Seeking Alpha
  • Cal-Maine Foods: Business Nature Limits Its Upside
    CALM Yesterday, 8:39 PM KEMS Research 5 Comments

    Summary

    • The egg business, despite being stable, has limited room for growth.
    • Already the largest player and twice as efficient as the industry, Cal-Maine Foods is unlikely to see further significant improvement.
    • Recent price correction is not a good entry point.
  • Kick American Science And Engineering To The Curb
    ASEI Yesterday, 5:22 PM Doyle Publishing Ltd. Comment!

    Summary

    • It's hard to know where to begin with our criticism of American Science and Engineering, as there seems to be so much wrong here.
    • Low returns on assets, highly volatile operational results and expensive stock make for a toxic mixture.
    • The recent (small) insider buys are not enough to diminish our anxiety about this stock. We recommend investors dump the shares.
  • Debunking Yet More Misleading Amazon.com Articles
    AMZN Yesterday, 4:12 PM Paulo Santos 34 Comments

    Summary

    • There are several more articles with misleading information regarding Amazon.com.
    • I go over these articles to show just how misleading they are.
    • Indeed, not only are these articles misleading, but reality sometimes stands in direct contrast with them.
  • Why The Caesars Deal Is Kaput - Et Tu, Brute?
    CZR, CACQ Yesterday, 10:14 AM Anthony Cataldo 4 Comments

    Summary

    • Two law firms have suggested that the Caesars deal is inequitable.
    • Some very crude measures, based only on recent market reactions, suggest that some inequitable conditions might be present in the proposed deal.
    • I do not believe that this deal is doable, at least not in its current form.
    • CZR needs to "sweeten" the deal for CACQ shareholders.
    • If not, that is also okay - CZR can "gamble" on alternative financing options.
  • GameStop Really Is Blockbuster
    GME Yesterday, 9:51 AM Michael Carter 7 Comments

    Summary

    • GameStop's recent Q3 2014 earnings showed declines in both revenues and net income. Net income was particular impacted by an exit in an overseas market.
    • Despite the ongoing debate, GameStop is following the same path of Blockbuster.
    • GameStop and Blockbuster exhibited five major traits that were nearly identical for each company, respectively, and these are discussed in this article.
    • GameStop's stock should be a lot lower than it is today if it weren't for financial engineering that has taken place the past few years.
    • It's not that GameStop doesn't recognize the problem with used gaming, it just can't find a way to fit in with the overall supply chain.
  • A Short Case For Garmin: Fitness Will Lag
    GRMN Yesterday, 6:15 AM Justin Hess 3 Comments

    Summary

    • Garmin shares are up 20% YTD and Q3 EPS of $0.76 beat consensus estimates of $0.71.
    • Analysts expect Garmin’s Fitness segment to carry the business – Fitness currently makes up ~48% of TEV/EBITDA in 2014 but only makes up 19% of 2014 revenues.
    • The competitive landscape of Fitness and case studies from Garmin’s other segments suggest unrealistic sales and margin growth have been priced in by the market.
    • This holiday season has already put pressure on margins and now is an attractive time to short the stock.
    • Correcting for overzealous forecasts of sales and margin expansion suggest a target price of $41.
  • No Excuses: Falling Gasoline Prices Are Impacting Tesla's Sales
    TSLA Fri, Dec. 26, 7:19 PM Anton Wahlman 295 Comments

    Summary

    • Falling gasoline prices are unequivocally bad for Tesla sales right now, all other things equal.
    • Even rich people prefer to justify a $100,000 purchase by saying they’re saving money somewhere in the equation.
    • The direct variable cost per mile of driving electric remains 2.5x cheaper than gasoline at $2.50, but by that argument, 100% of car sales would already have been electric.
    • There is more to the total factor cost of owning a car than simply the variable cost of fuel, including reliability and flexibility.
    • The good news for Tesla is that if gasoline prices increase, it would be 100% good news: No excuses apply to both directions.
  • America's SUV Sales Boom Vs. Tesla's Negative Growth Rate
    Editors' Pick TSLA Fri, Dec. 26, 7:00 AM Anton Wahlman 230 Comments

