My Own Analyst

Still Negative On GNTX

It was a bad trade, but it's still a good short (after listening to the call).  If you didn't cover, hang on!

Monday Morning Thoughts

Gold seems to be getting its mojo back...

Be aware that Cramer dissed MAKO during the lighting round on Friday apparently...

RMD filed more lawsuits after winning a recent one.  My client got real nervous about this one and sold a bunch, but I think it could be a good trade when they report next week - lots of negativity priced in lately.  Not sure if it will be a "Treasure" to buy after or something to consider before.

One of the things I did this weekend was to dig into Gentex (GNTX), which announced a huge deal last week.  There were a couple of articles on SA this weekend that viewed the deal and the stock favorably, but I think that this company could give weak guidance on Wednesday when they report.  I have a pending SA article that goes into the details, but the deal really wasn't such a great deal and leaves the company with less financial flexibility.  Further, there was a sudden and surprising CFO change a couple of months ago that could suggest some sort of issue.  The stock isn't particularly cheap or expensive based on the current numbers, so trading negatively doesn't seem to be too risky.  Short-interest isn't high either.

Bad News on ISRG

I remain negative - my target a year out (464) is below the current price.  This is really the main reason:

http://www.acog.org/About_ACOG/News_Room/News_Releases/2013/Statement_on_Robotic_Surgery

Reverse Surge at ISRG

As I keep saying, this one is dangerous at this time...  Apparently under investigation for safety....

http://www.bloomberg.com/news/2013-02-28/intuitive-surgical-robots-probed-by-u-s-in-survey-of-surgeons.html

 

Expect DORM to Plunge

COLMAR, PA--(Marketwire - Feb 21, 2013) - Dorman Products, Inc. ( NASDAQ : DORM ) today announced sales for the fourth quarter ended December 29, 2012 of $135.0 million, down slightly from $135.6 million in the fourth quarter of 2011. The decline was the result of an extra week in the fourth quarter of 2011 that generated approximately $4.8 million in sales, and a planned one-time $5.1 million reduction in orders to remove inventory from a large customer's supply chain in anticipation of a January 2013 change in how our customer distributes our products through its distribution network. Excluding the impact of these items, sales growth would have been approximately 7% in the fourth quarter of 2012. 

 

Very proud of this call...  Consensus was $158m, and Big Al caught the analysts and the machines sleeping...  

Quiet Monday I Mean Wednesday

It's hard to get started on Mondays - the Wednesday after a day off is even harder.  Not too much going on today of note.   I published a negative article on DORM under the Pro platform at Seeking Alpha.  It's not available yet to the public, but the bottom-line is that I expect the stock to decline to 28 or lower over the next year, perhaps soon.  Previously, I had been cautious on being short the name because I thought that there was a remote chance of the company being acquired before year-end, but we can rule that out now.  The negative thesis is based on a read-through of ORLY, AAP, AZO, PBY and GPC, which account for 60% or so of sales.  I think that the consensus numbers are wrong and that growth will be slowing.

AB on APOG

Here is what I sent my clients who own the stock:

They had a great quarter, with sales growing double-digit despite weak end markets and EPS zooming as margins improved.  This is being driven by strong installation business.  It was a clear beat, but the guidance is somewhat muted for their fiscal fourth quarter ending in February.  The quarter is a tough comp on the EPS line due to a one-time tax-benefit from a year ago.  In any event, the consensus for FY13 won't change.

There were two reasons for near-term caution, though I think that this story is on track longer-term (share gains, operational improvement).  First, the large-scale optical business went in reverse, shrinking from a year ago by 5%.  Part of this was likely due to Sandy and also it was a tough comp, but this was disappointing.  Second, the architectural backlog was flat sequentially, discontinuing a trend of growth.  It seems like healthcare facilities may be slowing what had been strong demand.

While I think the long-term story is strong here, the stock has run too far for now in my view, especially in light of some near-term comparison issues.  I think we will have a better chance to add, and some of my technical indicators suggest that the pullback could approximate 15% or more.  As a reminder, the stock is trading well above our buy price of 19.50, and I don't expect to change that buy price.

This is a black 1.  I am reticent to suggest shorting it, as I think that this company is an acquisition candidate, but it might make sense to buy some puts.  The stock has had a great run and is subject to profit-taking.  The current price reflects a valuation that seems to high to me for now.  It's a "nimble short"...

Early Action - Monday After Thanksgiving Edition

CHS was downgraded by FBR, with the target lowered from 20 to 18, apparently based on macro conditions.

IIVI announced what is likely a smart purchase though not material initially to June 2013 annual sales and earnings.  They are adding to their portfolio of thin film filters with a purchase of assets from Oclaro for $27mm, folding them into their Chinese unit, Photop.

Opco was out pumping LQDT, suggesting that they will provide robust FY13 guidance on the call Thursday and maintaining a 60 target.  Again, this is one we might enter for a ST Trade assuming we get a slot available.

Here's one from left field:  YHOO.  GS has FINALLY jumped on after the big run (conviction buy list, 24 target0, so it's time to sell most likely.  The stock is near the top of a range.  They had a big event, but it's over.  Everyone loves the Google Girl, Marissa Mayer, but these things take time.  YHOO is second-rate.  I say fade the stock this morning - it's trading just below 19.05 peak this morning at 18.88 (1.53 units overbought - 19.85 would be 2.0)

Fade FLO

Flowers is overdone on this Hostess thing, and now they are going into mediation.  Seems like a low-risk short here to me near 23-23.50

A Spec to Trade

I want to point out a stock, Vringo (VRNG).  I have looked into this one - it's very binary.  The company is suing GOOG for patent infringement.   I don't pretend to know the potential outcome - settlement talks begin tomorrow and a trial the following week.  

The stock has been very hyped.  There are a ton of shares out there and stupid longs are latching onto James Altucher.  The likely best case is that they could get to $12 or so - the stock is just above 5.  I think a lot could go wrong, and it could take a long time.  This one isn't a great short, but it might be a good one to trade from the short-side, as there will be a lot of shares coming out.  Management is selling - sold near 4 last week.  

I think the odds favor that this will be a dud, but, if you are short, you end up fighting a bunch of speculators looking for a golden ticket.  Management could be very happy taking a much smaller amount than they are asking ($600mm and change, plus perhaps royalties until 2016 valued at $700).  The stock is up today on Maxim raising its target from 6.50 to 10.  

I would be looking to short (for a trade) in the high 5s...