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    • Mon Feb 11th 21:55 PM | Rating: 0 0
      Commented on:
      Walgreen: Attractive Valuation and Growth Story
      To tmuller --

      First good luck on your CFA designation, it's a tough program. I was awarded my CFA designation in 2001 when the exams were easier. I made a mistake of pursuing my MBA at Stern and the CFA designation at the same time; it was just too hard to do both at once.

      Second about the ink refills when you wrote: "Speaking of convenience ? so you mail off you cartridges How do they get refilled online?" The manufacturers such as HP want as much of a closed-loop as possible. The software alerts the user to order new cartridges (via online) before s/he runs out akin to EOQ or JIT theories and these new cartridges come in the mail so s/he won't have to make time critical convenience purchase. At the same same, you send back the used cartridges in the mail back to HP so HP can recycle the cartridges.

      Third is the continuity assumption -- just because WAG was successful in the pass doesn't mean it will continue to do so in the future. You are making a huge assumption that WAG will continue its own ways and may be dangerous. In the old days, downtown department stores (with premium locations) had real economic power and then when the malls was developed, these same downtown stores became dinosaurs.

      Good luck.
      View article »
    • Sat Feb 9th 11:28 AM | Rating: 0 0
      Commented on:
      Walgreen: Attractive Valuation and Growth Story
      [Provides convenience argument...and explains] "Walgreens is able to charge higher prices because they provide convenience. That’s just Michael Porter 101." -- M Hines

      I'm sorry but your argument goes from bad to worse. Let's take your ink cartridge refills as a example of high value products that will add value to WAG. If the argument is on convenience, as Mr. Hines asserts, then buying these ink cartridges refills online if far more convenient and is also congruent with Porter's thesis (please ask yourself, why did companies such as HP and Dell have software that monitor ink-levels along with automatic reminders, perhaps to create captive markets? Hmmm).

      WAG may charge, in my opinion, a small premium for convenience, but that convenience is not economic moat by any stretch of the imagination. I have a HP inkjet printer and despite the nice software reminders, I still buy them from Costco or Walmart because I am a creature of habit.

      Cheers.
      View article »
    • Fri Feb 8th 08:33 AM | Rating: 0 0
      Commented on:
      Walgreen: Attractive Valuation and Growth Story
      This a stock that gets mentioned on Vestopia and each time I read the investment thesis, I keep thinking to myself, these guys don't get it. Charlie Munger challenges investors to look ahead and think about where the company will be in the future, say ten years from now. I'm sorry, but I don't see Walgreen being a successful company in the next 10-years (as reminded by their 10/2007 earnings release).

      In my past, I have been a loyal Walgreen customer and one day it dawned on me that it doesn't make sense to pay for Walgreen's 24-hour convenience if I am paying prices that are 30% to 50% higher for the identical products, respectively, that are being sold in Wal-Mart. Now, I have access to a 24-hour Wal-Mart super store and there even less of a need to shop at Walgreen. That said, I hold the opinion Walgreen's margins will not stay at lofty levels.

      Let's not forget the two main drivers of valuation creation are "margins" and "capital base" (per Tom Copeland et al) and my point is the high margins won't be there. Selling products like high-price ink cartridge refills does not reflect reality and opening more stores that are not competitive in the marketplace is sheer folly.

      As I go down Mr. Munger's mental checklist, I keep asking myself the basic question of: "What is the compelling reason for customers to shop at Walgreen versus WalMart?" By the way, I noticed your Walgreen comps listed failed to capture WalMart -- perhaps that was an omission on your part to make Walgreen look attractive?! Hmmm.

      Cheers.
      View article »
    • Fri Feb 1st 16:16 PM | Rating: 0 0
      Commented on:
      Microsoft Takeover Bid for Yahoo!
      It's a brilliant move by MSFT given that the average takeover premium is about 30%. By making such a bold move (hence the sizeable premium), it sends a strong signal to Yahoo!'s board that this is a compelling offer and to send a signal to would-be acquirers that MSFT is quite serious and means business.

      When you look at the anti-takeover defenses, a 62% premium is very difficult to argue against and given that MSFT has the means to complete the deal, there's not much ammo left.

      Plus, the timing is great since Yahoo! is facing weakness in it's operations.
      View article »
    • Fri Feb 1st 14:54 PM | Rating: 0 0
      Commented on:
      Stocks That Ben Graham Would Like Here
      I still can't believe people use accounting numbers at face value. I used to follow OSG on the debt side and it's earnings and cash flow were highly dependent on the tanker market -- it was feast or famine at times.

