Seeking Alpha
View as an RSS Feed

Lares Capital  

View Lares Capital's Comments BY TICKER:
Latest  |  Highest rated
  • I Believe MusclePharm Has Shown Signs Of Significant Mismanagement [View article]
    Paulo, looks like this was plain old "channel stuffing":

    http://bit.ly/14wUF4l
    Apr 6, 2015. 09:19 PM | Likes Like |Link to Comment
  • Perma-Fix Environmental: A Comeback In The Making [View article]
    Do you think any specific information that they will not file 10K on time?
    Mar 24, 2015. 07:13 PM | Likes Like |Link to Comment
  • Hewlett-Packard beats by $0.01, misses on revenue [View news story]
    HP just became 1000 times overpriced based on new revenue multiple....
    Feb 24, 2015. 04:12 PM | 2 Likes Like |Link to Comment
  • Joe's Jeans: No Need To Go Bankrupt, Just Throw The Bums Out [View article]
    In one word: ugly. The last Q was shockingly bad as JOEZ top line came in 15-20% below where it should have been assuming the trend. There must be some underlying reason for such a sudden sales collapse such as a cancel by a large customer, they didn't get a shipment on time because of a port dispute, or an issue with the working capital. We can only guess at this point as 10K has no information on what caused Q4 sales to come up so short. but there is one key metric which is really disturbing: JOEZ impaired $3.6 million of its inventory as obsolete or discounted vs. usual 1.5-2 million. This implies that whatever they made didn't sell well and won't probably sell well.

    Even worse, JOEZ has drawn on its revolver with CIT to stay afloat probably making CIT very nervous. While technically JOEZ could stay afloat for another Q or so if its lenders do nothing, I think chapter 11 now is the most likely outcome. CIT may (and I would if I were them) decide to pull its credit line as their loss wouldn't be so large due to decent collateral.
    Feb 17, 2015. 09:46 AM | Likes Like |Link to Comment
  • Why Is MusclePharm Doing So Badly? Here's My Best Guess [View article]
    Just looked at their Balance Sheet: both A/R and inventory are way up as % of sales in last Q. This doesn't look good and doesn't explain why they have trouble both selling and collecting. Not that I really dug in yet to form an overall opinion..but just sayin'...

    You should look at FTLF. Similar company but seems more conservative.
    Feb 4, 2015. 10:24 PM | 1 Like Like |Link to Comment
  • Why Is MusclePharm Doing So Badly? Here's My Best Guess [View article]
    Paulo,

    If you guess is correct, it's old fashioned "channel stuffing", a well known accounting fraud scheme. You should sell the stock immediately. This is how Sunbeam ended up in bankruptcy.

    Read the end of the first page of this article:
    http://nyti.ms/1Cw3sYa

    I am not familiar with MSLP books to make a judgement but if you are right, the company may be as bad as worthless.
    Feb 4, 2015. 04:34 PM | Likes Like |Link to Comment
  • 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 | 2 Likes 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 | 2 Likes 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
COMMENTS STATS
437 Comments
461 Likes