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Vince Martin  

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  • Maintaining A Buy At Varonis Systems [View article]
    Wow. Thanks for the comment, very enlightening and knowledgeable. I'd make it "best of SA" if I could. And thanks for the comment link - some very interesting thoughts there.

    The sales/scale issue you mention is the biggest risk IMO - management saying "well, these guys are underperforming" makes me worried. It's obviously not a natural sell - even if it is a solid product - and it seems a bit early, given the sales ramp of the last few quarters, just to say "well our product is great but some of our salespeople stink".
    Sep 12, 2015. 06:20 PM | Likes Like |Link to Comment
  • Enova International: Still Too Risky At $12 [View article]
    It's 20% growth off a depressed base - I don't think it changes much right now, and I don't think management thinks so either, from the CC and the lowered guidance. I don't think there's any chance they get to pre-FCA levels any time soon, if ever.

    To your second point, if they can recover to 60%+ of pre-regulation levels, I'm not sure it's a solid investment - it depends on how long that takes. If you look at the UK, 60%+ is aggressive - there's a real chance of revenue being halved and the remaining half being less profitable.

    In terms of being better than peers...maybe. I might be too cynical there, but the argument that "our algorithims are just better than everyone else's" never holds much water with me - too many companies have made that argument and proven wrong. (Not that ENVA is going to wind up imploding like some subprime lender in 2006, but I'm skeptical they can work around regulations much better than anyone else.) And I do think it's a concern, as I noted, that they've talked up their data and algos and yet much of their future potential is based on moving into new markets (whether geographically or demographically).

    As for gross margin and originations - I'm not entirely sure I see your point there. The gross margin ex-LOC trend appears to be more of a mix issue than a growth issue, or a result of the company originating more, slightly less profitable loans.

    All told, we'll see. It's a tough stock to be hugely confident on, because so much comes down to what an unelected group of regulators may or may not do at some unspecified time in the future. My argument is basically is that if the US looks at all like the UK, then I think there's a huge, huge cut in overall profits here.
    Sep 12, 2015. 01:34 AM | 1 Like Like |Link to Comment
  • Gap Inc.'s Decline Isn't Over [View article]
    China's fine, but the yuan revaluation is a minor headwind and this is a $13 billion market cap - I don't see that moving the needle for some time. There are a lot of US retailers who are and have been in China for a while now - very few have really made it a significant part of the business as yet.

    As far as the changes at Gap - I half-jokingly referred to them in my last article, but I'm skeptical. If the tools were that valuable and that meaningful, I assume a) Gap would have used them before and more importantly b) would have tried them out before closing 175 stores. In my opinion, the problems here aren't execution - it's the brand (the 'preppy' brand of Gap and Banana Republic isn't in) and it's a bit secular (the decline of the mall). I don't think taking a few best practices from Old Navy offsets that.
    Sep 11, 2015. 02:36 PM | 1 Like Like |Link to Comment
  • Enova International: Still Too Risky At $12 [View article]
    1. "Who will take that business?" is really the hinge question here. That's only a bullish argument if there's much business left to take. What would concern me from the long side is that Enova itself made that same argument about the UK business, but so far that has not been the case - revenue is down huge and profits are down more. Still, the US is not the UK, and if the rules are less onerous here than there may be an excellent opportunity along those lines.

    2. I don't think trailing figures really apply much, and in particular to the new initiatives. Yes, the growth was great, but there was also a "right time, right place" aspect to it. The new initiatives are very different, both with international risk and in terms of moving up the ladder in the US.

    3. I live in Chicago, so there is no need to tell me about parking tickets :) I agree with you in the sense that payday lending will be allowed - I just don't know how profitable it will be allowed to be.

    4. Agreed on CFPB - there's an argument that much, if not all, of the bad news is priced in.

    Thanks for the comment - appreciated.
    Sep 11, 2015. 01:47 PM | Likes Like |Link to Comment
  • Enova International: Still Too Risky At $12 [View article]
    Haha. I did mention the stake but didn't know the S-1 would be filed two days later...CANNOT believe the stock is down 10% on that news. Is this is a surprise to anyone? The market is weird sometimes.
    Sep 11, 2015. 01:42 PM | 1 Like Like |Link to Comment
  • Vince Holdings: Trying Not To Make The Same Mistake Twice [View article]
    That's a really fascinating comment, and I agree on retail more generally. It's not a matter of just "oh, Amazon and e-commerce are getting more sales." There's fixed-cost deleveraging involved - if you cut brick-and-mortar revenue 5%, profits don't go down 5%, or down 10% - they can drop 25% or 30% easily, particularly if the company doesn't see it coming. I think brand loyalty is a lot less than it used to be - if a company slips up, it's not a matter of just "we'll get 'em next time."

    In regard to the second part of your comment, I'd point out that trend is EXACTLY what has already happened in the teen space. It's a bit too simplistic to say teens are always the early adopters, but there's a logic to the idea of that trend migrating into the retail space more broadly.
    Sep 10, 2015. 05:54 PM | 1 Like Like |Link to Comment
  • Dover Motorsports: There's A Bull Case Here, But When? [View article]
    They have really paid down their debt over the last few years, so at least recently they get some credit for capital allocation - that said, for shareholders, the Nashville expansion was a nightmare that's yet to end.

