Seeking Alpha

David Trainer

 
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  • Big Value Opportunity In Liberty Tax
    Today, 9:56 AM HRB, INTU, WMT Comment!

    Summary

    • Liberty Tax has comparable margins and return on invested capital to its larger competitors.
    • Despite its comparable profitability, Liberty Tax trades at a significant discount to its peers.
    • Increasing complexity in the tax code due to the Affordable Care Act and rapid growth in its online service are significant catalysts for profit growth.
  • Best And Worst ETFs, Mutual Funds, And Key Holdings: Energy Sector
    Yesterday, 9:53 AM COP, CVI, GASL 1 Comment

    Summary

    • Lists of the Best and Worst ETFs and Mutual Funds in the Energy Sector.
    • Distribution of all Energy Sector ETFs and Mutual Funds across our Predictive Rating Scale.
    • Ratings are based on rigorous analysis of the profitability and valuation of each fund's holdings.
    • Our rating system is forward-looking and does not rely on past performance.
  • Consumer Staples Sector
    Wed, Aug. 27 BG, CLX, FSTA Comment!

    Summary

    • Lists of the Best and Worst ETFs and Mutual Funds in the Consumer Staples sector.
    • Distribution of all Consumer Staples ETFs and Mutual Funds across our Predictive Rating Scale.
    • Ratings are based on rigorous analysis of the profitability and valuation of each fund's holdings.
    • Our rating system is forward-looking and does not rely on past performance.
  • Best And Worst ETFs, Mutual Funds And Key Holdings: Consumer Discretionary Sector
    Mon, Aug. 25 ITB, JCP, PETM 3 Comments

    Summary

    • Lists of the Best and Worst ETFs and Mutual Funds in the Consumer Discretionary Sector.
    • Distribution of all Consumer Discretionary ETFs and Mutual Funds across our Predictive Rating Scale.
    • Ratings are based on rigorous analysis of the profitability and valuation of each fund's holdings.
    • Our rating system is forward-looking and does not rely on past performance.
  • How To Avoid The Worst Style ETFs
    Wed, Aug. 20 ALFA, LLY, LNG 5 Comments

    Summary

    • Avoiding the worst ETFs is just as important, and just as difficult, as identifying the best.
    • Past performance is not a reliable indicator of future returns. Investors need in-depth research into the holdings of ETFs.
    • ETFs with overvalued holdings and high expense ratios are at risk to drag on a portfolio.
  • How To Avoid The Worst Sector ETFs
    Tue, Aug. 19 BDN, FIDU, FSTA 1 Comment

    Summary

    • Avoiding the worst ETFs is just as important, and just as difficult, as identifying the best.
    • Past performance is not a reliable indicator of future returns. Investors need in-depth research into the holdings of ETFs.
    • ETFs with overvalued holdings and high expense ratios are at risk to drag on a portfolio.
  • Update: PetSmart And Jana Partners
    Mon, Aug. 18 PETM 4 Comments

    Summary

    • Jana Partners filed a document with the SEC claiming to have received information from an anonymous source that PetSmart has been attempting to hide poor results from investors.
    • Due to the risks of holding a stock where activist investors are at odds with management, I am no longer recommending PetSmart long.
    • With the stock up 18% since my article in June, now is a good time to take profits.
  • Danger Zone: Price To Earnings Ratios
    Mon, Aug. 18 HE, LO, MSFT 3 Comments

    Summary

    • Due to their simplicity and ease of use, P/E ratios are among the most common valuation metrics in the world.
    • Accounting distortions and hidden liabilities make P/E ratios exceedingly unreliable as a determinant of valuation.
    • Economic earning are a much more significant driver of value.
  • How To Find The Best Style ETFs
    Fri, Aug. 15 DGRW, FTCS, IESM 6 Comments

    Summary

    • With so many ETFs to choose from, finding the best can be a daunting task.
    • You cannot trust ETF labels, only due diligence on the holdings allows an investor to understand an ETF.
    • Low costs and quality holdings, not past performance, is the best indicator of an ETF's future success.
  • Danger Zone: Newell Rubbermaid
    Thu, Aug. 14 HELE, TUP, JAH 5 Comments

    Summary

    • Newell Rubbermaid has overstated growth in accounting earnings.
    • Its competitors have superior capital efficiency.
    • NWL's valuation implies double digit profit growth going forward while profits have been stagnant over the past decade.
  • New Stocks Make Most Attractive/Dangerous Lists For August
    Wed, Aug. 13 ACIW, NSR, PETM Comment!

