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Adam Levine-Weinberg  

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  • Best Buy: Should You Buy This 3 Ring Circus? [View article]
    Are you expecting upside or downside from that business?
    Aug 31, 2012. 05:18 PM | Likes Like |Link to Comment
  • Best Buy: Should You Buy This 3 Ring Circus? [View article]
    Thanks for the comment. I doubt it, though. Without repurchases, BBY will have more cash on its books, so that Schulze would need to take on less debt to finance the buyout. It doesn't make much difference one way or the other. I think they genuinely suspended the repurchase in order to give Joly maximum flexibility.

    You could contrast that to JCP, which bought back $900 million of stock in early 2011 in the high $30s. Then it brought in Ron Johnson, who now is trying to convince the market that JCP has a "rock-solid balance sheet" to finance his transformation plans. 18 months ago, that was true; since then JCP's cash has dropped from $2.6 billion to under $1 billion.
    Aug 31, 2012. 01:12 PM | Likes Like |Link to Comment
  • Chipotle's Fall From Grace Was Predictable: Will It Rise Again? [View article]
    Thanks for the comment. I should have been more careful in what I said; your potential losses are undefined, not infinite. That said, stocks don't have to move in penny (or dollar) increments. If a company puts out great news and shares double when they resume trading, you wouldn't have an opportunity to go long and mitigate your losses on the way up.

    Glad the NFLX short worked out for you.
    Aug 31, 2012. 07:50 AM | 1 Like Like |Link to Comment
  • Chipotle's Fall From Grace Was Predictable: Will It Rise Again? [View article]
    Obviously, you have to pick an investing strategy that works for you. If you play a short with options, you can define your risk, which is great. I was a little worried that JCP would take longer than expected to come back to earth, but I never thought there was a serious chance that the stock would keep going up indefinitely.
    Aug 31, 2012. 07:46 AM | Likes Like |Link to Comment
  • Ford Set To Rally This Fall [View article]
    Thanks for the comment; the last paragraph is basically what I was getting at. The cash flow from using deferred tax assets is available for investing in the business and growing the dividend. I think we will see a bump in cash flow over the next couple of quarters as some of the investments Ford has been making (e.g. expanding North American capacity) start to pay off.
    Aug 30, 2012. 10:28 PM | Likes Like |Link to Comment
  • Chipotle's Fall From Grace Was Predictable: Will It Rise Again? [View article]
    Thanks for the comment. Obviously you have be careful when you do a straight short, since your losses are potentially infinite. But as you said, you can cut your risk with options. I was short CMG from $400, and published a short recommendation on Seeking Alpha in May, so my point was that hindsight was not required.

    At any rate, when I'm confident that I've done my analysis properly, I don't worry too much about bounces in the stock. For example, I started shorting JCP around $31 and added to the position as the stock went higher. I was down about 25% when the stock peaked in February, but ended up with a tidy profit. Stocks like NFLX, JCP, and CMG all offered a substantial margin of safety for shorts. I don't know enough about Salesforce or Under Armour to comment intelligently on their prospects.
    Aug 30, 2012. 04:21 PM | Likes Like |Link to Comment
  • Chipotle's Fall From Grace Was Predictable: Will It Rise Again? [View article]
    I'm not sure what Ben Graham study you are referring to. Usually, value investors look for a PEG of 1 or better, which would imply 35% annual earnings growth (over the next five years). It's really hard to predict earnings trajectories further out than that. You could certainly justify giving CMG a premium to that (maybe a PEG of 1.5 or 2) due to its strong track record, but anything beyond that is dicey in my book.
    Aug 30, 2012. 04:08 PM | 1 Like Like |Link to Comment
  • Ford Set To Rally This Fall [View article]
    Thanks for the comment. I think the market has been focused too much on Europe over the past year, rather than the fact that Ford and GM are very profitable. I don't believe either mgmt. team is asleep at the wheel, and so I expect European losses to end over the next few years (the political situation in Europe means the process will take a while). Without the European "anchor", I think F is worth $18-$20 and GM $40-$45. Even assuming each company loses $5 billion in Europe between now and 2015 (I think it will be less), the stocks are undervalued.
    Aug 30, 2012. 12:24 PM | 2 Likes Like |Link to Comment
  • Ford Set To Rally This Fall [View article]
    Thanks for the comment, but I'll stand by the thesis in my article. Note that I was referring strictly to Europe in terms of "bottoming out". Ford has been on a strong upward trajectory in the U.S. Even with a weak economy, automakers are benefiting from an overdue replacement cycle in the U.S. High gas prices actually help because they allow automakers to push the "buy a new car, save on gas" rationale.

    We can all revisit this at year-end...
    Aug 30, 2012. 11:10 AM | 1 Like Like |Link to Comment
  • Don't Be Fooled By Strong August Retail Sales [View article]
    Update: as expected August SSS numbers are coming in quite strong. Target was up 4.2%, Macy's up 5.1%, Kohl's up 3.4%. It looks like retailers will move higher today, and I think the next couple of weeks will offer good points to take profits in the sector and get out.
    Aug 30, 2012. 08:41 AM | 1 Like Like |Link to Comment
  • Ford Set To Rally This Fall [View article]
    Thanks for the comment. Closing a plant will be expensive, but Ford has plenty of cash in its automotive unit. Management said that the problem is structural, not cyclical, on the Q2 call. From that perspective, I think the market would give F a boost even if the company has to pay a couple of years of severance.

    Also, while the company is booking taxes on its profit, it's not paying anything, and won't be paying anything for years to come. The company still has over $10 billion in deferred tax credits to offset income. The company would have to earn roughly $40 billion before it starts owing cash taxes.
    Aug 30, 2012. 08:15 AM | 1 Like Like |Link to Comment
  • HP's Dip Is A Buying Opportunity [View article]
    I think the corporate board system in the U.S. is a travesty. But at 99% of public companies, that's basically the way it works.

    All I mean to say about Autonomy is that I think HP will turn the business around and having a good data analysis software product will help them sell other products over the long term. But Autonomy was over-priced relative to earnings potential to begin with, and then HP had to pay a premium to buy the company. HP should have passed on the acquisition, but it was/is a good strategic fit.
    Aug 29, 2012. 12:19 PM | Likes Like |Link to Comment
  • HP's Dip Is A Buying Opportunity [View article]
    Printers and PCs are not a growth engine. I hope that was clear from the article. But I don't expect the company to be losing money there, either. I think you are focusing too much on revenue as opposed to profit; for a number of years, much less than half of HP's profit has come from PCs and printers.

    The long term story is IT services, but particularly bundling servers, storage, networking equipment, and software for "big data" analysis and cloud infrastructure. IBM is obviously a strong competitor, but I think HP has the assets to win a good chunk of business as well.
    Aug 29, 2012. 09:39 AM | Likes Like |Link to Comment
  • HP's Dip Is A Buying Opportunity [View article]
    I think it was a smart strategy but a terrible price. In any case, board members don't really have much control over anything aside from hiring/firing the CEO. They don't have the time to actually figure out what a particular acquisition will be worth; they have to work with the information the CEO gives them, for the most part.
    Aug 29, 2012. 09:34 AM | Likes Like |Link to Comment
  • HP's Dip Is A Buying Opportunity [View article]
    As I recall eBay turned a tidy profit on Skype... You can blame that on Steve Ballmer being dumber than Meg Whitman if you like, but that's the fact.
    Aug 29, 2012. 09:05 AM | Likes Like |Link to Comment
COMMENTS STATS
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