Amazon and Blockbuster Should Squeeze Netflix [View article]
In the last four days, I have rented from RedBox "Source Code" and "Adjustment Bureau". Afterwards, I had to delete those two movies from my NetFlix's queue. I have done similarly with other movies that are forever marked long (or short) wait. With low fees, I, among many others, can tolerate that but not with the new fees. Moreover, the instants are mostly low star ranked and old movies anyway. It is to me like a side dish.
Personally I have, in recent days,evolved from thinking to drop the instants (old garbages) but keeping the mailing service to cancell everything all together at the end of August.
Watching movies is different from carrying an apple phone, pod or pads or drive a Porche. There is nothing trendy about where you get your movies. It is all about convenience and cost. Now others can offer the same.
NFLX share price is not about the company itself it is all about growth potential to justify the current multiples. If the headwinds (A.higher price make non-die hards quickly leave, B. high price make getting new subs much more difficult, C. Walmart, Amazon, BlockBuster, Crackle.com, Red Box, etc. provide alternatives and will make NFLX life more difficult -- competing for new customers, passing down future operation cost increases to customers, etc.)are so obivious, it would be foolish for retail small guys to hang onto shares. When signs start to show, and news breaks out, no "stops" you put in place will work. Shares can drop 20 or 30% at the open. At this point with NFLX starts to run out of stories to tell, I don't see shares jump 20% at the open. NFLX has been so overly analyzed that any positive news on its potential has more than been baked in already. Now tell me which is more risky going forward Long or Short?
I am short on NFlx and will be shorting it in the next few quarters.
Why Netflix May Be Edging Closer to the End of the Road [View article]
For people who have concerns of shorting NFLX, they need to look this way: when price move from$240.00 to $300, it is the same as 24/sh to 30/sh. It is no big deal for any single company share moving in that range.
The key is to short the same way you would go long, that is dollar cost average in and follow and stay with the stock. Sooner or later this NetFlix will become the NextFlip.
If you draw a 10 year chart and you will see the left half of a "Christmas Tree" has been formed. The right half I am sure will be the other half of a Christmas Tree. Companies that experienced "Christmas Tree" formation include great dow members of Intc, MSFT, GE, Pfe and non dow members CSCO, NVDA, etc. When charting, if you set a time frame for each stock's unique glorious and post glorious time frames you will easily see a Christmas tree shape. If you chop off a big chunk of the upper portion (not just tree top) of the tree, that is usually the company stock end up eventually when there are no new inventions to show and analysts have no new stories to tell. Those pumped stocks never recover (unlike highly cyclical ones in energy and raw material and precisous metals those tend to be able to recover based on supply and demand picture of the world market)
Going long with potentially Christmas Tree stocks is very damaging if you get in (or stay in) at the top. Because once they gets down, they won't going up anywhere near the bubble zone for 10, 20 years or eternity--you end up holding a tree stomp as your hair turns gray. Nasdaq march of year 2000: briefly went over 5,000 and look at where the index is today after 11 and a half years. Intel was close to 80 per share and look its shares movement in the last 10 plus years (equivalent of 800/sh down to 190 to 210 level). Today's intel has more revenue makes a lot more money on a per share basis, has a lot more cash in their war chest and even pays a hefty divident. But it trades in the high teens and low twenties vs 10 and 11 years ago, when intel had much smaller revenue, no dividend but it was trading at almost 80/share. Why, a stock can be brought down even if it continues to grow in revenue and profits. All it takes is a slow down in growth (rev and earning). If mighty intel can have this kind of destiney, imaging the sorry online version of a video rental store can potentially end up.
(Netflix - 100 Year Old Wall Street Game of Blind Enthusiasm and Fooling of Retail Investors Continue.)
"A dream of worry-free growth for years to come mostly, a dream that is largely unrealistic and unlikely to come true."
"No stocks, especially stocks in traditional business (DVD rental certainly is, and in my view even streaming is not a hot new tech stuff anymore either), can defy gravity and shoot to the moon. People forgot what happened to Blockbuster, Hollywood Video, Movie Gallery (seekingalpha.com/symbo...), and AOL. Like Netflix, Blockbuster and AOL, two names no less dominating and powerful in their respective businesses in 1990s than Netflix is today, fought hard to thwart off a demise of stagnating and thinking businesses replaced by similar, but improved, products or ways of service delivery. Let’s not forget how strikingly similar the situation of Blockbuster’s in 1990’s was to the situation Netflix is facing today."
If you are not a true tech company, then you will run out of new themes very soon. In the heart of it, NetFlix was and is and will probably be the best NEW NEIGHBORHOOD video store. It is the Blockbuster of the internet age. Amazon, Walmart maybe the equivalents of Hollywood, Movie Gallery, and the rest maybe the equivalent of mom and pop independent street corner stores of the 1980s" to 90s'. Bottom line, as long as there is money to be made, players small and large, strong and weak will come into the playground thus effectively put a cap the LONG TERM growth prospect of even the strongest player. It is true with every other industry. Look no further than today's green technology field. I think it will sooner or later, more or less happen to the great Apple story too.
NFLX is all about valuation not about the company (which is a great one). Right now the stock is priced on a perpectual growth assumption based on its recent past record.
