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  • iPhone 6 China Launch May Be Delayed Until 2015, Apple, China Mobile Sell Off
    Yesterday, 1:58 PM AAPL 41 Comments

    Summary

    • Reports have surfaced that the iPhone 6 China launch could be delayed until 2015.
    • Pre-orders for the iPhone 6 have reached 4 million. Analysts are expecting sales of 10 million units on its launch weekend.
    • China represents 15% of Apple's revenue.
    • A delayed China launch could cause the iPhone 6 to miss its sales bogey.
  • Will The Last Casino Leaving Atlantic City Please Turn Off The Lights?
    Yesterday, 8:19 AM BYD, MGM, CZR 4 Comments

    Summary

    • Trump Plaza is set to close on September 16th - the 4th Atlantic City casino to close this year.
    • Atlantic City casino revenue has declined about 8.2% each year since 2006 due to hangover from the financial crisis, and competition from new casinos surrounding states.
    • 12 new casinos are in the pipeline for the mid-Atlantic and New England area.
    • Avoid Caesars, MGM and Boyd Gaming due to exposure to Atlantic City.
  • iPhone 6 Release Delayed In China: Will The Launch Be A Bust?
    Mon, Sep. 15 AAPL 97 Comments

    Summary

    • The iPhone 6 launch is being delayed in China.
    • Apple is not following the playbook for the iPhone 5S and 5C which led to a sale of 9 million units on their launch weekend.
    • The last iPhone launch to be delayed in China - iPhone 5 - sold only 5 million units on its launch weekend.
    • If history is any lesson, the iPhone 6 launch will be a bust.
  • How BlackBerry Flipped The Script On Apple And IBM
    Mon, Sep. 15 BBRY 178 Comments

    Summary

    • BlackBerry's acquisition of U.K. start-up Movirtu is creating buzz.
    • If Movirtu's virtual SIM technology is used in devices for Apple, Samsung, et al., it will be a game changer.
    • The Apple/IBM alliance in enterprise mobility was expected to hurt BlackBerry in a key area for growth.
    • With the Movirtu deal, BlackBerry has completely flipped the script.
  • Caesars In Restructuring Talks, Debt For Equity Swap Could Be Highly Dilutive
    Fri, Sep. 12 CZR Comment!

    Summary

    • Caesars and its subsidiary, CEOC, are in formal talks with first-lien bondholders to restructure $6B in debt.
    • Caesars has transferred significant assets from CEOC to other subsidiaries, including CERP and Caesars Growth Partners.
    • First and/or second-lien bondholders will most likely ask that Caesars unwind these transactions prior to any restructuring.
    • Given $24B in debt and an enterprise value of $12 - 15B, a restructuring will most likely result in a debt for equity swap.
    • Caesars' equity is worthless and any debt restructuring will be highly dilutive. Caesars is a short.
  • BlackBerry's Acquisition Of Virtual SIM Start-Up Enhances BYOD Offering
    Thu, Sep. 11 BBRY 76 Comments

    Summary

    • BlackBerry recently announced its acquisition of Movirtu, a U.K. start-up whose software allows users to have multiple phone numbers on the same device.
    • Movirtu's virtual SIM technology makes it easier for employers to bill for work-related use of mobile phones.
    • SIM technology should also enhance BlackBerry's mobile device management in the BYOD space.
    • BlackBerry remains a strong buy.
  • 21Vianet: Management Call Raised Red Flags, Stock Down 15% Mid-Day
    Thu, Sep. 11 VNET 19 Comments

    Summary

    • 21Vianet was up 18% in early trading yesterday on news of a $100MM stock buyback.
    • The shares closed down 8% due to an article accusing the company of fraud and falsifying financial records.
    • Management's Thursday morning conference call did not assuage investors as the stock opened lower.
    • Where there is smoke, there is fire. I am short 21Vianet.
  • Forbes Thinks Molycorp Is Oversold, Here Is Why They're Wrong
    Thu, Sep. 11 MCP 29 Comments

