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19 Comments

    • ON: Thu Oct 2nd 13:52 PM
      Commented on:
      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
      View article »
    • ON: Wed Jun 18th 16:05 PM
      Commented on:
      The Hedge Fund Shakeout Continues
      There are too many imitators out there...long/short equity is very, very CROWDED
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    • ON: Wed Jun 18th 16:05 PM
      Commented on:
      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.
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    • ON: Tue May 27th 14:48 PM
      Commented on:
      Oil Manipulations Exposed
      Everyone is forgetting another dominant reason for the oil price surge:

      THE WEAKER US DOLLAR

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    • ON: Thu May 8th 16:38 PM
      Commented on:
      The Short Case on Priceline
      Told you guys. Now you're roasted.
      View article »
    • ON: Wed Apr 30th 11:51 AM
      Commented on:
      Sticking with North American Palladium
      The PGM grade is heavily weighted towards Palladium though. Also, many of the other holes were lower in grade.
      View article »
    • ON: Fri Apr 25th 16:24 PM
      Commented on:
      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.
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    • ON: Fri Apr 11th 19:13 PM
      Commented on:
      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...
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    • ON: Thu Apr 10th 19:51 PM
      Commented on:
      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)
      View article »
    • ON: Sun Feb 10th 23:07 PM
      Commented on:
      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.
      View article »
    • ON: Tue Jan 29th 20:23 PM
      Commented on:
      My 2008 Predictions for Financial Catastrophe
      We won't see anything this dramatic happen. Markets would be halted and heads of industry/government would meet behind closed doors to work things out. Interesting read though.
      View article »
    • ON: Tue Jan 29th 16:58 PM
      Commented on:
      eBay On Its Way To $10?
      Hahahahahaha...I love your analysis. "All items point down, fundamentals, technicals and sentiment". No where in your post did you offer any semblance of valuation/fundamental analysis.

      "eBay’s stock price may be as much as $10 lower if they are unable to curtail the international interception schemes" --- Yeah? How did you come up with that mythical figure?

      This article is a JOKE.
      View article »
    • ON: Sun Jan 13th 22:27 PM
      Commented on:
      AOL Money & Finance Surpasses Yahoo Finance, MSN Money For Top Portal Spot
      Lisa was spot on about the linking to Bloomberg, etc being the real reason for the jump. Yahoo Finance is still king in usability (have you looked at how cluttered the AOL quote pages are?). As far as Google goes, I don't think they have rolled out enough features to justify the hype. I just don't get what they are trying to do, they are usually good at topping competitor offerings with better features (ex: gmail) but their finance site isn't that much different from Yahoo's.
      View article »
    • ON: Sun Jan 13th 22:17 PM
      Commented on:
      Bill Gross: 5 Picks for 2008 - Barron's
      Gross has little skill. Where was he 10 months ago with this? And he's just plain wrong about growth being low or negative for a long time. The global economy is too resilient and the march of emerging economies will not be stopped in the long run.
      View article »
    • ON: Fri Dec 28th 00:54 AM
      Commented on:
      Bye, Bye Best Buy
      David, you're overlooking one HUGE variable: a massive shift in consumer spending to electronics from other goods (clothing, toys, etc). Even with declining overall consumer spending, BBY's category could still grow.

      Besides, why would you short BBY when it doesn't trade that much higher than your price target? There are much better potential shorts out there right now.
      View article »
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