    Summary

    • 17 new stocks make our Most Attractive and Most Dangerous lists for August.
    • NetApp has improving returns on capital and a cheap valuation.
    • ACI Worldwide's acquisition driven earnings growth masks declining economic profits.
  • Danger Zone: Small-Cap Blend Investors
    Tue, Aug. 12 AHL, FYT, IESM Comment!

    Summary

    • I continue to believe that small caps are overvalued compared to large caps.
    • Small Cap Blend investors land in the Danger Zone due to their allocation to the worst ETFs in the style.
    • There is still value to be found in Small Cap Blend stocks and funds, but it takes diligence.
  • How To Find The Best Sector ETFs
    Mon, Aug. 11 FENY, FXN, IHI 1 Comment

    Summary

    • With so many ETFs to choose from, finding the best can be a daunting task.
    • You cannot trust ETF labels, only due diligence on the holdings allows an investor to understand an ETF.
    • Low costs and quality holdings, not past performance, is the best indicator of an ETF's future success.
  • Cheap Funds Dupe Investors - Q3 2014
    Fri, Aug. 8 D, ED, FUTY 1 Comment

    Summary

    • Comparison of AUM in funds with attractive holdings versus attractive costs.
    • Distribution of ETFs and Mutual Funds by Predictive Rating and our two component ratings.
    • Commentary on the shortcomings of traditional ETF and Mutual Fund research.
  • Do Microsoft Bulls Have A Convincing Case?
    Wed, Aug. 6 AAPL, MSFT 28 Comments

    Summary

    • Microsoft's return on invested capital has been steadily declining since 2007,.
    • Despite apparent earnings growth in 2014, Microsoft's core operating profitability continues to decline.
    • If Satya Nadella's restructuring initiatives can stabilize Microsoft's falling ROIC, the stock is a great value at this price.
  • The Long Overdue Crash In Whole Foods
    Tue, Aug. 5 KR, WFM 31 Comments

    Summary

    • Whole Foods stock has crashed over the past year, but the warning signs that it was overvalued have been clear since 2010.
    • Those who bought Whole Foods in 2010 or earlier have done well. Those who bought more recently have dramatically underperformed.
    • Momentum strategies can work for a time, but the short-term gains always carry a big threat of long-term risk.
  • Best And Worst ETFs, Mutual Funds, And Key Holdings: Large Cap Growth Style
    Fri, Aug. 1 ADBE, ALFA, JNJ 2 Comments

    Summary

    • Lists of the best and worst ETFs and mutual funds in the large cap growth style.
    • Distribution of all large cap growth style ETFs and mutual funds across our predictive rating scale.
    • Ratings are based on rigorous analysis of the profitability and valuation of each fund's holdings.
    • Our rating system is forward-looking and does not rely on past performance.
  • Zillow's Offer For Trulia Is A Hail Mary
    Thu, Jul. 31 Z, TRLA 3 Comments

    Summary

    • The market has reacted enthusiastically to Zillow's potential acquisition of Trulia.
    • Lost in the enthusiasm are the significant risks that this acquisition brings.
    • With the added share dilution from this acquisition, it will take extraordinary profit growth for Zillow to justify its valuation.
  • Danger Zone: First Trust Utilities AlphaDEX Fund ETF
    Wed, Jul. 30 FXU 2 Comments

    Summary

    • Analysis of a fund's holdings is crucial to predicting the future performance of a fund.
    • Funds that look good on traditional backward-looking rating systems can actually be at high risk to blow up.
    • First Trust Utilities AlphaDEX Fund ETF looks especially dangerous.
  • Danger Zone: NCR Corporation
    Wed, Jul. 30 NCR 12 Comments

    Summary

    • NCR Corporation faces threats to its business model from online commerce and banking.
    • Acquisitions are increasing liabilities without fixing NCR's core problems.
    • NCR's valuation implies an unrealistic amount of growth.
  • 10 Stocks To Look At If The Market Crashes
    Mon, Jul. 28 GPS, HSY, SNI 11 Comments

    Summary

    • A market crash in the near future looks increasingly plausible.
    • As long as investors have some cash on the sidelines, a crash can be a great opportunity for investors to buy great companies at cheap prices.
    • The following 10 companies should be investors' watchlists if the price gets right.
  • Investment Style Rankings For ETFs, Mutual Funds And Stocks
    Fri, Jul. 25 SCHD, SUNE, VZ 3 Comments

