Marshall Hargrave's  Instablog

Hedge fund manager John Hempton of Bronte Capital appeared at this year's Value Investing Conference last week and boosted that he had over 120 short positions, and one of his short ideas is Jos. A Bank (JOSB). He notes that he can't tell if Jos A Bank's "inventory is real despite high sales."

The market failed to react on Hempton's thoughts, but the retailer tanked some 7% earlier this week after announcing that 1Q 2013 results will come in well below expectations. The company now expects EPS for 1Q between $0.27 and $0.30, compared to previous consensus of $0.46.

Back to Hempton

Part of the issue that Hempton noted was that inventory has been on the rise, where the big issue is that inventory has been on the rise, so has net income.

Jos. A Bank has managed to grow revenue at 36% over the last four years, yet, its inventory has grown over 50%.

The variant view

Although I can see Hempton's point, when looking at the long-term trend for Jos. A Banks, the numbers are in line with historical standards. Jos. A Banks' four year (fiscal 2010 to 2013) average inventory turnover ratio is 1.32, which is exactly where its 2013 turnover ratio is. Although this is below Men's Wearhouse's of 2.46 for the same period, Men's Warehouse also trades in line with its average with a current turnover ratio of 2.48.

Even ex-inventory, Jos. A Banks' current ratio is 2.4, in line with Men's Warehouse's (MW) 2.9, Aeropostle's 2.2 and Express' 1.6. Including inventory, Jos. A Banks' current ratio is 4.4.

Bottom line

Although Hempton certainly has a point that Jos. A Bank's inventory is "too" high and continues to rise despite sales, they have managed this for the last four years, where investors have not seen this as a fundamental issue. I still remain on the sidelines, mainly because I like Men's Wearhouse better, but I'm also waiting on more details from Hempton. Should be interesting.

Be sure to check out our detailed stock analysis (click here). TOTAL (NYSE: TOT) pays the highest dividend among the oil and gas Supermajors, paying investors an impressive 6% dividend yield. Other notable Supermajors include BP, Chevron,Exxon Mobil (NYSE: XOM) and ConocoPhillips (NYSE: COP).

Total is a France-based integrated international oil and gas company, operating in over 130 countries and across all aspects of the petroleum industry, upstream and downstream.

Even more impressive is that Total produces base chemicals, has interests in coal mining and power generation, and is also active in solar-photovoltaic power.

READ THE REST @STOCKPUCKER

Be sure to check out our detailed stock analysis (click here). F5 Networks (NASDAQ: FFIV) took a beating last week, seeing its stock tumble some 20% on disappointing earnings and a poor 2013 outlook, but is the news really all that bad? With the company's positioning in an exciting and high growth industry, it's tough not be intrigued, to not at least take a look at the stock. But I think the stock could be low for a reason.

• Fiscal first quarter sequential revenue growth was a mere 0.8%, which suggests that second quarter revenues will fall by 4.2% sequentially. Revised full year expectations put this year's earnings equal to last year, with no growth.

• Margins have began contracting, which is in part leading to poor EPS growth expectations.

• A couple of F5's largest customers account for 17% of revenues (Avnet Technology) and 14% (Tech Data).

• The majority of weakness is in the telco space, which is F5's largest segment (accounting for over 25% of revenues last year).

F5 noted that the telco space has seen notable press related to delayed funding for several projects and hesitation related to sign new orders, thanks to budget constraints.

READ THE REST AT STOCKPUCKER