SuperValu: Earnings Play With Compelling Risk/Reward Ratio [View article]
Stop worrying SVU at this price level. Watch out WFMI instead. The moment Whole Foods shows ANY SIGNS of slow down in sales and earnings growth (it is not a matter of if but when just look at long term charts for--intc, msft, csco, ge, etc.) the stock will fall off the cliff. All the stop loss nonsense will not save you Why? Because it may open the next day at 30% off. One recent example is VPRT (Vista Print)last July. It opened after earnings report date at more than 30% off.
As for WalMart, it was and still is a great company that is why everybody everywhere bring it up all the time. But if you look at the 10 or 11 year chart of its stock, it basically did nothing but dish out the dividends while its sales or profits probably more than doubled if not tripled in that same period. Why? it is all lie in the price. WalMart is growing like crazy in China in the last 5 to 10 years by the way.
Investing is all about price and not to loose big. When I look at SVU, the victims are the ones bought its shares at 40, 30 or even 20 or 18. If you believe SVU won't go under then accumulate shares using dollar cost averag in. If you are scared, stay away.
Companies like SVU will not have too many outcomes. It will either go under which I think it a near impossibility, or teetering around the bottom until someone comes in scoop up at 40 to 50% mark up, or work its way out of debt and other issues and start to show the money to the Street. Then the shares will be back to at least at around $20.00 level (I know you think I am crazy to say that -- I agree at this moment it is). But look at long term charts of Aeo (used to be AEOS on Nasdaq), hal, ba (share hitting mid 20s in the last recession just about 8 or so years ago) and tyc (also was burdend by debt around 2002). Look at short term chart (3 year chart) of SBUX and one year chart of BP. The list goes on and on. The key is to spot deep value and buy every time you see an opportunity. If you do that every single time you will come out way ahead because the odds are with you not against you. And once you own them ALLOW them time to work things out. Many times share double in extreme short period of time some times it takes a few years. On Wall Street, you either deliver (reason to exist)or die or be bought out.
I am buying SVU not because it is great company (in my opinion it is not even a very good company SWY and KR are much better--but I don't see serious mispricing in both of them.) but because it is way mis-priced. Although not guaranteed, I like my odds with SVU at $8.00 to $12.00. Keep in mind, smart used car dealers and junkyard owners often makes more money than sales people in suites and ties selling BMWs.
Markets Underestimate One Thing About J.C. Penney [View article]
Went to local Penny store almost 3 months ago, observed very light traffic compared with Macy's on the same day.
Went there again yesterday and again compared with Macy's, it looked just as crowded as Macy's (I checked twice within 3 hours both time went to both stores). I see many Latinos there too. The good sign is Penny looks and acts like a department store now with customers of different age and different ethnic background (can't know their financial background). The best thing I saw is lots of people either carrying clothing or carrying bags. Looks like most were there to buy not to check out.
I agree with GioTrader 13, retail stores do not have clients they have customers. With the right merchandising and the SALES SALES AND SALES SCREAMING AT CUSTOMERS in the form of signs, mailing coupons and emails, People will come.
"Don't confuse this with an outdated model like Best Buy or Circuit City. Similar retailers are thriving. This drop has everything, and nothing else, to do with a CEO who had a vision, botched execution and left stores half empty for a prolonged period of time. "
Good point. JCP has been struggling not because there is fundamental changes in what it is doing (like what Amazon and its alike have been impacting Best Buy or Circuit City or may I add what Netflix has done to Blockbuster, or Apple has done to Sony, music industry in general and Nokia, or internet and PDF files have done to newspapers or printing industry in general). JCP's problem is mismanagement which can be corrected. JCP also has widespread presence, a brand recognition and history, real estate holdings, etc.
Given enough time and with the right people it will be back to "normal" (not another Apple but just be a "normal" department store chains getting its normal share of business.). This waiting for it to get back to "normal" is why I invest in it. I do it not because some day it will become a Amazon or Ebay. I do it because it is abnormally run and not getting its rightful share of business right now. When a company is in trouble (in abnormal state), it is when mispricing of its equity occurs. People like Ackeman and Soros are doing nothing but explore the likely mispricing right now. Not because they are betting on it become a Amazon making thousands of percentage gains.
1. JCP is now officially too big to fail now with Soros on board. These guys will make sure the liquidity is there. 2. Retail, unlike other trade/industry, is relatively easy to turn around once you find the right "buttons" (the right merchandise target the right customer base). 3. Retail tends to have ups and downs with most of the chains at one point or another. Just pulled out stock signs of major retailers and draw a long term charts and you will see at one point or another they all went through what JCP is going through right now. In the last 13 years, you will see major ups and downs in AEO, ANF, GPS and even M. The list is of course much longer but the pattern is similar.
JCP was not injured to a point that there is no return. It is just another "struggling" phase it is going through.
4. Retailing landscape has not gone through the kind of fundamental changes in supermarkets sector where entrants not only increase competition but also fundamentally changing how one needs to do to compete and survive with Wal Mart in the picture and with so many companies entering into selling groceries (TGT, KR to name a couple) that affect traditional grocers like SWY and SVU. Not only that the new entrants tend to employ non-union labors vs. SWY and SVU's traditional very highly paid union employees with expensive benefits (pensions and health insurance for example). They just cannot compete with Walmart's army of $10/hour part time employees.
