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Yesterday

  • The Science of Hitting commented on Holly LaFon's article 18 hr ago
    Eddie Lampert's Statement on Sears Outlook
    March 9, 2017 by Eddie Lampert To Our Associates: Following our year-end financial results announcement this morning, I wanted to reflect on the...
    View all 1 comment
    The Science of Hitting 03-26 07:35
    • "We saw the disruption of retail coming more than a decade ago and built a differentiated online shopping and membership platform – Shop Your Way – to ensure our participation in the next wave of retail."

      Judging by top-line revenues or comp store sales growth (negative each of the past ten years), they have a lot of work left to do to ensure their participation in the next wave of retail...

2017-03-25

2017-03-24

2017-03-19

  • The Science of Hitting commented on The Science of Hitting's article 03-19 06:47
    Why I'm Buying Under Armour
    Over the past year, Under Armour (UA)(UAA) stock has declined by more than 50%. Most of the real pain has occurred over the past six months –...
    View all 8 comments
    The Science of Hitting 03-19 07:47
    • C59661,

      UA's growth requires significant investments in working capital; that was exacerbated at the end of FY16 due to slowing revenue growth (which resulted in excess inventories) and continued International growth (longer payment terms). In addition, UA has had significant capital expenditures in each of the past two years. Both of these items have driven a sizable gap between net income and free cash flow. As you suggest, it's important for an investor to understand how the financial statements work together; this is how we get to the true economics of the business. Thanks for the comment!

       

       

2017-03-16

  • The Science of Hitting commented on Grahamites's article 03-16 11:43
    Valeant: It's Not a Game of Chess- Part I
    “I think there are times when you should be satisfied with less based on just the ideas of decency, and at Valeant they just looked at it as a...
    View all 1 comment
    The Science of Hitting 03-16 12:43
    • I've struggled to truly grasp the Valeant saga, so I'm excited to see what your coming articles Grahamites. Here's the best thing I've seen so far:

      http://www.afr.com/markets/aussie-john-hempton-beat-wall-street-royalty-on-valeant-20170314-guy6g8

       
  • The Science of Hitting commented on The Science of Hitting's article 03-16 09:34
    Why I'm Buying Under Armour
    Over the past year, Under Armour (UA)(UAA) stock has declined by more than 50%. Most of the real pain has occurred over the past six months –...
    View all 6 comments
    The Science of Hitting 03-16 10:34
    • Softdude,

      As noted in the article, I think it's appropriate to look at normalized earnings power. Even then, the valuation is daunting (by my math, roughly 20x pretax earnings). The question is whether the runway (where UA can be in 5, 10, and 20 years) justifies that premium. My hope is that the premium shrinks (aka the stock falls) so I can buy more. Thanks for the comment!

2017-03-15

  • The Science of Hitting commented on Grahamites's article 03-15 12:48
    Timeless Lessons From the 2017 DJCO Meeting – Part III On Integrity, Morality and How to Judge People
    The most-asked question this year both during and after the Daily Journal Corp. (DJCO) meeting, to my recollection, was how Buffett and Munger were...
    View all 5 comments
    The Science of Hitting 03-15 13:48
    • Great stuff, thanks for sharing Grahamites!
  • The Science of Hitting commented on The Science of Hitting's article 03-15 07:24
    Why I'm Buying Under Armour
    Over the past year, Under Armour (UA)(UAA) stock has declined by more than 50%. Most of the real pain has occurred over the past six months –...
    View all 4 comments
    The Science of Hitting 03-15 08:24
    • Swnyc2, 

      I think UA has a unique brand that has slowly been built over the past two decades. At the core, I think it's best-in-class product and a differentiated message. It's supplemented by endorsments with athletes that align with the brand (people like Jordan Spieth, Cam Newton, and the Rock). It also reflects the patience and focus required to stick to your knitting - for example, building a real presence in the apparel business before throwing the UA logo on every imaginable type of shoe. This is all a bit "fluffy" for me because It's difficult to quantify (maybe you're the same way). With that said, you can't deny what the've done to this point; they at least "had" something special. 

      So that gets to what I really think you're asking: is this sustainable? Personally, I take some comfort in the industry dynamics - namely, a handful of players that tend to act rationally. If you think about the cost structure of these competitors, I think it tends to reinforce / encourage this behavior (the economics are quite different than an airline trying to sell its last seat). There's room for Nike, Adidas, and Under Armour to all have a seat at the table.

      I'm betting these things will not change. If they do I hope I'll recognize it and act quickly. This is more difficult (in my mind) than something like GEICO where the competitive advantage is so damn clear. Maybe it's a sign of the times that I'm willing to venture into a name like UA...

      Hopefully I've done a decent job of answering without overstating my confidence level. 

      Thanks for the comment!

2017-03-14

  • The Science of Hitting commented on The Science of Hitting's article 03-14 13:08
    Why I'm Buying Under Armour
    Over the past year, Under Armour (UA)(UAA) stock has declined by more than 50%. Most of the real pain has occurred over the past six months –...
    View all 2 comments
    The Science of Hitting 03-14 14:08
    • DLV - I agree with much of what you've said. As it relates to Adidas, I would note that "increasing market share" doesn't appear to be their primary / only objective, as implied by the financial targets they've announced at their investor day. Management is calling for material margin expansion over the next few years. But your broader point stands: this is a fiercely competitive industry (as it has been for some time), and the position of the horses in the race can change; my bet is that UA will be one of the winners when it's all said and done. 

      I hope that market correction comes as well :) Thanks for the comment!
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