Sreeni Meka

Long/short equity, deep value, special situations, growth at reasonable price
Sreeni Meka
Long/short equity, deep value, special situations, growth at reasonable price
Contributor since: 2007
Company: Sreeni Meka's Covestor Profile
It is news if insiders are buying not the other way. Coffee price is not much a factor compared to dairy prices.
Other end I see big lines at every Starbucks drive-through and most of the stores are always crowded. May be I am looking at things half full. As economy is getting better I would say more customers are able to indulge these semi-addictive coffee drinks. There are number of intangible assets Starbucks posses what other retail outlets do not have. Most Starbucks customers express gratitude for the ambiance and customer service.
Starbucks is pioneer in mobile payments. Many customers pay ahead of the transactions through mobile purchases. That is Starbucks withdraw money from customer accounts into their digital accounts so their accounts have credit to buy coffee. How many companies can have the luxury of deferred cash ?
There is lot more to options pricing. Biggest threat to option pricing is implied volatility, and choosing right delta. Some people mitigate high prices with spreads . Unless you know what options you need to buy and at what price, there is great chance you may get burned.
Having said that, there is a great oppurtunity to make big and loose big due to 100X levarage. Take free options training at and do paper trading first prior to jumping into options trade.
Excellent insight on calendar trades, Terry.
Cash America Price to cash flow appears to be wrong . It should be much lower, Can you double check?
Congratulations Seeking Alpha. Glad I am one of the contributors from its infant days. With this kind of growth, one day SA will be as influential as Barron's or WSJ.
DVD rental business totally transformed from brick and mortar to Kiosk based. At present redbox is the name of the game.
Again never take a business for granted, Coinstar has to move pretty aggressively in transforming into online streaming while focusing on its core Kiosk based rental business.
Now a days Game Stop also feeling the pinch due to kiosk game rentals. As of now Coinstar is a double edged knife. I noticed people standing in lines to rent at kiosks during weekend nites.
DVD business is rapidly changing, as Netflix blinked competition is eating its lunch.
Once Netflix was the only online movie player and had negotiating power. Now Studios have more bargaining power as you mentioned more and more payers willing to buy the content from studios. Even $7.99 price does not look like break-even price for Netflix. They may have to raise the price as the new content is going to cost lot more. Online movie business model has been changing rapidly.
Netflix still carries great brand name, however CEO lacks confidence and selling his stock. Is it walk the talk ?
Buffett has built strong culture not just Berkshire corporation. His legacy and principles will guide his corporation even after Buffett. Same with Apple's Steve Jobs. They are irreplaceable but their corporate culture, vision and discipline stay there way longer.
Good work Brad. I own some TSCO myself. I bought it even it appears trading at Par . I see dedicated customer base for Tractor Supply every time I visit their stores. Majority of the customers appears to be upper middle income group and they are comfortable at Tractor supply than over crowded urban shopping outlets. Balance sheet looks healthy, however TSCO pays $161,214 million on operating leases. I guess they must be including those expenses in SG&A. How about capitalizing these expenses for analysis purpose ? Still debt ratios are not that bad even after conversion. Any weakness in TSCO I may add more.
Jason, Enjoyed reading your article and your analysis. GMCR running tight on cash flow for past several periods. I agree its growing firm needs to reinvest. But they are in borrowing binge and spending more on acquisitions than net operating cash flows, in other words negative free cash flow. Inventory unusually high this quarter along with additional borrowing .
The hyper growth in coffee industry is too good to believe. I have not read complete 10K statements to comment on financial shenanigans, however with the recent SEC investigation one can smell rat. Again no one is guilty until proven. We wish them good luck, in the mean time I stay defensive with this equity.
Appreciate your responses. The more pungent they are, the better I get convinced to acquire more. That is what happened during my last recommendation on Cal-Mine foods. I had very interesting responses on that article. So far Cal-Mine returned 57.52% with dividend that is 74.18% annualized since June 12,2009. Hey, there are no guarantees, do your due diligence before you invest.
I am convinced Patni is still undervalued based on balance sheet and cash flow analysis. Going forward, there is lot of room for growth as far as IT outsourcing business. Patni has all the elements to grow.
One other factor I forgot to mention was it's tax status. Patni is enjoying tax holiday benefits due to its development center locations in special economic zones (SEZ) and may not continue after March 2011 unless they extend a potion of their development centers in new SEZ locations. That will extend its special tax benefits for 15 years.
Good analysis Paul. I am long time holder of this equity. Here is an additional way I analyze this stock:
As end of September AB has $500 Billion assets under management. Historical (adding good times and bad times) the average price per $100B assets the stock price is at $8. So I can say the fair price is $40 and assets still growing with market. That makes the current price is at very good position. I can say high margin of safety, and business model is great although there were cultural issues during merger. Now the storm and calm period is over. Business should get better. Here is historical AUM and equity price ratios. Its a sure pick for value equity holders.
Month -- AUM ($B) -- Month End Stock price -- Price/$100B
12/31/2004 538 $42.00 $7.81
04/30/2005 522 $44.94 $8.61
06/30/2005 516 $46.74 $9.06
08/31/2005 543 $44.22 $8.14
11/30/2005 568 $55.00 $9.68
03/31/2006 617 $66.25 $10.74
06/30/2006 625 $61.14 $9.78
09/30/2006 659 $68.99 $10.47
11/30/2006 731 $76.49 $10.46
03/31/2007 742 $88.50 $11.93
06/30/2007 793 $87.09 $10.98
09/30/2007 813 $88.07 $10.83
11/30/2007 806 $81.95 $10.17
01/31/2008 751 $66.39 $8.84
04/30/2008 766 $62.02 $8.10
06/30/2008 717 $54.68 $7.63
09/30/2008 590 $37.01 $6.27
11/30/2008 452 $17.61 $3.90
01/31/2009 429 $17.08 $3.98
03/31/2009 411 $14.72 $3.58
05/31/2009 458 $19.08 $4.17
07/31/2009 467 $20.64 $4.42
08/31/2009 482 $27.04 $5.61
09/30/2009 498 $27.28 $5.48

Average: $7.94
Justified Price $39.56
In India, it is like 2008 Real estate market in USA as far as real estate is concern. The real estate time bomb set to explode in late 2009 or 2010. Over construction, speculation drove the urban land prices unreachable to average Indians.
