99% Trader

Long/short equity, contrarian, commodities, arbitrage
99% Trader
Long/short equity, contrarian, commodities, arbitrage
Contributor since: 2014
"can you imagine how silly this 'computer' thing is? it's as big as an entire room, it cost millions, and it's not even all that powerful. Trust me, nothing will ever come from this 'computer' gadget. it's an expensive gimmick"
I think that this may be the new "pump and dump" scam, and I find it fascinating.
Given the incredibly low volume that it took to pump this thing, I don't think too many invetors lost money on the buy side.
I've got a gut that the only people who got killed where the short sellers. 73% of the stock is held by one guy, so he could buy/sell to himself to pump up the price. And even though this pig touched $20, remember, it was less then $0.10 even a few months ago. Even hitting $2 a few weeks ago would have seemed incredibly overbought and "no way" could it go any higher, thus luring in the short sellers.
The majority shareholder didn't sell his shares and as the price went up and margin calles were triggered, all the shorties were forced to cover. It's actually quite brilliant. The SEC was extremely slow to act, because who cares if shorts get hurt, right?
I wonder if we'll see this again......the old P n D model was beef up the price by marketing it, and then dumping the shares onto retail guys. This new one seems to be beef up the price to ENTICE short sellers, basically giving them a carrot they couldn't resist. The old P n D guys would say "look at this stock, it's the next big thing, it's going TO THE MOON!". The new P n D guys say "look at this stock......it's gone up 1000% in a few weeks and it's got NO ASSETS and NO REVENUES! Short this thing, it's going to ZERO!!!"
And of course they're right, it will go to zero. But not before they crush the shorts and they make a ton of cash.
Has anyone read the actual website? It's truly hilarious. In the blurb for the $1500 public speaking course, it says this:
" ALL GURUS HAVE ONE POWER POSITION TRICK IN COMMON:

THEY GIVE TALKS! - MANY and Often. "
Truly earth shattering insight. Then there's this:
" Giving a public speech or talk is probably the quickest way to gain INSTANT credibility and AUTHORITY while gaining SOCIAL PROOF- simultaneously!

When ANYONE talks on stage- people go into passive receptivity and listen. They GIVE the speaker authority and attribute special abilities to them ...even if they on't like them.

