Saturday, June 9, 2018

Allergan: Unwelcome Guests?

Appaloosa and Senator sent letter to company requesting corporate changes that are rearview mirror leaning.
The activists are right that a more focused and nimble company is needed to achieve better results.
The company already has a plan that needs focus and any disruption from activists could be a negative on the existing plan for higher EPS targets in 2019/2020.
Allergan (AGN) is down 50% from all-time highs back in 2015 so understandably activists are agitating for changes. The time to make those moves was a few years back while now the biopharma needs to execute on the initiatives already set forward by the CEO.
Read the full article on Seeking Alpha. 

Disclosure: Long AGN. Please review the disclaimer page for more details. 


Friday, June 8, 2018

Under Armour: Rock Solid

Under Armour has quickly learned how to market footwear to generate buzz.
The footwear segment is where the athletic apparel company has the most growth potential.
The stock remains cheap at 2x forward sales estimates.
Under Armour (UAUAA) made a huge mistake while trying to grow too fast. The move into discount stores hurt the brand value and the recent release of shoes for "The Rock" shows the company has finally regained a marketing edge that will reward shareholders now and in the future.
Read the full article on Seeking Alpha. 

Disclosure: Long UA. Please review the disclaimer page for more details. 



Thursday, May 24, 2018

Chipotle: Corporate Disruption

Chipotle announced the restaurant is moving their headquarters from Denver to Newport Beach.
The company is shutting down the Denver office and facing substantial re-organization costs.
The move does nothing to improve the food with integrity concept desired by customers.
Expect EPS estimates to collapse as the company has limited corporate personnel to implement new strategies.
Only a few months ago, Chipotle Mexican Grill (CMG) announced that Brian Niccol would take over as the new CEO from the co-founder. The stock has surged on this news rising $100 now, but my investment thesis has maintained that investors need to dump shares on this rally as the most likely outcome is disruption of the business model and cultural change from the hiring of an exec from Taco Bell that was at odds with the people at Chipotle. Today, the new CEO fired the first warning sign on this disruptive period.
Read the full article on Seeking Alpha. 

Disclosure: Long AAPL. Please review the disclaimer page for more details. 


Friday, May 18, 2018

Baidu: Another Gift

Baidu trades down $25 due to the departure of the COO from daily activities.
The company has a long history of growth without the involvement of Qi Lu.
The stock continues to trade favorably to domestic peers despite massive margins.
Despite being a dominant player in the fast-growing internet space in China, Baidu (BIDU) consistently trades at a discount to American peers. The departure of a key executive and an analyst downgrade provide another gift to own this stock on a $25 dip and at levels from back in 2014.
Read the full article at Seeking Alpha. 

Disclosure: Long BIDU. Please review the disclaimer page for more details. 

Thursday, May 3, 2018

Snap: $7 Target Turns Optimistic

Snap reported disastrous Q1 results.
The company faces DAUs turning negative in Q2.
Snap continues to produce larger free cash flow loses.
A previous $7 price target is now far too optimistic.
All of the indications pointed toward Snap (SNAP) disappointing the market with quarterly results. The social messaging stock did not disappoint with a disastrous Q1 report that places our previous $7 price target as now highly optimistic.
Read the full article on Seeking Alpha. 

Disclosure: No position mentioned. Please review the disclaimer page for more details.