“I hadn’t had a hot meal in two days, and I knew they’d be open.”
Nicole Gainey

Once upon a time, I completed an analysis of BWLD for my main man flippe-floppe-flye on the stock BWLD which was at the time a trading thesis for him. I bring it back from the dead.

Good morning chaps, I as previously advertised have been employed at the aforementioned historical minimum wage once reserved for galley slaves, that is, consider yourself lucky not to be fed to the sharks.

The title should alert you to the fact that we will start this weekend briefly examining the previously floated investment theme from Mr Fly; “Be long the adipose challenged consumer”

We are of course going to briefly discuss why this could in point of fact be a stroke of genius [no pun intended] and why it might save an otherwise go-go stock, I refer of course to BWLD

First, obesity is a disease, that is hallmarked by addiction, depression, poor self worth and esteem that finds solace in eating, thus chemically inducing the pleasure areas of the brain. [Limbic hippocampal region]

Thus, any product that provides the desired pleasure, will in all likelihood gain great loyalty from the consumer base. A second and as important factor is the cult of cool. Is this product a product that invokes the correct responses from your [the consumer] peer group.

Having never heard of BWLD, never mind eaten them these are questions that I cannot answer. It is important for any individual investor to have, or gain a viewpoint, as this could prove quite vital to the ultimate success of the investment.

Moving swiftly on to the Industry.
The Industry is Restaurants
Net Profit margin……………8.0
Dividend Yield………………..1.8%

Some of these metrics are relevant to BWLD and some are not. Be warned in advance BWLD is a growth or go-go stock, it has very aggressive accounting. The success or failure in the accounting will have a large impact within the final outcome in market price.

The Debt/Equity ratio within the industry is high. Compared to BWLD it is massively high. In 2003 BWLD retired a tranche of debt via an equity placing. Why did this occur?

The cost of capital in 2003 at the tailend of the recession was almost free money, the Fed discount rate was at circa 1.0% and corporate debt would have been around 3.0%, why in that environment deleverage and take expensive equity capital?

The answer is that the company holds an extraordinary level of cash, some $64.6million, while the working capital requirements are a fraction of that. We are talking say $5million in cash would just about squeeze by.

The reason is that there is an interest income that flows directly to the bottom line, boosting Net Profits. Further, the small amount of long term debt held by the company at $9.5million, the interest payments are capitalized. Not really for any other reason other than again boosting the bottom line. It is not illegal, but it is aggressive.

The industry pays a dividend, BWLD does not. Again, growth of Net Profits is key. They must continue to grow, and thus higher multiples will be awarded to the stock. Net Profits have grown, +40% annualised but this is a high hurdle to keep clearing

Depreciation is being accelerated for tax purposes, but not being disclosed in a forthright manner in the Income Statement, again aggressive.

A number of Operating costs are being capitalised, costs from Selling,General & Administration, again, aggressive, borderline legality issues with growth in Revenues [+24.5%] on an annulised basis far higher than SG&A [+17.1%]

The very high Capital Expenditures in relation to Depreciation charges will tend to overstate the cash generating ability of the business. [1.63]

Therefore we return to the necessity of loyal customers. In any economic downturn that might crimp Revenues, it is vital for a go-go stock to maintain earnings growth, without which the market might re-value the shares in short order.

Last point, the “Insiders” have been heavily selling stock, unloading circa $3million in stock, worth thinking about.

flip-flop-fly and the results;
Sector Spotlight: Machine Gunning
Wall Street can be a brutal place to make a living, especially during earnings season. To put it plainly, buying or selling stocks, ahead of earnings, is equal to river boat gambling. Furthermore, when one of your favorite companies misses estimates, not only does it hurt monetarily, it jars your very existence.

For me, this earnings season has been the worst of my career. I don’t think I’ve ever had two top ten holdings blow up like this, first NTRI, now BWLD. Thankfully, I had great success, early in the year, else I’d be in a deep hole.

The lesson to be learned: never go all in, or heavily overweight a stock, no matter how much you like it.

Sure, BWLD is a top ten holding, but comprises less than 7% of my holdings. Does that make me not want to punch the beards off of the bitches who are running BWLD into the ground? No.

However, I’ll survive this bombing and probably come out on top, eventually.

My plan is to buy here, for now. The stock is down way too much, on a small miss. Plus, the company is entering its best quarter, going into peak football season.

Nonetheless, I will not chase the stock lower. If it looks like support is weakening, I will wait for it to dip again, before adding.

In short, this is a machine gunning to the torso.

All in all, I’ll be fine, with nice gains and positions in HANS, MVIS, GME, RIMM, AAPL, VMI, iiG etc.

