Thank you. If you have read our views since last october here and had core long and trading long positions when we did,you've made a bundle -- on the order of the 300% or so we have here excluding hedging costs. Yet our analysis of the stock's risk reward math is flipped from that we had up until Sep 10th and the carbonation delay for 2-3 years.
Instead of growing rev and earnings in excess of 50% as things were two years ago, or even 15%+ guided for 2013 and the "new norm" here during each of the last 3 Q, mgmt is now guiding for high single digits for 1H14 and hopefully rising to mid teens for 2H14 if no further slippage in share and no unanticipated new entrants -- both of which happened unexpectedly during the Sep Q.
If Einhorn's thesis continues to unfold on that pathway, revenue, cash flow and eps growth are all destined for further compression. Mgmt should be thinking about buying back stock alright, but it may be wise to consider watching how things pan out on the SS market for a few Q before being aggressive on share buybacks for this company... perhaps that timing would line up beautifully for the carbonation rollout in 2016.
Hey longs, this is the level of intellect being brought to bear on blind bullishness here. You can see this putz is one clueless carwash attendant.
You might want to actually do some independent reading and consider the implications of what einhorn and Kelley have told everyone about the challenges and implications thereof in recent days.
You should start another new alias -- maybe utterlycluelessdaytrader would be apt.
You suggest Einhorn will close out his short "for tax purposes" implying he has a significant loss. However, Einhorn is sitting on a huge gain on his short position in GMCR.
Einhorn's big short position on this likely weigthed between $90 and $110, and bigger than it was originally as momo guys chased this above $85 this year even after the Company told the street carbonation was 2-3 years out on Sep 10th.
Your comments are always worth considering, but to say yhoo board put buyers and peanut shorts matter to the tape is a rough go. As for clueless daytraders gambling with unhedged short term otm options, they can't have much capital and what they do have will soon be lost. They share that lack of discipline and knowledge with clueless equity longs and shorts here. To be clear, there is no such thing as a "crowded trade" when the baseline group involved is retail players posting errant ideas and conclusions. A guess is that altogether, excluding perhaps 3-4 pm who read and or post here when they feel like it, all of the shares represented by posters here put together for even just one long or short chunk trade would not influencing this tape for more than a few seconds before institutional trade on hft programs resume trendlines.
Going back to the week before Sep 10th meeting, where we first expressed concern over the hyp of the carbonation program at two conferences and suggested fail to roll that out would be a problem for the stock, we've tried to provoke counterpoint to our present outlook which is negative for the shares, but there is none here short of getting the carbonation done say 2 years ahead of the current promise of 2-3 years. We also think the street bias in on the fence these days, waiting to see what is going to unfold on share, margins, operating leverage, license fees, etc. The simple recap is they really need to figure out how to have willing participation in license fee payments, yet to do that will have an acidic effect on revenue and pressure margins and operating leverage. Ultimately, calling pennies per pod a good outcome while they race to attempt developing their own brands that will enable them to retain the premium sector they are losing ground in really is not that...
what is your take on "many" vs "several" and more "new competition" to come in addition to the aggressive new rollouts & pricing on premium products?
Your comments are those of a juvenile moron, nonsensical and devoid of meaning or relevance. But enough dissing a dufus trying to dis me. LOL
Every comment shared here is factual...
I've already told you that we have no idea where stocks will trade from one day to the next. Trying to trade that way is a surefire way to lose capital.
I also told you, twice prior, that if i was dumb enough to own short dated otm calls at $65 I'd sell them out before they expire worthless. Let me guess... you rode on the nose cone down like Dr. No did...
You guys playing these short-dated calls need to figure out the smart money is selling you otm premium... goofball daytraders buy that leverage play, some 90% of the time to the detriment of their net worth.
grfft, love it. thanks...
As written early this year, our estimate has also been for 20% growth in GGR for macau this year. that only a couple of analysts were dialed in has been to our advantage now that they are all figuring out that it really is early days still for macau, and especially MPEL and lvs (which we pushed back from on the Spanish Empire events.
