Hot Topic, Inc. (NASDAQ:HOTT)

CAPS Rating: 1 out of 5

The Company is a small mall-based specialty retailer operating the Hot Topic and Torrid store concepts.

Recs

4
Player Avatar TMFSpiffyPop (99.40) Submitted: 10/3/2007 11:17:44 PM : Underperform Start Price: $8.43 HOTT Score: +3.77

Look at their Web site. Seriously. Just click over there. C'mon, just take's a minute. I'll even give you a link:http://www.hottopic.comThere. Saw it? Good. You'll understand, then. End of story.Underperform.

Report this Post 15 Replies
Member Avatar FleaBagger (29.28) Submitted: 10/16/2007 1:12:05 AM
Recs: 0

I followed your URL, and it's not coming up. It says: "Virtual Host or Web Application Not Found."

Member Avatar TMFSpiffyPop (99.40) Submitted: 10/18/2007 12:14:41 PM
Recs: 0

Works for me. Try again. It's just their home page. Already 5.25 Score and counting..... --D

Member Avatar pschkqitzsough (77.37) Submitted: 11/6/2007 2:29:30 PM
Recs: 0

Looks nice? What's your point?

Member Avatar TMFSpiffyPop (99.40) Submitted: 11/7/2007 9:18:27 PM
Recs: 0

My point is: What I'm looking at is extremely fringe (I suspect the front screen changes with its apparel every month or so), and does not look like it will succeed as a mainstream business.

Member Avatar JoeleneW (82.45) Submitted: 11/11/2007 10:25:15 AM
Recs: 0

TMF Breaker Dave--you are right on. Although generally I am not a big fan of retail, there is no way this one is going to mainstream.
This one is a Capital U underperform.

Member Avatar ikkyu2 (99.28) Submitted: 11/14/2007 2:33:17 AM
Recs: 0

For what it's worth, I also operate a web site that sells T-shirts. It is just a kick for me in my spare time - I'm a doctor, I certainly don't need the money. I coded it up over a couple of weekends with a $22 Dreamhost account, several 2-liter bottles of Coke (KO), and some open source CMS and shopping cart software. Some design buddies of mine designed the shirts and I send them royalty checks.

Hot Topic's website looks almost as professional and polished as my site. And they sell T-shirts too! Nice going, guys.

Member Avatar TMFSpiffyPop (99.40) Submitted: 3/10/2009 12:44:45 AM
Recs: 0

So at first I was right -- 2007 into '08 wasn't a great time for Hot Topic -- but then came Twilight, and to Hot Topic's credit it was all over that trend, and during the worst market of our lifetimes. Consequently, Hot Topic the stock is about flat my original thumbs-down, while the market has lost 55% of its value, leaving me as cold as Hot T. is hot. But I'm going to re-up this for another year. I don't expect to get back to even, but I do expect to claw back from about 60 points down. We shall see. --David

Member Avatar JakilaTheHun (99.93) Submitted: 5/8/2009 8:32:43 AM
Recs: 3

Not to be insulting, but you are completely clueless here. I'm not just saying that because your pick is getting destroyed right now; your analysis was completely off from the very get-go. You obviously have no understanding of this business at all. To call Hot Topic 'a fringe retailer' sorta ignores the fact that they are in almost every single mall across the nation. They're not "fringe" and their success has very little to do with Twilight. If anything, they've perfected the art of borrowing from "the fringe" and selling stuff that's completely not edgy, but pretends to be. Maybe I take some personal offense to this analysis, too. I enjoy goth rock and industrial music. I have mixed feelings on Hot Topic, but you seem to be making some very negative insinuations about a lot of people. I guess that's fine; you have a right to do that; but I thought that TMF was a company that does things a bit differently and gives people a chance based on their talents. The 'extreme fringe' comment suggests to me something wholly different. Over the past five months, I've been beating the market by about 50%. I've got a 99.91 rating as I write this and I've been ranked in the top 100 for a bit. Those stats will probably drop a slight bit if we get another down swing, but overall, it's not to shabby for a lowly Goth. I don't have long hair, wear all black, or rock the nail polish any more, but you should've seen me three years ago. In any case, Hot Topic is pretty "mainstream" if you ask me. Too mainstream, really --- but that is the way to make the big bucks. Sorry if this comment seemed too aggressive, but your pitch really struck me the wrong way.

