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Jeremy Johnson

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  • A few too many on one side of the boat? The world's most popular short, the yen is strengthening in chunks now, with the dollar -2.5% and buying ¥91.10. More popular than long dollar/yen has been long euro/yen and that's getting pounded even harder. The twin trade to short yen has been long Japan stocks, particularly in the form of the hedged equity ETF (DXJ). It's off 3.3%[View news story]
    Exactly, there is little reason to believe the 40 year trend of yen appreciation will reverse.

    http://bit.ly/WnphQM
    Feb 25 06:58 PM | Likes Like |Link to Comment
  • 3D Systems (DDD) -9.5% following its mixed Q4 results. The 3D printer maker, whose 3-for-2 split goes into effect today, is guiding for 2013 revenue of $440M-$485M and $1-$1.15 vs. a split-adjusted consensus of $442.2M and $1.05. Q4 gross margin was 51.7%, -10 bps Q/Q and +460 bps Y/Y. Backlog +23% Q/Q to $11.4M. R&D spending (the subject of some criticism) +70% Y/Y to $7.8M (8% of revenue). SG&A +51% to $26.5M. Q4's 45% growth a slowdown from Q3's 57%. SSYS -6.5%. XONE -5.2%. PRLB -3.3%. CC underway (webcast). (PR) (slides[View news story]
    For decades, H-P made a bundle of money in "commoditized" 2D printers. I don't think that is the main issue to focus on. Most good companies have real competitors, if they don't they get regulated and at best turn into to bonds (like utility stocks).
    Feb 25 03:51 PM | Likes Like |Link to Comment
  • VeriFone Now A Falling Knife [View article]
    Invest by P/E does not work.
    Feb 25 11:59 AM | Likes Like |Link to Comment
  • VeriFone Now A Falling Knife [View article]
    Historical financials look ugly -- might have some accounting earnings but hasn't produced much cash before acquisitions (and after of course has used a lot). Bad business, who cares what the price is.
    Feb 22 02:35 PM | Likes Like |Link to Comment
  • More on FOMC minutes: Those expressing concern about the costs/risks from further asset purchases are upgraded to "many" from "several." A "number" said a close look at the data might well lead the FOMC to "taper or end" QE before a substantial improvement in the labor market occurred. "Several" argue the risks of ending too soon are also significant. Status quo for now, but the monetary law of the land can clearly no longer be called QE∞. [View news story]
    If the FY14 federal budget is even close to what happens in reality, $85 billion of monthly purchases would mean the Fed is shrinking the level of debt held by the public on an annual basis. I doubt the Fed wants to do this -- their upper comfort level is probably monetizing 100% of actual issuance. They will need to start laying the framework for a reduction to the area of $50 billion a month.
    Feb 20 05:41 PM | Likes Like |Link to Comment
  • Price Matching Is Synergistic With Sales Tax Collection [View article]
    Over the past year or so (perhaps more, but this is what I notice personally) Best Buy has been much more aggressive in pricing (and in some cases I think Amazon has let prices increase). It is now likely that a large portion of the Best Buy store is price matched on the sticker.

    I know for a long time things like cables at Best Buy were literally 3x more expensive than on-line -- where the cheapest HDMI cable you could buy was $30-40, but not any longer. They realize this just made customers upset.

    Anyway, I think people shop Amazon for convenience at this point first and price second (although bargain hunters can be a ... vocal group). Going to a physical store is just very inconvenient and its not like electronics retailers have much of a shopping experience.
    Feb 20 05:35 PM | Likes Like |Link to Comment
  • Price Matching Is Synergistic With Sales Tax Collection [View article]
    I think Best Buy has price matched online for a long time. I shop in these stores from time to time in California. I always see people with printouts from online for many years and getting price matched. Also, for TVs Best Buy has price discretion. You can get deals there beyond just price matching with negotiation. This is done regularly.
    Feb 20 04:46 PM | 3 Likes Like |Link to Comment
  • Mondelez's Sugary Valuation Could Cause Wealth Decay [View article]
    Better to buy Wal-Mart than Kraft -- they are just going to grind them into the ground on price over the years.
    Feb 15 04:56 PM | Likes Like |Link to Comment
  • Mondelez's Sugary Valuation Could Cause Wealth Decay [View article]
    It's not undervalued. Good business at a fair price, that is all. Expected returns 6% nominal under current inflation.

