Too complex for me haha.Turnarounds in these industries seem to be difficult. Maybe the old me would have taken a nibble. Great management gives you reassurance, but not conviction and w/out conviction, it's as good as speculation.
Seem to be much easier to navigate turnarounds in consumer products/cyclicals where the product is easy to change and the strategy to acquire customers (ex/new) can change rapidly, too. Have watched many of those turn; but not so many outside of that industry (only LUMN, but that was an AI play lol).
GAP, WWW,(currently VFC) etc - brands come and go. Buy them on the cheap at less than 1x sales and a single digit cash flow multiple, wait for new management to sell the rubbish, deleverage the balance sheet and unveil a new marketing strategy that pulls in customers from stale brands to these fresh revamps... multiples skyrocket... Wall St overestimate prospects (ANF) and then sell the stock... rinse and repeat.
Wall St seems to always overestimate the up/downside in these businesses - but that's also because the constant has been a solid consumer through the last five years. Maybe that changes in the future? Maybe tariffs also make these turnarounds more difficult (Happy Liberation Day). Idk. No strategy is bulletproof, but this is one I wish I focussed on more.
Today NKE is doing poorly. It's 2x sales (expensive) but think about the legacy of the brand - Michael Jordan, Tiger Woods, Rafael Nadal ... these moments are etched into the minds of sports fans. There's some nostaligia value to "great" moments that Nike benefits from. That's Nike's historical value BUT what's current? Who's their current sporting great? Nike has never been just another sneaker brand, but that's what they currently are. The brand is boring and overpriced but a turnaround is feasible. At the moment, it's still too expensive for me to bite. Let's see what, CEO, Hill does next.
(Note, when I mention cyclicals I don't include retailers because they're basically impossible to turn around. Too capital intensive, strategies take too long to implement and there's no real brand value.)
I don't really post here anymore because I find better stuff in the UK (but I do lurk and read up on interesting ideas put forward here). Sorry for the long post. Felt if I were going to say something, may as well be something that may be useful to someone. |
