Schadenfreude: reposting a 2011 post on Sears

I posted on Sears in 2011

They finally filed bankruptcy.

I am surprised it took that long.

Here though is the post again. It reads okay.

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We have been short Sears Holdings, publicly, albeit in small quantity. Being summer in Australia I did not even look at the market for the last couple of days - but got into work for some congratulatory emails as Sears stock is off very hard on an announcement of truly awful sales, the closure of 100 to 120 stores and $1.6 to $2.4 billion of non-cash charges. (More about the charges later on.)

I look pretty smart putting a Sears short on in November - and kudos is gratefully accepted but undeserved. I was short Sears at my old firm when the Eddie Lambert controlled K-Mart took them out for considerably more than they were worth. It was
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The last day of the quarter (Tesla edition)

Hedge fund managers who actively trade to produce profit specifically on the last day of the quarter should be treated with scorn. They are marking their book and that is bullshit.

It doesn't mean that it doesn't happen. Just treat it with the contempt it deserves.

Companies that do things to produce results on the last day of the quarter should be treated with similar scorn. Channel stuffing, shifting expenses into the next quarter and other forms of abuse lay there.

I am completely staggered by an SEC filing by Tesla today detailing an email by Elon Musk to staff. I will quote in full:

EX-99.1 2 tsla-ex991_6.htm EX-99.1
Exhibit 99.1 
The following e-mail was sent by Elon Musk to all employees of Tesla, Inc. on September 30, 2018.

We are very close to achieving profitability and proving the naysayers wrong, but, to be certain, we
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Crypto Pot Stock

There is a point in the cycle when it is impossible to separate comedy from stock promotion.

Examples in the past:

But now the promotes are crypto and marijuana. So I give you this from a genuine promotional email. I could not make this up. Needless to say I do not recommend buying this stock.




ATTBF Is The ONLY Cannabis-Crypto Stock
YOU Need To Watch On Monday!
Dear Fellow Traders,

My New “Crypto Pot Stock” Alert for Monday is: ATTBF

ATTBF Joins The
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Crypto Pot Stock

There is a point in the cycle when it is impossible to separate comedy from stock promotion.

Examples in the past:

But now the promotes are crypto and marijuana. So I give you this from a genuine promotional email. I could not make this up. Needless to say I do not recommend buying this stock.




ATTBF Is The ONLY Cannabis-Crypto Stock
YOU Need To Watch On Monday!
Dear Fellow Traders,

My New “Crypto Pot Stock” Alert for Monday is: ATTBF

ATTBF Joins The
Continue reading "Crypto Pot Stock"

Thinking aloud about China Biologic Products

There are stocks which you never get right - and where the facts and history is just so ambiguous that you don't think you will ever get them right.

China Biologic Products (Nasdaq:CBPO) is one of those that leave me perplexed. It is a blood processor in China with a strange political and arguably unsavoury past followed by years of spectacular performance and a few failed takeover bids.

I am short. And I think now I have probably made a little money - but hardly enough to justify the stress I have gone through. And after all this time I am still far from sure what the underlying reality is.

So I will lay out what I know and what I think I know.

The creation of China Biologic Products and the arrest and imprisonment of Dr Du

Australia has a long history in blood processing to provide
Continue reading "Thinking aloud about China Biologic Products"

Thinking aloud about China Biologic Products

There are stocks which you never get right - and where the facts and history is just so ambiguous that you don't think you will ever get them right.

China Biologic Products (Nasdaq:CBPO) is one of those that leave me perplexed. It is a blood processor in China with a strange political and arguably unsavoury past followed by years of spectacular performance and a few failed takeover bids.

I am short. And I think now I have probably made a little money - but hardly enough to justify the stress I have gone through. And after all this time I am still far from sure what the underlying reality is.

So I will lay out what I know and what I think I know.

The creation of China Biologic Products and the arrest and imprisonment of Dr Du

Australia has a long history in blood processing to provide
Continue reading "Thinking aloud about China Biologic Products"

How the Chinese business elite think of America…

China Properties Group is a Hong Kong listed property developer with operations in Shanghai, Beijing and Kunshan. The business conditions description in the last interim report gives a reasonable appraisal of what the Chinese business elites think of America.

To quote:

Business Review and Outlook 
10 years ago, the U.S. printed money like crazy and exported U.S. dollars all over the world. Now, the U.S. has become a global enemy, trying to bring back the exported U.S. dollars (the U.S. dollar debt of the emerging market in the first quarter was close to 3.7 trillion) and supply chains, as well as to undermine the asset markets of other countries and the global supply chain order. No wonder the U.S. has made a lot of enemies. Fortunately, Trump does not have the same wisdom as Mao Zedong in making alliance with one while
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Dear Bayer shareholders, what are you thinking?

Bayer is a life-sciences company. It sell drugs with litigation risks (especially Xarelto), it genetically modifies seeds (which I guess has litigation risks). It sells herbicides and pesticides all of which have litigation risks.

If you do "life sciences" you muck around with living things and that has litigation risks.

On twitter recently I sought out discussion on risks of Bayer stock and litigation was the key one.

