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  • Airline stocks fall; DOJ probing price collusion [View news story]
    rik, I agree! The price action on the airlines has been bizarre lately. I have been adding as they dropped, but it is as if somebody (or a lot of somebodies) knew the Justice Department was going to pull this trick. I really hope the SEC investigates recent sales and shorts of airlines, and if they found out the Justice Department was going to do the take down on the industry ahead of time. The sad thing is that the employees will be hurt worst of all. Justice attacks airlines; airlines forced to cut fares; profits dry up; airline employee benefits and pay take the hit; airline executives still fine. Oh, and shareholders flee, but wait, that has already happened ahead of time. Only the innocent and honest shareholders get screwed.
    Jul 1, 2015. 04:15 PM | 3 Likes Like |Link to Comment
  • Airline stocks fall; DOJ probing price collusion [View news story]
    I agree, Bgold, but...this Justice Department, more than any I can remember, just doesn't do things the right way. Here is the quote from the story:
    >>Justice Department spokesperson Emily Pierce confirmed the probe, saying investigators are looking into “possible unlawful coordination by some airlines,” but would not confirm which carriers.<<
    Assuming the story is correct, this is just wrong. American citizens have billions of dollars invested in these companies, and they drop this bomb on the stock market, taking down every airline. They literally cost innocent people billions in losses today by throwing around their rumors and not specifying who and what the extent of the issues are. They should know better than this and they are either clueless or don't care about the damage they do. There doesn't seem to be any concern for the damage they have caused innocent airlines and investors. If this was just a dumb mistake on their part that would be one thing, but they did the exact same thing to the banks and others. This appears to be their playbook when they want to attack somebody. I just don't think it is appropriate for the Justice Department to act that way. It reminds me of the IRS probes into the political enemies of the administration. The people of the United States deserve better!
    Jul 1, 2015. 03:57 PM | 18 Likes Like |Link to Comment
  • Chambers Street Properties and Gramercy Property to merge [View news story]
    That pretty much sums it up, phig! We are looking to sell ourselves...and we will do so at a discount to current prices!?!?
    Jul 1, 2015. 08:24 AM | 2 Likes Like |Link to Comment
  • Airlines: Preparing For A Descent? [View article]
    I'm trying to be gracious, but this is just horrible logic, and the perfect example of why the herd usually underperforms. Airlines are, perhaps, the most hated investment class ever, and their fundamentals have never been better! AAL could make more than UPS and FDX combined this year (two solid transpos), yet the market cap is about 1/5th of these two shippers! Remember, it isn't just mom and pop investors, but also professionals who can't beat indexes. The airlines have already dropped; now is the time to buy, not sell imo. The fundamentals are fantastic. AAL "might" turn a profit this year? AAL will likely make so much money in this quarter alone that the PE for *just this quarter's* earnings is cheaper than the major indexes for the *whole year*. Of course, there are risks, like terrorist attacks and pandemics, but even if oil goes back to $100 a barrel and we get a slowing in the economy, the legacy carriers are still undervalued currently imo.
    Jul 1, 2015. 05:59 AM | 6 Likes Like |Link to Comment
  • American Airlines Investors Are Ignoring Major Risks To The Company [View article]
    Let's add historically low interest rates as another huge positive. The legacy carriers, and particularly AAL, are updating their fleets and financing at low rates. Planes can last 20-30 years in some cases, and AAL's fleet is now very new and efficient.
    Jun 23, 2015. 10:17 AM | Likes Like |Link to Comment
  • American Airlines: Patience Is A Virtue [View article]
    Harm, a lot of great points in the article, and I think good balance, too. My one big point would be that the PE is backward looking, and since that was when oil was at a much higher price, it could be very deceiving to look at backward numbers here. AAL was using roughly 360 million gallons a month last year, so a $1 drop in fuel prices equates to over $4 billion a year! Nobody is even considering that AAL (and the other majors) had profitable models at $100 oil because of the restructuring that you detail above. So, the $4 billion is extra cash. Fracking, cost restructuring, historically low rates, and a modest recovery make airlines a buy imo. They may be great investments for the next five years. Your list of risks is certainly valid, but I think Mr. Market is discounting the *possibility* of these risks, and ignoring the *reality* of lower oil, lower rates, higher load factors, and limited capacity.
    Jun 23, 2015. 08:47 AM | 2 Likes Like |Link to Comment
  • China Automotive Systems: Free Cash Flow, Growth, And No Debt [View article]
    I like this company, too. Just like you, I appreciate their global focus and their R&D. Having big auto companies as customers also validates their legitimacy as a business. My one concern, is financial management. I hope they can manage their finances well and reward their shareholders rather than fleecing them. I own the stock, too.
    Jun 23, 2015. 07:27 AM | 2 Likes Like |Link to Comment
  • REITs That Pay Monthly [View article]
    Brad, my kind of timing on the secondary! Question: do you think the extra shares put the divvy at greater risk? That puts the payout at close to 100%, doesn't it? Or, do you think they will quickly use the funds to increase the FFO commensurately. Thx.
