Fire sale going on

[wildcat]

This quote by the CEO makes me suspicious:

"The company said its same-store revenue in both rural and urban markets declined more than expected due to what it termed "the worst box-office slump in more than two decades,"

The Hollywood box-office slump happening now is at *theaters*. One of the reasons for this movie-going slump is the explosion in home theater technology, i.e., wide-screen TVs, surround sound systems, etc. People enjoy simulating the theater environment at home. And what do people watch at ome? Yep, rentals! Based on this, you'd think a Hollywood box-office slump would be good for the industry!

Not necessarily. I go to the rental store and if I don't find anything interesting I don't rent. So technically it could leak down to rental business and be bad for the industry. The sector is not going to hit the ball out of the park but it will be stable/slow grower. Cash flow is solid so good chance for buybacks if management is smart. EPS growth prospects are fine IMHO even with slow growth. Looks like the aquisition cycle is over among the majors.

BBI is full of overpaid exceutives and is trying to recoup after Red's savy deal, or at least from Viacom's perspective.

Online rental again IMHO does not appeal to a large population and there is no real threat of it taking over the brick & mortar.

 

[brewer12345]

I think we are also talking about stuff on the margin. I mean, the movies that do the best at rental only gross $25 to $75 at box office, but what often drives traffic to the stores is the big headline stuff (StarWars 3, etc.). With a sloppy big-time film release schedule util Q4, traffic will likely remain soft. When there are big, exciting films released, the other stuff does well too, because people will often rent an "also-ran" at the same time or instead of a headlne film.

 

[Mr._johngalt]

Down 7% or $350 as we speak! The pain..... 

I thought it was "Ze plane! Ze plane!" Surprised I had the herve
to post this. Got to go tend my lamas.

JG

 

[Nords]

Down 7% or $350 as we speak! The pain..... 

Happy Monday, everyone! Brewer, looks like Wall Street has been following up on your math.

I really need to go longboard shopping...

 

[brewer12345]

Beats the hell out of me why the market acts like this, BWDIK? This is why I try to focus on the business and just ignore the day to day stuff.

BTW, SPH is starting to look awfully attractive. Nice yield, too, especially if it gets to 30 or less.

 

[Nords]

BTW, SPH is starting to look awfully attractive. 

What are you using for a screen?

 

[brewer12345]

What are you using for a screen?

Huh? You mean criteria, or some sort of formal mechanical thing?

I think SPH starts to look attractive at a yield around 8% because:

- I know and understand the business (used to own the stock)
- I think I understand the reason why it has sold off
- When I do a simple single stage DDM with a ~3.5% div. growth rate, 4.3% risk free rate, and some assumption about risk premium (3.7% isn't a bad start), I come up with a MUCH bigger number (~55) than the current stock price (~31)
- tax deferred yield is nice
- IMO, mgmt is reasonably good. Conservative, competent, but still willing to strike if they think they see a good opportunity (Agway Energy deal of a year or so ago).

 

[Nords]

Huh?  You mean criteria, or some sort of formal mechanical thing?

Yeah, I'm just wondering how a particular stock gets on your radar. Do you run a screening tool daily or work from what you encounter on the job or from what you read on the internet or in magazines?

 

[wildcat]

If I had to guess I would say Brew doesn't mess with screens too often. I bet he has an idea of what companies he would like to own and waits for the right price. Screens only tell you so much.

 

[brewer12345]

Yeah, wildcat is partially like. I also use screens to generate deas for further study (and to wait for my price). Sometimes I have to wait a long time. I really liked NLS in 99 and 00, but it was way too expensive. I bought it for peanuts in 2002.

 

[preben]

Brewer; I took my 6-7% profit long ago (on $5k mentioned at that spike) but left MOVI on my streamer which explains the revival of this old thread and AUCH I do not hope you held it all the way down? About 5 bucks now...
Cheers!

 

[brewer12345]

Nope, bailed out a while ago. Sometimes things don't work out the way you'd like.

So long as the successes more than outweigh the failures, that's OK.

 

[azanon]

Hope you didn't lose too much.  As i said, mail order dvd is in, anything that isnt mail order dvd is out, big time.   No surprises here.

Netflix continues to go up and up.

I dont buy individual stocks, but i'd pick a mail-order DVD if i did;  probably netflix since they're the one i use.  I couldn't be more happy with their service.   From a personal experience, it revolutionized renting movies for me.   To not have to drive to a video store to get a movie AND to return it is a godsend. No late fees is also a godsend.