    Summary

    • For the first 11 months of 2014, Tesla's US unit sales are estimated to be down 15%.
    • As a comparison, I provide 27 examples of SUVs with strong or extremely strong US unit sales increases for the same period.
    • Almost all of these 27 SUVs also sell more cars per year in the US, compared to Tesla.
    • Given the discrepancy in the growth rates, something doesn't add up here: Either Tesla is wildly overvalued or the other automakers are extremely undervalued.
    • The other automakers could spin off these SUV model lines at valuations exceeding Tesla in most instances.
  • 15 Insane (But True) Reasons The Herbalife Fraud Should Be Shut Down Today
    HLF Fri, Dec. 26, 6:00 AM Quoth the Raven 178 Comments

    Summary

    • These are 15 reasons that the Herbalife fraud should have already been stopped - if not shut down immediately, placed under injunction until FTC investigation concludes.
    • Herbalife insider caught on video calling the company "an eventual deception" and "inauthentic".
    • First hand primary source evidence points to Herbalife being the largest fraud since Madoff/Enron.
    • Questionable death in Mexico surrounded by 7-8 year old questions about the lead content in Herbalife's product.
    • Herbalife Board Member Pedro Cardoso is wanted for fraud in Brazil. Enough is enough - shut it down.
  • SandRidge Energy And Its Potential Bankruptcy Risk
    SD Thu, Dec. 25, 11:17 AM Nate Costello 17 Comments

    Summary

    • SandRidge Energy is currently involved in several lawsuits including a class action lawsuit, in which its financial filings for 2012, 2013, and 2014 are no longer to be relied upon.
    • An investor presentation in Nov. 2014 shows SandRidge assuming an ambitious $90/bbl oil and $4.00/MMBTU natural gas, with a possible range from $80/bbl - $110/bbl and $3.50/MMBTU - $5/MMBTU respectively.
    • Credit spreads for energy companies in the U.S. high-yield debt market have almost doubled to 10.43% from an all-time low of 5.68% in June, which was greatly impact SandRidge.
  • Render Unto Caesar The Things That Are Caesar's... And Begin With The Debt
    CZR, CACQ Thu, Dec. 25, 6:24 AM Anthony Cataldo 7 Comments

    Summary

    • Caesars Entertainment Corporation (CZR) wants to buy affiliated Caesars Acquisition Company (CACQ) to facilitate their Chapter 11 reorganization.
    • Prior to this announcement, on December 12, CZR stock price dropped, when they failed to make an interest payment on debt.
    • After the proposed merger announcement, on December 22, CZR stock price recovered, and continued to track with the stock price for CACQ.
    • A December 22 announcement followed, expressing concern that the 0.664 shares of CZR for CACQ were inadequate.
    • The December 22 challenge has merit, and appears to be good for CZR and bad for CACQ.
  • Update: As The Herzfeld Caribbean Basin Fund's Chairman Sells Shares, Fellow Shareholders Should Follow Suit
    CUBA Thu, Dec. 25, 4:12 AM Jordan Flannery 3 Comments

    Summary

    • After having advanced by 103.2% over the past five trading sessions, shares of the Herzfeld Caribbean Basin Fund have jumped to a substantial premium to NAV.
    • The fund's chairman filed a form 4 with the SEC after the close of trading on Tuesday which highlighted his recent and significant stock sales.
    • While it seems logical to take profits in this CEF after its run up, news of insider sales may be enough to catalyze downward momentum in the fund's shares.
  • Update: A FuelCell Energy Director Is Disgusted And Hits The Road After 22 Years
    FCEL Thu, Dec. 25, 2:14 AM The Specialist 22 Comments

    Summary

    • FCEL director James D. Gerson packs in and calls it quits.
    • The news significantly lowers my already low confidence on FCEL.
    • While I certainly didn’t predict this exact news in advance, it doesn’t come as a surprise.
  • Franklin Electric: Declining Margins And Increasing Inventory Makes It A Good Short Candidate
    FELE Wed, Dec. 24, 11:40 AM Finance Professor Comment!