    Summary

    • Molycorp closed at $1.50 per share on Tuesday, achieving a new 52-week low two days in a row.
    • Forbes believes the stock is way oversold.
    • Given stiff headwinds in the broader markets and Molycorp's $1.35 per share valuation, the stock may have more room to the downside.
  • Lululemon Earnings Preview: The Growth Story Is Officially Over
    Wed, Sep. 10 LULU 26 Comments

    Summary

    • Lululemon disappointed the market last quarter when earnings declined 60% Y/Y.
    • The stock sold off 16% in one day, prompting founder Chip Wilson to seek alternatives to raise the stock price.
    • Wilson sold half his shares to a private equity firm, yet Lululemon's growth story is still in question.
    • At 22x trailing 12 months earnings and a cloudy future, I expect the stock to decline post-earnings.
  • RadioShack: Closing Its Doors For Good?
    Wed, Sep. 10 RSH 9 Comments

    Summary

    • Last quarter's $38 million cash burn has left RadioShack with $62 million in cash on hand.
    • The rumored cash infusion from Standard General has yet to materialize.
    • Bankruptcy could be imminent.
  • Did Twitter's 'Buy' Button Kill The Sell Thesis?
    Wed, Sep. 10 TWTR 10 Comments

    Summary

    • Twitter has been on its grind since Q2 earnings.
    • Catalysts for the stock include a more targeted ad model, European expansion and testing of promoted videos and a "buy" button.
    • At 26x run-rate revenue, Twitter's valuation is robust given it does not turn a profit.
    • If Fed talk of interest rate increases or ending QE persists, I would sell Twitter at these levels.
  • 3 Reasons Why Caesars Is The Short Of The Year
    Tue, Sep. 9 CZR 26 Comments

    Summary

    • At 8x-10x LTM0614 adjusted EBITDA, Caesars stock is worthless.
    • As the market factors in Caesars' $24 billion debt burden, the stock's trading value ($12.05) and intrinsic value ($0) should converge.
    • At sell-offs of 60%-70% in the shares, the January 15, 2016 puts at a $10 strike price would deliver returns from 90%-130%.
  • Avoid These Two Casinos With Exposure To Atlantic City
    Mon, Sep. 8 CZR 11 Comments

    Summary

    • Casino revenue in Atlantic City has declined over 8% annually since 2006.
    • Caesars' recent closing of Showboat Casino is the third casino closing in Atlantic City this year.
    • Investors should avoid MGM and Caesars based on exposure to Atlantic City.
  • Apple: 4 Reasons Why The Giant iPad Will Be A Giant Flop
    Mon, Sep. 8 AAPL 179 Comments

    Summary

    • Apple is rumored to be developing a giant iPad.
    • A giant iPad would limit mobility and be a step backwards in comparison to the original iPad concept of increased mobility.
    • The iPhone 6 and BlackBerry Passport will hurt sales of the giant iPad.
    • Amid a declining U.S. economy, consumers will reduce purchases of luxury items like a giant iPad.
    • The giant iPad will be a giant flop.
  • MarketWatch: 'Chinese Government Will Do Everything To Stop Apple'
    Mon, Sep. 8 AAPL 80 Comments

    Summary

    • China represents 15% of Apple sales and the lion's share of the company's growth.
    • For the iPhone 6 launch to be successful, Apple needs the full support of the Chinese market.
    • MarketWatch's assessment throws cold water on the Apple investment thesis.
    • If Apple reaches $110 or higher after the iPhone 6 launch, I plan to short the stock.
  • Molycorp Placed On CreditWatch By S&P, Tests 52-Week Low
    Mon, Sep. 8 MCP 12 Comments

