Published: February 25, 2021
SumZero offers the research insights of Scott Preston, Albert Lee, and Arham Khan on nano-cap wellness brand, Boomer Holdings. Ten of the top-performing ideas on SumZero last year fell under the small, micro, or nano-cap categories. We explore the upside potential of BOMH, which is positioned at ...
Published: October 29, 2020
The sports betting industry, bolstered by a 2018 Supreme Court ruling, stands to become a $8B+ industry in the next five years. Not only are companies like DraftKings integrating new risk management and digital wallet technologies to make the user experience more seamless, but sports betting repr...
Published: August 18, 2020
The news that Disney (DIS: US) plans to release the live-action version of Mulan with an additional $29.99 on-demand price tag to Disney+ subscribers shone a spotlight on one of the biggest questions impacting the film industry as the COVID-19 crisis continues to hamstring the economy: how will n...
Published: April 06, 2020
Wong Kok Hoi, founder and CIO of Singapore-based APS Asset Management has been bearish on JD.com for years. Last week, SumZero published his full-length short report on the e-commerce giant, whose $60B valuation he deems "unjustified". We sat down with Wong for an in-depth dissection of his thesi...
Published: February 20, 2020
Similar to paradigm shifts in the retail industry, virtual fitness technology is evolving to recreate the positive social incentives found in a gym or group exercise classes. Peloton (PTON:US) and Nautilus (NLS:US) are at the forefront of this transformation, but who will gain the long-term edge?
Published: January 24, 2018
Papa John's has recently been mired in controversy. When pressed on the firm's negative performance during a heated earnings call, founder and CEO (Papa) John Schnatter made incendiary remarks regarding recent NFL protests.
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: October 06, 2017
The finances of school districts nationwide were devastated by the financial crisis. Local funding for schools, generally based on residential property taxes, collapsed commensurately with property values. Hundreds of schools were shut down, and tens of thousands of teachers were laid off. Th...
Published: July 07, 2017
It's been a tumultuous week for Rite Aid amidst a high profile merger attempt with Walgreens and investigation by the Federal Trade Commission. Investor Brandon Paulson shared a long idea on Rite Aid a few months ago on SumZero, and though his original hope for a merger has been dashed, Paulson ...
Published: February 27, 2017
The theater industry has been threatened by at-home streaming services like Netflix and Amazon. Because of this competition, the market has moved its interest away from the industry’s biggest players. However, Donald Marchiony believes the time is now to invest in Cinemark Holdings (NYSE:CNK), th...
Published: October 23, 2016
After the 2013 documentary Blackfish revealed many troubling animal rights issues with SeaWorld’s iconic Orca Show, SeaWorld stock (SEAS:US) has tanked. Residual consumer distaste for the brand has remained strong...overly strong according to Marina Sitsiuhina, a former analyst at GE Capital and ...
Published: April 01, 2016
While many who frequent gyms scoff at Planet Fitness as "the gym that serves pizza", according to Ben Axler of Spruce Point Capital in New York, there is also reason to scoff at PLNT:US as an investment. Planet Fitness was able to IPO under the relaxed conditions provided under the Federal JOBS a...
Published: December 17, 2015
After years of government stimulus, China has finally begun to experience economic slowdown. While this is no secret to investors, Stanley Wang of Pareto Capital Management in Atlanta has identified what he calls “the Big Short” on the Chinese economy: Macau. Government stimulus yuan are flowing ...
Published: November 20, 2015
Simply put, Macy’s owned real estate is worth at least $26bn, whereas the Company’s enterprise value is currently $24bn; this implies that the Macy’s retail operation, which would generate over $600m of pro forma free cash flow (after factoring in increased rent, etc.) is worth negative $2bn. Thi...
Published: August 20, 2015
We think the current situation is an incredible opportunity from a risk/reward standpoint. Gaiam is a well-established, widely known brand that has just launched a new product line to greatly broaden its appeal <em>and</em> an incredibly high growth, recurring revenue streaming content business a...
Published: July 17, 2015
To better understand the athletic apparel landscape, we conducted numerous interviews with key industry players. We found that many were observing an unusual amount of discounting among Nike athletic compression products, which directly target many of Under Armour’s bestsellers. Significantly, al...
Published: June 11, 2015
There are probably four key metrics investors should keep an eye on with Revlon. The first is enterprise value-to-EBITDA, which is now 10x, while comps sit at 14x. The second is leverage, or net debt-to-EBITDA, since Revlon has a high level of indebtedness. As the company pays down debt with free...
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 15, 2014
We are pleased to announce the Winners, Runners-Up, and Honorable Mentions for the fourth and final leg of the <strong>FactSet Top Idea Tournament</strong>, the Large Cap contest. We would like to thank everyone who participated, including our esteemed Judges Panel, as well as our partner <em>Fac...
Published: October 17, 2014
We believe that the Board has a unique opportunity to monetize the Company at a very attractive valuation, but in order to do so the Board must act with urgency. We hope that the Company will do the right thing and take the required steps to maximize value for all shareholders. We look forward to...