    I am not sure why neither DDE nor DVD has tried to sell itself (perhaps they have and there aren't interested suitors, which is a worry), but in both cases there seems a clear argument that the companies are worth far more in a larger peer's portfolio than they are as standalone companies. The two tried to re-merge a few years ago - one of the cited reasons was to cut the costs associated with being public.
    Sep 10, 2015. 12:29 PM | Likes Like |Link to Comment
  • Thompson Creek Metals: If You Want The Mine, Buy The Bonds (Or Royal Gold) [View article]
    I assume you're referring to the title, as I didn't really discuss RGLD in the article, and the title was a bit tongue-in-cheek. My point is that if you think this is a great mine the way to own it is by buying the secured bonds or RGLD, because they will be the owners at some point and I think the equity here has a good chance of getting wiped out, or close to it.

    I haven't looked at RGLD in depth, but 10x sales is a misleading metric - they have insane margins since they're just a royalty company. The stock trades at ~15x operating cash flow. That is actually what is so special about them ;)
    Sep 8, 2015. 12:37 PM | Likes Like |Link to Comment
  • Vince Holdings: The Decline Is Just Too Much [View article]
    I'm putting together an update now - I actually didn't go long the stock, though I thought about it after Granoff's departure, so it's only credibility not money lost :). But I agree - there's a lot of red flags left and a lot of concern even at $5+.
    Sep 8, 2015. 11:14 AM | Likes Like |Link to Comment
  • Guess? And Vince Holdings: A Tale Of Two (Soon To Be Ex-) CEOs [View article]
    Hope they work out for you - I still am uncomfortable with GES, and I'm about to really work through the quarter for VNCE and what those results mean...I wrote in this piece I thought it would be bad, but clearly didn't think it would be that bad. (Fortunately, I didn't buy ahead of the report.) What worries me at first read is that there are some cash questions - extending the repayment to Sun and paying the term loan down from the revolver.

    Both are cheap, though, and there's definitely a sense that the downside is limited - of course, I very erroneously thought that for VNCE at $12 or $13 or whenever I wrote the full long case a couple of months back. Best of luck, thanks for reading.
    Sep 6, 2015. 02:53 PM | 1 Like Like |Link to Comment
  • Vince Holdings: The Decline Is Just Too Much [View article]
    Well, Stan, you were right and I was wrong. Stock below $6 after-hours and what an unmitigated disaster of a quarter.
    Sep 3, 2015. 04:24 PM | Likes Like |Link to Comment
  • Eldorado Resorts: Waiting On A Short-Side Catalyst [View article]
    I saw that - much stronger than Vegas' numbers for the month. Slot hold helped a bit though - drop growth looks like 5-6% increase in the month and sub-2% for the trailing 12 months, and it wasn't a tough comp.

    Shreveport July numbers were amazing as well - don't remember if there was an issue a year ago but the entire market was up 9.5%. ISLE had a blowout yesterday as well...may be more juice left in the regional rally than thought.
    Sep 3, 2015. 11:27 AM | 2 Likes Like |Link to Comment
  • Tuesday Morning: The Story Has Changed Post Q4 [View article]
    Thanks for linking to that - Jeremy is a phenomenal analyst, I'm disappointed I missed that and will read it momentarily.

    How bad it is for malls depends a bit on how you define 'mall'. Outlet malls are doing well. High-end properties (think Macerich and Simon) appear to be holding their own as well.

    But in terms of the classic American mall - the two-story, 100-150-store indoor setup with a food court, off a three-lane road in a suburb somewhere - they're in big trouble. Sbarro didn't go bankrupt just bc their pizza is terrible. The trend in teen traffic is down, (see ARO, AEO, ANF of course), traffic as a whole is down, and there's a vicious cycle/negative network effect that comes with that lower traffic. Malls are closing, occupancy rates are down, sales are down, and there's a long list of bankruptcies (Cache, Body Central, Delia's, Wet Seal, in the last 18 months). Even profitable major retailers (GPS, AEO, and others) are decreasing their footprint.

    There's a mall reasonably west of Chicago that is almost completely closed and it's really kind of a bizarre place to walk through. But once you hit the 'tipping point' of lower occupancy, traffic slows, then sales drop, then occupancy drops and there's a point of no return from which occupancy accelerates to zero.

    I'm a big believer that it's a symptom of the broader bifurcation of retail (and life, if you want to get political) in the US, and the pressure on the middle class. And I also think there's a pendulum swing toward 'uniqueness' and against what's seen as conformist or 'chain', and malls are certainly on the wrong side of that swing. To me, it's the same reason that PG and MCD are struggling - small, organic, unique is what's cool now. And I think that's going to accelerate. So short answer - which I never give - I think they're in decline all over, and I think it's only the beginning.
    Sep 2, 2015. 04:26 AM | Likes Like |Link to Comment
  • Interface: A Pullback Offers Another Buying Opportunity [View article]
    Sequential growth was ~8% a year ago, no? The CEO is saying the back half will be better both seasonally and year-over-year - does that really imply 3% YOY growth and a ~flat Q4?

    That said, you raise a fair point and Q4 in my model may be overaggressive - I think there's conservatism in the gross margin figure that could mitigate that a bit if I'm wrong. But it's not the "key element" to the bull case - this isn't a trading call, it's an article on the long-term value and I don't think that materially changes at 19x or 20x CY15 EPS.
    Sep 1, 2015. 04:45 PM | Likes Like |Link to Comment
  • Interface: A Pullback Offers Another Buying Opportunity [View article]
    Yes, it's a tougher comp, but there was some currency impact to Q4 last year so that should help the as-reported numbers. Consensus figures, if you take the midpoint of Q3 guidance, are for zero reported growth in Q4. That seems too low to me.
    Sep 1, 2015. 04:35 PM | Likes Like |Link to Comment