      It just goes to show why people need to be careful about accounting numbers. It's just a starting point in the analysis.
      View article »
    • Sat Jan 26th 03:36 AM | Rating: 0 0
      Commented on:
      Rick Santelli Takes Down Jim Cramer
      Take the high road ... Mr. Kenyon, did you really need to make this post???

      On page 256 of "Seeking Widsom" by Bevelin: Loa-Tsu said "Respond intelligently even to unintelligent treatment." Be nice to people and if they are not nice to you -- don't be nasty -- just avoid them in the future.
      View article »
    • Fri Jan 25th 04:55 AM | Rating: 0 0
      Commented on:
      Fed's Folly: Fooled by Flawed Futures?
      This is simply jejune logic -- I failed to see how a small amount like $7.1 Billion in trades (fradulent trades that was created over a number of months) in the capital markets consisting of trillions of dollars could the sole cause of the market meltdown. Any student of financial history can compared this amount to Long Term Capital Management (LTCM) and discern the amount involved at LTCM was much greater and never resulted in a 75 basis point cut in the Fed Fund rate. Barry Ritholtz needs to work on basic logic and employ the simple techique of cause and effect.

      For example, I strongly believed Mr. Ritholtz neglected the fact that two of America's greatest wealth creation engines are showing double digit declines -- the decline in the housing market (as measured by housing prices) and the decline in US equity values (for example, the Russell 2000 index, was down about 15% when measured from 12/26/07 at 797.03 to 673.18 on 1/18/08, which is impressive in light of the so called January effect). When you have this much wealth being destroyed in America, one of the richest economies in the world, at such speed -- it is a problem for the US economy and for the global economy as well.

      Separately, I am not a fan of Bernanke's actions and I consider his 75 basis point cut to be "bush league" akin to wetting his pants. However, I still believe the rate cut was INDEPENDENT of the so-called fraud.

      Cheers.

      View article »
    • Mon Jan 14th 15:53 PM | Rating: 0 0
      Commented on:
      Seeking Alpha Announces Free Conference Call Transcripts for 2,500 U.S. Companies
      When I was a Buy-Side analyst, earnings-transcripts were a must read to scan for sales, margins, earnings, cash-flow and ROIC inputs. Now that I'm no longer working for an asset management firm, I realize how much of a disadvantage the little guy has versus the professionals and the free transcripts service is a big help. Thank you.
      View article »
    • Sun Jan 13th 01:53 AM | Rating: 0 0
      Commented on:
      Helen of Troy: A Stock to Launch a Thousand Buyers?
      You do bring up good points in that HELE has been consistently profitable in the past and its current earnings yeild is over 10% and should remain at 10% (barring any significant downside earnings surprises) at these current price levels.

      The latest balance sheet reveals HELE has significant cash and investment balances and that easily amounts to $2 a share in surplus cash.
      View article »
    • Mon Dec 17th 11:54 AM | Rating: 0 0
      Commented on:
      Investools: Too Many Accounting Red Flags
      10Q Detective is committing the same mistake as the last critic (Paul Simenauer who, by his own admission, stated he was "dead wrong on SWIM"). Please advise the readers as to the intrinsic value of SWIM so we can discern how overvalued SWIM is. Mr. Simenauer had numerous opportunities to provide his intrinsic value analysis, and to date, he has failed to supply it. I hope 10Q Detective's response is better.

      Second, how does 10Q Detective reconcile the positive cash free cash flow per FASB #95 based on the latest form 10-Q filing. I've stated before: "Cash flow from operations revealed $30.3MM in positive cash flow and investing activities consumed about $14.6MM for "capex-related activities" for a positive "free cash flow" of under $16MM for the nine-month period ended 9/30/07." Clearingly, if SWIM is engaging in "accounting gamesmanship" as hinted by 10Q Detective, how is SWIM generating positive free cash flow.

      Third, and this is related to points #1 and #2, is comparing the SWIM model to either the Gillette model or HP model (i.e. lose on razor but make it up on the razor blades or lose on printers but make it up on ink, respectively). That is to say, the fundamentals at Investools itself is less of a concern than the profit engine and synergistic relationship when combined with thinkorswim. Or, I don't disagree with 10Q Detective views on Investools so long as the combined SWIM franchise makes money after the dust settles and the franchise is sound.