Published: October 10, 2014
We are pleased to announce the Winners, Runners-Up, and Honorable Mentions for the second leg of the <strong>FactSet Top Idea Tournament</strong>, the Best Short contest. We would like to thank everyone who participated, including the judges panel, as well as our partner FactSet Systems for their...
Published: May 20, 2014
iRobot (Nasdaq: IRBT) has seen its stock rise irrationally due to investor speculation of a “Robotics Revolution,” caused by media, analyst, and investor hype over small investments by companies such as Google (GOOG) and Amazon (AMZN) in robotics. In reality, we believe IRBT is a struggling consu...
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: April 01, 2014
It's obviously not going to be easy for the company to turn around in a quarter or two, but with previously successful new management, solid fundamentals and the worst being priced into the stock with a short interest of some 20-21%, I believe LULU represents a solid opportunity for anyone that w...
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
<strong>Long on Volkswagen Ag (VOW:GR)</strong>
Contributor: Nick Poling, Volsung Management.
Current Price: $186.15.
Target Price: $215.00.
Expected Return: 15.5%.
Timeframe: 2+ years.
Elevator Pitch: Best-in-class, investing at a level peers cannot match. Deserves to trade at premium to p...
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: November 08, 2013
This high-quality luxury retailer admittedly faces competitive threats, but the stock is nearly discounting a worst case scenario. Has characteristics sought by both Graham and Buffett.
Published: October 17, 2013
At $58.88/share, WWW shares today trade at 21x 2013 consensus EPS and 17x 2014 consensus EPS estimates. A long investment in WWW shares present an asymmetric risk/reward profile whereby I see an opportunity for compelling returns and minimal risk of capital over a 3 year holding period. I expect ...
Published: September 27, 2013
A buyout opportunity is possible with the participation of an activist investor who has a proven track record of hitting 40-50% returns in 2-3 years as its third-largest shareholder. My target price per share is $25.35, representing a 57% return from the closing price of $16.16 on 9/13/2013.
Published: September 13, 2013
Special situation: merger between OMX and ODP enhances competitive position and unlocks value; deal risks overblown; Valuation obscured by "hidden" assets and "phantom" liabilities.
Published: September 06, 2013
A small Korean company has acquired some big brands through two separate LBO's since 2007. It turned around Fila, now it plans to sell the golf lifestyle in Asia with Titleist.
Published: August 28, 2013
Heavily shorted, dirt cheap company with excellent management. Suffering from temporary industry headwinds that will abate.
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: August 15, 2013
It is important to understand what makes QVC such a structurally good business. Approximately 75% of the products sold on QVC are exclusive, reducing direct competition with other retailers. The use of on-air hosts to promote products engenders consumer trust and loyalty and is an effective way t...
Published: August 08, 2013
As a shareholder of Outerwall, Inc. (Nasdaq: OUTR) (the "Company"), we are very concerned about the Company's current direction. While the Company has seen EBITDA from its Redbox unit grow from roughly $50 mm in 2008 to over $400 mm expected in 2013, the Company's market capitalization has yet 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: May 16, 2013
Ruby Tuesday is a strong value play that is in the midst of a turnaround. There's a built-in safety net thanks to in store sale leasebacks, consistent cash flow yield, continuous debt paydowns. There's new management in place, new concepts in development; all while the stock trades at a discount ...
Published: May 08, 2013
A private equity buyer could take Croc’s private at ~8.5x EBITDA, with modest leverage. Including off-balance sheet operating leases, the lease adjusted leverage is only 2x today, that could support at least an additional 4x. The PE firm would need to bring retail expertise in order to help execu...
Published: April 18, 2013
I recommend buying CDS or shorting stock on JC Penney. Under recently fired CEO Ron Johnson, the company has burned cash ($820 mil LTM) and just had to drawn $850 mil on its revolver.
Published: March 28, 2013
A confluence of potential events makes TIF an attractive short opportunity. If you think that any 3 of the following 6 catalysts will occur, consider shorting TIF. These include: Broad USD strength, Japanese economic shock, brand fatigue, European economic crisis, US market correction, or a China...
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 28, 2013
SKUL has been a dog, but there is a good chance its net sales deceleration is stabilizing – at least for the next quarter. On the Q3 conference call, SKUL management tightened the FY 2012 guidance to $290-$300M from the previous range of $280-$300M. This is a fairly noteworthy event as $280M in ...
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: December 05, 2012
American Apparel is trading at $1.00 despite increasing Same Store Sales for the past 18 months in a row. The company has stated in the past announcements if store sales continue to trend higher, the company will refinance their existing high cost debt which should trigger significant upside to t...
Published: December 03, 2012
We believe Martha Stewart Living is a compelling turnaround story with a very favorable risk/reward profile. While sporting an enterprise value of just $168.0 million, Martha Stewart Living brands include “Martha Stewart,” one of the world’s premier lifestyle brands, as well as “Emeril Lagasse,” ...
