Investment in Manchester United?

Major League Soccer Cup was getting into the second leg of Conference Semifinal weekend. As a super soccer fan, especially of our home team Seattle Sounders, I had planned to watch every match to be televised on two TV sports channels on this super soccer Sunday.

It's also in the soccer season of English Premier League, so I started the day with one of the PL matches: Manchester United visiting Swansea, as appetizer. 

I had shared numerous times that I started playing soccer at five years old in Beijing and could have become a successful professional player if I had kept formal training in my childhood. However, I did watch thousands soccer matches either at the fields or on TV while growing up from a kid to a youngster. During those years from late 1970s to early 1990s, in my opinion, the most successful European League was Italian Serie A, mainly because Italian National Team surprisingly won the World Cup in 1982, which created soccer mania on Apennine Peninsula. Though I didn't know the detail information then, can imagine that huge investments flew into every Serie A club, so almost all super stars all over the world rushed to Italy. As a result of it, I followed Serie A the most and was amazed by those super stars' performances. However, English soccer influenced the world in those years significantly as well because England was always considered the origin of modern soccer. Manchester United was one of the English clubs I liked then. Mark Hughes was probably my most favorable Manchester United player in 1980s.

Getting into 21st Century, I didn't follow world soccer much in the first decade because there were very few matches broadcast on TV while I was living in United States. After being able to watch more live matches on TV in recent years, I figured that English Premier League might be the most influential in the world in this new era. Manchester United had been leading the league for quite a long time, so I started following it again. As we all learn that this club has been in trouble since Ferguson retired. The management seems never able to rebuild a productive elite squad though I assume they have spent a lot of money to purchase super stars in the last several years. 

At the beginning of this season, they brought Championship expert, Jose Mourinho, back to England. I always evaluate him a quick fix for an underperformed elite club. It's a surprise to me that he hasn't showed the talent at Manchester United. Just like his predecessors, he also imported super stars such as Ibrahimovic and Pogba. I started paying attention to Ibra while he was playing for AC Milan several years ago. Two reasons drove me to put him as my most favorite in this decade: one was his play style being similar to Gullit who was my last most favorite in 1990s; another was that he was captain of Swedish National Team that I really admired in early 90s, especially during Euro Cup92, which was held in Sweden. Ibra had been scoring in every match at the beginning of this season but struggled recently. At age of 35, he is no longer powerful and accurate. Pogba wasn't very stable but improved. His performance in the last several matches was widely recognized. 

Watching today's match, I was impressed by Pogba's first goal so much. It was a bullet shot into keeper's upper left corner. This goal led Manchester United to retain the power in this league. Ibra scored the following two goals to have his confidence rebuilt a little bit. More importantly, I was pleasant to see the big stars of this team cheering the goals together: Ibra, Rooney, Mata, Fellaini and Pogba. Manchester United owns such an invincible attacking troop, they should be a contender of Premier League Championship. Of course, I know they are still evaluating the players and will trade some of them during the window in winter, so you never know who is going to stay and who isn't. 

While watching the match, I suddenly recalled that Manchester United was public traded in NYSE, so pulled the related information online to do a little bit research on it. 

Glancing its financial statement, I could tell:

• Revenue increased year over year from 320M to 515M in the last 5 years;
• Net Income increased from 23M to 36M during the same period of time;
• Current Assets more than doubled due to the increase of Cash & Accounts Receivable, almost no inventories;
• PP&E kept at the same level without much additions;
• Intangibles doubled from 112M to 244M, probably referred to copyrights and players' contracts;
• Long Terms debt increased from 422M to 490M, pretty high;
• Cash Flow from Operations increased from 31M to 186M

Without in-depth analysis, I only can summarize that its business is booming and generating huge positive cash flow. Expenses may be a little bit high. Debts level isn't optimal because equity financing may not be efficient. Reasonableness of Intangibles need to be retested.

However, I decide to initiate coverage of its Stock with the symbol of MANU traded in NYSE . Its current price is at the level of $15. After its quarterly earning is released on 11/10, I will publish my rating. 

Sports industry is huge, I would like to see more clubs to go public, which will have their operations well financed and offer more opportunities to the investors who are also sports' fans like me. 

A Tumultuous Week on Wall Street

It has been a very tumultuous week in the sense of Stock Markets, not from overall perspective but individual stocks I am following. This blog is defined as my individual one but you can consider it as the one of my business - South Archer Investing & Consulting when I write about Markets. 