    Summary

    • Franklin Electric's Inventory and Account Receivables have risen disproportionately versus its sales over the last couple of quarters.
    • During the same period its margins have declined.
    • Stock appears overvalued at ~21x P/E given its flat EPS growth.
  • Danger Zone: Revlon
    REV Wed, Dec. 24, 9:30 AM David Trainer 2 Comments

    Summary

    • Profits have gone nowhere for a number of years.
    • Brand erosion is proving hard to reverse.
    • Current valuation makes Perelman buyout unlikely.
  • The Bear Case For Alacer Gold Remains Strong
    Editors' Pick ALIAF Wed, Dec. 24, 8:44 AM Itinerant 4 Comments

    Summary

    • Sulphide expansion at the Cöpler mine is facing time and funding constraints as well as execution risks.
    • Significant extension of oxide mine life could provide relief but is currently not supported by published data.
    • We see share price under pressure for the foreseeable future.
  • Rosetta Stone: Misleading Financials Mask Continued Deterioration In Business
    PRO Top Idea RST Wed, Dec. 24, 5:00 AM Jay Yoon 48 Comments

    Summary

    • RST management is using questionable financial reporting practices which significantly overstate the financial performance of the business.
    • In Q4 2013, RST changed its definition of Adjusted EBITDA to a methodology which significantly inflates performance via aggressive deferred revenue add-backs.
    • A more reasonable method for calculating EBITDA indicates that management’s FY 2014 Adjusted EBITDA guidance of $18mm - $22mm is overstated by at least $22mm.
    • In addition to aggressive financial reporting, RST’s business has continued to deteriorate due to competitive pressures.
    • RST shares are overvalued by over 40% at the current price level.
  • Update: Continental Resources Seeks Elusive Cash Flow Neutrality
    CLR Wed, Dec. 24, 3:47 AM Profit Propositions 6 Comments

    Summary

    • 2015 capex budget is slashed by 41%.
    • The company expects to grow average production 16-20%.
    • Cash flow neutrality is achieved at $65 WTI oil price.
  • Is BlackBerry Really Working With Boeing On A Self-Destructing Phone?
    Editors' Pick BBRY Wed, Dec. 24, 12:20 AM KIA Investment Research 254 Comments

    Summary

    • Reuters reports “BlackBerry works with Boeing on phone that self-destructs”.
    • The internet comes alive with the story.
    • KIA Investment Research contacts Boeing for the real story.
  • Zynga Investors Could Learn Something From Candy Crush And Kim Kardashian
    Editors' Pick ZNGA Wed, Dec. 24, 12:04 AM Brian Nichols 7 Comments

    Summary

    • Zynga's stock has soared behind the success of Looney Tunes Dash.
    • Investors might want to take note of recent history with Glu Mobile and King as an indication of how the Zynga momentum will end.
    • ZNGA's valuation and recent gains imply the upside has come, and will soon be gone.
  • If You Own A Tesla Model S, Just Don't Dent It!
    Editors' Pick TSLA Tue, Dec. 23, 10:29 PM Paulo Santos 430 Comments

    Summary

    • Tesla has yet another threat emerging.
    • This particular threat threatens Tesla's image, reputation, trade-in values, demand for cars and the insurance rates charged to Tesla owners.
    • Tesla still has a chance to fix the issue.
    • If the issue is not fixed, the resulting reputation could lead to long-term subpar profitability.
  • Update: AuRico Gold Amends Its Royalty Agreement With Crocodile Gold
    AUQ Tue, Dec. 23, 7:11 PM Ben Kramer-Miller Comment!