    Kraft split had to be done to ameliorate post retirement benefits and Wal-Mart / other top 5 grocers exposure but the dis-synergies will hurt a lot.

    Over short-term coffee / cocoa pricing going down will hurt revenues but stimulate demand and either help profit or at least help keep it stable.

    Lastly, these businesses are not really very high return and everyone should realize this. Using book capital, it may look like it, but these firms have decades of marketing dollars spent to achieve their current "brand equity" and there is steady inflation in what it costs to get your message out.
    Feb 15 01:21 PM | 2 Likes Like |Link to Comment
  • Why Hyperinflation Is A Myth (And What It Means For Gold Prices) [View article]
    Hyperinflation is always and everywhere a political decision. In Zimbabwe it was used as a tool to transfer wealth from the remaining white elites. In Germany it was a form of nonviolent protest against reparations. In neither case was economics important. If there is ever a hyperinflation in America, it will be to achieve a political purpose. And not just to change the guard from red to blue or back again -- it would be something of a scope far greater, on the scale of a major war.
    Feb 12 07:20 PM | Likes Like |Link to Comment
  • Three Dell (DELL +0.7%) investors owning a combined 3.3% of the company - Harris Associates, Yacktman Asset Management, and Pzena Investment Managment - have joined Southeastern Asset Management (8.5% stake) in opposing the Dell LBO, Reuters reports. Dell ticked higher to $13.63 today, putting it within a hair's breadth of its $13.65/share LBO price. For now at least, the LBO consortium isn't budging[View news story]
    In my opinion it is virtually guaranteed that the price will rise. Your risk is that the deal gets blocked by the government due to MSFTs involvement. That is why it is not trading over $14.00, in my view.
    Feb 8 08:04 PM | 2 Likes Like |Link to Comment
  • Dell Goes Private: Saving It From Market 'Short-Termism' Or Smart Tax Strategy? [View article]
    My guess is the new term loans will have some covenants on dividends because while there is a lot of cash, there is also a lot of preexisting debt. The deal would not make sense to the lending syndicate if it were valued on a cash free basis. Also some of that cash is going to buyout public shareholders already I believe.
    Feb 7 07:39 PM | 1 Like Like |Link to Comment
  • How Much Of A Premium Will Dell Deliver? [View article]
    I bet they can get a fairness opinion at $13.50 to $14.00 so that is all they need. 25-30% premium to 200 day moving average.

    Comps trading at low multiples is a help as well.
    Feb 4 04:01 PM | 1 Like Like |Link to Comment
  • Dell (DELL -2.4%) is "very, very close" to striking a $13.50/share LBO deal, David Faber reports - he thinks an announcement could come tomorrow, and that Microsoft (MSFT -0.5%) will put in $2B. Dell shares have slumped to $13.30 following the WSJ's report of a $13-$14/share deal price. Update (12:34PM ET): The WSJ now reports the price is likely to be in the $13.50-$13.75/share range. Microsoft is expected to invest ~$2B, Silver Lake over $1B, and Michael Dell's P-E firm ~$700M. [View news story]
    About $6.
    Feb 4 02:51 PM | Likes Like |Link to Comment
  • Cheap Valuation Makes Molson Coors Worth A Look [View article]
    No, they will probably pay down a little debt on the StarBev deal before returning more capital to shareholders. The payout ratio is about 35% which isn't bad and they buy back shares from time to time. I personally would prefer they not increase the payout ratio much and continue to invest in the business.
    Feb 4 11:30 AM | Likes Like |Link to Comment
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