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  • Weight Watchers: Excellent Business At A Fire Sale Price [View article]
    Thanks for the comment, good thoughts. Come back if you see anything else.
    Apr 1 01:17 PM | Likes Like |Link to Comment
  • Weight Watchers: Excellent Business At A Fire Sale Price [View article]
    "You don't think achieving this kind of cuts has a lasting effect on future revenues, as you need for example marketing to generate business?"

    It is possible and I am worried about that. Some more recent glassdoor comments make that seem like a possible scenario. Although, they could be disgruntled employees -- so using glassdoor might sort of self select in a negative fashion (but that is not to dismiss the problem).

    "And if it was that easy, why didn't management do this earlier on? Plus management clearly has some other explaining to do as the lawsuits keep piling up."

    Good points. We shall see.
    Apr 1 01:13 PM | Likes Like |Link to Comment
  • SolarCity: Overpriced Or Opportunity? [View article]
    You wrote "So the Book Value is pure and growth in Book Value represents true growth of this company."

    That is a fiction of your imagination. The growth in book value DOES NOT represent the "TRUE" growth of this company. Please.

    Here is the math for the increase in book value over the last 12 months:

    Dec 31, 2012: $280 million in equity
    Add noncontrolling contributions: $189.7 million
    Add issuance of common stock: $174 million
    Add issuance of common stock for acquisition: $108 million
    Add issuance of common stock for another acquisition: $140 million
    Add issuance of common stock options for above acquisition: $14.8 million
    Add issuance of stock based compensation: $27.9 million
    Add issuance of common stock for exercised options: $15.5 million
    Add issuance of common stock warrants for cash: $8 million
    Less: net loss from operations of ($32.9 million)
    equals: $804 million

    So, no, the increase in equity is ENTIRELY DUE TO ISSUANCE OF, and hence dilution of, EQUITY. Why are they issuing equity, because the price of SCTY shares is extremely frothy and forgiving. Watch the downside people.

    BTW, a five to ten bagger means this stock could sell for $25 billion to $50 billion. That means it would have to earn $2.5 billion *at a minimum.* To even get to that level of operating cash flow means growing the business by 14 times -- and to get earnings high enough they may need to grow the business even more. We shall see.
    Mar 31 10:05 PM | 1 Like Like |Link to Comment
  • Weight Watchers: Excellent Business At A Fire Sale Price [View article]
    Who cares about girls in that age group? That is not the target demo of WW. They average age of a WW member is 50. We are not talking about people who want to "look good for spring break" or something. We are talking about people who want a solution which works and will pay for it.

    Of course the kids don't use WW -- but isn't that how it has always been?
    Mar 31 04:27 PM | 7 Likes Like |Link to Comment
  • Weight Watchers: Excellent Business At A Fire Sale Price [View article]
    Hey Critical, I'll try and put more emphasis on those sorts of things in the future. But remember, they haven't happened yet -- and I have no special insight into the operating margins they could achieve on $300 or $500 million. So, naturally, I don't have all the much to say except for the ACA makes it really attractive for WW to enter this new field of health benefit plan based dieting solutions. In fact, it looks like they are the only serious competitor on the national stage.

    "I don't see a sustaining free cash flow considering the downtrend for main revenue sources."

    The numbers given by management for 2014 don't really make this seem too crazy.

    If you look at their guidance, and you factor (1) in the gross margins guidance, (2) their seemingly dire revenue target for the year of $1.4 billion, and (3) some of the cuts we already know about in marketing -- then this business could still earn $65 million in 2014.

    If they achieve $150 million of cuts on top of that, that could put earnings around $150 million after tax. And, as I said above, there are reasons to think management is aiming a bit low with guidance. So a bear case assumes there is no place at which revenue declines would stop. As Approximately Right said above, the current negative trends mask the a high return on capital business -- further the business has a lot of variable costs and the company is getting rid of some fixed costs. This company can still make a lot of money at a smaller size. At a smaller size, however, the debt becomes increasingly difficult to deal with. The stock market is not wrong to worry about the debt -- but I think we wouldn't see the stock at these levels without the debt being the way it is.
    Mar 31 04:18 PM | 2 Likes Like |Link to Comment
  • Weight Watchers: Excellent Business At A Fire Sale Price [View article]
    I saw your comments above Delicious, they were good. Thanks for contributing. WW has the resources to build a better defense, in terms of technology, than they have currently I think.

    Just curious, you know this subject much better than I do, aren't many people at WW seeking to achieve a weight target and then stick with it for the remainder of their life? I would argue anyone planning to do that must think of their change in diet (and presumably exercise) as a life-style commitment? Is that totally off base? Thanks for the clarification.
    Mar 31 03:57 PM | Likes Like |Link to Comment
  • Weight Watchers: Excellent Business At A Fire Sale Price [View article]
    Great job pointing out myfitnesspal. This comparison of WTW with myfitnesspal is short and sweet: http://bit.ly/1pEAvhC

    It favors myfitnesspal but I view the differences as things which can be fixed. It is not hard to make WTW's food database better and it is not hard to improve the granularity or factual information available via WTW website and apps. Perhaps the point system needs to be reviewed. Or perhaps WTW users should be allowed to use a point-system OR a more granular data driven system similar to myfitnesspal.

