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  • 3D Systems: No Goodwill Impairment Despite Weak Results
    Yesterday, 12:59 PM DDD 17 Comments

    Summary

    • Despite the planned discontinuation of several legacy products, 3D Systems did not feel the need to take any of the goodwill writedowns I anticipated.
    • If fact, goodwill actually increased due to the acquisition of botObjects at the end of last year, and will likely increase further with the closing of the Cimatron deal.
    • Without these acquisitions, organic revenue growth was down to single digits, and continued adjustments to net income for ongoing acquisition costs is making non-GAAP earnings appear higher.
    • Revenue also continues to be affected by currency headwinds that are likely to continue into the future, yet management reaffirmed revenue growth rates above last years levels.
    • Given that guidance has proved to be overly optimistic in the past, I would take the stock's positive reaction to this as an opportunity to short the stock.
  • 3D Systems: Goodwill Writedowns Are Coming
    Wed, Feb. 4 DDD 50 Comments

    Summary

    • 3D Systems declined 5% Tuesday in sympathy with weak guidance from fellow 3D printing company Stratasys, but the selloff still might not be over in this over-hyped sector.
    • These companies seem to be continually cutting their revenue and earnings forecasts as 3D printing struggles to enter mainstream manufacturing.
    • Of particular concern is the $100M goodwill impairment charge that SSYS took on its MakerBot acquisition, given that DDD has made many similar purchases over the past several years.
    • Any writedown would have a detrimental effect on DDD's valuation, since more than half a billion dollars in goodwill it has makes up 40% of book value.
  • Merger And Industry Consolidation Should Help Dawson Geophysical
    Dec. 8, 2014 DWSN 4 Comments

    Summary

    • Seismic data provider Dawson Geophysical has been beaten down amidst the slump in oil prices on fears of reduced Capital Expenditures by producers.
    • However, the company still provides an essential service as America's shale oil and fracking boom continues.
    • The company is taking advantage of the temporary slowdown and their strong balance sheet to enter into a strategic merger with TGC Industries.
  • Update: Falcone's Exit From Harbinger Group Clears Way For Leucadia Buyout
    Nov. 26, 2014 HRG 6 Comments

    Summary

    • Phil Falcone stepped down from his publicly traded Harbinger Group to focus on another investment vehicle.
    • He was replaced as chairman of HRG by Leucadia chairman Joseph Steinberg, as Leucadia also bought an additional 5M shares to raise its stake to 22%.
    • This plus the exit of Falcone sets the stage for a possible buyout by Leucadia since they understand the value contained within Harbinger's diverse assets.
  • Update: UCP Reports A Loss But Strong Growth
    Nov. 11, 2014 UCP 3 Comments

    Summary

    • Small-cap homebuilder UCP reported impressive growth, with revenue and new home orders up triple digits over the same period last year.
    • However, earnings were still negative at an 8 cent loss, versus expectations of a slightly better than breakeven quarter.
    • This temporarily delays the thesis that operating leverage would lead to increased earnings and a possible recognition of a tax benefit.
    • However, the strong growth should still eventually translate into earnings as the company gains scale and operational efficiency.
  • Core Molding Technologies: A Cheap Stock In An Up Cycle
       • Nov. 7, 2014 CMT 3 Comments

    Summary

    • Core Molding Technologies is a small-cap company that manufactures fiberglass reinforced plastic moldings, mostly for the trucking industry.
    • With trucking undergoing a resurgence which will likely continue with falling gas prices, Core Molding Technologies looks well positioned to continue their solid results.
    • Even after doubling in the past two years, the underfollowed company still looks quite cheap compared to its earnings and growth potential in this latest up cycle.
  • Update: ARC Group Earnings Weighed Down By Acquisition Costs
    Oct. 9, 2014 ARCW Comment!

