Tuesday, May 5, 2009

Finally A Post About Stocks

When I started my sporadic blogging, I thought that I would be writing a lot more about individual securities and a bit less about everything else. Fail on that count.

So we've had quite a rally recently. There are two points that I think are very relevant. One is insider selling vs. insider buying recently.

Top Sellers:
May 1-4 Jeff Bezon Chairman, CEO and President of AMZN: sold $247+mm of AMZN; surely it was all estate planning
Apr 28-30: David Novak Chairman, CEO and President of Yum Brands (KFC/PH/TB): $82+mm; surely he still eats there every day
Apr 30: John Doerr (top VC) Director GOOG: $30 mm; surely he still uses it for search
Apr 27-28: Steven Rales Chairman Danaher Corp: $58 mm
Apr 27-May 4: Joe Ricketts Director TD AMeritrade: $49 mm; surely still using their penny counting machines
Apr 29-30: Bill Gates, whatever he is now at MSFT: $22 mm; surely still uses internet explorer
Apr 23: Tom Ward Chairman, CEO and President of SandRidge Energy: $22 mm
Apr 29: Wade F.B. Thompson, CEO Thor Industries: $11 mm
April 17-29: Robert Fisher (the founder I think) Director Gap Inc: $29 mm; surely still has a closetful of khakis

Top Buyers (ex- one possibly M&A related transaction):
1. Director of Cullen/Frost Bankers Inc.: $2.2 mm
2. Chairman of First Cash Financial: $0.807 mm
3. CFO/VP Finance/Admin Cavium Networks: $0.640 mm

A sucker rally, just looking at the relative size/volume, and more importantly, both the personal and the corporate brands of the sellers. If there ever were the perfect time to avoid asymmetric information transactions, now might be it. If Bezos is selling, should you be buying? Do you know AMZN better than he does? Thought so.

The second point is a view on the quality of the rally. This summarizes a lot of stocks and how they have fared since early March. My attempts to figure out the logic of the run are in parenthesis. There are some legit reasons for those (overall market correlation, index inclusion, credit agreement renegotiation, "less bad" results) but as a whole, I think it is a low quality rally.

Chiquita Brands (Obama is mandating bananas for every UAW lunch bucket) 52-week low $4.32, now + 131%
Bare Escentuals (people are now stocking up on make-up) low: 2.45, now +287%; Ulta +115%
Helen of Troy (people are now stocking up on curling irons) low: 8.55, now +86%
RC2 Corp (people are now stocking up on toys) low: 3.22, now +252%
Gildan (people are now stocking up on t-shirts) low: 5.66, now +98%
Hanes Brands (people are now stocking up on underwear) low 5.14, now +237%
Caretrs (OshKosh brand is now hot again, 10 years later) low 11.94, now +95%
Philips Van Heusen (people are now stocking up on dress shirts): now +122%
True Religion (more believers now): now +125%
Lululemon (Yoga studios enrollments through the roof, I am sure): now +245%
Liz Claiborne (because apparel stores SSS second derivative is less bad): now +332%
American Apparel (every legal dep't nightmare)" now +392%
Coach (bagging it): now +123%
Sketchers: now +121%
Iconix Brands: now an iconic +204%
Steve Madden: now a callus-free +126%
Crox, because everything eventually comes back in fashion: +311%
Ethan Allen (home interior retail is back in vogue because foreclosure sales are up): +93%
Sealy, because after the market fall, people have been soiling their mattresses at night, so they need replacements: + a bedwetting 947%
Movado Group: +107% based on today's high; hoards of tourists are crowding Canal Street again
Nautilus, because fit people are more likely to get a job: +124%
Central Garden and Pet: +341%. No word if the fertilizer was natural or artificial.
Saks: +245%
Dillards, a bedrock of proper governance: +237%
Retail Ventures (this is DSW, because people have been wearing out their shoes looking for work: +233%
Abercrombie: +100%, The Buckle +183%, JCrew +187%, StageStores +250%, Jos A Bank +170%, Ann Taylor +222%, Zumiez +156%; Hot topic +165%

Office Depot + 375% Office Max + 334% because small business is roaring back
Carmax + 124% because car sales are primed to jump, we're well below autopark replacement rates, and Obama will cut us a good deal on a 12 mpg Dodge truck
Compucredit +119% because subprime borrowing is hotter than ever

Publicly-traded pyramid schemes: Prepaid Legal +47%, Usana +42%, Herbalife +89%. Now everyone gets to be a sphynx.

Royal Caribbean +186%, Carnival +99%: because cruise vacations are hot; Vail Resorts +99%, Cedar Fair +91% because ALL vacations are hot, Orbitz: +101%, so vacations really must be hot

Restaurants are also full with people so they have had to raise prices across the board to deal with the crowds stampeding through the doors: Cheesacake factory +258%, Cracker Barrel +206%, Buffalo Wild Wings +175%, Dominos +256%, Cal Pizza Kitchen 195%, Dennys 151%, Steakn Shake +302%, Dine Equity (+557%, not a typo, this is IHOP and Applebees!), Einstein Bagel +347%, Krispy Kreme +300+%, Ruby Tuesday +839% (again not a typo), Carrols +351%, CHUX +385%
McCormicks +381%, Ruths Chris +421%, Mortons +215%=== steak dinners on expense accounts are baaaack, with bigger and jucier slabs of beef and a more exclusive wine cellar collection than ever; even the lowly side, the down-home creamed spinach is now 50% saffron by weight; reseravations 30 days in advance everywhere.

So, there you have it. When is it going to end? Don't know. There may not be a new nominal bottom if inflation expectations keep rising.

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