Drew Handy's Comments RSS Syndication from SeekingAlpha.com http://seekingalpha.com/user/2990911/comments http://seekingalpha.com/article/811321/comments?source=feed#comment-8464631 8464631 Thu, 16 Aug 2012 11:59:53 -0400 http://seekingalpha.com/article/775331/comments?source=feed#comment-8045161 8045161
I hold a generally different macro view than you. I am positive on the medium to long term (3-5 years) for the equity markets. Corporate earnings in the United States remain robust and the weakness in Europe is something that will take time to get through --- I anticipate the political process in Europe will take another 8-12 months to get to a level of cooperation that will yield stability in the EuroZone. That being said, a stagnant Europe and U.S. that will grow 2-5% per annum would be positive for corporate earnings going forward.

I view PNRA as better suited to long term growth than WEN, because PNRA has better pricing power that can grow profits during good times and protect against potentially volatile and higher commodity prices (which Fed policy is increasing the risk of) in the medium/long run. I view WEN (though I appreciate the breadth of their menu as a consumer) as being in a tough competitive environment and generally without the kind of pricing power than will enable them to grow profits. WEN's prospects do improve if the U.S. enters a long-term recessionary environment that cripples consumers, however. Considering you subscribe to that view, it would make sense that you'd view WEN favorably.

My broadest forecast for U.S. consumer demand over the next 10-20 years is greater luxury demand, more niche/value-added demand, etc and that luxury demand filtering down aggressively to aspirational consumers in the middle and lower-middle classes. Due to their growth rates, those firms are often relatively expensive fundamentally but because they fit long running secular trends I seek out buying opportunities in them.]]> Thu, 02 Aug 2012 19:26:09 -0400
I hold a generally different macro view than you. I am positive on the medium to long term (3-5 years) for the equity markets. Corporate earnings in the United States remain robust and the weakness in Europe is something that will take time to get through --- I anticipate the political process in Europe will take another 8-12 months to get to a level of cooperation that will yield stability in the EuroZone. That being said, a stagnant Europe and U.S. that will grow 2-5% per annum would be positive for corporate earnings going forward.

I view PNRA as better suited to long term growth than WEN, because PNRA has better pricing power that can grow profits during good times and protect against potentially volatile and higher commodity prices (which Fed policy is increasing the risk of) in the medium/long run. I view WEN (though I appreciate the breadth of their menu as a consumer) as being in a tough competitive environment and generally without the kind of pricing power than will enable them to grow profits. WEN's prospects do improve if the U.S. enters a long-term recessionary environment that cripples consumers, however. Considering you subscribe to that view, it would make sense that you'd view WEN favorably.

My broadest forecast for U.S. consumer demand over the next 10-20 years is greater luxury demand, more niche/value-added demand, etc and that luxury demand filtering down aggressively to aspirational consumers in the middle and lower-middle classes. Due to their growth rates, those firms are often relatively expensive fundamentally but because they fit long running secular trends I seek out buying opportunities in them.]]> http://seekingalpha.com/article/755941/comments?source=feed#comment-7840191 7840191
Readers: In the meantime, please use the following as the correct data for CLX in the table above:

Market Cap: 9.50B
Employees: 8,100
Qtrly Rev Growth (yoy): .7%
Revenue (ttm):5.41B
Gross Margin (ttm): 0.42
EBITDA (ttm):1.07B
Operating Margin (ttm):0.17
Net Income (ttm):536.00M
EPS (ttm):4.03
P/E (ttm):18.14
PEG (5 yr expected):2.78
P/S (ttm): 1.75]]> Fri, 27 Jul 2012 12:29:50 -0400
Readers: In the meantime, please use the following as the correct data for CLX in the table above:

Market Cap: 9.50B
Employees: 8,100
Qtrly Rev Growth (yoy): .7%
Revenue (ttm):5.41B
Gross Margin (ttm): 0.42
EBITDA (ttm):1.07B
Operating Margin (ttm):0.17
Net Income (ttm):536.00M
EPS (ttm):4.03
P/E (ttm):18.14
PEG (5 yr expected):2.78
P/S (ttm): 1.75]]> http://seekingalpha.com/article/732211/comments?source=feed#comment-7569661 7569661
Investors in EK and GM had decades to see the writing on the wall---not that those names have any relevance to this discussion. ]]> Thu, 19 Jul 2012 19:22:00 -0400
Investors in EK and GM had decades to see the writing on the wall---not that those names have any relevance to this discussion. ]]> http://seekingalpha.com/article/732211/comments?source=feed#comment-7569551 7569551
The focus of this brief article are those types of companies, due to their principal business, characteristics, and timing, that have a wide range of potential outcomes, risks, and opportunities over the short to intermediate term. These can serve a constructive role in a portfolio. With ~ 300 words per name, it is not meant to be a full analyst report on each name; rather, it's a general introduction to further research for those new to the names or an instrument of discussion.

