Mexx

23 Comments

    • IT Industry May Slump Until 2010 [view article]
      Oh goodie, it looks like I have two more years of buying great companies.

      Eventhough we are melting down.... this is a great period for the long term investor to continue accumulating steadily.       Oct 02 03:00 PM
    • Ceradyne: Tremendous Growth with Major Risks [view article]
      Agree. But looking at the concentrated revenue risk from a different point of view. As long as we have enemies and the risk of a terrorist attack looms. There will be no major cutbacks on defense spending. McCain winning will give this stock a bump while Obama winning will keep this stock flat. We can alway pass $700B bills in the event we get attacked and need to raise military spending. Oct 02 01:31 PM
    • Credit Cards and Exchanges: The Only Safe Ways to Play the Financials [view article]
      Good article. I like NDAQ and I'll patiently wait for another market panic attack to see if I can get the stock to dip below $30 so I can have a bit more of a safety cushion. Thnxs

      Sep 24 11:24 AM
    • Dryshippers: A Buy or a Sell? [view article]
      Good article. I've owned GNK for a while, and have seen the up and down swings on the stock - the Chinese are living off their inventories right now but cannot do it indefinitely. Demand for coal and other dry goods will return and the BDI will soar. Sep 09 07:28 AM
    • Top 5 Stock Picks for September [view article]
      Chris,

      I thought AUTH was expensive even at its current lows, but man, I never thought it would drop this much in one day. I feel for you, I've had my share of micro-caps dropping more than half in a short-time -this truly sucks.


      Given the drop and the potential risk of losing one of their biggest customers, I am curious to know from you, is this an over reaction or was this drop well justified?

      Buy-Don't Buy?


      Sep 08 10:15 AM
    • Five Retailers for Falling Gas Prices [view article]
      Cheaper oil will not solve for the real estate crisis we are currently in. I agree with 2 lakes, there are broader issues at hand that may keep people out of the stores for some time to come. I am not convinced we have hit consumer spending bottoms, nor I think that these stocks just because they have dropped more than 50% can be considered cheap.
      > CMG is far from cheap with a forward P/E of 24 and a EV/EBITDA of 13.25
      > DKS is probably achieving cheap status and has a solid business model and OK balance sheet. But much of its diversified inventory makes it susceptible to consumer discretionary spending. I would consider buying if it drops another 15-20% as a margin of safety.
      > SHLD - There is not much of retail business model here. The retail experience sucks and if you've been to a Kmart lately you'd think you just walked in to a Bloomies because it's so pricey. Lampert is clearly way above his head on this one, he is not a retailer. The real estate angle on this one is not good enough reason to buy.
      > KONA - A want to sell everything sushi/pizza/burger/tac... with a twist of hawaiian restaurant. No thanks. BWLD yes.
      > JMBA - Total speculation. Put your Vegas money on this one and be ready to hold for 5 years.

      Aug 12 09:55 PM
    • The Case for Jamba Juice [view article]
      Matthew, I've already place my bet in the Jamba roulette -that bet is long.

      While I concur with some of your points, most of your points are too anecdotal or tactical to make a case for Jamba either way.

      There is a lot of pessimism built into the stock, at this level, the numbers don't mean much, the fact that it trades below book is meaningless, there are lots of micro-caps that fit that profile (e.g., VIMC, FMD come to mind).

      Nonetheless, I think it comes down to three things:

      Unique Value Proposition (UVP): The fact that MCD, SBUX, Dunkin, and everyone else has jumped into the smoothie business simply validates the Product category and exposes more people to the smoothie concept. Competition is alive and well, it may be in very fragmented market but it is there, and lets not forget all the near perfect substitutes in the ready to drink market. So the question is can Jamba create a UVP that can help differentiate itself and help grow their biz. model. My answer is maybe. I think serving quality drinks is a great start, but they have a bit to go in the in-store experience, your example of the 6min. brings to light the in-store issue.