 

[brewer12345]

It still isn't clear to me that NFLX will ever make enough money to justify the stock price.

I'm a lot more interested in businesses that flow obscene amounts of cash.

 

[BUM]

Huh?  You mean criteria, or some sort of formal mechanical thing?

I think SPH starts to look attractive at a yield around 8% because:

- I know and understand the business (used to own the stock)
- I think I understand the reason why it has sold off
- When I do a simple single stage DDM with a ~3.5% div. growth rate, 4.3% risk free rate, and some assumption about risk premium (3.7% isn't a bad start), I come up with a MUCH bigger number (~55) than the current stock price (~31)
- tax deferred yield is nice
- IMO, mgmt is reasonably good.  Conservative, competent, but still willing to strike if they think they see a good opportunity (Agway Energy deal of a year or so ago).

Regarding SPH

I'm in at 34 but those divvys are very tasty. Not too late to get in on the January. Maybe time for me to DCA.

 

[azanon]

Whether current stock prices are representative of a companies' worth is beyond my ability, which is why i prefer to just stick to mutual funds.  

All i can say with accuracy is that Netflix is a great company and is very enjoyable to be a part of.  I love everything about it;  being able to load up your queue with a bunch of movies and then just letting them ship them to you as you watch them.   The ease of walking out to your mailbox and there they are!  and also sending them back is so painless.

I guess its like other hot companies like ebay/paypal, and google.  No doubt the companies are great, but trying to figure out whether a stock price represents the greatness is the tricky part.  

If i had to guess, i bet netflix is fairly priced at the moment simply because several other companies are/were trying to compete with them (like amazon and walmart), so its not clear who'll end up being the winner when everythings said and done.   This competition is hurting the stock of netflix because a lot of folks are betting the 1000 pound gorillas like amazon and walmart will price squeeze them to death.

 

[brewer12345]

Regarding SPH

I'm in at 34     but those divvys are very tasty. Not too late to get in on the January. Maybe time for me to DCA.

I sold at 36 and change. Earnings released this morning weren't too pretty, but they weren't disastrous either. If they manage their way through this winter, things should be fine. I am starting to get interested at current levels. A couple more bucks and I'll probably jump in. I think SPH is not a bad play if you think we will hit a soft patch/recession next year.

 

[TromboneAl]

I'm sorry to pick on you Brewer, I know you're a smart guy. But this one picture says it all as to why a good old boring index buy and hold approach beats the excitement of individual stock trading.

 

[HFWR]

Over the years, I've made more good decisions than bad regarding stock picks and market timing, but it makes my head hurt...

 

[Nords]

I'm sorry to pick on you Brewer, I know you're a smart guy.

Now you have to post a chart & thread comments from one of his GOOD picks.

 

[brewer12345]

Al, pick all you want. I learn from the things that blow up (usually more than I learn from my successes). I intentionally invest in volatile stuff. Sometimes individual exposures will blow up; that's part of the equation. Over time, however, the returns of volatile stuff are very attractive. Plus, I didn't take the beating in 2001-2003 that the indexes did (I made money through the equity market crash). As always, I suggest that anyone reading my dribblings here do their own due diligence.

 

[TromboneAl]

Here's a good pick.

 

[soupcxan]

Ok, the clock has to be ticking on a short squeeze for MOVI...almost 50% of the outstanding shares are short, and it continues to decline...when it pops, I bet it pops big.

 

[Nords]

Ok, the clock has to be ticking on a short squeeze for MOVI...almost 50% of the outstanding shares are short, and it continues to decline...when it pops, I bet it pops big.

Man, someone finally said it.

But I bet we can watch it go lower for another few months. $4? $3?

 

[brewer12345]

Man, someone finally said it.

But I bet we can watch it go lower for another few months.  $4?  $3?

There has to be a catalyst for a short squeeze. If MOVI muddes through until next year and then reports SSS are going up in the mid single digits, I'd expect a flurry of short covering. OTOH, if things keep going the way they have, the shorts may never have to cover. One of the great things about being short something that eventually goes BK is that you NEVER have to cover. That also means that you never have to realize the gain for tax purposes, even though you can generally do what you please with the cash you made off the trade.

I'm expecting a short squeeze in PPD, but the recent lawsuit BS has put a damper on things for the moment. Unless it entirely derails the bank loan negotiations (which I don't think will happen), I am expecting a lot of pressure to be brought to bear on a large short position