Is Gannett Co. (GCI) A Value Bargain or Value Trap?

In my last post I introduced the concept of 'Value Traps' - where the business looks like it is a 'bargain', but there is in fact a justified reason behind the market's discount.

There are some industries that experience significant upheaval and change as a result of a disruptive technology or change in consumer behavior. The erosion of economic fundamentals that occurs will impact a Value Investor's estimation of a business' intrinsic value.

An immediate example that comes to mind is the newspaper and print media industry. Let's see what Buffett has to say on the matter:

From the 1991 Berkshire Hathaway Letters to Shareholders:

"We have a significant investment in media - both through our direct ownership of Buffalo News and our shareholdings in The Washington Post Company and Capital Cities/ABC - and the intrinsic value of this investment has declined materially because of the secular transformation that the industry is experiencing."

And again in his 2006 Letter:

"And fundamentals are definitely eroding in the newspaper industry, a trend that has caused the profits of our Buffalo News to decline. The skid will almost certainly continue."

And for those who might believe that each newspaper's website will substitute for any lost revenue Buffett continues:

"True, we have the leading online news operation in Buffalo, and it will continue to attract more viewers and ads. However, the economic potential of a newspaper internet site – given the many alternative sources of information and entertainment that are free and only a click away – is at best a small fraction of that existing in the past for a print newspaper facing no competition."

And now for a real-life example: Gannett Co [Ticker: GCI]. Founded in 1906, Gannett's operations are primarily in the US and UK, and include 90 daily newspapers, 1,000 non-daily publications as well as 23 television stations that reach an estimated 20 million viewers in the US.

In order to establish an estimate of Gannett's Intrinsic Value, I will first need to obtain an estimate for free cash flow. Going to last year's Cash flow Statement. I take Net Income, add Depreciation and subtract Capital expenditure. Free Cash flow comes out to be around $1.24 billion.

Now comes the tricky part: estimating future earnings growth. I go to analyst consensus earnings - here. Scrolling down to the bottom of the page I see that analysts are expecting average annual earnings growth for the next 5 years of 4.35%.

I now plug both these figures into a simple DCF calculation, use a 10% discount rate, divide by the total number of shares outstanding and get an intrinsic value of about $64 per share - a 55% discount to current market price. On the face of things - this seems like a bargain, right?

What's wrong here? Going back to Yahoo's analysts consensus earnings estimates, I take a look at earnings growth for the last 5 years - an average of just under 2%. Many studies have shown that analysts tend to be optimistic in their assumptions - and here we see it in action. The last 5 years earnings growth was barely 2%, and analysts believe that in the next 5 it'll be double that? I doubt it.

What happens if I plug in 0% growth for the next 10 years into my DCF - in other words the industry remains stagnant and goes nowhere. I come up with an intrinsic value of $44 - still a 7% discount to today's price. In other words, contrary to analyst consensus, the market believes that the industry will experience continued erosion.

Gannett looks like a bargain, but a Value Investor who looks past the numbers, takes analyst estimates with a pinch of salt, and investigates what's happening in the industry may come to a completely different conclusion.

In my next post on Value Investing Principle #4, I will reveal what I believe is the best way to spot a 'Value Trap'.

Please read the Legal Disclaimer.

Disclosure: Author does not hold a position in GCI.

Avi Ifergan is the Managing Partner of Israel Value Funds (www.israelvalue.com) an Israel-based investment partnership that follows a disciplined and long term oriented Value Investing approach, with a primary focus on Israeli public companies. Avi is a former equity analyst, corporate advisor and serial entrepreneur. These days he spends his time teaching economics at a major Israeli university and seeking value investing opportunities. He very much appreciates your feedback at avi@israelvalue.com.

Value Investing Principle #3 (Part 3): Value Investors Love a Good Bargain

In the previous 2 posts on Value Investing Principles (here and here) I looked at the concepts of Margin of Safety, and Intrinsic Value. I explained that the calculation of the intrinsic value of a business is not an exact science but rather a rough estimate of value, hence the need for a margin of safety.

As promised in my previous post, in this post I am going to attempt to answer the last of the 5 questions that I posed:

Isn’t it possible that the reason the price of a stock is so cheap is because the company is poorly managed, is not profitable or is a high-risk business?

