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  • Joe's Jeans: No Need To Go Bankrupt, Just Throw The Bums Out [View article]
    To be honest, it's hard to judge without any other evidence.

    On a positive side, the company wants to find (or found) a buyer and they want to install their own CEO. On a negative side, Q4 wasn't good and the company is in trouble. It could also mean nothing new, the board wants to install someone more competent and put a former CEO in charge for the time being.

    The market reaction was negligible with the stock roughly matching the market activity and lower daily volume. I would watch for further news and the earnings announcement, which may shed some light.
    Jan 23, 2015. 03:47 PM | Likes Like |Link to Comment
  • Over The Long-Term You Cannot Bet Against China Because The Chinese Are Too Smart [View article]
    Paulo, let me reiterate. China still has a weak education system, mostly poorly educated workforce engaged in manual labor, and no immigration. What makes you think that an average Chinese has high IQ apart from that silly academic paper which contradicts any other study? Have you been to China? It's still a very poor mostly backward country apart from Beijing and Shanghai...
    Jan 8, 2015. 08:44 PM | Likes Like |Link to Comment
  • Over The Long-Term You Cannot Bet Against China Because The Chinese Are Too Smart [View article]
    I am afraid that you have a serious case of Chinese beer goggles, probably contracted from Jim Rogers. Most of the Chinese data is about as reliable as earning reports of Chinese micro-caps. I don't even believe China GDP growth numbers because its supplied by local party leaders whose promotion depends upon how much their region contributed to the party 5 year plan of GDP growth.

    We don't know reliably median Chinese IQ but likely it's quite low compared to any Western country. Most of its population are still employed in manual, construction or factory labor - do you think they solve mathematical puzzles after work? Chinese universities are very poor, with few exceptions. I took classes in their supposedly second best school, Peking University MBA program and it was on a level of a second-tier US university (actually some of my professors had their PhDs from second-tier US Universities). I could only imagine what the rest of the universities are like.

    Finally, China has generated high growth due to a demographics fluke. With one child policy, it currently has an unusually large proportion of its population in their 30's - most productive age. In 30 years, it will have the same population in its 60's with no reasonable solution possible such as immigration.

    You say China is not socialist. I think you are only partially right. The dictionary definition of Socialism has never been implemented anywhere. Today, China is still a statist top-down rigid dictatorship where almost all large companies are majority government owned, foreigners cannot directly own stock and hold dubious off-shore derivatives with no voting rights (search for VIE in Alibaba prospectus), information is censored, and property rights are not respected (did you know that Chinese don't actually own their houses but lease from the government for 50 years?).

    I don't think China has a bright future, barring some major revolutionary reforms. They picked up low hanging fruit of being a cheap world factory, they don't have a ladder to climb the rest of the fruit tree.
    Jan 8, 2015. 05:11 PM | 1 Like Like |Link to Comment
  • The Most Consistent Risk/Reward Speculation That I Have Ever Found [View article]
    Dkostek, this is unnecessary harsh and not entirely accurate. The borrow rate now for EDC and EDZ is about 4.5% on IB. IB and other professional brokers charge around 2% on margin balance. So this is not such a high watermark to beat.

    The real life strategy would have to take into account the factors you mentioned but it can be successful in principal if you spend the time to conduct daily analysis. It's just not as cut and dry as one might believe.
    Dec 20, 2014. 07:52 PM | 1 Like Like |Link to Comment
  • Understanding How Amazon's Use Of Capital Leases Overstates Its Cash Flow Metrics [View article]
    Very nice article. Amazon bonds are already approaching "junk" territory...

    http://bit.ly/1qwWOfC
    Dec 10, 2014. 04:44 PM | 4 Likes Like |Link to Comment
  • Joe's Jeans: No Need To Go Bankrupt, Just Throw The Bums Out [View article]
    You are not quite correct about PIK. Don't forget that Dahan and convertible notes aren't getting paid now (it still accrues) which actually offset about $5-6 million a year:

    "as a result of the events of default under the Term Loan Agreement and the revolving credit agreement, the Company is prohibited from making any (i) payments under the subordinated convertible notes issued to the former equity owners of Hudson Clothing Holdings, Inc. and (ii) earnout payments to Joe Dahan. "
    Dec 3, 2014. 02:30 PM | Likes Like |Link to Comment
  • Joe's Jeans: No Need To Go Bankrupt, Just Throw The Bums Out [View article]
    Companies don't voluntarily file if they can pay because it means two things: 1) zero to shareholders and 2) management is replaced. Now, the management are the biggest shareholders or junior creditors who will likely get next to nothing in Chapter 11 (Grossman, Dahan, Kim) so obviously they will do their utmost not to file.

