Friday, May 14, 2010

JC Penney -- Womens Shoes and Then What?

JC Penney (JCP) released results announcing improvements and giving guidance upwards. If you parse the earnings release they claim improvements in men’s, shoes and hand bags and children’s wear. They announce new or continuing merchandising efforts such as Sephora and Liz Claiborne. Meaning they are not happy with the women’s category.

If the men’s category went up I am not sure the economy is really improving. Probably a lot of Wall Street Guy’s buying cheaper shirts. I suppose they just want to tone it down for a while. Will this category keep some loyalty?

A notable lack of merchandising talk in the release. They just covered a few high level numbers and moved on. Hard for investors to identify deep value. We are just skimming the surface and dealing with the superficialities.

Disclosure: No position in this stock

Thursday, May 13, 2010

Arby's Stinks Up the Joint

Wendy’s/Arby’s (WEN) posted some disappointing numbers. The stock continues to maddeningly fluctuate around the $5 @ share range despite a share repurchase program. Wendy’s continues to execute while Arby’s stinks up the joint. They are hiring new guys to fix Arby’s and you have to wonder what is the vision?

Management is curiously short on information other than they think they have refinanced a large whack of debt. The disclosure challenge will be in the product and marketing announcements about new Arby’s offerings. The question becomes how fast and how soon. The clock is ticking.

Disclosure: No position in this stock

Wednesday, May 12, 2010

Moody's CEO McDaniels Lacks Credibility

Moody’s (MCO) smoking gun. In the what were you thinking category; New York Times DealBook reports today :

“Moody’s chief executive, Raymond W. McDaniel, exercised options on 100,000 shares that were promptly sold on March 18, the day the company received the Wells notice. The delay in disclosing the information only served to fuel suspicions that his transactions took advantage of inside information”

Not only has Raymond McDaniel ruined his credibility his actions make him look like a thief running from the scene. Warren Buffett has also been selling. What will Raymond say about the whole sordid mess?

Disclosure: No position in this stock

Macy's No Stated Merchandising Strategy Management Still Confused ?

Macy’s Inc (M) trumpeted their return to profitability and even increased guidance on revenue growth. But here are a few cautions investors should be aware of. In the press release they did no refer to any retail or merchandising trends or initiatives. They just spoke to basic numbers. This mean management is still reactive and not leading anything forward.

They seem to have increased cash on hand but short term borrowings are also up. No discussion in the earnings release on this issue. We can all borrow cash and put it into a bank account. What’s the point? Why was this done?

Disclosure: No position in this stock

Tuesday, May 11, 2010

Winn Dixie Customers Stop Eating Shareholders Starve

Winn Dixie (WINN) released results and on the earnings call blamed cautious eating habits in the south east of the USA. Peter Lynch the Chairman and CEO let it slip that store visits are down some 3.4%. Peter that’s because the consumer does not like coming to your stores. He did mention that they are working on their merchandising and other ways of attracting consumers with money in their pockets.

Meredith Adler of Barclays Capital did get Bennett Nussbaum SVP and CFO to admit that while he still has not discussed it with the Board Winn Dixie will become a net borrower in 2011. Board of Directors please consult your governance practices you should already be aware of this.

The stock has no dividend and the cash flow cannot keep up with capex. No discussion about when this critical factor will reverse and investors will see some real returns.

Disclosure: No position in this stock

Monday, May 10, 2010

Berkshire Hathaway Poor Disclosure on Foreign Bonds

Berkshire Hathaway (BRK.A; BRK.B) Warren Buffet’s wealth creation machine issued an earnings release for Q1. The release refers investors to the 10Q which has more comprehensive information.

The document does have a few tidbits which make you think.

Specifically Item #2 of the MD&A of financial condition and results relating to insurance investment income indicates that some $11 billion or approximately 33% of fixed maturity investments were invested in foreign governments.

No further information. The $11 Billion just hangs there. No break down on which country, length of maturity, foreign exchange risks if any. The same item explains that US government debt is “AAA” and state and municipal debt including the foreign debt is “AA”. Given that we are all worried about the Euro some more disclosure would have been nice.

Disclosure : No position in this stock