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Nat Stewart

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  • Are Pyramid Schemes Inherently Fraudulent? [View article]
    I switched to saying "financial sales" not insurance in my second example for a reason.
    Mar 10 02:38 PM | 2 Likes Like |Link to Comment
  • Are Pyramid Schemes Inherently Fraudulent? [View article]
    The pyramid element in financial sales is the sales manager. They bring in "recruits" and when they fail out, the recruits "natural market" become a part of the sales manager's book of business. Nothing new here.

    Operational leverage is critical to making real money with a direct distribution model. This does not make it a scheme or a scam. It is common sense, really. The type of person who might succeed with HLF distribution is a smart promoter, and such a person will see this immediately. Since this is how the product comes to market, it makes complete sense - kind of like creating a mini-franchise within the business.

    The product itself is legitimate and meets an immediate need in the marketplace. The obesity crisis is far more dangerous than the fact that most hlf distributors never make it to the 365 day a year vacation life in the promotional material.

    Elitist hedge fund managers can't see the benefit of this product because they live in an elitist bubble, with no clue about the product choices of average or below average people.

    I fail to see anything wrong with the model. Many, many products are sold with the "hope-ium" formula. If you believe the adds, the worlds most popular cola can make you the happiest, most popular person in the world, after all.
    Mar 10 01:51 PM | 4 Likes Like |Link to Comment
  • Are Pyramid Schemes Inherently Fraudulent? [View article]
    I doubt the HLF participant marketing material is any more misleading than the State Lottery commercial I heard on the radio this morning. The formula is to get people fantasizing about easy riches, wile ignoring the basic math (Most tickets expected value = less than 60 cents on the dollar).

    Everyone knows state lotteries function as a tax on the poor but no one cares.

    "Herbalife's grand deception is suggested by the high failure rates of its new recruits"

    Not true at all. All 100% commission opportunities have a tremendous churn rate of participants. For example, life insurance is sold by promising a great career, but the real formula is to capture the new participants "natural market" then let them (the 99%) fail out. Participants by and large know this, but they do it because they figure, "it might work".
    Mar 10 11:45 AM | 6 Likes Like |Link to Comment
  • 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 | 3 Likes Like |Link to Comment