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Nat Stewart

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  • FTD Companies - A Free Cash Flow Monster With 50% Upside [View article]
    10Flob, I find it more than a bit annoying that you are rambling on in the comments of my article with your thoughts that have nothing to do with my article's value added content. Perhaps you should be commenting on the FTD article that was a more general thesis (which I linked to) or write your own article.

    FTD has been dealing successfully with a changing florist marketplace for a long time. If the situation was as dire as you suggest, I think we would have seen it in the results by now. So long as capital allocation is good and they can continue to earn a place in the marketplace that is reasonable, the business ultimately does not have to be 100% sustainable forever. Indeed no business is, ultimately. From an investor POV all that needs to occur is that the cash thrown off needs to surpass the cash put in over a reasonable enough length of time to generate a good rate of return. Regardless, I don't have a crystal ball. This business generates allot of cash, so given everything the capital allocation will be very critical for future investor returns.

    And as I stated, If you have that much to say and believe you have an independent and unrelated insight, write your own article or at least post your comments on the article which provided the general investment thesis on FTD. I don't appreciate commentators who use other people's articles as the bully pulpit for their own, completely unrelated investment thesis.
    Mar 1 10:42 AM | 1 Like Like |Link to Comment
  • Why I Never Want Berkshire To Pay A Dividend [View article]
    Great Job on your first article!
    Feb 13 10:53 AM | Likes Like |Link to Comment
  • Why I Never Want Berkshire To Pay A Dividend [View article]
    Am I the only one who feels like they have read this article several times before? Must be dé·jà vu.
    Feb 12 07:36 PM | 1 Like Like |Link to Comment
  • Why I'm A Passive Investor (And You Should Be Too) [View article]
    If one breaks out the things that make socalled "passive" a good strategy, It seems to devolve into semantics. For example, note the following truisms that apply to most everyone:

    -Diversification is better than no/little diversification
    -Low fees are better than high fees
    -tax efficiency is better than tax inefficiency

    When I read the DFA site, quite frankly many of their products could or should be classified as low cost quantitative funds. "passive" is in my mind a misnomer.

    If active is simply another word for "higher fees, poor tax efficiency, lack of diversification" it kind of... I don't know, just seems to be a rigged contest. DFA is not "passive" in my book, rather it is the application of intelligent, fact based strategy.
    Feb 11 10:23 AM | 3 Likes Like |Link to Comment
  • FTD Companies - A Free Cash Flow Monster With 50% Upside [View article]
    Another long undervalued firm that I follow, Helen Of Troy (HELE) just announced a Massive buyback (29% of outstanding shares) and also said they would kick things off with a 300M tender offer. Talk about closing the value gap! I think management at FTD could learn from this.
    Feb 10 07:12 PM | Likes Like |Link to Comment
  • Are We Turning Japanese? [View article]
    "What really matters for national economic growth is not population per se, but the labor force and people's willingness to work."
    There is an increasing disconnect between productivity and "work", and it has been slowly accelerating for at least 70 years. Fake work is an epidemic. In one way or another, many jobs are a product of deficit spending with little economic purpose - In other words they consume more than they produce. Entire sectors of the economy that employ millions are a result of government complexity and regulation that in real terms do nothing to boost productivity and standards of living (Just as one example).
    In my opinion, we need to stop thinking about "growth" as an ideal in and of itself, and start thinking about wealth or well-being per person. The difference is much like the difference between "Earnings growth" and "earnings growth per share." Only the second one is really valuable to the shareholder.
    We can have "growing earnings and well-being per person" without perpetual population growth. With Automation and artificial intelligence very rapidly taking once decent paying jobs, new frameworks and new thinking will increasingly be required.
    Feb 10 08:07 AM | 10 Likes Like |Link to Comment
  • A 'Special Situation' Opportunity At National Beverage Equals Low Risk With High Reward [View article]
    Most likely some weak hands piled in near the highs, now they are depressed and selling. That is what Mr. market does - He gets euphoric, then he gets depressed. Look at the price history of this stock, or any stock and get some perspective. Day-to-day is just noise in most all circumstances.

