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Investor RayRay

Investor RayRay
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  • Is The Recent Plunge In Chipotle's Stock Price Justified? [View article]
    I disagree. The difference between CMG and MCD/BKC is the image. CMG is cool while MCD/BKC not much so. Simple as that. People go to CMG for a quick meal or something they can grab and take home after work. This is no different than other fast food chains. I am not saying CMG food/experience is not superior, which I believe it is, but if MCD/BKC/etc... manage to have product offerings that taste great and appeal to the health conscious public I can guarantee you CMG will have tough competition on their hands.
    May 2 02:42 PM | Likes Like |Link to Comment
  • Yahoo +7.5% AH on Alibaba numbers, guidance, display turnaround [View news story]
    This definitely gives me confidence that Alibaba will IPO at the higher end of estimates ($150B+) which will be huge for Yahoo. Also remain confident that Yahoo will have a successful turnaround of core business which will be further bolstered after the cash flow from Alibaba IPO in 3Q.
    Apr 15 04:47 PM | Likes Like |Link to Comment
  • 3 Reasons Why You Should Buy Yelp [View article]
    I was responding to Donkey Kong's assertion that investors are paying an excessive price for Yelp's growth. Ever heard of PEG? That is P/E/G. I am simply substituting the numerator with EV/Revenue.

    You bring up the same points that have been brought up over and over again. Stock dilution is a negative but a necessary negative to fund continued growth. You can argue one way or the other but the fact of the matter is that this has been a well known practice since Yelp's IPO and is not uncommon among young technology companies. Extortion of small businesses? I am sure there are many small business owners out there that hate Yelp but I can also point to other small business owners that do not advertise with Yelp and yet have great ratings. We can fruitlessly go back and forth on this but the fact of the matter is there are no scientific studies to support these accusations.
    Apr 10 01:32 PM | Likes Like |Link to Comment
  • 3 Reasons Why You Should Buy Yelp [View article]
    I would like to see some numbers to actually back up your statement. If we take today's share price of ~$67, we get an EV/2014E Revenue of approximately 13.5x. Using this conservative, relative to consensus that is, growth estimate of approximately 50%, we get EV/Rev/g of approximately 0.26x. We can do the same exercise with GOOG which is trading at approximately 6.1x 2014E Revenue with an estimated growth rate of 10%, and we end up with EV/Rev/g of approximately 0.61x. Sure, these are analyst numbers and could be off but it sure looks like there is support to the notion that after this recent "crash", investors may have an opportunity to get growth exposure at a discount to even tried and true stocks such as GOOG.
    Apr 10 11:14 AM | Likes Like |Link to Comment
  • Why Yelp Is The BlackBerry Of Social Media Services [View article]
    Every time we have a stock run up like Yelp has, without fail, there will be a Seeking Alpha article calling it "overvalued" or a "bubble."

    I mean to begin with, you dedicate half of the article to earnings? I guarantee you if Yelp management were to announce that they are going to stop reinvesting in their business and focus on profits, the stock would be under $10. The fact of the matter is, the market is bidding the stock up based on continued fruitful reinvestment. Does this make Yelp riskier than established, profitable companies? Absolutely it does, but the question really should be whether or not potential returns can justify the present risks. In Yelp's case, the opportunity is absolutely massive and they would be foolish not to take advantage of it. Their total addressable market (local businesses and customers looking for those local businesses) is massive, truly an opportunity like no other. You claim they are not a market leader but no other local review service can compete with them. Google will buy Yelp before they ever try to compete with them.
    Mar 11 02:01 PM | 1 Like Like |Link to Comment
  • HCP, Inc.: A Wonderful Healthcare REIT, Yielding 5.8%, At A Fair Price [View article]
    Excellent article Michael and I agree with your analysis. Although my opinion may be colored by confirmation bias, since I am long HCP, I believe you get the best of all worlds with HCP. Specifically, versus HCN and VTR, you get a higher and more time tested yield. Additionally, since HCP (-23.5% LTM) has been hit harder than VTR and HCN (-14.2% LTM and -11.1% LTM, respectively) due to the management change, which I find completely unjustified, we can expect stock price appreciation without the risk of great RIDEA exposure.

    I gave VTR and HCN a look, but ultimately decided to continue to add to my HCP position instead. I expect HCP to be more opportunistic in making accretive acquisitions in the next couple years and outperform its peers.
    Mar 10 10:42 AM | 1 Like Like |Link to Comment
  • Why I Sleep Well At Night Owning This Blue Chip Health Care REIT [View article]
    Thank you for the great interview. I am long HCP but looking at VTR as well. I apologize if you explained this in a previous article, but you mention that you are a big fan of triple-net so I am curious why VTR over HCP? HCP has a much larger triple net portfolio and VTR has been aggressively pursuing increasing their RIDEA exposure.
    Feb 25 12:52 PM | 2 Likes Like |Link to Comment
  • The Smart Trade For Tesla's Earnings [View article]
    The author suggests selling a call at $220 which will have a better outcome than buying the $195 put if the stock does not make a huge move to the upside or downside.

