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  • Vitacost Remains A Go-Private Candidate [View article]
    Well done Mike!
    Jul 2, 2014. 12:13 PM | Likes Like |Link to Comment
  • FactSet: Obvious GARP Play With A Superb Business Model [View article]
    We will see FDS's Q3 10-Q sometime in the next two weeks. As the press release* describes it, revenues were up 8%. The company's adjusted measure of earnings increased 11% y/o/y. TTM free-cash-flow generation is up 9%. Important to the thesis above, diluted shares outstanding has decreased over 4% y/o/y (with an excellent average purchase price of about $105).

    As the transcript** notes: "All key metrics grew. ASV, revenues, EPS, client count and user count...Our performance during the...third quarter was positive on all fronts, especially since the third quarter is typically not a robust one...In fact, this Q3 was our best third quarter for new client acquisition since 2007."

    There has been no material change to the underlying thesis. Good luck.


    Jul 1, 2014. 04:16 PM | 1 Like Like |Link to Comment
  • Shares of Coach reeling after revenue warning [View news story]
    Well said LTV
    Jun 24, 2014. 03:49 PM | 1 Like Like |Link to Comment
  • Bargain hunters circle PetSmart [View news story]
    The company has a very good moat but its growth prospects conjoined with its current price leave only a thin margin of safety. Not cheap enough yet, in my opinion. However, the threat of online retailers is greatly overstated... as usual.
    Jun 23, 2014. 05:03 PM | Likes Like |Link to Comment
  • The Fresh Market: A GARP No-Brainer In A Fabulous Market [View article]
    I am not as fond of Coach -- not sure I understand the dynamics of high gross margin fashion clothing. My current understanding is that Coach has diluted its brand. Fortunately they have a storied history and a long history of success. I would be interested in seeing a cheaper price for the shares to offset my ignorance of the industry's dynamics.
    Jun 21, 2014. 10:12 AM | Likes Like |Link to Comment
  • 2 Reasons Why Successful Value Investors Are Putting Up To 50% Of Their Portfolio Into Berkshire [View article]
    When I saw the title of this piece I wanted to see whether you've included Mr. Mecham. Very nice work, he is a talented manager and one of my heroes despite his youth. One should check out his AZO investment some years back. Further, I believe he leveraged big time into his BRK.B position.

    Anyways, some of these individuals purchased their BRK.A/B at lower prices than prevail today. Although, anyone buying the stock is likely to make money over a ten year period and today's prices are fairly reasonable.

    Disclosure: Long BRK.B
    Jun 20, 2014. 10:18 PM | Likes Like |Link to Comment
  • The Fresh Market: A GARP No-Brainer In A Fabulous Market [View article]
    Nope, didn't flip.

    "As WFM and TFM moves into their next phase of growth, it will be more difficult to maintain these margins as consumers need disposable income to shop there."

    That might be more true of WFM than TFM but I think there is a broad and growing customer base whom desire quality over economy.

    If management can continue to execute (and we should watch this closely as the complaints about management on glassdoor are pretty shrill) then then company's recent history demonstrates the effectiveness of the concept. Even disgruntled employees typically praise the concept.
    Jun 20, 2014. 07:12 PM | 1 Like Like |Link to Comment
  • Shares of Coach reeling after revenue warning [View news story]
    Interesting observation. Do you have a specific case study in mind when you say that?
    Jun 19, 2014. 02:20 PM | Likes Like |Link to Comment
  • Yelp, Inc.: In A State Of Cognitive Dissonance [View article]
    "Also, according to the SEC filings, Yelp insiders have sold $928 million worth of stock. This is unreal as only in America can you have an enterprise value of $4.3 billion and insiders have sold more absolute dollar value of stock than FY2013 revenue by a factor of three, yet retail investors are chasing this name."

    Great paragraph.
    Jun 6, 2014. 04:32 PM | 6 Likes Like |Link to Comment
  • FitLife Is Very Cheap, But Probably Not For Long [View article]
    Just an update. The stock is at $2.10 or a market cap of $17.1 million.

    TTM Sales: $19.96m (P/S of 0.85)
    TTM net income: $1.598m (9.3% yield, ROE of 27.5%, ROA of 16%)
    Cash: $3.3m
    Working capital: $6.4m
    Equity: $5.8m (P/B of 2.94)
    Debt: $1.8m

    And on the last press release* it read:

    “We saw strong domestic demand particularly in the last month of the quarter, a portion of which was attributable to the inventory build-up by some of our customers in advance of our planned transition to GNC’s centralized distribution platform. The move to this distribution platform is consistent with GNC’s established vendor policies, reflecting our strong growth trend established over the last several years. We look forward to the continued expansion of this relationship,” stated John Wilson, FitLife’s Chief Executive Officer.

    Things are progressing fairly well.

