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Groupon Fires Its CEO and Best Buy Beats

Markets continue to flirt with all-time highs. Let’s see how they react with the sequester starting to take effect starting today. Companies in the news today include a couple of names that are facing some stiff competition and making changes to hopefully turn things around.

News

Groupon’s (GRPN) stock price is slightly up after the company fired its CEO following a weak quarterly earnings report which resulted in its stock price tanking more 20%. In an e-mail to employees, ex-CEO Andrew Mason wrote the following:

"After four and a half intense and wonderful years as CEO of Groupon, I've decided that I'd like to spend more time with my family. Just kidding – I was fired today."

It doesn’t seem as if the former CEO took his firing seriously. No wonder Gurus had sold out of Groupon in the last quarter. Those selling out include:

Earnings

Consumer electronics retailer Best Buy (BBY) reported earnings that were better than what analysts were hoping for. In the fourth quarter, excluding restructuring charges, income from operations came in at $1.64 per share versus analyst expectations of $1.54 per share. Helping the company beat analyst expectations were pre-Super Bowl sales which enticed consumers to purchase a new television before the big game.

Longer term, the company is doing a much better job in tackling “showrooming,” a term that describes visitors going to Best Buy stores to touch and feel a particular product only to buy them from online retailers like Amazon.com (AMZN) or eBay (EBAY) for less. The company is also doing more extensive training for new hires and encouraging promotion of its online store. Early figures show that this strategy is working as online domestic revenue increased 11%. Best Buy also announced it did not receive an offer from founder Richard Schulze by the deadline it had set. The company is also not giving guidance for the first quarter, which might or might not be a good thing.

Despite its recent bounce from its low, Gurus have for the most part been net sellers of Best Buy.

Gurus who have recently sold out or reduced their positions include:

Shares of Salesforce (CRM) are up more than 4% after the company reported earnings and revenue that topped analyst estimates. The sales and marketing company also forecast its fiscal 2014 figures which began on Feb. 1 in line with analyst estimates. The company is expecting sales of $3.82 to $3.87 billion; analysts were expecting revenue of $3.85 billion.

At a forward P/E of 82, I know value investors will not even look at Salesforce. But I bring Salesforce up to show how much Wall Street will reward a company that is growing sales at a fast pace. But underneath that sales growth, the company’s operating margins are abysmal and sometimes negative.

Several Gurus have reduced or sold out of Salesforce as the company has one of the highest valuations in tech. Gurus who have recently sold out or reduced include:

  • CEO Buys, CFO Buys: Stocks that are bought by their CEO/CFOs.
  • Insider Cluster Buys: Stocks that multiple company officers and directors have bought.
  • Double Buys:: Companies that both Gurus and Insiders are buying
  • Triple Buys: Companies that both Gurus and Insiders are buying, and Company is buying back.

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About the author:

earningsyield
I'm in love with value investing and in particular Joel Greenblatt's "magic formula". I run a well diversified portfolio

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