    With regards to FIZZ, all looks good to me.

    Mr. Market will do what he does, if you pay attention too much he can get in your head and rattle you. U might be watching the quotes too closely.

    Per Buffett's 1987 shareholder letter:

    "Mr. Market appears daily and names a price at which he will either buy your interest or sell you his. Even though the business that the two of you own may have economic characteristics that are stable, Mr. Market's quotations
    will be anything but. For, sad to say, the poor fellow has
    incurable emotional problems. At times he feels euphoric and can
    see only the favorable factors affecting the business. When in
    that mood, he names a very high buy-sell price because he fears
    that you will snap up his interest and rob him of imminent gains.
    At other times he is depressed and can see nothing but trouble
    ahead for both the business and the world. On these occasions he
    will name a very low price, since he is terrified that you will
    unload your interest on him."

    If you want to be trading day to day or following that closely and reacting to it, you really need to find more liquid stuff than this. This is a stock to sit on, and just let things play out.
    Feb 7 03:12 PM | Likes Like |Link to Comment
  • FTD Companies - A Free Cash Flow Monster With 50% Upside [View article]
    Hi Sid, great question. It is very similar to the main question I had when I first started evaluating this business.
    My understanding is that Amazon's product is much closer to the ProFlowers product, which does not use a florist network.
    The US floral industry is a 28B market, vs. FTD's 2012 full year sales of 613M. At the moment I think there is plenty of room for FTD to compete successfully, I don't see any major problem signs. However, it will certainly be something to monitor over time.
    Just anecdotally, I have found the Amazon flower product to be inferior to the extent that I asked someone who sent my family Amazon flowers to never do so again. I found the presentation offensive to the nature and sentiment of sending flowers. It just doesn't send the right message, in my opinion.

    Also, the article I linked to by Watkins Capital had some good info you will find relevant.
    Feb 5 03:58 PM | 1 Like Like |Link to Comment
  • FTD Companies - A Free Cash Flow Monster With 50% Upside [View article]
    Hi HSP,
    Thank you for the additional information and comments. I was unaware of the sale stipulation that you mentioned.
    In my view, the share price decline has set up a wonderful opportunity for a highly accretive buyback program - the larger the better. I noticed that in the recent shareholder presentation, they focused on the limited capex that is required to maintain sales and grow the business. This suggests to me that they might be on the same page with regards to use of capital. Ideally, we could see this company buy back an enormous number of shares over the next 3-5 years - A huge buy while the shares are severely undervalued as they are now would be a nice way to kick-start the program. I think your 2015 EPS figure is reasonable, however mine is a bit lower.
    I am look forward to when management gives more information on how it plans to use capital.
    Feb 5 03:09 PM | Likes Like |Link to Comment
  • Winmark Corporation: A High Margin, Owner-Operator Small Cap That Is Breaking Out [View article]
    I have a brief update on Winmark that can be read here:
    Feb 5 11:37 AM | Likes Like |Link to Comment
  • Dumb Investment Of The Week: Commodity Funds [View article]
    I agree that the idea of "investing" in commodities is a bad idea.

    Even if an investor were to do it directly, what sense would it make to stockpile things like corn and wheat, where storage and insurance must be paid, and spoilage eventually sets in? The entire notion makes no sense.
    However, the good news is that for those who trade individual commodity ETFs or futures, some of the info can be taken and used for advantage.

    I wrote an article with a simplified example of how contango/backwardation analysis can be used by speculators, which can be found here:
    Jan 30 04:29 PM | Likes Like |Link to Comment
  • How To Retire At 30! [View article]
    The notion that they "retired" at 30 is a just a marketing hook/publicity stunt for their blog business. If they had really done this with only 600K invested they would be complete fools.
    Jan 30 09:54 AM | 2 Likes Like |Link to Comment
  • Why Leverage Is Pointless [View article]
    I will give you a few very simple examples.

