Seeking Alpha
View as an RSS Feed

Jay Unni  

View Jay Unni's Comments BY TICKER:
Latest  |  Highest rated
  • The Buckle Is On Sale [View article]
    Right, the slightly lower capital expenditures mean that they are not building as many stores as in previous years, which management has confirmed. However, the new store growth is only a fraction of the growth rate, making up ~3-4% of the 12.97% growth last year. The rest is coming from same-store sales and growth in online sales, which don't require additional capital expenditures.
    Jun 14, 2012. 03:31 PM | Likes Like |Link to Comment
  • The Buckle Is On Sale [View article]
    Thanks for the input. I didn't look at EV/EBITDA because Buckle has no debt and a fairly simple, straightforward capital structure.
    Jun 14, 2012. 03:20 PM | Likes Like |Link to Comment
  • Why I Just Sold FactSet Data Systems [View article]
    Jun 4, 2012. 05:56 PM | Likes Like |Link to Comment
  • Why I Just Sold FactSet Data Systems [View article]
    To match the historical PEG of 1.25, the shares would have to be priced at a P/E less than 20.2. Using TTM income, that would be $79.40. So I would consider buying again below $80/share.
    Jun 2, 2012. 01:16 AM | 1 Like Like |Link to Comment
  • Win 2 Ways: Short Spanish Stocks [View article]
    You are right, American citizens are not allowed to use CFDs. It's a shame, a CFD would be the perfect tool for this trade.
    Jun 1, 2012. 12:20 PM | Likes Like |Link to Comment
  • Green Mountain Coffee Roasters: After The Bust, What Next? [View article]
    "Keurig" searches, reached a 50% higher pre-holiday peak this year versus last year. It is hard to get raw data on amounts of searches, as Google Trends only posts its "search volume index" numbers, which measures the number of searches against the total Google searches on each day.
    Feb 9, 2012. 05:37 PM | Likes Like |Link to Comment
  • C&J Energy: America's Cheapest Oil Services Stock [View article]
    I was under the impression that the fleets can do off-contract work during the term if the client does not need them on a certain day.
    Feb 9, 2012. 05:09 PM | Likes Like |Link to Comment
  • C&J Energy: America's Cheapest Oil Services Stock [View article]
    About the share issuance: using reflexive reasoning, I take the opposite view, that the risk from share issuance DECREASES as share price increases.
    They have been issuing shares to raise capital for their new fleets this year, instead of issuing debt. They may continue to finance their new fleets this way in the future. The downside is the downward pressure on the stock price, but the upside is that the company will not be saddled with interest payments.
    If the share price rises, they can issue the same amount of shares and raise more cash for the company. Though in the short term this may put pressure on the stock price, it can boost the underlying trend by building extra cash reserves and paying off any new fleet purchases that occur in the future, fueling new growth.
    Thus, as the share price rises, the fundamentals that the price supposedly reflects can also rise, creating a self-reinforcing trend.
    This is of course, can only take place if the last risk you mention, execution risk, does not play out.
    Feb 9, 2012. 04:46 PM | Likes Like |Link to Comment
  • C&J Energy: America's Cheapest Oil Services Stock [View article]
    I agree with the other comments.The trends in shale exploration and production and domestic oil production are so important to the American economy that I think the chances of a complete moratorium on hydraulic fracturing are virtually nil.
    The debate about the fracturing process has largely ignored the bigger issue. Since fracturing typically occurs miles below drinking water reservoirs the likelihood that the fracturing process itself pushes fluids into a clean water reservoir is extremely small. The bigger issue is the disposal of fluids AFTER the well has been fracked.
    The fluids currently may be dried in surface ponds or disposed of in watery reservoirs, and perhaps these procedures may be problematic. The EPA may change these procedures and significantly increase the costs associated with hydraulic fracturing, and the oil service companies may be forced to bear the brunt of these costs. I do believe this is a significant risk to the profitability of the industry.
