One Tin Soldier Rides Safeway
"If Safeway kept better inventory I could buy the stock AND groceries!"
"I'm gonna take this right foot, and I'm gonna whop you on that side of your face. And you wanna know something? There's not a damn thing you're gonna be able to do about it" - Billy Jack
Last March 3rd the New York Times ran an article entitled "Wal-Mart Extending Dominance of the Grocery Business". You need a NY Times membership to read the full text. For our purposes, it's sufficient to say the headline was not in any way ironic. The Times was asserting a) Wal-Mart (WMT) wasn't just leading but was Dominating the grocery sector and b) pity the existing grocers and their stocks.
At the risk of going all "John Nash" on readers, I can tell you that I also saw a very distinct and troubling sub-text in the Times' article. What may have looked to the lay-person like just another wrong-headed mass-media stock column was, to the discerning Minyan, a vicious and baiting personal attack on me, Jeffmacke. I'm long Safeway (SWY)... a grocer! I think Wal-Mart is akin to Ali after Manila; "the champ" reduced to clown. I've been vocal about this to the point of obsession, precisely to keep investors from buying into idiocy like "Wal-Mart isn't just a grocer; they are GREAT grocer!" This Times article unwound all my efforts. It was the Paper of Record, the vaunted Gray Lady herself using her steel-toed boots of oppression trying to stomp down my voice and my portfolio.
So I didn't just take the article as an attack on me; it was an assault on me, you, our loved ones and a little something I call Free Speech.
There was a time when I would have gotten pretty worked up over that kind of published disrespect. I would have ranted and/or raved. I would have ululated angrily and beat my chest in outrage. I would have worked myself up into a froth, paused and frothed again for weeks, relaunching an attack with every tick of the tape in my direction.
I would have wasted a lot of energy.
I'm older and more calloused now. I've learned. The thing about fighting The Man in general and the Gray Lady in particular is that they are much bigger and louder than you are. You might as well yell at the Hoover Dam for all the impact you can have. To have any chance you have to chip at them and grind at them and outwork their slow, obtuse, oafish selves. Just stake your mental claim and wait for the conventional wisdom to work its way in your direction.
So, the same day the Times published their "Wal-Mart Extending Dominance in Grocery Business (and Jeffmacke is simply a crackpot about both Wal-Mart and Safeway!)" personal attack I staked my claim:
"When I read "Wal-Mart Extending Dominance of the Grocery Business" in the same NY Times that I'm mocking as being half a year (or more) late on the video game industry, it doesn't make me mad at the paper for being wrong. Nor do I see evidence of a conspiracy to hurt me, Jeffmacke, as a Safeway shareholder.
I just think how wrong they are, make a note to myself to make fun of them later, when even they see that they were wrong, then look to buy a little more Safeway stock."
Last Tuesday Wal-Mart's stock traded as low as $42.31. Of note, WMT touched at that same exact level intra-day last September and hasn't closed any lower than that price since 2001. Last Thursday, Safeway reported better than expected earnings, driving the stock to about $28. It's the highest SWY has been since the stock collapsed in 2002.
Safeway's stock is up about 15% since March 3rd. Wal-Mart is down a couple percent, even after bouncing over 2-bucks from the lows last week.
My updated thoughts are as follows:
Technically speaking, Wal-Mart's double-bottom at $43.21 is sort of interesting from a trading perspective but the 5-year chart of Safeway makes me drool...
- In terms of conventional wisdom coming my way, the Wall Street Journal, though not totally main-stream media (read: The Man) did concede that Wal-Mart may "share the blame" with high gas prices for Wal-Mart's woes last Saturday. It's a start but I'm still waiting for the Times' apology.
- I haven't sold any Safeway into this ramp and I plan to add on dips; for what it's worth in a non-advising way.
- There's buzz out there that Wal-Mart is already starting to push back-to-school. WMT pulled a similar trick last Christmas, starting the season early to generate some much needed sales momentum. For you fans of history, the impact was a slight sales bump for Wal-Mart in November then back to dismal once the rest of retaildom got on-board.
- I don't really like the Safeway shopping experience any more than I did when I wrote about it last January. If I could get sold on store operations I could see myself loading up much more on the stock.
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