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Analog Devices, Inc. Message Board

chuckpalot 15 posts  |  Last Activity: Mar 31, 2014 4:01 PM Member since: Nov 23, 2010
  • Reply to

    David Trainer: Enter The Hack Zone

    by chuckpalot Mar 28, 2014 10:58 AM
    chuckpalot chuckpalot Mar 31, 2014 4:01 PM Flag

    Thx for the feedback Jeff.

    Institutions hold over 96% of DNKN 100MM share float which is great support, I agree. Look more deeply and you'll see two players (Fidelity and Jennison) held 30% between them as of 12/31/13. That's what I call a love affair. Not surprisingly, they both are based in the Northeast - the heart of DNKN country - so they've got a decent handle on the business model, management acumen, the good neighbor role DNKN plays in each community it serves, and clearly understand the long-term potential of the company.

    The bears have been dead wrong about DNKN since it came public three years ago. It costs a lot of $$$ to be wrong here and even more $$$ to be stubborn about it!!!

  • I read David Trainers' ultra bearish article yesterday, (Danger Zone: Dunkin Brands Group), in part, because like any reasonable investor, I like to know what the "dark" side is thinking about one of my bigger investments.

    First of all, when someone says "trust me", you're being shown the ultimate red-flag on trust, no? So when Trainer says his research is not about his (massive?) ego, you come away with a visual that his little Nashville office is littered with self-portraits.

    Guys like Trainer swim against the tide for the very purpose of ego development. Last year he (in)famously called Apple shares absurdly overvalued and set a $240 price larget. The stock was trading at $425 when he made this prescient call and today nearly 12 months later, it's closer to $540. Looks to me like the the real Danger Zone exists between this guys ears.

    So on to his attack on DNKN. According to Trainer, who is short the stock, DNKN is using prior one-time charges to inflate current earnings growth, its ROIC is below its WACC (say what?) and, moving fundamentally, there's just no way DNKN can succeed beyond its entrenched East coast stronghold.

    At least he stopped short of using the LMNOP argument in his vague and meaningless research!

    Nowhere does Trainer delve into part of what makes DNKN unique in comparison to the rest of the industry; and how being nearly 100% franchised changes any financial metrics for ROIC, WACC, or even LMNOP!

    Neither does he discuss DNKN's rising dividend model, or substantial share buyback plan. Though he really hammers home and negaitively spins the regularly scheduled and now commonplace insider selling of key executives who sold a whopping 7% of their holdings last year! Since when is 7% wholesale dumping? Exactly.

    I encourage any shareholder to read Trainers "research". If you're like me, it'll make you feel even better about being a DNKN shareholder!

    And using Trainers' Apple analysis as a yardsick, put DNKN at $60+ next year.

  • A quick serve homerun!

    Tried one earlier today and it was mighty tasty. Kudos to the DNKN kitchen for coming up with this, especially the "sauce" which is more of a spread; creamy, buttery, and hint of lemon. I'm an eggs-benny lover, and while this isn't exactly what you'd get at a multi-star sit down restaurant for 4X the price, it most definitely works. Hope they keep it on the menu for a while.

    Just another reason for America to keep running on Dunkins

  • Reply to

    Arabica Coffee prices and the Cost to Dunkin

    by regecon Feb 25, 2014 11:06 AM
    chuckpalot chuckpalot Feb 27, 2014 11:29 AM Flag

    Welcome to another bear! Glad to have you!!

    Actually, it's a great time to be long DNKN, though I'm not so sure I'd say that about SBUX.
    (Two very different businesses, different demographic appeal, very different cost structures and profit margins, not to mention GROWTH POTENTIAL).

    Once you understand this, you'll appreciate why Mr. Market is putting a premium on DNKN.
    Reminds me a little of MSFT in the 80's & 90's ; it never got "cheap" enough for the average investor to jump in. Yet, all they did was deliver exceptional growth Q after Q, and year after year. This will play out at DNKN as well.

    You know, most of the DNKN bears I know live outside of DNKN country. And now I get it. They just don't really understand the biz, and more importantly, how quickly it becomes an asset in a new market. Having grown up in the heart of DNKN country (and still living here) I tend to take that fact for granted.

    Of course, that will all change pretty dramatically in the US over the next 10 years - not to mention internationally, as well.

    BTW, daily fluctuation in the share price doesn't matter to me. I'm not trading it. This is one of those rare "buy and hold" stories that provide outstanding returns over the longer haul, regardless of market swings, commodity prices, or recessions.

