Barclays New Horizons Deep Value But First Some Pain $BCS #LIBOR #Barclays

Barclays Center

Barclays Center (Photo credit: Wikipedia)

Barclays (NYSE:BCS) just announced a new CEO. Surprise they stayed with one of their own and Antony Jenkins gets the hot seat. There was consensus that Barclay’s should go with someone from the outside. Somewhat understandable when it appeared the whole command structure of Barclay’s seemed suspect and disappointing. But you see this Diamond guy who had to be shown the door was an outsider and apparently was quite the disappointment. He was a Yank too and well here is the opportunity to fix that problem.

But when you think about it Antony Jenkins is the right guy. There is much fixing work to repair Barclay’s. They not only stand astride the LIBOR scandal but Banks in general are suspect. Derivatives as financial weapons of mass self-destruction, terrible European economy, snail slow US economic recovery, Basel capital adequacy issues. Well lets just say the list goes on and on. Then you have the organizational aspects of the new Barclay’s as its refocused and re-purposed. Or put another way cutting and chopping people and jobs.

This is why you want an insider. An outsider would hire lots of consultants to tell him what is going on. The insider knows or can find out very quickly.

What does this mean to the shareholder. Huge write-offs as the ugly heavy retooling work is undertaken. The stock price will sag and suffer in the interim. Deep value investors will find Barclay’s on their radar. but it will be only the bold and the brave who will benefit.

George Gutowski writes from a caveat emptor perspective. Follow me on twitter @financialskepti

RIM to become a venture capital vehicle $RIMM $IBM $GOOG $MSFT

Image representing Research In Motion as depic...

Image via CrunchBase

Think about it Research in Motion (Nasdaq:RIMM) should become a venture capital outfit. Here’s how and why:

  1. No outstanding debt and about $2 billion in cash and equivalents
  2. Client base continues to grow and create positive cash flow
  3. Patents have huge valuation. Sell and create huge war chest.
  4. In house R&D does not work so why not buy new ideas?
  5. Maybe go private and become mysterious without idiotic press scrutiny.

George Gutowski writes from a caveat emptor perspective. Follow his twitter feed @financialskepti

Best Buy Sticks with a Homey for CEO. Not exactly the Big Bold Bet. $BBY $AMZN $DJTRET $RTH

Image representing Best Buy as depicted in Cru...

Image via CrunchBase

Best Buy (NYSE:BBY) announced a new CEO with a supposedly mid range pay package. Mid range that is for a company of Best Buy’s size. Brand new CEO Hubert Joly scored a pay package valued around $32 million over three years to entice him to the problematic consumer-electronics chain.

OK so Best buy is not hot and the opportunity to run it may not be the best piece of sugar out there. However, it does put to rest the lack of CEO quandary. More telling is Hubert Joly has a history of working with problematic companies. He has more recently been running Carlson a global hospitality company and or Carlson Travel. This puts him squarely into the Minneapolis Business milieu, which quite frankly is not that big.

So here is the inferred strategy from the board of directors by the numbers:

  1. The corporation has a problem
  2. We blow off the chief problem maker
  3. We hire a new guy with no retail experience
  4. But the new no retail guy is good at stabilizing companies
  5. Why do this?
  6. Unstable companies do not attract super-star candidates
  7. Unstable companies do not attract premium paying take over offers
  8. Board is still uncertain about what course to take in the future
  9. Board is still uncertain how the market cookie will crumble
  10. But in the meantime stability guy fixes what can be fixed.
  11. Also hire lots of consultants and investment bankers to get advice and unlock value.
  12. This is not the time to hire the retail equivalent of Marisa Meyer
  13. The retail equivalent of Marissa Meyer is probably Jeff Bezos.
  14. This means a take-over by Amazon (Nasdaq:AMZN) so we need to clean up the joint.
  15. In the mean time we need to sell some big-ass TV’s.

George Gutowski writes from a caveat emptor perspective.

George Soros buys into Manchester United $MANU #shortsales #soros #hedgefund

DAVOS/SWITZERLAND, 27JAN10 - George Soros, Cha...

