more stock comments

UEPS -- got the chance to read some street research from Baird on the quarter. I was shocked to see the discrepancy between what UEPS is paid in South for welfare payments and what they are paid in Iraq for various government payments like war casualties, etc. UEPS gets about $3.7 in revenue per card per month in south africa. In Iraq they get about 22 cents -- are the services that much different? don't know. if they got the same in SA that they get in Iraq, revenues would be a lot less. I checked back to the reports I could find from the past and a year ago the same analyst was talking about IRAQ earning 70-80 cents in revenues per card per month. that's better but still not close to SA levels. I can remember reading previous notes from this analyst that assumed growth opportunities like Nigeria and wage payment in south africa would reach $2 in operating profit per card per month at maturity similar to South African welfare. I thought he said the same for Iraq -- turns out it was .50 in operating profit per card per month. still have a long way to go to reach those levels.

Do I think the $3.7 they get from SA is too high? of course. Is it likely to change soon? no because they have the contract, they are one of the few if not only people that can operate offline in the rural areas of SA, while still providing broad smart card services.

CEO just announced he is selling half of his shares over time. that's not a positive sign although its not necessarily negative either -- it means he doesn't think the stock is about to materially jump but it doesn't mean he thinks its going to fall any time soon.

There is no doubt that UEPS is an incredibly cheap stock for the metrics they can produce now -- issue is how sustainable are those metrics like high free cash flow and high return on assets? how quickly can they diversify their business away from SA welfare and or can they earn similar economics elsewhere that they earn in SA? I have said before that until UEPS gains traction in a 2nd area such as Nigeria, Iraq, Ghana, wage payment, etc. the stock's multiple will suffer. To me its limited downside and lots of upside potential thanks to the cheap multiple.

Wow - I guess someone was really hot to trot to sell Cypress Semi and once it hit the 200 day moving average the selling has dried up -- stock was back to almost 10 after being near $8 not that long ago. I am recouping losses on that one but I didn't get the chance to ramp it up near $8. Still like the secular story here plus the cyclical one that if ECRI is right and the recovery exceeds expectations then all this nonsense about double ordering on the semi' side will give way to outperforming growth.

I still hope to cover a few others such as MXWL, etc. but not tonight.