Today Bayer stock is down 12 percent on a California court case where a dying plaintiff claimed that roundup caused his cancer and a jury agreed.

The damages were set at $289 million.

Having watched lots of legal stuff in American stocks I would be surprised if this were not rounded down at least 90 percent on appeal, and if the agglomeration of future cases didn't cost a lot of money.

But whatever. Here is a list of the biggest
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Xero

I was quoted in the Australian Financial Review on Monday stating that Xero is the only Australian company with the potential to be a $100 billion global tech behemoth.

As the market cap is less than USD5 billion now I am saying a 20 bagger is possible.

The $100 billion number was a matter of some dispute in the office - and a discussion is in the appendix. However suffice to say there is huge upside provided it all works.

Xero however have a few hoops to jump through on that path. This post is to explain my view and also what I hope management improve. I do not think they have done a great job of it so far (even though the stock and business have been a success).

But for the uninitiated I am going to explain what Xero does and why it has such potential.

Xero is
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Investment Bridge, HSBC and the Streisand effect

Note: copies of all tweets referred to in this note are kept at the end of the blog post for posterity - just in case they are removed by the original tweeters.

Investment Bridge is a London operation selling structured financial products. I suspect some of those are structured by HSBC for reasons you will see.

Investment Bridge tweeted a link to an FT story about reforms at HSBC after a wave of money laundering scandals.

Here is the tweet:


I replied that HSBC should start by fixing in Guangzhou branch. To quote:


The importance of GE’s credit rating

The cover story in Barrons this week is on GE's dim prospects. I confess to being a very minor source for that story. I don't own GE - but there is a price below the current price where I would buy it.

That said, I think there is one last shoe to drop, and it is a doozy. And it wasn't covered in Andrew Bary's excellent article. That is that GE's credit rating - and hence its business - is under threat.

GE's best business (by far) is jet engines where it competes with Rolls Royce (in wide-bodied engines) and a Pratt & Whitney consortium in narrow bodied engines. 

There is a new generation of engines (and planes) now - and the aviation business is booming. Boeing's stock price reflects that.

But GE is no longer the unequivocal engine leader. In wide-bodied (ie planes with two aisles) the current
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Nasdaq and the New York Stock Exchange (and possibly Herbalife) team up to help organised crime

Charlie Gasparino suggested in a tweet and a story that Herbalife, the Nasdaq and the New York Stock Exchange have teamed up to produce an anti-short-seller Bill. The Bill forces disclosure standards on short sellers.




I have no conclusive evidence either way as to whether Herbalife is involved behind the scenes or not. However the Bill is real and Charlie is usually a fairly thorough reporter and I have no reason to disbelieve him. And Herbalife has not denied the story.

The Bill is a threat to my physical safety. 

I want to assure readers that I am not exaggerating in the slightest. 

Bronte has a business model on the short side of maintaining a large database of people we regard as crooked and finding stocks associated with them and shorting those stocks. Often we do not know the full extent of the crook's business - we are
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Further notes on visiting Herbalife clubs in Queens

Preface: I once wrote a blog post - a response to Mr Ackman's campaign on Herbalife - which gave notes on visiting a Herbalife club in Queens. This remains one of the top ten most visited posts ever written on this blog.

On Saturday morning I visited two Herbalife clubs in Queens neither of which I had visited before.

One was a well known one - one of the first hits when searching for them using Google. The other was just found using Google Navigation and was about half a mile away.

Both clubs were pretty marginal businesses - but both were stable and viable. One was ten years old, the other five years. The first one was - believe it or not - prosperous enough to have employees.

My purpose was to check implementation of the Federal Trade Commission (FTC) rules on the ground. The FTC rules come from
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Herbalife and Bill Ackman in furious agreement

Today Bill Ackman announced that Pershing Square was settling an insider trading securities class action. To quote:

Pershing Square and Valeant have agreed to split the $290 million total settlement such that Pershing Square will pay $193.75 million and Valeant will pay $96.25 million. 

But Mr Ackman seems to think that a settlement of approximately $200 million does not say anything at all about the legitimacy of the case. Again to quote:
“We continue to believe the case had absolutely no merit,” said Pershing Square CEO Bill Ackman. “We decided, however, that it was in the best interest of our investors to settle the case now instead of continuing to spend substantial time and resources pursuing the litigation.”
Herbalife - who previously settled a case for a roughly $200 million payment - is of course in full agreement.

I think it is the first time Mr
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The Urban Dictionary is surprisingly up-to-date: nocoiner edition

Nocoiner is a person who has no Bitcoin. Nocoiners (usually Socialists, Lawyers or MBA Economists ) are people who missed their opportunity to buy Bitcoin at a low price because they thought it was a scam, and who is now bitter at having missed out. The nocoiner takes out his or her bitterness on Bitcoin Hodlers, by constantly claiming that Bitcoin will crash, is a scam, is a bubble, or other types of easily refuted FUD. Nocoiners have little to no computer skills or imagination; even when they see the price of Bitcoin go up and its adoption spread they consider all Bitcoin users to be in a collective delusion, with only themselves as the ones who can see what is happening. This attitude comes from being steeped in the elitist priest cultures found at Harvard, Yale and Columbia, where anyone who is not part
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