Wait a minute...for much of this thread you've maintained that is not about how ostk the company/stock does, but rather its about naked short selling. And when ostk was falling for all those months you didnt' say a word. Now that ostk is finding some momentum to the upside you're jumping on the bandwagon? Keep your story straight. Also, OSTK is available to short at IB. That alone counters all the innuendos and half-truths you've managed to spiel for the past 87 pages.
It isn't abouit the fundies, and no, that is a different article. I posted it as information that made the stock rise, which is kind of important. And the replies on Real Money say the stock could be over 40 in a heartbeat. Half truths? BUYINS.NET, www.buyins.net, announced today that these select companies have been added to the NASDAQ, AMEX and NYSE naked short threshold lists: NYSE Group, Inc. (NYSE: NYX), They are so greedy, the hedgies and brokers, the NYSE group hit the list Friday. What a joke. What a stupid joke. The joke is, of course, the regs don't stop it.
09:48 OSTK Overstock.com: hearing chatter that OSTK is pulling stock certificates (28.77 +0.39) good luck w/that IB locate.
Course, you guys are all smarter than Alsin, and you know all about someone you've never met. Get in his way, and get mowed down with all the other scum.. Al Dunlap. That bastard Greenberg needs an orange jumpsuit - and he may get one. Overstock.com (OSTK:Nasdaq) BULLISH Price: $30.42 | 52-Week Range: $21.60-$48.65 The better way to mitigate negativity is to carefully parse and examine the criticism. Breaking down Overstock's financials shows it does not have a liquidity problem. A trip to Overstock headquarters built confidence in Patrick Byrne's leadership. Position: Long Internet Exploring Overstock's Discount By Arne Alsin RealMoney.com Contributor 3/23/2006 2:08 PM EST URL: http://www.thestreet.com/p/rmoney/internet/10275341.html Negativity makes investors uncomfortable. A simple way to mitigate this discomfort is to avoid stocks that are enveloped by negativity. The problem with this is opportunity cost. You'll miss out on some extraordinary investment opportunities. The better way to mitigate negativity is to carefully parse and examine the criticism. That's what I've tried to do in this two-part column on the negativity directed at Overstock (OSTK:Nasdaq) . Below, I address criticism involving the balance sheet and management. 'Overstock Has A Liquidity Problem' My review of Overstock's operations indicates that it has ample liquidity. The company has cash and marketable securities of $112 million and credit lines of more than $50 million. The company should be cash-flow positive this year. Even if it's not, the notable gross-margin expansion in recent quarters makes the likelihood of anything beyond a minimal operating loss quite low. There would be a "liquidity problem" if sales decline in a material way, but there is no evidence to suggest that this is likely. The fact that liquidity is not currently an issue for Overstock doesn't stop critics from focusing on it. It's easy to couch data in a way that scares unsophisticated investors. For example, a recent column in the New York Post assailed Overstock's liquidity, saying that the company had a "paltry $11 million in net cash." That metric is accurate -- Overstock has $11 million in net cash, calculated as cash plus marketable securities minus accounts payable -- but that metric is not meaningful. If it is, some of the finest companies in America are in similar trouble.