This hurts, but life goes on.

As for today’s trading:

With the Fed meeting on deck, I suspect the market will flat line, until “The Great Bearded One” makes his decision.

For now, I’ll make a few offerings to the stock God’s, while punching my fucking monitor– with the set of brass knuckles I have on my hands right now.

# posted by Broker A @ 9:41 AM 25 comments links to this post

Fly Buy: BWLD
I bought 10,000 BWLD @ $30.

Disclaimer: Don’t bother. This is a car accident with a bag of grenades in the trunk.

Tuesday, October 30, 2007

The Important Matter of Buffalo Wild Wings
So, “The Fly” was having a pre-earnings celebration, prior to the market close–waiting for BWLD to post spectacular numbers.

I was in the office, graciously handing out low end hamburgers, deli meatballs and good champagne, until I saw the BWLD miss.

Franticly, I started taking back the burgers, making the assholes in my office spit out the meatballs, while knocking over their champagne glasses. Needless to say, the party was over. Back to work.

I couldn’t believe my eyes; the fat bitches who run BWLD had done lost their chicken head minds, via not beating eps estimates.

Now, as you already know, “The Fly” came back to the internets and declared tomfoolery. I sugar coated the reaction and made believe the STOCK WASN’T DOWN 5 FUCKING BUCKS.

Believe me when I say, I am fully aware that the stock “de-banked” me.

In other words, the homosexual commenter, named “Knob Polisher,” is right! I’m just throwing money away, owning this dog bone of a stock. Not only did I lose buckets of money; I bought 3,000 shares at the bell.

Ha! Who’s better than me?

Here’s the kicker:

Those disgusting, filthy, slobs, who run BWLD, let the company miss. That’s right, it’s entirely managements fault. They showered themselves with stock grants, while watching the drunken idiots, who eat at their filthy restaurants, eat cheap wings. This is America, ain’t shit cheap, with the exception of heavy lead laden toys–made in China.

Fuck that.

If “The Fly” were CEO of BWLD, he’d jack prices continuously, especially on over inebriated patrons.

I mean, why should I, as CEO of BWLD, have to absorb the high cost of freakishly big chicken wings? Again, fuck that; I’m passing that cost, and much more, along to you (the drunken, football fool).

In short, the BWLD quarter was devastatingly bad. Atrocious. I’d spit on the CEO, if given the chance and proper escape route.

What “The Fly” needs to do is get done with his 2005-2007 plays, and prepare, via hard nosed research, for 2008-2010.

Fly Buy: BWLD
I bought 3,000 BWLD @ $38.95.

Disclaimer: If you buy BWLD because of this post, filthy restaurants will spring up all over your neighborhood. And, you may lose money.

Today is the day, ladies.

After the close, we find out if those fat fucks from Ohio were redoubling their chicken wing eating efforts or not, at BWLD. The current eps estimate is .26; I’m hoping for .31.

Either way, I’m a buyer of the stock, going into peak football season. Remember, BWLD makes more money off alcohol consumption, than wings.

Hey, guess what?

Bernanke is going to skin the shorts alive today. And, iiG is up, again. Anyone surprised?

Which reminds me, “The Fly” bet ‘both of his eyes,’ that VMI would print $100, this week.

Finally, seeing the low end restaurant chain TXRH post good numbers gives “The Fly” confidence that BWLD will do the same. Also, I’d like to beat the devil out of the fuckers who keep selling LFT.

Off to my local Panera Bread.

Going forward, I have unbreakable confidence in BWLD. Aside from queer corn prices, BWLD should be clicking on all cylinders, going into peak football season. Should the stock dip, post earnings, I’ll be cracking open the family safe, in order to get a piece of the burgeoning chicken wing business.

Finally, “Don Dollar Danks,” CEO of iiG, is settling lawsuits I never knew existed. Funny, yet profitable shit. In my opinion, Danks is the best CEO in America. However, it’s also worth noting, if he were a guest in my house, I wouldn’t leave him alone for a second–for fear he would steal the silverware or a few DVD’s.

It would seem that the restaurant industry is having a bit of an upturn currently. My interest was piqued by the reality TV series America’s Next Great Restaurant which is playing over here currently, I’m a sucker for reality TV.

Anyhow, it got me looking at the restaurant industry. I haven’t really done too much analysis in the past on restaurants save BWLD when my main man flippe-floppe-flye was touting the stock. To date, BWLD is taking off.

Kinda missed the boat on that one [at least for the moment] So DAVE will be the subject of an analysis once I get through the airlines etc.