    Summary

    • S&P placed Molycorp on CreditWatch with positive implications.
    • The Oaktree financing will solve Molycorp's liquidity and working capital needs in the short-term.
    • Mountain Pass is not fully operational, which S&P views as negative. The stock declined 5% on the news.
    • I used the stock drop as an opportunity to take profits on my short position.
    • The stock is near its 52 week low of $1.61. With 60MM shares sold short, potential short covering could send the stock higher.
  • Did Samsung Spook Apple Investors?
    Fri, Sep. 5 SSNLF 13 Comments

    Summary

    • Samsung launched three new devices on September 3rd, including the Galaxy Note 4 phablet.
    • Apple's stock declined 4% due to positive reviews after the Samsung launch, and fears that the iPhone 6 launch would not live up to expectations.
    • Xiaomi Corp. and Lenovo Group Ltd. are hitting Samsung on the lower end the market.
    • Samsung's preemptive strike may have been an attempt to soften the blow from the iPhone 6 on the premium end of the market.
    • Based on pent up demand, the iPhone 6 launch should be a success. I expect Apple's stock to bounce back above $100.
  • Molycorp: Oaktree $400MM Lifeline Is 2014's Most Expensive Loan
    Fri, Aug. 29 MCP 27 Comments

    Summary

    • Oaktree's $400MM lifeline at 12% is the most expensive loan of 2014.
    • Oaktree receives 10% warrants and is well-positioned to control the company if Molycorp restructures.
    • I rate the stock a sell.
  • Caesars Is Worth $0 Per Share
    Fri, Aug. 29 CZR 23 Comments

    Summary

    • Caesars was acquired in an LBO for $6 billion in cash and $22 billion in debt at the height of the financial crisis.
    • Current Long-term debt of $24 billion is 16x LTM EBITDA of $1.6 billion.
    • At 8x - 10x LTM EBITDA, Caesars is worth $12 - $15 billion, much less than its $24 billion debt load.
    • Caesars' stock is worthless.
  • Carl Icahn Needs To Pump The Brakes: Herbalife Worth $34-$43 Per Share
    Fri, Aug. 29 HLF 27 Comments

    Summary

    • A recent tweet from Carl Icahn sent Herbalife's share above $51 per share.
    • At 5x - 6x EBITDA, which is warranted for a company with flat to declining earnings, Herbalife is worth $34 - $43 per share.
    • Herbalife is a sell.
  • Herbalife's Convertible Bonds Signal Pain Ahead
    Thu, Aug. 28 HLF 164 Comments

    Summary

    • In Q1 2014 Herbalife raised $1.2 billion in convertible debt to facilitate stock buybacks.
    • Disappointing Q2 results revealed slow revenue growth and declining earnings.
    • Public attacks against its business model could hurt Herbalife's ability to grow its sales force, maintain revenue and cash flow.
    • Convertible debt - trading at 78 cents - is signaling pain ahead for Herbalife.
  • Best Buy Fights Gravity, But Stock Sells Off 5% Post Earnings
    Tue, Aug. 26 BBY Comment!

    Summary

    • Best Buy announced quarterly earnings this morning.
    • Revenue and operating income after-tax declined 4% and 38%, respectively, Y/Y.
    • At 14.0x LTM operating income after-tax, and 6.8x LTM EBITDA, Best Buy is a sell.
  • Molycorp: Conversation With Kamakura - What Did Bondholders Tell Us Prior To Q2 Earnings?
    Tue, Aug. 26 MCP 34 Comments

    Summary

    • Molycorp's senior and subordinated debt were sending signals prior to Q2 earnings.
    • The subordinated notes confirmed that the company was impaired. The senior notes implied a pending event that could leave senior note holders with fewer claims on assets.
    • I currently have a sell rating on the stock and own straddles in case bondholders are correct.
  • Earnings Preview: Can Best Buy Continue To Fight Gravity?
    Tue, Aug. 26 BBY Comment!

