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: Jurgis Bekepuris who wrote (3309)	2/24/1998 2:14:00 PM
From: Michael Burry	Read Replies (2) \| Respond to of 78492

Remember Buffett isn't selling Gilette or Coke, but he's not buying more now either. We know he may not be selling because of the capital gains, but there isn't a very good reason for why he's not buying more even on the recent substantial dips if he still felt they were good values. I'm not at all afraid of being wrong. I'm not sure where you got that. My opinions are broadcast to the world, and I expect every bit of any harsh response that I get. Everyone wants to like Nike. I have been tied up and whipped by people everywhere for my position. I still have confidence in my views, and the crowd just makes me more confident. Like I said, I still feel firmly contrarian. And hey, I make money by knowing more than the market. That's what investing is about for value investors. If I bought Nike now, I'd be a momentum player. Look at Nike's revenues. They outright exploded in 96 and 97. Wearing shoes isn't a fad, but wearing Nike's shoes and paying through the nose for them is. Much of that growth was in the US (40% in 97) and that US growth is not really there anymore. Nike is a much more recent phenomenon than most seem to care to think. It is not yet a consumer monopoly, and any pricing power it had was a fad. I want Coke. I don't necessarily want Nike shoes. That equivalence is not there yet, and may not ever be there. Your example about every consumer brand not attaining monopoly status/pricing power is a good one. Nike is being challenged, and it is still up in the air which way it will go. Nike shoes became a big fashion statement, as did Fila. Oracle is indeed a good example. It drifted lower , then got slammed from the low 30's to the low 20's on the announcement. People were awfully bullish, emotional, and thinking "all the bad news is figured into it" at 32. The only people that didn't like it were the ODBMS junkies and people that hate Ellison. What I can say is that we have a lot of traders buying Nike and saying they'll hold it long-term when they've never done that before. A lot of emotion. We'll see, but I don't expect them to change their stripes. And Nike hasn't even announced any really bad news yet. Sanborn's argument is fairly vague IMO, and it doesn't sway me. I don't see how Nike is historically undervalued to itself or its peers, even on operating cash flows/EBITDA. Great, 9.5X EBITDA. Doesn't excite me. And I don't buy his argument that he can buy now because he now feels it is a consumer brand name that deserves a premium. So his view of the valuation has changed. That premium view gives him confidence, and allow him to make his value argument. But that's a big assumption for a stock that only demonstrated a premium in 1996, never before and never since. He's been at it for 7 years, and he's been successful. And I may be wrong. But if you're argument is that I should give in and just say, ok, "how dare you think you know better than the market," I will say that's my job. I will never buy the stocks that everyone is touting as "forever" stocks, because everyone ignores the price when they buy those stocks. Even value investors might do well to be wary of their own brand biases when purchasing stocks of well-known companies. Good Investing, Mike