Idea List Changes
1. Incrementally Bullish
- KATE: Back on the active long list. Business stinks, but the company shouldn’t be public – and by YE17 it likely won’t be. Not a traditional type of call for me, but there’s also optionality here on above-trend organic growth, better e-comm penetration, margin upside, etc…and it’s cheap.
- LB: Great brand (Vicky), Good company, Lousy stock. Interim CEO steps down signaling more near-term problems. That’s when we start getting interested in a name like this. In the end, sex sells.
- WSM: down three notches on Short list. The space seems to have bottomed – in part evidenced by increasing share-of-wallet yet again in retail sales nums. Still don’t like this story one bit. But it’s cheap and things are ‘less bad’.
- LULU: Numbers still too high next year, and people already looking for incremental margins to push 30%. But next two quarters have more tailwinds than headwinds – and the stock is still down 21% since the Aug peak despite the pop on the latest quarter. It should work in 2017, but prob not til the back half.
2. Incrementally Bearish
- CRI: Should a name with this many headwinds really be out 10th highest conviction short? No. It’s now up five notches.
- AMZN: We were uncharacteristically bifurcated on this one with AMZN on both the long and short bench. Yes, the $25+ earnings call is great. Yes, AMZN is crushing it this holiday. But is that a unique call with the stock +57% for the year-to-date? Not one bit. On the flip side, Bezos truly does not care about this year, or next year, and maybe the year after that. He’s going to have to earn money at some point for people to believe the $25 EPS call. And in the meantime, he’s investing in everything from price to potentially streaming NBA games. $$$expensive. Imagine the day when people think AMZN is taking over the world AND we see sales decelerate to ONLY 19% while the stock is at 156x earnings… Now we’re only Short Side w AMZN.
