Author Topic: OSTK - Overstock.com  (Read 130851 times)

alertmeipp

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Re: OSTK - Overstock.com
« Reply #150 on: March 19, 2012, 02:37:30 PM »
Well, prepare for the worst now ....

I just stepped back into this stock which usually means you should expect a 10-20% swing down anytime!

 :P

I apologize in advance.

Truth be told, I have similar super-natural power - stock usually goes up 20%+ AFTER I sold some.
Well, I did sell some today (across the board selling to raise cash), so let the battle begins. 8)


Parsad

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Re: OSTK - Overstock.com
« Reply #151 on: March 19, 2012, 02:51:05 PM »
I'd love a 20% swing down! I've built a sizable position but I'm hesitant to go really heavy with the yoy decline in unique visitors. Another 20% down in the stock price and I would not hesitate!

FWIW, here is the traffic data on alexa. No hard numbers, just graphs but it seems to confirm the yoy decline seen on compete.

http://www.alexa.com/siteinfo/overstock.com#

Actually, go to the "traffic rank" and compare to Zappos.com over the last three months.  They track almost identical.  I think part of it is seasonal decrease in traffic.  Do it for 6 months and max as well...they track closely.  Cheers!
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Eric50

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Re: OSTK - Overstock.com
« Reply #152 on: March 19, 2012, 03:41:19 PM »
I'd love a 20% swing down! I've built a sizable position but I'm hesitant to go really heavy with the yoy decline in unique visitors. Another 20% down in the stock price and I would not hesitate!

FWIW, here is the traffic data on alexa. No hard numbers, just graphs but it seems to confirm the yoy decline seen on compete.

http://www.alexa.com/siteinfo/overstock.com#

Actually, go to the "traffic rank" and compare to Zappos.com over the last three months.  They track almost identical.  I think part of it is seasonal decrease in traffic.  Do it for 6 months and max as well...they track closely.  Cheers!

Yep, I've seen that. Traffic seems better on alexa. What worries me there is the year over year decline in page views per user and time on site. This might mean a lower conversion rate... Do you know any other source that might give us more reliable/precise data on traffic? (I've tried google trends too but found it quite useless).

prunes

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Re: OSTK - Overstock.com
« Reply #153 on: March 19, 2012, 05:13:21 PM »
In case you haven't seen, there's a new article on Gurufocus about Overstock:
http://www.gurufocus.com/news/168976/overstock-is-unbelievable--in-a-good-way

Quote
This business is growing at a fair clip. Again, it is a broker. Customers pay for the purchase upfront and Overstock pays the supplier later. This is inherently a negative equity business. The business model is not unlike DELL a decade ago.

Quote
So now you know why Francis Chou is long Overstock and why Costco is Charles Munger’s favorite company.

I'm taking those comments with a grain of salt. Anyway, it seems most people either hate or love Overstock.

I still don't understand what durable competitive advantage the company has versus Amazon. Why can't Amazon compete in this space?

Parsad

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Re: OSTK - Overstock.com
« Reply #154 on: March 19, 2012, 05:35:08 PM »
I still don't understand what durable competitive advantage the company has versus Amazon. Why can't Amazon compete in this space?

Amazon doesn't have to compete...they could just buy them for $500M or less right now and it would be cheaper than building the business from scratch.  Frankly, I don't know why Amazon just doesn't make an offer and take them out.  Cheers! 
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compoundinglife

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Re: OSTK - Overstock.com
« Reply #155 on: March 19, 2012, 06:33:53 PM »

Amazon doesn't have to compete...they could just buy them for $500M or less right now and it would be cheaper than building the business from scratch.  Frankly, I don't know why Amazon just doesn't make an offer and take them out.  Cheers!

Might be addition for SHLD's online business as well, although I doubt they are entertaining any purchases with the current liquidity exercises they are going through.

WRT Amazon and their purchases, this visualization of their investments and purchases is interesting:

http://www.businessinsider.com/~~/f?id=4a6daa20c1432863111130b9






Parsad

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Re: OSTK - Overstock.com
« Reply #156 on: March 19, 2012, 06:41:07 PM »
Great chart!  I didn't know Amazon bought Imdb.com.  Cheers!
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lessthaniv

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Re: OSTK - Overstock.com
« Reply #157 on: March 20, 2012, 09:00:20 PM »
I was intrigued by the analyst questions on the Q42011 conference call referencing internal discussions of stock buybacks using debt. I recognized that nothing is concrete. Just musings at this point. But its interesting to have a closer look at it.

 I've copied the relevant part of the transcript down below, for reference. The numbers given were $50M-$100M of straight debt at a BBB rate (estimated at 8%).

