Published: October 23, 2017
Walmart's stock has risen over 25% in the last 6 months. This has been hugely surprising to analysts, with the company surging past most sell-side estimates. The retail giant has recently been facing several well-publicized headwinds, which seem to be having to bearing on its stock price. The...
Published: June 25, 2015
When Groupon went public, it was generating nearly all of its revenues through local coupons and deals. The company acted as a middleman by allowing merchants to offer special deals to its user base, achieving gross margins upwards of 80% in the process. However, this business model had very litt...
Published: June 05, 2015
SumZero asked Daniel Osowsky, long-time SumZero member and founder of Santa Monica based Osowsky Capital, to discuss his recent investment into retail giant Bed Bath and Beyond (BBBY:US). Since Osowsky posted his long recommendation on SumZero in late 2014, the stock has appreciated a meaningful ...
Published: April 24, 2014
We believe that this premium valuation is due to erroneous expectations of significantly improved earnings in future years through a successful turnaround, and perhaps more importantly, hope that FDO will be acquired by DG, WMT or perhaps even the target of a leveraged buyout. Acquisition risk is...
Published: February 28, 2014
Recommending a long investment in Kroger with a 1 year target of $47. KR represents an opportunity to invest in both stability and growth at an attractive valuation (20% discount to S&P). While the industry has grown annually at 3.2% with only one down year in 10 years (-0.1% in 2009), KR has gro...
Published: January 23, 2014
So Bad Its Good - JCP will stabilize and valuation will come back to reflect ongoing concern. JCP has seen unprecedented same store sales drops as it tried to change its image. This has ended and they have bottomed on the sales losses. If JCP can stabilize sales and margins then they would have E...
Published: December 17, 2013
In an environment with increasingly fewer undemanding valuations in the consumer space (though in itself not a reason), Foot Locker offers an interesting value proposition: A company with a relatively dominant market position in its industry (>20% market share and >3x as big as next biggest pure ...
Published: November 21, 2013
Pier 1 Imports Inc missed 2Q13 earnings due to what appear to be transitory execution issues of a lack of marketing emphasis on value during a very promotional period and failure to adequately display newness due to an overemphasis on outdoor furniture, all during the final period of peak investm...
Published: August 22, 2013
We have talked to ice hockey players who value BAU equipment at a premium and trust the performance (any feedback from players welcome). The equipment market in ice hockey is a rounding error for Nike et al. The market is roughly $650m in size. It is not worth allocating resources towards due to ...
Published: May 24, 2013
The initial taste in people’s mouths when they hear of a Sears’s spinoff is what initially drew us to the situation. Over the last seven years, many value investors have fallen into the “SHLD” trap hoping that the market will value the assets on a “sum of the parts” / liquidation value higher tha...
Published: March 21, 2013
BBBY is still growing, albeit at lower rates, maintaining superb margins to other retail competitors with seasoned management developed in-house and most importantly, generating a massive amount of free cash flow. It also boasts a remarkable track record of sound capital deployment with high retu...
Published: February 01, 2013
Let’s start with the base retail business. It reminds me of an old Saturday Night Live skit where a banker explains that his business plan is making change. ‘we’ll give you 5 nickels for your quarter. We can even give you ten pennies for your dime…How do we make money? Simple: Volume!’ Do you rem...
Published: November 29, 2012
While 2012 has been a year of disappointment, there is still very much reason for optimism in the case of the JCP turnaround. While SSS and SSF have declined more dramatically than anticipated, management has succeeded on the cost cutting front and the new JCP, while still very small, has exceede...
Published: September 26, 2012
We have the opportunity to invest in a simple retail business that is misunderstood by the market. We recommend going long the stock, ABS bonds and ASC bonds as yield to event will offer a nice return.
Published: September 19, 2012
I would like to suggest a long Walgreen’s (WAG) / short CVS (equal size) pair trade. Currently trading at $35.67 and $47.43 respectively. I expect a 20% return on the long/short position over the next year, with no market or industry correlation.
Published: June 27, 2012
The story here is that Hanesbrands will be able to delever the balance sheet using the strong free cash flow it will generate over the next two years as cheaper cotton prices run through its cost structure and the Company realizes benefits from decreased inventory levels.