Even in small towns in India with less job prospects or reliable future tax stream real estate prices are lot higher than thriving American cities. For past year or so real estate transactions came to screeching halt due to slow down in software business. First time many young Indians got to know about cyclicality of economy since Indian economy closely tied to global markets.
I don't know the percentage of these real estate assets in Indian bank balance sheets but if common man cannot afford to buy land or home with his disposable income it is simply American lesson. Real Estate market collapse like Miami condo market, so do the banks in India.
No, I do not work for Cal-Maine. And all my research is from non-material public information, mostly from SEC's edgar and other public data. I personally come up with ratio's and projections with my own calculations.
By the way, this weekend Barron's mid-year review discussed about this equity. I am long on this equity and personally I would rather invest than trading for short-term.
On Jun 13 10:33 AM firboy4 wrote:
> That last remark makes me think that you work for Cal-Maine. I've
> been watching and trading this stock for several years and it's P/E
> ratio is always very low, yet the stock still seems to fluctuate
> between 18 and 26. So, for me, CALM is a trade, not an investment.
> But one good thing about it is that if I ever get stuck holding it
> for a while, I know that the dividends are decent. So, I'm with
> you on buying this stock. I actually think I bought it on Friday
> afternoon after having sold it early that morning.
> Due to simply looking at it's 52 week chart and having traded it
> many times, when I was checking it out a couple of weeks ago and
> noticing it was down to around 20, I just knew it was due for a rebound.
> Either I was just lucky or maybe looking at the 52 week chart helped.
> But it went up to 26. I thought it would only go up to 24 though,
> and then drop back down to around 22 or so. It did drop back down.
> That's just the nature of this stock!
> Anyway, one can make a nice living just trading the fairly even ebb
> and flow of this stock's price, and do it in the safety of knowing
> dividends will continue. As you said, Mr. Adams has 1/3 of the shares,
> so I could assume that he wants those dividends to keep coming his
> way.
> Along with that, the whole idea of people eating eggs is in itself
> a good topic for much discussion, including the influences you mentioned
> such as population growth, fertilizer prices, etc... But all things
> considered, the egg business is in my opinion a rather stable business.
> If Marie Antoinette had said, "Let them eat eggs." maybe she wouldn't
> have lost her head. Hey, it's Saturday and I'm just having my coffee
> before heading out on the trails.
Appreciate your comments. If cash flow simply depends on depreciation rather than income, ( in my opinion ) it is a sure sign of trouble. It takes long time to realize the emperor is naked until some one from big investment firm down grades the equity.
One of the factor was amount of remittance getting into India. It has leaped to $30 billion USD per year , which is highest in the world. But we are not counting Hawala amount comes pretty much come from blue collar workers at Middle east; probably nothing from US after September 11th. Half of the legal amount (Approx. 15Billion) goes to Andhra Pradesh and most of it end up into Hyderabad.
My guess (again its a guess) is 80 percent of 30 billion amount goes southern cities, pre-dominantly Hyderabad, followed by Bangalore and Madras, since most of Indians in US and Canada are from these cities. Add up Gujaratis and Punjabis and Malayalis from Middle East; ton of this money is not going into productive resources (Job creating) like Manufacturing or technology but mostly it to buy land (which is fixed supply). Naturally Indians enjoying free ride in real estate, now the demand outweighed by supply and eventually speculators and greed.
If you are concerned about northern cities, you cannot imagine souring high prices in Southern cities, even including third tier towns in Andhra Pradesh.
What bothers me most is, financial system in India is not very tightly regulated. Banks including ICICI, HDFC, CITI are willing to give loans more than 100 percent value. Last night I got cold call from ICICI and willing to give 1 crore loan ($250,000). We are worried about sub-prime loans in US, which we all thought highly monitored market ended up in to deep mess and pulling entire economy in recession.
Indians never had such kind of wild boom in its entire history after independence. All the sudden every one who hold few acres of land feeling like multi-millionaires. Do you remember early 2000 and late 1999 days in USA?
Some argue Indians making higher salaries than before due to outsourcing and buying more properties, well what about 99 percent of Indians working on jobs not related to US software and associated firms.
Indian stock market has grown leaps and bounds since 2002 and the valuation is so high after all the foreign money including hedge funds pumped into Indian market. When will we see March 2000 days in India? Is India at verge of Bubble to pop? Or some more time stream left in the wild ride? Prudent idea is, cash out and deposit your proceedings in a banking system where you will get guarantee for whole deposit.
I would rather not see Indian market to collapse and vanish all the paper wealth overnight. However, at this extreme over-priced real estate and stock market makes me nervous. Time only tell the unbearable prices (even in dollar terms) are real or irrational. Nevertheless, if there were correction in Indian market, probably it would be brutal since Indian capital market does not have checks and balances like other matured western markets. If Indian market catches the cold, Banks will belly-up with liquidity issues and bankruptcies drive both real estate and stock market to bottom. Indian banks do not have insurance more than $2500 (RS100,000), and people have deposits other than federal(state/union) banks will seeall their wealth also get vanished overnight. That is what happened in 1929 market crash in USA, India has not seen that kind of catastrophe before and I hope not.