    Summary

    • AuRico Gold has amended its royalty agreement with Crocodile Gold.
    • The company will receive C$20 million upfront and retain a 2% NSR royalty on the Fosterville Gold Mine and a 1% NSR royalty on the Stawell Gold Mine.
    • I had not anticipated this in my recent article.
    • While this is a positive development for AuRico, the valuation is still rich, and I would continue to avoid the stock for now.
  • Herbalife And The Black Hole In The Economy
    HLF Tue, Dec. 23, 5:21 PM Rogier van Vlissingen 81 Comments

    Summary

    • Pattern of loss claims demonstrates Herbalife is a net detractor from GNP.
    • Patterns of loss claims demonstrates potential tax-evasion issues.
    • Rational valuation of HLF shares is nearly impossible based on hard data and imponderables.
    • Herbalife is insufficiently reflected in Icahn Enterprises (IEP).
    • The action now shifts to the rest of the MLM industry, and the investors that have an interest in them.
  • Why Bill Ackman Will Be Proven Right On Herbalife Soon
    HLF Tue, Dec. 23, 12:51 PM Regal Point Capital 137 Comments

    Summary

    • Herbalife is running out of time.
    • Herbalife is running out of money.
    • Herbalife is running out of excuses.
  • GoPro Is Likely Not A Wise Long-Term Purchase, Even At These Levels
    GPRO Tue, Dec. 23, 11:58 AM James King 22 Comments

    Summary

    • GoPro is at its lowest price since September, but it is still not a bargain.
    • GoPro is soon going to face new competition, and possibly a saturated market.
    • In order for GoPro to be a good investment, we need to see new innovations, including something to keep customers coming back yearly.
    • GoPro's largest competition comes from something that almost everyone already has.
    • What makes GoPro have better staying-power than recording devices of the past, such as camcorders?
  • The Big Challenge For Seadrill In 2015
    SDRL Tue, Dec. 23, 10:39 AM Economics Fanatic 27 Comments

    Summary

    • Debt will be the biggest challenge for Seadrill in 2015.
    • I expect the company's debt to increase in 2015 along with an increase in cost of debt.
    • I expect Seadrill to pursue asset sale in 2015 (provided market conditions offer decent value).
    • Share repurchase in 2015 seems unlikely or a bad decision considering the debt and cash flow outlook.
    • Sustained recovery in oil prices will be the single biggest upside trigger for Seadrill, but that is unlikely to come in 2015.
  • Sony Hack Shows Its Star Division Is Poorly Run
    SNE Tue, Dec. 23, 9:29 AM Dana Blankenhorn 19 Comments

    Summary

    • The Sony hack was not sophisticated.
    • The company ignored cyber-security warnings going back three years.
    • Time to dump this turkey.
  • Student Transportation: Get Off This Bus Before It Crashes
    Editors' Pick STB Tue, Dec. 23, 9:23 AM Doyle Publishing Ltd. 33 Comments

    Summary

    • Student Transportation has generated 43% of its cash over the past seven years by tapping sources of capital. How long can this continue?
    • We believe the balance sheet represents negative equity to the tune of approximately $92 million.
    • There are two classes of shareholders: management and everyone else. Guess which group gets a free put option?
    • Our most optimistic price level on Student Transportation is ~27% below the current market price.
  • NQ Mobile Dives Deeper On Earnings Losses
    NQ Mon, Dec. 22, 6:48 PM ValueWalk 24 Comments
  • Dunkin' Brands' Troubles And The Parallels To Starbucks
    SBUX Mon, Dec. 22, 6:23 PM Howard Penney 14 Comments

    Summary

    • SBUX continues to be a Best Idea short.
    • Is SBUX seeing similar pressure to DNKN?
    • Call me crazy, but it isn’t clear that Starbucks is immune to some of the softness Dunkin’ is facing.
  • For Mellanox The Future Is Arriving And It Isn't Pretty
    MLNX Mon, Dec. 22, 4:00 PM Paulo Santos 15 Comments

    Summary

    • Akram's Razor has long predicted that the future held the threat of obsolescence over Mellanox's head.
    • This future, it turns out, is now arriving.
    • The article explains why and how this future is arriving, pointing to very clear and specific already-announced products and facts.
  • Netflix: Negative Near-Term Outlook
    NFLX Mon, Dec. 22, 3:14 PM Musings of a Banker 9 Comments

