Behind The Idea

We're getting back on the boat this week. Last week's episode about Royal Caribbean and the viability of cruising hit a nerve, and we wanted to explore further. Paul Brady of Conde Nast Traveler joins us to talk about the benefits of the new Silverseas deal and the surge in cruise popularity, and William Mack, CFA, of Spring Mill Research explains why the deal concerns him, and why he likes cruise lines as well even this late in the cycle. A double interview episode! Topics covered - Paul Brady from 1:15-4 Learn more about your ad choices. Visit megaphone.fm/adchoices

Royal Caribbean (RCL) was sailing along smoothly until it decided to make an expensive purchase. Are rougher waters ahead, or will this pass quickly? We look at the nature of the deal, of cruises, and of consumerism in the 21st century, based on an article by Spring Mill Research. Topics covered: 3:30 minute mark – snapshot of the Spring Mill Research thesis, or how RCL isn’t learning their lesson 6:30– What is there to say about this deal? 15:00 – The prospects for the cruise business in general, i Learn more about your ad choices. Visit megaphone.fm/adchoices

So much in life is about timing. The same goes for short ideas. We review a recent pitch by Berna Barshay of Viola Capital Management, LLC that argues that Ralph Lauren's chic look is passé with younger shoppers, and that the stock's recent rise is unearned. Is it a question of the right fashion or the right timing? We discuss. Topics covered: 2:55 minute mark - Recapping the short thesis - sales in the off-price channel and loss of millennial foothold. 6:30 - Looking closer at the generational issue for R Learn more about your ad choices. Visit megaphone.fm/adchoices

Shopify - the next major web platform or an overhyped tech company? We review a couple recent articles - both bull and bear - and see where the different sides get it right or wrong. Topics Covered Quick recap of Shopify - 2:00 minute mark Mike's experience with Shopify as a potential competitor - 4:00 Is Shopify making a land grab, and how does the multi-sided platform compare to a network effect - 9:00  The side hustle secular trend (or is it?) - 13:45 The bear case - competition, reliance on Facebook, Learn more about your ad choices. Visit megaphone.fm/adchoices

Kerrisdale Capital joins us on Behind the Idea to go over some of their recent short ideas and the current state of the market, as a follow-up to our review of their Proteostasis idea (episode #9). Sahm Adrangi and co make their case and explain why shorts can also get it wrong. Topics covered - Proteostasis (3:00 minute mark), St. Joe's (17:50), QuinStreet and the adtech problem (29:00), the state of activist shorting and the hedge fund business (34:30). Learn more about your ad choices. Visit megaphone.fm/adchoices

Disney is the king of story telling, but the market hasn't been buying what the company is selling. Brian Langis recently told a story - https://seekingalpha.com/article/4172855-future-disney-espn - for how Disney will not only survive cord-cutting but thrive. Is a happy ending coming for shareholders? We discuss. Topics covered: 2:00 minute mark - What do we know about Disney already?  7:50 - The strategic outlook for Disney, and the opportunity Brian Langis sees 14:15 - Everybody's worried about canniba Learn more about your ad choices. Visit megaphone.fm/adchoices

Conde Nast Traveler Articles Editor Paul Brady joins Behind The Idea this week to follow up on our Delta discussion (episode #15). We discuss the state of the industry and the limits on capacity, and how Delta is trying to gain distance from its competitors. Topics covered: 2:00 minute mark - Delta’s focus cities and offering full scheduling options 5:25 - Capacity constraints and where that leaves fliers and airlines 9:25 - What are the risks and drawbacks to being at full capacity? 14:25 - What is Delt Learn more about your ad choices. Visit megaphone.fm/adchoices

Does anyone eat cereal anymore? And what can Kellogg do about it? That's the topic of this week's Behind the Idea, as we take Prescience Point's short idea - https://www.presciencepoint.com/wp-content/uploads/2018/04/Prescience-Point_Kellogg-Company__K_.pdf - and see what really matters for Kellogg going forward. Topics covered: 2:00 – Setting the table for the consumer packaged good industry and the general Prescience Point thesis  4:50 – Assessing the decline of cereal, and Mike puts on his Peter L Learn more about your ad choices. Visit megaphone.fm/adchoices

Professor Aswath Damodaran joins Behind the Idea this week to discuss Facebook as a follow-up to our episode reviewing his article (BTI #12). He also sheds light on his investing philosophy, why he dislikes the Dean of Valuation moniker, and the importance of faith and testing your faith in investing. Topics covered: Why the 'Dean of Valuation' is a terrifying title - 1:10 minute mark Recapping Damodaran's Facebook (FB) thesis - 2:00 How do you deal with the risk to Facebook's dominance? - 3:45 The piece W Learn more about your ad choices. Visit megaphone.fm/adchoices

The airline industry has changed. How do the remaining big players separate themselves from one another? Tim Dunn detailed Delta's focus city strategy in a recent article - https://seekingalpha.com/article/4167776-deltas-focus-city-strategy-delivers-revenue-advantages - which shows one approach. We look at whether management's story checks out and what it means for investors to consider an oligopoly. Topics covered:  What’s going on in this thesis and with the focus city model? (1:30 minute mark) Decon Learn more about your ad choices. Visit megaphone.fm/adchoices