  • Reply to

    Arabica Coffee prices and the Cost to Dunkin

    by regecon Feb 25, 2014 11:06 AM
    chuckpalot chuckpalot Feb 27, 2014 11:10 AM Flag

    You'll see that "risk factor" boiler-plated in every 10K they publish, so let's not get carried away.

    As for pricing product at the store, I tend to think DNKN has learned something about this (hedging) while thriving over the past 50 years; this years' sudden jump in beans is nothing new and will happen again down the road.

    I may be wrong but I'd bet most of their bean requirements for 2014 were contracted last year, or even earlier - and at very low commodity prices.

  • Reply to

    Arabica Coffee prices and the Cost to Dunkin

    by regecon Feb 25, 2014 11:06 AM
    chuckpalot chuckpalot Feb 25, 2014 4:09 PM Flag

    Actually, Mr. #$%$, donuts make up a small and ever-shrinking % of sales. Talking single digits.

    Still, every now and then I'm in the mood, and it's good to know they always have 'em fresh and tasty.

  • Reply to

    Arabica Coffee prices and the Cost to Dunkin

    by regecon Feb 25, 2014 11:06 AM
    chuckpalot chuckpalot Feb 25, 2014 3:43 PM Flag

    regecon,

    Yes, futures contracts help normalize short-term market price fluctuations for the DNKN buying consortium. And please note DNKN does not buy coffee and distribute it to its franchisees; they source it themselves.

    Historically, when the price of beans rises, the stores have not raised the price for a cup of coffee by a few pennies. What they have the freedom to do is recoup those increases by lifting the price of baked goods, sandwiches, etc. A nickel bump in the retail price of a sausage/egg/cheese on a toasted everything bagel (my fav) goes basically unnoticed by the consumer, and offsets the higher prices of beans, if it comes to that.

    It all comes out in the wash, and royalties paid to DNKN are essentially unaffected.

  • chuckpalot by chuckpalot Feb 20, 2014 1:14 PM Flag

    I admire the audacity of the short bears playing DNKN, but I have no sympathy for their being wrong and losing $$$. If they really knew what they were doing they'd be in this stock for the long haul and collect a nice four-bagger.

    If DNKN was such a lousy company/stock why would three "professional" fund firms have locked up over a third of the float? You don't see that every day and the reason DNKN is so compelling is simple:

    Opportunity + Execution = Homerun

    The other problem shorts face is with so many funds having locked up shares for the long haul, and with DNKN buying back stock to boot, the pressure on the stock will remain TO THE UPSIDE for the foreseeable future - ironically, helped by regular and persistent short covering.

    Sure, if the DNKN story changes and they stumble, then there will be a swift correction (see potbelly) bringing lots of pain. But for now, the pain belongs to shorty, and it's likely to continue that way for a long while.

    GL!

  • Reply to

    $50 and beyond......

    by mech812 Feb 18, 2014 9:40 AM
    chuckpalot chuckpalot Feb 18, 2014 1:49 PM Flag

    Mr. Roach,

    I suggest you do a little extra homework on how and where DNKN sources its beans, who actually buys them, and why , even with market price fluctuations, the consumer sees no price change at the register for their medium regular.

    So here's your bonus question: How does the market price of arabica affect the revenue and profit stream of a franchise, and thus, the royalties it pays to DNKN?

  • chuckpalot by chuckpalot Feb 14, 2014 12:57 PM Flag

    Like reaching into a small bag of Munchkins (r).....

    Great earnings report last week! Impressed with same-store sales coming in up 3.5% during some tough weather patches in the northeast in December. This compares very favorably to a slow down in SBUX same store sales over the same period, and NEGATIVE comps at MCD in Q4. Clearly, Dunkins is showing strong momentum vs the competition.

    With 40+ new menu items planned for 2014, the launch of the loyalty program rolling out now, and continued marketing and commercial expansion, the table seems set for continued growth in comps.

    Open Mouth - Insert Foot: WEEI's morning host, Jerry Callahan, got even more red in the face from fallout of a disparaging remark he made about Donuts last month. As a result, DNKN's pulled their advertising from the once-mighty all sports radio station. No biggie, EEI is losing share daily to their cross town rival at 98.5 The
    Sports Hub.

    Fun with Maps! Was playing around with the new version of Google Maps the other day and did a search on Dunkins. If you have more than a passing interest in this company, one look at the national map showing all the DNKN pins will surely get you salivating - not because how many there are, but how open the opportunity is west of the Mississippi. Manifest Destiny!!!