    Summary

    • Style Ratings and Rankings for ETFs and Mutual Funds.
    • Distribution of ETFs and Mutual Funds by Predictive Rating.
    • Ratings are based on rigorous analysis of the profitability and valuation of each fund's holdings.
    • Our rating system is forward-looking and does not rely on past performance.
  • Update: Angie's List Earnings
    Wed, Jul. 23 ANGI 10 Comments

    Summary

    • Angie's List reported a larger than expected loss on lower than expected revenues after hours on Wednesday.
    • Service provider revenue continues to grow faster than membership, strengthening my belief that the ANGI business model is unsustainable.
    • I predicted that increasing competition would slow revenue growth, which is what we see in this earnings report.
  • Danger Zone: Stocks With Most Misleading Non-GAAP Earnings
    Wed, Jul. 23 CALD, TRMB, TSLA 4 Comments

    Summary

    • Companies sell non-GAAP earnings as a way to better inform investors, but the opposite is actually true.
    • In most cases, non-GAAP earnings are simply a tool to produce the appearance of greater profitability.
    • Diligence is required to adjust GAAP earnings into NOPAT, a comparable, reliable measure of profit.
  • Best And Worst ETFs, Mutual Funds And Key Holdings: Industrials Sector
    Tue, Jul. 22 AGCO, DE, PKB Comment!

    Summary

    • Lists of the Best and Worst ETFs and Mutual Funds in the Industrials Sector.
    • Distribution of all Industrials Sector ETFs and Mutual Funds across our Predictive Rating Scale.
    • Ratings are based on rigorous analysis of the profitability and valuation of each fund's holdings.
    • Our rating system is forward-looking and does not rely on past performance.
  • Rating Breakdown: Best And Worst ETFs And Mutual Funds By Sector
    Mon, Jul. 21 CB, KBWP, WAG 2 Comments

    Summary

    • Best & Worst ETFs and Mutual Funds in each Sector by: Predictive Rating, Portfolio Management Rating, Total Annual Costs Rating.
    • Ratings are based on rigorous analysis of the profitability and valuation of each fund's holdings.
    • Our rating system is forward-looking and does not rely on past performance.
  • Sector Rankings For ETFs And Mutual Funds
    Fri, Jul. 18 BXP, WMT, XLP 5 Comments

    Summary

    • Sector Ratings and Rankings for ETFs and Mutual Funds.
    • Distribution of ETFs and Mutual Funds by Predictive Rating.
    • Ratings are based on rigorous analysis of the profitability and valuation of each fund's holdings.
    • Our rating system is forward-looking and does not rely on past performance.
  • A Private Takeover Would Be Good For PetSmart
    Thu, Jul. 17 PETM 4 Comments

    Summary

    • Jana Partners has discussed the possibility of a private equity buyout after announcing their 9.9% position.
    • Currently, PetSmart is leaving long-term growth opportunities on the table in an effort to meet quarterly earnings goals and return cash to shareholders.
    • A private equity buyout would create much more value than a large dividend or buyback.
  • AOL Update: Acquisition
    Wed, Jul. 16 YHOO, AOL 1 Comment

    Summary

    • Multiple Yahoo executives have shot down the notion that it will acquire AOL, despite AOL CEO Tim Armstrong's desire for a deal.
    • A potential acquisition was the greatest threat to my AOL short thesis. With Yahoo apparently off the table, I expect this stock to go into the $20s.
    • Marissa Mayer's sentiments about AOL dovetail with my views on the company.
  • Update: Intel Earnings
    Wed, Jul. 16 INTC 3 Comments

    Summary

    • Intel is up over 6% this morning after growing revenue 8% from last year on the back of strong PC and Data Center Group performance.
    • These strong earnings strengthen my bullish thesis on Intel and my fair value estimate of ~$40/share.
    • My article from last November predicted the turnaround in the PC Client Group, and my article from earlier this month called for continued weakness in Mobile.
  • Danger Zone: Hawaiian Electric Company
    Wed, Jul. 16 HE 28 Comments

    Summary

    • Hawaiian Electric's high dividend is not supported by operating cash flows.
    • Solar power poses a significant threat to the current business model.
    • Unusual pension assumptions understate the liability and overstate earnings.
  • New Stocks Make Most Attractive/Dangerous Lists For July
    Fri, Jul. 11 DWA, EXAR, REGI Comment!

    Summary

    • 13 new stocks make our Most Attractive and Most Dangerous lists for July.
    • NeuStar is undervalued even if it loses the NAPM contract, and hugely undervalued if it keeps it.
    • Exar Corporation has shown no signs that its turnaround will ever lead to consistent profits.