Ulta Salon Top Social Media Stock This Week. Here’s Why. $ULTA

Ulta Beauty, 928 Eisenhower Pkwy, Ann Arbor, MI 48103, Canrbrook Village Shopping Center (Photo credit: Wikipedia)

Ulta Salon (Nasdaq:ULTA) became the highest social media stock this week on www.Stocktwits.com Ulta had released earnings and beat street estimates creating a trading frenzy. Long time traders familiar with the stock were waiting for it. Judging by their social media commentary they were watching the technicals and positioned themselves well before the earnings release.

The stock has increased from $90 to $100 @ share in the past ten days. Good ride for two weeks. Matter of fact it was excellent.

Couple of factors to consider. A brand new CFO resigned just thirty days into the job. Ulta says it had nothing to do with the company. The CFO position has been hard to fill. Fast growth companies need a strong CFO or the proverbial Black Swan shows up.

The short position is about 4.82% of the public float and there has been some very recent covering. Up tick/down tick is 0.97 which is right on the line of neutral. So it did not take much to pop.

Fundamental investors will be scrutinizing the growth story and balance sheet fundamentals. Fast growth creates its own challenges. Good sales execution is not the only factor to success. But then if you do not have a regular CFO in place you would not know that.

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

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3D Systems Possible Black Swan Event. But How Soon? $DDD

3D Systems (Photo credit: Wikipedia)

3D Systems Corporation (NYSE:DDD) has watched its stock increase roughly 250% in the past twelve months. Obviously it has bested most comparative metrics. Is 3D on solid footing or is it a house of cards. Controversy is starting to abound.

The short position is 23.9% of the float and has contracted slightly in recent past. The short position should be considered bullish as it eventually needs to be covered. However shorts have their reasons and usually they do not believe in the company. Money flow uptick/down tick is 0.69. Not what you call a momentum stock.

3D is engaged in a public dispute over accounting and disclosure practices. Usually the auditor can speak to the issue but it’s not quite working out in this case. Members of the board are selling their positions. The board is off-loading. Thats worse than key executives. Not a comforting sign for the buy and hold investor.

There is also the question of a  Seeking Alpha blogger called Mr. Douglas House and separate (I believe) comments by Gray Wolf Research all of which were just recently released. Say what you want about the articles and comments managements reaction may be very telling.

I particularly enjoyed Mr. House’s Nov 26 post with this quote

“DDD’s paranoid behavior, epitomized by its November 19 tightly controlled non-interactive conference call and its heavy-handed attempts to get my article removed from SA, reveals a management team that feels threatened by its own information. All of my observations, perceptions and opinions have been gleaned from DDD’s SEC documents, its website and its press releases. It is a self-inflicted conspiracy. I will be diplomatic and call the situation unusual.”

Touche for Mr. House. I must admit that I now follow him. Here is the link to the entire article. Its worth the read. http://seekingalpha.com/article/1029061-3d-systems-pardon-me-sir-could-you-spare-an-explanation.

At almost the same time Gray Wolf Research posted this blog also with Seeking Alpha http://seekingalpha.com/article/943201-3d-systems-at-the-peak-of-inflated-expectations

In the meantime you can make out the graceful outline of a black swan slowly floating into the middle.

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

 

 

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• 3D Systems Corporation: Doth They Protest Too Much? (businessinsider.com)
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Aspen Technology Black Swan Event Coming Soon $AZPN

Image via CrunchBase

Aspen Technology has had a good run over the past year (Nasdaq:AZPN). Here are a few concerns about potential Black Swan events.

Firstly the CEO Mark Fusco is selling. Never a good sign when the Number 1 guy wants to unload.

Secondly there is a history of accounting problems. When you read the following list just play the mission impossible theme song in your head. You know the one with the lite fuse leading to the big explosion. Here we go:

The company’s fiscal 2005 annual report, revealed six material weaknesses:

1. inadequate staffing and ineffective training and communication within our accounting and finance organization;
2. ineffective revenue recognition controls;
3. inadequate financial statement preparation and review procedures;
4. ineffective and inadequate controls over the accounts receivable function;
5. inadequate controls over the accounting for taxes; and
6. inadequate controls over bank accounts.