      Lastly, 10Q Detective stated: "In fact, the premium fundamental and technical analytical software available at Investools can be had for FREE at a plethora of websites, from Morningstar to MSN Money's Stock Research Wizard." This statement wrong (and needs a retraction) -- for example, Investools clients have access to the Prophet software (please note I am a fundamental analyst by training), and I don't recall seeing Prophet's software at any of the sites mentioned by 10Q Detective.

      Cheers.
      View article »
    • Tue Dec 11th 18:11 PM | Rating: 0 0
      Commented on:
      The Short Case on INVESTools
      Here's what I find amusing since Paul Simenauer stated: "I welcome any intelligent debate." So much for the intelligent debate; it ceases to be an constructive dialogue debate when Mr. Simenauer comes across as a sore loser.

      Mr. Simenauer, I want to thank you for showing the investment community your true disposition as your original analysis and investment thesis of shorting SWIM speaks volumes about you as the next Jim Chanos ... NOT!
      View article »
    • Mon Dec 10th 17:42 PM | Rating: 0 0
      Commented on:
      My INVESTools Saga Continues
      I'll bite. Joe needs to open his mind and try to discern SWIM given the Gillette or HP model, which is another bona fide means of validating SWIM's franchise. Also, I like to know why Joe never calculated the intrinsic value for SWIM, i.e. the amount of money it would take to replicate SWIM today. It would be nice to compare Joe's intrinsic value (along with supporting work) to the current market value of SWIM.

      Since Joe is the critic of SWIM, the burden of proof lies with him, not SWIM.
      View article »
    • Mon Dec 10th 17:29 PM | Rating: 0 0
      Commented on:
      The Short Case on INVESTools
      Paul Simenauer,

      If you aren't going to calculate either SWIM's intrinsic value or value-chain analysis, then giving you more recommendations would be a waste of my time. Had you simply tried to discern the amount of money it would take to replicate SWIM today, it would force you to consider the very same questions you've just asked me, i.e. churn, customer satisfaction, etc.

      As for Joseph Citarella's* original editorial piece, I failed to see an investment thesis in that article and it can across as someone sharing his personal opinion (btw, Joe was clueless on key aspects of SWIM like yourself). I've learned in life, one shouldn't get into debates over personal opinions, religion or politics since it's akin to a fool's errand. In contrast, your original piece on SWIM was sloppy and contained an investment thesis that was hastily put together (and you yourself subsequently admitted you were dead wrong).

      In the spirit of Charlie Munger, it might be best for you if you tried to figure things out for yourself.

      Good luck.

      * There is an aphorism on foolishness that I like to share with you: The fool himself or someone who follows that fool. My question to Paul Simenauer is: Why are you basing your decision on message boards from unknown people with questionable and unverifiable motives? Why not do the reasonable thing and get the facts from the source, which is the company?
      View article »
    • Tue Dec 4th 17:51 PM | Rating: 0 0
      Commented on:
      Bill Miller Heading For Second Straight Losing Year
      In the Asset Management industry, rather than speculate if a perticular asset manager beat an index by luck or chance, the industry normal is to look at the fund's performance attribution over time. Nothing is stopping Paul Kedrosky from performing a crude attribution of Mr. Miller's fund or simply ask the fund to release its performance attribution reports.

      View article »
    • Tue Dec 4th 16:16 PM | Rating: 0 0
      Commented on:
      The Short Case on INVESTools
      Investools updated key financial metrics on its businesses -- please see their 11/29/07 presentation. On page 6, the Company outlined some demographics of both Investools and thinkorswim customers. On page 14 is a "comp" chart of thinkorswim versus some of its peers and it is simply impressive -- if you recall wall street's goal is to get its customers to trade so it can collect commissions. Investools/thinkorswim has done a great job getting its customers to trade at an astounding annual pace; keep in mind, it's hard to distort an average annualize trade statistic given the size of thinkorswim's customer base.

      A second point is that Investools released its Q3:07 form 10-Q filing and I wanted to get a good read on Investool's cash flow per FASB #95. Cash flow from operations revealed $30.3MM in positive cash flow and investing activities consumed about $14.6MM for "capex-related activities" for a positive "free cash flow" of under $16MM for the nine-month period ended 9/30/07.

      In summary, the ongoing positive trend at thinkorswim along with Investools generating positive "free cash flow" makes SWIM a difficult short candidate.
      View article »
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