08/14/2012: GARY ON NATIONALLY SYNDICATED INVESTORS EDGE RADIO BROADCAST
[email_link]
https://archives.warpradio.com/btr/InvestorsEdge/081418.mp3
JUST LETTING YOU KNOW
Taunting Markets
We know what has happened to markets when they have been taunted. Just remember, what happened in 2008, was because of people taunting the markets – getting leverage of 20…30…40 to 1 on the same product that topped out and went south. They taunted the markets by giving loans to people to buy homes that had already doubled over 2 to 3 years and the people couldn’t afford the first payment because all they wanted to do was to flip that home to the next sucker.
And I believe they’re taunting the markets again. That’s my take.
Groupon (GRPN)
Groupon is down 2.04 to 5.51, a $20 IPO that you maniacs opened at 31.14, closed that day at 26.00 and which is now 5.51…as we are finding out that the main part of their business is slowing. Now—I want you to recall that when this came public, there were several things that I said to you.
- They already have accounting problems.
- Other coupon companies pay their merchants back much quicker than Groupon. Which means that if Groupon has to do same, it’s going to hurt their cashflow.
- Man, this reminded me of a fad. And when I use the word “fad” you know what I mean. I get Groupon stuff every day from Central Florida. There’s only so many massages I need at 20% off. You get my point. If you ask me, the top has been put in for the industry.
I speak to business that have done business with Groupon and LivingSocial and some are successful but a lot of them aren’t.
There are some darn good IPOs doing really well, but then there are some which are just…look out!
KAYAK (KYAK)
This was a recent $26 IPO. You guys opened it at 35 and it’s back just about to 26. And what do they do?
The same thing as Priceline.
The same thing as Expedia.
The same thing as Trip Advisor…and like a hundred other sites that do the same thing.
Besides your being able to go to the hotel sites, the airline sites, and the cruise sites – without going to these sites.
You catching my drift? It’s called “The space is getting crowded.”
Just remember you have to think through these things.
LinkedIn (LNKD)
Linkedin gapped up on its earnings and now it’s failing. And it broke back below it’s 50-day moving average and frankly it’s the strongest name out there, out of all the social type whatchamedoogie. And I’m not making a call on what happens next. I don’t own the stock. I don’t really have an interest in it right now.
But I just want to let you know as a lesson, there’s something called the “cousin stock theory” in Wall Street. If you have 20 stocks in a group and 19 go into a bear market, odds favor that the the 20th is also going into that bear market.
I just wanted to bring that up because of what’s going on in social media. You’ve got Facebook (FB) which looks like it has a chance of breaking down out of another flag pattern at 20. And Linkedin still has an $11 billion market cap, lots of insider selling, they already did a secondary, the don’t have a billion in revenues, and it’s trading at a measely 210x earnings.
Again, I bring this up because I pay attention to where the noise is out there on Wall Street. I check on the noise so that you guys don’t get caught up on the noise because – you’re going to lose a lot of money if you do.
That said…you’ve got…
Michael Kors (KORS)
Mind you, the valuation vs. sales is kinda up there. But their sales are growing 50…60…70%. The IPO was 20. It gapped up on earnings six month ago and I bought it perfectly. And then they announced a monstrous secondary and that was it for me. I wound up giving back what I made. Hence, six months further, they just came out with another gangbuster earnings number, which was way ahead of estimates, even though I think they sandbagged.
And the stock had a big gap up off of that and mind you…as we always look at precedent, I have in front of me a chart of Riverbed (RVBD), after it came public in 2007 and it went up, correct and even did a secondary like KORS and then it came out with an earnings report, gapped up and looks exactly like KORS. Just letting you know, the stock went up 50% from there. We’re not saying the same thing happens with KORS.
But we’re always looking a precedent. If I were you (and I’m not you), I’d put Michael Kors on my watchlist.
And as always, you get to decide.
LISTEN TO GARY LIVE ON WEEKDAYS 6-7 PM ON A STATION NEAR YOU AND AT GARYK.COM
6-7 pm EST
Best of Investor’s Edge
Saturdays 1-2 am EST
Gary Kaltbaum owns Kaltbaum Capital Management, LLC (“KCM”), an investment adviser registered with the U.S. Securities and Exchange Commission. The opinions expressed herein are those of Mr. Kaltbaum and may not reflect those of KCM. The information offered in this publication is general information that does not take into account the individual circumstances, financial situation or individual needs of an investor. The information herein has been obtained from sources believed to be reliable, but we cannot assure its accuracy or completeness. Neither the information nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Any reference to past performance is not to be implied or construed as a guarantee of future results.