In attempting to answer this question I will introduce a new Value Investing concept - 'The Value Trap' . I'll also explain why some investors tend to be fooled by Value Traps, and in a later post will provide some advice on the best way to recognize them.

Drawing on the metaphor I used in the first post, imagine you are shopping and you see packets of pasta at half price. Instinctively you may want to take advantage of the bargain and buy in bulk. Savvy shoppers will immediately ask 'where's the catch?' - and will attempt to identify something faulty with the good (perhaps the pasta is close to its expiry date or is of poor quality). If you've discovered a valid reason why a product is 'on special' or trading at a significant bargain to market prices, you have discovered a 'Value Trap'.

Simply put, I define a Value Trap as a company that appears to be undervalued and a Value Investing opportunity, but in fact does not possess any recognizable significant investment potential.

So, to answer the question I posed: In my humble opinion I believe that for the most part, when a business is valued cheaply, there is a good reason for it and I seek to identify it. Most of the time, the market is to a large extent correct. This is expected. Never in the history of mankind have investors had so much company and industry information available at no cost, and never have they been as savvy and educated.

There are instances, however, when the market has mispriced or undervalued a business with little justification. These include:

(i) When it focuses on the Short Term and ignores Long Term potential: I think this is a primary reason for pricing inaccuracies as analysts and investors with a short term investment horizon focus solely on quarterly earnings. Long Term Value Investors take advantage of such short-sightedness to pick up quality companies cheaply.

(ii) The Market Confuses Uncertainty with Risk - this is a underlying theme of Mohnish Pabrai's investment philosophy. You can read about it in detail here. Basically, investors tend to react in simialr fashion when there exists business uncertainty as when there exists business risk - they panic. Two recent examples come to mind: in 2005 Mercury Interactive's CEO and CEO were accused of fraud with regards to the backdating of options. The market responded with a significant sell-off and drop in market price. Mercury's business and clients had not changed. The only difference is that 2 of Mercury's former senior management would now be wearing orange overalls. Hewlett Packard was able to take advantage of the negative market sentiment and less than a year later to acquire the company for $4.5 biliion in cash. A similar story occured with M-Systems and an internallly-initiated options backdating enquiry which resulted in the market severaly overeacting. Nothing had changed in the business at all, but the end was the same as Mercury's. SanDisk took advantage of the negative market sentiment and low share price and acquired M-Systems for approximately $1.5 billion

(iii) When Investors Do Not Properly Understand The Business: Sometimes investors do not understand the fundamentals of a specific business, and when certain industries face negative sentiment, these businesses included and collectively punished. A current example is the sub-prime crisis. There may exist certain mortgage businesses or financial insitutions that have little exposure to low-quality loans, and yet they have suffered the same fate as the others in the industry.

Rear-View MIrror Investing: Why Investors Fail To Recognize Value Traps?

The main reason that investors fail to recognize Value Traps is what Buffett calls 'Rear View Mirror Investing' - making investment decisions based on past experience. (See the entire article here). Psychologically we all tend to place significant weight on our past experiences and extrapolate them into the future. This is one of our prime learning mechanisms. If we get food-poisoning from dining at a certain restaurant, we most likely won't return there again. And the converse with positive experiences. Unfortunately, this does not exactly work in the investing game, and is a major cause for failing to recognize a 'Value Trap'. As John Maynard Keynes suggests:

"It is dangerous to apply to the future inductive arguments based on past experience, unless one can distinghuish the broad reasons why past experience was what it was."

There are many examples of businesses that were once dominant players in their industry, and in fact still remain dominant, yet the fundamentals of the industry as a whole have changed.

In my next post, I will provide an example of a great business that looks absurdly cheap, but which, because of massive changes in the industry it is in, make it a 'Value Trap'.

Can you think of the industry that I am referring to? Or a business in such an industry?

Until next time: "May you possess the Wisdom to see what the market does not, and the Courage to act on it".

Value Investing Principle #3 (Part 2): Value Investors Love A Good Bargain

"The entrance strategy is actually more important than the exit strategy". – Eddie Lampert

"Plan before acting. Fight only when you know you can win." - Zhuge Liang

In the previous post on the Principles of Value Investing I introduced the concept of Margin of Safety and Intrinsic Value and answered the first of 5 questions that I posed:

(1) Does the price of a business or stock ever trade at a significant discount or premium to their true or intrinsic value? If so, why?

(2) How Do I Calculate the Value of a Stock?