    In TSLA's case, there is a lot of implied volatility priced in the premiums of these options so I agree with the author in that regard but I will be selling further out of the money strangle spreads.
    Feb 18 03:13 PM | Likes Like |Link to Comment
  • Select Comfort: 70% Upside Ahead [View article]
    Well thought out article but could you elaborate on the new product innovations? I see nothing from the mattress manufacturers this year that will significantly move the needle. As you described briefly, most of the new product lines are simply refreshes of old technologies, certainly nothing to get the consumer excited. SCSS's big unveil in CES last month was an $8,000 bed, which at that price point, tells me it is more of a see-what-we-are-capabl... product rather than a volume driver of top and bottom line growth.

    Additionally, it will likely take time to restore SCSS's brand. It is a much tougher sell to convince the consumer they need a $5000 bed versus a $1000 bed. From what I have seen so far, I am not convinced their marketing will drive materially increased conversion this year, although we do have to keep in mind they are just getting started.

    As a last point, the 20-30 new stores this year baffles me. Management's focus should be on improving traffic and conversion of their current store base. I cannot fathom the reasoning behind growing retail footprint coming off of a year where the company posts -4% SSS. Keep in mind that MFRM posted positive compares last year so this very much has to do with SCSS itself, whether it was their product offerings or marketing. Something has to be fixed and spending money to build more stores is not the answer right now.

    SCSS is fairly valued in my view. Until I see a catalyst for the business, I will most likely stay on the sidelines.
    Feb 15 10:48 AM | 4 Likes Like |Link to Comment
  • Facebook Hits A New All-Time Low: Buy Soon [View article]
    Your comment is wrong on so many levels. First of all you didn't even look at Facebook's report because it makes no mention at all of EBITDA. Secondly, EBITDA is a useful metric when used correctly. Nobody is denying that Interest and Taxes are real costs. Instead, by taking out Interest, Taxes, and D&A across the board, you arrive at a proxy for free cash flow to the party we are concerning our valuation with...the EQUITY holders. You need to check your facts before you post a comment like that and perhaps pick up a basic valuation book.
    Aug 2 09:58 AM | Likes Like |Link to Comment
  • Time To Own Dell And Express [View article]
    I agree with your sentiment on EXPR. Uncertainty lingers about EXPR moving into higher priced knits but EXPR has proven over the past year that they can be successful with the introduction of new and high margin products (i.e. new fragrances, watches, etc...). I believe their earnings miss could have been mitigated if they had transitioned their product lines better but they are definitely positioning for long term profitability by attempting to differentiate their products and gain more pricing power.

    I have on my specialty retail compset an average LTM EV/EBITDA of 7.3x with EXPR trading at just 4.8x. I expect some mean reversion potentially as soon as the next earnings report.
    Jul 3 01:33 PM | Likes Like |Link to Comment
  • McDonald's: Fundamentally Overpriced [View article]
    In your DCF you are adding the equity book value to the discounted cash flows which is completely incorrect. Doing so, you are assuming one of two things...

    a) You did not calculate a terminal value and are assuming MCD's will continue operations for the next 5 years and then completely liquidate its assets. I am willing to bet the house on this NOT happening.

    b) You calculated a terminal value but the terminal value is meaningless because you are assuming MCD will liquidate its assets some point in the future and thereby cease its operations. Such action would prevent MCD's cash flows from going into perpetuity.

    Also I believe your 20% discount rate is highly arbitrary and requires much more support than what you have provided in this article and in the comments.
    Jan 14 01:38 PM | 1 Like Like |Link to Comment
  • Best Buy (BBY) slashes its price for the HTC Flyer tablet from $499 to $299. H-P's decision to unload TouchPads for $99 "permanently changed consumer acceptance of prices that were always idiotic for tablet(s)," writes Karl Denninger. "Firms enjoying high margins on them now (cough-AAPL-cough) are going to get trashed."  [View news story]
    AAPL will never drop the iPad below $300 for the sole reason that such action would destroy their premium image. Apple doesn't want to be that kind of company that has 50% off sales. They know their success is due largely to their premium reputation and their pricing decisions are based off of this fact.
    Oct 2 08:33 PM | 2 Likes Like |Link to Comment
  • Struggling women's apparel retailer Talbots (TLB) gains 23.9% three days after private equity firm Sycamore Partners disclosed a 9.9% stake, and two days after the company adopted a "poison pill" shareholder rights plan to prevent a hostile takeover. In spite of the latter event, investors appear to be speculating the company will be a buyout target.  [View news story]
    Huge short interest on TLB.
    Aug 11 01:20 PM | 2 Likes Like |Link to Comment
  • The Day After: Stay Away From Gold, Treasuries; Buy Solid Blue-Chip Stocks [View article]
    How do you compare where we are now, a time of economic expansion (albeit sluggish), to the Great Depression? I agree with the author. There are tons of opportunities in equities that all of this selling has created and it would be foolish not to take advantage of them.
    Aug 8 07:08 PM | 5 Likes Like |Link to Comment