[EBAY – eBay] Dilemma and Opportunity

After having not followed eBay for a long while, I tuned into eBay’s Seller Summit in late 2015 where the company laid out its structured data agenda, intensifying its strategic move away from the messy, spectrum-of-value bazaar of an earlier .com era – when, in the absence of 2-day shipping and consumer experience, broad selection […]

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[LEN – Lennar] Sum-of-the-Parts Valuation

Conservatively, the US needs to build about 1.3mn homes annually (MF and single-family) to keep pace with household formation (population growth + “headship” rates) and secondary home demand, and replace destroyed housing stock.  Based on Census Bureau data, it looks like we overbuilt by around 3.5mn units from 2000 to 2007 and underbuilt by 4.1mn […]

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Quickblurb [AXP – American Express; SAP – SAP SE]

[AXP] Mounting pressure on multiple fronts could collectively confound the Street’s expectations of low double digit EPS growth in 2018 and 2019.  [As you’re likely aware, AXP primarily differs from Visa and Mastercard in that the company, in addition to running a payment processing network like its peers, also: 1) issues credit cards (i.e. makes loans) […]

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[DAL – Delta Airlines, UAL – United Continental] So You’re Saying There’s a Chance?

Call me a sucker, but I’m tentatively a believer.  With both stocks priced at under 10x trailing earnings (and 11x forward earnings assuming 1%-2% guided margin compression in 2017 at DAL), the market is skeptical about margin sustainability.  Given the industry’s ignominious legacy of undisciplined competition, where the dumbest competitor has historically set the price […]

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[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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