Orchid of the Day–AutoNation (AN)

April 2nd, 2014 No comments

-AutoNation CEO went on CNBC and was extremely bullish on current sales trends and his confidence on auto sales for the rest of the year

”happy to declare the epic winter of 2013 officially over”
business in the last 10 days of March was simply phenomenal..that follows 10 weeks of (low showroom traffic)”
”going forward..16 million will be achieved..confirmation consumer is coming out of hibernation..will probably have a very strong spring market”
now say confidently the industry will break through 16 million for the year”

Why is it good news for AutoNation?
-Confidence in good business trends and a recent up-turn inflection point in the business is positive for AutoNation fundamentals

Categories: Orchid/Onion

March ISM Manufacturing 53.7 vs. 54.0 Estimate/53.2 Prior

April 1st, 2014 No comments


Categories: News

March Rotation in Technology from Growth to Value

March 30th, 2014 No comments

Every time Jeff Gundlach does a presentation he has a segment where he talks about the “bloodless verdict of the market” on recent price action moves of various instruments and sectors.

Since I focus on the consumer technology sector, I’d be amiss to not document the significant rotation from tech growth names to tech value names in this month of March. It has been a stunning move. I’m not really sure what was the catalyst behind the timing of this rotation, but we shouldn’t ignore it. If you have a good theory or thesis on why this is happening now, let me know by emailing news(at)firstadopter(dot)com. Here are some of the examples on my screens:

Value Technology Companies (Lower Earnings Multiples)







Growth Technology Companies (Higher Multiples)







Categories: News

Onion of the Day – Rackspace (RAX)

March 25th, 2014 No comments

-Google announces massive new cloud price cuts from a 32% price cut across the board, a 68% price cut on storage, and a 85% price cut on queries Link

Why is it bad news for Rackspace?
-Large price cuts by cloud competitors significantly pressure Rackspace cloud business margins

-New York Times: “Prices would continue to fall roughly in line with Moore’s Law, Mr. Hölzle said” Link 

This quote above means Google intends to keep pricing very low going forward

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h/t @Colin_Sebastian

Categories: Orchid/Onion

Stephen Mandel’s Investment Check-List

March 8th, 2014 No comments

Lone Pine’s Stephen Mandel is widely regarded as one of the best bottoms-up fundamental portfolio managers out there. He also has a great reputation for managing his employees well, which is rare in the hedge-fund industry.

One of the keys to Mandel’s success is he gives check-list guidelines for his analysts to follow in what he wants for longs and shorts. Given Lone Pine’s success over the years, I would say the guidelines are working.

For long ideas Mandel wants:

-sold return on capital
-good cash flow
-prudent balance sheet
-competitive barriers (aka moat)
-strong management team

Mandel focuses on the long-term opportunity market size. He wants to see a long runway for growth where a company can reinvest capital at a high rate of return. That’s why he loves retail roll-out stories because if a retailer is successful in one region it is likely to be successful nation-wide.

For short ideas Mandel wants:

-avoid private equity targets (companies with good cash flow etc.)
-competitively challenged (aka no moat)
-fads, 1 product companies
-falling knives (results will be much worse than consensus)

For his price targets on solid growth companies, Mandel’s analysts model earnings 2 years out and are willing to put a 25Xs earnings multiple on that forecast. The game-plan is one year later the company will be valued at 25Xs forward earnings with the stock hitting the analyst’s price target as consensus catches up to Mandel’s analyst earnings estimate.

Categories: Articles

Full Price War. AT&T Cuts Mobile Plan Prices Again

March 8th, 2014 No comments


AT&T cut prices for the second time this year. Single-line 2GB plan will now be $15 cheaper to $65/month. The company is also offering a new line $100 bill credit promotion for the month of March for new and existing customers. Source: AT&T

Categories: News

T-Mobile Changes Plan Pricing and Features

March 8th, 2014 No comments

The major changes are doubling the 4G LTE data allotment from 500MB to 1GB in the low-end $50/month Simple Choice plan, adding a new 5GB plan for $70/month, and raising the unlimited 4G LTE data plan by $10 to $80/month.

T-Mobile’s chief marketing officer told the Wall Street Journal raising prices for unlimited customers “partly reflects the cost of providing such plans.” Data use is “soaring” with customers using 50% more data year-over-year. Source: T-Mobile

Categories: News

February Jobs Report

March 7th, 2014 No comments


The February jobs number beat expectations as the impact of weather was lower than expected. After an initial rally, the market closed around flat (+0.05%). Most pundits now fully expect the Fed to continue the $10B/month taper on the modest employment numbers.

Categories: News

IPO Metrics Comparable to 2007 and 2000

March 6th, 2014 No comments

first two months of this year, 42 companies went public..raising $8.3 billion..tying 2007 for busiest start to a year for initial public offerings since 2000

investors are bidding aggressively for newly minted shares this year..paying median 14.5 times annual sales compared with six times in 2007..at the height of the Internet frenzy in early 2000, they paid a whopping 30 times – Wall Street Journal

So the median IPO this year is going for 14.5Xs sales vs. 6Xs in 2007 and 30Xs in 2000. This could be bullish if we’re going to 1999-2000 type heights or bearish if we’re extended beyond the 2007 top.

Categories: News

Disney Actively Selling Internet Streaming Channel and Program Rights

March 5th, 2014 No comments

DirecTV is in talks with Walt Disney Co to license the rights to offer Disney’s broadcast and cable channels as part of an Internet-based product, DirecTV said on Wednesday.

The deal would mirror a first-of-its kind agreement that Disney and satellite rival Dish Network Corp announced earlier this week.

The agreement between Dish and Disney marked the first time that a U.S. pay TV operator has been given the flexibility to offer its content over the Web through smartphones, tablets and computers outside of a pay TV subscription.

In that agreement, Disney allows for Dish to stream linear and on-demand content from ABC broadcast stations as well as cable channels, ABC Family, Disney Channel, ESPN and ESPN2. Dish has not revealed plans for its streaming service. – Reuters

For the first time a major content provider is offering the ability for a pay TV operator to sell their channels through video streaming and on-demand over the internet. It remains to be seen whether this may lead to smaller bundles, which would drive more cord-cutting. This could be is a big step away from the traditional cable TV model.

If DISH and DirectTV push an internet offering hard, it may force Comcast, Verzion, and AT&T to add more stringent bandwidth caps to their internet data subscribers as they lose more TV video subscribers.

Categories: News