Taliban Bars Vaccines Over Drone Strikes

According to a new press release, Taliban leaders in Afghanistan demand that American drone strikes halt or polio vaccines will be denied to civilians subject to their control. This curious threat – linking disease eradication in the Taliban's own backyard to American military behavior – continues a common theme of Islamofascists* that recently included the poisoning of 160 schoolgirls because they committed the offense of being girls seeking education. The basic premise of the Islamofascist movement is understood fairly clearly once it is evident that the health and education of the population are less valuable to the movement's proponents than the solidification of their military despotism.

The principal difference between Afghanistan and Iran in this is that Iran spent a few years unable to make spare parts for US-made military equipment, and learned the value of engineers (and thus schools) to the movement.

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* Islamofascism may not be a word, but is intended to describe a brand of fascism conducted in advancement of a strain of purported Islamism that includes doctrinaire claims of a religious right to operate a despotic police state that oppresses contrary elements by declaring them religiously forbidden and thus subject to reprisal on religious grounds without need of courts, due process, or even evidence. Iran has offered an example of Islamofascism for several decades, and now supports genocide in Syria to prevent the threat of successful Islamic democracy.

MTGE's New Offering Defers ~42¢/sh

At Seeking Alpha, I show how the at-NAV issuance of the new MTGE shares gives shareholders a tax benefit akin to indefinite deferral of 42¢ of income, without requiring a tax-deferred account. This is a single-instance case of the hidden deferral available when ACAS-managed mREITs issue shares following the earning of taxable income.

Since ACAS is now a taxable entity, this indefinite deferral amounts to about 15¢ per MTGE share of income tax it won't pay (or tax asset it won't consume). With 2m shares, this is a $300k one-time bonus. ACAS has done this already this year (I didn't do the math on the first secondary offering), and will surely do it again at its managed fund. Growth in ACAS' holdings of MTGE work to its advantage both by growing its management fees and by growing the fair value of its holdings of MTGE.

Enjoy the new article!

iBeer

For giggles, check out an illusionist in a Bierhaus.

Lumia & iOS: You First. No, You.

The Siri virtual assistant and Lumia's voice-controlled search function each reportedly complement each other as the 'best smartphone ever'. Assuming Siri's results are coming (as they appear) from Wolfram, those results are subject to change. Of course, the next time the Lumia is updated, it's likely to have a new "feature" inserted by Microsoft's marketing department to control bad spin.

But for now, it's a battle of complements. You first. Oh, please; after you. No, I insist, really.

Gotta love it.

Adding to AAPL

I've been a bit busy to write new entries, but in the interest of full disclosure wanted to mention that a new purchase of Apple today and the purchase made in the course of my long/short AAPL/RIMM position (the RIMM leg of which closed last month at a gain of about ), I have doubled my AAPL position this year. That is, accumulated 2012 purchases equal my pre-2012 holdings. This raises my average entry price, but at current earnings growth the P/E is just too good at these pullback prices for me not to participate.

In other news, in a hamfisted and clumsy move I tried to enter a covered call on DNR and ended up entering a naked put, which executed. Come Monday, that will reflect assignment over the weekend at $16. Whoops. Object lesson: read everything you click. That review pane has a purpose. The company's been volatile, and its product is oil, so the current ~$15 won't last. I'll be looking to exit at least some of my post-accidental-additional-purchase position in the next few months.

Apple Crushes Cell Phone Market Target

Apple continues to amaze in the cellular arena. After having dramatically overshot its original objective of taking 1% of the global handset market, Apple has over the last four quarters doubled its share of the cell phone market to 7.9%.

That's not 7.9% of the global smartphone market, but 7.9% of the whole cellular market – smartphones, feature-phones, dumb cell phones, prepaid phones, etc. Of even greater interest than Microsoft's apparently headlining smartphone partner Nokia dropping from the world's leading vendor by volume (not by profit; it's lost money consistently for a while even despite Microsoft's cash injections) to the #2 slot, is that the #2 ranking is achieved with a product mix that's only 16% smartphones. By contrast, Samsung's product mix is 43.9% smartphones. Apple's is 100% smartphones. The difference in market segments addressed by each company explains how Samsung and Apple seem to be the only handset manufacturers currently making money in mobile phones.

Further reading:
Investing In Smartphone Failures (you can make money on predictable failure)
Apple's 'Share' In Jeopardy? (Share of unit sales isn't share of profits, which is literally where the money is)
Playing Microsoft's Mobile Victory in China (if you believe in a MSFT victory, the play is MSFT and not its commodity hardware vendor partners)

Inevitable Decline of Apple (Not)

After refuting Forrester's CEO's claim that Apple would inevitably decline as a result of Jobs' death, I spotted another Apple-is-Doomed article, this one baldly asserting without any evidence that Apple's margins were about to be cut in half. The only argument in the second post was that Apple's margins would attract margins-cutting competition.

That is how a commodity market works. As a differentiated product vendor, Apple isn't making hardware on which users will run the same OS as they would on an HTC, Nokia, or Samsung handset. Apple owns its own OS and doesn't pay a licensing fee to Redmond for it, and it has the ability to shut down hostile applications found in its ecosystem. Apple can nimbly make hardware changes, knowing exactly where the dependencies are and what APIs must be tweaked to give developers the same (or better) results they had on their development platforms.

Apple's products aren't coming under pricing pressure so much as they've been discovered to be supply-constrained in am international market famished to devour even more product. By year-end, China will be as large or larger a market for Apple than is the United States. Next year, China will be Apple's largest market. And they love the brand.

That's differentiation. It's how Gillette maintains pricing power in razor blades. Some folks just don't get it. Apple differentiates with branding and technology and user-experience and makes more than anyone in its material markets.

Short if you want, but I'm happy to stay long. At P/E <14 and profit growth ~100%, this isn't a company you will find many times in your life.