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Sally Jones
Sally Jones
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Francis Chou Drastic Cut - Overstock Up 237% Over 12 Months

April 26, 2013 | About:

As of April 23, 2013, Francis Chou, fund manager of Chou America Mutual Funds, reduced his position in Overstock.com (NASDAQ:OSTK) by 12.25%, with current shares after the trade at 1,891,587. Chou sold in the price range of $18.91 per share, for a 1.48% loss to his portfolio. OSTK’s current price is $1.75 with a change from average up 4%. This is Chou’s second reduction so far this year, and his fifth chop since last fall when the share price was around $15.5, according to GuruFocus Real Time Picks.

His holding history since third quarter 2011 shows an average price for shares bought at $11.8 per share with a 67% gain.

With a market cap of $447.19 million, Overstock.com is an online discount retailer that sells a broad range of products including clothing, furniture, rugs, bedding, electronics, jewelry and cars. Its fair trade department, Worldstock.com, sells artisan-crafted products from around the world and offers additional unique items. The store sells 984,000 products online, and the company has 1,280 employees.

The company’s key ratios are a P/E of 23.4, a P/B of 15.3 and a P/S of 0.4253.

Overstock’s revenue spiked last fall from an increase in unique website visitors and average order size. Although the third quarter 2012 was the third consecutive quarter in which Overstock made net earnings, the company was unprofitable by $19.44 million in 2011. Overstock reported 2012 revenues of $1.1 billion and a net income of $14.7 million. The company’s first quarter 2013 revenues are also showing growth as of last week when Overstock.com reported financial results for the quarter ended March 31, 2013.

Overstock.com’s first quarter 2013 revenue was up 19% over the same quarter 2012, with $312 million versus $262.4 million, respectively. The company realized a 24% increase in gross profit with $58.9 million in first quarter 2013 compared to $14.5 million in the same quarter 2012. The company’s gross margin has increased 80 points since the same quarter a year ago. Overstock.com’s net income for first quarter 2013 is $7.7 million compared to $2.7 million in the same quarter a year ago. The company’s diluted EPS of $0.32 per share is a $0.20 per share increase over last year, same quarter.

A further sign of growth, Overstock opened an additional facility in Kentucky last month. With speedy fulfillment and delivery being crucial to the company’s customer satisfaction, company officials say this additional distribution facility will reduce the time for resolution and refunds for customer returns. Outbound shipment times will also see improvement for customers located in the eastern U.S.

Jonathan Johnson, Overstock’s acting CEO, said, "Overstock.com is investing in its supply chain to get product to and from customers more quickly and to remain customer-centric."

As of April 23, 2013, the portfolio of Chou Associates Management lists 31 stocks with a total value of $382 million and a quarter-over-quarter turnover of 5%.

His top buys, sells and holdings:

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About the author:

Sally Jones
Sally Jones writes about Real Time Picks. She says, "I truly enjoy watching the Gurus in realtime and telling their story."

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