Last Week's Losers
So I head off on a lovely vacation, and now, ten days later, have to figure out what happened to my portfolio. Wrote about the winners earlier, so what about the losers?
I didn't sell any of these, but I'm not all that thrilled with them at the moment, either. Some of the drops seem overdone and might be buying opportunities, but I've tried with limited success to catch falling knives before, so I'm just patiently watching. So here they are, the most interesting loser stories from the last ten days of my portfolio:
Click Commerce (CKCM), which I haven't written up my views on yet in detail, got pantsed last week when they released their earnings. Ouch. The stock had been on a tear this year, to be sure, but it was slowly edging down as I packed for the beach, and when earnings came out the next week it fell further, took a nearly 30% haircut overall and my position is now more than 25% underwater. I'm not buying more of this one right now, I don't find it compelling enough to jump in without figuring out better why a fairly good earnings report caused this kind of reaction. That's the danger, I suppose, of owning a company that the momentum junkies fall in love with.
Lions Gate Entertainment (LGF) also got beat up a bit on lower than expected earnings. This falls roughly in the same camp as Marvel or Dreamworks Animation (both of which I wrote up here) ... I don't think analysts or I will ever be able to very accurately predict their earnings and I'm not that worried when they miss them. I like the huge film library, the constant search for new properties and franchises, and the focus on profitability and niche exploitation -- Lions Gate now has to be considered the market leader in horror films, which are among the best profit makers in Hollywood, even as they also lead in producing or acquiring low cost, critically acclaimed and surprise hit films and television programs. Heck, they even released the Moonlighting DVD boxed set -- and the continuing hunger for old TV shows on DVD should also help them continue to grow. Their library makes them a potential acquisition target, but as a film consumer I'd also like to see them remain independent and keep producing and releasing films that major studios won't touch, but which make money and make sense for a smaller player who knows how to handle them.
Cendant (CD) -- So your former chief finally gets convicted, and the stock goes down? OK, so it didn't drop very far, but still. Not sure what' s happening with this one these days, the movement in price doesn't make much sense to me. If you want to buy into real estate brokerages and the travel business, this still appears to me to be a bargain-basement way to do that. The brands are solid -- Century 21, Coldwell Banker, Avis, Budget, Ramada, Orbitz and many others -- and with a nice dividend and a forward PE of 12, your downside is pretty limited, especially now that they're offloading a lot of their odd non-core businesses. This one sits in my Roth and gathers dust, I have no intention of selling it at these prices, but I'm not so in love with them that I'm looking for another entry point, either. Hope to look back in a few years and see it fairly priced, and at that time I'll have to think about it again.
Middleby (MIDD) falls sort of in its own category if we're talking about the week that was. I wrote about their great earnings before I left on vacation, but it appears the blowout quarter spurred some buyers who didn't know what they were getting into, and they all sold last week when it became clear that Middleby wasn't going to grow at 40% a year. I still love Middleby, and their solid growth, great management, smart acquisitions, and steady paydown of debt all look pretty good to me. International growth in restaurants is a good and solid trend, and Middleby is a very good way to take advantage of that with what I consider to be very limited downside (especially now that a little of the great-earnings froth has been worked out).
Harris and Harris (TINY). I honestly don't get why these guys fell -- all of us who own shares are holding on for the long term home runs in nanotechnology, or at least we should be ... their latest release should have very little impact on that, since pretty much all they said is that they're raising more money to invest in more nano companies. They're a venture capital company, that's what they're supposed to do. I haven't written this one up in detail, but suffice to say that I like their business plan, and I'm ready to hold on through what is likely to be some very dramatic swings, especially once their companies start to begin dipping their toes into the public markets or commercializing real nano breakthroughs. Patience, patience, patience with this one.
Akamai (AKAM) bumped back down to earth slightly after a nice earnings run -- not much happened, but I liked their earnings release and I see them steaming happily along. Hard to believe the old dot-bomb has come so far back and become a dominant company with a strong and sustainable business -- especially now that the Speedera acquisition, which took out a major rival, is done. I like it.