DAVOS/SWITZERLAND, 27JAN10 – George Soros, Chairman, Soros Fund Management, USA, captured during the session ‘Rebuilding Economics’ of the Annual Meeting 2010 of the World Economic Forum in Davos, Switzerland, January 27, 2010 at the Congress Centre. (Photo credit: Wikipedia)

George Soros hedge fund extraordinaire bought a huge and I mean huge slug of Class A Manchester United (NYSE:MANU) He has somewhere around 7.8% but claims he is not mounting a takeover. Basically he can’t; the Glaser family controls enough Class B shares which have super voting privileges that can out gun anything in the boardroom. Therefore no one will try.

George Soros is known to have invested in soccer (Excuse me football as non Americans refer to it) in the past. After all it is the worlds most popular sport. The stock is down a little after a summer time IPO. Manchester United is heavily indebted and will not produce huge amounts of free cash flow soon. So what’s the attraction.

According to a blog post on FT/Alphaville on Aug 20, 2012 by Joseph Cotterill the shorts are starting to circle. They think they smell blood in the water. OK there is some blood in the water. But you do not have the makings of a short raid. What you probably have is the makings of a classic short squeeze. George Soros by tying up a large junk of the public float just eliminated a lot of liquidity making shorting an even higher risk venture than normal.

So George Soros is aware of the sharks circling. Hell he may even throw some cheap hamburger in the water to excite them a little more. Right now if he may even decide to lend the stock to shorts and charge a rental fee. If the shorts beat down the price he can call the shares and create buying momentum as shorts sellers scramble to cover.

He may buy more at lower prices in the future.

Unethical you say. Hell this guy broke the Bank of England.

Illegal you say. This guy operates globally and could do this behind closed doors where you have banking secrecy that says it is not illegal. So there.

In any event isn’t it interesting that we refer to him as George Soros and rarely if ever mention any hedge fund name. It’s always George Soros this and George Soros that.

George Gutowski writes from a caveat emptor perspective.

Barnes & Noble Bizarre International Expansion $BKS $AMZN $AAPL $GOOG

Image representing Barnes & Noble as depicted ...

Image via CrunchBase

Barnes & Noble (NYSE:BKS) is on the ropes. They have stopped giving guidance because the numbers are too damn embarrassing. They are closing stores and fending off activist investors who think they can run a bricks and mortar business in a digital world. So out of the blue they announce this expansion thing in the UK. Long criticized for a poor presence over seas they decide ti interrupt their life boat drills and open up a shiny new store.

Several possible explanations.

  1. The board and senior executives are delusional and believe an invasion of Europe will help solve their problems. Maybe?
  2. Activist investors are pushing on this point so hard management needs to do something to shut them up. Possibly?
  3. They are looking to distort market operations with large book orders and position themselves in a post bankruptcy world. I like this one.

If you believe life is a chess game they have just moved a knight in a strange way and are seeking a gambit. They cannot hope to influence markets in the US. But if they go to Europe they can become disruptive enfant terrible who must be bought out or off. At first you are ignored, then you become a pest. Eventually you upgrade yourself from damn annoying to insufferable. Marketing directors fall on their sword and CFO’s reach for their cheque books.

Far fetched. Don’t kid yourself. The crazy player theory has worked before. Question is does Barnes and Noble have enough time to make it work.

George Gutowski writes from a caveat emptor perspective.

Google Extends Portfolio of Brands. Frommer strategically smart because they were tactically inept. $GOOG $YHOO $MSFT


google_logo (Photo credit: keso)

Google (Nasdaq:GOOG) is extending its portfolio of brands. Does that mean Google is fresh out of ideas and needs to acquire some external energy source to drive revenues. Yeah probably. Travel is one of the most researched purchases. Even before the internet consumers checked things out very closely.

Travel vendors advertise extensively and traditionally are one of the top three advertisers. The other two being automotive and consumer electronics. So Google is smart to pick up good assets in this category. What  it also means is that Google has no game when it comes to developing compelling applications so they are forced to use enormous cash resources to buy up what they cannot develop internally.

