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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: energyplay who wrote (62057)	4/16/2005 2:38:36 AM
From: shades	Read Replies (2) \| Respond to of 74559

Would GOOG with a P/E of 128 qualify? Ebay only has a 56 P/E. The boys at KL financial shorted GOOG at 160 and lost 300 million - probably a good bet in a fair market - but timing is everything and in this rigged market you only kid yourself that you have an advantage over the mm's and specialists and brokerages while they suck you dry.

To: energyplay who wrote (62057)	4/16/2005 10:04:52 PM
From: Slagle	Read Replies (1) \| Respond to of 74559

Energyplay, Thanks for the information, much of the time I let my hunches lead me up the primrose path. You are probably right and MHK is an unprofitable short, after all they and Warren Buffet's carpet company have nearly taken over the whole industry and they don't cut prices to the consumer as much as the smaller mills did years ago. The market for the carpet that goes in office buildings and hotels is called "contract" market and yes, it is smaller than the residential market. One of my uncles started the first contract carpet mill back in 1955. Contract carpet is produced on order, unlike residential, so inventory control is not as big a problem. Profit margins are higher in contract and the business cycle usually less severe than in the much larger residential market. MHK is in contract and residential both. Accepting that you are probably right, I still think there may be some other factors worth consideration: Carpet is made completely of oil, face yarn, backing and all. In the past these synthetics rose in price in concert with oil, but with a time lag. This is probably just beginning to hit. I guess I should check on this. The last time there was a really big oil price run-up, back in the 1970's the two biggest mills in the industry went broke, along with lots of lesser mills. Though MHK is a fairly old company (originally a New York woven mill) it has never faced a market slow down since it began to acquire it present mega-mill size. Carpet shipments were fairly strong all through the 1990's and since then because of all the homebuilding it has been the same. Residential mills have a tough time during recessions, or at least that the way it was in the good ole days. Carpet itself is in a sort of decline with other floorings gaining market share. But I heard that MHK has gotten into the wood flooring biz in a fairly big way. MHK gives out lots of stock to employees and to acquire competitors. But I WILL keep your guidelines for good shorts in mind Slagle