Scott Weitz

Why This Rally Is Unsustainable

Of course individual stocks can do well.

I'm referring to our macro situation...and its not pretty. Bankruptcies are climbing rapidly, foreclosures are off the charts, we're closer to socialism than most realize. Equities have rallied, but credit markets remain terrible.

The game has changed. Those that think we're going to bounce back to 2007 levels are kidding themselves.


On May 05 05:12 PM Smackdown wrote:

> Wrong. Plenty of opportunity. I already pointed out the MLP space.
> Earnings have continued strongly and distributions are being increased.
> Things are not so tough. The world goes on and taking advantage of
> the panic has yielded once in a lifetime returns.
>
> Alerian MLP index returns for 10 years (as of 4/27) is 13.27% annual.
> One year is -21.9%, five year is 6.94%, ytd is up over 25%.
>
> S&P by comparison is 10 year -2.85%, One year is -37.01%, five
> year -3.57%, and ytd is kind of a wash.
>
> From Oct/Nov lows, the Alerian is up over 50% with divs. Individual
> name, the way I do it, are up way more.
>
> Please educate me about why these companies are doing poorly or why
> I should not be long? Some like SXL and NS have announced record
> results and are actually forecasting more records....
>
> Plus I am collecting huge tax deferred distributions that are steadily
> increasing.
>
> On May 05 02:59 PM Scott Weitz wrote:

Why This Rally Is Unsustainable

How can you call the author a 'basketcase' when you give no facts and/or data to support your position.

The reality is that home prices have not hit bottom, the banks are a fraud, the commercial real estate market collapse is imminent...and don't forgot about the coming crisis for municipalities and state and dreadful lack of tax revenue.

Lets call a pig and pig, and not try to dress it up. Earnings are down 33% + across the board. Things are tough....but we need to let the system unwind. Denying that we have a problem will not fix the situation.

In time, you will certainly be right, a recovery will come...but we are not in the midst of it now. Things are still getting worse.

On May 02 02:32 AM InvestBaboo wrote:

> This author is a real basketcase.
>
> XL capital staged a rally to $9.84 from the low digits. To this basketcase
> author this is a 400% unjustfied rally. He would argue "What has
> changed in the fundamentals since March of this year to justify a
> 400% rally?" To those investors who remember seeing XL at 40 dollar
> plus last year it has barely begun to make up for the decline. These
> investors were probably shocked and aghast that a 40 dollar stock
> so quickly ran down to the single low digits in such a short timeframe.
> The same is true with all other equities the author talks about.
> The author forgets that these were behemoths once that were brutally
> punished by the market and have not recovered even to half their
> original value.
>
> "THE MARKET OVER CORRECTED MANY EQUITIES TO THE DOWNSIDE AND NOW
> IS BARELY BEGUN MAKING UP FOR THE OVER CORRECTION." There have been
> significant improvements in the fundamentals that are helping the
> markets now put proper value on these devastated equities. While
> the market will not reward them with their 2008 highs (yet!) the
> market will certainly take them a lot higher than where they are
> today.
>
> It is exactly this "Cup half empty" syndrome that creates suckers
> out of people. People like this author always think they are smarter
> than the market and always try to double guess and/or outsmart the
> market. There is a whole bunch of these sucker authors on Seeking
> Alpha who have caused their readers great disservice by influencing
> them to stay out of this rally. If this author and others like him
> had simply followed charts and then came up with a rationale to justify
> why the markets were rewarding the equities perhaps they would not
> only be wiser but also richer.
>
> As for the author finding faults with the technical parameters of
> this rally there are thousand other analysts who will look at the
> same data and argue otherwise. At the end of the day the markets
> rule and investors are wise to follow the trend till the bend at
> the end.

Is Crocs Doomed For Failure?

I guess this argument was just settled...down 20% in afterhours.

Is Crocs Doomed For Failure?

I guess this argument was just settled...down 20% in afterhours.

Is Crocs Doomed For Failure?

You see what you want to see. I'm not denying that CROX is a good company. I am arguing that they are trading at unsustainable valuations and the stock will crash on the first sign of bad news.

As for the CC, what do you expect them to say? 'Domestic sales are slowing and our stock is overvalued'? I don't hear many executives that are bearish on their own company.

Is Crocs Doomed For Failure?

