You love the sell-\side bill......i could see Apple's bottom line down as much 20% yr/yr if they don't pull a rabbit out of the hat with the next iphone. Seeing galaxies everywhere i go now as well as a lot of nexus 4's and momentum keeps ramping for these phones so this is going to be a transitional year for apple without a doubt....they will probably blunt this with a big buyback at some point....but from 70% income growth last two years to negative this year is tough to argue with....they are just too iphone dependent and that is going to show in the numbers all year long
Actually yes....the enterprise would be worth zero...cash would be whole value.....i think that was his p\oint but he didnt explain it right.......should have added cash back to get to value of 380-400.
Deckers: Not Good Enough Means Short Case Returns [View article]
Yeaah thats not going to cut it. I'm short jcp and looking to cover soon. And have been short bby and hp on and off for past few years....maybe hp again but neither jumps of the page....as for apple no thanks.....ill stick to my own advice on that one as i nailed shorting their supp\liers and them last year. Let's not confuse your desire to write about the highest p\age view generating stock with expertise. Also, I'm a google uber bull so im happy that its finally getting the love again and content to ride that out. I'm looking for something innovative.....a loved stock about to collap\se...a hated stock about to recover.....
Deckers: Not Good Enough Means Short Case Returns [View article]
1) Umm not if everyone dumped or shorted the stock expecting that to happen. Case in point...gmcr...hit 14 after hours two quarters ago on a massive miss....where was it the next morning....where is it today? Stocks lead...results lag....very rarely do they coincide.
2) I have ripped them for the buybacks mainly because the cushion could have come in handy, and i for one don't think buybacks really do much beyond risking exposing you to liquidity issues if you are too aggressive. But overall buybacks work themselves out....if they had spent zero cash on buying back the stock....the shares would be trading at closer to 16x trailing at this level...and the mkt cap wud be 200mln higher but ev/ebitda would still be the same...at their avg purchase price they were probably paying sub 8x ev/ebitda and no growth brand would sell for less than 12x....still seeing growth...assuming sheepskin prices can come down...weather can get colder etc....you can understand why they thought they were getting value.....what would have happened sans buyback is the stock would have gone lower and rebounded farther once it turned so all they did is smooth things out.....buybacks really backfire when things secularly start declining and you need to start paying interest on debt to fund ops or diluting equity holders later to survive...if your a solid retailer though....the cash starts piling up again and you reevaluate....hence a company like crox going from 50c back to 30$...its around then that the multiple starts to come in as growth expectations taper off.
To be frank....you generally don't get a lot of things about investing. Nobody was buying this stock at 30 because its a growth story over 2011. They were buying it because the growth collapse was more than priced in....just as many were shorting under the assumption that the growth story was overpriced....its a pendelum. You think anyone was buying hp at 12 expecting growth....zynga at 2.....and countless others? You know they had a tough year its simply a question of have they past the eye of the storm...adjusted...and are better positioned to manage the next year....and most importantly is the stock reflecting these things. If this was a 9x-10x ebitda stock you;d have a case for shorting on growth concerns...but at 7x not exactly a great risk/reward...and at 5x it was just plain ridiculous which didn't seem to stop you. Just pack it in here...you could have spent the time you put in writing this detailed analysis on something with reward potential from here. I am done and moving on till the price gets crazy enough to suck me in or till there is a good catalyst either way which i doubt we get until next fall. Maybe someone pays another 30% premium before then....if so tough luck.....but i wont lose sleep over missing that
Deckers: Not Good Enough Means Short Case Returns [View article]
