Comments on Dan Schmeidler's articles RSS Syndication from SeekingAlpha.com http://seekingalpha.com/author/dan-schmeidler/articles http://seekingalpha.com/article/133242-homebuilders-are-peaking?source=feed#comment-480262 480262 Mon, 27 Apr 2009 23:14:38 -0400 http://seekingalpha.com/article/133242-homebuilders-are-peaking?source=feed#comment-480134 480134 Mon, 27 Apr 2009 20:21:33 -0400 http://seekingalpha.com/article/124465-autozone-no-repeat?source=feed#comment-433071 433071 Thu, 19 Mar 2009 22:48:14 -0400 http://seekingalpha.com/article/124465-autozone-no-repeat?source=feed#comment-417495 417495 Hey Marcap I am glad someone finally brought up this point...I have > searched through a ton of analysts and been watching this fast Eddie > special for a while and I was totally flabbergasted that no one brought > up the fact they are functionally insolvent... > > they also had negative cash flow this Q and used borrowed money to > buy back stock... > > Having said that AZO is tightly controlled and ESL has about 40+% > last time I checked > > IMO Dan's article would be far stonger had he brought up these points > > > here is a link to latest release for anyone wishing to check out > the #'s for themselves > > http://nocache-phx.corporate-ir.net/phoenix.zhtml?c=76792&p=irol-newsArticle&ID=1261914&highlight=]]> Sat, 07 Mar 2009 19:01:09 -0500
The negative equity is an accounting fiction. Its negative because they bought back so much stock, not from losses. They haven't lost money in over 15 years, or at least as far as my model goes back (1992). That's why analysts don't care about...it doesn't matter to earnings or earnings potential going forward real solvency. Lots of retailers have declared BK over the last few years that looked like they had plenty of equity and assets for that matter, per accounting terms. TWTR, SHRP, ULTE, are ones I've followed. CAO was on the verge as well

2Q has historically always been a low cash generating quarter, often negative. But they still manage to average $500 mm over the last five years and $350 mm over the last 10 years by generating lots of cash in 2H of the year.

Buying back the stock adds leverage to the model, yes. But they generate enough cash to pay it all down in a few years.

They could fix both of the "problems" of negative equity and high debt anytime they want by simply doing a sale lease back on the +2,250 stores they own. This would payoff a large chunk, perhaps most, of the debt. And given many of the properties are worth more a lot more than book value (they have been depreciating for years, some for decades, while real estate has generally been up until last year), so selling them would generate an "accounting gain:" to erase the negative equity.

But why would they do that? The book value/equity statistic misses the real value of the firm- its ability to generate cash and huge returns for equity holders. Or if you prefer raw statistics:

ROE=208% in 2008, +100% the four years before that
ROIC (incl off-BS leases), +20% for last 6 years
Operating margins & profit margins, 17% & 10% last year, highest in industry
ROA=15% in '08

I would much prefer a company that generates large amounts of cash with few assets and less equity than one generating the same cash with more assets and more equity. Let alone a company with lots of assets and little cash generation to show for it.



On Mar 07 12:29 PM Chris coxblocks wrote:

> Hey Marcap I am glad someone finally brought up this point...I have
> searched through a ton of analysts and been watching this fast Eddie
> special for a while and I was totally flabbergasted that no one brought
> up the fact they are functionally insolvent...
>
> they also had negative cash flow this Q and used borrowed money to
> buy back stock...
>
> Having said that AZO is tightly controlled and ESL has about 40+%
> last time I checked
>
> IMO Dan's article would be far stonger had he brought up these points
>
>
> here is a link to latest release for anyone wishing to check out
> the #'s for themselves
>
> nocache-phx.corporate-...=]]> http://seekingalpha.com/article/124465-autozone-no-repeat?source=feed#comment-417241 417241 Sat, 07 Mar 2009 12:29:52 -0500
they also had negative cash flow this Q and used borrowed money to buy back stock...

Having said that AZO is tightly controlled and ESL has about 40+% last time I checked

IMO Dan's article would be far stonger had he brought up these points

here is a link to latest release for anyone wishing to check out the #'s for themselves

nocache-phx.corporate-...=]]> http://seekingalpha.com/article/124465-autozone-no-repeat?source=feed#comment-416933 416933 Sat, 07 Mar 2009 01:20:31 -0500
In my Facts # 2 above: Net S/H Equity (Deficit) should read ($242.648M) and NOT ($242.648B) as stated.
]]> http://seekingalpha.com/article/124465-autozone-no-repeat?source=feed#comment-416880 416880 Fri, 06 Mar 2009 23:19:47 -0500
1. AutoZone shares are trading at near their 52-week high, trading at $152.76 vs a 52-week high of $157.49.

2. Net Shareholder Equity is actually negative after deducting Goodwill of $302.6M. Net S/H Equity (Deficit) = ($242.648B).

3. Share book value is still only $1.04 even if we include Goodwill, which means that at $152.76, AZ is trading at almost 147 times book value.