Then for good measure the company lurched forward annually displayed significant accounting problems:

1. In 2006  “inadequate and ineffective controls over accrual of goods and services received,”
2. In 2007 “inadequate and ineffective controls over the recognition of revenue.”
3. in 2008, “inadequate and ineffective controls over the accounts receivable function;”
4. in 2009  “inadequate and ineffective monitoring controls;”
5. in 2010 “inadequate and ineffective controls over the periodic financial close process;”
6. in 2011 “inadequate and ineffective controls over the recognition of professional services revenue;” and finally,
7. in 2012 the company still reported “ineffective controls over income tax accounting and disclosure.”

Every year the company is declaring inadequate and ineffective controls. This will eventually lead to a Black Swan event of major importance. It’s just that simple.

The short position is a measely 2.52%. Uptick/downtick money flow ratio comes in a 0.68. Money is leaving the stock if your paying attention.

George Gutowski writes from a cavest emptor perspective. Follow him on twitter@financialskepti

 

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Jamie Dimon Twists in the Wind $JPM $GS #Bank of England

Jamie Dimon – Caricature (Photo credit: DonkeyHotey)

Today after weeks of rumours Mark Carney was officially appointed the new Governor of the Bank of England. Not that long ago Jamie Dimon of JP Morgan (NYSE:JPM) was telling off Mark Carney not appreciating Mark Carney’s comments about the economy. Mark Carney until today was Governor of Bank of Canada. Long ago he worked for Goldman Sachs (NYSE:GS)

Then Jamie Dimon fell out of favour with the Obama administration and kissed his chances of becoming the next treasury secretary good-bye. Oh then he had the trading problem with the London Whale. Throw in the LIBOR price setting scandal for good measure.

Mix it all up.

Well lets put it this way. Chairman and CEO’s of large New York money center banks are supposed to be influential. They need to get stuff done. Jamie Dimon has few cards in his hands. When the JP Morgan board realizes this they will have to do something about it.

Obama will not give him an ambassadors post. I don’t see Jamie Dimon happily teaching.

Its layered and nuanced but it will be very real. Jamie Dimon’s gonna have smaller and smaller pieces if the pie and shareholders will suffer. Who on JP Morgan’s board has the balls to manage this one.

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

Oil & Gas investors despair with SandRidge Energy. Too many conflicts? $SD

SandRidge Energy (NYSE:SD) needs to be taken out to the woodshed and whipped very hard. They have not maximized shareholder wealth. About five years ago the stock traded at $64.58 on June 30, 2008. Today it bounces around at $5.70. During September investors experienced between $7 and $8. The oil business and the price of energy has not been that bad.

Several large shareholders are sending letters asking for changes which will improve shareholder value. Many feel the board has too many conflicts to make good tactical and strategic decisions.

As money flow is negative clocking in at 0.78 management continues to invoke shareholder rights plans and poison pills. Some 12% of the float is short with a very slight reduction in recent past.

Analyst consensus is anything from hold to overweight to outright buys. Investors buying this stock are looking at a corporate Donnybrook. But you know at under $6 @ share you have an option on a fixable energy company which will one day benefit from rising energy costs.

The investment is not for faint of heart. Activist investors will need to use threats of negligence lawsuits and nicey nicey departure packages which while undeserved will help accelerate the departure of poor management. Once poor management exits the turn around commences.

The shorts have to be covered. The sky will look blue eventually. The stock is priced like an option without an expiry date. Not a core holding but if you have room for some very deep value plays put this one on your watch list.

So whats it gonna take to clean out the executive suite. Because in the mean time a miniature Warren Buffett by the name of Prem Watsa is praising management. He also controls about 10%. So management may just find itself on an auction block as one value investor tussles with another.

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

Walmart Drags Feet with Bribery Investigations. Faux Outrage Everywhere. $WMT

English: simulated Wal-Mart logo (Photo credit: Wikipedia)

Wal-Mart (NYSE:WMT) is dragging its feet when it comes to bribery allegations and investigations. Wal-Mart shared that a previously disclosed investigation into bribery at its overseas units expanded into markets including Brazil, China and India.

Well of course it did. Regardless of what you think of Wal-Mart, operating in Brazil, China and India on the scale that they are interested in requires lots of local co-operation. The ethics and morals not to mention legal structures in those parts lends itself to bribes.