    Involuntary bankruptcy is a possibility, but probably only if it's clear this quarter is bad and the lenders want out any cost (possible but probably too early for that).
    Dec 3, 2014. 01:51 PM | 1 Like Like |Link to Comment
  • Joe's Jeans: No Need To Go Bankrupt, Just Throw The Bums Out [View article]
    Thank you for reading. I still see no rational basis for putting JOEZ into bankruptcy. Everyone would lose. This Q would be critical - if the cash flow is bad then who knows - BK may be an option, but if they show improvements, the return could be huge.

    I think the stock plunged: a) someone knows something (obviously BK) or 2) some bin investor needs to offset capital gains or 3) Joe Dahan really needs money after his 63K allowance was put on hold by technical default

    Next couple of days will be critical in terms of the news. Watch for Sec 4 forms.
    Dec 2, 2014. 11:23 PM | Likes Like |Link to Comment
  • The Cloud Is A Long-Term Negative For The Server Market [View article]
    I don't think the demand will decline at all. The margin pressure though will be relentless. With Wintels becoming cheaper and cheaper, CPU is the last component which is maintaining gross margins in excess of 60%. IBM, SUN, and HP got out of chip business seeing that that customers will not pay a premium, it's just a matter of time before some Chinese no margin operator will come in (or maybe buy AMD) and will put a sticker on every computer "Who cares what's inside?"
    Nov 26, 2014. 04:23 PM | Likes Like |Link to Comment
  • The Cloud Is A Long-Term Negative For The Server Market [View article]
    Are you saying that Intel reported that according to its own research it's a great choice? :)
    Nov 26, 2014. 02:50 PM | Likes Like |Link to Comment
  • The Cloud Is A Long-Term Negative For The Server Market [View article]
    Not at all. Intel has no choice but to invest in cloud or be another "Blockbuster" (not the movie, the company). I am afraid Intel today is where Compaq and Sun were in 2000. The PCs and servers didn't go away, they just became low margin commodities, the same will happen to chips.
    Nov 26, 2014. 02:48 PM | Likes Like |Link to Comment
  • The Cloud Is A Long-Term Negative For The Server Market [View article]
    Paulo, overall I think your thesis is good but I disagree with a couple of points:

    "Although less servers are needed, this trend does not affect storage".

    Cloud will eventually be very bad for storage (hard drives, SSD, etc.). If you are a consumer, you don't buy digital music, you stream it from Spotify. If you are a business user, you don't have to buy Microsoft Office and install it on your hard drive, you buy Office 360 streamed to you from the cloud. If you are a company, you don't back up your server data to offline storage, you rely on your cloud provider back-up which is much more efficient.

    I also think even a bigger problem for Intel and other "brand names" is commoditization of servers in the cloud due to virtualization and "big data" technologies such as hadoop moving calculations to a grid. If you are a cloud provider, you want to buy a million cheap no-name easy-to-replace boxes with modest CPUs, not a high-end 64 core server. The servers are racing to the bottom where the cheapest producer takes all, just like PCs did a few years ago.
    Nov 26, 2014. 02:07 PM | Likes Like |Link to Comment
  • No Alpha In Omega Protein [View article]
    I would have complemented your article if it came out a couple of days earlier but now it's old news with a 20/20 hindsight. Many investors don't understand an extremely volatile nature of OME main business with many moving parts and get overenthusiastic over a good earning report and bearish with a bad one. In reality, this is a very mean-reverting business where buying cheap and selling high, while paying less attention to last Q earnings, is the best strategy.

    I actually think that now OME presents a decently value after a huge sell-off. I am with you that one shouldn't be very comfortable with their last purchase of Bioriginal for that high a multiple (that's why I am not an owner of the stock at this moment). But overall one should start looking into getting back as the stock price will probably mean-revert just like it has always done.
    Nov 19, 2014. 01:17 PM | 5 Likes Like |Link to Comment
  • Joe's Jeans: No Need To Go Bankrupt, Just Throw The Bums Out [View article]
    Robin, EBITDA is likely to significantly improve as they cut post merger costs. Also, their CapEx is very small as they mostly do wholesale. So, given lower interest costs, most of it would flow to the bottom line (after tax).

    Joe's and Hudson are decent brands and do have brand equity. Just look how much they charge for their jeans.
    Nov 19, 2014. 10:12 AM | 2 Likes Like |Link to Comment
  • RCI Hospitality: The Exotic Dancers Must Be Paid [View article]
    Alex, I'm not sure why you think Rick's didn't treat its employees well. The court decision made mockery of minimum wage laws. Do you really believe that any of the dancers were making less than $7 an hour? It's possible that the judge was handcuffed by idiotic labor laws and had no choice so I am also not exactly optimistic that Rick's prevail on appeal. Yet, the pay out is far away and you should take the present value of the payout which is much less than $10 million. In addition, the case wasn't going well for a while so a lot of it was already priced in.

    On an energy drink, all I can say Eric never learns his lessons from Ricky Bobby debacle. I agree that the company should stick to its core business where plenty of money can be made.
    Nov 19, 2014. 10:06 AM | 1 Like Like |Link to Comment
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