You don't see a "Wal Mart" in department store landscape. You don't see uneven playing field in labor costs and in merchandise cost difference (no Wal Mart here). So, the challenge is mostly confined to right the ship with the right leadership in a relatively fair and even playing field.
Predication: JCP will be up at least 50% by this time of next year if not sooner.
They only thing that can be called "investing" is to buy index fund. Actually an index broader than even the s & p 500 such as US Total stock index. Then in essence you are investing in the US economy. Then no matter what happens you will always be fine granted your time line is right with your personal financial situation/planning. That way, no matter how the sector(s) rotate or how company stocks with a sector rotate, you will always own the whole thing. Today's hot sector you will own it and when it cools down and overtaken by another sector you will loose on one sector by gain by the gains in a new hot sector. One company is competed to death, its market share will be picked up by other companies in the same sector. Overall when population continues to grow (in this unique country of immigrants and emerging markets in Asia, Latin America some day soon in middle east and africa), you will be a certain winner OVER TIME. Anything else is pure gamble. I don't care how eloquently one put out a "research report" or a '"blog", it does not mean anything at all. All it means to me is: it is a reflection of what just happened and what the momentum might be going forward (short term). In the financial markets, there are no analysts. They are all financial "reporters". Just like playing commodities, you gamble based on reports (not research) you read and you go buy your guts and instincts developed over many many years of practice and observation. Add to that, if you have a strong personal financial position (coupled with discipline) and believe that most of the time the crowd is mostly likely wrong (especially today's crowd led by 21st century news media all out coverage), then over time you will make decent money. I have done this over and over again. It worked every single time EXCEPT (I have to admit) in the 08 to 09 financial crisis. It is just too complicated for anyone to understand and to apply the rules. Banks are in their own unique world where an already opaque sector is certainly to be interfered by government, any government in fact when the financial utility stops functioning. Then you have selective bail outs, you have government take overs like Fannie Mae and Freddie Mac. But other than that most sectors, you will see rotations and that's where you make your money. Look at share price movements of MSFT, INTC, CSCO and all the big oil and metal companies since late 1990s. Bear in mind, MSFT, INTC, CSCO are making A LOT MORE sales and profits today than 99 to 2000 yet look at how the market reward these companies. The meaning of rotation and against the crowd is right there in the long term charts.
I don't know too much about stores like JCP, Macy's, Gap, ANF, AEO, etc. because I don't shopping (I wear whatever wife brings home). But I have been following these stocks movements for years. By looking at their long term stock charts they all seem to go through big up and downs. First was AEO about 11 years ago (back then it was listed on Nasdaq as AEOS), it was struggling to keep up with ANF. The financial news space was filled with negative news about their operation in the US and Canada. I bought AEOS at about 3 to 4 dollars per share (before the split it was 6 to 8 range back then) and I sold them at double 7 to 8 dollars range. But the stock went on to reach 34 and now still at around 20. Years later during the great financial crisis, I bought M (macy’s) again at near the bottom around 7 to 10 dollars. I again sold them at close to double near 18, now it trades at around 40. One can take a look at Gap as well (I did not buy it because my daughter was working there one summer as a high school student and she hated it), it also tripled (briefly went up by 400% since it’s low merely 3 or 4 years ago). Just 3 months ago I tried ANF and it went up big time (too fast so I cashed out some and switch to JCP). I am now placing bets on JCP (averaged around 16.50 to 18 per share. Bought a few hundred right before the news that CEO bought more than 1 million dollars worth of his own money on open market—check insider purchase record, it should be just about 8 or so weeks ago if I remember correctly). I loaded up thousands more shares after the news. My bet on JCP is based on my belief that stores go through cycles. A few get things right for a few years and others learn and catch up. It seems to me more like a ROTATION of “favorism” since most of the long established name stores have relative strength in brand recognition and real estate holdings to offer a buffer. So I don’t see my bet will have a potential total blow up. I will give it a few more years this time around if it does in deed to turn around under the new Apple bred managers. My down side is within what I can bear but the upside is just too tempting to ignore. THIS TIME I WILL HOLD SHOULD IT DOUBLE AGAIN.
Netflix Heading for $320/Share Despite Already Being Overvalued [View article]
Same chart different read. To me, NFLX near term looks very bad (long term even worse based on valuation). The stock is heading toward $240 very quickly. Long term (3 years, it will be about 100/share if not a lot lower). I may close at 240 and quickly short it any time it rebounds.
Great short is hard to come by. This one is easy FROM THIS POINT ON.
Netflix Management: A Walking Contradiction or Are We Just Arguing Semantics? [View article]
Most people (especially NFlX mgmt) assumes more subs will drop mail service and keep the streaming. I, for one, will do the opposite. Keep the mailing service and drop the streaming. Why, most of the instant streaming movies are either too old or low 2 or 3 star ranked ones. OLD AND LOW QUALITY!!
By keeping the mailing choice, I can get free DVD online watching from Crackle www.crackle.com/ . But by checking out WalMart's Vudu I will probably cancel NFLX altogether. Why, you can get the latest releases right away from them for very little money. Why wait for 28 days.