Member Avatar JakilaTheHun (99.93) Submitted: 5/8/2009 8:44:50 AM
Recs: 1

But I will say this validates one of my investment hypotheses --- keep away from retail trend stocks (both long and short)! Maybe this is testament to the fact that I'm getting older and have no faith in my own ability to spot trends of teenagers (or even adults!) any more. I don't care how good one is at analyzing companies, predicting retail trends tend to be tough if you're not in a particular target market. The huge amount of HOTT shorters is testament to the fact that middle-aged men and women rarely understand what makes teenagers tick.

Member Avatar TMFSpiffyPop (99.40) Submitted: 5/9/2009 1:13:06 AM
Recs: 1

Jakila,First off, thanks for your comments. You're right, I do think Hot Topic and its Torrid brands are "goth"-based and a bit too trend-dependent. I really don't mean to rub anyone goth or otherwise the wrong way with that -- I think that it's hard to run a brand that is counter-cultural unless you really have a megatrend secretly steer-roped, and if you have roped a megatrend steer, you have a great future. I don't think this is a megatrend, though -- I don't believe what Hot Topic sells will break out into the mainstream. So it comes down to whether or not the brand and the business has truly hit home with a fervent and persistent group of people who will buy from it for a lifetime like, say, Harley people will buy from Harley for a lifetime.My pick is well down at this point because I have been flat-out wrong. I don't defend myself or the pick. I could walk away a significant loser, here. That said, Hot Topic is actually dramatically down from where it was just a couple weeks ago, so I have made up about 40 Score on this one, lately. Whether that continues, we shall see. Part of the reason I keep this pick in play, as is, is that I am enjoying studying, following, learning. If I simply ended this pick and ate my losing Score, I would truly stop following Hot Topic and forget it. I don't want to. So we leave it in and see how we do.Congratulations on your outstanding CAPS performance. Let me make it very clear: I'm both pleased and flattered to have you in our community, and I hope you will pull up a chair and stay a decade or two and continue to inject your own unique and winning perspective so that I and all other Fools can learn from it.Foolish best wishes,David Gardner

Member Avatar JakilaTheHun (99.93) Submitted: 5/14/2009 7:49:33 AM
Recs: 1

Thanks for the response, David.

I still disagree with you. :)

Decided to write an entire article as a rebuttal (not just to you; lots of others, as well):

http://seekingalpha.com/article/136852-why-hot-topic-is-a-dangerous-short

Member Avatar JakilaTheHun (99.93) Submitted: 5/14/2009 7:51:14 AM
Recs: 0

Unfortunately, Seeking Alpha changed the title of my article, btw.

It was "Hot Topic: Turning Short Sellers Into Angsty Goth Kids" before. How could anyone turn down a great title like that? ;)

Member Avatar TMFSarahGen (99.74) Submitted: 5/20/2009 4:33:17 PM
Recs: 0

Jakila, totally agree with you - but tonight's earnings announcement with a guide down just gave us another - ahem, "buying opportunity". Of course your excellent CAPS score speaks very well of you and your stock picking ability.

I promised Dave I would come here to say, "DAVE YOU ARE TOTALLY RIGHT!" if earnings didn't go well. Conf call starting in next couple minutes - the hold music is the most awesome hold music I've ever heard.

I still like HOTT though. Back to the battle! Dave, I still don't think you'll see your underperform pick go green though.

Member Avatar TMFSpiffyPop (99.40) Submitted: 5/28/2009 10:51:30 AM
Recs: 0

When does this one turn green for me? Maybe not far off.... :) --David (what a comeback, regardless -- of course, this had previously been a big winner for me before the Twilight....)

Member Avatar bmw56 (52.70) Submitted: 6/4/2009 10:44:30 AM
Recs: 1

The true turn-off for me is principle-based: When I went to their site after TMF's suggestion, I saw 4 young teenagers striding in front of a club called Whiskey A GoGo. I am not an old man, don't have kids of my own and could care less about the clothing... but I am definitely against promoting the image the site portrayed to the age group that HOTT targets. It's simply irresponsible.

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