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No Mean Sum

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  • Transformation Play; Value Micro Cap Near Its 10 Year Low [View article]
    The most relevant question would appear to be whether MGMT can reduce SG&A to the point where STLY is earning a solid ROE, and fast. If they cannot, and perhaps even if they can, putting the company up for sale may actually make the most sense for shareholders. I say this because as a stand-alone brand with outsourced manufacturing and excess cash, STLY would make an attractive bolt-on acquisition for another (larger) furniture company. To an established aquirer, STLY could be an attractive way to increase their operating leverage.
    Jun 20 09:40 AM | 1 Like Like |Link to Comment
  • Upcoming Earnings May Catalyze This Underfollowed Spin-Off [View article]
    The stock to me is over-sold and under-followed, so every earnings announcement is a chance to increase awareness. I had hoped that the sale of plant assets would have a more positive effect. It seems like it's going to take more than a strong performance and asset sales to get Wall St's attention in this environment. If they were to pay a dividend like similar securities I'm sure the cult of dividend investors would begin to clamor over the company. Share buybacks could also be interesting but tend to generate less attention. Overall long term investors seem well positioned but as for short term speculation the market is fickle and anything is possible.
    Feb 4 07:41 PM | Likes Like |Link to Comment
  • Weight Watchers: A Plan At Last [View article]
    I am just beginning to look at WTW and all I can't help but be reminded of HLF at every turn. I think whatever management has said about meetings being an ineffective or out-dated delivery system must be sheer nonsense. Just look at how HLF has leveraged peoples need for community and support systems to help sell product.
    Dec 18 01:45 PM | 1 Like Like |Link to Comment
  • How To Value REITs With Questionable Alignment [View article]
    Nice writeup. Have you ever looked at NCT?
    Dec 12 09:29 AM | Likes Like |Link to Comment
  • Newcastle Investment: Spin-Off Machine Providing A Triple Threat [View article]
    Does anyone know what would be close public comps for NCT? Seems hard to value without being able to estimate the intrinsic value of the CDO's and other assets. So it would be nice to see if there are public companies with comparable assets and what they are yielding.
    Dec 10 05:35 PM | Likes Like |Link to Comment
  • Toronto-Dominion Bank's Surprise Dividend Increase Is Overlooked By Investors [View article]
    Do you have a link to any articles or research citing how the adjustments to income would normalize income / debt ratios? Thanks in advance.
    Dec 9 06:36 PM | Likes Like |Link to Comment
  • Forget Belgium, Here Are 7 Reasons That Herbalife Fits The SEC's Definition Of Pyramid Scheme [View article]
    Just2look, you are right, I said FTC and I meant SEC.

    SEC Hallmark 7, "No demonstrated revenue from retail sales. Ask to see documents such as financial statements audited by a certified public accountant (CPA), showing that the MLM company generates revenue for selling its products or services to people outside the program."

    As for the FTC,

    "The critical question for the FTC is whether the revenues that primarily support the commissions paid to all participants are generated from purchases of goods and services that are not simply incidental to the purchase of the right to participate in a money-making venture."

    I believe Mr. Ackman displayed compelling evidence that at least some of the distributors make their purchases solely on the basis of whether or not they will be receiving downstream royalties. In either case, HLF has not demonstrated CPA validated data to the contrary.
    Dec 4 08:50 AM | 1 Like Like |Link to Comment
  • Forget Belgium, Here Are 7 Reasons That Herbalife Fits The SEC's Definition Of Pyramid Scheme [View article]
    Let me make it nice and clear for you, I didn't say that sales to distributors weren't "real", I said they were in network sales. As the CEO said, 90% of distributors buy for personal consumption. According to the FTC, one indication of a pyramid scheme is that the most of the sales occur within the distribution network for personal consumption or otherwise. Even if the 30% rule was correct, that still doesn't pass the hurdle for "most" occurring outside the network. Further, as Mr. Ackman points out in his presentation, HLF does not consider in network sales retail sales (slide 27, ) so I'm not sure how you've decided that in network sales now count as retail sales, "Under certain circumstances". But since HLF doesn't release the data, we don't know what the actual retail sales figures are, so I guess you can make up whatever you want (see slide 28).

    Also, whether or not distributors leave HLF satisfied or not has no bearing on the pyramid criteria of whether or not the success rate is both extremely low and there is an emphasis on recruiting.

    I'm sure it's clear to Mr. Ichan and others that HLF does in fact have all the attributes of a pyramid scheme but being intelligent investors they realize that, that may not matter in our present regulatory environment. It is that leap of understanding that separates savvy professional investors from the mob on SA arguing to that HLF is the Alpha and Omega of business models. The smart money is keeping their mouths shut and working behind the scenes to make sure HLF keeps the cash coming and not making presentations or posting on SA about whether or not it is in fact an pyramid scheme. Recognizing that, I suggest you emulate your betters and drop the subject, or at least come up with some more relevant arguments in favor of the long side.
    Dec 3 11:17 PM | 4 Likes Like |Link to Comment
  • Forget Belgium, Here Are 7 Reasons That Herbalife Fits The SEC's Definition Of Pyramid Scheme [View article]
    1. "All royalty payments are based on sales produced by a downline."

