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  • Consider Shorting The Shake Shack Now [View article]
    The thing is I really don't know where the stock will go in 5 days in 5 months. But I have high visibility the stock will touch the IPO price of $21 in a year. I think you pay too little attention to the timing factor. The single most painful aspect for short is not only to be right but also to be right in a short time interval. That's why, to have the timing right, short sellers have to have a good catalyst. Given SHAK is outrageously overvalued, I doubt the decline will stop in one day. So, I don't care to lose the absolute top. I only care about risk adjusted returns.

    Option trading is not exactly the answer either. While a few strategies limit the downside, the upside is not as big either.

    Again, we have different approaches in terms of shorting. I just feel some inexperienced short sellers will make the wrong move given you did not list the actual short strategy in your main article.
    Jan 30, 2015. 04:02 PM | 1 Like Like |Link to Comment
  • Consider Shorting The Shake Shack Now [View article]
    I appreciate the author wrote this article to outline SHAK's financials. However, the argument in this article is considered weak from a short seller' angle. Good short sellers do not make decision based on conservative EBITDA and P/E valuation metrics. (They use aggressive valuation metrics to ensure margin of safety at the short side) Growth stocks rarely plunged significantly just because of valuation alone. If the company continues to grow at higher pace than the market expectation, any drop caused by valuation concern will be used as an excuse to buy more "cheaply".

    Again, I don't dispute SHAK is massively overvalued, but when a short trade is on the table, conservative EBITDA and P/E valuation metrics are not enough. Market mentality has to be considered as well. Otherwise, a naïve reader will be burned quickly to receive a margin call for the short trade and then realize the stock indeed drop by 50% after a year.
    Jan 30, 2015. 02:08 PM | 3 Likes Like |Link to Comment
  • Consider Shorting The Shake Shack Now [View article]
    Timing is key here. I won't short it until its sales growth misses the estimate. It is a pain to short it now and see it goes up to $80. Short sellers love catalyst. Valuation alone is not a good catalyst. After all, theoretically, the pumpers can always justify the price as long as the company continue to expand at 40% pace. "It will be the next CMG."" Buy it because it will be eventually worth $10 billion" ...

    An earning miss can counter all these non-sense arguments.
    Jan 30, 2015. 01:58 PM | 4 Likes Like |Link to Comment
  • Shake Shack - Should You Buy Into The IPO Hype? [View article]
    I won't say SHAK is a cult stock. Rather, it is a fashion stock. As a New Yorker, I know how people get into the crowd of Shake Shack. People around you all talk about it, then you decide to try it out. Then, people start to shake their heads. It is just good burgers. Nothing really that special. Most of people I know only go there every couple of months while most of these guys go to Chipotle at least once a week. The difference is CMG retain people while SHAK attracts new people. The lukewarm comps data from SHAK confirms it.
    Jan 30, 2015. 01:15 PM | Likes Like |Link to Comment
  • Shake Shack - Should You Buy Into The IPO Hype? [View article]
    Yes. I learn to respect you as well. I think we have common interest on consumer oriented companies. After all, these companies are relatively easy to understand. However, it is also very difficult to find significantly mispriced stocks in these stocks. SHAK is one of the few. I may pull the trigger to short it after it reports a disappointed earning.

    After years, I learn to only pull the triggers when things get pretty extreme.
    Jan 30, 2015. 01:10 PM | Likes Like |Link to Comment
  • Coach Mirrors Starbucks: A Restructuring Déjà Vu [View article]
    Coach's latest earning is not as bad as I thought. However, there is still little indication the company is improving. The "improving" North American comps reflected the semi annual sale Coach did in 2014.

    Let's look at this way. Coach is still priced almost 20 times of its 2016 earnings. There may be some upside, but hardly enough to offer 30%-40% return potential for a year.