Strategically they also want to capture the properties before Yahoo (Nasdaq:YHOO) and Bing (Nasdaq:MSFT) pick them up and set up viable beach heads.

Strategically smart because they were tactically inept.

George Gutowski writes from a caveat emptor perspective.

Groupon Con Artist Compulsion They need an intervention. $GRPN

Logo of Groupon

Logo of Groupon (Photo credit: Wikipedia)

Groupon (Nasdaq:GRPN) continues to disappoint. They just do not seem to make anyone happy. Like an old flame who still generates passion but not fondness investors continue to be flummoxed. Management does not know what else to do. Brokers are saying sell and run for the hills.

Here is the problem or at least part of it. Hype was so high behavioural economists could have compared it to drug addiction. More just give me more. Take my money just give me more thrills. By the way to the uninitiated this is not financial analysis. This was euphoria which management played to.

Management has a problem. They cannot change their narrative. They cannot come out and lay out some new course of action. They are so locked into the daily deals conundrum any deviation will mean capitulation. They have to keep rolling the dice in the same manner.

Con artist’s are clinically unable to come clean and bring closure to their narrative. Some investors still believe too ardently and do not want to abandon the narrative. But quite frankly at this point you should be able to see the money. Groupon does not have an excess cash position.

Perhaps they need an intervention?

George Gutowski writes from a caveat emptor perspective.

JCP suspends guidance then gives secret clues. Read here. $JCP

JCPenney logo used in various versions from 19...

JCPenney logo used in various versions from 1971 to 2011 (Photo credit: Wikipedia)

JC Penney (NYSE:JCP) is working hard at restructuring which means red ink before black. Because the surgery will not look pretty they want to do away with the guidance for the rest of the year. This will protect the weak and squeamish investors for reality. well at least for a few more quarters.

But they did give a secret clue to performance. Ready here it is. They claim they will have $1 Billion by year-end. So for a retailer that means after the Christmas inventory build and January Sales on Jan 31, 2013. JC Penney will have $1 Billion of cash in the till. They currently have $888 million. If you are Chinese 888 is a lucky number and brings good fortune.

If you are an investor with a penchant for arithmetic JC Penney has promised for the last six months positive cash flow of $112 million all in. I assume of course that nor borrowing or other types of cheating will be involved.

OK buddy you got something to prove. We are now half way through Aug. Your Christmas strategy has to be in place. That’s a big, bold, shiny promise.

So Merry Christmas and Happy Holidays in advance.

George Gutowski writes from a caveat emptor perspective.

Yahoo Shareholders Need to Sync up with Marissa Mayer. She wants to Spend not Liquidate. $YHOO

Marissa Mayer

Marissa Mayer (Photo credit: jdlasica)

Yahoo (Nasdaq:YHOO) new boss is doing a review of all businesses. No surprise there. So media comment seems to be mis-focused. Any new boss will review. At Yahoo you will review and then x-ray everything. What some shareholders are freaking about is the potential non return of the some $4 billion cash from the Ali-Baba divestiture. Many investors were expecting a large cash haul after suffering through many Yahoo generated frustrations.

Investors may need to re-align their expectations. You do  not hire someone like a Marissa Mayer and hand her some blanks and expect results. She needs cash to spend on product and probably M&A. I am on record as thinking that Yahoo shares should be a viable currency for acquisitions but you never take cash completely out of the picture.

Great generals did not win by retreat. Attack and audacity have carried more than one day.

Yahoo shareholders will need to reconcile with the new normal under Marisa Mayer. She has been hired to grow Yahoo not liquidate it. Many Yahoo shareholders need to ask themselves why do I own Yahoo? Yahoo investor relations has a large communications job ahead of itself.

George Gutowski writes from a caveat emptor perspective.

Will Marissa Mayer Do Deals Before Giving Birth Vegas Bookies Ponder Point Spread $YHOO

Everyone knows Yahoo’s (Nasdaq:YHOO) new boss Marissa Mayer is pregnant and due in the fall. Will Vegas bookmakers give odds on a major deal occurring before the birth of her new child? Some people will be on anything.

George Gutowski writes from a caveat emptor perspective.