Good luck to you all.]]> Thu, 19 Jul 2012 19:16:34 -0400
The focus of this brief article are those types of companies, due to their principal business, characteristics, and timing, that have a wide range of potential outcomes, risks, and opportunities over the short to intermediate term. These can serve a constructive role in a portfolio. With ~ 300 words per name, it is not meant to be a full analyst report on each name; rather, it's a general introduction to further research for those new to the names or an instrument of discussion.

Good luck to you all.]]> http://seekingalpha.com/article/732211/comments?source=feed#comment-7553851 7553851 Thu, 19 Jul 2012 13:08:11 -0400 http://seekingalpha.com/article/705221/comments?source=feed#comment-7162851 7162851 Sun, 08 Jul 2012 02:17:52 -0400 http://seekingalpha.com/article/700491/comments?source=feed#comment-7070681 7070681 Wed, 04 Jul 2012 16:19:01 -0400 http://seekingalpha.com/article/692751/comments?source=feed#comment-7009101 7009101
We may differ in what we see---I see TEA as offering synergies in terms of offering what SBUX has been deficient. First, TEA has what Tazo does not: brand recognition. It also provides a strong high-end niche retail business, which fits where SBUX has begun to go with their boutique/premium coffee lines. There would also be overhead synergies and upstream supplier efficiencies relative to TEA today.

I am surprised that SBUX would go to the massive expense and risk to attempt to develop a brand without much equity (TAZO). Perhaps it's another one and done experiment by Howard (see: Starbucks Cafe). However, if it's the first in a large scale development of TAZO locations, I'll be highly surprised. There are three potentials: 1) one-and-done experiment; 2) development of TAZO line; and 3) acquisition. 1) is ineffectual; 2) is expensive and risky; and 3) offers value to the brand. How do you view that triad? The article is most about assessing the strategic move of SBUX, after all.]]> Mon, 02 Jul 2012 17:35:50 -0400
We may differ in what we see---I see TEA as offering synergies in terms of offering what SBUX has been deficient. First, TEA has what Tazo does not: brand recognition. It also provides a strong high-end niche retail business, which fits where SBUX has begun to go with their boutique/premium coffee lines. There would also be overhead synergies and upstream supplier efficiencies relative to TEA today.

I am surprised that SBUX would go to the massive expense and risk to attempt to develop a brand without much equity (TAZO). Perhaps it's another one and done experiment by Howard (see: Starbucks Cafe). However, if it's the first in a large scale development of TAZO locations, I'll be highly surprised. There are three potentials: 1) one-and-done experiment; 2) development of TAZO line; and 3) acquisition. 1) is ineffectual; 2) is expensive and risky; and 3) offers value to the brand. How do you view that triad? The article is most about assessing the strategic move of SBUX, after all.]]> http://seekingalpha.com/article/687451/comments?source=feed#comment-6855301 6855301
I don't disagree, and I view aggregators very positively from an investment perspective. That said, aggregators owe their existence to the hard assets ultimately, so they face some risk of hoteliers taking that margin over in-house (perhaps a poor business move as you mention), or low barriers to entry (marketing and perhaps early-mover advantage are the only "moats" for aggregators) potentially generating increased competition.

That said, corporate hotel chains have compelling assets in the U.S., including many assets that are attractive to foreign buyers, so it will be interesting to see their performance and the evolution of their balance sheets over the long run. ]]> Wed, 27 Jun 2012 15:15:36 -0400
I don't disagree, and I view aggregators very positively from an investment perspective. That said, aggregators owe their existence to the hard assets ultimately, so they face some risk of hoteliers taking that margin over in-house (perhaps a poor business move as you mention), or low barriers to entry (marketing and perhaps early-mover advantage are the only "moats" for aggregators) potentially generating increased competition.