Just ONE public speech can give you all this and more for a lifetime.
Just take pictures and or record the speech of you in front of an audience then use that in ALL your marketing materials- forever! "
Like, it's simply a Nigerian bank scam but with (slightly) better grammar.
Then this article is not as relevent to you. Most people who are in SBUX at this point did not get in so early.
Of course I'm short. I'm short a lot of things in this market.
Why do you say it like it's a dirty word that one would be ashamed of admitting?
At any price?
With that strategy, you won't need anyone telling you to "get out of the market"
you'll get yourself out quick, fast and i a hurry. You seem to lack the most basic of security analysis skills.
If Starbucks had a patent on coffee, I'd agree with you.
And again, you're making the rookie mistake of confusing the company with the stock price. The company is a great one, well run and with a bright future. That doesn't mean it's a buy at any price.
As a quick example, the iphone 5S is a fantastic, well engineered phone. At $300, it's a great deal. At $1000, it's a crappy deal, even though the phone itself is the exact same in both situations.
SBUX is a great company at a highly overvalued stock price. Buying it now is like buying an iphone for $1000. You'll own a quality asset, but you paid way too much for it.
Boy, you can say that again!
"irrelevent" they'll tell you...."SBUX is fully hedged!!!!!"
Which they clearly aren't if you look deeper then the CEO's statements. Most "investors" have no clue how to do due dilligence, however.
Yeah, that forward guidance for 2015 has no prayer of being reached, considering the robust margins SBUX projects......with milk and coffe both at multiyear highs, those margins are not going to happen.
In fact, I'd say in about 30 minutes will begin the start of SBUX's revising forward guidance, which should continue every quarter for some time.
Short at the bell for a quick buck.
Falling tide is going to sink all boats for the next 6 months. Just about every stock can be had lower later.
I still think earnings are going to disappoint, and margins are going to be affected. Most importantly, forward guidance is going to be worse then previously porjected.
Commodities don't trade like that. There is no bulk discount when buying coffee. Or gold, or oil, or any other global commodity.
In any case, the wording is clear. They had better margins due to lower coffee prices. They did not say "We've got great margins because we locked in a low price months ago"
You can't keep expanding mulitples forever. Even a "mild" expansion is not likely if you're already at absurd multiple levels.
And you're analysis would be accurate if stocks were more or less at fair value right now. But they are only at their sky high prices directly as a result of Fed intervention. Now that stimulus is being withdrawn, stocks will probably correct down to fair value (who knows where that is, but it's at least 15-20% below where we are). Once that is done, fundamentals will again take over.
But fundamentals are not driving the price right now.
Great analysis here
I posted sources in the article, did you not read them?
The CFO said categorically "we are not hedged at all for 2015" just a few months ago.
And I provided numerous pieces of evidence showing they are not fully hedged. The fact that they claimed in recent quarterly reports that low coffee prices helped margins is pretty clear. If they were hedged, lower prices would not help margins at all, because THEY WOULD BE HEDGED. I.e. locked in at a specific price.
definitely not. They wouldn't be able to hedge at prices that were lower then the spot market, obviously.
They did not hedge at market lows.
just wait until the insider trading reports comes out. How much yo want to bet insiders didn't dump hard yesterday
Shorts are not long term bets. I would have a price target that I feel is attainable within a 3-6 month time period.
Not exactly true. Yes, insiders buying is always more bullish then selling is bearish, for many different reasons.
Sustained one sided selling is bearish though. I don't view the CEO taking out $350+million in just over a year to be a terribly good thing.
We shall see though.
It will depend, to be honest. I love the "buy the rumor, sell the news" trade, and that also goes in reverse.
If SBUX gets pounded down going INTO earnings season, I won't be shorting. If the price is in a steady downtrend from here, I'll be sitting this one out.
My capital is actually doing pretty good, thanks for the concern though :)
And do you honestly think that SBUX can raise prices indefinitely without losing business? Yes, they have a great brand. At the end of the day, coffee is coffee, and there IS a price point the consumer will be unwilling to pay
That was one small part. More important is that they clearly aren't fully hedged. If the low price of coffee helped margins (which they mentioned as a selling point) then high prices have to hurt them. Its simple.
Because if they were fully hedged, coffee could go to $0.05/lb and that wouldn't help margins. That's the risk of hedging. They would still have to buy at the price they hedged at.
Clearly, I'm a trader. It is a little hard to classify me as a "groupie" when 95% of all the people in this trade are over on the other side, with you.
That alone would worry me, looking around and all I can see are people who are agreeing with me.
I don't take anything personal. You're on your side. I'm on mine. Let the chips fall where they may.
Pretty much all of the factors you've listed have all been priced in by the market. No one is disputing that SBUX is growing. But if the markets already priced in all the growth, the stock will go nowhere.
This is, in my opinion, the biggest mistake of the retail investor. The inability to separate a company from its stock price. There are several fantastic companies with crappy stock prices that will likely linger for a year. Or two, or more. SBUX. TSLA. The list goes on.
If you've been in SBUX for 20 years, then definitely this article is not geared towards you, and i would absolutely jeep holding. The next year or so for SBUX will only be a blip on the radar when all is said and dobe.
You and I have fundamentally approaches to investing. I don't believe one is better then the other, merely different.Congrats on a great investment.
With coffee prices up 75% in two months, I would be a seller of all coffee companies, yes.
SBUX may be the best of them, but I'd rather be invested in a winning trade then simply own the best of the losers.
Not that I'm calling SBUX a loser, of course. Its a great company. But it won't hit new highs for 12-18 months at least.
I agree if you're timeframe is 10+ years, definitely hold. And I said that in the article.
For me though, if I feel something is dead money for a year or more, I'll sell. I'd rather put my money to work and then buy back in at a lower price. And then if it goes up and I've missed my chance, it is what it is I guess.
Source that says they're hedged for 2015 please. My research suggest they aren't even fully hedged for 2014.
That very well could be the case, but it wouldn't affect the price of SBUX for likely a few years at least. We're taking a 12-18 months timeframe.
Pretty flimsy reasons. This article is pretty much the opposite of the authors name. A value investor would never even dream of buying PLUG right now. Or any stock that's up 2200%+ in a 52 week period for that matter.
This is a speculative casino stock, pure and simple.
China showing signs of life? It's sliding into credit contraction, the stock market is getting killed, there is a massive housing bubble that looks ready to burst any day, export data was stunningly low, and we just had our first ever corporate default that we still don't know what (if any) domino effects that will cause.
As for the market rallying on "stimulus" expectations, I doubt they're going to get it. TFinance Minister Lou Jiwei said earlier today
"The Chinese government's efforts to streamline administrative approvals and delegate power to lower levels as part of the all-round reform pledges have activated the vitality of market forces, China's Finance Minister Lou Jiwei said in a speech at the forum.
It has been proven that the implementation of such efforts rather than an employment of massive fiscal stimulus has helped propped up the slowing economy, Lou said, vowing further streamlining efforts."
http://bit.ly/1mp62XJ
Doesn't sound like stimulus is in the cards.
Commenter FNEZHADIAN beat me to it, posting the longer dated chart below