    Summary

    • Netflix’s increasingly complex business faces real near-term threats.
    • Q4-14, US Streaming subscriber numbers to be key focus.
    • International growth strategy a double-edged sword.
    • Earnings outlook for the next three fiscal quarters is sharply negative.
  • The Case Against Barrick Gold - Part 2
    ABX Mon, Dec. 22, 2:30 PM Short/Long Trader 13 Comments

    Summary

    • Even more negative news has come out on Barrick, especially the closure of the Lumwana copper mine.
    • By a wide range of metrics, Barrick looks weak and its overall outlook appears bearish.
    • There are additional long-term problems Barrick faces with Pascua-Lama.
    • Barrick remains a value trap that should be avoided.
  • Sears: The Lampert Report
    SHLD Mon, Dec. 22, 2:15 PM Llenrock Group 12 Comments
  • Did Qihoo 360 JV Partner Coolpad Ship Phones Bundled With Malware?
    QIHU Mon, Dec. 22, 2:00 PM China Stock Research 11 Comments

    Summary

    • Recent reports from a US-based security firm claim to have found serious malware in Coolpad Phones.
    • Qihoo has built a reputation on security; did it trust the wrong partner?
    • What does that mean to the recently announced JV?
  • Is Zynga Worth The 13% Pop Since Last Week?
    ZNGA Mon, Dec. 22, 12:19 PM Patrick Mork 17 Comments

    Summary

    • Zynga released its new Looney Tunes title, which was met with good initial consumer feedback.
    • The company continues to be too focused on casual games and the U.S. market which could threaten growth.
    • Zynga benefits from several key advantages as a large publisher, but needs to see the bigger opportunities available to it.
  • More Evidence Of Vimicro's Falsified Contracts
    VIMC Mon, Dec. 22, 7:57 AM TrinityResearch 3 Comments

    Summary

    • Of the RMB 1.04 billion in total contracts announced by VIMC in its press releases, only RMB 187.6 million, or just 18% were confirmed by government web sites.
    • Six of the contracts could not even be found, i.e. were either canceled and thus removed or never existed at all.
    • Contract value was materially overstated in three cases.
    • Two of the contracts were actually granted to competitors of VIMC and not to VIMC.
  • Even If Approved, Globalstar's TLPS Will Underperform Free Wi-Fi On (Tens Of) Millions Of Existing Devices
    Editors' Pick GSAT Sun, Dec. 21, 2:07 PM Gerst Capital, LLC 30 Comments

    Summary

    • Statements by the CEO implying "every Wi-Fi device out there" only needs a software/firmware upgrade to support "carrier grade" TLPS are directly refuted by analysis of detailed manufacturer data.
    • Quantitative analysis clearly shows (tens of) millions of existing devices will underperform Wi-Fi Channels 1-11 in the 2.4GHz band, both in terms of range and throughput.
    • The source data comes from a manufacturer supplied "S2P file" that includes key RF filter measurements sampled in 0.5MHz steps across the entire 2.4GHz Wi-Fi band.
  • Why We Think Tesla Has More Downside
    TSLA Sun, Dec. 21, 12:14 PM Orange Peel Investments 158 Comments

    Summary

    • Oil continues to plunge, making Tesla less and less appealing to those wishing to save money on gas.
    • The company's stock is trading at a large multiple despite a market that seems unsure of itself.
    • We lower our price target from $210 to $185.
  • Creative Edge Makes Front Page Canadian National News
    Editors' Pick FITX Sun, Dec. 21, 9:28 AM Matthew Finston 123 Comments

    Summary

    • Canada's largest circulation national newspaper, the Globe and Mail, has published a two-part investigative report on the complications of Canada's MMPR system.
    • The paper's second part paid significant attention to the notorious, 'Creative Edge Nutrition,' a company that has been scrutinized here at Seeking Alpha.
    • Using the seedy practices of Creative Edge as an example of Canada's mismanaged system, the Globe and Mail ultimately puts Ottawa in the spotlight for failing to take responsibility to regulate its own industry.
  • LendingClub: Overvalued And Not Disruptive
    LC Sat, Dec. 20, 8:58 PM Sean deLone 38 Comments

