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Vince Martin

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  • Bassett Furniture Continues To Impress [View article]
    It was an odd decision, no doubt; investing company capital in a fund of funds while arguing that it was necessary to keep such a large balance for safety's sake is an odd combination. The sheer use of such a fund to store a substantial amount of company cash is one I can't recall any other publicly traded company doing (though I'm sure it's been done.)

    That said, they didn't get burned too badly on it, it did perform well before 08-09 (so did everything else of course) and, as you noted, it's largely behind them (I think they have less than $1MM left.). It's worth pointing out, I guess, but I think the risks right now are far more tied to macro/housing concerns and valuation, given that it's nearly doubled since June or so.
    Feb 23 12:34 AM | Likes Like |Link to Comment
  • True Religion Still Worth A Look [View article]
    It is a tenuous spot, because you have to figure the strategic review is going to move the stock, either through a deal or through the lack of a deal. But you also you have no idea when either scenario might occur. Still, great trade!
    Feb 13 02:18 PM | Likes Like |Link to Comment
  • Cumberland Pharmaceuticals: A Rare Value Stock In The Drug Industry [View article]
    It has declined, but it's nowhere near "virtually gone." Quick Google search shows the number is still about half a million annually under the age of 15.
    Feb 12 02:17 PM | Likes Like |Link to Comment
  • Why Fundamental Analysis Failed In Caesars Entertainment's Case [View article]
    Fundamental analysis didn't fail. Every one of the risks you cite was either stated by me in the original piece -- where I specifically warned investors to wait for results about the bill on Christie's desk -- or is so standard that I didn't bother to cite it. I would assume that a short-seller with a Pro subscription can understand the danger of a short squeeze with such a thinly traded stock, and indeed that was discussed in the comments.

    You're also making it sound like I recommended a short near the bottom; the stock had jumped 75% when the first piece was written.

    As for the comments about fundamental analysis not being forward-looking, take one look at the line you create in the "broken downtrend" chart. That is purely 20/20 hindsight. You could draw that line 8 times on the drop from 15 to 5; if it's such an obvious signal, why did it fail so repeatedly?

    So the point is that, yes, the Christie news was completely foreseeable, as was the spin-off news. The fact that the market reacted the way it did was foreseeable to some extent -- which is why I warned against shorting ahead of the NJ bill -- but the size of the move was not. (That's why there are traders and markets and arguments, of course.) Similar additional developments will, too, be foreseeable, at least in the sense of recognizing the potential for additional risk; online gambling bills don't materialize in a matter of hours.

    Lastly, I'm curious as to why you say that using industry EBITDA averages as a method of fundamental valuation is "asinine". If similar companies and similar properties are being taken out at a premium at 8x and CZR is valued at 10x with no growth, that information is of no value? It seems far more instructive than a line on a chart, though I admit my knowledge of TA is rather shallow.
    Feb 11 03:33 PM | 3 Likes Like |Link to Comment
  • Caesars' Short Case Clearer, Simpler -- And Stronger [View article]
    CZR is not "ahead of everybody else." That's simply untrue. They're at best even with several other companies.

    As far as shorting in the near-term, there aren't any more of these in the pipeline (again, NEAR term). The NJ bill took over a year, and there's no legislation anywhere else that, as of right now, is near passage. (CA looked good for a while, but the tribal issues there are a major roadblock; note that NJ/DE/NV never dealt with those concerns.) So I don't see any catalysts here, but I do see a capitulation by the shorts.

    And yes,, "very sensitive trigger finger" is the understatement of the year.
    Feb 9 06:52 PM | Likes Like |Link to Comment
  • Caesars' Short Case Clearer, Simpler -- And Stronger [View article]
    Feel free to explain...there is no revenue growth here. On my end, there's nothing to justify; the short thesis is intact, as is a low-float stock with a very high short interest. It's a dangerous stock to short, for a variety of reasons, which I made clear to first time around.
    Feb 9 06:48 PM | 1 Like Like |Link to Comment
  • How WMS Shareholders Should Hedge Against A Failed Buyout [View article]
    $3,000 in revenue per machine per day does not translate to WMS' bottom line...WMS (depending on whether it's a lease or a sale) only counts a minute amount of that as revenue (its take of the house edge, most likely below 1%) as revenue on its P&L, then deducts its expenses from that revenue. So if $3,000 a day is bet on a WMS machine, the machine might "win" $250 and WMS might generate $25 in revenue. (Those numbers are obviously not exact, but show the difference between the billions and millions you cite.)
    Feb 5 12:08 AM | 1 Like Like |Link to Comment
  • WMS Industries Stock Is No Gamble [View article]
    SGMS execs were pretty tight-lipped on the call about the process, side-stepping a direct question about how it all went down. I find it unlikely that WMS was shopping itself. You generally don't see that in a scenario where a stock has fallen by 2/3 in less than three years.
    Feb 3 05:44 PM | 1 Like Like |Link to Comment
  • 4 $5 Stocks Screened To Limited Downside [View article]
    You didn't miss out on anything. TLAB is now about 9% above its all-time low even accounting for the dividend, and below where it traded even before it made a silly 19% jump on the news of the dividend's announcement.