(3) Why Not Pay the Fair Value for a business? Why Must I seek a Margin of Safety?

(4) How great a Margin of Safety do Value Investors generally demand?

(5) Isn’t it possible that the reason the price of a stock is so cheap is because the company is poorly managed, is not profitable or is a high-risk business?

In today's post I will attempt to answer questions 2 to 4.

Q2: How Do I Calculate the Value of a Stock?

The important point to understand here is that calculating the Intrinsic Value of a business or stock is not an exact science. It is an estimate or a range between prices.

A simple example: Let's assume you are interested in purchasing a felafel stand. How would you calculate what price is a fair price you should pay for the business? Hopefully, you would look at 2 factors:

(i) Cashflow: You would try to assess how much cash the business will generate (cash flow) every year after all your expenses have been paid.

(ii) Growth Expectations: You will try to assess the growth potential of the business.

Now let's assume you do some research and discover that similar falafel stands in the area generate in their first year of operation an annual cashflow of $50,000, after all expenses have been paid. And let's assume that you discover that a similar falafel stand increased it's annual cashflow by 10% every year.

Would you pay $50,000 for the stand? Probably – as this means that you would earn back your initial $50,000 in one year. How about $100,000? Yeah, maybe. $200,000? Um, let me think about it. So you now have an estimate – in your opinion it is worth somewhere between $50,000 to $200,000.

If the seller of the falafel stand wants $1 million for it, you would immediately recognize that only a fool would pay such a price – even if there are hundreds of other fools paying similar prices for similar businesses elsewhere. On the other hand, if someone, for some reason offered to sell it to you at $25,000 – you would take a serious look at this deal.

In calculating the intrinsic value of stock, Value Investors apply a method called "Discounted Cash Flow" or DCF. The 2 main assumptions are free cash flow and growth. As much has been written by individuals far more capable than me, I will not go into the actual calcualtion or methodology of DCF. Instead allow me to point you to:

(i) An excellent article from the Motley Fool.

(ii) Joe Ponzio's FWallStreet - Joe's blog is first class - extremely well written, a shining example of an individual bringing value to the market. Specifically look at the 4-part series on The Value of a Business that begins here. You can also download a very good DCF excel spreadsheet which Joee used on his analysis of JNJ here.

Q3: Why Not Pay the Fair Value? Why Must I seek a Margin of Safety?

"One of the hardest things to imagine is that you are not smarter than average" - Daniel Kahneman, New York Times "Why Both Bulls and Bears Can Act So Bird-Brained", March 30, 1997

You haven't been paying attention, have you? Calculating Intrinsic Value is not an exact science – it is estimation only that requires two assumptions – a forecast for annual cash flow in year 1 and an estimated growth rate. As these are only assumptions – they can be wrong (and often are). You need to leave some contingency in the event that your assumptions are wrong.

Warren Buffett refers to the field of construction and engineering where the Margin of Safety concept is applied daily:

"You also have to have the knowledge to enable you to make a very general estimate about the value of the underlying business. But you do not cut it close. That is what Ben Graham meant by having a margin of safety. You don’t try to buy businesses worth $83 million for $80 million. You leave yourself an enormous margin. When you build a bridge, you insist it can carry 30,000 pounds, but you only drive 10,000 pound trucks across it. And that same principle works in investing." - The Superinvestors of Graham-and-Doddsville

In his 1974 Letter to Shareholders Buffett wrote:

"Never count on making a good sale. Have the purchase price be so attractive that even a mediocre sale gives good results."

This is why I have always said that Value Investors earn their money when they place a 'buy order' - not on the sell. The skill is in buying well.

And in his 1992 Letter to Shareholders he said it again:

“What is ‘investing’ if it is not the act of seeking value at least sufficient to justify the amount paid? Consciously paying more for a stock than its calculated value - in the hope that it can soon be sold for a still-higher price - should be labeled speculation (which is neither illegal, immoral nor - in our view - financially fattening).....The investment shown by the discounted-flows-of-cash calculation to be the cheapest is the one that the investor should purchase - irrespective of whether the business grows or doesn't, displays volatility or smoothness in its earnings, or carries a high price or low in relation to its current earnings and book value...... If we calculate the value of a common stock to be only slightly higher than its price, we're not interested in buying. We believe this margin-of-safety principle, so strongly emphasized by Ben Graham, to be the cornerstone of investment success.”