Catching up on some reading this morning,
grftt's personal visit and knowledge that COD Manila was absolutely, completely unaffected was great to learn last week, especially since I've not spoken with anyone from the company since just after the CC the sell side knows less than we do. If you missed his posts on this, review for them as they are compelling and highly worthwhile in our vie. Last week's Barron's had an article on M9 titled "The cloud over the Philippines, the gist of which talks about displaced workers and disrupted lives are going to affect the Philippines' economy and tourism much the way Japan was affected by the Tsunami a couple years back. In context, it reads much like the post I wrote the day after the event... I'd suggest reading for anyone who has serious interest in the Philippines, again, against the backdrop that Manilla itself suffered little storm damage and COD manila is unimpaired.
An interesting aspect of the article is that we can be thankful COD Manila is not yet running. The article notes that in the wake of the storm the Philippine's have seen 30-40% cancellation rates on resort reservations... that makes sense... I certainly would have cancelled any trip to the islands planned for anytime over the next few months.
Note the article closes on the positive note that much as seen in japan, observers expect that the country will see a rapid recovery of lost economic activity as they race to restore normalcy. COD's showpiece contribution to tourism in Manila will figure prominently in that regard.
into the cash and equiv pieces. Yes total debt is up, but cash is also up commensurately over the relevant time periods... some $560m since year end. Hello? Moreover, aggregate debt is no problem whatsoever vs annual cash flow (see first part of this post) and a non-issue for HLF's ramping FCF. We note several idiots here are now parroting Ackman's bs that the buyback is ineffective at present levels -- okay Bill, just keep telling yourself that as they do the $2B leveraged buyback because that will take out some 15% more of outstanding shares and the economics of the after tax cost of debt vs less efficient common dividends saved alone justify the buybacks, even before considering that cash flow itself can handle the debt service comfortably (leaving out the EPS and valuation lift for residual shares) before considering any further progress coming on top of sandbagged guidance and posturing by mgmt.
That concludes the first half of your 101 accounting and finance class. LOL
You must be one of Ackman's "special" accountants who thinks HLF is an "Alien Spaceship" and big fraud. Bill could sure use some competent help in this area though...
To your inquiry, I am massively overqualified to answer your sophomoric questions. In fact, no CPA or counselor designations are needed, neither is a pm or analyst background... All one needs is the first semester of accounting and maybe an introductory finance class. LOL
This will be brief and solely about gravitas of knowledge... you'll have to take some basic business courses to learn more.
Let's start with sales. They are up yoy by some $197m or 19% with gm flat at 80% yoy and ytd vs ytd. These two factors coupled with the $275M of cash flow (now running at an annual clip around $800m/and growing rapidly!) used to repurchase shares ytd despite going dark 2Q waiting for PWC re-audit visibility, as well as the $10m of dividend relief resulting from those buybacks, have driven acceleration of earnings growth. EPS was up 15% ytd (double the SPX despite trading at a market multiple now that the Ackman effect is fading hard) and some 27% yoy for 3Q. Brilliant financial engineering and clean execution with no funny balance sheet debits geniuses mught expect to see if there was any fraud here. LOL
Now, in a vacuum and all else being equal, we'd expect that surge in sales and operating profits to cause a commensurate increase in both inventory to handle the sales flow and receivables rising on that bigger book. Not happening here... inventory is lean and mean, essentially flat at up 2%. Similarly, receivables are crisp and actually down $7m from $116m at 12/31/12. A quick review of the balance sheet also answers some of your concern regarding increased long term debt. As HLF expands distribution capability internationally, it has invested an incremental $30m in property t9m and it also has increased prepaid expenses by an incremental $30m... so let's carry that newfound understanding (cont)
Have a read through the detailed discussions now included in the 10Q for Sep 30.
Extensive eff around with tax disclousures and accrued taxes and opening retained earnings which began in the June Q -- two months after the PWC began its engagement.
Here's the fun part for me... the dope short morons here try to dis me and always fail to understand nuance, but after 8 months of PWC in there thrashing around the financials for the last three years, the only changes noted have to do with tax treament. As I have been writing about for 4 months, the "visibility" part is obvious -- nothing but clean recertification coming right up, Ackman's last gasp is one of a scuba diver $1B underwater.
