Goats and CROX
My recent roadtrip across the country was the longest I have been unplugged from Wall Street since the late 1980’s. Everybody has their breaking point and I had hit mine. Some species of locust appear every seventeen years, I will unplug every seventeen.
Imagine my surprise when I booted up the trading turret to discover CROCS, Inc (CROX-NASDAQ) had traded up 30 points during my brief absence.
Last November I weighed in with these comments…
Battling valuation insensitive growth stock investors can be a trying experience for short sellers, and in this case the longs might not be satisfied until every Tom, Dick and Harry own a pair in each and every color.
CROCS shareholders are no doubt tripping all over themselves in their clumsy clogs celebrating a new high in the shares. To be sure, third quarter earnings were a blowout and management continues to execute smartly against their plan...and have clearly mastered the game of “under promise and over deliver”.
Eventually the stock will have a nasty pullback...but will it happen from levels twice the current quote?
Well, here we are, with the stock a double since Halloween. And I still have yet to meet anyone who admits to be short the name.
But there are notable winners in the shareholder base. Although it looks as if SAC might have moved on after extracting a few pounds of flesh from the shorts, Mazama Capital has been along for a very profitable ride.
From what I can figure they have made at least $200 million from the position, maybe more. Good stuff for Gretchen, their consumer analyst. No doubt their mascot will be eating well too…
MAZAMA, n.: A sure-footed and agile mountain goat native to the northwest mountain ranges of North America. Mazamas are frequently found navigating the highest peaks of their native terrain. Having curved black horns and rugged white hair and beard, Native Americans also called this animal the “wisdom of the mountain”.
Large positions like this can make a firm like Mazama. Great job. For those of you not lucky enough to have access to Gretchen’s expertise, there is another blonde to watch. And shopping is her gig too…
CROX-Ah yes . . .the stock everyone loves to hate. Ok, I’ll admit it. They’re hideous. I have made fun of these shoes since the day they came out. Boy was I wrong. At approx. $30 bucks a pair, I bought three, just to feel like I wasn’t robbing the joint. I haven’t paid less than a hundo for a pair of shoes in like . . .forever! Moreover they are comfortable! OMG I am OBSESSED! Kids love them because they can take them on and off at will by themselves! Parents love them: no Velcro, no laces, and no buckles! Fat people love them. Gardeners love them. Nurses Love them. Chefs love them. Ok—so they’re made from the dregs of Petroleum sludge. . . who CARES? EVERYONE LOVES THE CROCS! This is where I find this stock unique-they created a niche market for themselves: a multipurpose shoe that multitudes of demographics NEED to HAVE. And that is the key people—something I need in my closet that I don’t already HAVE. And—to make the Crocs people even MORE brilliant . . .they bought this crazy little company called Jibbitz. Jibbitz are little charms that you can stick into the holes in your Crocs and . . . personalize them. Think about it as a charm bracelet for your shoes. FANCY! At $2.50 a pop—parents are handing over their wallets. Brilliant. Talented Blonde
Although I initially thought Crocs were clumsy, I have learned how to heel-and-toe in mine. I won’t tell the shorts to cover here. But at least stay out of the left lane guys, assuming you can still make your car payments.
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The content contained represents the opinions of 1440 Wall Street. This commentary in no way constitutes a solicitation of business or investment advice. It is intended solely for the entertainment of the reader, and the author. No position in CROX
Michigan: Turn Out the Lights
My recent travels led me to the Motor City in search of something positive to write about. Alas, it was not meant to be, although the Tigers were rocking Comerica Park the day I caught a rare day game with an old college roommate...who had just lost his job.
Michigan’s unemployment rate of 7.1% leads the nation, which averages 4.5%. The state’s governor is about as popular with residents as Eliot Spitzer was on Wall Street...before his recent flip-flop. Loser.
Several executives of publicly-traded homebuilders have used the word suck to describe business conditions recently. Thankfully, the captains of the auto industry show more discretion, as they likely have more to complain about.