    That doesn't matter it is still income derived from another persons production which is not retail income and therefore indicative of a pyramid scheme.

    2. "You have been lied to by the Anti-MLM cabal ... the amount of internal consumption does not determine if a company is running a pyramid scheme or not."

    The CEO said on television that 90% of the product is consumed by distributors. End of story.

    3. "There is nothing at all wrong with marketing a business opportunity. You have no clue as to a new distributor's motivations and expectations. You are being very arrogant in claiming to know what is worthwhile or not."

    There is something wrong with marketing something as a business opportunity when the failure rate is > 90% and a significant portion of the earnings are based on recruiting people to undertake said opportunity after you.

    Finally, I don't even know why I'm wasting my time responding to you when it is clear that you are probably paid by HLF or some MLM organization based on the fact that you have 800+ comments on only 2 stocks HLF and AVP. Such a history leads any reasonable person to conclude that you are either an employee of the company and/or lead a very sad existence spreading misleading information about MLM companies.
    Dec 3 10:27 PM | 5 Likes Like |Link to Comment
  • Forget Belgium, Here Are 7 Reasons That Herbalife Fits The SEC's Definition Of Pyramid Scheme [View article]
    Yes, it is a non-negligible risk, especially as the valuation increases. I think a likely but not often mentioned outcome is that regulators impose some additional disclosure and/or transparency requirements on the company. Not wanting to be seen as asleep at the switch or supporting hedge funds, the regulators can be seen as having done something but not killing the stock. Ackman will be hoping that the model collapses under the strain of additional transparency - a "sunshine is the best disinfectant" strategy. Longs on the other hand, will argue that whatever the regulators make the company disclose is immaterial to the model and we'll be right back here arguing again :)

    On another note, Ichan's lockup ends if the stock trades at over $75 for five consecutive days - so it will be interesting to see how long he stays in for after that expires. Although it is kind of personal for him so he might go along for the ride just to burn Ackman. Sort of a reverse version of the classic scene in Wall St 1 between Gecko and the rich Brit.
    Dec 3 07:21 PM | 3 Likes Like |Link to Comment
  • Forget Belgium, Here Are 7 Reasons That Herbalife Fits The SEC's Definition Of Pyramid Scheme [View article]
    It has nothing to do with the Belgian Courts opinion. Here are my reasons.

    1. HLF distributors on average derive the majority of their compensation by means of royalty payments.

    2. The vast majority of HLF product is sold within the network. ( I realize that HLF claims that its product is consumed by network members, nevertheless this in network consumption fits the description of a pyramid scheme.)

    3. A significant portion of HLF's marketing pitch is devoted to selling the "business opportunity" which an opportunity with an extremely low chance of being an worthwhile opportunity for it's prospects.

    Thus I believe HLF fits the bill as a pyramid scheme. Whether or regulators will chose to enforce is another question entirely.
    Dec 3 06:54 PM | 7 Likes Like |Link to Comment
  • Forget Belgium, Here Are 7 Reasons That Herbalife Fits The SEC's Definition Of Pyramid Scheme [View article]
    HLF does appear to be pyramid scheme but it doesn't look like anyone who matters cares. I think the more interesting question is whether or not HLF can sustain these levels of sales and profitability. As Ackman pointed out there is a certain fad aspect to the sales-distribution system. I believe the company called it "pop and drop".

    I suspect Ackman Believes the model is unsustainable and hence he is willing to ride the short to its logical conclusion a.k.a the end of the earth. This stock is what happens when weak shorts meet weak longs.
    Dec 3 04:44 PM | 3 Likes Like |Link to Comment
  • The Tile Shop: Like Crazy Eddie's, But With An Undisclosed Related Party And A Chinese Twist [View article]
    I am short, but just because there is no Bejing Pingxu doesn't prove there is fraud. I wish it did but we need more evidence for proof.
    Nov 26 09:33 AM | Likes Like |Link to Comment
  • On Tile Shop's Inventory [View article]
    I was just re-reading Phil Fisher tonight and came across this passage.

    "Another method for insiders to enrich themselves is to get the corporation's vendors to sell through certain brokerage firms which perform little if any service for the brokerage commissions involved but which are owned by these same insiders and relatives or friends... There is only one real protection against abuses like these. This is to confine investments to companies the managements of which have a highly developed sense of trusteeship and moral responsibility to their stockholders. This is a point concerning which the 'scuttlebutt' method can be very helpful... Regardless of how high the rating may be in all other matters, however, if there is a serious question of the a lack of a strong management sense of trusteeship for stockholders, the investor should never seriously consider participating in such an enterprise." - Philip A. Fisher, Common Stocks and Uncommon Profits
    Nov 25 09:16 PM | 1 Like Like |Link to Comment
  • On Tile Shop's Inventory [View article]
    Just to play devils advocate: This might indadvertedly raise TTS's profile with the SEC.
    Nov 25 05:03 PM | Likes Like |Link to Comment