than our target prices we begin buying. When the stock price of one of these companies continues to fall we typically buy more of it. We are able to do this because we have a 5+ year mandate and are unconcerned with most market fluctuations. In other words, buying solar now may look horrible in 3 months, but we feel confident that it will look great in 3-5 years.

Great Mohamed El-Erian Interview

I just finished watching a great interview with Mohamed El-Erian. He is the current PIMCO co-CIO and is the former manager of the Harvard Endowment. Unfortunately I can't post the video directly to my blog because CNBC deliberately makes you go to their site so that you have to watch their advertising. So you will be forced to follow links to watch the video's on CNBC's website. Just click on each of the three images below to watch the video in its entirety:




I believe Mohamed El-Erian provides one of the best perspectives on the current economic environment of virtually any other market thinker. Its too bad Harvard lost such a great investment manager.

Looking to Buy a Solar Stock?

After a strong rally late last year many investors stayed away from solar stocks. Fortunately many of those stocks have come back to earth and have provided investors with more attractive entry points. Here is a handy chart showing where many of those stocks stand today:

Hat Tip: China Analyst

It's the Economy, Stupid

Hat Tip: Ritholtz

Super Tuesday and Mardi Gras

I think its safe to say that "Super Tuesday" is a little bit more important for our country than "Fat Tuesday", though I'm sure at least a few people down in New Orleans or Rio de Janeiro would contest that arguemnt. Today is the make or break day for the Presidential candidates on both sides of the aisle, as candidates Obama, Clinton, McCain and Romney battle for their parties nomination.

Primaries are taking place today in 24 states: Alaska, Arizona, California, Colorado, Connecticut, Georgia, Idaho democrats, Illinois, Kansas democrats, Massachusetts, Minnesota, Montana republicans, New Jersey, New York and Tennessee. After today we will have a pretty good idea who we will have to choose between in the general election. Going in to today Intrade is predicting a McCain vs. Clinton general election. Here's how it is shaping up:

After starting slow on InTrade McCain is now the consensus favorite to win the Republican nomination with nearly 90% of the Intrade vote:
Romney's fall has been almost as stunning as McCain's rise:

After briefly giving up the lead to Obama following New Hampshire, Clinton is hanging on to a narrow marging going into Super Tuesday:
Obama is definitely still in this race and with a strong showing in a few key states, he could surprise the world and walk away with a nomination:
I know I will be glued to the television tonight. By tomorrow I hope to break down what the economic policies of the likely nominees mean for the economy and for the stock market.

Next Generation Search Technology

True Knowledge is still in beta, but the idea of "semantic search" is an interesting one:

Google vs. Microhoo

The war for the internet started long ago, but it escalated dramatically this week. Much has happened over the last few days, but I'll start with a Google update. After an earnings release that disappointed analysts Google's stock tumbled after the close yesterday. For the first time since Google went public its stock price dipped below its 200 day moving average. The introduction has gone fairly well. I don't expect them to develop any sort of extended relationship. In fact, I think that this represents an extraordinary buying opportunity for Google shares. I won't discuss my entire Google thesis here, but suffice it to say that the growing reach of the internet is one of the most profound trends in the world marketplace and Google is in the best position to monetize:


The surprising thing about the glut of news this week is that the best news for Google issn't the news about the successful bid to open up the C Block of wireless spectrum nor is it the recent ComScore numbers confirming Google's continued dominance in search, rather, it is the news that Microsoft announced an unsolicited $44.6 billion bid for Yahoo.

Microsoft is clearly running scared. Its recent moves confirm this fact. Buying aQuantive for $6 billion, buying a 1.6% stake in Facebook for $240 million and now announcing an unsolicited offer for Yahoo! at $44.6 billion can only mean one thing: Microsoft is waging an all-out war against Google's internet dominance and is willing to pay a pretty penny to maintain its internet relevance. You can see it through their overspending for internet properties. You can see it with their "Startup Center" advertising campaign. You can feel it with their focus on online advertising companies. They are throwing their best people at the internet because their software business affords them the pleasure, but it many ways it is like HP's Ink business: its great while it lasts, but the writing is on the wall.

I personally am not a big fan of Yahoo! Sure, they were an internet pioneer but they seem to have lost touch with internet reality. Again, I don't have time now to go into my full Yahoo! thesis, but I think a quick anecdote will tell it all. When Google develops a new application they tell their engineers to solve client's problems. Once they have solved the problem, developed a strong user base and proven the concept, they then hand off the application to a monetization team that seeks to find ways to monetize the application. When Yahoo! designs applications engineers work together with monetization teams, oftentimes crippling projects while they are being developed.

The solution? Go long Google at its smooth 200dma. Meanwhile watch as Microsoft enters an incredibly difficult integration and loses focus on its core suite of products. I view the Yahoo! purchase as a necessary evil for Microsoft: they can't afford to let anyone else buy Yahoo!, but at the same time they can't relish the challenge of integrating Yahoo! while in a war with Google. Ordinarily I would expect other offers for Yahoo, but this deal is just too rich as it is and I don't think IAC or anyone else will do more than a bit of due diligence before passing.