    Summary

    • Investors in LendingClub’s products and stock face huge risks.
    • Despite the hype, LendingClub’s business model is not disruptive or unique.
    • LendingClub cannot produce the origination volumes to deserve their $9 billion dollar valuation.
  • Starbucks: Will The Big Bets Pay Off In FY2015?
    SBUX Sat, Dec. 20, 3:53 PM Howard Penney 6 Comments

    Summary

    • I remain Bearish on SBUX.
    • The company is making a big bet on food and it is not without risks.
    • The following are my notes from the analyst meeting in Seattle.
  • EVs As A Status Symbol, And A Possible Tesla Advantage
    TSLA Sat, Dec. 20, 1:13 PM Paulo Santos 523 Comments

    Summary

    • I've already written on how Tesla being an early leader in a supposedly high-growth market (EVs) is no guarantee of victory.
    • Lack of barriers to entry in the EV marketplace, together with no sustainable advantages for Tesla support this claim.
    • In this article, I explore the opposite - whether there might be one thing where Tesla really might have an advantage over other automakers.
  • Down The Rabbit Hole With NQ Mobile
    NQ Sat, Dec. 20, 6:30 AM Keubiko 229 Comments

    Summary

    • NQ Mobile announced the sale of subsidiary FL Mobile.
    • The transaction value appears very high at roughly $600 million.
    • The real value appears to be a tiny fraction of the headline value and raises some troubling question.
  • Imprivata: Accelerating Losses And Evaporating Margins
    IMPR Sat, Dec. 20, 6:00 AM Dallas Salazar 5 Comments

    Summary

    • IMPR's losses greatly accelerated into the 9M Y/Y with the quarter's results looking just as bad.
    • IMPR's inability to sell its services and product at anything close to profitability has crushed margins across the board.
    • IMPR has plenty of cash and liquidity to drag its story out for the midterm which makes this a name to consistently keep on a short board.
  • Yelp: Large Premium For Elusive Profits
    YELP Fri, Dec. 19, 5:49 PM Doyle Publishing Ltd. 9 Comments

    Summary

    • We can't say precisely what the catalyst might be for Yelp's decline, but we are concerned about the combination of high price and operational challenges within the company.
    • Since we cannot be sure that Yelp will enjoy meaningful revenue growth in the future, our advice is to not overpay for it.
    • We recommend investors sell YELP and buy one of the other companies in the Internet Content Space.
  • McDonald's Nears 52-Week Low: How Overpriced Chicken And Millennials Are To Blame
    MCD Fri, Dec. 19, 2:55 PM Ryan Canady 89 Comments

    Summary

    • McDonald's stock has fallen heavily, but perhaps for good reasons.
    • Elementary mistakes like overpriced chicken offerings reveal critical problems at McDonald's.
    • Millennials are fleeing the company in record numbers for healthier alternatives.
    • McDonald's management is flopping around looking for solutions, but none have come.
  • LeapFrog's New Products Are Not Helping Them
    LF Fri, Dec. 19, 2:39 PM Sramana Mitra 14 Comments
  • BlackBerry: The Drowning Man Of Mobile
    BBRY Fri, Dec. 19, 1:53 PM Mark Hibben 218 Comments

    Summary

    • BlackBerry's fiscal 2015 Q3 results contained a 33% y/y decline in total revenue, a 42% y/y decline in Service revenue, and a 23% y/y decline in Hardware revenue.
    • The steep declines in revenue confirm the continuing collapse of the BlackBerry ecosystem.
    • The steepest decline in Service revenue demonstrates BlackBerry is waning even in the enterprise.
    • BlackBerry continues to be a short opportunity.
  • Analysts Stand Behind Amazon As It Continues To Flounder
    AMZN Fri, Dec. 19, 10:49 AM Allan Mason 84 Comments

    Summary

    • Amazon has received multiple buy recommendations from analysts in the recent days as it continues to underperform.
    • The reasons for the bullish calls are getting even more bizarre.
    • A look at what may be the worst trade of 2014.