Seeking Alpha

Pendulum

View as an RSS Feed
View Pendulum's Comments BY TICKER:
Latest comments  |  Highest rated
  • Bill Gross's Perspective On The 10-Year Treasury [View article]
    Hi wdchil,

    Thanks for the comments.

    The 10-year yield is going to rise/fall depending on what bond investors are willing to pay for bonds. Bond investors/traders may drive up the yield, regardless of the impact on the economy.

    I don't think a 4% yield would be a disaster for the economy, but it may be bad for stocks.

    If yields get too high, then I expect the Fed to try and talk them down. It is yet to be determined if they will be successful.

    Looks like the 10-year wants to get to 3%. If buyers don't come in at that level, then there could be a quick move to 3.5%.

    I agree that nobody (not Gross and, certainly, not me) can predict the bond yield. Best to have a plan B if wrong. I may certainly be wrong.
    Aug 20 06:59 PM | 1 Like Like |Link to Comment
  • Bill Gross's Perspective On The 10-Year Treasury [View article]
    Hi Chris,

    Thanks for the comments. I agree that it is better to wait for a bottom in bond prices (top in bond yields) before getting in the market. I prefer to be a bit late than early.
    Aug 20 09:53 AM | 1 Like Like |Link to Comment
  • Bill Gross's Perspective On The 10-Year Treasury [View article]
    Hi ricksteph,

    Thanks for the comments. Yes, Gross (and other big bond managers) have been wrong about Treasuries over the summer (and at other times). I still have a lot of respect for him, even when I disagree. I am not an expert on bonds and he sure is.
    Aug 20 09:50 AM | 1 Like Like |Link to Comment
  • Disaster Scenario For Treasury Bonds: Is The 10-Year At 2.83% A Trigger Or Trap? [View article]
    Hi Preston Moore,

    Thanks for the comments. I agree that inflation for most people is higher than the official numbers. The Fed cares a lot about wage inflation, but unfortunately, that is one are that if lagging.
    Aug 18 11:49 PM | 1 Like Like |Link to Comment
  • Disaster Scenario For Treasury Bonds: Is The 10-Year At 2.83% A Trigger Or Trap? [View article]
    Hi silverant,

    Thanks for the comments. I agree that a higher yield on the 10-year is a big risk for stocks too. I like cash right now.
    Aug 18 11:47 PM | 1 Like Like |Link to Comment
  • Bullish On American Apparel: Beyond Controversy, An Inflection Point And Growth [View article]
    Hi all,

    I received a question about what I think about APP's earnings that are expected to be released today after the close. I wanted to answer it here to clarify a few things.

    I am not an analyst that builds quarterly earnings models and tries to guess the EPS numbers. Therefore, I don't have an estimate about APP's earnings.

    My perspective on APP is a long term one. I will review the earnings information, but slight EPS out-performance or under-performance is probably not going to change my perspective much. I plan on writing a follow-up article on APP. Unfortunately, I am behind in my writing and I hope to catch up soon.

    One quick comment. Last week the company released the monthly same store sales numbers. See:

    http://bit.ly/1eEpCHi

    It is interesting to see that APP is still posting good comps, despite some of the problems other retailers are having. I have been hearing a lot of negativity on the back to school season from analysts (see CNBC or Bloomberg), so it will be interesting to see how APP performs in, what seems like, a difficult environment.

    I am happy to answer questions about APP, but will do so in the article comments.

    PLEASE NOTE THAT THIS IS NOT INVESTMENT ADVICE. SEE DISCLAIMERS ABOVE AND IN MY BIO. PLEASE DO YOUR OWN HOMEWORK. THE STOCK HAS A LOT OF RISK.
    Aug 12 11:32 AM | 1 Like Like |Link to Comment
  • Bullish On American Apparel: Beyond Controversy, An Inflection Point And Growth [View article]
    Hi,

    Thanks for the comments.
    Aug 6 10:46 AM | 1 Like Like |Link to Comment
  • Bullish On American Apparel: Beyond Controversy, An Inflection Point And Growth [View article]
    Hi Michael,

    Thanks for the comment.

    Interesting comment about the Columbus store. It is summer vacation now, so I am assuming that your observation is about the school year, correct? What other stores are near the American Apparel store? Do they usually seem more full? Very interested to know.

    My observation about the NY store is purely anecdotal. I don't do official channel checks and it is by no means scientific.

    The company stopped doing earnings calls and investor conferences. While this is disappointing for investors trying to get info on the company, I can understand. They are in a messy period and working on a turnaround. There is probably not much that they can say to make investors more bullish on the company. I assume that if/when the company hits a few milestones, it will start doing more investor relations.

    I agree that this is a high risk, high reward situation.
    Jul 31 08:15 PM | 1 Like Like |Link to Comment
  • Bullish On American Apparel: Beyond Controversy, An Inflection Point And Growth [View article]
    Hi APPInvestor,

    Thanks for the comments and questions.

    There are lots of risks with APP and its accounting history and track record of losses are important risks. Also, I am not an accounting specialist.

    In my analysis, I assumed a higher share count that includes the impact of the warrants and an additional assumption for future dilution. Please see the table in the article.