Nflx is no Apple, there is no prestige or trend setter factor in it. It is just movie watching. I would definitely short the stock using dollar cost average approach. Sell partial on rebound days and close partial on down days. Stay with the short until the roof caves in then add short and chase it down all the way to $108. NFLX won't be a growth story soon. It is just too easy for the competition to get in. If apple's ipads can draw so many good pads from all the laptop makers from HP, Toshiba, Sony, Samsung, Motorola and God knows who else, why can't NetFlix. You are right, it is not a matter if but when (how soon to be exact).
Oh, did anyone thought about the price hike will make people share the sub? Just like car pooling when the gas price shot up. My kid in college never pays nflx but watches movie using my account. I know a few people share nflx account within family members. So this projection (or assumption) that sub growth will continue on especially after the price hike and the media hype, to me is hard to imagine. Watch it and short it and you will be paid!
NetFlix stock is all about growth. At this point, the growth will get harder. Reasons:
1. Overseas markets: A)China: impossible for two reasons political and language barrier. B)India: less language barrier but facing bollywood and pricing issues. C)other countries: either too small or language and cultural barriers. Do not forget, hollywood is where most movies were made and to be made. When analysts are running out of talking points, in this day and age they will sing the overseas markets song. We have heard of the "new paradigm" in the 1990s' for dot com bubbles.
2.Die hard NFLX users won't leave because of a few dollars increase in monthly fees. They don't care about having to have the newest releases right away. For those who do care about how much time you have to wait to get the latest releases, the price hike will be important. Growth in adding new members will get more difficult and costly.
3. Competition: too many alternative ways of viewing the same movies. The gap between NFLX's nice web use programing will be closed as time goes by. PLus when you are using internet TV to watch downstreaming movies, the differences between NFLX and others are not big. If the ipads can draw in so many players, why not streaming movies? Moreover, unlike Apple's i-products which carries a brand and status meaning, watching movies on line using internet ready tv is nothing near.
4. Cost of content and cost of streaming: Content sellers are not going to sit still and Internet providers will soon use "meter". We will see when the meter is installed, how people's behavior will change
NetFlix will certainly be the best in DVD mailing and on line streaming service, but the issue is in valuation. I will continue add my short position on rebound days--dollar cost average in.
Time will tell if NFLX can continue to grow at past rate.
SuperValu: Just Like an LBO but for Retail Investors [View article]
To gosolar88:
"$600M of their revolver expires in 2012" (if it is accurate). One should worry about it IF you believe SVU A)SVU's quarterly and annual after interest/principle payment cash flow is almost zero going forward--cannot be further from the fact and realistic situation on the ground B)SVU has no case or cash instruments reserves and C)SVU has no more assets to shed.
To MarkusJ: "Walmart is entering Chicago's Urban Market"
A)Look closely at all the locations under SVU's portfolio of banners and in particular look at Alberson's (how many stores they have and where are they located). WalMart was and is not the MAIN problem for SVU. SWY and KR's and Target to a lesser degree are SVU's main competition because they saturated in the neighbourhoods.
B)WalMart's locations are still primarily in the outskirts of major metro areas. They are effective Mom and Pop type of business killers in small towns but not really grocers killers (WalMart is much more than selling grocery). If KR's FredMeyer's (a smaller version of Walmart) can do well in the Pacific Northwest in competing with WalMart, I do not see too much of a point to relate WalMart to SWY and SVU. It will make more sense to relate WalMart to Target.
C)People are not going to drive an extra 15 to 25 miles to buy cheaper groceries especially when gas prices are stubanly high for a long time now. If price is so important there will be no 7-Elevns in the US soon.
SVU's problems are its large debt that ties its hands and limits its options (less money to spend on remodeling and opening new stores). The problems can be lessened overtime by continued steady cash flow and when the economy stablizes and people start to spend more again.
1. Macy's (http://bit.ly/tdHCyS): between 2001 and 2003, it bounced up and down and formed a triple bottom around $14/share. It then reached $46/share in 2008 before it came down to $5.00 in 3/09 and now it is 900% higher.
2. Gap stores (http://bit.ly/K9lkJU): in 2001 was trading around 34 by end of that year it was below 12 and about a year later (2002) it reached a lower low at low 11s before it launched to 26 in mid-04. It came back down to below 10 in late 08 and early 09 (housing/banking crisis). In less than 18 months, it went straight up to 26 and later 38 in 2012 and it is still up there today.
3.American Eagle (AEO, used to be AEOS on Nasdaq before they split the stock and traded on NYSE): 3 to 4 (before split it was 6 to 8, chart reflect split) in late 2002 to late 2003. After bottoming out, it first went up to 25+ in 2005 and then to 32 (1,000%) in late 2007 now it is around 18 to 24 range.
4. ANF: from 01 to 2003, it had to form a triple bottom before it went 550% from 15ish to 80 in 2007. But wait, from 08 (housing and banking crisis) it came from 80 down to 15 AGAIN. Today it is in the 48 to 50 range. Less than 6 months ago, similar talk of good money after bad is also heard on ANF, but it went from 30 in Nov 2012 to 52 in February 2013 (3 months gaining 70 plus percent).
In retail, you can see more examples in TIF, JWN, etc. They all experienced this big up and down similar to JCP is going through today. They were all given up by the weaker hands missed by the "want to make big bucks but don't dare" crowd.
Cases like this can also be seen in banking known to many and lesser degree in industrial stocks. Just take a look at TEX (smaller version of CAT).