    Jun 23, 2015. 07:22 AM | 2 Likes Like |Link to Comment
  • American Airlines Investors Are Ignoring Major Risks To The Company [View article]
    tut, well said. If AAL was selling for the same forward PE as the S&P 500, I would agree with his thesis, but it isn't anywhere close. If AAL had the same forward PE as the S&P500, it would be ~155. That is not a typo. 155 is what AAL would be selling for today with comparable valuations to other companies. That is where the author fails his readers. This piece is essentially like running into a theater, talking about how dangerous theaters are during fires, and then yelling fire when there is no fire. In fact, the theater is doing great and has exits built to code and there is a fire truck sitting in the parking lot at the moment. AAL is, imo, a screaming buy. This piece is just one more bit of evidence that airlines are among the most hated investments in the history of the stock market. AAL is selling at almost a 75% discount to the S&P 500. That is a remarkable discount. Even if profits drop 75%, it isn't overvalued relative to other companies.
    Jun 23, 2015. 07:09 AM | 5 Likes Like |Link to Comment
  • American Airlines Group leads airline sector higher [View news story]
    The irrational drop in the airlines reminds me of Apple's drop, too, flicks. Except, this one is even more ridiculous. There were plenty of people saying Apple would keep dropping to the high 200s then (that would be roughly the $30s now, post split). When you let good and profitable companies get down to 4-5 X earnings, there is just too much they can do with the cash; the stock price has tremendous pressure to rise. If disaster doesn't strike and oil stays in the 60-80 range, as I expect, AAL and UAL should be multi-baggers over the next three years. The street is as pessimistic on these names as I have ever seen for any stock over my investing career. Horrible despair, gloom and pessimism make many argue that AAL is overpriced at 4-5 X this year's earnings.
    Jun 22, 2015. 05:52 PM | 2 Likes Like |Link to Comment
  • American Airlines Group leads airline sector higher [View news story]
    Just to put it in perspective, AAL would be trading at ~$155 today if it had the exact same forward PE as the S&P 500. No doubt it should have a discount, but 27%--almost 75% off--is ridiculous. UAL is similarly mispriced.
    Jun 22, 2015. 11:16 AM | 1 Like Like |Link to Comment
  • United Continental: An Undervalued Stock With Strong Upside Potential [View article]
    I agree UAL is insanely cheap! Thx for pointing it out. AAL is just as cheap, too. I like this point: both of these companies are cheap even if we only count this quarter's earnings and don't even count the other three quarter's numbers in their estimates! IOW, the major market averages have much higher prices on forward PE estimates for all of 2015 than AAL and UAL have just on this quarter's estimates!
    Jun 22, 2015. 05:44 AM | Likes Like |Link to Comment
  • Good Times Restaurants Just Announced A Huge Bump Up And Nobody Noticed [View article]
    Back of the envelope, and assuming YHOO's numbers are right, I come up with the following (rounded and rough): with MCD's forward P/S we would be in the ~20s, and with SHAK's forward P/S we would be in the ~60s. GTIM has a long, long way to run if they execute and manage the growth well. Having two synergistic and winning concepts should command a much higher valuation than we have today. BTW, growth has accelerated on a massive scale. I was figuring around 40% before the acceleration.
    Jun 22, 2015. 05:30 AM | 2 Likes Like |Link to Comment
  • Opportunities Ahead For American Airlines [View article]
    Steve, after looking at your profile, I think you have a uniquely well informed perspective on the airlines. Thanks for commenting!
    Jun 4, 2015. 07:27 PM | Likes Like |Link to Comment
  • Opportunities Ahead For American Airlines [View article]
    I'll give you two for the price of one, Harm: valuation and profits. Profits have changed dramatically, and valuations don't reflect that. AAL is trading at a lower price than last year when oil was $95 a barrel and estimates were almost half of current numbers. AAL is selling for less than 15 times this *quarter's* earnings, as opposed to the average S&P 500 stock, which is selling for almost 19 times this *year's* estimates! So, let's review a bit: aviation went from the period of regulation, to the period of the asset raiders (airlines had a lot of hidden value, and the raiders cashed that in, often at the expense of the businesses), followed by the period of mass and sometimes mindless expansion, followed by 9/11 and mass bankruptcy. The airline industry was attacked by foreign terrorists and the US Government failed to protect them. Revenues were off by huge percentages in the following quarters and years--few businesses could survive an attack like that, with subsequent revenue implosions. Fast forwarding to today, they have emerged in a more rational business environment--not a perfect one, but a more rational one. Just like people who were burned by the bank blowouts in '08, or the tech bubble in '00, airlines have left a trail of wounded skeptics. As you know, a contrarian looks for emotional, herd mentality to find incorrectly priced assets. I think we have a classic case in the airlines. People act like 3 times earnings is where AAL should trade. I'm not saying the airlines will displace Google and Apple, but I think they have a good business model. It does have unique risks, but I think that the market will come to value them more highly over the next five years. So, the very, very low valuation will inflate a bit as people realize they are legitimate businesses, and I think the general market is overvalued if rates go back up. One asset is grossly underpriced and the other is fairly valued to overpriced, and that is why I think airlines will outperform. Thanks for asking!
    Jun 3, 2015. 08:58 PM | 3 Likes Like |Link to Comment