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: Paul Senior who wrote (74828)	1/9/2024 11:04:12 AM
From: Harshu Vyas	Respond to of 78476

You're totally right about brand recognition and Chris Hufnagel mentioned it. He effectively said there was no strategy or direction (the word he used to describe WWW's business was "transactional) and instead of creating something with the brands, they just went on a buying spree making poor, value destructive acquisitions. Similar to VFC, another company I'm watching. I imagine that inventory problem will sort itself out with time. Ex-management blamed supply chains. But if they can get rid of inventory quickly (even at discounts), cash flows will pick up. Is that something management are eyeing to alleviate some pressure? In the early 2000s such a strategy worked. Has the market gotten smarter in 20 years? I think the competition element is harder to figure out, especially as we move forward. WWW will never be in the playing field of NKE (for example). They're niche and even with a solid consumer base, they're still a cyclical. I'm investing in the sheer "cheapness" of the combined operations. They recently sold a Kentucky distribution centre for $23m, are looking to sell Sperry, and have sold/licensed the worst performing segments of their business (Leathers, Keds etc). Hufnagel is taking an aggressive approach to taking out the trash. Annual revenues (normalised) in the future may even dip below $2b after these divestitures but if profits and cash flows improve, I don't really care. On $2b peak revenues, peak profits may be at a 7% net margin or $140m. And the last time they made a margin around that mark, they traded 15x earnings. A valuation of $2.1b. This is lazy, back-of-the-envelope analysis that isn't totally perfect, but it demonstrates the point I think - current market cap is a little over $700m. If you want to do the same thing with FCF, WWW's best year (not inc. 2020) was $285m (10% margin) and they traded 10x FCF. On $2b, that's exactly $2b. Either way, it's much higher than today's valuation. I don't know if growth is accessible. I'm assuming it's not. Historical management have tried and failed to make acquisitions - is that because the brands they're working with have already "maxed out"? I'm just buying a cyclical somewhere near its trough - it may fall more, I don't know. If there is some accessible growth that Hufnagel can extract from the brands (which he has implied), it's a bonus.

To: Paul Senior who wrote (74828)	1/9/2024 2:28:37 PM
From: Madharry	Read Replies (2) \| Respond to of 78476

consumer rant- I went to DSW and on line several times over the summer and fall looking for a reasonably priced closed mens sandal. could not find anything. went to a Sketchers outlet store and found a pair of crox like shoes for $20. very happy with them. Had to throw away my previous pair of crox as I left them in the car and they shrunk in the heat, which seems crazy , but then i am not a physicist or chemist. I purchased some xom for the first time to get more energy in my portfolio. According to Stephanie link their break even on oil is around $35 and she loves their latest acquisition. i am looking at toyota now . is there a reason not to own some? Their latest Prius offering looks very competitive with EV offerings , has an ev range of over 50 miles. and with awd offers acceleration of 0-60 in 7 seconds or so. I just bought SLB in the energy space as well. another Stephanie Link pick.