BA: BA is a stock a client asked us to research. Normally, we don’t work a la cart; however, if the client is ok with us sharing the work we’ll do it on occasion. BA has some accounting issues. They’ve experienced more pricing pressure and competition from Airbus and others. We only wrote one report and don’t intend to write more.
Sample Reports: November 23rd, 2016
Losers prior 2005 - 2013
MNST: We started coverage of MNST at $60.04 in August of 2012. We did some deep digging into the industry. Academic research was pointing to the dangers of teenage drinking and energy drinks. Two teenagers had heart attacks from drinking MNST products. It looked like it might become a class action suit. The Canadian government, for example, was pleading with the FDA to protect underage teens and several states started legislation to ban energy drink sales to minors. Management denied any marketing was geared toward underage teens, which was proven false. The stock bottomed at $44 in November of 2012. Management stepped up marketing spend and the stock started to rally back. Our last report was at $56.34 in November of 2013. Eventually, there were rumors KO may buy them. We never wrote a cover.
CMG: Our original thesis for CMG was based on rising commodity prices, unreliable sources of natural beef and vegetables. The company might have saturation issues. Originally, we wrote a short at $242 in Nov. 2010. The stock traded down for several months to a low of $220. While we didn’t write a cover, we believe clients started to cover as it rallied back. In February, the stock was up 30 points as the company increased prices to account for higher costs. The stock rallied after that. We never wrote a cover. It was obvious to clients the idea wasn’t going to work. Our $278 report was just revisiting the stock, not related to the 2011 work.
BWLD: Buffalo Wild Wings was one of our losers. Chicken wing prices doubled due to higher feed prices, more competition, including McDonald’s experimenting with chicken wings, etc. Operating income fell from 18.5% to 15.5%. Unfortunately, the company fought this off by creating “boneless wings” which consisted of scraps of chicken shaped to look like a chicken wing and fried. They averaged margins back up causing the stock to recover. We never wrote a cover.
CSGP: Costar is a software company used by real estate brokers for listings. We thought the collapse of the real estate market would wash out its subscriber base. We heard a lot of bad stories about the CEO’s