So, just for shits and giggles;

If we take $50M at 9%  then the annual cost of this debt is $4.5M. Let's assume the average cost of the buyback is around $7/share. Those numbers suggest that OSTK could buy in 7M shares representing approximately 30% of the outstanding shares. Assuming those shares are cancelled the share count falls to around 16M. According to the 2011 proxy roughly 15M shares are owned in aggregate by; Chou, Fairfax, Owners & Director's, CMC (according to online posts). 

In other words, for the cost of $4.5M in annual interest payments the entire shareholder base can be solidified for the cost of $4.5M annually. Liquidity would drop but the downside seems low relative to the upside.

Now, looking at the 2011 numbers I note that a $4.5M increase in gross profit is easily attained by a 40 basis point increase in the current gross margin which declined to 17% from 17.4% one year ago. In addition the G&A expenses where huge in 2011. Largely due to legal costs. The annual expense increased 18% or $21M yoy in 2011. While I expect legal costs to continue I would submit that its not likely to continue at this pace annually. That should allow more funds to be loosened up in the coming year.

My point being ... on $1B in revenue - the small margin improvement that I deem possible will easily pay for this and I think it's realistic to be expecting these margin improvements in 2012. I really like this idea.

And if FFH/CHOU could be enticed with a 9% bond the capital structure would remain in solid hands; Overstocks partners are rewarded handsomely by holding attractive debt and supporting their equity stakes; And the long term minority shareholder gets rewarded too with a bigger slice of the pie.

Remember, Francis has all ready expressed a taste for OSTK debt when he began buying the Converts some time ago.

Thoughts?
______________________

Excerpt from Transcript:
Unidentified Analyst

Hi. A question about a comment Patrick you made a little bit ago that I was hopping you could give more clarification on you said that you are not adverse to flopping equity for debt, I presume that means taking on that and buying back shares, what’s the plan for this. What are the thoughts now, things going in wrong directions kind of levering up, if you could just give more color on that comment and then I have one another question for Jonathan after.

Patrick M. Byrne

Sure Steve, I’ve – my – you did read me correctly that yes if we could issue debt had an attractive enough price. That wouldn’t be interested in issuing any debt with any warrants, but a piece of straight debt and at 8-ish percent or something which is where we understand the market for BBB as these days. If we could issue debt at that level and buy an equity, I think that that’s something that we would strongly consider.

Unidentified Analyst

Any thoughts on how much that you would take on, how much stock you would buyback. I know that depends a little bit on the share price but and all for the timing, when you might deal this.

Patrick M. Byrne

Well I shouldn’t be clear this is I’m just sharing my thoughts not that there is no plan to do this. There is no plan as something we’ve of late discussed, but somewhere north of 50 and less than a 100 would be the appetite. And Jonathan is there anything inappropriate without me, so these are just my I’d say my ruminations rather than any corporate plan at this point.

Jonathan E. Johnson III

Yeah, we don’t have a corporate plan in this front, we do have an S3 which filed and effective and it allow us to issue debt and if the market conditions are right and we get the right prices, we always consider, we’re always looking to manage our capital structure on our balance sheet the best we can.
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Parsad

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Re: OSTK - Overstock.com
« Reply #158 on: March 20, 2012, 10:38:47 PM »
I just merged the "long" and "short" Overstock threads, so now you have just one thread...be it long or short.  Cheers!
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lessthaniv

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Re: OSTK - Overstock.com
« Reply #159 on: March 21, 2012, 06:48:24 AM »
I just merged the "long" and "short" Overstock threads, so now you have just one thread...be it long or short.  Cheers!

sounds good.

here is the presser with respect to the new hire as marketing head:

Overstock.com Hires Tim Dilworth as SVP, Marketing


2012-03-21 09:00 ET - News Release


Seasoned Coldwater Creek executive brings online and brick and mortar experience to Overstock.com

SALT LAKE CITY, March 21, 2012 /PRNewswire/ -- Overstock.com, Inc. (NASDAQ: OSTK) today announced it has hired Timothy Dilworth, a former executive of Coldwater Creek, as the company's senior vice president of marketing.

(Logo: http://photos.prnewswire.com/prnh/20120110/LA33954LOGO)

The company said Dilworth will be responsible for defining and driving all marketing activities across the Overstock.com organization.

"We're very pleased to welcome Tim to the Overstock.com team," said Patrick Byrne, chairman and CEO of Overstock.com.  "Given Tim's background and experience, we expect he will make an enormous contribution to our company."

Dilworth has worked for Coldwater Creek since 2000 in various positions within the company's marketing group and last held the position of Coldwater Creek's senior vice president of marketing.  Previously, Dilworth had served as vice president of marketing and ecommerce and held other positions at Coldwater Creek in marketing analytics.

Dilworth holds a Business and Information Technology degree from Montana Tech of the University of Montana and a Masters of Business Administration from the University of Idaho.
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