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Stan Piland

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  • Why I'm Long General Dynamics: Robust Financial Metrics, Low Valuation [View article]
    Nice article! I have been thinking about doing some work on defense companies, but have not yet gotten to it. Sentiment has been awful on the sector, given expectations of a sharp contraction in U.S. defense spending. But it seems to me the sector can benefit from an expected arms race resulting from the U.S. withdrawing military protection from its numerous smaller allies. In that regard, the recent $60 billion Saudi arms deal is likely the tip of the iceburg. Maybe I need to move this up the priority list. Thanks.
    Oct 26 01:47 PM | 1 Like Like |Link to Comment
  • It’s Not Too Late to Buy Quality Distribution on the Cheap [View article]
    Thanks for the comments,
    Regarding rails as the low cost shipping alternative, I agree. But don't forget QLTY owns Boasso which has 40% market share in the ISO tank container market. I think Boasso is an unappreciated growth driver for QLTY. Apollo has owned QLTY since 1998 and has a seat on the board. I do not think they are sellers until the stock is meaningfully higher, and I am comfortable investing with them. But there is no question that they control the company.

    Regarding a double-dip recession, that would postpone the investment case for QLTY. By the same token, I do not think you need a particularly robust recovery for this stock to work. Right now, the whole trucking industry is suffering from overcapacity, which probably starts to abate in the first half of 2011. QLTY has less of an issue with overcapacity than truckload or LTL players for reasons noted above. But a tighter market will benefit everyone and will probably help valuations.

    The debt is both an issue and an opportunity. My sense is that they are more interested in reducing debt than making acquisitions at this point. An as noted, it is expensive debt, but I am still assuming some modest dilution once the offering is priced.
    Oct 21 04:51 PM | 1 Like Like |Link to Comment
  • School Specialty: A High Quality Business for the Contrarian Investor [View article]
    This sounds like a pretty cool story! I never heard of them, so have to do a little work on the. Do you know how strong their online service offering is? The reason I ask is that some of the SaaS companies like SQI offer huge savings on indirect goods, and education is one of their target markets. This would not affect SCHS' proprietary product, but maybe less proprietary supplies, etc. Thanks!
    Oct 19 12:28 AM | 1 Like Like |Link to Comment
  • Why Investors Should Stay Long Lululemon [View article]
    Market cap is a function of past and expected finacial performance:
    UA has a 10.2% operating margin; LULU's is 23%. UA has a 5.6% net margin; LULU's is 15%. UA has 13.5% ROE; LULU's ROE is 36%.
    And LULU is growing faster. UA's PE is 1.65 times its expected growth rate; LULU's PE/G is 1.16X.
    The stock is volatile enough that a nimble trader can make money on the long or the short side. But if I were setting up a paired trade, UA looks like the better short...
    Oct 18 07:52 PM | Likes Like |Link to Comment
  • Why I'm Holding On to Chicago Bridge & Iron [View article]
    Mark,
    I wish I did!
    Natural gas prices have made the gas stocks very hard to own. They would be natural beneficiaries over time. But short term, supply drives the cycle, and pricing is just awful. So I own a little CHK and just bot some SWN, but not making a big bet there.
    I have heard that FWLT is interested in exanding into this business, but no exposure now that I know of.
    Wish I could be of more help,
    Stan
    Oct 12 06:00 PM | Likes Like |Link to Comment
  • Why I'm Holding On to Chicago Bridge & Iron [View article]
    I think CBI is a great idea, and if I didn't own so much would still be a buyer. Natural gas has always been a regional market defined by pipelines. But driven by economics, environmental concerns, and geopolitical considerations, I think LNG is an old idea whose time has come. Within the next 5-10 years, I think there will be global markets for natural gas, much like currently exist for oil.

    Getting there will provide a tailwind for CBI revenues for years.
    Oct 7 11:37 AM | Likes Like |Link to Comment
  • The Blackberry vs. iPhone vs. Google Phone Quandary [View article]
    Questions for folks who obviously know more than I do:

    Verizon just told me that they they now require 20 months before allowing another phone upgrade on a 24 month contract.
    It used to be a year...is 20 months new?
    Does this have the potential to dramatically slow year-over year-comparisons for smart phones next Christmas?
    Thanks...
    Jan 17 07:58 PM | 1 Like Like |Link to Comment
  • Astra-Zeneca Flies to 'Jupiter' on Drug Results [View article]
    The statin industry is one of the biggest frauds ever foisted upon the American people. And in a perfect world all these companies would be all brought up on RICO charges. That's why I don't invest in them.

    Admittedly I have not reviewed the data from the second phase of the Jupiter trial. However the initial phase was the first statin trial to ever show a even a modest survival benefit in patients with no history of cardiovascular disease. It also was the first to require both elevated C-Reactive protein (CRP) and high cholesterol as criteria for inclusion in the study. Previous studies focused only on patients with high cholesterol.

    Additionally, that trial was stopped early and the data extrapolated out to show much better results at 5 years.

    So is Crestor's modest success due to reduction of cholesterol or reduction of CRP? Or reduction of rho-kinase? Or is it something else entirely?