      Management: Contrary to other's opinion, I think management is quite competent. Their marketing is stellar, they understand operations and are lasered focus on creative a memorable customer experience so that they increase customer frequency (a key metric). Scoring the Nestle distribution deal in the RTD market by leveraging their brand was a stroke of genius. They are keenly aware of service, throughput, sizing/pricing and are working hard on fixing them. Unfortunately, that leaves little time and money to respond to indiv. shareholder letters. Judging Management responsiveness by the fact that they did not respond to your letter is a bit... petty.

      Profitability: It is absolutely critical for Jamba to figure out how to make money on a $2.95 drink and still fulfill the brand promise and deliver a UVP. The scalability of the business, the mass market appeal, and most importantly the ability to make money over the long haul rests in making the $2.95 drink work for the business. This is where the futures market could come into play, along with some tight controls over operations and cost containment.

      Bottomline, we are clearly in long-term speculation territory. At the next earnings meeting, pay attention to the three things above, everything else is short-term noise.




      Aug 04 09:57 PM
    • Breaking Up With Jamba Juice [view article]
      bail out. My second closing thought is that this should be part of your speculative plays in your portfolio. Only put in what you can afford to loose.

      Who knows, we could be looking at the next RIMM, circa Sep 30, 2002.       Aug 01 06:35 PM
    • Breaking Up With Jamba Juice [view article]
      rushnut,

      In my view at this stage, it is less about the numbers (because there are several metrics that could help you justify goin in from a deep value perspective); and more about the strategy, business drivers and their ability to execute on that strategy.

      Nonetheless, the two numbers that are worth keeping attention are Profitability and Cash Flow. It will be specially interesting to hear what they are doing about Profitability (or whether the existing plan is working to keep them above water) and their plan to generate FCF.

      Aside from that, these are the things that will make or break the company or are things that you need to consider to determine whether to invest in JMBA or not.

      PROS
      A Strong Brand - You cannot discount their position in the market, they are truly the #1 brand in the marketplace.

      Their product as a valid category - SBUX, Dunkin Donuts, MCD are all jumping into the smoothie market. With the possible exception of dunkin donuts, i think they are all going to fail, but along the way they would've introduced a broader market into the product category.

      Nestle Distribution: This is a limited distribution agreement at the moment, but if it expands nationwide or internationally, it could certainly pave the way for JMBA to become a national brand both as a retail out and in-store

      Management - To date, their management has proven very competent. They are good marketers and good operators. For good or bad, they are focused on execution and not the stock price.


      CONS
      > Cost of raw materials -the rise in milk, fruit and just about everything else that goes into their drinks. With cost of goods going up their margins are continually being squeezed. This is the one that I think is the hardest to solve and the one that bothers me the most because it affects their entire business model.

      > The California Economy - Their concentration in CA makes them particularly suspectible to its economy. If you believe CA will whether out the real estate slump, Jamba will do well.

      > Price Point -Their price points may be to high to make Jamba a truly mass-market product. Their concept is more like a Fudruckers than a McDonald's in the burger space. It will interesting to see how they do with their $2.95 drink offer.

      Two closing toughts, if you put money in, go into it with a five year horizon, without any regard of what happens in between. Obviously Greg Gerber the writer of the original article had a much shorter time horizon and decided to .       Aug 01 06:25 PM
    • AuthenTec Earnings Highlights: Record Sales, Continued Execution [view article]
      Chris,

      I've had AUTH on my watch list since the beginning of the year. I've seen it drop about 35% since. However, after yesterday's stellar earnings announcement, I am scratching my head wondering why the big sell off today. Do you have any insight into why the market reacted so negatively to their quarterly earnings.

      Are the big boys seeing something that we are not. Any insight would be greatly appreciated.