Q4: How great a Margin of Safety do Value Investors generally demand?

"If you understand a business and if you can see its future perfectly, then you obviously need very little in the way of margin of safety...Conversely, the more vulnerable the business, the larger the margin of safety you require." - Warren Buffett

As the Buffett quote suggests, the Margin of Safety that you give yourself is a function of to what extent you feel confident about forecasting a businesses cashflows and growth. Value Investors typically demand a margin of safety (or discount) of at least 30% (and sometimes as high as 50%) to calculated intrinsic value.

It is also worth noting that the greater the Margin of Safety that you give yourself, the lower the risk in losing your initial investment. The Partners at Tweedy Browne, a well-known Value Investing fund manager explains:

"One of the many unique and advantageous aspects of value investing is that the larger the discount from intrinsic value, the greater the margin of safety and the greater potential return when the stock price moves back to intrinsic value. Contrary to the view of modern portfolio theorists that increased returns can only be achieved by taking greater levels of risk, value investing is predicated on the notion that increased returns are associated with a greater margin of safety, i.e. lower risk."

In Part 3 of Value Investing Principle #3, I will attempt to answer Question 5 and discuss what the industry refers to as 'Value Traps'.

"May you possess the Wisdom to see what the Market does not, and the Courage to act on it".

Warren Buffett Bursting with Pride at Israeli Acquisition

Warren Buffett is currently on a whirlwind tour of Asia. The impetus of the trip was an invitation by Iscar CEO, Eitan Wertheimer to Buffett, to officially open Iscar's first metalworking production plant in Dalian China.

In yesterday's exclusive interview with Ha'aretz's Guy Rolnick, Warren Buffett could not say enough great things about his purchase last year of Israeli metalworking company, Iscar.

Below are some of Buffett's thoughts:

"Iscar is a dream deal. It has surpassed all the expectations I had when buying the company, and my expectations had been very high."

"Since I met Eitan Wertheimer [Iscar's CEO], and acquired Iscar, the people at Berkshire Hathaway think I'm a lot smarter".

When Rolnick asked Buffett how Iscar has performed since he acquired it, Buffett responded:

"Next week I have a board meeting in Columbus, Ohio....Only three Berkshire Hathaway companies will be making presentations there: two insurance companies and Iscar.... And when the people from Iscar make their presentation.... the buttons are going to burst right off his shirt because [I'll] be so puffed with pride about that deal."

For those readers who are not up to speed with the Berkshire acquisition of Iscar, here's a quick summary.

• In early 2006, Buffett received aone and a half page letter from Eitan Wertheimer, Iscar's CEO, describing the Iscar business. Buffett stated that when he read the letter something jumped out at him, and he invited Eitan to Omaha.
• Soon after meeting Wertheimer, the details of Berkshire's acquisition of Iscar were agreed upon.. Buffett did not use an investment bank or corporate advisors on the acquisition. He didn't even visit the Iscar plants.
• Berkshire paid $4 billion for an 80% interest of the business. This was Buffett's first acquisition outside of the US.

Soon after the Iscar acquisition, Buffett paid his first visit to Israel. Below is a 7 minute interview from that trip. Apart from the first 25 seconds, the interview is in English.

In the interview, he explains why he does not perceive Israel as a greater security threat than either the US or the UK.

Some Excerpts:

" I can give you an absolute, unequivicol answer....it's very impressive when a country of 7 million or so people turns out a business like this.... I haven't seen anything like this in the US."

"We weren't measuring Iscar against any other Israeli company. We were measuring it against everything we see in the world".

"If you compared Israel in 2006 with Israel in 1948, it's very very impressive".

"Israel should not be a secret....it's remarkable place... particularly the talent.... talent's worth far more than money."

Value Investing Principle #3 (Part 1): Value Investors Love A Good Bargain (Margin of Safety)

"Confronted with a challenge to distill the secret of sound investment into three words, we venture the motto, Margin of Safety."

– The Intelligent Investor, Chapter 20, Benjamin Graham

"Good warriors prevail when it is easy to prevail. "
- The Art of War, Sun Tzu

In this post, and in the following two after it, I will discuss the ideas behind what is probably the most central concept in the Value Investing discipline: the 'Margin of Safety'. Benjamin Graham, the 'Father of Value Investing' introduced it to the investing world in his book, The Intelligent Investor.