Wal-Mart (WMT:NYSE) had a net cash deficit at the end of January of over $14 billion. Dell (DELL:Nasdaq) had net cash of negative $782 million as of the end of January. And Costco (COST:Nasdaq) runs a net cash deficit quarter after quarter. The net cash calculation is meaningless for a retail model for a variety of reasons, e.g., it does not factor in the value of inventory. It is impressive (and capital-efficient) when a retailer grows a business using a minimal amount of capital. In the case of Dell, Costco and Wal-Mart, they are using other people's money (i.e., vendors') to finance their business growth. Study the operating model of Overstock and you'll see the same dynamic. About 62% of its business is partner fulfillment (product shipped directly from vendor to Overstock's customer). Growing this business requires minimal capital. And this business generates an enduring float.That's because the company receives cash two days after a transaction and vendor payment isn't due for 30 days. Criticism No. 3: 'CEO Patrick Byrne Is Crazy Overstock CEO Patrick Byrne is a prime target for critics. Byrne's use of elaborate imagery (e.g., "Sith Lord") and talk of conspiracy have made it easy for critics to lampoon him. While all the criticism generates entertainment for the media, it obscures some serious charges levied against certain hedge funds, such as manipulation of so-called independent research and front-running. (TheStreet.com and James Cramer were issued subpoenas last month by the Securities and Exchange Commission in connection with an agency investigation into such manipulation.) For potential investors in Overstock, media attacks on Byrne have added a layer of complexity to the assessment of the company. Investors have to be able to sort through these media attacks, some of which are beyond the bounds of reason. For example, columnist Herb Greenberg (a former columnist at TheStreet.com) recently lumped Patrick Byrne together with the likes of Al Dunlap, Jeff Skilling and Dennis Kozlowski. My Trip to Salt Lake City What is the truth about Byrne? Is this 43-year-old Stanford Ph.D. crazy? A couple of weeks ago, on a day Byrne was traveling and out of the office, I flew to Salt Lake City to talk with employees at Overstock, including several members of the senior management team. The ostensible reason for my trip was to discuss the company's model and operations with members of the management team. I also wanted to take the opportunity to quiz everyone that I talked to about working with Byrne on a daily basis. The feedback that I received in Salt Lake City is the polar opposite of the media's portrayal. He is greatly admired within the company for his intellect and energy. He is integrally involved in every department, from analytics to marketing to technology to distribution. People that work with him were uniformly startled, amazed and dumbfounded when I mentioned details of the media's representation of him. It doesn't square with the Patrick Byrne that they work with side by side. One consistent theme I heard is that Byrne is fascinated with every element of the business. You might think that warehouse distribution would bore a Ph.D. The stories I heard indicate the opposite is true. A manager in analytics told me how Byrne recently helped write the algorithms for a quantitative program to facilitate purchasing decisions. Another manager told me that Byrne regularly talks to employees at all levels in an effort to glean new information. The only criticism I could get from anybody regarding Byrne is that he is impatient when it comes to implementing operating improvements. There is no grandiosity or pretense, or even a hint of ostentation, at headquarters. The offices are clean and simple. Several employees pointed out items (in some cases the clothes that they were wearing) that are available on Overstock's Web site. Employees have a strong passion for the brand and the company's mission. I heard Sam Walton's name mentioned several times. Frugality seems to be an obsession at the company, and Walton is held up as a role model. What Do the Financials Say About Byrne? The financials of Overstock and SEC filings tell you a lot about Byrne. There is no "pro forma" presentation of earnings. It's always been GAAP accounting. This is unusual for a high-growth company. Byrne also refuses to embrace EBITDA as a framework for financial presentation because he considers it misleading. Byrne does not take a salary. He owns about one-third of all Overstock shares. He feels his "interests are aligned with shareholders" (per an SEC filing) and has declined incentive compensation each and every year. This is refreshing to see and, unfortunately, unusual. Large share ownership rarely prevents CEOs from taking more, even though their ownership already puts them in an incentive position. For example, Ralph Lauren of Ralph Lauren (RL:NYSE) and Jim McCann of 1-800-Flowers.com (FLWS:Nasdaq) are among the ranks of leaders who have large ownership positions in their companies -- over 40% and 50%, respectively -- yet still accept huge amounts of incentive compensation. It's costly to other shareholders and it's exploitive because their share ownership gives them effective control of the board of directors. It's rare to find a CEO, like Byrne, who says "no thanks" when it comes to incentive compensation. If you study the operating history of Overstock in detail, you have to be impressed with Byrne the businessman. There is no precedent in the history of retail for what he has accomplished. I expect Overstock revenue to exceed $900 million this year. That represents a tenfold revenue increase is just four years. It's been accomplished