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Dennis Gartman: Next Great Trade Is Canadian Banks

Rather, the valuation parity is not to the extent that he implies.

Dennis Gartman: Next Great Trade Is Canadian Banks

The P/B and P/E ratios on all these Canadian banks are MUCH higher than their US counterparts. They have declined, yes, but the valuation gap is not to the extent that Gartman is leading you to believe.

Most of the P/B ratios here are over 1X while the same ratios at US banks are <0.5X. None of these Canadian banks look like screaming buys to me.

How the iPhone and Poor Management Contribute to Apple's Downfall

"If the market continues to be shortsighted and not properly value their cash flows, then it is a fantastic buying opportunity"

And a fantastic opportunity for management to get lower strike stock options. They don't mind the stock price dips so much.

How Far to a Housing Bottom?

A housing bottom means NOTHING. Do not believe the pundits, housing will not be our savior. This is a crisis of DEBT and deleveraging. It may have started with housing loans, but stabilizing home prices are not our savior.

Priceline.com: Expecting Weak Earnings

You were dead wrong. PCLN beat guidance. Cautious outlook, but the stock is undervalued.

M/I Homes: Common Share Price Perplexing

They can meet short term liquidity needs by selling houses, even if accounting wise they are losing money on them

The Hedge Fund Shakeout Continues

There are too many imitators out there...long/short equity is very, very CROWDED

The Hedge Fund Shakeout Continues

You hit the nail right on the head. However, the top managers will still get paid because they can deliver the 20%+ annual returns. New managers and those who do not perform will have to lower fees or die.

Oil Manipulations Exposed

Everyone is forgetting another dominant reason for the oil price surge:

THE WEAKER US DOLLAR

The Short Case on Priceline

Told you guys. Now you're roasted.

Sticking with North American Palladium

The PGM grade is heavily weighted towards Palladium though. Also, many of the other holes were lower in grade.

Why the E*Trade Shorts Have It Wrong

There will be forthcoming debt-for-equity swaps. So more dilution is coming, but the question is whether or not that actually increases the value of the shares because it bolsters capital and takes out high cost debt.

Citadel is already making a killing on this deal because in addition to the cheap MBS portfolio and shares, they are running all of Etrade's option trades through their clearing business. Also, look at all the insider trades being made on ETFC by Citadel...they are clearly being active in trading the shares and lord only knows what they are doing on the derivatives side to either hedge or create upside. It would appear that Citadel still has a large stake in the performance of the company over time via the common, but we just don't know for sure given that they have their hand in many cookie jars here. My personal guess is that they DO expect to make money on the equity but it's the icing on the cake.

American Eagle Outfitters' Wings May Be Falling Off

The cash flow numbers you cite are somewhat irrelevant. You need to adjust the prior year's free cash flow downward to account for the "Proceeds from sale of trading securities". Otherwise your prior year cash flow is overstated.

Looking at EBITDA-CapEx as a more comparable metric, you'll find that 2007 was actually up about 2%. I know that doesn't include some relevant working capital outflows, BUT many of those outflows were for inventory builds at the new concepts and we just can't tell if those are going to be successful yet. In any case, you either need to give them credit for sales growth or some slight working capital inflows in the next year or two if they decide to exit these concepts. They are going to get some future value out of the cash spent on inventory and new stores.

On that topic of new concepts, I will concede that it is a bad time to be spending all this CapEx on new stores ($250mm in 08). They won't be able to judge long term potential in an environment like this one, especially with an adult concept (adults are even less likely than teens to spend money on clothing during a recession). Furthermore, they're going to be able to get better lease terms by waiting and it just makes sense to tighten the belt when times get tough so that there is flexibility in case things get really bad.

There are big economic headwinds, but this company looks somewhat cheap to me. I'd love to see what assumptions you used for sales and margins to get to your rock bottom DCF price. This company has $3/share in cash and securities (the ARS are real securities which will either eventually be redeemed by issuers or held with higher interest rates). Additionally, you could cut margins by 40% and stall growth, and as long as CapEx was reigned in (no smart managers would keep spending if the environment remains weak), they could produce cash flow north of $200mm. That means they would be trading between 10-13X free cash flow (market cap adjusted for excess cash), or a FCF yield of 7-10% in a nearly worst case scenario. My opinion is that their margins and sales won't suffer that drastically, although they should fall some for sure.

Teens and parents will want fashion at decent values in these times, and that's what AEO offers (unlike ANF whose price points are much much higher). Many teens work part time jobs and spend most of their discretionary income on clothes and entertainment, not food/bills/rent/etc. I would think that should lend some stability to the business. Just my two cents...

The Short Case on Priceline

"it was the first to eliminate booking fees on airfares which forced competitors Expedia ("EXPE") and Orbitz Worldwide ("OWW") to follow suit" - Actually, the other two didn't follow suit.

More importantly, you missed the fact that Priceline is the place people go looking for fares in a tough economic environment. Just check Alexa and you will see that trend playing out as of late. They will report a very strong Q1 in my opinion (airline load factors and hotel occupancy rates for March were healthy)

The 'Uptick Rule' (A.K.A The Dangers of Dog Piles)

Why should we allow unfettered optimism to drive up valuations on the long side and not allow shorting to correct such? It's a market, we don't need the big brother SEC creating controls. Besides, we had the crash of 1987 when the uptick rule was in place (it obviously didn't help much).

And you're an idiot if you think Goldman's trading desk (which one by the way? they have many) would be engaging in momo tactics like the one you suggest. The type of trading they do is much more hedged and much more complex.