These are all facts for everyone to see and reflect on by drawing a 10 to 15 year chart. The problem is few people look at long term chart. They are fooled into believing that by looking at the short term movements of stock prices they can make a fortune. People making conclusive statements are fortune tellers. I don't know FOR CERTAIN JCP will double or triple, that is not for anyone to know or to tell. But by looking at the sector, the nature of the problem, the degree of its current weakness, the numerous real turn around cases in different sectors ESPECIALLY in retail/department store category, I will be willing to take a risk on JCP and feel history is on my side. And knowing Soros shares the same view can only make me like my odds better (I bought into JCP after the big earnings disappointment and added more on the day CEO was changed). The verdict is 12 to 36 months. Let's look back at JCP by then to see what happens.
The key point here is with JCP, there is no "disrupter" like an Apple or Walmart here. The key is JCP is in a relatively leveling playing field. Macy is no apple or Walmart which are game changers. Once you got the smart and capable people in place and money support (from loans to hedge funds investing), you got a new life. Whoever is loaning the money and investing like Soros are lot more resourceful than anyone constantly talking here, period.
The leveling playing field pretty much means if you believe the injured ones will learn the lesson and if the injured ones are doing something meaningful to correct their course of actions, then the injured ones will have an equal opportunity. If not restore its old position, at least earn A FAIR VALUATION!!!
Then you look at big and smart money, how they move. Keep in mind, Soros like Buffet, gets to sit down and talk to insiders from the very top to all levels of management team members. What they can gain in terms of insights are not something people like you can remotely imagine. Therefore, a bet is to be based on how you read the facts open to everyone. At this low price, I will give it a shot. You want to have big gain? Try GE, PFE, MRK and JNJ, you will be lucky to get a 10% gain. These giants are like mutual funds, they won't die and they won't jump either, OK. You want 50% or 100% or 200% or more in gains, you gotta stick your neck out and take the risk. That's the price you pay buddy. Just bet smartly, that's all.
Amazon and Blockbuster Should Squeeze Netflix [View article]
Personally I have, in recent days,evolved from thinking to drop the instants (old garbages) but keeping the mailing service to cancell everything all together at the end of August.
Watching movies is different from carrying an apple phone, pod or pads or drive a Porche. There is nothing trendy about where you get your movies. It is all about convenience and cost. Now others can offer the same.
NFLX share price is not about the company itself it is all about growth potential to justify the current multiples. If the headwinds (A.higher price make non-die hards quickly leave, B. high price make getting new subs much more difficult, C. Walmart, Amazon, BlockBuster, Crackle.com, Red Box, etc. provide alternatives and will make NFLX life more difficult -- competing for new customers, passing down future operation cost increases to customers, etc.)are so obivious, it would be foolish for retail small guys to hang onto shares. When signs start to show, and news breaks out, no "stops" you put in place will work. Shares can drop 20 or 30% at the open. At this point with NFLX starts to run out of stories to tell, I don't see shares jump 20% at the open. NFLX has been so overly analyzed that any positive news on its potential has more than been baked in already. Now tell me which is more risky going forward Long or Short?
I am short on NFlx and will be shorting it in the next few quarters.
Why Netflix May Be Edging Closer to the End of the Road [View article]
The key is to short the same way you would go long, that is dollar cost average in and follow and stay with the stock. Sooner or later this NetFlix will become the NextFlip.
If you draw a 10 year chart and you will see the left half of a "Christmas Tree" has been formed. The right half I am sure will be the other half of a Christmas Tree. Companies that experienced "Christmas Tree" formation include great dow members of Intc, MSFT, GE, Pfe and non dow members CSCO, NVDA, etc. When charting, if you set a time frame for each stock's unique glorious and post glorious time frames you will easily see a Christmas tree shape. If you chop off a big chunk of the upper portion (not just tree top) of the tree, that is usually the company stock end up eventually when there are no new inventions to show and analysts have no new stories to tell. Those pumped stocks never recover (unlike highly cyclical ones in energy and raw material and precisous metals those tend to be able to recover based on supply and demand picture of the world market)
Going long with potentially Christmas Tree stocks is very damaging if you get in (or stay in) at the top. Because once they gets down, they won't going up anywhere near the bubble zone for 10, 20 years or eternity--you end up holding a tree stomp as your hair turns gray. Nasdaq march of year 2000: briefly went over 5,000 and look at where the index is today after 11 and a half years. Intel was close to 80 per share and look its shares movement in the last 10 plus years (equivalent of 800/sh down to 190 to 210 level). Today's intel has more revenue makes a lot more money on a per share basis, has a lot more cash in their war chest and even pays a hefty divident. But it trades in the high teens and low twenties vs 10 and 11 years ago, when intel had much smaller revenue, no dividend but it was trading at almost 80/share. Why, a stock can be brought down even if it continues to grow in revenue and profits. All it takes is a slow down in growth (rev and earning). If mighty intel can have this kind of destiney, imaging the sorry online version of a video rental store can potentially end up.
Netflix Management: A Walking Contradiction or Are We Just Arguing Semantics? [View article]
seekingalpha.com/insta...
(Netflix - 100 Year Old Wall Street Game of Blind Enthusiasm and Fooling of Retail Investors Continue.)