4. Current Liabilities slightly exceed Current Liabilities. CL = $2.528B vs CA = $2.462B

5. Sales for the year ending Aug 30, 2008 were only up 5.7% from the prior year. 2008 = $6.523B vs 2007 = $6.170B

6. Sales for most recent Q1 (Nov 30, 2008) were actually down 33% from Q4 (Aug 30, 2008). Q1 = $1.478B vs Q4 = $2.211B

Opinions:

The fact that people are not buying as many new cars, in my opinion should not greatly impact after-market sales for auto parts, since the only thing which really changes is ownership. After all, even I were to buy a new car today, someone else would likely buy my old one and eventually need parts for it. Thus it would not be a car removed from the market. Sure there will be some cars which will go to the scrap yards as opposed to being sold, but that is always the case no matter if people buy new cars or not, since most cars do eventually get to the point where it costs more to fix them, than they are worth. And of course, there will still be accidents and therefore car write-offs. So unless the insurance companies suddenly decide to fix seriously damaged cars as opposed to writing them off, I see no significant rise in after-market auto-parts sales.

Conclusion:

I agree with Dan. At $152.76, I believe that AutoZone is way over-priced. At $152.76 per share, I think that shorting this stock is among one of the best shorting opportunities available today. Time of course will tell.

Unlike Dan, I do not hold any position in this stock.
]]> http://seekingalpha.com/article/124465-autozone-no-repeat?source=feed#comment-415529 415529 What if AZO were to aquire one of the bigger warehouse distrubutors > in the aftermarket?]]> Fri, 06 Mar 2009 06:22:52 -0500

On Mar 06 06:21 AM User 370887 wrote:

> What if AZO were to aquire one of the bigger warehouse distrubutors
> in the aftermarket?]]> http://seekingalpha.com/article/124465-autozone-no-repeat?source=feed#comment-415528 415528 Fri, 06 Mar 2009 06:21:58 -0500 http://seekingalpha.com/article/124465-autozone-no-repeat?source=feed#comment-415419 415419 Fri, 06 Mar 2009 02:08:16 -0500
Long term people are more likely to put off the cosmetic or no urgent repair needs sometime way into the future. On the low end of the socio-economic scale people might even put off getting their air fixed.

So while sales may increase I think its short term. More middle class buyers but fewer lower income buyers as they put off repairs and even give up their cars.

On the otherhand I don't think bankrupcy is in their future since cash flow is strong.

There are better values to be had. I'd certainly buy EBAY, DELL, or MSFT here versus AZO long term. Cheaper, stronger balance sheets, and better overall growth prospects.]]> http://seekingalpha.com/article/106188-less-negativity-more-inflation?source=feed#comment-307689 307689 Mon, 17 Nov 2008 07:11:35 -0500
“The future has not been written. There is no fate but what we make for ourselves.”
www.youtube.com/watch?...


BUILD.. BUILD.. BUILD.

DRILL.. DRILL.. DRILL.
]]> http://seekingalpha.com/article/106188-less-negativity-more-inflation?source=feed#comment-307586 307586 Sun, 16 Nov 2008 23:02:21 -0500 http://seekingalpha.com/article/106188-less-negativity-more-inflation?source=feed#comment-307440 307440 What the Fed is attempting to do right now id save the banking system from outright collapse. IMO they have suceeded. Their next job is to induce the banks to make good loans to credit worthy borrowers Credit worthy borrowers don't need anymore money, they are leveraged enough. You don't fix credit insolvency by pushing more credit on everybody.]]> Sun, 16 Nov 2008 18:23:25 -0500 What the Fed is attempting to do right now id save the banking system from outright collapse. IMO they have suceeded. Their next job is to induce the banks to make good loans to credit worthy borrowers

Credit worthy borrowers don't need anymore money, they are leveraged enough. You don't fix credit insolvency by pushing more credit on everybody.]]> http://seekingalpha.com/article/106188-less-negativity-more-inflation?source=feed#comment-307419 307419 Sun, 16 Nov 2008 17:51:24 -0500
The government should let reality sink in for those who put themselves at risk and enable the prudent to allocate savings in ways they feel make sense, such as buying distressed assets that hold promise. Government seizure and allocation of resources operates on the assumption that public officials are better capable of allocating savings than the savers.

Government bailout programs, and fiscal stimulus packages effectively redirect private resources in ways that public officials deem appropriate. Why is this assumed to be more efficient than allowing those who have demonstrated the capability to execute productive activities (earn money) and save (demonstrate prudence) the freedom to allocate their own resources in ways that make sense to them?