    That being said, I think that CJES revenues will increase more than enough to compensate for these higher costs in the future.
    Jan 30, 2012. 10:57 PM | Likes Like |Link to Comment
  • C&J Energy: America's Cheapest Oil Services Stock [View article]
    Excellent article pointing out a stock with such an amazing margin of safety. I would like to add even one more impetus for increased earnings in the future: the purchase of Total, "a manufacturer of hydraulic fracturing, coiled tubing, pressure pumping and other equipment used in the energy services industry and one of (CJES's) largest suppliers of machinery and equipment."
    In addition to vertically integrating the company to reduce costs, the Total purchase allows them to sell machinery and equipment to third party service companies to further profit from the trend in shale exploration and production. CJES just spent $2 mm building a new manufacturing facility for Total, which was completed in December 2011, so I expect this business segment to contribute to earnings growth significantly in the coming years.
    I am curious to know if you are worried about the risk of an influx of fracking fleets to CJES's oily basins. The Bloomberg article you mentioned stated that at least two of the majors (HAL, BHI) have been shifting their fleets to North American oily basins. This may bring down the spot rates CJES has been charging for off-contract work. I currently view this as the largest risk to earnings. And as gas prices decrease, this risk will become larger and larger.
    Disclosure: I am long CJES.
    Jan 30, 2012. 10:35 PM | 2 Likes Like |Link to Comment
  • Green Mountain Coffee Roasters: After The Bust, What Next? [View article]
    Thank you for your feedback. As for the re-stating of Einhorn's comments, I wanted to address certain concerns he had raised, and look at them from a different, reflexive angle. Admittedly, I did not address a few concerns that he had brought up, like transparency issues and the size of Green Mountain's potential market.
    I do not know enough about transparency issues in public companies to speak intelligently about that. I feel that the market for Keurig brewers is sufficiently larger than the current market to allow for years of growth. Currently, Google Trends seems to show "Keurig" being searched for mostly in the Northeastern states, suggesting that the brewers have yet to fully penetrate the Midwest and West Coast markets.
    I do feel that his public announcements helped to reinforce the downward move. The chart shows a steep drop from $90 to $70 during the week that Einhorn's comments were being discussed and circulated (Oct 14 - Oct 21).
    I am curious about what you feel that I misstated. I want to remain as unbiased as possible in my analysis, and if you have discovered a flaw in my reasoning, I would be glad to discuss it.
    Jan 30, 2012. 09:37 PM | Likes Like |Link to Comment
  • Crown Crafts: Trading at a Very Attractive Valuation [View article]
    This is one of my favorite value plays. Great Analysis - You nailed the risks. That line of credit is a major plus that I hadn't considered. A 1% rate is great - it is probably a great idea to use leverage with those kinds of terms.
    Now, this company looks even more attractive than when you originally wrote this article; it is trading near book value, and with a 4.4% current yield. I think it is only a matter of time before more institutional buyers start buying and bidding up the price.
    I think your target is a little optimistic, because you cannot expect a market -average P/E for a volatile small-cap name like this. But then, of course, the target depends on the growth and the notice it gets from the institutional players.
    Jan 17, 2012. 11:34 PM | Likes Like |Link to Comment
  • Rolling Up Our Sleeves On Jos. A. Bank [View article]
    Nice job bringing this cash flow red flag to the attention of investors. Yes, JOSB has been stocking up on inventory, and is delaying its payments on it. However, I do think that the "best case" may be considerably better than poor working capital management.

