Wednesday, November 15, 2006

Another Quick Update

Increased the (AMZN) short position by a third at 42.88. Average cost basis on the short is now 41.82. I might have it in me to short a third round, but if it moves another 3-4% against me I'll take my lumps and cover.

Altria Group (MO) made a nice move today after Goldman upgraded it. Here's a short blip coming from Goldman:

We are adding Altria to Americas Buy/ Conviction Buy List from Neutral as we expect the potential Kraft spin-off and an improvement in international tobacco trends to drive the stock towards our new 12-month target price of $96 (representing 19% upside from current levels). While management indicated that it intends to announce on 1/31/07 the details of the Kraft spin-off, the stock continues to trade at a significant discount to its sum-of-the-parts value. We see several catalysts in the near term that could alleviate investors lingering skepticism about the timing of the Kraft spin-off and concern over weak international tobacco trends.

Abercrombie & Fitch (ANF) selling off today after yesterday's earnings release. The numbers themselves were quite good actually, but guidance was neutral to slightly negative and analysts fear tough comps going forward.

Despite the ANF drop and the AMZN move against me, things are looking damn good for the portfolios. I might begin to trim a few positions, and I've also thought a bit about consolidating the portfolio so that I don't have as many holdings.

Also, come Friday, the Broadcom (BRCM) position will be called away at $30 for a decent profit. Could have made a lot more had I not sold the calls, but I'm not complaining. And, the Form Factor (FORM) position could get called away at $40 if it does not trade lower in the next couple of days. If these positions get called, I'll have a lot more ammo to make a few moves.


gaamblor said...

I'm with you on AMZN but i'm waiting for it have a down tick before shorting.

LCUT looks like it came down a ways you buying more at this level?

Brute Force said...

Ya, I may have jumped the gun on AMZN... hopefully, it doesn't spike on me and force me out. I'm willing to take a 6-7% risk on the position.

And, yes, I was close to pulling the trigger on LCUT today. Planning on doubling my position, but I think I'm going to wait and see what happens with the FORM position. If it gets called away, then I'll be using some of those funds. If it doesn't, then I'm going to figure out which positions to trim before I add to LCUT. I think LCUT's worth more and looks like a value at these levels. Have you done any research or valuation analysis on it yet?

gaamblor said...

I was looking at it today, everything looked awesome and then i saw the inventory numbers

March 91.3m
June 137.1m
Sept 166.2m

I know you have to build up a bit for christmass but the entire shareholder equity in inventory?

It looks like trouble ahead to me

Brute Force said...

I agree that the large inventory numbers are a bit scary... from their latest SEC filing they cite, as you mentioned, build-up for holiday shopping season.

Now, Lifetime has a VP in charge of inventories (Clifford Siegel, Vice President of Inventory Forecasting & Replenishment). Here's a link talking a bit more about their inventory: Demand Solutions Case Study: Lifetime Brands.

Well, I hope you're wrong about troubles ahead, as I am preparing to double up on the position very soon. But, your concerns are warranted, as this is a pretty monstrous inventory build-up.