The Daily Dose: Attacking Bad Actions

 | Nov 05, 2013 | 9:30 AM EST
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Two weeks ago I did battle with Sears (SHLD) on social media. I put into practice 10% of the attack plan as taught directly to me by Master Sun. On Monday, I did battle with Sears again, except this time it was on Kmart.

All I can say is that it got nasty behind the scenes, something I am not used to (to me reputation and character are keys in this business). But I was nonetheless prepared for this foray, thanks to the back alleys during childhood (yes, for real). After thinking about each experience with a very rare stiff drink on the rocks (I don't drink), I felt this rage developing. I remarked to my COO that "Sears has just tossed gas on a human flame."

For now, and unbeknown to them, I am done with Sears having thoroughly exploited their misleading statements to the remaining investor base and customers. I am ramping up a personal crusade, however, to take it to execs where I believe wrongdoing is being done. Think Banksy for financial services. It could be ridiculous jargon designed to cover the truth for investors. Or it could be actual fundamental issues with a company. Wherever and whenever I feel the moment is right, I intend to strike like a cobra to a human leg. Believe me -- they won't even see the strike coming.

Exposed: Kellogg

 Since the current CEO officially took over in January 2011:

  • S&P 500: +38.64%
  • Kellogg (K): +21.45%

 Underperformance, bottom line. Then we receive a massive restructuring plan that doesn't include the CEO being pushed out of the door, everyone but him. Consider the following:

"This project will generate a significant amount of savings, a majority of which will be invested in key strategic areas of focus for the business."

  • Translation: our products are not wow enough to justify higher price points/our savings will be reinvested into marketing to compete more effectively, no full shareholder benefit.

 "The company expects that this investment will drive future growth in revenues, gross margin, operating profit, and cash flow."

  • Translation: yes, gross profit and operating profit dollars will grow, but watch those margin percentages.

 "An optimization of supply-chain infrastructure will include actions designed to increase efficiency and improve margins, including the consolidation of facilities and the elimination of excess capacity."

  • Translation: late to forecast changes in consumption and what others were doing in the aisles.

"Global Business Services will create increased productivity throughout the organization. The program will consolidate common processes or business services across multiple regions and functions."

  • Translation: attention to processes was not a high priority, and we were wasteful with shareholder capital.

On a Positive Note

I am still bullish on Starbucks (SBUX). Although a close call with my team, I could make the case for a price range of $85 to $87, based on new platforms for growth globally in non-coffee categories.

On a Negative Note

I have been hardcore touring malls. Abercrombie & Fitch (ANF) a top destination of mine, as has been Hollister. The stock caught an upgrade on Monday. Buyer beware. The assortment looks very dull, and is still priced out of the sweetspot where teens are buying (especially in female categories).

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we like this chart here, it appears ready to move higher. BOUGHT BZUN OCT 35 CALL AT 3.40
Large-cap, high-quality McKesson (MCK) is too cheap now, at $147.51 or so. The stock hit $243.60 more than 2.5...



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