I really don't have time to keep up with your little war of words. Go nurse your prized "100 shares of Krispy Kreme" stock! I am sure the insiders will be glad to sell you some more in the next few days. Why don't you get out a bucket so you can catch all their shares. If you believe the reasons insiders post on the net, you are even more gullible than I thought. By the way is the first stock you have ever owned?
The way your post was worded, you were basing all of KKD's business on the store YOU drove by. In this post you state "If this store is typical....."......an assumption on your part.
Have the bagel stores you're talking about been around 65 years?
Using diversify's posts for an example, is a poor choice. He uses the word "assume" just about as much as you use the word "If".
Why is management dumping so much stock? Seems to me that the reason was given by the insiders at the time of their sales.
Thanx for response. I agree with your points. And I have made some small $ writing covered calls, but thats it on options.
I'm more of a fundamental type investor myself. So i think i'll stick with the short position, and add if stock goes up a little more. I just think its tough to tell when the hype will end, and the SSS comparisons pale. I don't think it will be longer than a year, but I'm a cautious type of short....
By the way back in the 70's the brokerage firms in Atlantic City used to have investors lined up outside the offices (all day I might add) to open new accounts and buy the stock of Resorts Intl and Bally among others. They skyrocketed for a while and ------------well the experienced investors know the rest of the story, but Whatever, you probably don't have a clue what happened. Whatever, I'll bet the insight you gained from CNBC was essential in developing your investment strategy.
I never stated anything about how busy all the KKD stores were, just commented that the one in my hometown is not all that busy. If this store is typical of the average KKD store, I feel very comfortable with my position in the puts. Quite frankly, I have never understood all the hype, but is not really that much different than the Bagel hype a few companies had a few years back. One must remember that in the early growth years, franchise sales can distort the earnings numbers as franchise and equipment sales go straight to the bottom line, while the core biz may or may not be all that wonderful. I think everyone would agree that the numbers can become somewhat distorted. I think Diversify has correctly pointed out that if they are partnering they book the franchise fee sale and equipment sales, but if company owned these are intracompany transactions. I stand by my comment that the KKD store in my area is not all that busy--they may be selling the hell out of donuts to the grocery store or gas stations in the area, (but I think this ultimately hurts because the older product is not that good). Whatever----I have waited until this last 3 months to start shorting as I felt the hype would hold for 2 to 3 years after going public. I just think the game is about over. Clearly I could be wrong--but I don't think any long has looked very hard at the valuation, balance sheet---they just have been sucked in by the hype and showmanship. By the way, why is management dumping so much stock?
<<I've always been leery of buying puts because u not only have to be right on the direction that the share price will go, but WHEN, and as you know most options expire worthless. Could you share your opinion with me on why buying puts is a better way to go than shorting? Thanks. >>
You are correct regarding the caveats of options, and I don't think it is a question of whether or not buying puts is a "better way to go than shorting". The advantage of buying puts is that they can offer much greater leverage than you can get by shorting the shares, given the same amount of capital or margin. That extra leverage comes at the cost of extra risk. As you wrote, most options buyers will lose money, and most options sellers will make money. But if you determine that the probabilities of a well-timed move are sufficient to overcome the premium cost, the potential gain is far greater with options than it is with the underlying shares.
Of course, there are other reasons to buy and sell options which have more to do with hedging, but the bottom line is that they offer greater leverage in exchange for greater risk. Because of the time factor, I would not recommend buying options unless you are a technical trader, because the fundamentals often take many months or years to play out (as we have seen in spades with KKD).
Good luck -