    Summary

    • ARC Group Worldwide reported record sales for their 2014 fiscal year ending in June, but increased expenses related to acquisitions hurt earnings.
    • Adjusted earnings for the quarter were slightly negative, resulting in annual adjusted EPS of 38 cents, well below expectations of 50 cents.
    • Even based on this non-GAAP metric that adds over a million dollars to net income, ARCW still looks expensive at over 35 times earnings.
    • Despite the impressive revenue growth due to acquisitions and an increased focus on 3D printing, I would avoid the stock until they can demonstrate better earnings.
  • A Pair Trade To Play The Bursting 3D Printing Bubble
    Oct. 3, 2014 ARCW, HDNG 5 Comments

    Summary

    • 3D printing stocks continue to decline as investors seem to finally be paying more attention to their still sky high valuations.
    • Another manufacturing company, ARCW, also has ridden the bubble higher even though 3D printing currently accounts for less than 5% of sales.
    • Similar to 3D printing manufacturers, ARCW's earnings could come under pressure due to the haste in embracing the 3D printing hype.
    • Selling ARCW short against going long another undervalued manufacturing company could be a good way to play the deflating 3D printing bubble.
  • Homebuilder UCP Could Rise On Increased Earnings Or A Buyout
    Sep. 24, 2014 UCP 15 Comments

    Summary

    • UCP, Inc. is a small cap homebuilder that develops lots in desirable geographic areas.
    • It has just swung to a profit in the past quarter and is expected to increase earnings dramatically next year.
    • This will allow it to recognize an income tax benefit that will show up as further increased earnings through a lower tax burden going forward.
    • The company also has a large inventory of undeveloped or partially developed lots that are being carried on the books at low purchase prices.
    • Despite this likely understatement of land value, the company trades near book value, making it a desirable buyout candidate for other homebuilders facing tight inventory in desirable locations.
  • MDC Holdings Will Benefit From The Continued Housing Recovery
    Sep. 16, 2014 MDC 6 Comments

    Summary

    • MDC Holdings is an attractive mid-tier homebuilder that operates primarily in the West under the Richmond American name.
    • The company has reported increased revenues and earnings on the back of the housing rebound that began in 2012 and has continued despite naysayers.
    • Increases in both price and volume of sales has been a boon to homebuilder margins and profits, but for the most part their stock prices have not kept up.
    • MDC should continue to benefit from the improved housing environment because of their recent land purchases and strong balance sheet.
    • Despite this desirable geographic and financial position, the stock is also cheap relative to other homebuilders and the overall market.
  • Payments Not Guaranteed To Pay Off For Amazon, No Immediate Threat To PayPal
    Aug. 15, 2014 EBAY, AMZN 17 Comments

    Summary

    • Amazon is making another push into a crowded industry, hoping to steal market share with their usual strategy of undercutting more established players.
    • This would seem to bode poorly for currently dominant PayPal, but I believe they are well enough established, especially with larger retailers, to fend off Amazon's charge.
    • eBay shareholders stand to benefit from the continued strong performance of PayPal, while Amazon shareholders could see just another unprofitable foray into a low margin business.
  • Update: Roundy's Earnings Disappoint
    Aug. 7, 2014 RNDY 16 Comments

    Summary

    • Roundy's earnings disappointed again, despite increased contributions from new Mariano's stores.
    • Same store sales were weak, even at the better performing Mariano's banner.
    • Management seems upbeat about the continued expansion of Mariano's, but an overly aggressive buildout could stretch the company's fragile financial position too thin.
  • Roundy's Could Turn Around Soon
    Jul. 25, 2014 RNDY 45 Comments

    Summary

    • Buying stocks trading at 52 week lows is difficult while markets are near all time highs, since there are not many and you can temporarily look quite foolish.
    • However, these shunned stocks could be where the value is in this overstretched market, if they have a strong enough business to turn things around in a still improving economy.
    • This article will look at a stock currently trading near a 52 week low that offers potential upside due to a solid turnaround plan that is being underestimated.
    • Roundy's is a company that is transitioning to focus on their premium Mariano's brand, but struggling legacy grocery stores and a high debt load are holding them down.
    • The CFO's just announced departure is not a worrisome sign, because he is still a major shareholder and recently joined other insiders in purchasing shares.
  • What To Do When You Can't Find Anything To Buy
    Jul. 3, 2014 AAPL, AMZN, ATW 163 Comments