CV Therapeutics (CVTX)-- Phase IIIa is complete for Regadenosan, only one more clinical trial to go for this imaging agent. That success is already priced in, it appears, as CVTX didn't move very much when it was released, just tailed off to the downside for no good reason that I can see. Their future drugs will be much more in doubt and future announcements might be expected to really move the needle, I'm just holding on for the ride to see what comes. I see this as a potentially dominant company in the long term, and I'm delighted with my three largest biotech holdings, CVTX, PDLI, and VRTX. PDLI is actually my biggest percentage gainer for this year, just recently passing Google. I'll write more in detail about that big three as soon as I get a little smarter and can type all the big words you have to use when you talk biotech.
And the worst performer of all award for my vacation week goes to ...
Design Within Reach (DWRI), which really disappointed the analysts and investors, and me, with it's latest earnings release and lowered guidance. Growth in sales and earnings is continuing at the 50%+ rate I expected, and I still think that can continue, but they're having significant margin problems due, they say, to the Euro and high shipping costs (most modern furniture is still sourced out of Europe).
Though I must say, I think a 30% haircut is overdoing it a bit, and as I have time to think through the company's prospects and try to figure out whether or not I really believe this business is as strong as the consumer in me thinks it to be, I might be adding if the price stays down here in the basement (I bought my first position around $18, as announced here last month). I think the company has some fairly strong plans in place for dealing with these depressed margins, including changes to their shipping offerings and vendors and attempts to diversify their suppliers across other currencies. Frankly, I don't think the currency issue is predictable enough to worry about -- it should be helpful sometimes, and hurting others, but in the end it ought to work itself out if the rest of the business is successfully managed. The real surprise to me was the extent to which the new studios, even as they performed well in lifting overall sales, ate into the growth of internet and phone sales -- I'll definitely be watching that in the future.
This is still a small position for me, and it sure grew smaller in my absence. Keeping an eye on it to buy more if I think management really is likely to keep sales growth on track and keep the new studios coming -- with their centralized fulfillment and management, I'm fairly certain they should be able to solve any macro shipping cost problems over time.
Is this just a hiccup on the high growth road, or a sign that their plan isn't going to work? Too early to tell, but my gut feeling about the "semi-luxury urban contemporary furniture" market is that it's a good one that's not being adequately addressed by existing big retailers, and I think DWRI has the potential to be a big brand in that space.
technorati tags: CKCM, Click Commerce, Cendant, Middleby, tiny
AKAM
Akamai
CVTX
DWRI
Design Within Reach
CV Therapeutics
I didn't sell any of these, but I'm not all that thrilled with them at the moment, either. Some of the drops seem overdone and might be buying opportunities, but I've tried with limited success to catch falling knives before, so I'm just patiently watching. So here they are, the most interesting loser stories from the last ten days of my portfolio:
Click Commerce (CKCM), which I haven't written up my views on yet in detail, got pantsed last week when they released their earnings. Ouch. The stock had been on a tear this year, to be sure, but it was slowly edging down as I packed for the beach, and when earnings came out the next week it fell further, took a nearly 30% haircut overall and my position is now more than 25% underwater. I'm not buying more of this one right now, I don't find it compelling enough to jump in without figuring out better why a fairly good earnings report caused this kind of reaction. That's the danger, I suppose, of owning a company that the momentum junkies fall in love with.
Lions Gate Entertainment (LGF) also got beat up a bit on lower than expected earnings. This falls roughly in the same camp as Marvel or Dreamworks Animation (both of which I wrote up here) ... I don't think analysts or I will ever be able to very accurately predict their earnings and I'm not that worried when they miss them. I like the huge film library, the constant search for new properties and franchises, and the focus on profitability and niche exploitation -- Lions Gate now has to be considered the market leader in horror films, which are among the best profit makers in Hollywood, even as they also lead in producing or acquiring low cost, critically acclaimed and surprise hit films and television programs. Heck, they even released the Moonlighting DVD boxed set -- and the continuing hunger for old TV shows on DVD should also help them continue to grow. Their library makes them a potential acquisition target, but as a film consumer I'd also like to see them remain independent and keep producing and releasing films that major studios won't touch, but which make money and make sense for a smaller player who knows how to handle them.
Cendant (CD) -- So your former chief finally gets convicted, and the stock goes down? OK, so it didn't drop very far, but still. Not sure what' s happening with this one these days, the movement in price doesn't make much sense to me. If you want to buy into real estate brokerages and the travel business, this still appears to me to be a bargain-basement way to do that. The brands are solid -- Century 21, Coldwell Banker, Avis, Budget, Ramada, Orbitz and many others -- and with a nice dividend and a forward PE of 12, your downside is pretty limited, especially now that they're offloading a lot of their odd non-core businesses. This one sits in my Roth and gathers dust, I have no intention of selling it at these prices, but I'm not so in love with them that I'm looking for another entry point, either. Hope to look back in a few years and see it fairly priced, and at that time I'll have to think about it again.