"A dream of worry-free growth for years to come mostly, a dream that is largely unrealistic and unlikely to come true."
"No stocks, especially stocks in traditional business (DVD rental certainly is, and in my view even streaming is not a hot new tech stuff anymore either), can defy gravity and shoot to the moon. People forgot what happened to Blockbuster, Hollywood Video, Movie Gallery (seekingalpha.com/symbo...), and AOL. Like Netflix, Blockbuster and AOL, two names no less dominating and powerful in their respective businesses in 1990s than Netflix is today, fought hard to thwart off a demise of stagnating and thinking businesses replaced by similar, but improved, products or ways of service delivery. Let’s not forget how strikingly similar the situation of Blockbuster’s in 1990’s was to the situation Netflix is facing today."
If you are not a true tech company, then you will run out of new themes very soon. In the heart of it, NetFlix was and is and will probably be the best NEW NEIGHBORHOOD video store. It is the Blockbuster of the internet age. Amazon, Walmart maybe the equivalents of Hollywood, Movie Gallery, and the rest maybe the equivalent of mom and pop independent street corner stores of the 1980s" to 90s'. Bottom line, as long as there is money to be made, players small and large, strong and weak will come into the playground thus effectively put a cap the LONG TERM growth prospect of even the strongest player. It is true with every other industry. Look no further than today's green technology field. I think it will sooner or later, more or less happen to the great Apple story too.
NFLX is all about valuation not about the company (which is a great one). Right now the stock is priced on a perpectual growth assumption based on its recent past record.
SuperValu: Earnings Play With Compelling Risk/Reward Ratio [View article]
As for WalMart, it was and still is a great company that is why everybody everywhere bring it up all the time. But if you look at the 10 or 11 year chart of its stock, it basically did nothing but dish out the dividends while its sales or profits probably more than doubled if not tripled in that same period. Why? it is all lie in the price. WalMart is growing like crazy in China in the last 5 to 10 years by the way.
Investing is all about price and not to loose big. When I look at SVU, the victims are the ones bought its shares at 40, 30 or even 20 or 18. If you believe SVU won't go under then accumulate shares using dollar cost averag in. If you are scared, stay away.
Companies like SVU will not have too many outcomes. It will either go under which I think it a near impossibility, or teetering around the bottom until someone comes in scoop up at 40 to 50% mark up, or work its way out of debt and other issues and start to show the money to the Street. Then the shares will be back to at least at around $20.00 level (I know you think I am crazy to say that -- I agree at this moment it is). But look at long term charts of Aeo (used to be AEOS on Nasdaq), hal, ba (share hitting mid 20s in the last recession just about 8 or so years ago) and tyc (also was burdend by debt around 2002). Look at short term chart (3 year chart) of SBUX and one year chart of BP. The list goes on and on. The key is to spot deep value and buy every time you see an opportunity. If you do that every single time you will come out way ahead because the odds are with you not against you. And once you own them ALLOW them time to work things out. Many times share double in extreme short period of time some times it takes a few years. On Wall Street, you either deliver (reason to exist)or die or be bought out.
I am buying SVU not because it is great company (in my opinion it is not even a very good company SWY and KR are much better--but I don't see serious mispricing in both of them.) but because it is way mis-priced. Although not guaranteed, I like my odds with SVU at $8.00 to $12.00. Keep in mind, smart used car dealers and junkyard owners often makes more money than sales people in suites and ties selling BMWs.
Markets Underestimate One Thing About J.C. Penney [View article]
Went there again yesterday and again compared with Macy's, it looked just as crowded as Macy's (I checked twice within 3 hours both time went to both stores). I see many Latinos there too. The good sign is Penny looks and acts like a department store now with customers of different age and different ethnic background (can't know their financial background). The best thing I saw is lots of people either carrying clothing or carrying bags. Looks like most were there to buy not to check out.
I agree with GioTrader 13, retail stores do not have clients they have customers. With the right merchandising and the SALES SALES AND SALES SCREAMING AT CUSTOMERS in the form of signs, mailing coupons and emails, People will come.
What Soros Sees In J.C. Penney [View article]
Good point. JCP has been struggling not because there is fundamental changes in what it is doing (like what Amazon and its alike have been impacting Best Buy or Circuit City or may I add what Netflix has done to Blockbuster, or Apple has done to Sony, music industry in general and Nokia, or internet and PDF files have done to newspapers or printing industry in general). JCP's problem is mismanagement which can be corrected. JCP also has widespread presence, a brand recognition and history, real estate holdings, etc.
Given enough time and with the right people it will be back to "normal" (not another Apple but just be a "normal" department store chains getting its normal share of business.). This waiting for it to get back to "normal" is why I invest in it. I do it not because some day it will become a Amazon or Ebay. I do it because it is abnormally run and not getting its rightful share of business right now. When a company is in trouble (in abnormal state), it is when mispricing of its equity occurs. People like Ackeman and Soros are doing nothing but explore the likely mispricing right now. Not because they are betting on it become a Amazon making thousands of percentage gains.
J.C. Penney Hangs By A Thread [View article]
2. Retail, unlike other trade/industry, is relatively easy to turn around once you find the right "buttons" (the right merchandise target the right customer base).
