Michael Shulman

Blue Nile's Strong Q3: The Outlook Just Got Brighter

Your note was amusing since it relied on data and numbers rather than hope and hype -- but how can you be bullish on a company so grossly overvalued facing 2% growth? They have experienced margin expansion due to cost controls and reductions -- a one time event -- and sales are essentially stagnant. They are selling for 80 times earnings -- if they grew profits 20% a year it would still take them four years to grow into the premium the market is assigning to them. I have recommend shorting NILE in my newsletter, ChangeWave Shorts, not just for valuation reasons but Santa is going to have a hard time coming down the chimney this year -- and there will not be as many diamonds in his bag as people believe.