    It is not a good idea to buy now.
    Jan 30, 2015. 11:29 AM | Likes Like |Link to Comment
  • Shake Shack - Should You Buy Into The IPO Hype? [View article]
    Well said, Whatsup. We finally found a common ground.
    Jan 30, 2015. 11:23 AM | 1 Like Like |Link to Comment
  • Shake Shack - Should You Buy Into The IPO Hype? [View article]
    Let's see who are the silly boys catching the stock above $50 and forgetting to sell quickly.
    Jan 30, 2015. 11:08 AM | Likes Like |Link to Comment
  • There's A Lot To Like About Shake Shack [View article]
    The new $21 IPO price makes HABT's $18 IPO price a steal. People who think SHAK will have the same IPO run as HABT will be deadly wrong. It is ok to be "overvalued", but when the valuation gets too extreme. The only feasible outcome is to decline.
    Jan 30, 2015. 08:43 AM | Likes Like |Link to Comment
  • Investors Should Run Away From The Shake Shack [View article]
    Shack burger is good but not great. The amount of oil they use on the burgers is too much. Very strong flavor. I cannot imagine anyone can eat the unhealthy burgers every day.

    The store environment is also just OK. Better than McDonald but not as good as Panera.

    I see Shack burger a fashion in NYC. The fashion will reverse in a few years.

    The average stock sales will continue decline. I can't imagine that will have any stores outside NYC will have more sales per store. The traffic in NYC is just incredible. The fashion nature of New Yorkers also helps its sales in the past years. The selling shareholders are very smart to get out when the fashion is about to burn out.
    Jan 29, 2015. 10:21 AM | 1 Like Like |Link to Comment
  • Investors Should Run Away From The Shake Shack [View article]
    Very nice article with a few firm data. I have no idea why the IPO is so hot. I guess the investment bankers in NYC all have tasted the Shack burgers before.

    Negative sales per store and slower revenue growth both point to a big disappointment after the IPO. It may become the best short candidate after a few months.
    Jan 28, 2015. 05:07 PM | 1 Like Like |Link to Comment
  • There's A Lot To Like About Shake Shack [View article]
    If SHAK is really valued at $900 million, it will be a biggest disappointment. The store is very popular in NYC. I can testify for that. However, it will find it very difficult to expand outside northeast. The concept and value proposition is too narrowed. It is too metro. That's probably why the company chose to expand to Mideast before expanding to most other parts of the US.
    Jan 28, 2015. 10:17 AM | Likes Like |Link to Comment
  • Shake Shack lifts IPO pricing range [View news story]
    A company with only 31 company owned stores will be valued at almost $800 million. This is an insane valuation. Not to mention its growth already slowed down in 2014.
    Jan 28, 2015. 10:04 AM | 1 Like Like |Link to Comment
  • Is The Habit The Next Chipotle? [View article]
    Doyle, I have to say you know little about growth company investing. I would rather be worried to pay 5x TTM sale for HABT if it already has 40% ROE. For growth companies with growing competitive strengths, higher starting ROE is actually a hurdle rather than a benefit. A company starts with lower ROE can easily see EPS jumped 10x with only a few times increase of sales.

    You probably never knew that CMG actually was losing money when it went public in 2006. Now, its ROE is in the healthy 20% range. You should feel fortunate that you didn't short CMG back then when it was $50.
    Jan 28, 2015. 08:59 AM | 2 Likes Like |Link to Comment
  • 'Smart Money' Keeps Buying Cheap Shares Of J.G. Wentworth [View article]
    "Extremely high-leverage companies in the financial sector have a way of imploding or blowing up when the unforeseen is seen. " What you said is right, but anything has a price. Low P/E is the price a high-leverage company pays.

    Investing is not about avoiding risks at all costs. Instead, investing is about betting on high probability. Unforeseen disaster is a rather low scenario for JGW along with many other leveraged P/E firms. Also, you have to understand JGW has some luxury to utilize high leverage. It has stable cash flows from insurance companies. Certainly, JGW is not everyone's stock. I am not even comfortable to have more than 15% money in JGW. Something less than 10% though is a good bet.
    Jan 27, 2015. 09:34 AM | Likes Like |Link to Comment