CDW Corp. (CDWC)
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CDWC Forum Topics
- All Comments on CDWC
- General Discussion on CDWC
- The Risk/Return Tradeoff For Technology Stocks [view article]
- The Week Ahead: Earnings Galore [view article]
- Acquisition Of CDW Highlights Challenges Of Shorting On Valuation Alone [view article]
- Madison Dearborn in Talks to Buy CDW -- WSJ [view article]
- CDW Corp: With Solid Earnings and Buyout Talk, Probably Little Upside Left [view article]
- Is LCD Market Overcapacity Being Reined In? [view article]
- One Page Barron's Summary [view article]
- CDW Corporation Q4 2005 Earnings Conference Call Transcript (CDWC) [view article]
loading ...Recent CDWC Articles
- The Risk/Return Tradeoff For Technology Stocks
- Ingram Micro Reports: Tech Spending Outlook Remains Fuzzy
- The Week Ahead: Earnings Galore
- CDW Corp.'s Strong June Sales: Proof Businesses Are Starting To Loosen the Purse Strings?
- Hardware Retailer CDW Corp. Reports Strong May Corporate, Government Sales
- Acquisition Of CDW Highlights Challenges Of Shorting On Valuation Alone
- Madison Dearborn to Buy CDW for $7.3 Billion
- CDW Corp. Goes Private: Investors Lose a Useful Read Into Channel Sales for Tech Equipment
- CDW Corp: With Solid Earnings and Buyout Talk, Probably Little Upside Left
- Madison Dearborn in Talks to Buy CDW -- WSJ
- Full List of Articles »
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Editors
General Discussion on CDWC
Is this a buy or a sell? Replysh
The Risk/Return Tradeoff For Technology Stocks [view article]
Is there a caveat here. Some Questions. Why are my highly speculative PANL and TIVO stocks slightly rising while my cash rich quality stuff and recently high risers are being hammered? On a broader question why are bread and butter companies, i.e. consumer retailers that normally survive bad times, going down in a supposedly good economy with high employment? And why are the precious metals going down also? I think that the dirty, no-longer-secret truth is, that the highly leveraged fund managers are exiting their over extended borrowing and lending practices by selling the hard earned cash value of their best stocks (our profits) in order to survive.More to the point about Apple, the survival mind set of the hedge fund manager is to take the profits in cash or commodities for their credit bailout by selling the most valuable things in the house first before they are foreclosed on by their international banking creditors. They will publically attribute this large sale of profitable companies as profit taking and are praying that JQ public will not realize what a sh*t bag of a financial mess they have created. Reply
Trent
The Week Ahead: Earnings Galore [view article]
Not many stocks rising last week... Yesterday's end of day rally was a wild one, but the volume came in selling at the close. Replyr
The Week Ahead: Earnings Galore [view article]
Out of many voices comes one helluva story and no voice is insignificant. Remember that little butterfly in the Amazon helping cause the storms in Kansas? We're all part of the grand scheme of things to one extent or another.Unfortunately the earnings were up but the stock went down...go figure. Reply
Trent
The Week Ahead: Earnings Galore [view article]
Yep. Hopefully the one extra voice added to the discussion. If not, I guess worst case is my incremental hot air was insignificant in the scheme of things. Replyr
The Week Ahead: Earnings Galore [view article]
Yet, you did discuss the earning report afterall, didn't you? I guess it was just to juicy of a story, huh? ReplyTrent
The Week Ahead: Earnings Galore [view article]
In part the stocks I am watching are based on whether they are on my watch list or have discussed them in the past. As you say, Apple is discussed to death and the incremental value of my own contribution would probably be minimal. While some will surely disagree, I feel I can add more value to the discussion of the others listed. Replyr
The Week Ahead: Earnings Galore [view article]
Although I am sick to death of hearing about AAPLs iPhone, it has had a huge impact on the NASDAQ in recent weeks, helping it keep its head above the subprime waters. Suppliers to iPhone production have also benefited from its successful launch. I am curious as to why you would not monitor Apple's earnings report Wednesday after hours? A bad report (although very unlikely) would have a profound effect on the stock and possibly others in the NASDAQ. XRX, WDC. and some of the others you mentioned are mere sideshows in comparison. ReplyThe Week Ahead: Earnings Galore [view article]
I will keep my EMC stock and ride the wave. ReplyAcquisition Of CDW Highlights Challenges Of Shorting On Valuation Alone [view article]
Whoops...<i>If government spending slows or if another competitor gets super aggressive</i>, CDWC would be vulnerable. Reply
Acquisition Of CDW Highlights Challenges Of Shorting On Valuation Alone [view article]
Here, this post might help you: www.speciousargument.c...I didn't compare to <i>just NSIT</i> and, as stated, it was not part of a paired trade. While CDWC enjoys higher operating margins, there is significant incentive for others to catch up. And again, much of CDWC growth was/is from government. If government spending slows or if another competitor gets super aggressive.
Anyway, I think we've beaten this one to a pulp.