    I've read other comments and they all basically make it sound like WTW *could* easily be many peoples first choice BUT myfitnesspal has better technology. Further, people seem to want the detailed data myfitnesspal provides -- rather than the point system. Maybe our culture has gotten used to nutritional labeling (I think it was only standardized in 1990)?

    Anyways, great comment.
    Mar 30 02:07 PM | 2 Likes Like |Link to Comment
  • Weight Watchers: Excellent Business At A Fire Sale Price [View article]
    Hey frrizzo380, here is my math:

    As of December 31, 2011 they had 73,603,322 shares outstanding
    Less 9.5 million (Artal buyback)
    Less 8.8 million (first tender)
    Equals = 55,303,322 (today's share count = 56,426,741)

    Anyways, Artal still owns 28,749,089 shares (or 50.9% of shares outstanding). Before they owned something around 38.249 million shares for 51.9% of the company.

    A March 15, 2012 8-K* reads:

    "Pursuant to the Purchase Agreement, the Company has agreed to purchase from Artal a certain number of Shares such that upon the closing o fthis purchase, Artal's percentage ownership interest in the outstanding Shares will be substantially equal to its current level [i.e., 52%]"

    * http://1.usa.gov/1h97JAx

    They sort of took money from themselves. Artal may have gained a $779 million in cash but they lost $1.78 billion in mark-to-market on their investment in WTW.
    Mar 30 01:56 PM | 2 Likes Like |Link to Comment
  • Weight Watchers: Excellent Business At A Fire Sale Price [View article]
    I don't argue from growth typically -- hence why you see "no clear arguments." I could make the argument but the source materials are much more convincing.

    Within this 3 hour investor presentation they discuss their long-term healthcare strategy (don't expect much action on this front in 2014): http://bit.ly/1jnNDrC

    I didn't write it down, but I believe it is around minute 50 or 60 when they discuss their healthcare growth plans.
    Mar 30 01:27 PM | 2 Likes Like |Link to Comment
  • Weight Watchers: Excellent Business At A Fire Sale Price [View article]
    "Stock based compensation" is extremely different than "stock-option based compensation" if you are referring to my bio. I support the former but am opposed to the latter due to the exponential rewards is garners corporate managers whose share prices have increased dramatically.

    I wasn't saying they were going to pay back their debt in 9 years -- that is just a way of analyzing the overall size. Besides, I want there to be some debt capital in the corporation.

    You might be right about the timing. I hope we see this company selling in the market for $500 million -- I would probably be a buyer.
    Mar 30 12:39 PM | Likes Like |Link to Comment
  • Weight Watchers: Excellent Business At A Fire Sale Price [View article]
    Yep. Another interpretation is that the company's owners just put themselves in a position to use their creditors money (but not their own). If Mr. Graham were here I would think he would explain that in a situation like this, common stock holders are *advantaged* (they get profits using the creditors capital) and creditors are *disadvantaged* because the risk of their lending has increased. In my opinion, I think the company will be able to push enough cash flow to satisfy the creditors and lower their leverage -- greatly benefiting common shareholders.
    Mar 29 12:57 PM | 2 Likes Like |Link to Comment
  • Weight Watchers: Excellent Business At A Fire Sale Price [View article]
    Sure thing, hopefully we get an opportunity to buy again. Either the stock tanks and we buy more -- or it shows enough improvement to go long at a higher price. Either way, I feel I may be a buyer.
    Mar 29 12:48 PM | 1 Like Like |Link to Comment
  • Weight Watchers: Excellent Business At A Fire Sale Price [View article]
    "Go back and look at Tenneco and Dana holdings during the late 2008 and early 2009 crash. Although they faced a different set of challenges, in retrospect, the market completely missed priced the automotive suppliers. Some of these stock dropped 99% and investors determined with a cursory glance that the debt would overwhelm the companies and the equity would vaporize. During that time period, overall automative industry units experienced SAAR declines from upwards of 16.5 million to 11 million units. I point is out because a good friend of mine made about 40X his money buying DAN and TEN equities near the bottom as I was too smart to buy them because surely the debt crush them."

    Great tale, great lesson, thanks for sharing. I saw your piece, it was good and I am obviously in agreement. Good luck.
    Mar 29 12:46 PM | Likes Like |Link to Comment
  • Weight Watchers: Excellent Business At A Fire Sale Price [View article]
    Thanks for the comment Glyndon.

    "The apps are just too cutthroat to sustain any margin."

    Most apps cannot command the premium which Weight Watchers can... so I don't exactly understand that point. Weight Watchers is about life-style change not dieting. The vast majority of people are DYI dieters, only a tiny fraction of maybe 5% use a commercial service like WTW. But those who do, do so very seriously. They will pay, if it works. The cost is really small in proportion to the existential value these people stand to gain. That is the "value proposition" to use some corporate speak. Weight Loss is emotion and deadly serious at times. People will continue to pay a premium for results.

    Also, I personally find the buybacks despicable. But I do see the debt as the reason the stock is so cheap. The debt it is not due for 6 years-ish and the corporation has had a strong history of cash flow and so I would expect we hit bottom and bounce off before the debt is due.
    Mar 29 12:35 PM | 2 Likes Like |Link to Comment
  • Weight Watchers: Excellent Business At A Fire Sale Price [View article]
    People may be betting it falls further. I see that as a possibility too, so I am keeping the powder dry. That said, we are starting to see good pricing now.
    Mar 29 12:14 PM | 2 Likes Like |Link to Comment
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