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Author Archives: scuttleblurb

[IBKR – Interactive Brokers] Low Volatility Weighing on Commissions; Valuation Still Attractive

IBKR began as an electronic market making platform for professional traders at a time when market making was still mostly being conducted via open outcry.  Its foundation of technology and automation ensured transactions at the lowest cost and fulfillment at the best possible price, core capabilities that it later brought to bear in launching its brokerage […]

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[SVU – Supervalu] Opportunity Post Save-A-Lot Divestiture?

(959 words) Ugly few years for this poor grocer, but the implied valuation of the core wholesale business looks like it could be interesting post recent Save-A-Lot divestiture (discount grocer). The company used most of its $1.3bn in gross proceeds ($1.24bn after taxes) to significantly reduce its debt load by $1.1bn (total PF net secured/net […]

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[ADS – Alliance Data] Form vs. Function

In form, ADS is a bank.  In function, it is a loyalty company that helps retailers drive customer engagement and top-line growth.  The Citron short report from Aug. 2016 fails to recognize this distinction, essentially arguing that because ADS’ private label business literally makes money like a bank, it should trade like one.  But it […]

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[GBX – Greenbrier] Valuation About Fair on Normalized Railcar Shipments

(862 words) GBX (1/6/17) The industry’s long-term average railcar deliveries are around 45k-50k units/year, so even after the decline from ~82k deliveries in 2015 (tank cars for crude and railcars for coal got smoked as commodities cracked), 2016’s 60k units are still running above normalized levels as units have been since 2012.  GBX’s own backlog […]

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[PPG – PPG Industries] High Quality Specialty Chem with Share Gain Opportunities

PPG is a soundly capitalized century+ old global[1] coatings manufacturer that has averaged low-teens unlevered after-tax return on capital over the last two decades[2] and whose stock I toe-holed at 15x trailing earnings after the Company pre-announced disappointing 3Q earnings on volume weakness in Europe, where it had previously witnessed relatively strong growth. Our daily […]

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[DF – Dean Foods] Levered Commodity Processor, Impending Challenges

Dean is a levered commodity processor sandwiched between fragmented but price-protected dairy producers and consolidated retailers, donating market share in a secularly declining market to undisciplined, subscale peers.  Its stock trades for 16x management’s charitably adjusted EPS,[1] a full market multiple for a narrow-moat business. The environment in recent years beckons 2007-2010: 1) a period of rapidly […]

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[BRO – Brown & Brown] Compounder in a Fragmented Sector

“He wasn’t just saving his own soul when he donned his coat and hat after dinner and went out again to resume his work – no, it was also to save some poor son of a bitch on the brink of letting his insurance policy lapse, and thus endangering his family’s security ‘in the event […]

[DDMG – Digital Domain] Confused Corporate Strategy, Few Sustainable Advantages

Overview Digital Domain Media Group, Inc. (“DDMG” or “the Company”) is a short because it loses money, has had questionable related party transactions, a confused corporate strategy that could lead to further shareholder destruction and few sustainable competitive advantages.  DDMG has ~43mn shares outstanding; ~35mn of those shares are under a lock-up agreement that expires […]

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