That said, corporate hotel chains have compelling assets in the U.S., including many assets that are attractive to foreign buyers, so it will be interesting to see their performance and the evolution of their balance sheets over the long run. ]]> http://seekingalpha.com/article/668981/comments?source=feed#comment-6751311 6751311
To be honest, I don't understand why CS and other issuers are allowed to float these products in the open market.]]> Sun, 24 Jun 2012 19:30:36 -0400
To be honest, I don't understand why CS and other issuers are allowed to float these products in the open market.]]> http://seekingalpha.com/article/662311/comments?source=feed#comment-6475291 6475291
Absolutely---I actually believe companies should be more willing to reduce dividends when warranted, and SFL does have a track record of active dividend management. The risk (or future opportunity) from the shareholder perspective is that reduced dividends often produce significant downward volatility in shares. I hope you'll also notice that I'm not making any claims regarding the future performance of these companies --- just that investors heavily focused on the attractive dividend yields should be aware that they are outsized by metrics and could fall. In the case of SFL, an increase in global economic activity in coming quarters or years could well increase profitability and cash flows and sustain the dividend. As a shareholder, you will no doubt be richly rewarded in that event.

Many dividend investors view all dividends as substantively equal, so my hope is to get investors to look more closely at the quality and sustainability of dividends.]]> Fri, 15 Jun 2012 17:04:11 -0400
Absolutely---I actually believe companies should be more willing to reduce dividends when warranted, and SFL does have a track record of active dividend management. The risk (or future opportunity) from the shareholder perspective is that reduced dividends often produce significant downward volatility in shares. I hope you'll also notice that I'm not making any claims regarding the future performance of these companies --- just that investors heavily focused on the attractive dividend yields should be aware that they are outsized by metrics and could fall. In the case of SFL, an increase in global economic activity in coming quarters or years could well increase profitability and cash flows and sustain the dividend. As a shareholder, you will no doubt be richly rewarded in that event.

Many dividend investors view all dividends as substantively equal, so my hope is to get investors to look more closely at the quality and sustainability of dividends.]]> http://seekingalpha.com/article/662311/comments?source=feed#comment-6475081 6475081 Fri, 15 Jun 2012 16:57:05 -0400 http://seekingalpha.com/article/662311/comments?source=feed#comment-6475011 6475011 Fri, 15 Jun 2012 16:55:33 -0400 http://seekingalpha.com/article/658111/comments?source=feed#comment-6470981 6470981 Fri, 15 Jun 2012 14:57:11 -0400 http://seekingalpha.com/article/658111/comments?source=feed#comment-6425451 6425451
Thank you for your comment and adding insight to the discussion. Indeed, I agree that purchasing with expectation of acquisition carries some risk. The appealing aspect of TR is that few iconic brands in American consumer culture are available at or below a $2 billion market cap. The unappealing aspect is that there is no way to know when more effective management will take over.

I agree there are many better investments in terms of long term fundamentals. Those you've mentioned in the consumer staples space would fit the bill and many have attractive valuation metrics. None, however are likely takeover candidates due to their size. ]]> Thu, 14 Jun 2012 13:20:44 -0400
Thank you for your comment and adding insight to the discussion. Indeed, I agree that purchasing with expectation of acquisition carries some risk. The appealing aspect of TR is that few iconic brands in American consumer culture are available at or below a $2 billion market cap. The unappealing aspect is that there is no way to know when more effective management will take over.

I agree there are many better investments in terms of long term fundamentals. Those you've mentioned in the consumer staples space would fit the bill and many have attractive valuation metrics. None, however are likely takeover candidates due to their size. ]]> http://seekingalpha.com/article/658111/comments?source=feed#comment-6404781 6404781
Describing one of the factors in a more detailed manner than in the article, the top 5 executives at TR are paid (inclusive) over $15 million annually, when net income is only $45 million. Investors and future acquirers may view the denominator in the P/E as artificially depressed due to the lack of performance and excessive compensation of present management. Another difference is a lack of debt, which was present in Cadbury when acquired by Kraft. TR would bring net assets to an acquirer in a transaction.

Thanks for adding to the discussion.]]> Thu, 14 Jun 2012 00:00:07 -0400
Describing one of the factors in a more detailed manner than in the article, the top 5 executives at TR are paid (inclusive) over $15 million annually, when net income is only $45 million. Investors and future acquirers may view the denominator in the P/E as artificially depressed due to the lack of performance and excessive compensation of present management. Another difference is a lack of debt, which was present in Cadbury when acquired by Kraft. TR would bring net assets to an acquirer in a transaction.

Thanks for adding to the discussion.]]>