Simply explained, the Margin of Safety principle demands that investors only invest in businesses or stocks that trade at a significant discount to their calculated 'true value'. This 'true value' is also called the 'intrinsic value'. In other words, if you calculate a stock's intrinsic value to be $100, you should give yourself a 'margin of safety' and only pay, say $70 or less for it. Makes sense, right? This is no different to when you go shopping at the supermarket: Pasta, which normally sells for $2 a pack is now on special, and priced at $1. You wouldn't think twice (unless of course you're allergic to pasta or the expiry date is way passed today's). Savvy shoppers will take advantage when items are on sale, and buy in bulk.

All this sounds like common sense, but I bet you're dying to ask the following questions:

(1) Does the price of a business or stock ever trade at a significant discount or premium to their true or intrinsic value? If so, why?

(2) How Do I Calculate the True (Intrinsic) Value of a Stock?

(3) Why Not Pay the Fair Value for a business? Why Must I seek a Margin of Safety?

(4) How great a Margin of Safety do Value Investors generally demand?

(5) Isn’t it possible that the reason the price of a stock is so cheap is because the company is poorly managed, is not profitable or is a high-risk business?

In this post I'm going to answer only the first question. The others will be dealt with in the coming posts.

Q1. Does the price of a business or stock ever trade at a significant discount or premium to their true or intrinsic value? If so, why?

A1: Yes – all the time. Don't believe me? Open any newspaper, or financial website (Yahoo will do), pick any major public company and look at the 52-week high and 52-week low. Let's look at Teva (TEVA). The 52-week low was $30.70, pricing the entire business at around $23.39 billion. (To calculate the value of the entire business, mutliply the no. of shares that are outstanding by the share price). The 52-week high is $45.44, pricing the entire business at $34.62 billion. That's a huge spread – a little over $11 billion. How can this be? Which is the correct and fair price? Can a business change so significantly that it will have gained or lost $11 billion in value in the space of a year? The answer to all this is simply this: the market does not always behave rationally. Why not?

Two reasons that may explain this are:

(i) The market is sometimes driven by the emotions of greed and fear. For example, when an individual invests in a company without really researching it, because he heard from a neighbor that he made several thousand dollars from a stock that shot up 20%. That's not rational - it's insane. Imagine being told that the price of bread increased by 20% at a certain bakery. You wouldn't feel the sudden need to rush out and buy bread from that bakery. You'd look elsewhere for a better deal. Most people however, behave differently when it comes to the stock market. When hearing a stock or fund has increased by a huge amount, they feel that they are going to miss out on the profits and buy after the stock is has already increased in prive. That's greed talking. My neighbor, however, is smarter than that. If I tell him that I bought SanDisk at $37, and it drops to $36, he understands that he can get a better deal than what I got, and he calls his broker. Just like buying pasta on special at the supermarket. Right, Oren?

In Robert Hagstrom's, The Warren Buffett Way, (see also this post) he explains that the Value Investing methodology developed by Graham was based on the belief that the market is often wrong:

"Graham's conviction rested on certain assumptions. First, he believed that the market frequently mispriced stocks. This mispricing was most often caused by human emotions of fear and greed. At the height of optimism, greed moved stocks beyond their intrinsic value, creating an overpriced market. At other times, fear moved prices below intrinsic value, creating an undervalued market."

(ii) The market forgets that stocks are fractional bits of actual companies. Some individuals think of stocks as bits of paper that are traded back and forth. They rarely consider the business behind the stock - the products or services, the clients or employees. As Benjamin Graham wrote in Security Analysis in 1934:

"It is an almost unbelievable fact that Wall Street never asks: 'How much is the business selling for? Yet this should be the first question in considering a stock purchase."

"Why Both Bulls and Bears Can Act So Bird-Brained" - a New York Times article written a decade ago explores this in some depth. You can view it here.

So I think it's just about now where we learn the first Value Investing Mantra.

Repeat after me:

"The Price of a stock is not the same as the Value of a stock"

Most investors do not understand this principle, which explains why the market crowd is very often emotionally-driven, and does not behave rationally.

Value Investors focus on the Value of the business, not on the price of it.

As Warren Buffett famously declared: "Price is what you pay, value is what you get."