    The company had 108 million shares outstanding at the time of the 10Q publication. In its income statement it doesn't include the dilutive impact of warrants because of the net loss. However, in my calculation I include the impact of the 53 million warrants. I assume that the company uses the proceeds for the exercise of the warrants to repurchase 15 million shares, to counter the dilutive impact of the warrants (this assumes the company buys back shares at $3, above the current price, to be conservative). I also assume 20 million shares of future dilution to be conservative.

    This is not a valuation of the warrants now, but a set of assumptions to figure out the share count in the future. Like all assumptions, it may or may not be correct. This does not answer your question about the accounting of the warrants, rather it is how I see the warrant situation playing out.

    Shareholder equity has been declining for a few years. It seems that the net losses were the main driver. The fact that shareholder equity is negative is a risk and a concern. However, I view it more of a lagging indicator than a leading indicator.

    I am not sure about the future pricing of the warrants. I am not a specialist either.
    Jul 31 11:15 AM | 1 Like Like |Link to Comment
  • Bullish On American Apparel: Beyond Controversy, An Inflection Point And Growth [View article]
    Hi seekingalphaalpha,

    Thanks for the comments. A few responses.

    This is definitely a high risk / high reward company and this article is focused on the long-term. This is not an overnight trading idea.

    Of course nobody knows what is going to happen 3-5 years from now. In the upside case, I set out a bunch of assumptions. If you don't agree with those assumptions, that is fine.

    I also noted a downside case where the stock could lose 50% of its value. There is clearly downside potential.

    We will see how it plays out over the next few months and year.
    Jul 30 04:02 PM | 1 Like Like |Link to Comment
  • Bullish On American Apparel: Beyond Controversy, An Inflection Point And Growth [View article]
    Hi Adam,

    Thank you.
    Jul 30 03:11 PM | 1 Like Like |Link to Comment
  • Bullish On American Apparel: Beyond Controversy, An Inflection Point And Growth [View article]
    Hi Marc,

    Thanks for the comments and questions.

    1) The midpoint for management's guidance for FY 2013 sales is a 6.3% increase over FY 2012. This is not just the retail segment and includes wholesale. In the retail segment they plan on opening 5 new stores, but most of the increase in retail revenue will come from same store sales. Management has not given guidance on same store sales, as far as I know. You can see the historical numbers in the tables in the article. Given this information, I thought it was prudent to start with 5% and decline. It will be hard to keep up with the historical numbers, but the initiative to increase accessories sales should help same store sales.

    2) I don't know the same store sales numbers for international vs. US. However, FY 2012 revenue growth compares to FY 2011 was 13.8%, 2.9%, 11.5% for US retail, Canada and International. US Retail had 3 less stores on a net basis and international had 7 more stores on a net basis.

    I hope this helps, but please do not rely on my information. This info is in the company's financials, so please check it. The article and my comments are not investment advice.
    Jul 30 03:11 PM | 1 Like Like |Link to Comment
  • Bullish On American Apparel: Beyond Controversy, An Inflection Point And Growth [View article]
    Update: Michael Bigger wrote a blog post about this article:

    http://bit.ly/16hgrva

    As I mentioned, I came across APP because of Michael Bigger's blog. This is a good example of following smart people, but doing your own homework. I liked his idea, but did my own homework. Please do your own homework and do not rely on my article. My article is NOT investing advice.

    In his post, Michael Bigger wrote:

    "It seems the company is getting quite a lot of attention from investors lately, and we are happy to see this. We would like to point out though that consumer spending headwinds have been faced by companies such as Crocs ($CROX), Coach ($COH), Deckers ($DECK), and a few others lately. Although $APP is not immune to these type of macro economic issues, our long term thesis is unchanged. We believe the company has strengthened its balance sheet to be able to withstand a few bumps on the road."

    This is an important risk.

    As I wrote in my article:

    "The 3x potential increase in the share price will likely take a few years to play out. Even if the upside case plays out, there may be dips along the way, so having a strategy for the downside is important. There are a lot of risks, so please do your own detailed homework. This article is not investment advice."
    Jul 30 12:16 PM | 1 Like Like |Link to Comment
  • The Disaster Scenario For Treasury Bonds [View article]
    Hi Bernard,

    The mistake was fixed. Thanks for your comments.
    Jul 29 09:32 AM | 1 Like Like |Link to Comment
  • The Game Has Changed: 4 Dynamics Impacting The S&P 500 In 2H 2013 [View article]
    Hi EK1949,

    Thanks for the comments and I will clarify.

    Inflation of ~2% is a good thing for the economy. Right now, inflation projections from the Fed dropped well below 2%. This is creating a situation where any movement in inflation could be a negative for the market.

    If inflation (and/or inflation expectations) rise to 2% in the short term, then the calls for tapering will pick up. Tapering and the eventual end of QE are negatives for equity investors. Low inflation is one of the reasons for the Fed to delay tapering and it may go away with higher inflation. Over the long term, 2% inflation is good, but I am concerned about how we get there from here.

    If inflation stays at the current levels, or drops, I also think it will be bad for equity investors as it will not help earnings growth and may lead to multiple compression.

    When I reference inflation in this article I mean the Fed's inflation definition. Inflation in my life is above 2%, but that is another topic.
    Jul 2 10:25 AM | 1 Like Like |Link to Comment
COMMENTS STATS
541 Comments
122 Likes