At this point almost all if not all the alleged bribes were to further Wal-Mart interests. There is little to no sign of personal enrichment at the expense of Wal-Mart. So the investigation will uncover lots of morally repugnant we must hold our nose details. There will be a fine which will amount to a speeding ticket and then back to EPS and what do we need to do to make it grow.

The New York Times (NYSE:NYT) article focuses more on how Wal-Mart managed the hot potato and not on why the local culture forced it into this behaviour pattern.

Faux outrage everywhere. The Mexican lesson to other businesses is to pay the bribe. NYT claims some $32 million were paid out. Small price to achieve the growth the Mexican market gave them.

This will go away. NYT articles to the contrary.

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

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Twinkies Emergency Measures Recipes #twinkies #recipe #ridiculous #diabetes

Twinkies (Hostess Twinkies is a trademark of Interstate Bakeries Corporation). (Photo credit: Wikipedia)

The brand value of Twinkies seems to be stronger than both management and unions. Hoarding has started big time. I did a quick and i mean quick internet search for Twinkies recipe’s and found this one on Leites Culinaria . The fancy foodie websites no got the goods on this.

• Nonstick cooking spray  or vegetable oil
• 1/2 cup cake flour
• 1/4 cup all-purpose flour
• 1 teaspoon baking powder
• 1/4 teaspoon salt
• 2 tablespoons milk,  preferably whole
• 4 tablespoons unsalted butter
• 1/2 teaspoon vanilla extract
• 5 large eggs, at room temperature
• 3/4 cup granulated  sugar
• 1/4 teaspoon cream of tarter
• Seven-Minute      Filling, er, Frosting

Directions

• 1. Preheat the oven to 350°F (175°C) and adjust the oven rack to the lower-middle position.
• 2. To make your shiny, single-use Twinkie molds, start with a piece of aluminum foil, preferably heavy-duty, that’s  approximately 14 inches long. It should be just a little longer than it is  wide. Fold the foil in half lengthwise, then fold it in half again to      create a rectangle that’s about 6 inches long and 7 inches wide. Repeat to  make a dozen rectangles.
• 3. Place 1 sheet of folded foil on your work surface, with the long side facing you. Place a standard-size plastic or glass spice jar on its side in the center of the foil, the jar’s long side also facing you. Bring the long sides of the foil up around the jar. The foil won’t reach all the way around, and that’s okay. Fold the foil in around both top and bottom ends of the spice jar, nice and tight. You’ll end up with a sort of trough situation. (Cookbook author Todd Wilbur has a   video of the process here; if you’re impatient, fast forward to  1:10, where the action starts.) Repeat until you have 12 foil Twinkie      molds. Spritz the molds with an obscenely generous amount of nonstick spray  or use your fingertips to coat the molds with vegetable oil. Place the Twinkie molds on a baking sheet or in a roasting pan.
• 4. Whisk the flours, baking powder, and salt together in a bowl.
• 5. Heat the milk and butter in a small  saucepan over low heat until the butter melts. Remove from the heat add the vanilla. Cover to keep warm.
• 6. Separate the eggs, placing the whites in the bowl of a standing mixer fitted with the whisk attachment (or, if using a hand mixer or whisk, a large mixing bowl) and reserving the yolks  in another bowl. Beat the whites on high-speed until foamy. Gradually add  6 tablespoons of the sugar and the cream of tartar and continue to beat      until the whites reach soft, moist peaks.
• 7. Transfer the beaten egg whites to a large bowl and add the egg yolks to the standing mixer bowl—there’s no need to clean the bowl (or, if using a hand mixer or whisk, simply place the egg  yolks in a separate large bowl). Beat the egg yolks with the remaining 6 tablespoons sugar on medium-high speed until the mixture is very thick and a pale lemon color, about 5 minutes. Add the beaten egg whites to the      yolks, but do not mix.
• 8. Sprinkle the flour mixture over the egg whites and then mix everything on low-speed for just 10 seconds (or, if using a hand mixer or whisk, until blended but not thoroughly combined). Remove the bowl from the mixer, make a well in one side of the batter, and pour the melted butter mixture into the bowl. Fold gently with a large rubber spatula until the batter shows no trace of flour and the whites and yolks are evenly mixed, about 8 strokes.
• 9. Immediately scrape the batter into the prepared molds, filling each with about 3/4 inch of batter. Bake until the cake tops are light brown and feel firm and spring back when touched, 13  to 15 minutes. Transfer the pan containing the molds to a wire rack and  allow the cakes to cool in the molds.
• 10. Just before filling, remove each cake from the foil. Using the end of a chopstick, poke three holes in the bottom of   each cake, just like in the bottom of real Twinkies. Wiggle the tip of the chopstick around quite a lot to make room for the filling. (Again, you can see this in action here, beginning at minute 3.)
• 11. Transfer the frosting to a pastry bag fit with a small tip (about 1/4 inch across). Pipe the frosting into the holes you created in the bottom of the cakes. As you fill each cake, hold it in your hand and press your palm gently around it so you can feel the cake      expand, taking care not to overfill and crack the cake.
• 12. Unlike real Twinkies, these won’t last indefinitely. They’re best served still slightly warm