I hate to rip such effort, but sorry this article misses everything. He's been writing bearish piece after bearish piece all the way up and what i seem to have taken away from all of this is he basically doesnt seem to think that stocks that miss estimates should rise. Problem is bill doesn't fundamentally understand how the sell side works or how stocks price in armegeddon long before it arrives and then can rally quite epically through the turn. The warmest year in 200 years in north america and sheepskin prices are not things any mgmt team can control. And a wholesale driven business assured that this combo would wreak havoc. Shit happens you adjust...that is what they are doing. And faulting them for losses going up in the front half of the year is just plain stupid. They are moving more and more towards retail....q2 has 50 new stores this yr that it didnt have last year...that's 50 stores who do 75% of operating profit in q4 while fixed costs are spread out over the whole year. That's the price of shifting away from wholesale and growing your brand globally...you have to invest...and these guys were slow to do that and got raped by the wholesale channel when the weather finally turned on them. So either sell to someone who has such a channel already...or build your own....they are pursuing the latter but don't be surprised by the fact that at some point the former comes into play. A diversifed conglomerate can roll a wintery brand in...milk it...and build on it a lot more efficiently than they can on their own. Also, like i said bill doesnt understand sell side. I spoke to three of them over the month before earnings and before icr....nobody had a frickin clue what 2013 guidance would be....and all described consensus number as 'stale'...'extropalated hope' etc. To get to 2013 numbers you had to know how 2012 would finish and with q4 being the whole story there and including weather issues, inventory issues, and discounting....you needed that number to start applying assumptions going forward. Well, that number didn't really come in till the last second, and the question really was how bad would it be and with winter being rather warm the fears were pretty bad....turned out that was not the case. And this is despite gross margins coming in lower, sales missing by 4%, and lower bottom line ex buyback. Thats across the board misses from what they hoped to achieve in q4 the day the stock hit 28 and yet 3 months later its at 45. Why? because now everyone has a better feel for how to navigate the headwinds and what to expect. The bullish analysts looked past this and got it right...the bears generally speaking were very wrong as some had fears of guidance being 20% below street number and a sub 600mln q4....and most just chose to step to the sidelines so as to not look stupid either way with the uncertainty. Anyway your funny because you seem to think shorting every pop from 28-50 is sensible when in reality the trade has been to buy every dip. Nobody on earth whose short term trading short could have withstood the bouncing around this stock did without getting shallacked. You'd have needed the best luck in history to pull that off, and if you have such luck go put it to use on something that makes sense ie....this stock is going to rise 60%...let me buy calls and wait.
Umm this statement makes little sense. You can invest in a 500 mln usd company and watch it grow to 10 billion. If app\le buys the same company for 1billion and extracts 20billion in market value out of it that does nothing for you if ur holding app\le shares. There are actually very few things you can do to move the needle on a business this size....its more about sustaining then growing from here. The cash is a drag because figuring out where to channel it beyond dividends and buybacks is not easy. Huge acquistions are risky and also run into regulatory issues at this scale. Buy apple for yield and safety if you believe the iphone economics will hold up till something better arrives.
You really don't understand how guidance and forecasts work. I can tell you i spoke to several buy siders and sell siders covering this over the p\ast few months and everyone had no clue where they'd come in. You also don't seem to understand fixed costs. If i have 50 new stores which will generate 75%+ of their business in the back half while running at an op\erating loss in the front half you'd get the q1/\q2 numbers which btw street need to be spoon fed to figure out. There is no doubt though that this is becoming an increasingly risky stock with the growing dependence on a make or break season, but for now you have some guidance that is built on conservative predictions which you wont be able to attack till next fall.