    In general, you need to treat around 100 patients with high cholesterol and no history of heart disease for 1 to avoid a heart attack. And the heart attacks tend to be more severe, so there is no survival benefit...bad odds given the side effects.

    Maybe products like this explain why drug companies' marketing and lobbying expenses run almost four times their R&D budgets.
    Dec 6 02:36 PM | 1 Like Like |Link to Comment
  • Asia: The Next Big Bubble [View article]
    Ditto to Jeff Nielson's response.

    Here's a little perspective: the U.S. consumes about 25 barrels of oil per capita annually. Japanese and European annual oil consumption per capta is in the mid teens. China's oil consumption in 2007 was just over 2 barrels per capita!

    With real savings and real wealth creation, there is also considerable headroom for demand growth before it can even remotely be considered a bubble. It is a mistake which defies all Chinese history to assume they will continue to rely on exports as Japan has.

    As an aside, I think the reason China is stockpiling copper and other resources is because they see the recent political changes in India. If India decides to build 50,000 miles of roads over the next 5 years like China just did, there won't be enough of ANYTHING in the commodities pits to meet the incremental demand...
    Aug 9 05:52 PM | 4 Likes Like |Link to Comment
  • Fundamental Valuation: How Low Could We Go? [View article]
    Good article Brett.

    The historical valuation data on earnings gives a similar prognosis for market valuations.
    The way I see it, we are in a secular bear market for valuations, within which we can have oversold bounces and cyclical rallies. But the trend for valuations is probably lower.

    Historically secular bear markets have lasted 12-15 years and have correlated with secular bull markets in commodities.
    In the 70s, the market bottomed in late 1974; valuations did not bottom until summer of 1982. In the 30s, the market bottomed in '32; but valuations didn't bottom until '42. In between, the S&P rallied almost four-fold between 1932 and 1937 without coming anywhere close to the 1929 high. It sold off sharply from 37 to 42, but bottomed at a level almost twice the '32 low, even as valuations undercut.

    If recent government initiatives are successful in stemming panic and preventing a deflationary spiral, then the indices can rally pretty sharply from these valuations. But once we anniversary the massive unwinding of financial company leverage, and once the consumer starts to comp positive, the hangover of a massive government debt burden will ultimately be inflationary...hence, another selloff and lower lows on valuations if not absolute stock prices.

    Buy and Hold investors are likely to face a continuing valuation headwind for years to come.
    Oct 18 03:46 PM | Likes Like |Link to Comment
  • Positive Divergences Continue to Stack Up [View article]
    No question there are some short-term bullish divergences, but they must be viewed within the context of a broader, very powerful downtrend. Evidence of this view includes downtrending MAs on every index and stochastics which just can't muster a meaningful reversal from oversold levels.

    The most bearish divergence is that between eqities and short-term credit markets. Historically such divergences have always resolved in favor of the credit markets.

    Finally, does anyone really think the S&P should trade at 23X trailing 4Q earnings when the economic wheels are falling off in the free world? In previous such crises, that multiple has dropped to single digits. And that's probably where we are going before this is over...
    Sep 28 06:35 PM | Likes Like |Link to Comment
  • Ambac Collapse: Anticlimax of the Week [View article]
    Nice Post Tom.
    Regarding the Rating Agencies, Paul Kedrosky wrote an excellent article Friday examining the role of the Credit Rating Agencies in the negative feedback loop which is perpetuating this crisis. In contrast to short sellers who sounded an early alarm and arguably kept valuations from going higher than they did, Moody's and S&P first perpetuated the explosion of debt and are now exacerbating the subsequent implosion.
    These companies SHOULD be irrelevant, but their relevance is mandated under Federal Securities Law.
    In fact if the markets are so precarious that we must ban short selling, then we should likewise suspend the Rating Agencies' ability to downgrade until they can be legislated out of existence.

    Sep 21 02:09 PM | Likes Like |Link to Comment
  • GDP and the Decline of National Statistics [View article]
    It appears to me that the people who develop the Government economic data may have gone to the same schools as the folks who determined that sub-prime CDOs deserved AAA credit ratings.
    Aug 28 07:14 PM | Likes Like |Link to Comment
  • Pilgrim's Pride: The Weakest Link in the Food Chain [View article]
    Gee whiz, I wondered why this stock was down 70% in 9 months! I couldn't figure out why it was down 50% since they priced a deal 2 months ago. Ya really think it's wholesale meat prices? This whole industry is dialing back production in light of higher input costs. PPC and TSN have both announced multiple production cuts, and even SAFM has postponed a major expansion. Cattle and hog producers, which have much longer production cycles, are also culling herds which is temporarily depressing prices for competing meats. By year-end pricing for all proteins will be rising sharply, and so will these stocks. PPC has the most leverage to that dynamic.
    Also, while PPC has the most debt, they don't have much in the way of current maturities and the deal gave them plenty of cash...so liquidity is off the table.
    You can short this stock if you want too, but we are 8 years into a commodity cycle which historically has run 12-15 years. When commodities go, they all go. The only two I know which haven't had big moves to the upside are electricity and meat....meat is probably next. Long SAFM, PPC, and wish I had some CALM.
    Aug 18 08:13 PM | Likes Like |Link to Comment
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