    "Special" dividends are just a transfer of control of cash; they don't create any value for investors. There's absolutely no reason to chase them.
    Feb 1 10:32 AM | 1 Like Like |Link to Comment
  • Perion Network: Are The Risks As Bad As Some Suggest? [View article]
    Frank --

    I've enjoyed your pieces on here, and I'll take the opportunity to rebut a few of your concerns:

    1-2: It may be not be uncommon for last-minute contract renewals, and indeed at no point did I argue there was any real probability that a failure to renew the contract would occur and lead to a massive sell-off. But your AVG example simply proves the point I was making: Google was attempting to change its policies to prevent PERI (and AVG) from using some of the tactics those companies clearly feel are successful in growing search. I never argued that a deal would collapse; my point was that there were "serious negotations about the nature of the deal" which could impact PERI. The fact that AVG is down 6% today (and PERI down in sympathy despite announcing an extension) shows that those concerns have at least some validity to them.
    3. AVG's history is instructive -- for traders. But the risks I detailed in PERI went far beyond the contract, which, again, was not the focus of the piece. The article, overall, focused on the long-term risks toward PERI's business model.
    4. If Google is repeatedly negotiating with Perion to get it to change its business practices, then I think the statement "there may be some concern on Google's end" is hardly baseless. It happened in 2009, and acc to Mandelbaum himself on the most recent conference call Google is again trying to prevent Perion from certain tactics. And you take "distrust" out of context: I wrote that Google "clearly has some distrust of the company's business model." In that case, Google would have no hesitiation in renewing the contract -- but insist on changes in that business model. Which is exactly happened in 2009, and looks set to happen again.
    5. see above. It's important that PERI's key partner is repeatedly attempting to take away tactics that Perion itself clearly sees as important to revenue growth.
    6. Get real. The point is that when a company's three products have ratings of 1-2 stars out of 5 and screaming reviews of "Malware!" and "this software installed itself" on a number of highly trafficked websites, there is a good risk of a long-term effect. Whether or not the "malware" claim is accurate -- and I pointed out it was not -- can you really argue that a clearly diminishing reputation is not a long-term investment risk?
    7. Mandelbaum told Bloomberg that "some people just don't know how to uninstall anything." A definition of ignorant is "Lacking knowledge, information, or awareness about something in particular." And I did explain why that explanation is insincere: the company itself publishes (and I linked to) the multi-step process required for removing its software. When your company explicity targets "second wave adopters" who by definition are less tech-savvy, then dismisses them for their lack of computer skills when it is your company that intentionally making the uninstall process more difficult, it is at least "insincere" to claim that their ignorance is the problem, not your unnecessarily and intentionally complex removal process.
    8. I wrote "these segments peaked in 2001," and that was a poorly written sentence (I realized that after responding to the first comment.) My point was that Perion's basic business model relies on tactics that are outdated and unnecessary. Toolbars and emoticons and paid photo-sharing apps are relics. Whether or not PERI is showing growth doesn't change the fact that it is competing in out-dated segments. And, btw, organic growth is guided for at least 25% by the company, not at least 35%.
    9. That growth is being purchased through the CAC expansion. That spending may have a positive ROI but there are two key risks. One, the company's growth is not coming from new purchases of its licenses. That has been flat for years, which brings into doubt the usefulness of their programs. Two, those CAC investments inevitably run into the law of diminshing returns. But the overall point is that the seemingly strong growth is coming from questionable tactics (that the company may be forced to stop) and from increased marketing spending. That's not a formula for successful long-term growth.
    10. I said Mandelbaum's response to Bloomberg was "insincere," and I stand by that. Beyond that, I did not impugn his character or his credibility in any way.

    And, in fact, the AVG news PRECISELY proves the point of the article.The first commenter sums the case up best. The risk was not a failure to renew -- it is the fact that all of the PERI growth you're so fond of is coming from increased search revenue, which is coming from increased CAC which results in increased use of toolbars and advertising through free versions. And if Google changes its terms -- which it is going to -- that model for growth is
    no longer viable. The company is then left with subpar software that adds little value, faces huge competition from free (and ad-free) products from far larger companies and does not appear to be stoking significant demand. Where does the growth come from now?
    Jan 31 05:35 PM | Likes Like |Link to Comment
  • Perion's Risks Extend Beyond Bloomberg Report [View article]
    What behaviors will be modified? That's the question, because clearly Perion thinks that there is value to the company in some of the tactics mentioned by Bloomberg and reviewers.

