Volumes drop as we head into the summer season, and volatility traditionally increases during that time. [more]
60 Minutes did a smear piece on Lumber Liquidators, a cheap flooring company that is publically traded, and the stock price dropped 25%. There are laws about formaldehyde levels in cheap fiberboard-backed engineered flooring and apparently the company has violated them. They are probably worthless now; every cat lady with chronic fatigue syndrome sitting around on fake hardwood is going to jump on the class-action bandwagon and the rest of the value of the company will be diverted to pay off the settlement. [more]
Lemtrada is Genzyme's new MS drug, a biologic. When sanofi acquired Genzyme they couldn't agree on the value of Lemtrada and issued some warrants based on milestones. I own some of these warrants and was pretty pleased about the preliminary data for Lemtrada. I learned at the end of the pertinent European trials, however, that they didn't bother blinding the trials and this was really something that cheesed me off. It's sketchy thing #1 in this blog post. [more]
I was making a pitch for PNRA, but it turned into a rant, so that's when I know it's time to take it to this blog instead. Because I know how you guys like to listen to my rants. People don't understand the 21st century. Comps and margins are OK, but more and more, fast food in America is not a commodity story, not a pricing story, but a technology story.
Read the label on a Big Mac, or a McFrosty Shake. You recognize all those words? Or would you need a chemical process engineer to help?
Read the quarterly statement of KO. What's that, $3B spend on advertising? You think HFCS prices move the needle on this product? Do you even know all the technological venues in which Coke buys your consumer eye time?
The other day I was shopping in HD. They had Christmas lights, but only one strand of the kind I liked - I needed 3 to complete my decorating needs. So, I whipped out my iPhone 6, scanned the UPC, and the app took me to the only online vendor for this particular strand of lights - homedepot.com. I put the box back on the shelf, ordered 3 strands delivered to my home (they arrived the next day), and looked around. I suddenly had nothing to do in that part of town any more. But I was hungry. And I had an iPhone 6 in my hand. My thumb found the PNRA app, almost by accident. Within a minute I had ordered my favorite sandwich - and received my $2-off-any-sandwich loyalty reward coupon. Payment was accomplished by thumbprint - Apple Pay - and I got a text indicating my card had been charged the correct amount. "No way these bozoes will be able to have my food ready in 10 minutes," I thought, so I dawdled on the drive over to Panera. It took 6 minutes. I walked in, and there, right at the door on a special shelf, was a bag, stapled shut, with my name on the receipt. It had my order inside; the soup was hot, the sandwich was warm with toasty bread and melty cheese, and the pickle was still cold when I got it home. Some of you will find this to be a story about Christmas lights, or sandwiches, or Panera 2.0 initiative affecting margins -whatever. I say that technology is the common thread here and I say that a hot sandwich with a cold pickle next to it is technology. An order waiting for me in 6 minutes with no human needed to hand it to me, no waiting in line, is technology. Sure, you could open a burger joint. Could you build the little handheld thingus that the In-n-Out kid uses to take my order when the drive through is backed up? I don't think so. Transformational technology is still happening. My iPhone 6 measures how many steps I take every day - I didn't ask it to, it started doing it the minute it was powered on.
You think my health insurer might be interested in that information some day? [more]
SDRL became stupid cheap again. As far as I can tell nothing has materially changed since my analyses a few months ago. It hit 40 and change two months ago, a 52 week high; now it's 29 and change. Same stock. 13% dividend yield if you get in here, which looks sustainable. Q-over-Q earnings are super consistent. [more]