Fortunes change rapidly in the auto industry, however. in 1897 Charles B. King decided to pursue the manufacture of gasoline engines for the marine market after venture capitalists shot down his efforts to build engines for automobiles. Who could blame the VC’s?-only four automobiles prowled the mean streets of Detroit in 1897.
Still, Henry Ford was able to find savvier VC’s in 1899 and formed the Detroit Automobile Company in August of that year. Unfortunately he was out of business within eighteen months.
Thus, Ransom Eli Olds of the Olds Motor Works was the undisputed king of auto’s in 1900. Indeed, by 1902 the Curved Dash Oldsmobile (pictured below) was the best selling automobile in the country. Olds was on a roll, growing revenue from 410k in 1901 to $2.3 million by 1903. Ransom Eli Olds had it made. And Ford was plotting a comeback.
The heady success lead him to raise additional capital to expand his business. This move substantially diluted his voting control and by the summer of 1904 the new financial backers of the company were firmly in control, and Olds was out of the company he founded. But Olds was not done and went on to build trucks-the R.E.O. Speedwagon.
The cyclical auto industry’s fortunes have waxed and waned over the past century. But lately the news has been dire. Oldsmobile was shuttered by General Motors and Michigan’s unemployment rate is currently higher than Mississippi’s.
In just a few minutes from the time this entry posts, the Ford Motor Company will close the doors of its Wixom, MI plant, long the home of the Ford Thunderbird. Wixom produced more than 6 million cars over its 50 year history and employed nearly 6,000 workers and 280,000 cars at its peak production.
As part of Ford’s downsizing, there are only about 1,100 workers left at the facility at its closing. Most will be retiring or moving to another Ford plant elsewhere. Others will be offered an educational buyout where they will be compensated for necessary re-training in another field. Wixom’s assembly line was over 15 miles long.
Lincoln Mark series and Continentals as well as the Ford GTs were also produced there during its operational life. The plant will be celebrating the rich history of Wixom by holding a final party this Saturday, the Wixom Legacy Celebration, which will honor 50 years worth of past and present employees.
Farewell Wixom
Hemmings Auto Blogs
Michigan is in a one-state recession. Is it any wonder the likes of Wilbur Ross are snatching up auto-related assets?
Wilbur knows how to profit from the changes. Michigan needs to learn how to Roll with them.
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The content contained in this blog represents the opinions of 1440 Wall Street. This commentary in no way constitutes a solicitation of business or investment advice. It is intended solely for the entertainment of the reader, and the author. No position in securities mentioned
Best Execution
Do you run fast money at a big money shop? Your days go by in a blur...meetings with CEO’s, rubber chicken roadshows, brief conversations with dodgy people, and lame blogs. They all compete for your time.
Oh yeah. You have to buy and sell things from time to time. On a “Best Execution” basis:
In deciding how to execute orders, your broker has a duty to seek the best execution that is reasonably available for its customers’ orders. That means your broker must evaluate the orders it receives from all customers in the aggregate and periodically assess which competing markets, market makers, or electronic communications networks (ECNs) offer the most favorable terms of execution.
Some of the factors a broker needs to consider when executing its customers’ orders for best execution include: the opportunity to get a better price than what is currently quoted, the speed of execution, and the likelihood trade will be executed. SEC
And don’t forget about “price improvement”.
And you don’t even have to pay the brokers. The squeeze is on.
The average broker fee on New York Stock Exchange-listed shares fell to 3.9 cents a share in 2006 from 4.2 cents in 2005. In the late 1970s, that figure was 12 cents. Total U.S. stock commissions fell to $10.8 billion in 2006 from $13.4 billion in 2002, even though trading almost doubled during that time.
Many buyside shops continue to reduce the number of brokers they trade through, not exactly great news for small and mid-cap managers who deal with boutiques and regional brokers day in and out.
How will the smaller guys survive? Will all institutional trading end up at 25 sell side shops and a few dark pools? Commission sharing arrangements are nice in theory...but checks are not always cut from my experiences.
