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Chris DeMuth Jr.
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Chris DeMuth Jr. is the founder of Rangeley Capital LLC. Rangeley is an investment firm that focuses on event driven, value-oriented investment opportunities. Rangeley Capital and his value investing forum, Sifting the World (StW), search the world for misplaced bets. Rangeley exploits them for... More
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  • A Gift For You 4 comments
    Dec 17, 2012 11:16 AM | about stocks: WMT, AAPL, JCP, TGT, CWTR, ANN

    The growing secondary market for gift cards offers an opportunity to research real-time consumer trends and to capture savings at the same time. The average gift card has a market value of 28% less than its face value, with most discounts ranging from 10-50%. Some gift cards, such as Wal-Mart Stores (NYSE:WMT) or gas cards, are discounted lightly because they can essentially work as a cash substitute for most people. However, others offer both significant savings and data.

    Among the least discounted retailer card at the moment is Apple (NASDAQ:AAPL) and among the most discounted retailer is J.C. Penney (NYSE:JCP). In fact JCP cards are so out-of-favor that during sales, net of the discounts on their gift cards, their jewelry can be purchased for around the value of their scrap gold and silver. Today, AAPL and JCP define the polls of most in favor and most out of favor, respectively. We're using gift card markets as one way to track emerging trends.

    So what trends can be found? Target (NYSE:TGT) is strong and strengthening. We don't know what this means, but several women's retailers are weakening, especially Coldwater Creek (NASDAQ:CWTR) and Anne Inc (NYSE:ANN). TGT holders will not part with their cards for more than a tight 5.1% spread to their face value while CWTR is currently a 13% discount and ANN is a soft 27% discount. While monitoring each of the retailers that we follow for big moves in these discounts, I also purchase any deeply discounted cards.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Additional disclosure: Chris DeMuth Jr is a portfolio manager at Rangeley Capital, a partnership that invests with a margin of safety by buying securities at deep discounts to their intrinsic value and unlocking that value through corporate events. In order to maximize total returns for our partners, we reserve the right to make investment decisions regarding any security without further notification except where such notification is required by law.

    Stocks: WMT, AAPL, JCP, TGT, CWTR, ANN
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  • User 7508671
    , contributor
    Comments (4) | Send Message
     
    Interesting comment about "JCP cards are so out-of-favor that during sales, net of the discounts on their gift cards, their jewelry can be purchased for around the value of their scrap gold and silver." Years ago, I remember reading an article that one could buy the silverware in the department stores for less than their scrap value due to the sudden increased in prices of silver metal.

     

    I also buy discounted gift cards if I am buying something of larger value. What website do you use to buy (or sell) gift cards?

     

    Great articles you have.
    4 Feb 2013, 03:26 PM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (10208) | Send Message
     
    Author’s reply » Thank you.

     

    I love the silverware story. It is my hobby to execute quirky ideas such as that.

     

    My favorite site is http://bit.ly/TAQLp5. It aggregates all others. One comment on this site is that I tend to ignore ongoing EBAY auctions and focus on the spot market discounts that are easy to exploit.

     

    One can also sell. I did so recently when I acquired a huge pile of BBY cards due to unusual circumstances.
    4 Feb 2013, 03:30 PM Reply Like
  • User 7508671
    , contributor
    Comments (4) | Send Message
     
    Thanks Chris. Just read your comments on the value forum. "If you constantly find dollar bills that cost $0.70, you should be very happy ..."

     

    In case you like to collect airline points, like I do: If you fly Southwest Airlines, try to get the companion pass. Companion flies free for current year and next year. So, if you it on 3/8/2013, it is valid until 12/31/2014.

     

    Under Southwest link below, you'll noticed "2 round trip" flights free ad. You can get both the personal credit card and business card at the same time since you got a business. Each card offers 50,000 Rapid Rewards Points (Southwest miles), and these points do count towards the companion pass qualification. You'll need 110,000 points for the companion pass. The other 10,000 points you can get by charging on the credit card, flying, or transferring points that qualify such as Marriott rewards points. (Not all points qualify.)

     

    Each Southwest point is worth 1.6 cents on Wanna Get Away fare. So, points from these two cards + companion pass are worth $3,200 less credit card annual fees of $198. Not huge money, but I know you get a kick out of these ideas.

     

    http://bit.ly/YSbGDJ
    11 Mar 2013, 07:13 AM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (10208) | Send Message
     
    Author’s reply » I am positively obsessed with airline points. Thanks for the valuable steer.
    11 Mar 2013, 07:42 AM Reply Like
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