    It is true that inventory as a percentage of assets has increased from the first of the year, however, in each of the past 10 years, JOSB has increased inventories in anticipation of the fourth quarter. As MarketWizard07 points out, a better comparison may be Q3 inventory percent of assets for 2011 and 2010, which are both above 40%.

    It is also true that inventory on an absolute basis has increased over the years, as illustrated by Patty Edwards' bar chart, however, this is perhaps less than the full story, since the store count has also increased during that period. Again, as MarketWizard07 points out, a better comparison might be the inventory level per store.

    The five and ten year averages for Q3 finished goods per store are both around $528000 per store, with a standard deviation of $44,000. The current figure, $578,000 / store, is more than one standard deviation higher, so this is significant. But management was planning this increase.

    CEO Neal Black explained his reasoning for increasing inventories this season on the last conference call. He gave four primary reasons:
    1. "The cost value of new inventory is higher than last year, due to cost inflation--just replacing the same units means that the total cost will be higher."
    2. "We are planning to open 50-53 new stores [in 2011], As compared to 36 new stores [in 2010]."
    3. "We need to build back some basic inventory that was sold down to below planned levels at the end of 2010."
    4. "We need to build and carry some extra basic stock inventory in order to get ahead of coming additional price cost increases in some categories."

    The "some categories" that Black refers to are likely the Wool, Silk, and Leather products, as he mentioned earlier that these materials were likely to increase in price in 2012, while cotton was likely to decrease.
    I have a strong feeling that anticipation of cost increases is the main reason that they are building up inventories currently--JOSB is trying to avoid margin compression in the future by stocking up now.

    As Brian Harper points out, high inventories are part of JOSB's business model, so retailers like GPS may not be the best comparison. From the Q3 conference call, "We also look at the size of our inventory as a strategic advantage, which gives us the opportunity to aggressively promote as deeply as we need to in order to drive the planned margin dollar results, without running completely out."

    You are correct that the season did not go as well as they hoped, as Neal Black admitted that November was a "tough month" and comparable store sales were less than November 2010. The reason for the steep discounts in December 2011, Black explains, is that they are hoping to make up the difference by deeply discounting in December.

    Admittedly, these discount may hurt margins. However JOSB is hoping to gain more sales, and thus increase earnings, in a recessionary environment. The CEO states that the promotions have become "the new normal", and that they "will continue to be promotional until the economy gets better."

    I believe that there is no reason to expect any sort of "crazy accounting issue" with this company, as the items you mention are explained openly by management.

    The key question is whether JOSB's strategy of deep discounts will work in Q4. While I am less skeptical than you are, I am still apprehensive. The answers will come when we see
    a) Comparable store sales for December,
    b) Total inventory drawdown when Q4 results are released, and
    c) The wool, leather, silk, and cotton pricing environment in 2012.
    Dec 31, 2011. 12:22 AM | 3 Likes Like |Link to Comment
  • 4 Of George Soros' Favorite High Growth Stocks [View article]
    Since Soros Funds typically speculate on possible reflexive processes underway, the valuation of Amazon may not be a great concern to Soros's underlying investment thesis. In fact, the high valuation of Amazon is likely part of the reason for the speculation in the stock.
    Soros discusses the behavior of stocks in "far-from-equilibrium" conditions. Under such conditions, the market price may have less to do with the behavior of Amazon's earnings, and more to do with the market bias towards the stock.
    Currently, it seems that Amazon stock is undergoing a "test" of that bias, with its shares down from the $240 a piece to around $180. If the stock can post solid fundamentals for the quarter, that shows good holiday sales and evidence of the company making inroads with its Kindle Fire device to the tablet market, the market bias is likely to turn more positive than it was before, and send market price upwards. Such a move is likely to be reflexive, as an upwards price movement will make the market bias more positive (analysts turn positive on a stock that is in a bull run), and both will reinforce each other on the way up.
    That is, can increased hype about Amazon actual increase fundamental sales of Amazon products in some way? Amazon does is not a net seller of its shares, so the positive bias is not affecting the fundamentals via that mechanism.
    However another mechanism may be at play. A glance at AMZN balance sheet shows that its accounts payable is growing at a rapid pace, far faster than its accounts receivable. This results in a growing working capital figure.
    So, Amazon is getting generous terms from its creditors, likely due to the favorable bias that credits have towards them. The higher working capital allows Amazon to make investments that will eventually grow its earnings. Thus the bias is affecting the fundamentals of the stock, through the credit market, not the stock market. The stock price trends are simply ancillary effects.
    It makes perfect sense that Soros funds would be speculating on such a stock. They seek out positions where the fundamentals are being affected by and are affecting the market bias and market price. This two-way relationship is the key to a reflexive process. If Amazon is actually undergoing such a process, the stock may be in for a boom and bust, allowing speculators to make a lot of money on the rise up, then make money on the way down as well.
    The key events to watch for are the 1) fundamental data that will be released when Q4 results are reported, and 2) the resultant price action - can Amazon's share price recover from the "test"?
    Dec 18, 2011. 12:03 PM | 1 Like Like |Link to Comment