Monday, January 21, 2013

Value Trap

"Hi-tech is all about investing for growth" - this makes it difficult to do a turnaround relative to other sectors.
Becoming a value proposition by cutting costs does not work in this space

Bricks and Mortar retail is a really tough business. Even Starbucks is seeing the effect of online sales...
In effect, he says that it is a value trap.
JCPenney for example - Bill Ackman's Pershing Square holds 25% - and he says that it's going to be a brilliant turnaround. The problem is that there is no real differentiating factor wrt JCP. It's just another shopping place and a big problem is the refurbishment and upkeep of these large, good-looking mega stores. Unless you can anchor your customers to your shops, you can't clock sales...
Walmart does it well.

Cash flows matter. A lot of analysts assume that cash used in investing activities can be ignored because they will cause future growth...

Good interview. Hate the interviewer - annoying guy.

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