Twitter released 3Q earnings last Thursday, which was pretty promising: Revenue & EPS all beat the estimates and Monthly Average Users slightly increased Quarter-over-Quarter. In addition, almost all operating metrics were improved. Given massive negative views from analysts who are following it, the result was definitely a pleasant surprise. Though most of the analysts are still taking a very cautious approach, no one downplayed it. Obviously, possible turnaround is widely recognized in the investing community. Presumably, money will flow into it significantly if its Q4 result shows sustained improvements. As Chief Investment Officer of my advisory firm, I tweeted that South Archer Investing & Consulting initiated coverage, set 3-month target price at $30 and a Buy rating. The closing price today is $18.02. Why I assigned such a huge premium is that I am confident that several potential acquirers will recognize Twitter's legitimacy as a social media platform with infinite room of growth. Within three months, these acquirers will realize that they must own this promising business or it will grow into a real threat. Google, Facebook have to seriously work out their bidding process, or it would be too late to react. However, Twitter's shareholders may opt to keep it independently if that will bring in much more Return on Investment. In general, Twitter's performance in this week has brought a lot of hopes for the investors.

Zillow reported another successful quarter and outlook was lift as well. There aren't many analysts following it, at least, I didn't read many recommendations from Wall Street research firms. However, Given its leadership in this tremendous real estate sector, I always speculate it to be one of the next investing lotteries. I assigned its 3-month target price at $39 and a Buy rating. In addition, I also set its 10-year target price at $2,000. If Netflix can jump up 100 times in 14 years, so can Zillow. 

When I was pursuing my MBA at University of Illinois at Chicago from 1998 to 1999, I lived in an apartment on South Archer Ave. Prior to that, I had prepared to get a graduate degree in Finance at Illinois flagship campus in Urbana-Champaign. As far as you can perceive, my academic interest during those years was in Finance. Instead of working on some part-time jobs after classes at UIC, I intensively traded stocks through a Datek online account by dialing America Online modem. Flipping hot Internet stocks, such as Amazon, Ebay, Yahoo, CMGI and America Online itself every day in the small living room in that apartment, I applied theories learned from the classes of Corporate Finance and Investment. With $20,000 capital, I did make extra money, which helped me drive around the country during Christmas break, Spring break and Summer break. I remember that the lecturer of our Corporate Finance class used to be a bond trader at Chicago Board of Exchange and the professor of Investment class had been the head research of a mutual fund for Illinois State, so we learned pretty decent practical knowledge from them. Though I had obtained a lot of concepts in Economics in my young ages academically and professionally, the knowledge I captured during that period of time in Chicago applied to US stock markets the most. To memorize the joy I had in that small apartment, I registered my one-man investment company with the name of South Archer. As I shared, my goal is to make it a tens-millions dollars hedge fund with the initial capital of one million from the compensation of my demolished property in suburban Beijing, but Chinese government has never paid me after they reached an agreement with my father for a much reduced amount several years ago. It is still an unsettled issue today and I am still waiting for this initial capital for fulfilling my plan. Other than seriously trading the stocks, I am building South Archer to be a boutique stocks' advisory firm. In this week, I published my rating guideline similar to the traditions on Wall Street: Strong Buy, Buy, Hold, Sell, Clearance. The last one is my own creation, which stands for On Sale and Short Selling. Rather than 12-month price target, I use 3-month to predict price movement in near term. For some high growth stocks, I call Investing Lotteries, I also assign a 10-year price target for each, which generally indicates dozens times higher than its current price level. For example, I predict Zillow's price to achieve $2,000 per share in 10 years, which bumps more than 50 times up.

Facebook released another strong quarterly financial report the same as many of the previous quarters. However, to stick to their ridiculous conservatism, outlook was given unfavorably. The price dropped to $120 level. In each decade, investors enjoy exponential growth on a dozen of stocks, such as Microsoft, America Online, Amazon, Netflix, etc. Facebook definitely falls into this category. However, in my opinion, its stock performance has been the most mediocre amongst these lotteries. I insist it driven by Mark Zuckerberg's own agenda, which doesn't have other shareholders' interests put on the top. Ironically, after I blamed him on Twitter yesterday, his alma mater suspended the rest of the season of their men's soccer team. I don't know whether it is  a retaliation on me. If so, I will go after Sheryl Sandberg next. This is a joke. Anyway, I think Facebook's stock price should be close to $360 now if we compare it to others in its same league historically. My recommendation on it is Strong Buy with a 3- month price target at $150 and a 10-year at $1,800. Almost every major Wall Street research outfit maintains the rating of Buy. Obviously, every analyst considers the pullback being a buying opportunity.

Gopro had a catastrophic 3rd quarter, revenue and earning per share gravely missed the targets. My immediate reaction was Armageddon or Apocalypse, whatever you exaggerate for this action camera pioneer. Last night, I assigned Clearance on it with a 3-month price target to nothing, which calls short-selling. However, I did read more disclosures today that the disastrous quarterly result was driven by the issues of productions, which were at the side of supply. Demand on its products is still pretty strong. No matter what is the real driver, I give this stock up. South Archer no longer follows it even I have never officially started the coverage. 

Well, it is the end of the weekdays and the darkness prior to the dawn on weekend. I will forget everything related to my daytime job and professional interests for the next two days, only focus on watching sports and movies.