In the next posts I will continue our discussion on Margin of Safety and look at how intrinsic value is calculated, why you must seek a Margin of Safety, and how great a Margin of Safety is required. I will also briefly discuss 'Value Traps'.

Until next time - May you possess the Wisdom to See what the market does not, and the Courage to act on it.

VIDEO: Legg Mason's Robert Hagstrom on WealthTrack

Legg Mason fund manager, Robert Hagstrom was one of the interviewees on last Monday's edition of WealthTrack.

In my opinion, Hagstrom's greater contribution to the world is not as an asset allocator, but rather as a best-selling author. His books The Warren Buffett Way, The Warren Buffett Portfolio, and Latticework all raised the level of understanding and awareness with regards to Value Investing. In my opinion, all three are invaluable resources for becoming a more successful long-term investor.

In the last 5 minutes of the WealthTrack interview, the host provides a tight summary of Hagstrom's first book - which is about Warren Buffett's Value Investing Philosophy.

Below I provide some excerpts from Hagstrom's comments in the interview. As you will see from my thoughts (tagged IV in blue), I wasn't as impressed as I was from his books.

"It's true, the economy is weak, and it's true, there's a lot of negativity in the market, but these times are also the seeds of future excess returns. I think it's time to be cautious, a time to stay with quality, but I think if you look back at periods like this - these are the opportunistic periods that allow you to build a portfolio that's going to generate very high returns, much better than the market rate of returns".

IV: Why do some investors see what's happening in the market now as a terrible thing, while others are actually glad? The difference between these 2 camps is their 'investment horizons'. Short term oriented investors are having trouble dealing with the recent market weakness. Those investors that adopt a longer investment horizon view these periods as an opportunity to invest in great companies at bargain prices. Hagstrom's fund has an average holding perid of 3 to 4 years - so it is little wonder that he is concerned.

IV: In the interview Hagstrom indicated that his fund is now 100% fully invested in the market (i.e. it's cash holdings are minimal). I found this strange considering the fact that his previous comment suggested that this is the opportune time to look for great prices. If he thinks this is the case, why doesn't he keep some cash in reserve - like Fairholme's Berkowitz or First Eagle's Eveillard? Perhaps Legg Mason's team believe that the worst is already behind us? I don't know.

"We've taken the Warren Buffett Way, the Warren Buffett Process, and tried to apply it to the new economy".

IV: Hagstrom's top 5 holdings are Nokia, Yahoo, Amazon, Qualcomm and E-Bay. They make up a little over 30% of the fund. So he's definitely 'new economy'. I can see how he applies Buffett's principles of businesses with economic moats (you could argue that each is the dominant brand in its space), but what about predictability of future cashflows? You know there's going to be growth - but isn't that already factored into the high valuation multiple? How does one seek a 'Margin of Safety', the centerpiece to the 'Warren Buffett Process', when it is not easy to forecast future cashflows? This is why I wrote in my last analysis of SanDisk that Warren Buffett would not touch it.

When WealthTrack's host, Consuelo Mack, asked Hagstrom whether those stocks offer protection in a weak economy he replied:

"If we go into a recession, there's not much of anything that you can own that will do exceptionally well."

IV:Now I'm not sure about you, but I find this reply a little strange. How about company's that hold large positions of cash? Like Buffett's Berkshire Hathaway (BRK). That's what Sequoia, Fairholme and Eveillard have done - invested heavily in a business with strong cashflows and a strong cash position. When the market really craps out - you can count on Buffett to be pick out the treasure from the trash. How about Charlie Munger's favorite Costco (COST)? Costco will benefit in a recessionary environment as people seek ways to save money - and Costco is certainly one of the obvious places to do so. Another is GEICO - with a reputation as a cheap Insurance provider. Oh - that's right - it's owned by Berkshire.

If you can think of any other investment ideas whose business might benefit from a recessionary period - I'd love to hear them.

Signing off for today: "May you always possess the Wisdom to see what the market does not, and the Courage to act on it".

Shlomi Cohen: SanDisk's Steep Slide - Globes

Shlomi Cohen, one of Israel's veteran financial journalists wrote an excellent piece on SanDisk yesterday. I have followed Cohen's work since I have been in Israel, and he has proven to be very much in the know when it comes to the NAND flash memory industry.

In his column, he attempts to [and in my opinion, succeeds] pinpoint the reasons behind last Friday's market trashing of the stock.

You can view his piece here.