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Short Credit Acceptance: Approaching A Negative Inflection Point
- Per-unit profitability is declining as industry competition heats up.
- The company has maintained earnings momentum by leveraging up and buying back shares, but this strategy is reaching its limit.
- The market is valuing the company based on unsustainable recent earnings rather than normalized earnings or book value.
- The founder and chairman sees the writing on the wall and has started to cash out.
Do Not Buy Alcoa
- Alcoa's fundamentals are deteriorating, yet the market reacted positively to its poor results.
- There are signs that investors are taking an increasingly speculative outlook on financially weak companies like Alcoa.
- If you think investors are underestimating risks in Europe and China, shorting Alcoa may be a good hedge.
Income Inequality And Financial Instability
- Capitalism requires a balance between economic growth and wages so workers can pay for what they make.
- Economic growth without wage growth can occur if financed by debt.
- Debt-financed growth can happen for a long time, but is unsustainable and eventually leads to financial crises.
- The U.S. is at historically high levels of income concentration, even as income in the middle stagnates.
- Whenever such extreme inequality occurred in the past, markets crashed.
VIX Shorts, Look Out Below
- VIX futures ETPs have become extremely popular and investors are increasingly on the short side of the trade.
- This strategy works when the trade is not too crowded and the market is moving from fear to calm.
- Now the market is complacent and investors are in a bidding war to sell "market insurance."
- Unless investors are willing and able to engage in relative value strategeis in the VIX space, it is time for shorts to get out and reduce risk.
- Are REITs Undervalued?
- BofI Pops: Post-Earnings Analysis
- Credit Acceptance The Best Bet In Credit Services
- Sell BofI Holdings Before Earnings
- VIX Traders Are Complacent
- Cal-Maine Is A Short
- Imogo Mobile Technologies Is Worth $0
- BofI Holding Is Firing On All Cylinders
- The Risk That Should Keep VIX Shorts Up At Night
- VIX Shorts, Have A Little Patience
- Citizens, Inc. Faces Downward Pressure On Earnings And Book Value
- Dole Management's Questionable Buyout Deal
- First Internet: A Great Investment For The Risk Tolerant
- Atlantic American: Too Expensive For What You Get
- American Independence Corporation: Return-Free Risk
- Symetra Is A Buy
- National Western Life: An Asymmetric Risk-Reward Opportunity
- BofI Holdings Goes Parabolic: Revisiting The Original Thesis
- Which Emerging Markets Are Cheap?
ETNs As A Risk Redistribution Mechanism
Editors' Pick • Jun. 5, 2013 • 20 Comments
- Avoid REIT, Small Cap And Value ETFs
- Dole Is Too Risky
- Modeling The VIX Futures Curve
- Is Our Corporate Tax System Irrational?
- The Case For Long-Short VIX Portfolios
- Things Are Looking Up For Nicholas Financial
- Magellan Health Services Is Cheap, But Will Likely Become Cheaper
- How Apple Let Its Shareholders Down