I understand the growth vs. Nike and that you can’t compare on P/E’s alone. But, market cap 1/5th of Nike….seems outrageous. In my opinion, they seem to be a one horse wonder. Maybe it’s just where I live, but I have yet to see other shoe models (aside from an occasional flip-flop) or their clothing out on the streets.

I guess time will time. However, if I were long this stock, I would be more concerned than most of you. Insider selling (which admittedly is always an issue in most stocks) is abnormally high; here’s a list of sales in the past week alone: 1) Director: 53,000 shares sold; 2) VP: 61,369 shares; 3) CEO: 9,734; 4) CEO’s wife: 64,464 shares!!

Check out Director Raymond Croghan: He owned a little more than 350,000 towards the end of ’06 according to my calculations. Since then, he consistently sold share with the pace of sales picking up exponentially in the past couple months. Today, Raymond is left with 9,960 shares….are these the acts of a man confident in where the stock is sitting?
Granted, Raymond may have circumstances that I don’t know about, but this raises a big red flag to me.

You can tell me how fast CROX is growing until you’re blue in the face, but I would listen to the people who really know and whose actions speak louder than words.

Is Crocs Doomed For Failure?

I understand the growth vs. Nike and that you can’t compare on P/E’s alone. But, market cap 1/5th of Nike….seems outrageous. In my opinion, they seem to be a one horse wonder. Maybe it’s just where I live, but I have yet to see other shoe models (aside from an occasional flip-flop) or their clothing out on the streets.

I guess time will time. However, if I were long this stock, I would be more concerned than most of you. Insider selling (which admittedly is always an issue in most stocks) is abnormally high; here’s a list of sales in the past week alone: 1) Director: 53,000 shares sold; 2) VP: 61,369 shares; 3) CEO: 9,734; 4) CEO’s wife: 64,464 shares!!

Check out Director Raymond Croghan: He owned a little more than 350,000 towards the end of ’06 according to my calculations. Since then, he consistently sold share with the pace of sales picking up exponentially in the past couple months. Today, Raymond is left with 9,960 shares….are these the acts of a man confident in where the stock is sitting?
Granted, Raymond may have circumstances that I don’t know about, but this raises a big red flag to me.

You can tell me how fast CROX is growing until you’re blue in the face, but I would listen to the people who really know and whose actions speak louder than words.

Is Crocs Doomed For Failure?

JJ-

All you talk about is margins and how comfortable the shoe is. How do you explain that the company is valued at 1/5 the price of Nike with only 5% of the revenue.

Its a great product....my wife and kid both love them...its just tremendously overweight from a valuation perspective.

How do you explain all the insider sellling...its off the charts. Do you think you know something the board members don't???

And what about all the knock-offs? Is that going to hurt the company?

Is Crocs Doomed For Failure?

Does this imply that domestic sales were not that good this quarter?...just a thought.

Two Stalled Retailers To Consider Buying

I agree in terms of UA. CROX doesn't have the brand recognition UA has....and their market cap vs. Nike is WAAY to high to even consider buying the stock at this point. According to stock owners, CROX is 1/5 the size of Nike...that is absurd.

My prediciation: UA continues to roll, and CROX will have a miserable winter.

Is Crocs Doomed For Failure?

these companies are speculative...at best. I sold bite shoes while in college...they are a neat idea...but they'll never be huge in the golf market.

Is Crocs Doomed For Failure?

CROX is a good company, but they are WAAAY over valued right now.

Market Cap is approximately 1/5 of Nike!?!!?!? ....while Revenue is 5% of Nike. That is insane people.

Even if they continue to grow at current rates, it will take years for this stock to be fairly valued at current price.

And I'm not the only one with this opinion: the CROX CEO himself sold 53,000 shares last week!!!...and has sold over $60 MILLLION worth of shares this summer.



I like the product, but I hate the stock...investors need to see the difference.

Even Insiders Are Selling Crocs

Aside for my comments for VOIP, I've got some other reasons to think twice about crocs.

1) Saw some great CROCS knockoffs at the mall the other day for 12.95....they were identical to Crocs....increased competition is never good.

2) Is it just me, or are the winter shoes hideous?! Not that the summer crocs aren't hideous, but at least the summer models can be worn by kids and have some 'flair'. I can see why kids would love them. Of course this is just an opinion, but I think the winter models will only be purchased by the crocs loyalists and will not have the broad appeal of the summer models.