In this way savers are rewarded for their prudence when markets crumble. They can pick up discounted assets imprudent risk-takers are forced to liquidate. This natural bail-out mechanism.is the only equitable option, and is far more efficient. Enabling the productive and prudent of society to make decisions with their own resources for which they, alone, must bear the consequences ensures significantly greater circumspection. It also means that society is making lots of smaller investment decisions, versus massive, unilateral decisions from the top down. One mistake can bring us all down! ]]> http://seekingalpha.com/article/106188-less-negativity-more-inflation?source=feed#comment-307202 307202 Sun, 16 Nov 2008 11:51:36 -0500 http://seekingalpha.com/article/106188-less-negativity-more-inflation?source=feed#comment-307201 307201 Sun, 16 Nov 2008 11:51:04 -0500 between now and year end (after $100Bil in Oct), they will be selling resource
positions to raise cash, so gold could be pressured, still, right?
Likewise, the Dollar is being goosed up, not by fundamentals, but flight into
short-term Treasuries by all this fund liquidation money, and Soverign Wealth
Funds reportedly are selling US equities into Treasuries also, figuring the gov't
will always pay it back, even if they print it.]]> http://seekingalpha.com/article/106188-less-negativity-more-inflation?source=feed#comment-307025 307025 Sun, 16 Nov 2008 08:58:15 -0500 http://seekingalpha.com/article/106188-less-negativity-more-inflation?source=feed#comment-306976 306976 Sun, 16 Nov 2008 07:57:06 -0500 http://seekingalpha.com/article/106188-less-negativity-more-inflation?source=feed#comment-306963 306963 Sun, 16 Nov 2008 07:23:26 -0500
Although everyone is a Keynsian right now, economic stimulus only works after the deleveraging takes place. Otherwise you just prolong the deleveraging and delay the recovery. This is a job to be determined by our elected officials, not the Fed or even the Treasury. Especially when they choose to operate without adequate transparency or disclosure and refuse to do what they have been authorized by congress to do. If they were any other branch, they would be indicted for fraud (misappropriating of public assets). Perhaps congress should consider it. After all Paulson basically spit in the face of those who voted for the bailout.

Personally, as a fiscal conservative, I was always against it. You prime the pump only after the economy reaches the bottom and there is not adequate natural simulus to get it moving again. Hopefully, the Democrats will be more fiscally prudent that spend and spend Bush Republicans. That's why they deserve to get booted out of office for good.]]> http://seekingalpha.com/article/99650-credit-risk-capitalism-s-big-problem?source=feed#comment-282728 282728 Wed, 15 Oct 2008 08:01:44 -0400
Many investors and concerned citizens around the world are showing their outrage at what the Federal Reserve has done to the American economy with their easy money policies which caused the credit & real estate bubble and subsequent global financial meltdown.

Join the thousands who are signing & commenting on the Abolish the Federal Reserve Petition at www.petitiononline.com...

]]> http://seekingalpha.com/article/94564-the-fed-a-true-haven-for-capitalism?source=feed#comment-250256 250256 Wed, 10 Sep 2008 09:16:59 -0400 http://seekingalpha.com/article/94564-the-fed-a-true-haven-for-capitalism?source=feed#comment-249763 249763 Tue, 09 Sep 2008 17:20:18 -0400 The Bush administration is still in office. They nationalized Fannie, Freddie, and Bear Stears (so far). Russia nationalized Yukos, but the difference was they didn't talk about the importance of free enterprise, an "ownership society," and reducing the size of government while doing so. I guess the Russians would have seen right through such silly hypocracy. It's amazing that millions of Americans can't do the same.

National socialism is coming, and the people fighting for it say that it's necessary to keep the socialists from taking control. Orwell would be stunned by the rhetoric and propaganda.]]> http://seekingalpha.com/article/94564-the-fed-a-true-haven-for-capitalism?source=feed#comment-249540 249540 Tue, 09 Sep 2008 13:17:32 -0400 http://seekingalpha.com/article/94564-the-fed-a-true-haven-for-capitalism?source=feed#comment-249356 249356 Tue, 09 Sep 2008 11:20:23 -0400 http://seekingalpha.com/article/94564-the-fed-a-true-haven-for-capitalism?source=feed#comment-249190 249190 Tue, 09 Sep 2008 09:52:17 -0400 http://seekingalpha.com/article/94564-the-fed-a-true-haven-for-capitalism?source=feed#comment-249103 249103 Tue, 09 Sep 2008 08:30:51 -0400
I'm anxiously waiting for follow up postings from all of the SA "contrarians" who were long the GSEs due to their "strong earnings potential". Oops! That's gonna leave a mark.]]> http://seekingalpha.com/article/94564-the-fed-a-true-haven-for-capitalism?source=feed#comment-249038 249038 Tue, 09 Sep 2008 06:31:02 -0400
The Government takeover just cost the taxpayers $30 Billion just in yesterday's lost shareholder book value alone and we haven't even got warmed up. Any gains in other sectors will be gone by next week and we the american tax payers will be stuck with rediculous credit rates to pay for Bill's Ponzi scheme.

Maybe Greenspan would be a better guy to quote. No wait, he works for Bill too. ]]> http://seekingalpha.com/article/94564-the-fed-a-true-haven-for-capitalism?source=feed#comment-249030 249030 Tue, 09 Sep 2008 06:09:22 -0400
that will be the day i would like to see!]]> http://seekingalpha.com/article/93050-fannie-freddie-rally-a-product-of-fed-intervention?source=feed#comment-241961 241961 Fri, 29 Aug 2008 17:36:17 -0400 http://seekingalpha.com/article/93050-fannie-freddie-rally-a-product-of-fed-intervention?source=feed#comment-240725 240725 Thu, 28 Aug 2008 09:00:20 -0400