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: November 19, 2012
A weak tape, illiquidity, and (presumably) a seller playing for a takeout have created a unique opportunity to own a strong regional QSR operator with 10%+ unit growth, FY13 commodity tailwinds, and recent top-line momentum at a steep discount to its peers and its own historical valuation.
Published: November 14, 2012
Despite the macro headwinds in Europe, the returns on ANF’s international stores are excellent (35%+ after incremental non 4-wall costs) and its Direct-to-Consumer business continues to deliver healthy revenue growth (20%+) and operating margins (40%+).
Published: November 08, 2012
Being relatively easy to model and owning a unique franchise with an established reputation, ADT has multiple paths to reach increased value via achievable rev. growth from the existing subscriber base and B/S recapitalization. Currently, this orphaned equity is likely mispriced due to unclear pl...
Published: October 29, 2012
Public peers like Estee Lauder and L’Oreal currently trade for around 13x EBITDA on a total enterprise-value basis, with market cap. to free cash flow multiples of about 25x on average. Revlon, at today's closing price of $15.10, trades at a TEV/EBITDA multiple of 8x and a mkt. cap./FCF multiple ...
Published: October 11, 2012
CCL is setting up to outperform. After the tragic Costa incident and as fuel cost pressures abate, CCL will deliver both growth in EPS and FCF into 2013. The company took FCF guidance from flat to $450mm in 2012 and we expect to see almost $2B in 2013. CCL has left significant room to do $2.00 in...
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: July 16, 2007
RICK just exited Las Vegas (Q3’11), which had been a disastrous acquisition and a drag on numbers since ’08. RICK was losing ~$2 million per year in Las Vegas, which equates to an incremental $0.13 in EPS. By exiting Las Vegas, RICK will also realize $4.9 million in tax benefits (according to the...
Published: July 11, 2012
The problem at P&G is more on innovation and the complacency than execution. P&G used to differentiate themselves by a huge pool of innovative products, branding strategies and full analysis of consumer behavior. Those edges faded away in recent years, especially after the turmoil in 2000.
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.
Published: June 25, 2012
Generally the purpose of the SumZero site is to present obscure companies trading at significant discounts to their underlying intrinsic values. However, periodically "Mr. Market" undervalues large, well-known, blue-chip, high quality companies. I believe Procter & Gamble (NYSE: PG) is in this ca...
Published: May 30, 2012
Deckers shares have declined 32% in 2012 as an unusually warm winter negatively impacted boot category sales (consumers postponed boot purchases) and rising sheepskin costs pressured margins. However, Sheepskin costs recently declined 35% from the peak prices and a growing sheep flock in Australi...
Published: May 24, 2012
99 Cents Only Stores NDN agreed to sell itself to Ares Management LLC and Canada Pension Plan Investment Board for $22 a share, in a transaction valued at about $1.6 billion. The multiples paid for the transaction were as follows: P/S = 1.1x, EV/EBITDA = 9x, EV/EBIT = 11x, P/E = 20x. If BIG were ...
Published: May 07, 2012
<em>(The short call on GMCR was featured in a past SumZero Weekly Market Dispatch email)</em>
“I know it is tough to short on valuation alone, but this short is motivated by consensus management selling and in large size. The CFO has sold 38% of her shares, General Counsel 87%, President 13% O...
Published: September 11, 2012
Contributor: Matthew Stolzar
Firm: Independent
Location: New York, NY
Recommendation: Long unsecured CZR 5.75% 10/1/17 notes
Timeframe: 2 Years and Beyond
Quick Thesis
Caesars Entertainment Corporation (the “Company”), formerly known as Harrah’s Entertainment, is a casino entertainment ...
Published: September 11, 2012
<em>(The following is an abbreviated pitch pulled from the SumZero community)</em>
Source: Eden Chen
Firm: Lightmark Capital
Type: Hedge Fund
Location: Los Angeles, CA
Recommendation: Long
Recent Price: $68.66
Target Price: $95.00
Timeframe: 6 Months to 1 Year
Quick Thesis
At curr...
Published: September 11, 2012
<em>(The following is a condensed write-up from SumZero composed by one of the site's buyside professionals)</em>
Source: Hedge Fund. New York, NY.
Recommendation: Long
I propose a long investment in priceline.com (Nasdaq: PCLN), with a price target of $739/share to be reached within 12-...
Published: September 11, 2012
PetMed Express (Nasdaq: PETS)--Long
Current Price: $11.69 Target Price: $15.00
Source: Hedge Fund. New York, NY.
Quick Pitch: Expectations are rather low (from sellside analysts as well as the buyside with 26% short interest). The company's small beats the last couple of quarters have sent t...
Published: September 11, 2012
SumZero Analysts Following Aeropostale: 28
SumZero Investment Reports on Aeropostale: 15
<strong>SumZero Community Sentiment:</strong>
<em> <strong> 82% Long</strong></em>, 12% Hold, 6% Short
<strong>SumZero Consensus Price Target:</strong>
Mean: $22.63 per share
Median: $25.00 per shar...