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Krispy Kreme Doughnuts, Inc. Message Board

  • shawnd_3 shawnd_3 Oct 12, 2004 4:03 PM Flag

    John Kerry would fix this mess right up

    Lets vote Kerry in. I would like to see the day that Texas shifts from its extremist Right to somewhere down the middle and tell Bush and Haliburton no more lies.

    WE DO NOT BELIEVE YOU and your hyped Terror Alerts as we get closer to the elections.

    If invading IRAG based on lies was to our benefit, then why we are paying twice as much for a Gallon of gas than we did when Bush took office. Another 4 years of him, and gas prices will be at $4.00 a Gallon.

    Do not make the same mistake twice and vote for Bush.

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    • panic_on_the_porta_potty panic_on_the_porta_potty Oct 14, 2004 12:13 PM Flag

      And even blind squirrels know a nut like you, if they've ever seen one.

    • What happened since I turned my back! Actual conversation about how someone can make money with limited risk on this stock? This board should be about donut lovin fat folks bashing the Yale boys and their debate tonight.

    • """Give me a few issues, and I will point out pre-warning posts that discussed them. """

      the relentless and dedicated bashers have pretty well exhausted all conceivable wrong-way scenarios, no matter how bizarre or improbable. That a couple of them have occurred is due more to chance than any element of intelligence on the part of the bashers

      i think of you collectively as blind squirrels. If you don't know what that means, don't hesitate to ask

    • great. another leftwingnut

      still not enough of you to win any elections

      maybe Skerry could run in Iraq after he loses here. Man, that would serious him up a bit about the real world

    • LOL- I don't think you have to worry about $115. Heck I'll be happy if it stays above $11.50- LOL.

    • If KKD went to $115/share tomorrow, it would wipe me out. Maybe Mungerian can tell us how many standard deviations that would be.

    • Jesus. What a horror story! Thanks for sharing though.

      I don't think I've ever sold a put that even if the underlying went to zero would even cost me 1/2 of 1% of my account equity. Under no circumstances would I ever put on a trade or a serious of trades that would have even the tiniest chance of "gamblers ruin" type scenarios on my overall account equity. I diversify to a fault.

      If KKD went to zero tomorrow, net of the tax writeoff, I would lose probably 0.80% of my account.

    • Entertaining article about Taleb and Niederhoffer.

      I must confess. This is my 3rd life. I was killed twice. Both times, I was trying to pick up money in front of a bull dozer.

      The last time I died, a company with the stock symbol of DYN promised to buy out another company for $10/share. Both companies agreed to the transaction. I sold $10 puts and calls in the company to be aquired for about $4/straddle. I thought I was picking up gold.

      A few weeks later, DYN changed its mind and the other company went bankrupt. My net loss was $130,000.

      I can't remember the stock symbol of the other company that went bankrupt. It used to be called Northern Natural Gas; but changed its name to Enron long before I got involved.

    • I essentially agree with all that you are saying on the face of it. However, I think things change when you add more variables. Let's say that one restricts all put selling to a diversified portfolio of stocks trading with FCF yields of 10%+. Assume that margin isn't an issue, that you start 100% in cash, and would be entirely comfortable with having the entire portfolio put to you (enjoying 11%+ FCF yields of the underlying business on your basis). Where is the downside?

      Your analysis assumes random stock selection, ignores the investment value inherent in actually being put an undervalued stock, ignores diversification, and also assumes that even if some percentage of stocks did take off wihtout you, that one couldn't immediately recycle capital into similar replacements.

      Thank you for your article- I appreciate the notion of the strategy, but don't at all see it as being 100% opposite of the above.

      Regarding track records you unambiguously called me a liar (among other terrible things), which is different from saying that "it is pointless to discuss it". Don't waffle- a real man would either own up to being irascible or take me up on a wager. I have only the one account and audits are done all the time.

      As for KKD, I can appreciate that there are folks who may have superior insight on this particular equity. Maybe I will indeed lose money on this particular position. Obviously if your thought process is consistently this superior your investment performance probably squashes my amateurish punting overall.

    • <Let's say however, that long-term you think KKD, based on some fundamental analysis is worth maybe 14-15 and you want to get long a small piece. Why not enter the stock with a put?>

      If you really research KKD, ignoring the analysts and digging into the SEC filings, looking at management presentations, reading conference call transcripts, thinking about outlet economics, etc., I'd be surprised if you still the stock is worth 14-15. I've done that level of research and believe the business fundamentals and financial condition of the company are deteriorating severely. Di_versify has posted plenty of the evidence on this board; I'd done my research before ever looking at this board and came to basically the same conclusion as he has; if anything I might be more bearish, believe it or not. I think KKD is headed for bankruptcy in the next year to 18 months unless somebody ultimately buys them at something well below the current stock price.

      But even if you like the company and want to own the stock, there are still issues with selling naked puts. If you're short an option with a $12.50 strike price for a $.50 premium and the stock declines to $9 and then runs to $15 prior to your option expiring, you never own the stock unless you exercise (for a net cost of $12 ignoring spreads and commissions), or close out the option position at loss that offsets the lower price you paid for the stock. You missed the opportunity to buy it at $11 or $10 or $9 and you missed the appreciation from $12.50 to $15. All you collected was the options premium.

      To me, bearing the downside risk of equities while giving away most of the upside is a losing strategy long-term. But if it works for you, great. As you understand, it can work repeatedly and then explode on you. If I had a favorable opinion on the stock I'd rather own a LEAP call out a year or two than sell puts. That gives you leverage if KKD takes off and limits your downside (relative to an equivalent number of naked puts or shares) if the stock crashes and burns. My strategy with KKD is along those lines but in the opposite direction. I have a significant stake in KKD LEAP puts. I'm not betting on the next development with the SEC or the next quarterly earnings release (though I expect it will be a stink bomb), I want them out far enough for the deteriorating financials to play out.

      By the way, selling a put, as I'm sure you're aware, is essentially the same thing as owning the stock and selling covered calls. Limited upside relative to the downside.

      Academic research demonstrates that fat tailed events (i.e. 3+ standard deviations in either direction) occur far more often in financial markets than a normal distribution would predict. Here is a link to a long, but I think very interesting, article on a hedge fund manager who employs a strategy that is essentially opposite yours. He buys short-term options for tiny premiums, expecting the vast majority of them to expire worthless. His bet is that the handful that hit will more than pay for all the losers because markets underweight fat tail events. I don't have anything on his track record.


      With regard to personal track records, I just think discussing them on the internet is pointless. They can't be easily verified; even with verification of one account, somebody could be running 5 different accounts with 5 different strategies at 5 different brokers, so seeing a documented track record at one place doesn't prove anything. There are plenty of other issues with comparing portfolio objectives: risk tolerance, level of risk taken, time horizon, etc.

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