broxton street

Central Garden & Pet: All About Growth

You kind of miss the main point that cent is a vertically integrated manufacturer of a number of products that operates a distribution comany, which I believe is the largest pet product distributor to wmt
timing a disciplined buy at 8.15 very smart...look at the 2000-2005 price move pretty damn huge

Coinstar Investors Counting Pennies That Don’t Exist

Coin counting is high margin and CSTR has pricing power with the issuers of gift cards. Redbox may eventually sell dvd and be able to produce virtually any movie by dowloading it, writing it and printing the cover. Chanos has been recommending to short this stock since 2003 and is down 400%. so he will basically say anything to move the thing down

CALM Longs Walking on Eggshells

These comments are totally wrong: "Eggs, on the other hand, can be produced by stacking dozens of cages on top of each other and having each chicken produce a couple hundred eggs per year. What does the evidence point to in terms of industry supply trends? Yes, supply has been constrained – but it looks to be gradually expanding, as pullet chicks hatched is at a multi-year high, as is eggs under incubation – in other words, farmers are breeding more chickens to capitalize on the high prices. As invariably happens in a commodity business, this will cannibalize margins and profits."

you don't know anything about modern NPDS and UEP compliant cage systems required today. You can't stack cages and cram chickens anymore.
seasonality doesn't mean anything look at KO and PEP or Scotts lawn
Pullet chicks and eggs under incubation Have Not inclined and the total flock size is smaller than 2007
eggs are an Input cost for the entire baking industry and others
They will pay any price for eggs to make their product
currently egg prices are at an all time June high and may breach 2.00 per dzn this year. The usa eats 213 million eggs a day and the demand is extremely inelastic

Cal-Maine Foods: Eggs in One Basket

Westwood Asset Management
One of the main theories that we are operating off of is the demand inelasticity and the surge in commercial food demand over the last 10 years combined with a leveling off and return in growth for table egg consumption from individuals; also the normal population increases. So this has coincided with a reduction in producers and a slight reduction in birds. So basic economic; means higher prices.
I wouldn't worry about the huge short interest. We've seen this before and it doesn't really mean much.
However CALM's short interest surpasses anything that we have seen be before especially in a high dividend paying equity. This leaves the market open to abnormal rapid increases due to pannicy short covering combined with momentum buyers. If I was going to short CALm on fundamentals I would not due to this interest. Markets are a little like boats..everyone piles on one side and something unexpected happens in order for the market to reach equilibrium.
another price driver from econ 101 is the increase in inputs corn and soy meal. CALM buys from the spot market and every 20 cents in bushel of corn is 1 cent in cost per dozen, eevery 20 $ per ton of soymeal also = 1 cents. so for 4th Q we are expecting 39 cent area per dozen cost..
calm doesn't seem to have pricing power. the sales prices for their customers are derived from Urner Barrys weekly quotes.

So overall we are long due to the small PE and think there could be a short covering crisis

Should You Put Your Eggs in Cal-Maine's Basket?

Breaking stock prices can normally precede table egg prices and breaking stock quotes are moving higher
USDA QUOTE: Breaking stock prices were higher with checks and undergrades unchanged.
Demand was usually moderate while offerings continued tight to adequate.

Should You Put Your Eggs in Cal-Maine's Basket?

Just wanted to comment on this article that’s been hangin around this stock :


Firstly: all securities valuations models are based on future earnings and dividends or asset appraisals. see Grahm and Dodd or anything related to this subject. (according to the authors method Enron Stock would still be worth something) So lets start at or around any currently recognized valuation methodology.
Secondly although interest rates have some bearing on equity values; Bonds aren't a good proxy for individual equity values
Thirdly: seasonality is no reason not to own a company; see KO and PEP
so i guess no I do not really believe that a 10 year avg ROE is where you start on this stock; its not real world

Also the author comments that CALM has de-leveraged somewhat..
the company has generated enough cash to pay off 100% of debt in 9 months.So saying that the company has deleveragered somewhat is a little bit of an understatement

CALM is not cyclical in the traditional sense..so I guess the author is saying something to the expansion and contraction of layers effecting the $ per dozen. This works in deflationary or a stagnant inflation environment ,inflationary environments are somewhat different. Currently layers would need to expand and contract along an inclining trend line to create the same effect in this environment. See Inflation effects of
also this is a commodity business with no competitive advantages?
Specialty eggs are 15% of the company's revenues and they are operating with 3 or 4 growing brand names. Actually if you deduct the copack revenues its 18% of their revs. so their brand names like egglands, which have lower cholesterol, sell for a 80% premium to generic so I might (anyone might) consider this a competitive advantage. I guess that I don’t need to go into marketing 101 as well.

Low multiple = do not buy? You aren't at the high point in the cycle so the foregone conclusion of this statement is that the prices peaked (doesn’t look like it).
Typically the multiple expands as the earnings do,.
Reality: there are no visible capacity increases and it looks like 2009 will bear higher prices..
so this is pretty similar to steel coming out of the 20 year slump..X traded at 6X or 15 bucks in 2004 before going to 150.00 so it takes a little while for investors to realize that things have changed. yes its great to pull down 10 years of Reuters data and pen some baseless comment from it but one should ask this question
If this industry is going to blow out as it is wont to do
why are the number of layers trending down for the last 18 months on the back of a 100% upmove in combined regional prices?

So maybe a good short someday but the guys that shorted X @ 16 or 30 aren't around to pick up the phone anymore and their Hedge Funds are gone. So possibly you should wait for confirmation of the additional capacity or something in the pullet #s before.... drawing predetermined conclusions on dubious methodology?