      Mexx
      Jul 31 08:12 PM
    • Crocs: It's the Product, Not the Economy [view article]
      Amit, great write up and analyisis. Prior to yesterday, I thought Crocs was hitting a slump due the economic woes just like all other apparel brands. I thought their inventory problems was a short term snaffu that could be fixed. Furthermore, their positive int'l growth and brand extensions seemed favorable drivers for a potential bump up in the stock price to the mid-teens from the $9 levels prior to yesterday. But hearing the incompetence and misguidance of management in their earnings call yesterday, I realize I was dead wrong. I was long on CROX and will be cutting my losses very soon as I no longer see any real catalysts for this stock to go up anytime soon, not this year or the next.

      I anticipate the trickling of bad news will continue quarter after quarter and the stock will continue its downward slide.       Jul 26 11:48 AM
    • Crocs: It's the Product, Not the Economy [view article]
      What is up with Gumby, sounds like he bought the stock at $70 and is blaming Wall Street for his massive losses. Shoes made of the "finest" materials won't necessarily make you money you fool -if that was your investment thesis for Crocs, I can see why you are so pissed off.

      And do you think that seeing a bunch of medicare patients wearing crocs is going to raise the coolness quotient for the fashion conscious?

      Enjoy your "bacteria free shoes..." that is real fashion statement if I every heard one!       Jul 26 11:39 AM
    • Revised Upside Targets for Fannie and Lehman [view article]
      Agree with borisb, we have another newsletter peddler in disguise.

      And if you don't subscribe to his monthly service by 8/1, rates will go up 50%. Yeah right! -I'll check back on 8/2 and will report if you don't raise rates as you said.       Jul 21 11:23 AM
    • Well-Capitalized Regional Banks: The Bottom Is In [view article]
      Mr. Market has spoken. Profitable banks with solid margins like WFC can afford losses and have money to spare to raise their dividend. Jul 16 10:47 AM
    • Well-Capitalized Regional Banks: The Bottom Is In [view article]
      While it is easy to be a bear of banks stocks these days. we all know however that no matter how bad things get, we will still have banks in this country after this crisis passes. The % of survivors is anyone's guess. But a 2% failure rate may be conservative. To put this in context, during the S&L crisis, 50% of S&Ls failed. Banks are not S&Ls and the circumstances are completely different. But in the extreme case, it is completely conceivable that bank failure rates approach the double digits. What is more probable is that as a fewer but bigger will fail because of the consolidation in the industry in the last two decades.

      The so called "conservative banks" are labeled conservative because they usually increase their loan loss reserves during bad times and often during good times (when they can afford to). The conservative banks will put more money aside than required by the regulators. This is not money that sits in the cash account.

      You have to dig much deeper than yahoo's balance sheet numbers to figure out a banks loan loss reserves since it is usually a contra account against the loan asset base. So a bank showing say $1B in loans on their balance sheet could actually have $1.1B in outstanding loans because they have been netted out their loan portfolio by $.1B ($100Million) to account for loan loss reserves.

      To determine how a bank's loan portfolio is performing charge offs as a % of loans is a good metric. charge off's for banks tend to be <1%, uptrends in charge offs could be a huge red flag.

      Banks that are very profitable can afford to put more money aside for losses. Conservative banks that are very profitable are specially attractive that is why Warren Buffet is a big fan of WFC.

      The big unknown in banks today is portfolio values. For banks that relied more heavily on securitization to continue growing, the well has dried up as we have already seen with mortgage companies. Banks that traditionally relied on deposits for funding and held on to their loans have had the infrastructure to service and work their loans will end up fairing much better.

      Down the road (I mean, down the road), some banks may end up making a very strong come bank. Those that were too conservative in their loan loss reserves and in valuing their assets during this period of gloom and doom could potentially have write ups and release their excess loan reserves (a windfall to earnings).

      Bottomline, banks with conservative loan loss reserve practices, lower charge offs as % of loans, and healthy profit margins stand better chances of surving this crisis -and it is a crisis, not just media hype.
      Jul 15 09:42 PM
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