Middleby (MIDD) falls sort of in its own category if we're talking about the week that was. I wrote about their great earnings before I left on vacation, but it appears the blowout quarter spurred some buyers who didn't know what they were getting into, and they all sold last week when it became clear that Middleby wasn't going to grow at 40% a year. I still love Middleby, and their solid growth, great management, smart acquisitions, and steady paydown of debt all look pretty good to me. International growth in restaurants is a good and solid trend, and Middleby is a very good way to take advantage of that with what I consider to be very limited downside (especially now that a little of the great-earnings froth has been worked out).
Harris and Harris (TINY). I honestly don't get why these guys fell -- all of us who own shares are holding on for the long term home runs in nanotechnology, or at least we should be ... their latest release should have very little impact on that, since pretty much all they said is that they're raising more money to invest in more nano companies. They're a venture capital company, that's what they're supposed to do. I haven't written this one up in detail, but suffice to say that I like their business plan, and I'm ready to hold on through what is likely to be some very dramatic swings, especially once their companies start to begin dipping their toes into the public markets or commercializing real nano breakthroughs. Patience, patience, patience with this one.
Akamai (AKAM) bumped back down to earth slightly after a nice earnings run -- not much happened, but I liked their earnings release and I see them steaming happily along. Hard to believe the old dot-bomb has come so far back and become a dominant company with a strong and sustainable business -- especially now that the Speedera acquisition, which took out a major rival, is done. I like it.
CV Therapeutics (CVTX)-- Phase IIIa is complete for Regadenosan, only one more clinical trial to go for this imaging agent. That success is already priced in, it appears, as CVTX didn't move very much when it was released, just tailed off to the downside for no good reason that I can see. Their future drugs will be much more in doubt and future announcements might be expected to really move the needle, I'm just holding on for the ride to see what comes. I see this as a potentially dominant company in the long term, and I'm delighted with my three largest biotech holdings, CVTX, PDLI, and VRTX. PDLI is actually my biggest percentage gainer for this year, just recently passing Google. I'll write more in detail about that big three as soon as I get a little smarter and can type all the big words you have to use when you talk biotech.
And the worst performer of all award for my vacation week goes to ...
Design Within Reach (DWRI), which really disappointed the analysts and investors, and me, with it's latest earnings release and lowered guidance. Growth in sales and earnings is continuing at the 50%+ rate I expected, and I still think that can continue, but they're having significant margin problems due, they say, to the Euro and high shipping costs (most modern furniture is still sourced out of Europe).
Though I must say, I think a 30% haircut is overdoing it a bit, and as I have time to think through the company's prospects and try to figure out whether or not I really believe this business is as strong as the consumer in me thinks it to be, I might be adding if the price stays down here in the basement (I bought my first position around $18, as announced here last month). I think the company has some fairly strong plans in place for dealing with these depressed margins, including changes to their shipping offerings and vendors and attempts to diversify their suppliers across other currencies. Frankly, I don't think the currency issue is predictable enough to worry about -- it should be helpful sometimes, and hurting others, but in the end it ought to work itself out if the rest of the business is successfully managed. The real surprise to me was the extent to which the new studios, even as they performed well in lifting overall sales, ate into the growth of internet and phone sales -- I'll definitely be watching that in the future.
This is still a small position for me, and it sure grew smaller in my absence. Keeping an eye on it to buy more if I think management really is likely to keep sales growth on track and keep the new studios coming -- with their centralized fulfillment and management, I'm fairly certain they should be able to solve any macro shipping cost problems over time.
Is this just a hiccup on the high growth road, or a sign that their plan isn't going to work? Too early to tell, but my gut feeling about the "semi-luxury urban contemporary furniture" market is that it's a good one that's not being adequately addressed by existing big retailers, and I think DWRI has the potential to be a big brand in that space.
technorati tags: CKCM, Click Commerce, Cendant, Middleby, tiny
AKAM
Akamai
CVTX
DWRI
Design Within Reach
CV Therapeutics
This article posted by One Guy @ 8/17/2005 08:04:00 AM 0 comments
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