Good luck on your short. :-) Reply
Acquisition Of CDW Highlights Challenges Of Shorting On Valuation Alone [view article]
You should take off 12% for CDWC numbers before the buyout. Also, I don't understand the point of comparing it only to NSIT unless you are actually doing a paired trade, and here is another important number: Operating margin - NSIT 2.52%, CDWC 6.35%. That's a world of difference in either mail order or retailing.I'm not saying CDWC was a good buyout value; but IMO it wasn't a good example to make a general point about shorting based on valuation. Reply
Acquisition Of CDW Highlights Challenges Of Shorting On Valuation Alone [view article]
NSITMarket Cap: $1.1B
Enterprise Value: $1.3B
Revenue: $4.2B
Income: $65.5M
Forward PE: 12
CDWC
Market Cap: $6.74B
Enterprise Value: $5.8B
Revenue: $7.1B
Income: $281M
Forward PE: 20
So for nearly double the revenue, CDWC gets a 6-7X multiple on market cap and an over 4 multiple on Enterprise value. Granted CDWC enjoys larger margins and is likely a better run company, as Alan earlier pointed out. In my view--again, the wrong view--being a retailer in computer goods is nothing outlandish. NSIT could have hired some key talent where it is lacking and embarked on a fierce retailing war.
I don't see the comparison between a disk drive manufacturer and a retailer. If CDWC only sold disk drives, then I'd be more sympathetic.
Anyway, it appears that we agree to disagree, and that's okay. That's what makes markets.
Thank you for your comment. :-) Reply
Acquisition Of CDW Highlights Challenges Of Shorting On Valuation Alone [view article]
I understand from the clarification above that you mainly picked CDWC to short because you were negative on the computer industry and felt CDWC to be one of the most overvalued stocks there. Clearly that is a lot different than shorting based on valuation per se, though I'd argued that CDWC doesn't stand out as overvalued (forward P/E less than 20, ROA of 15%, trading at less than 1x sales is not super high valuation compared to, say, the disk drive manufacturers that also sell a commodity).Re: LEAPS vs. Short - obviously depends on the goal and the option pricing and other market conditions. For something like this where the goal is to hedge and "out of the money" doesn't mean much since it could go down 75% and still be overvalued, I liked LEAPS better.
Analysts - I pay attention to analyst earnings estimates, but regard their buy/sell ratings as a mildly contrarian indicator - i.e. prefer to be long something less loved and short something more loved in terms of buy/sell ratings, since the only future upgrades or downgrades matter in terms of affecting the price. Reply
Acquisition Of CDW Highlights Challenges Of Shorting On Valuation Alone [view article]
Josh, your starting point is as good as any. And you're right, many shorts are put on as hedges.My rationale for the short is missing? No, my rationale was that I believed--wrongly it turns out--that CDWC was overvalued compared to its peers. It's a rather straightforward rationale.
Was CDWC the most overvalued stock in universe? No, most defiantly not. I follow a limited number of stocks that interest me. CDWC was in my universe of technology stocks, and it was one that I thought was susceptible.
Did I have a hedge against it? Not directly, though I do hold other computer and technology related stocks. So in theory, if computer and software technology companies took a thumpin, CDWC would have formed part of a hedge. But that wasn't my rationale. I never performed a correlation analysis, nor did I make any attempt to hedge the same exposure short as I have long.
Did I expect a meaningful positive return? Yes, most definitely. I thought computer related stocks in general were due to correct because of lackluster demand. There's been nothing really new in the PC world for quite some time. Vista was and is not setting the world on fire. While most companies are doing well, there is no desire by most to spend aggressively on technology. In fact, the largest increases in sales by CDWC was not by the private sector, but rather the government sector. In summary, I thought computer related stocks in general would suffer and CDWC even more so.
You've picked one of the most overvalued stocks in general and chose some leaps as a hedge. Generally I don't like that strategy because of the decay of the put option. As time passes, the put option becomes less valuable. So you might even be correct in that the stock is overvalued and gradually drifts down in time, you might still loose on the trade. But I am sure you have thought that through and understand the risks and rewards.
Is picking the most overvalued stock the best strategy? Not in my opinion. One, they can go higher and often do. Two, they can often be momentum darlings and don't trade in relation to valuation. Three, there can be large short positions that result in squeezes, preventing the stock from being properly priced. Four, the analyst community might be in love with the stock and will continue to bull it higher. Have a look at Yahoo Analyst Opinion for your stock: finance.yahoo.com/q/ao.... And on and on. So I don't necessarily think that targeting the highest overvalued company guarantees you a win.
Instead, develop a broad portfolio of stocks, and if you believe that one of the companies you follow--and you can't follow them all--is a strong short candidate, then decide if you want to play the game or not.
The same applies to going long. Do I buy the most undervalued companies? No, I have a broad portfolio with a higher than average concentration in energy and precious metals. That fits with my belief that the commodities bull run has a long ways to go and that oil is not as plentiful as we wish it were. Given that one cannot predict the future price of commodities, I can't say that I have or haven't picked the most undervalued stocks.
I hope that helps Josh.
Thank you for your comment. Reply