Oreo

I see Apple as the weakest of that group; one that I'm least likely to own.

Apologies, I am curious - what % of your portfolio is the potential exposure on the puts that you've sold?

The probability of a donut here is way too high to place any kind of bet on the long side. It's crazy. Consider the following. 1. They make $20-30m of free cash (after interest) per quarter. The likelihood of this going any higher is near zero, in my view. 2. They got about $35m of cash & securities on hand. 3. Take a look at the table of contractual obligations, below. http://i.imgur.com/PTls0mh.png They got $1.2b of term loan coming due in 2018/19 and $250m on a convertible in 2020. Who the hell is going to refinance them? Unless they show an unbroken string of 3-4 quarters of mid single-digit SSS %, no one's going to refinance them. And then, they're dead. The brand is not worth anything. When you buy vitamins / whey /etc on Amazon, do you care if it's GNC or some other brand? No. All you care is whether it has enough 5 star customer reviews and whether it's Prime-eligible. Vitamin Shoppe has the same fundamental industry headwinds, but the key difference is that Vitamin Shoppe has not been stupid enough to lever their balance sheet and buy back stock. Maybe once GNC goes Ch.11 in 2018/19 Vitamin Shoppe wins some market share, or something. I doubt it, though. VSI will be a slow-melting ice cube. GNC a rapidly melting one. P.S. The 2020 GNC converts are so far trading at a high-teens yield / 60ish cents on the dollar; the conversion price per share is laughable ($66/sh).

BTW the royalties on these ETFs would blow your minds. I can see why Pabrai wants a piece. Paying for any of these ETFs that cost 40-90 bps more than the SPY is flat-out crazy, in my view, especially if you plan on holding the ETF for decades. That fee difference will compound and destroy your cumulative. The only ETF / MF where that level of fees could be justified is something like Greenblatt's Gotham long/short (e.g. 170 long, 70 short). But expense ratio there appears to be 2%, which is still way too high.

With a classic value ETF like QVAL, you are paying 50-80bps and the ETF then holds stuff like Cisco, Apple, Wyndham, HP (last I checked). Compare that to the simple S&P500 ETF tracker from Vanguard. Yes, you hold the S&P. But you pay 5bps (10-15x less). And by the way, for some weird reason, it keeps outperforming QVAL and its ilk by a significant margin. Why do people keep complicating things?

What is GNC fundamental service/product to the customer? It's selling 'health', 'dieting', 'self-esteem'. How are those 3 things not in structurally greater supply due to forces like Amazon, Sweetgreen / salad bars / salad chains, guys like Krogers increasing the shelf/fridge space dedicated to healthier & organic products, etc? Then, with operating / off-balance sheet leverage, how could GNC be in the top-10 things to look at from the long-side? The only long argument that I could possibly make is that management will re-purpose the real estate for something else, e.g. a high-traffic salad chain. But that's speculative. Maybe I could say that management is buying stock b/c they think someone will come in and bail them out. But when I step back and look at these arguments, it's kinda weak. I'd probably be short this but I don't want to shell out the 10% borrow cost.

I used to take VIC a lot more seriously initially, but over the years my view became more nuanced. One, it seems a fair proportion of VIC members take what they read on VIC and reproduce it on SeekingAlpha, COBF / etc, sometimes packaging and selling that as 'premium' / subscription products and earning $$$ from it. Kinda devalues the value of the effort that you have to put in to get in and then post 2 ideas a year so that you don't lose access. The air of exclusivity is gradually deflating. The board is also not immune to the occasional hard pump (& dump). Also, I get the sense that legit HFs / LOs do not really use VIC, COBF or any of these message boards and consider them low signal-to-noise. Real life interactions with other investors, calls to sell-side and attending conferences is where it's (ostensibly) at. Having said that, if you are stuck in a geographical/industry location where you cannot get access to other people who do stocks for a living or are interested in stocks, VIC is great. Otherwise, real life interactions/gossiping about stocks is kinda better. It's all about the opportunity cost of time and what else you could be doing with your time other than hanging out on message boards. For instance, I find that Twitter is a good place to be to keep a finger on the mood of the analyst / PM community.

I don't understand your point. KORS has had better earnings than RL over the last two years but worse stock performance. If anything, rotation should happen the opposite direction. Past 2 years, KORS stock went from $75 to $37. Past 2 years, RL stock went from $183 to $76. So, to your point, KORS has not had "worse" stock performance. + More subjectively, I do not think that RL's intrinsic value suffered a % worsening similar to KORS.

One more point: Consider the following thought experiment. Say you have $6 bil. You can spend it to either buy 100% of KORS or 100% of Ralph Lauren. Which one would you pick for the long-term? RL has been steadily trading down last 2 years. I'd imagine retail sector-focused value folks would rotate out of KORS and into RL, at least to some extent.

I have not listened to the call but my understanding is that the management team has (speaking relative to prior earnings calls) played down the "our stock is cheap" card and played up the "make strategic moves" card, which the market is interpreting as Idol desiring to go out and buy Kate Spade. I've done the $36 to $50+ flip before, but for me to do this again given the non-zero probability that Idol will buy Spade and the potential impact of "manufacture more in America" trend (i.e. Trump), personally I'd want to see KORS trade in the low $30s before I consider buying again.

tombgrt - apologies, did not mean to come across as a douche. I agree with a lot of what Patmo has said. Another thing I'd mention is that when you have a revolving door of management teams that cannot execute on an existing business base but then buy another one (Arden; a 'meh' kind of brand), and the margins aren't that far off from the market leader (L'oreal), then it makes a lot of sense to ding the company on the EV/EBITDA multiple. In the end, this is a show-me story. On occasion, I do like to invest in levered equity stubs, but the history & the background are just too much for me at >$30.

That's 2.5x growth from today. Where are the market share gains supposed to come from? From Loreal? Revlon has not achieved 18% margins in like...25 years. Come to think of it, Loreal (a business that has revenues of $28b.. i.e. 10x+ the size of Revlon) has margins of just 20%. There you go. That's scale for you.

Everything that was said + PayPal Amazon eBay, to a certain extent. Now that I think about it, float-y companies have always been a big part of my portfolio. They just don't screen as well on a P/E basis, usually.

I wish you said 'we' a few more times.

I get that but given that we're (almost) all anons here, the bias is nowhere near as prevalent as elsewhere in life, at least to me. I've had remarkably frank conversations online with people I've never met who are anons and it would be difficult for me to recreate that if the veil of anonymity was lifted, online or IRL. It's also much easier to cast a vote in a poll - the voter's choice cannot be traced to the voter.