    The reliance on search is less the issue of CPCs and mobile (though that's part of it) then the fact that the revenue growth is coming from free installations, not paid products. So they're vastly increasing acquisition costs to put more free, ad-supported versions out there, using these tactics to create more searches, and showing really strong revenue growth. But the short-term costs (CACs) and the long-term costs (a lagging reputation) make that near-term revenue growth simply not very valuable. The company is arguing that ROI on the CAC investments is still positive -- but there are diminshing returns there. And the fact that actual adoption of the ir products doesn't appear to be increasing much shows the main problem: their software simply doesn't have much, if anything, to differentiate from free versions already widely available.
    Jan 26 02:42 PM | Likes Like |Link to Comment
  • Perion's Risks Extend Beyond Bloomberg Report [View article]

    There is a trial period.

    And, no, I've never heard of Conduit. The agenda behind the article is pointing out risks for investors and writing a good piece for which SA compensates me. See below for a detailed response to the ad hominem attacks.

    It's not "easy" to put a negative spin on things. And, yes, it is scary, because if you had read the article you'd realize that Google is a) responsible for a majority of PERI revenue and b) nearly irreplaceable as a partner (per Perion's own filings). Other than that, I guess it's not that big of a deal.
    Jan 26 02:37 PM | Likes Like |Link to Comment
  • Perion's Risks Extend Beyond Bloomberg Report [View article]
    And if I was short PERI then you'd criticize me for having a financial interest in driving the stock down. I can't win.

    I have PERI on my watchlist. I read the Bloomberg article (and watched the video), and did more research to verify the facts in it and see if the company was worth keeping an eye on. In doing that research I felt an expanded article would be of interest to readers, and obviously SA agrees, because they are compensating me for the piece.

    Here's a news flash for you: analysts downgrade stocks every day. Commentators criticize stocks every day. It doesn't mean MS was "front running" for its clients and it doesn't mean I'm planning a bear raid. Seeking Alpha is in the business of publishing commentary on stocks. I didn't "happen to have" this information; I researched it extensively by reading multiple SEC filings, searching a number of sites that review Perion's products, and reading conference call transcripts. That's the kind of work required to post an article here.

    So if you have a criticism of those facts, go ahead. But an "ad hominen" argument based on nonsensical facts like "I believe MS was front running when they downgraded a disk drive maker even though the disk drive market is clearly headed for obsolescence and many analysts were bearish on STX and WDC" is useless and unfair.

    As for Quicken; Quicken has value, and has differentiated features not available if you, say, filed your taxes for free through TaxACT or whoever. Creating a software program that is intentionally difficult to uninstall without warning may be legal or not; but if you're trying to grow the user base for a software, and its reviews across the Internet are consistently negative, with words like "malware" and "scam," that should be of interest to people who own the stock. And when the CEO dismisses those people out of hand, and shows little concern about the reputation of his products, that, too, should be of interest -- whether I'm short the stock or not.
    Jan 26 02:34 PM | Likes Like |Link to Comment
  • Jos. A. Bank Clothiers (JOSB) leaks that "net income for fiscal year 2012 is expected to be approximately 20% lower than net income for fiscal year 2011," just a week before the end of the FY. CEO R. Neal Black says Q4 went slowly, impacted by Hurricane Sandy, unseasonable warmth and "distractions" from the presidential election and fiscal-cliff talks. Despite disappointing Y/Y results, the quarter and year will be "very profitable." [View news story]
    Jan 26 01:02 AM | 1 Like Like |Link to Comment
  • No Bakken, But Everything Else - Chesapeake Energy Is Set Up To Succeed [View article]
    It's stunning to me how CHK bulls talk about how their CEO can be "reined in". At day's end, with 6K+ stocks to choose from (and dozens in this sector), why on Earth would you ever give control of your money (which is what an equity investment is) to a man who you HOPE will be "reined in"?

    McClendon, simply put, transferred hundreds of millions of dollars from CHK to his own pocket in a variety of ways. He ran a bleeping hedge fund from his own office, using CHK funds and employees, bc the nine-figure annual paydays he was getting as the stock tanked wasn't enough. The man is, if not an outright criminal, a liar, a thief, and a stain on the sector and on our state. Just because he made smart business decisions does not negate this, and the fact that anyone would entrust their funds to this man is simply beyond my comprehension.
    Jan 22 10:30 PM | 5 Likes Like |Link to Comment