3. Retail tends to have ups and downs with most of the chains at one point or another. Just pulled out stock signs of major retailers and draw a long term charts and you will see at one point or another they all went through what JCP is going through right now. In the last 13 years, you will see major ups and downs in AEO, ANF, GPS and even M. The list is of course much longer but the pattern is similar.
JCP was not injured to a point that there is no return. It is just another "struggling" phase it is going through.
4. Retailing landscape has not gone through the kind of fundamental changes in supermarkets sector where entrants not only increase competition but also fundamentally changing how one needs to do to compete and survive with Wal Mart in the picture and with so many companies entering into selling groceries (TGT, KR to name a couple) that affect traditional grocers like SWY and SVU. Not only that the new entrants tend to employ non-union labors vs. SWY and SVU's traditional very highly paid union employees with expensive benefits (pensions and health insurance for example). They just cannot compete with Walmart's army of $10/hour part time employees.
You don't see a "Wal Mart" in department store landscape. You don't see uneven playing field in labor costs and in merchandise cost difference (no Wal Mart here). So, the challenge is mostly confined to right the ship with the right leadership in a relatively fair and even playing field.
Predication: JCP will be up at least 50% by this time of next year if not sooner.
Time To Make A Bet On J.C. Penney? [View article]
Time To Make A Bet On J.C. Penney? [View article]
By looking at their long term stock charts they all seem to go through big up and downs. First was AEO about 11 years ago (back then it was listed on Nasdaq as AEOS), it was struggling to keep up with ANF. The financial news space was filled with negative news about their operation in the US and Canada.
I bought AEOS at about 3 to 4 dollars per share (before the split it was 6 to 8 range back then) and I sold them at double 7 to 8 dollars range. But the stock went on to reach 34 and now still at around 20.
Years later during the great financial crisis, I bought M (macy’s) again at near the bottom around 7 to 10 dollars. I again sold them at close to double near 18, now it trades at around 40. One can take a look at Gap as well (I did not buy it because my daughter was working there one summer as a high school student and she hated it), it also tripled (briefly went up by 400% since it’s low merely 3 or 4 years ago). Just 3 months ago I tried ANF and it went up big time (too fast so I cashed out some and switch to JCP).
I am now placing bets on JCP (averaged around 16.50 to 18 per share. Bought a few hundred right before the news that CEO bought more than 1 million dollars worth of his own money on open market—check insider purchase record, it should be just about 8 or so weeks ago if I remember correctly). I loaded up thousands more shares after the news. My bet on JCP is based on my belief that stores go through cycles. A few get things right for a few years and others learn and catch up. It seems to me more like a ROTATION of “favorism” since most of the long established name stores have relative strength in brand recognition and real estate holdings to offer a buffer. So I don’t see my bet will have a potential total blow up. I will give it a few more years this time around if it does in deed to turn around under the new Apple bred managers. My down side is within what I can bear but the upside is just too tempting to ignore. THIS TIME I WILL HOLD SHOULD IT DOUBLE AGAIN.
Netflix Heading for $320/Share Despite Already Being Overvalued [View article]
Great short is hard to come by. This one is easy FROM THIS POINT ON.
Netflix Management: A Walking Contradiction or Are We Just Arguing Semantics? [View article]
By keeping the mailing choice, I can get free DVD online watching from Crackle www.crackle.com/ . But by checking out WalMart's Vudu I will probably cancel NFLX altogether. Why, you can get the latest releases right away from them for very little money. Why wait for 28 days.
Nflx is no Apple, there is no prestige or trend setter factor in it. It is just movie watching. I would definitely short the stock using dollar cost average approach. Sell partial on rebound days and close partial on down days. Stay with the short until the roof caves in then add short and chase it down all the way to $108. NFLX won't be a growth story soon. It is just too easy for the competition to get in. If apple's ipads can draw so many good pads from all the laptop makers from HP, Toshiba, Sony, Samsung, Motorola and God knows who else, why can't NetFlix. You are right, it is not a matter if but when (how soon to be exact).
Oh, did anyone thought about the price hike will make people share the sub? Just like car pooling when the gas price shot up. My kid in college never pays nflx but watches movie using my account. I know a few people share nflx account within family members. So this projection (or assumption) that sub growth will continue on especially after the price hike and the media hype, to me is hard to imagine. Watch it and short it and you will be paid!
Netflix's Valuation: Completely Absurd, Significantly Overvalued [View article]
1. Overseas markets: A)China: impossible for two reasons political and language barrier. B)India: less language barrier but facing bollywood and pricing issues. C)other countries: either too small or language and cultural barriers. Do not forget, hollywood is where most movies were made and to be made. When analysts are running out of talking points, in this day and age they will sing the overseas markets song. We have heard of the "new paradigm" in the 1990s' for dot com bubbles.
2.Die hard NFLX users won't leave because of a few dollars increase in monthly fees. They don't care about having to have the newest releases right away. For those who do care about how much time you have to wait to get the latest releases, the price hike will be important. Growth in adding new members will get more difficult and costly.
3. Competition: too many alternative ways of viewing the same movies. The gap between NFLX's nice web use programing will be closed as time goes by. PLus when you are using internet TV to watch downstreaming movies, the differences between NFLX and others are not big. If the ipads can draw in so many players, why not streaming movies? Moreover, unlike Apple's i-products which carries a brand and status meaning, watching movies on line using internet ready tv is nothing near.