with a tiny amount of capital, as only $66.5 million of net has been deployed. This includes all equity and debt issuance, with adjustments for current cash and repurchases. Look carefully at the facts surrounding the early operating history of Overstock and this business story is even more amazing. Competitors had several times more capital than Overstock. They had business relationships and ties to large companies that gave them significant competitive advantages. Whether you like Byrne or not, any objective observer that takes the time to review the facts has to acknowledge his business accomplishments. It is also worthwhile to read The World Stock Story, written by Byrne. World Stock (a division of Overstock) is Byrne's effort to help artisans in third world countries. This piece clearly evinces an idealistic passion for fair dealing and for not taking advantage of others for profit. It's fair to characterize Byrne as passionate, opinionated and idealistic. It's fair to call him a maverick. It is grossly unfair and absurd to link him to Dunlap, Skilling and Kozlowski. Ultimately, though, this may prove to be one the greatest of ironies. Dunlap, Skilling and Kozlowski have gone from widely admired status to positions of scorn and ridicule. In the years to come --- perhaps not on Wall Street, but in business schools -- Byrne may complete the opposite journey. -------------------------------------------------------------------------------- At time of publication, Alsin and/or ACM was long OSTK, FLWS and WMT, although holdings can change at any time. Arne Alsin is the founder and principal of Alsin Capital Management, an Oregon-based investment advisor, and portfolio manager of The Turnaround Fund, a no-load mutual fund. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Alsin appreciates your feedback; click here to send him an email. --------------------------------------------------------------------------------
who is right? http://www.thestreet.com/p/dps/cc/columnistconversation2.html William Gabrielski OSTK 3/23/2006 2:52 PM EST I agree with Arne, OSTK will probably do more than $900 million in sales this year, or about 12.5% ahead of 2005 levels vs. 63% top-line growth in 2005. In fact, I suspect OSTK will deliver even better results. However, what I was hoping Arne would do today is breakdown how OSTK gets to 5% operating margins, as I believe that is the key to longevity for this company. I would have also liked to hear more about the company's liquidity, and the impact of the company's recent comments at a conference where it upped its loss forecast for the first 6-months of 2006 to 2X D&A vs. the 1X D&A guidance it gave with its fourth quarter results. Lastly, I am still curious what Arne's 2010 sales assumption is, and what that gets him for a free cash flow number in his model. From a liquidity standpoint, Overstock is not in great shape. Going beyond the company's near-term cash balance, you have to assume some pretty significant working capital requirements in the coming quarters as OSTK gets ready for 2006 holidays. The company gave guidance that its reduction in inventories in the near-term, a source of funds, would go right to cap-ex, a use of OCF. No, the company isn't broke, but as its inventory levels come down, so does its available credit. Also, about $48.2 million of the company's marketable securities are in a foreign security that is pledged as collateral against its credit line, and cash will have to be posted as collateral later this year upon maturity, so you can't count this as available liquidity in its entirety. I have run OSTK's numbers dozens of different ways, and can come up with theoretical value as high as $100 under the right scenarios. The problem is that I have to underweight these scenarios significantly relative to the scenarios that give me $20 price targets given the company's failure in the past to generate profits and cash flow. I would also point out that while Byrne has said he is not a fan of metrics such as EBITDA in the past, his recent comments on a CNBC interview included a mention of EBITDA as a benchmark to measure his 2006 performance as CEO. I maintain my stance that if we are still valuing this stock on a sales basis in 2010, that this stock will not be trading much higher than it is today. With the focus on a slow-down in the top line from management, the company has to once and for all show its operating model can yield sustainable long-term cash flow. Even so, Arne's articles have given the stock a nice pop of late, and bulls are the ones laughing to the bank.
this guy and Comeau are Cramer lackies. They work for him, and have called OSTK a "shitty" company in a private email. I've told this board all along Bryne is a decent, honorable person adn he will not quit. I have no idea what he is doing behind the scenes, but I would n't give Herb and Jim a snowballs chance. I said I didnt' care about the fundies, and don't . Alsin does, but he backs up the checking I did last year. That is how his employees speak of him. A couple of San Diego papers have backed up their native son until we set them straight on the facts. San Diego has, according to a now retired journalist, lost an entire Biotech Industrial Park to Naked Shorting. I just want you to think about this. If Alsin is half right, then the powers taht be have consorted to destroy the employment of 2000 people. that will be their downfall. Also, depending on who you listen to, there are 8.7, 15, 30 , or 60 million shares sold short and naked short. Good night Irene. The fight that you are witnessing is one of survival. Not ours, theirs. And there will be more Refcos. I do not own OSTK at this time.