Updated Deathwatch List
April 02, 2012
– Comments (13) |
RELATED TICKERS: RSH
, BKS
, LUV
My original post from last week is here.
I'm collecting everything together again in alphabetical order. A Deathwatch List (TM) is a list of companies you do not expect to survive in their present form. For me, my guess is none of these have more than five years left, though debt financing could extend that in some cases. Some of these also still have extensive cash holdings.
-- Airline industry, entire, except for LUV. Added to list before it was actually a list in 2002. Suggested again by commenter. Since then many airlines have died or been bought out. The economics in this industry are simply terrible. There are a very few exceptions here, of which LUV is one, though less so than it once was.
-- Best Buy. Added to the list informally in 2009. I see no reason for Best Buy's continued existence, given Amazon, WalMart, Target, etc.
-- Barnes and Noble. Added to the list informally when the Kindle came out. Amazon owns the book market. They are dead in the water. Reminded by commenter in last post.
-- Radio Shack. Terrible name, dead business model, no moat, no reason to exist, uncompelling stores. Radio Shack should change its name and try to reinvent itself as something along the lines of the next Fastenol, a company that has proved there is a big market for certain niche players. Radio Shack is going nowhere as just another provider of cell phones.
-- Research in Motion. See post above. My call in June 2011 was that they would go b/k or get bought out relatively cheaply. The loss announced last week relating to the Playbook will not be their last.
-- Sears Holdings. I think the only value in this is in some of its brands, and in some real estate holdings. Kenmore, Diehard are the star brands. Lands End they have done more harm than good to, and my understanding is it is about to be sold. They have lost the low cost brand to Amazon and Walmart and they have nothing else to distinguish themselves. I also think there is some value in their appliance-repair/servicing business.
There may be some value in some of these, particularly in Sears. Smarter value investors than I am own a number of these. But even to the extent value is unlocked in some manner by spinnoffs or buy-outs, I just think they will not continue in their present form. BKS is probably in the most imminent danger.
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