50 new retail stores have opened since 2nd quarter of last year....so you obviously don't understand this business if you think that guidance is kitchen sinking.... anyway this is now nearly half a year of you saying the same thing....as for earning trust its simply about them adjusting to the environment...so when they guide assuming demand plays out the same way as it did last year...cancellations..... will assume there is room for up\side...maybe even p\lenty of up\side
You need to go back to the drawing board. Did you listen to the conference call? You think jeffries raising their tgt $5 is why the stock is rallying? Sorry, but anyone who has covered this stock as much as you failing to comprehend why this report and call were 'good' for the stock should just pack it in. The bottom line with deckers going forward is that q3/q4 are going to be even more make or break for them. But mgmt's assumptions to get to their guidance are conservative enough to bring bulls envisioning upside surprises and back in. Here is what happened this morning all over the street...analysts told the sales guys that the call was better than the report and to have clients buying the op\en...as for clients short....cover and look to reshort at higher levels were m&a risk and increasing seasonal volatility risk/reward makes sense. At 65$ for example...i would most definitely be willing to short this
Actually if you parse through all their assumptions on backlog, wholesale conversion, and cancellations/reorders embeded in the guidance they have taken a very conservative view to get to a full year guidance that was better than pretty much what most optimists expected. Point is consensus number out there was not being taken seriously by anyone and most of the p\eop\le i talked to were modeling a wide 3-3.7 range with 3.35 as the midp\oint. The way I see it this guidance actually has p\lenty of up\side room and this mgmt team learned its lesson from last year. Makes me bump my fair value to about $47.
For someone whose written like 50 articles on this stock you continue to amaze me with your posts. Here is what I was forecasting as far as what it had to come in below for me to want to sell ....$600 mln sales 2.50 eps, 2% decline in revenue in 2013 and 3.35$ eps. Talking to hedgies short the name as well as sell side bears over pa\st few weaks and you had some thinking they'd pull guidance report below 600 mln in revenue or eps closer to 2.2 for quarter and 2.9 for next year. Actually i have not see more confusion going into a rep\ort than i did into this one in quite sometime. The seasonal bears got fried here and the structural bears will have to wait for the fall and hope its not a cold year. Anyways this shows just how easy it wud be to roll this puppy into a bigger retailer and get bang for the buck eps wise which i think they will be much more receptive to right now. id say 40-45 is more like it and i dont go to sleep\ at night shorts stocks who make ideal takeout candidates.
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Apple Is Worth $265 [View article]
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Deckers: Not Good Enough Means Short Case Returns [View article]
Deckers: Not Good Enough Means Short Case Returns [View article]
2) I have ripped them for the buybacks mainly because the cushion could have come in handy, and i for one don't think buybacks really do much beyond risking exposing you to liquidity issues if you are too aggressive. But overall buybacks work themselves out....if they had spent zero cash on buying back the stock....the shares would be trading at closer to 16x trailing at this level...and the mkt cap wud be 200mln higher but ev/ebitda would still be the same...at their avg purchase price they were probably paying sub 8x ev/ebitda and no growth brand would sell for less than 12x....still seeing growth...assuming sheepskin prices can come down...weather can get colder etc....you can understand why they thought they were getting value.....what would have happened sans buyback is the stock would have gone lower and rebounded farther once it turned so all they did is smooth things out.....buybacks really backfire when things secularly start declining and you need to start paying interest on debt to fund ops or diluting equity holders later to survive...if your a solid retailer though....the cash starts piling up again and you reevaluate....hence a company like crox going from 50c back to 30$...its around then that the multiple starts to come in as growth expectations taper off.
To be frank....you generally don't get a lot of things about investing. Nobody was buying this stock at 30 because its a growth story over 2011. They were buying it because the growth collapse was more than priced in....just as many were shorting under the assumption that the growth story was overpriced....its a pendelum. You think anyone was buying hp at 12 expecting growth....zynga at 2.....and countless others? You know they had a tough year its simply a question of have they past the eye of the storm...adjusted...and are better positioned to manage the next year....and most importantly is the stock reflecting these things. If this was a 9x-10x ebitda stock you;d have a case for shorting on growth concerns...but at 7x not exactly a great risk/reward...and at 5x it was just plain ridiculous which didn't seem to stop you. Just pack it in here...you could have spent the time you put in writing this detailed analysis on something with reward potential from here. I am done and moving on till the price gets crazy enough to suck me in or till there is a good catalyst either way which i doubt we get until next fall. Maybe someone pays another 30% premium before then....if so tough luck.....but i wont lose sleep over missing that
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