    First is that when the system comes under stress, the exchanges, regulators, and brokers tend to change the rules in order to protect the system - and this tends to happen in a way that is detrimental to many existing investors/traders (raised margin requirements and short sell restrictions are two potent tools for doing this).

    The short sale restriction on Financial stocks in 2008 (changing the rules) was devastating to many hedge funds that would have otherwise had a sure thing, "hedged" position. Those "hedged" short positions blew up in their face.

    Then you have events like The Porsche short squeeze of Volkswagen stock, which once again blew up many hedge funds with their "hedged" positions.

    Or even better, study what happened to long-short equity funds in August of 2007. As stated in this paper by Andy Lo (PDF)

    "Based on TASS hedge-fund data and simulations of a specific long/short equity strategy, we hypothesize that the losses were initiated by the rapid “unwind” of one or more sizable quantitative equity market-neutral portfolios. Given the speed and price impact with which this occurred, it was likely the result of a forced liquidation by a multi-strategy fund or proprietary-trading desk, possibly due to a margin call or a risk reduction."

    The leverage of many players who all had similar bets using similar base line assumptions added risk to the system. In trading we call it a "stop run" or "squeeze". It takes many forms but the ultimate result is always the same - Push the over-leveraged out of their positions at exactly the wrong time, often resulting in massive, unexpected losses.
    Jan 24 12:33 PM | 2 Likes Like |Link to Comment
  • Why Leverage Is Pointless [View article]
    I would like to be positive on an article that features a highly useful trading metric -ATR- but do to the many erroneous, bizarre conclusions, I can't.

    Using "ATR" to measure risk without any notion of expected value is dangerous. Unlike with decent stocks, there is not a positive expected value from owning futures contracts. In many cases it is negative, particularly when transaction costs and negative roll yield are factored in. Given this, simply owning contracts, even if volatility between positions is equalized, is most likely a negative expectation bet and therefor automatically risky as it is a money loser over time.

    A leveraged portfolio will require continually adjusting exposures as market volatility, equity, and correlations change, as they always do in the real world. And when and if market conditions make these adjustments impossible, one can run into serious trouble - margin calls and blow-ups if one is not prudent and fails to understand the potential pitfalls of leverage. Ignoring leverage or considering it "pointless" or "not related to risk" is quite frankly a dangerous mentality. The use of leverage can over time make one very wealthy or lead one to quick ruin - ignoring it or thinking it is pointless is an extremely odd and inaccurate viewpoint.

    In 2007 and 2008, many super low volatility, "AAA rated" securities blew up in investors faces. Investors who simply looked at the historical volatility and chose to "leverage up" their positions because "Volatility matters, leverage does not" were annihilated. Some of the big banks that used this exact same risk mentality were annihilated. Everyone knows this. It is amazing to me after the events of 07 and 08 people will so quickly revert to this dangerous mentality.

    The article would have been much more useful if it had not made outrageous claims about leverage and had simply stuck with showing how to use ATR to size positions in a no leverage, long-only stock portfolio - that would have been far more relevant to the readers on this site.

    Your futures examples (as you yourself mention) were not realistic, and as this is not a futures oriented site only served to confuse things.
    Jan 24 09:07 AM | 3 Likes Like |Link to Comment
  • PotBelly: More Downside Ahead [View article]
    I agree with Mr. Wither. Potbelly lines (Chicago market) are intense during lunch hour. Turn-over is super fast/efficient and the sandwiches are value priced. I believe the concept and execution is more compelling and unique than this author gives them credit for. People don't just go to Potbelly, they REALLY like potbelly. When I first moved to Chicago 8 years ago, I was blown away by the place - I immediately looked to see if it was a public company. It might be overvalued on a short or intermediate term basis, but I think it is highly likely that it will end up being a nice ride for investors as they build out thousands of units in the coming years.
    Jan 24 07:55 AM | 2 Likes Like |Link to Comment