Your comments are ridiculous and demonstrate a comprehensive lack of capital markets and financial statements.
HLF's present and growing cash flow generation as well as the dividend relief associated with a leveraged takeout is ample to handle a rich LBO... the problem with trying to do an LBO is that the stock institutional sponsorship will likely want a substantial premium to the current valuation.
Longs can fret not; HLF's business plan outcomes, growing cash flow and aggressively taking out shares, will drive even better economics (share price realization over the next several quarters) for present shareholders.
Shorts? just plain old effd.
Stock up 36% now from where we came on vs kloppy calling us idiots and saying it's going to $20. LOL
What stocks are you talking about? Read my post again and see if you can figure out the difference between one day and the next 12 months. LOL
And then have a look at the week for both stocks, even though UAL held up.
UAL management does not compare with DALs; the numbers and track records speak for themselves.
I am "right" on everything else I said too, and i am sorry for being harsh on you...but i am weary of trying to discuss serious topics with the quality guys here while all the morons who don't even know the business or the company, let alone the issues here, try to dis me for airing legit issues. For those who have benefitted from things shared since last October, good for them. We've made serious coin here since, and anyone paying attention with us has too.
Good for you for not trying to give me S about my less than pleasant response to your post, but study what I wrote and see if you don't have something to learn from it.
Anyway, have a good weekend. Same to all the quality longtimers and newbies here.
that is one ridiculous post. The all time high is $116.
If anything right now, the chart reflects a broken stock having rollover from the recent topping pattern. It is decidedly not on a strong move higher and does NOT look posied to test all time highs. What the stock and chart does in the future will be all about reflecting what we got for news Wednesday and what happens with the key variables in the future...
Shorter term than a longer chart perspective, yesterday the stock benefitted from first blush on the headlines, panicked (unhedged) and likely mostly retail shorts, and a surprisingly good Q (I think we were the only ones expressing congrats to them Wednesday after the call), and we suspect a heavy and sloppy buyback effort from gmcr to ensure all felt good about not dropping.
Today analysts and people managing capital are unpacking the quarter, competitive and margin pressures, and letting the guidance on revenue growth sink in and trying to make decisions about buying, selling, covering or leaving the short hedges out there like we did at $85 until covering in just below $60 before the call.
It will be interesting to see where the stock is in a week and month. Like we said Wednesday night, we think you'll see $60 before you see $75.
you've always been a respectful and quality poster, so i'll try to recap
We know there are several non licensed players out there, and there are many licensed ones, in fact, way more and many important ones many of us thought would not renew last year starting with SBUX (at least for now). But we also know straight from kelley that there are all of the sudden and surprisingly several new players in the mix. For the longtimers who think some of the original knock-offs suked, they did. But PEET's various italian and French type of dark roasts, if you have not tried them and as i referenced with the stock at $85, are better than the best of gmcr's dark roasts which are surprisingly good too. Surely Whole Foods new ssare good too. I also think, and apparently many millions of SBUX drinkers agree, that SBUX ss kcups are better too, and same goes for the DNKN customers. Have you ever seen a margin breakdown on SS contribution by licensee? GMCR is not making close to the same margins on the SBUX and DNKN licensed ss pods as they are on their own label products... that in and of itself is a trend not analyzed or understood by even the analysts following the story, let alone these cheerleaders spelling drivel "dribble." LOL
But I digress, so back to the growing cadre of "new competitors" in the ss kcup playing field referenced by Smuckers (who also noted premium cups are killing growth in the lesser labels distributed by them)... licensed or unlicensed, the competition is increasing, a pernicious impact on gmcr's forward revenues and margins and contribution to pressuring operating margins. As for unlicensed players? let's focus on kelley's comments "large number of new competitors" and compare that to the "several" signed up for 2H14 (you noted this too) which he declined to quantify (several = less than a handful). When pressed by an anlayst, he said not gonna quantify, but said confident more would come into the fold.
See prior posts. "Uncle"