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Pastimes : Clown-Free Zone... sorry, no clowns allowed
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To: reaper who wrote (160608)4/17/2002 4:33:32 PM
From: yard_man  Read Replies (1) of 436258
 
as always, I do appreciate ur input.
on an absolute basis, what you are saying is true -- apples and oranges

-- But on the basic economics it isn't. Both companies have (DELL had -- and still has) rich valuations in their respective sectors and economic fundamentals bode ill for continuing growth in operating profit. That's enough for me ... yours is a rear-window view for KSS, IMO. When it is recognized that consumers are pulling back and that this is no longer the "growth" business it once was (growth is occuring through increased numbers of stores, right) -- they will receive a lower valuation -- WITH THE WHOLE SECTOR. It is a matter of style.

KSS costs are also likely to go up in the future -- where do you think their clothes are mfr'd?

It's a good short in my book -- is it in keeping with your style -- a looming liquidity problem developing?? NO -- I never said that, but it is grossly overvalued given it's real prospects for growth. Concerns that will remain going concerns -- can still be good shorts on purely a valuation basis.

The "piling in" you mention has already happened -- it is history.

One danger inherent in shorting the issues that have terrible liquidity problems is -- often that is known and as a result there is terribly high short interest -- (not telling you anything you don't know or haven't experienced) -- but one may have to wait through some terribly sharp retraces.

For some who like to trade -- it is enough to find something that has lesser prospects in the future and is a very liquid issue -- you can get in and out. I've made some good money shorting KSS -- don't care if they are kicking KMart's but or not ...
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