    Summary

    • With indices at all time highs, value investors like yours truly are struggling to find anything cheap enough to buy.
    • Even slow growing companies are trading at elevated valuations, along with most of the rest of the market.
    • Fast growers are trading at even higher, often absurd, valuations that count on years of sustained high growth rates.
    • Finding growth at a reasonable price remains elusive, unless you're willing to overlook hopefully temporary concerns that are weighing down the rare stock that has pulled back to attractive levels.
  • Quality Closed-End Real Estate Fund Now Trading At A Discount
    Jun. 19, 2014 RFI 21 Comments

    Summary

    • Cohen & Steers Total Return Real Estate Fund is an unleveraged closed-end fund that now trades at a significant discount to its holdings of quality equity REITs.
    • A merger with another fund seems to have temporarily brought down the price even further below their most recent net asset value.
    • A dividend increase announced with the merger has brought the annualized yield up to an enticing 7.8%.
  • Buy Axiall As Short-Term Issues Temporarily Drag Down Earnings
       • May. 12, 2014 AXLL 1 Comment

    Summary

    • Formed by a recent spin-off and subsequent merger, Axiall Corporation's diverse product lineup of chemicals and building materials offers strong long-term earnings power.
    • Recent issues are obscuring the cost savings likely to be realized through synergies and masking the potential long-term earnings power of the combined company.
    • A number of recent setbacks led to temporarily depressed earnings and an opportunity to buy shares at a discount.
  • TJX Should Buy Ross, And So Should You
    Apr. 24, 2014 ROST 10 Comments

    Summary

    • Ross Stores is trading at a very reasonable valuation given its impressive revenue and earnings growth history.
    • The discount retailer would be a natural fit in the portfolio of stores operated by the larger competitor TJX.
    • TJX could use their strong balance sheet to accelerate their own expansion by buying all of Ross Stores while it's on sale.
  • Monitoring The Cheap Oil Services Company, Geospace Technologies
    Apr. 9, 2014 GEOS 18 Comments

    Summary

    • Geospace Technologies is trading at a very low valuation given its strong earnings growth history.
    • The company is now even cheaper after the market overreacted to a contract delay.
    • This gives investors a good opportunity to benefit from the potential of its innovative new products.
  • Green Mountain's Pop Will Fizzle Out
    Feb. 7, 2014 GMCR 31 Comments
  • Atwood Oceanics Cheap Due To Unrelated Weakness
       • Jan. 28, 2014 ATW 13 Comments
  • Denbury Resources: A Pure Play On Enhanced Oil Production
    Jan. 22, 2014 DNR 9 Comments
  • A SodaStream Mea Culpa
    Jan. 22, 2014 SODA 51 Comments
  • Don't Count On Growth Forever From Chipotle
    Jan. 20, 2014 CMG 14 Comments
  • Conn's Is Creating A New Subprime Lending Bubble
    Jan. 9, 2014 CONN 48 Comments
  • Buy GSV Capital Before The Next NAV Report
       • Dec. 20, 2013 GSVC 37 Comments
  • Harbinger Group Still On Sale, Will Leucadia Buy It All?
       • Dec. 19, 2013 HRG 6 Comments
  • Buy Some Portfolio Insurance While It's Cheap
    Dec. 10, 2013 VXX, UVXY, TVIX 28 Comments
  • Could Salesforce.com Be Fudging Their Sales Numbers?
    Nov. 20, 2013 CRM 79 Comments
  • EMC Stores Big Data And Big Value
    Oct. 24, 2013 EMC 6 Comments
  • eBay's Wonderful Businesses Now Available At A Fair Price
    Oct. 21, 2013 EBAY 15 Comments
  • The Importance Of A Maintenance-Free Moat
    Oct. 16, 2013 TEVA 5 Comments
  • Buying A Business For Half Price At Mr. Market's Estate Sale
    Oct. 10, 2013 DPS 19 Comments