Seeking Alpha

Martin Vlcek's  Instablog

Martin Vlcek
Send Message
Martin Vlcek is a full-time investor and analyst who has been actively investing and managing money for more than 15 years. Martin has an Economics degree and he is currently a CFA program Level II candidate. His primary investment focus is on undervalued stocks with favorable risk-to-reward... More
View Martin Vlcek's Instablogs on:
  • Out-Of-The-Box Thinking On RadioShack

    This article, unlike my other articles, is meant to be for entertainment purposes only as it contains some crazy, out-of-the-box ideas and comments for RadioShack (NYSE:RSH)'s management which may offend some readers or bring no investing value to them.

    Let me offer some out-of-the-box ideas for the desperate RadioShack management that has been short on good turnaround ideas besides closing half of its stores, which goes against the current debt covenants. As my contrarian investor side was hungry to take a closer look at RadioShack and buy some RSH call options (my maximum loss is ~$700 if RSH goes bankrupt, and I consider the investment as a lottery ticket, a gambling and not investing), my former marketing side is hungry to give some advice to the struggling RSH marketing department.

    Some crazy, out-of-the-box ideas for RadioShack's management

    Please, just no more Super Bowl ads with the customer proposition so terrible, competitive edge close to zero and products commoditized. RadioShack has almost nothing to lose at this stage, so getting crazy might just be the thing that revives and repositions the brand and perhaps saves the company.

    On a bit ironic note, if nostalgia is what RSH is about, why not change it into a museum of old technology? RSH could even keep the current inventory. It will be obsolete within two years and become museum items. Add some education value, such as that people can dismantle the devices and see what's inside. RSH's new Fix It Here service of same-day mobile phone repair is a start, but doesn't give the power to users to play with the devices. I don't know who would pay for that, but it's an idea. But I like the next idea much more:

    Why repair it? Destroy it instead and buy a new one! Seriously, create a smashing corner - call it "SmashingShack" - where stressed out managers and general population can buy obsolete devices for pennies and smash them with a huge hammer, or destroy them whichever way they want, etc. You get the idea. Create some buzz and get free publicity instead of buying another Super Bowl ad. Give people helmets for protection, but with the GoPro (NASDAQ:GPRO) cameras attached (get some money from GoPro for this deal in the process). Let people post GoPro camera videos of themselves smashing things in your shops. GoPro is the new kid on the block that wants to show off, so it would be a win-win deal.

    People could even bring their own devices to destroy. That's what I call a true "Bring Your Own Device" (BYOD) policy. BYOD is a good buzzword, would look great in those PR messages. You actually just invented a brand new buzzword - Destroy Your Own Device (DYOD). Talk about being a trend-setter.

    And customers bringing in their own devices to destroy - that's what I call a real slashing of costs of goods sold (COGS) and great Just-In-Time management, or outright zero-inventory management. And while you are at it, change the company name to RadioShock from RadioShack. It would go well with the marketing changes I propose and communicating a real change. The ticker should be SHOCK, or SHCK.

    The billing model should be based on a pay-as-you-destroy basis, with paying for each device, or paying for time if you bring your own device. In addition, for power consumers, RadioShock should offer an all-you-can-destroy billing option, with a flat fee for 15 minutes with unlimited number of inventory destroyed.

    Again, I will point out that this article should be really considered for entertainment purposes only, but I stand behind my idea of the SmashingShack. The company should at least try it. They have nothing to lose, they need to make a splash and need to liquidate lots of inventory.

    Disclosure: The author is long RSH. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.

    Additional disclosure: I own a small, speculative long position in RSH through long-dated options. My total loss if RSH went bankrupt would be $700.

    Tags: GPRO, RSH, long-ideas
    Aug 13 10:04 AM | Link | Comment!
  • 2014 Mid-Year Portfolio Performance Update

    2014 has been a rough year for me so far because I am sticking with my strategy of cautiously protecting most of my spectacular 2013 gains. My perhaps overprotective stance has been costing me a lot this year, but I am patiently waiting for the best reward/risk opportunities, and there haven't been that many in 2014. I am in for the long run.

    The portfolio is now up 83% in a year and a half (time-weighted total return for 18 months ended June 30, 2014, before taxes, but incl. brokerage fees), but still down some 20% from its December 2013 peak.

    Here is the visual update:

    (click to enlarge)

    Jul 23 3:44 AM | Link | Comment!
  • My 2013 Growth Portfolio Performance: 113% Return Before Taxes

    General stock markets in 2013

    2013 was a spectacular year for many investors who were invested in the U.S. stock market. I consider 2013 to be an outlier and don't expect a 30% return for the broad U.S. S&P 500 stock index in 2014 but rather a +10% to -10% return, with +5% being the most probable outcome. However, a black-swan event is not out of question, so buying a partial cheap tail-risk protection is prudent this year.

    My Growth portfolio performance in 2013

    My growth portfolio returned roughly 113% in 2013 including all trading fees and costs, but before taxes. My actual money-weighted return including fees but before taxes was "just" 88% due to cash deposits and withdrawals. I didn't try to time the deposits/withdrawals, I just moved the cash according to my personal needs. However, this just proves the obvious, that trying to time the market - whether intentionally or not - can hurt your performance. But it can improve your returns, too.

    Important word of caution

    Please note that although this Growth portfolio represents all my investment funds, they represent a relatively small portion of my total net worth. Hence, the high risk and volatility of this portfolio is balanced by significant low-beta, income-oriented assets in my other holdings, such as savings accounts, certificates of deposits and real estate. Investors need to carefully consider, whether a high-beta investment portfolio should be a suitable part of their net worth, and investors should certainly carefully consider the total size of such portfolio in relation to all their net worth to make sure they are not exposing themselves to excessive risk.

    2014 outlook

    For my personal portfolio, I expect much lower returns in 2014 and my strategy for this year includes protecting some of the spectacular percentage gains that I achieved in 2013.

    I also intend to position my 2014 investments more conservatively due to generally prevalent high market valuations that present a risk of multiple market-wide pullbacks affecting majority of asset classes.

    (click to enlarge)

    My portfolio performance in 2014

    January 2014 started off with a sharp fall in my portfolio towards the end of the month. As of February 20, most of the January losses were recouped but I am still roughly 15% below the peak 2013 levels.

    May 2014 update

    The Growth portfolio is still down roughly 10% from its 2013 peak, which is an improvement from February 20, but still gives a negative YTD return of almost minus 10%.

    My strategy for 2014 hasn't changed; I am still protecting the impressive 2013 gains and waiting for favorable opportunities, which have been rare for my investment taste so far this year.

    Feb 20 1:28 PM | Link | 2 Comments
Full index of posts »
Latest Followers


More »
Posts by Themes
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.