Landmark's model came under scrutiny in an article by new SA contributor Alacran Investments (https://seekingalpha.com/article/4164640-beware-landmark-infrastructure-partners-lp). A lot of high-yield models may come up for scrutiny as the interest rate cycle turns. What does that mean for income investors? We look at how to avoid the high yield trap this week. Topics covered: What is Landmark's model, exactly? (1:45 minute mark) Definition of terms - MLPs vs. REITs vs. triple-net-leases (4:10) Mike explain Learn more about your ad choices. Visit megaphone.fm/adchoices

Barnes & Noble: Value trap or value play? We take a research report from Westpeak Research Association - https://seekingalpha.com/article/4163135-barnes-and-noble-new-page-evolving-history - as a launchpad to consider the bookseller's future and what that means for investors. Topics covered: Looking at Westpeak's Research (1:45 minute mark) The tradeoffs between a research report and an actionable long/short idea (5:00) Inverting this article to find the short case (12:20) But look at that value! (19:00) T Learn more about your ad choices. Visit megaphone.fm/adchoices

When the facts change on a stock that 'everybody knows', how do you change your mind? Professor Aswath Damodaran wrote an article about why Facebook is worth considering - https://seekingalpha.com/article/4162285-facebook-feeding-frenzy-time-pause - and provided a framework for how someone could update their views on a company. We take a look at that framework to see how it can be an example for investors, and where it might fall short. Topics covered: A summary of the professor's thesis and our three top Learn more about your ad choices. Visit megaphone.fm/adchoices

Google is a great company. Is it a good investment? How much should you pay up for quality? That's the topic of this week's Behind The Idea, as we look at David Trainer's argument - https://seekingalpha.com/article/4160296-nows-time-buy-discounted-tech-giant - that the recent dip is a buying opportunity. Topics covered include: The ups and downs of the buy the dips strategy (1:20) The quality of Google as a company (8:15) Potential threats to Google's moat (13:00) Risks David Trainer brings up and whether a Learn more about your ad choices. Visit megaphone.fm/adchoices

General Electric has fallen on hard times, to the point where the mere rumor that Warren Buffett could get involved has perked up the stock. What happened, and what happens next? Mike and Daniel take an article by WG Investment Research on the good, the bad, and the ugly with GE and see whether there's anything redeeming in the company's prospects or shares. Topics discussed on this episode: The backdrop of GE's situation (1:55 minute mark) Buffett's interest and the principle of coattail riding (3:00) Cove Learn more about your ad choices. Visit megaphone.fm/adchoices

Data is accepted as hard currency in this day and age, but can it always be believed? We look at Kerrisdale Capital Management's short idea on Proteostasis and the different ways they and other investors have looked at the data for PTI's key phase II trial. Topics covered - Proteostasis background and biotech company name portmanteaus* (1:40 minute mark); Breaking down Kerrisdale's argument, centering on the placebo group (7:00); Venturing into biotech as a non-scientist (12:25); The need for capital in bio Learn more about your ad choices. Visit megaphone.fm/adchoices

Investing in a cyclical stock at peak earnings can lead to a bumpy ride. What road will Thor Industries follow? We speak with DoctoRx (https://seekingalpha.com/author/doctorx/articles#regular_articles) about his thesis on the RV maker and why he thinks the bull case has miles in front of it. Topics covered: How to deal with THO's cyclical nature? (2:45 minute mark); Looking at the RV cycle specifically (4:55); What about oil prices and rising rates? (9:40); Millennials as RV Buyers (12:15); Tariffs as a he Learn more about your ad choices. Visit megaphone.fm/adchoices

Has anything changed for oil companies, and for Halcón Resources specifically? That's the topic of this week's Behind The Idea, as we look at Laurentian Research's three-part series - https://seekingalpha.com/author/laurentian-research/articles#regular_articles&ticker=hk - to see if the shale-oil company can turn it around. Items covered (with times in the podcast in parentheses) - Halcón's background (1:25), Laurentian Research's case (2:40), How to value HK's land (5:25), The true base rate and second- Learn more about your ad choices. Visit megaphone.fm/adchoices

Everyone loves a comeback story, but do they actually work in investing? Behind The Idea looks at Michael Rogus's argument (https://seekingalpha.com/article/4151019-tile-shop-value-left-shares) that The Tile Shop can turn things around, as well as why retail turnarounds can be such a graveyard for investors. Topics covered: A review of TTS's unhappy 2017 (1:30) Breaking down Rogus's TTS article (4:30) The elephant in the room (Amazon (AMZN)) and a potential fence against it (14:40) Are the gross margins su Learn more about your ad choices. Visit megaphone.fm/adchoices

Mergers & Acquisitions (M&A) garner headlines and lead to big returns for the right investors, but they can often be a bit of a crapshoot, especially in the Pharmaceutical industry. SA author Biosci Capital Partners makes the case in two articles that Crispr Therapeutics, a pioneer of gene editing technologies, might be a target for Gilead Sciences. Behind The Idea breaks down the case and discusses how to deal with the hope of a big payout and the risk that it won't happen. Learn more about your ad choices. Visit megaphone.fm/adchoices