Big brokers stand to gain the most from such changes, says Larry Leibowitz, chief operating officer for U.S. equities at UBS in Stamford, Connecticut. Small brokers will get squeezed out, he says.
``Investors don’t need to trade through 150 brokers,’’ Leibowitz, 46, says. ``They may need them for research, but they can use commission-sharing agreements for that. It’s harder to get best execution from the smaller shops, although some certainly can provide it.’’
Earth Day 2007
Saving the earth is no laughing matter. Everyone reacts differently to the issue, famous venture capitalist John Doerr even shed a few tears over the state of the mother ship, but that is his choice. To each his own.
For some reason green issues seems to bring out the worst in people, who knew saving the planet would be so controversial?
Sheryl Crow vs. Joe Kernen. Bloggers mocking the movement and Al Gore. I am willing to at least hear out the tree huggers...just don’t make me get in a bio-diesel bus and drive across the country with Laurie David.
Speaking of green, The Sustainable Blogger was one of the sharper bulge-bracket institutional sales types to cover the second-tier vanilla shop that provided a roof over my head for a decade. Get used to him, he will soon be part of the fabric around these parts.
A Bird, A Plane, A Green Gas Station?
As any true capitalist knows, the world keeps spinning, gasoline fired engines continue to dominate, and BP will continue to pump millions of gallons of gasoline.
From behind the 25 foot, white shrouding, covered with pictoral green grass blades emerged BP’s Helios House. Dubbed ‘A Little Better’, this gasoline station probably is…….. And a stunning architectural design to boot.
Envision a roof garden that makes use of ‘gray water’ to quench the drought resistant plantings that serve to shrink the ‘heat island’ effect. A welcomed innovation in thirsty Southern California where after all, this is a desert.
Imagine a network of solar panels that produce enough energy to not only power the station but also have the capacity to sell a touch back to the grid. Sun we have plenty of, so panel up cowboy, it’s Earth Day.
Is Semel Toast?
Jim Cramer lead off his Mad Money show last night by putting Terry Semel on the “Wall of Shame”. The Street is turning up the heat on Semel.
London is half a world away from Semel’s west coast office, but even the Brits are calling for his head. The departure of the head of Yahoo!’s European division is fanning the flames:
Rumours of a likely management purge gained ground as Yahoo! revealed that Dominique Vidal was leaving as head of the European division. The move is the latest in a number of high-profile departures
If Google blows the numbers out tonight the Bronx Cheer will only grow louder:
The squeeze on Mr Semel, the former Warner Brothers boss, is likely to worsen today, when Google announces its quarterly results. Already the runaway leader in search-based advertising, Google last week beat Yahoo! in the race to buy DoubleClick, the biggest independent broker of online display — or banner — adverts. The $3.1 billion deal gives Google massive presence in an area where Yahoo! previously held the upper hand.
Under Mr Semel, Yahoo has set its sights on Google’s core search business, billing Panama as its key weapon. While most analysts are willing to wait until the second quarter for evidence of its impact, there are growing indications that the grace period will be brief. Times Online
True, there is nothing new in those reports from London...and the lynch mob has forgotten that Semel never said that the first quarter was going to be the breakout quarter…
January 24, 2007
‘’The first time we see any benefit will be at the end of the second quarter,’’ he said in an interview yesterday. ‘’Every quarter thereafter we will start to get better.’’
Mr. Semel said Yahoo would not see the full impact until 2008, when the system will be expanded to international markets. NY Times
But it does not matter. Semel is a marked man.
Will Sue Decker replace him in the corner office? The consensus thinking still has her the front-runner.
The puke in the stock could start up the Microsoft for Yahoo! rumors again.That might keep a bid under Yahoo!’s stock. But in the event of a deal there would be a clear winner.
They report tonight.
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The content contained represent the opinions of 1440 Wall Street. This commentary in no way constitutes a solicitation of business or investment advice. It is intended solely for the entertainment of the reader, and the author. No Positions
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