    May 30, 2014. 12:20 PM | Likes Like |Link to Comment
  • The Fresh Market: A GARP No-Brainer In A Fabulous Market [View article]
    It's all good IA. I just don't want to be lumped into the category of investment banker jerks whom make up valuations out of thin air. I sincerely don't believe that is what I am doing here. Thanks for reading.
    May 26, 2014. 02:14 PM | Likes Like |Link to Comment
  • The Fresh Market: A GARP No-Brainer In A Fabulous Market [View article]
    Point taken 6034700. I hope you read my future articles.
    May 26, 2014. 01:48 PM | Likes Like |Link to Comment
  • The Fresh Market: A GARP No-Brainer In A Fabulous Market [View article]

    "What I've learned over time is that "one-time non-recurring" expenses have a way of becoming recurring and commonplace year after year."

    The company had an impairment charge of $27.5 million in Q4 2013. Do you really think it is best to just count that $27.5 million in estimating future earnings? That seems unlikely to be predictive.

    "Now, that likely makes me ultra-conservative in your view, but that's how I go about my analysis and it serves me well."

    It doesn't make you ultra-conservative. It might mean you underestimate the notorious malleability of GAAP net income. But as to "conservatism" -- that is definitely a case by case thing. For instance, take ExxonMobil (XOM):

    > GAAP Net Income 2013: $32.5 billion

    Now, at this point, you might say that the $32.5 billion, being GAAP net income, is more conservative than using free cash flow. But Exxon actually has to invest heavily to maintain production. Here is the depreciation charge and actual capital investment:

    > Depreciation and Depletion Charge: $17.1 billion
    > Capital Investment: $33.7 billion

    The depreciation charge, theoretically speaking, started out as a "reserve" for the replacement of capital assets. So, in theory, XOM would be taking a charge of $17.1 billion as a reserve for the future replacement of property. But as we can see (and that is pretty much how its been for a long time) the necessary capital assets cost MORE than the old assets and, therefore, depreciation is understated in terms of GAAP net income.

    Hence is GAAP net income more representative of *reality* than free-cash-flow in the cash of Exxon? No, hence Exxon is not selling at a PE of 13 but a much higher PE (at least until natural gas prices are more favorable, as they are becoming).
    May 26, 2014. 01:32 PM | 1 Like Like |Link to Comment
  • The Fresh Market: A GARP No-Brainer In A Fabulous Market [View article]

    I am only non-GAAP when I estimate maintenance capex, otherwise I am using GAAP figures to calculated free-cash-flow excluding growth capex. This is the way many people smarter than me calculate earnings. E.g., it is the same as Warren Buffett's "owners earnings." In Security Analysis, it has a discussion about adjusting depreciation for "true" depreciation... so free-cash-flow, insofar as it is earnings plus depreciation & amortization, plus/minus one-time irregularities, plus/minus the long-term trend in working capital, less maintenance capex, has been promoted as the way to value stocks since at least 1934. (Technical note: the cash flow statement only came into its modern existence in 1987 and therefore Graham was using a "balance sheet" approach to measure/check earnings.... which, I might add, is basically what the cash flow statement does these days.)

    "I personally don't care much for those analyses which rely on non-GAAP financials because they are not real - every earnings statement that references non-GAAP measures requires a statement that they should not be relied upon or used in place of the GAAP financials."

    They are real, although it depends on who is doing the math. Some retail establishments, for instance, put depreciation into their COGS -- if one knows depreciation accurately (and one can find the consolidated number on the cash flow statement) then one could remove the depreciation from COGS thereby creating a *new* (but real) "gross margin" and "gross profit." If that gross profit is more comparable with other retail establishments, how can one say that is not "real." Furthermore, to think that accounting numbers are real in the first place is a mistake. They are accrual based which implies many judgments on the accountants part.

    "When the company begins paying their income taxes based on their non-GAAP net income let me know and then I might take them a little more seriously."

    Ummm, you do know that companies do exactly that right? They don't pay taxes on their GAAP net income -- if they did, wouldn't every company have a similar tax rate? No, they pay taxes under different rules than Generally Accepted Accounting Principles. Tax rules for depreciation are different than GAAP accounting rules, for instance. That is why there are accounting entries like "deferred tax liability" (e.g., they have recorded GAAP revenue but not actually recorded TAX revenue -- hence "deferred tax liability") and "deferred tax asset" (they have paid TAXES on something but not counted it as revenue/income in GAAP yet).

    "This article, in requiring dependence on non-GAAP financials, along with the caveat (i.e. CYA) that all 6 of the points in the final paragraph be true, for me exemplifies why this is not a no-brainer."

    Well, I am glad you read the piece at least. You'd be surprised how many people criticize without even reading. Also, I really wouldn't call the last part CYA since those are just the things a long-term investor should watch. E.g., if I buy and management gets worse, that should be a red flag that my analysis needs to be reevaluated because management isn't as good as I thought. That is all those 6 points are about. Thanks for reading.
    May 26, 2014. 11:28 AM | 6 Likes Like |Link to Comment
  • The Fresh Market: A GARP No-Brainer In A Fabulous Market [View article]
    Good comment, thanks for joining the community. Here is the price to sales for TFM, WFM, SFM, and NGVC:

    TFM: 0.895
    WFM: 1.042
    SFM: 1.555
    NGVC: 1.001
    May 26, 2014. 11:07 AM | 1 Like Like |Link to Comment