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Bulls, Bears & Opportunistic Cynics


Meehan AND Collins?! I'm a bidder...


"You ever notice how EVERYONE is a 'first pitch, fastball hitter'?" - Crash Davis

People tell me I'm bearish.

I hear it all the time. In my emails, at parties and, in a new and amusing development, in on-line blog attacks.

Frankly, I'm indifferent about the distinction between "Bullish" or "Bearish" to the point that I'll pretty much accept whatever label someone chooses for me without protest. The logic behind that is hard to explain without drifting into Clintonian "depends on what the definition of 'is' is" egg-head waffling unless you have a specific example.

Thankfully we have Blockbuster (BBI).

Now... I'm neither long nor short Blockbuster at the moment. I've played the name both ways in the past and, for the record, have generally ripped them in virtual-print. But I have no real axe to grind.

The stock is ramping 8% today on the news that Carl "Wow, he's still around?" Icahn has taken a stake in BBI and Hollywood Entertainment (HLYW). This continues the momentum built yesterday when the stock rose on the news that the BBI would eliminate late fees for customers.

I can give you two opinions and no advice about the company and stock today:

  • First, I wouldn't step in front of that stock on the short side right here if you slipped me a roofie and tried to push me.
  • Second, the company is on a road to nowhere and better than even money to be gone in the next five years.

I've got no problem with people making money long the stock. Great trade, rock and roll. Hey, I'd like to see someone go in there and turn the company into a real retailer, if only because it would be fun to see how they'd do it.

But if you're thinking that those two news items (over-paying for Hollywood and eliminating late fees) are roads to recovery... and this is where we slip into "Doom and Gloom-speak"... that's just completely wrong.

I mean... the late fees thing? Late fees are Blockbuster's best business. It's where they've made the most money over the last 5 years by far. They are eliminating those fees and replacing them with a plan where customers who keep rentals 7-days beyond their return date are charged full retail for the product.

If you've ever worked the retail front-lines you have a pretty good idea how this is going to play out in the stores, with customers. "Poorly". Lines will become even more extended. Service will (somehow) become worse. Curse words will be directed at associates.

Were I forced to play the stock one way for, say, the next month I'd go long without hesitation. If you put the position in a time capsule for the next five years I'd choose short with the same haste. And, yeah, that's even taking into account the potential of "Infinite losses".

So, if you're asking me about the short term you can accuse me of being Hoofy himself and I won't argue. In the big picture, which is much less actionable by definition, I don't see how it doesn't end poorly. Obviously, that's Boo's camp.

Which is pretty much how I feel about the market and why I don't see the point of the labels beyond useful shorthand. I'm just another Meat looking for pitches to hit; I don't much care which side they come from.

Gimmick-Infringing Randoms:

  • The takeaways from Best Buy's (BBY) quarter: Things are squishy but not horrible in retaildom and the market remains willing to pay-up for co's that don't miss... which is kind of the definition of "strong tape".
  • "Neal Before Zod"?
  • I will be appearing in NYC next Wednesday, evening autographing Collins and Meehan for the auction winner.
  • No... I don't really appear anywhere autographing anything... it was just a little joke...
  • ... Except for Collins and Meehan next Wednesday. Give me a Sharpie (and hold them down) and I won't just autograph Meehan and Collins, I'll draw a human-mural on 'em for the auction winner to use how he or she chooses!
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No positions in stocks mentioned.

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