    I still think Dunkins' should drop the "Donuts" from their name; a tweak on branding that de-emphasizes donuts - which is an ever shrinking % of their sales anyhoo. Besides, nobody around Boston calls it by its full name, and haven't for a very long time.

    Not for nuthin but I still think some foreign entity will make a play for DNKN in the next year or two. If I'm wrong, we still win since the blue sky story here and abroad is very compelling and will take this stock over $85 in three years (which equals 20% compound growth from the current price).

    And, in closing, thanks to the Board for raising the quarterly dividend by over 20%. Just another reason to be a happy shareholder.

  • Reply to

    Just Like The Talbots; Deja Vu All Over Again

    by chuckpalot Jan 23, 2014 10:45 AM
    chuckpalot chuckpalot Feb 5, 2014 1:01 PM Flag

    Looks like both sides failed to agree on a price. I'll guess Dennis is still in denial about how ugly his once darling little child has become. (Same thing happened during Talbots negotiations with Kaluzny over several months)

    Sadly, the bottom line on these valuation/buy out impasses is the final price always goes lower. It's not as if CWTR has any real leverage in the negotiations.

    I still think a deal gets done after all the posturing plays out. And only the truly brave should be nibbling at this sell-off price under .70 - cause there are NO guarantees! I'm just betting Dennis comes around - albeit a day late and a dollar short!!

    GL!

  • Reply to

    Q: Who's Eating Micky D's Lunch?

    by chuckpalot Jan 23, 2014 10:59 AM
    chuckpalot chuckpalot Jan 23, 2014 12:06 PM Flag

    I don't recall much of grade school, sorry. But I do recall grad school where I learned 92% of all option traders end up losing money or going flat broke. It's probably closer to 100% for the ones who hang out on Yahoo all day.

    You can always go into fiction writing; you seem to be pretty good at that. LOL

  • A: Starbucks, Dunkins', Panera et al.

    We (fat) Americans can still only eat so much, and unlike the 70's and 80"s, there are better tasting and healthier choices on virtually every corner. McDonalds is in BIG trouble, but their massive size will allow them to survive for many more years. 10 years from now they'll be a shadow of their former self, and the stock price will reflect that reality.

    Rec: SELL

  • With a few minor differences, this is a movie I've seen before (and profited from).

    Trust me, there are people working on a deal from both sides. They're haggling over price, reviewing assets and liabilities, aligning financing, etc. all the usual stuff. The Buyer (I still say it's Golden Gate) is incorporating their "TakeoverLLC", lining up a new management team, and consulting with advisors on how to minimize the standard shareholder lawsuits that will likely follow any deal, regardless of price. (If they're smart, CWTR Board is doing the same DD on follow-on lawsuits, after all they said the turnaround was taking hold for each of the last three years, and individuals are now the targets of lawsuits).

    Talbots was in worse shape than CWTR at the time of their buyout, and while they owned more assets, they also carried more debt. They were heavily promoting/discounting, morale was low, stores were empty, etc, etc. Still, the final price was over $300 million (including debt) with a business doing about 30% more than CWTR.

    The bottom line here is that there IS VALUE in this brand, and it will be unlocked with new blood, new merchanising, store rationalizations, and a cash infusion. It's really hard to predict a final sale price but I'd put the over/under at around $2 +/- 10%.

    Just give it time. And remember, there are NO guarantees in life, but this is not a new scenario by any stretch.

    GL!

  • Reply to

    Good company but

    by lipkalr Dec 27, 2013 9:21 AM
    chuckpalot chuckpalot Jan 21, 2014 11:41 AM Flag

    I guess it all depends on your definition of "really rich". Are your looking merely at PE? (big mistake, imo). Do you think they've run out of room to grow the franchise model both here, abroad and in Asia? Do you think consumers are suddenly going to swap their must-have daily cup o joe for something more exotic like Romulan Ale? Or that lifestyles will slow down to the point where QSRs no longer offer value and convenience?

    My advice to you is to learn from your past mistake and start building a position in this winner - assuming you have a time horizon longer than a year or two. In a few years, you'll look like a genius, all the while being able to sleep well at night (this ain't no risky biotech startup).

    It's all about the law of compounding mistakes - investors do it all the time. They average down on their flea-bitten losers, vs watching a winner make perennial new highs from the sidelines. Drop the ego and start making $$$ using time and discipline vs a instant homerun mentality and denial.

    This advice is worth exactly what you paid for it...

    GL!

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