Homemade Twinkies Recipe | Leite’s Culinaria

Twinkies Cookbook Still available on Amazon $AMZN #union #diabetes

Box of Twinkies (Photo credit: Wikipedia)

Amazon still has the Twinkies cookbook from 2006 still for sale. No kindle version?

http://www.amazon.com/The-Twinkies-Cookbook-Unexpected-Collection/dp/1580087566

George Gutowski writes from a caveat emptor perspective. follow him on twitter@financialskepti

Starbucks Big Caffeine Clever Communications Plan. Coffee Tea or Lawyers. $SBUX $TEA

Teavana logo (Photo credit: Wikipedia)

Starbucks (Nasdaq:SBUX) has a rather clever communications plan in play. Off it’s 52 week highs set last March it may occur to some to perhaps sell and stick it to the tax man. The dividend is anemic at 1.74%. Short interest is 1.16% of float which means short covering will not drive the price in the near future.

Starbucks decides to spend $620 million to buy Teavana (NYSE:TEA) and get into the tea business. Wall street runs more on coffee so the deal logic does not seem strongly compelling. Green tea benefits aside. They let it be known that a head count reduction is in the works. So they look like they are focusing on costs.

Then the icing on the cake is a new buy back plan for some 25 million shares is announced. This tops up the 12.1 million still unexecuted share repurchases. So at 37.1 million shares at just under $50 @ share may easily hit the $2 billion mark. Which is the equivalent of three Teavana acquisitions.

So by reducing the share float and engineering a supposedly better EPS any stumbles from the Teavana acquisition will not be as transparent. Pretty clever eh? All this when the money flow ratio stands at 2.97. Would that continue and for how long to drive the price up.

Just to stir the pot a little,  law firm Levi & Korsinsky announces an investigation into Teavana. You see as recently as the end days of Feb 2012 Teavana was trading just under $24.00. So the Starbucks offer of $15.50 is not as good a deal as one would think. The shares were trading around $10 just before the offer. But breach of fiduciary obligation is being investigated. You see it’s not $24 and that’s a damn fine point.

Starbucks has to tap dance very carefully. So the communications plan is clever and nuanced. Because someone has to drink a lot of coffee

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

 

#OWS Impact on Macy’s Thanksgiving Day Parade. Oh Behave $M $JCP

The parade logo (Photo credit: Wikipedia)

Macy’s (NYSE:M) will hold the iconic Thanksgiving Day parade. somewhere a security officer who is paid to be paranoid is worrying about the Occupy Wall Street gang. Remember them about a year ago. Well they engage in a lot of street theater and that means protests and disruption.

Well Macy’s relax all is well for the following reasons. The presidential election has exhausted everyone both right and left-wing. No one has the energy. Also NYC got hit badly by hurricane Sandy. The public is not in the mood for disruption. Too much chaos is not what the revolution should be serving up.

Macy’s it safe to hold the parade and let America celebrate. Just watch out for JC Penney (NYSE:JCP). Everyone is down on JCP right now. But all merchants know that if enough transformation takes place JC Penney will recover its mojo and Macy’s will hear the competitive footsteps coming up behind them.

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