Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Spekulatius who wrote (30582)	4/8/2008 11:07:12 AM
From: Jurgis Bekepuris	Respond to of 78665

BID - I am not sure I agree with the claim of "ballooning balance sheet during the last 12 month". If you look at Yahoo finance.yahoo.com , both cash/receivables and current liabilities are seesawing - high in June/Dec and low in March/Sep quarters. For me this just says that they had to close a quarter immediately after large auctions or something and did not clear the balance sheet. But OK, it may be worth digging deeper, although I am not sure there will be any more definite answers. Let me know if you find something that disagrees with the claim above. I never considered short position to be indication of anything. Nowadays even more, when every permabear is an oracle and every new shorter is an expert. I can give you couple explanations off the cuff for short position: people think that art market is peaking, people think that worldwide recession will bust art market (this may be true if such recession happens, but I don't see worldwide recession, I see worldwide investor panic, which is a different beast ;)), people think that the Sotheby's realty is a bad business and will implode (if it hasn't already). But as I said, I welcome different information if you find time to dig into this one. :) Or we can wait for Q1 report and see the situation there. Might not be too late to buy after it. ;)

To: Spekulatius who wrote (30582)	4/8/2008 12:20:39 PM
From: Jurgis Bekepuris	Read Replies (1) \| Respond to of 78665

BID: couple things from Q4 earnings transcript worth mentioning: seekingalpha.com - They did not provide balance sheet in the Q4 PR and it was practically not mentioned in the transcript. :( Need to look at 10K for it. - They are buying their building for $340M. This may be negative if they are overpaying. - They will be paying off debt after building buy. After that they may buyback shares but not earlier. - They have off-balance-sheet liabilities: "price guarantees". Of course, they claim that they only offer price guarantees when they see a good deal, but this can lead to losses. - As I mentioned, their international breadth in this cycle is huge and still increasing. Still, there is no guarantees that they won't have a downturn. - I think I was wrong about Sotheby's realty. Quote: "In February 2004, Realogy Corporation, a global provider of real estate and relocation services, entered into a long-term strategic alliance with Sotheby’s, the operator of the auction house. The agreement provided for the licensing of the Sotheby’s International Realty name and the development of a full franchise system by Realogy’s subsidiary, Sotheby’s International Realty Affiliates LLC." So it looks like a licensing deal and not a Sotheby's subsidiary, although there may be some kind of participation (and potential losses) in the earnings.