4. Cost of content and cost of streaming: Content sellers are not going to sit still and Internet providers will soon use "meter". We will see when the meter is installed, how people's behavior will change
NetFlix will certainly be the best in DVD mailing and on line streaming service, but the issue is in valuation. I will continue add my short position on rebound days--dollar cost average in.
Time will tell if NFLX can continue to grow at past rate.
SuperValu: Just Like an LBO but for Retail Investors [View article]
"$600M of their revolver expires in 2012" (if it is accurate). One should worry about it IF you believe SVU A)SVU's quarterly and annual after interest/principle payment cash flow is almost zero going forward--cannot be further from the fact and realistic situation on the ground B)SVU has no case or cash instruments reserves and C)SVU has no more assets to shed.
To MarkusJ: "Walmart is entering Chicago's Urban Market"
A)Look closely at all the locations under SVU's portfolio of banners and in particular look at Alberson's (how many stores they have and where are they located). WalMart was and is not the MAIN problem for SVU. SWY and KR's and Target to a lesser degree are SVU's main competition because they saturated in the neighbourhoods.
B)WalMart's locations are still primarily in the outskirts of major metro areas. They are effective Mom and Pop type of business killers in small towns but not really grocers killers (WalMart is much more than selling grocery). If KR's FredMeyer's (a smaller version of Walmart) can do well in the Pacific Northwest in competing with WalMart, I do not see too much of a point to relate WalMart to SWY and SVU. It will make more sense to relate WalMart to Target.
C)People are not going to drive an extra 15 to 25 miles to buy cheaper groceries especially when gas prices are stubanly high for a long time now. If price is so important there will be no 7-Elevns in the US soon.
SVU's problems are its large debt that ties its hands and limits its options (less money to spend on remodeling and opening new stores). The problems can be lessened overtime by continued steady cash flow and when the economy stablizes and people start to spend more again.
J.C. Penney Hangs By A Thread [View article]
1. Macy's (http://bit.ly/tdHCyS): between 2001 and 2003, it bounced up and down and formed a triple bottom around $14/share. It then reached $46/share in 2008 before it came down to $5.00 in 3/09 and now it is 900% higher.
2. Gap stores (http://bit.ly/K9lkJU): in 2001 was trading around 34 by end of that year it was below 12 and about a year later (2002) it reached a lower low at low 11s before it launched to 26 in mid-04. It came back down to below 10 in late 08 and early 09 (housing/banking crisis). In less than 18 months, it went straight up to 26 and later 38 in 2012 and it is still up there today.
3.American Eagle (AEO, used to be AEOS on Nasdaq before they split the stock and traded on NYSE): 3 to 4 (before split it was 6 to 8, chart reflect split) in late 2002 to late 2003. After bottoming out, it first went up to 25+ in 2005 and then to 32 (1,000%) in late 2007 now it is around 18 to 24 range.
4. ANF: from 01 to 2003, it had to form a triple bottom before it went 550% from 15ish to 80 in 2007. But wait, from 08 (housing and banking crisis) it came from 80 down to 15 AGAIN. Today it is in the 48 to 50 range. Less than 6 months ago, similar talk of good money after bad is also heard on ANF, but it went from 30 in Nov 2012 to 52 in February 2013 (3 months gaining 70 plus percent).
In retail, you can see more examples in TIF, JWN, etc. They all experienced this big up and down similar to JCP is going through today. They were all given up by the weaker hands missed by the "want to make big bucks but don't dare" crowd.
Cases like this can also be seen in banking known to many and lesser degree in industrial stocks. Just take a look at TEX (smaller version of CAT).
These are all facts for everyone to see and reflect on by drawing a 10 to 15 year chart. The problem is few people look at long term chart. They are fooled into believing that by looking at the short term movements of stock prices they can make a fortune. People making conclusive statements are fortune tellers. I don't know FOR CERTAIN JCP will double or triple, that is not for anyone to know or to tell. But by looking at the sector, the nature of the problem, the degree of its current weakness, the numerous real turn around cases in different sectors ESPECIALLY in retail/department store category, I will be willing to take a risk on JCP and feel history is on my side. And knowing Soros shares the same view can only make me like my odds better (I bought into JCP after the big earnings disappointment and added more on the day CEO was changed). The verdict is 12 to 36 months. Let's look back at JCP by then to see what happens.
J.C. Penney Hangs By A Thread [View article]
The leveling playing field pretty much means if you believe the injured ones will learn the lesson and if the injured ones are doing something meaningful to correct their course of actions, then the injured ones will have an equal opportunity. If not restore its old position, at least earn A FAIR VALUATION!!!
Then you look at big and smart money, how they move. Keep in mind, Soros like Buffet, gets to sit down and talk to insiders from the very top to all levels of management team members. What they can gain in terms of insights are not something people like you can remotely imagine. Therefore, a bet is to be based on how you read the facts open to everyone. At this low price, I will give it a shot. You want to have big gain? Try GE, PFE, MRK and JNJ, you will be lucky to get a 10% gain. These giants are like mutual funds, they won't die and they won't jump either, OK. You want 50% or 100% or 200% or more in gains, you gotta stick your neck out and take the risk. That's the price you pay buddy. Just bet smartly, that's all.