    Summary

    • Best Buy reports quarterly earnings Tuesday morning before the market opens.
    • For the quarter-ended May 3, 2014 Y/Y declines in revenue and EBITDA were 3% and 6%, respectively.
    • Shifts in sales from brick and mortar to online has exacerbated sales at retailers like Radio Shack and Staples.
    • Best Buy has been fighting gravity as its online revenue grew 29% Y/Y. Online revenue growth is key to it meeting revenue expectations of $9B.
  • What Do The iPhone 6 And Air Jordan Have In Common?
    Mon, Aug. 25 AAPL 12 Comments

    Summary

    • Apple has traditionally sold iPhones in China like Nike sells Air Jordan retros - sell low volumes and maintain tight supplies to create frenzied demand.
    • China's gray market drove sales of the iPhone 4, iPhone 4S and iPhone 5.
    • The iPhone 5S is first iPhone to dominate China's market based on new sales.
    • To meet the iPhone 6 sales bogey, Apple must deviate from the "Nike Air Jordan playbook", and follow the "iPhone 5S playbook" in order to tamp down gray market sales.
  • Earnings Preview: Corinthian Colleges Is Flunking Out
    Mon, Aug. 25 COCO 3 Comments

    Summary

    • Corinthian Colleges is set to report earnings Aug. 25.
    • The government is investigating the company over whether it misled investors and students over its finances and job placement rates.
    • Without government support for student loans, Corinthian's going concern value is in question.
    • Whether or not it survives could be a harbinger for the for-profit college industry.
  • Excluding World Cup Impact, Twitter Is Worth $31 - $34 Per Share
    Fri, Aug. 22 TWTR 37 Comments

    Summary

    • Twitter's management felt the World Cup impact on Q2 results were de minimis.
    • I estimated Twitter's Q2 2014 revenue excluding the World Cup impact at $270 million, or $42 million less than the $312 million actually reported.
    • At 18x - 20x run-rate revenue sans World Cup, Twitter is valued at $31 - $34 per share, or 31% - 24% below its current price of $45.
    • Twitter is a sell.
  • Molycorp Is Worth $1.35 Per Share
    Fri, Aug. 22 MCP 63 Comments

    Summary

    • Molycorp's Q2 cash burn of $80MM was higher than expected.
    • The company is negotiating a $400MM financing package, of which $250MM will be available immediately.
    • Based on required capital of $430MM, I value the stock at $1.35 per share.
  • Red Herring In Twitter's 'Facebook-Like' Ad Revenue Model
    Thu, Aug. 21 TWTR 6 Comments

    Summary

    • Twitter is revamping its ad revenue model to resemble Facebook's.
    • Under "pay for performance" model, advertisers will pay when users click a link, download an app or supply their email address to advertisers.
    • By changing its ad model now, Twitter is implying that its Q2 results were amplified by the World Cup and are not sustainable going forward.
    • I rate Twitter a sell.
  • Molycorp: Sans Oaktree Financing, Q1 2015 Bankruptcy Likely
    Thu, Aug. 21 MCP 36 Comments

    Summary

    • Molycorp's $400 million Oaktree financing overshadowed dismal Q2 financial results.
    • Excluding a $13 million legal settlement, Q2 cash burn would have been $93 million.
    • Q2 results make previous estimates of bankruptcy appear more prescient.
    • The market is telling us that even with the Oaktree financing, Molycorp is still not out of the woods.
  • Molycorp Investors Register To Sell 23.8 Million Shares, Stock Dives 10%
    Wed, Aug. 20 MCP 19 Comments

    Summary

    • Shareholders have filed a shelf registration to sell nearly 24 million shares (about 10% of shares outstanding).
    • The stock is down 10% on the news.
    • Given operating losses and cash burn gone unabated, investors should avoid Molycorp.
  • Urban Outfitters' Earnings Decline Amid Record Revenue Portends Trouble
    Wed, Aug. 20 URBN Comment!

    Summary

    • Urban Outfitters reported quarterly earnings yesterday.
    • Revenue was up 7% Y/Y, yet net income declined 20%.
    • With a 21x p/e ratio amid declining earnings, Urban Outfitters is a sell.