Tag Archive for NFLX

Netflix Was A Total Pump and Dump… We Think These Stocks Are Too…

May 7, 2012 Scams

Most investors are taught to assume that markets are efficient and that investment decisions are made in an honest and professional manner. In fact, none of the major finance textbooks (think CFA and MBA here) cover things like pools, pump and dumps, affinity fraud, market manipulation, marking the tape, front running, cooking the books, etc… in an in depth and exhaustive manner.

Many times, investor ignorance costs the general public dearly. At www.hedgephone.com our main goal is to help investors steer clear of investment scams and pump and dump companies. We have learned the hard way that fraud in corporate America is an ever-present, ever-persistent problem.

Netflix (NFLX) investors learned the hard way about investment pools (loose agreements between big money traders to manipulate a stock). We believe that Netlflix was indeed a massive pump and dump (whether this was criminal or simply chaotic randomness) orchestrated by management, institutional investors, the media, and other interested parties whether they were actively manipulating the stock or not.

In our view, corporate insiders decided to go for a stock bubble valuation by juicing cash flow in the short term, moving toward an internet only “revolutionary” business model, and getting Jim Cramer to relentlessly pump the stock via Mad Money. The team is confirmed by interlinking director members from TheStreet.com, Netflix, etc… and from huge insider sales near the top of the bubble. If Cramer and company liked the stock so much, why were the corporate insiders who knew the business better than anyone else dumping shares like there was no tomorrow? In my view, this was simply a case of insiders dumping into the pumping whether they believed the hype or not. As a professional investor and part time fellow journalist, I was astounded to see nothing but positive articles (except of course from other authors at Seeking Alpha….) on the company from the likes of TheFool, The Street.com, Investors.com, etc.. etc… right before the implosion. We were extremely bearish. Not that it makes us special but it means that this was predictable (if we got it right, the big money managers from Harvard Business School certainly should have!).

The onslaught of BS in the financial media led to Netflix being priced at $300 per share and for over 100X what in hind sight look to be questionable earnings because they were later erased by huge losses. While most people simply believe the action in Netflix was based on a rational, efficient markets we think the stock traded the way it did because of speculation, media hype, and some old fashion stock promotion. Many authors argued that developments within the company caused the stock crash, but we think the action of the name was more typical of a micro-cap stock promotion. The fact that thestreet.com was so positive on Netflix while sharing board of director members with Netflix seems like a pretty obvious conflict of interest to me — nothing criminal, mind you, just a little bit slick.

At Hedgephone.com, we aren’t here to tattle on people but to educate them. We are looking for the next pool ready to blow up and we don’t think Netflix was the last organized pumped up and over-hyped stock to burn the little guy… Here is a quick and dirty list of companies we are investigating currently and why we think they are more hot air than hot stock at current valuations.

Angie’s List (ANGI) — We started covering ANGI at $15.50 a share and so far this short has been a nice winner similar to our call to short Groupon at $22 a share. Angie’s List reported dismal earnings last week as the company managed to lose another $14MM in the last quarter. Sure, revenues were up big but paying for business only makes sense for start up web companies right now because there is a bubble in these names created by massive economic stimulus and mal-investment (think 1999). Without this bubble, ANGI should probably be worth around 1X sales or about $150MM — a full 80% drop from current levels. The balance sheet looks sketchy, the bottom line is blood red, and even though web traffic is up the stock looks like a great short at today’s prices.

Linkedin (LNKD) — While this is clearly a great company, the stock is not a great investment in the classic Ben Graham 1934 Security Analysis sense of the term. LinkedIn is a bubble stock trading for 900X earnings. There is no rational explanation for this other than it is a repeat of the 1990′s technology bubble. While I wouldn’t short LNKD, I do think that investors should try starting their own web company versus investing in this clearly overpriced security.

Salesforce.com (CRM) — While cloud computing is a “revolution” in innovation, we don’t think that the market valuation for CRM is a real one. In fact, we think Salesforce is another “pool” manipulated by the big guns in the trading world. We also think the current technology bubble is so important to the Federal government that fraud charges will never be levied on any of the major manipulators or bubble company executives in the future even though these crimes are clear and identifiable. You see, we have created a culture of fraud on Wall Street and Main Street loses every time. That’s just the way it is — expect Saleforce.com to “beat” earnings and ramp a little higher before ultimately blowing up sometime in the next year or two.

YELP (YELP) — Yelp is a lot like Angie’s List because it is clearly just an eyeball and mouse-click valuation. The company lacks earnings, cash flow, book value, etc… but the market loves anything with a dot com at the end of it’s name. Yelp is one of the worst investments I can remember at this price but like all internet businesses anything can happen and the company may eventually grow into this astronomical valuation.

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Hollywood Stocks: Our Brief Research On Four High Drama Movie Names

March 22, 2012 Equities

Rapid technological change has warped the film and home entertainment industries, and not all of the advancements have been positive for film producers. With the move toward a $1 a day or all you can stream platform, studio executives are up against a wall and a hard place — they need to protect their cash cow home entertainment market yet they also feel a need to be “high tech.”

Here are four stocks to research in the film industry that are affected by shifts in rental, sell through, and box office sales. Many of these stocks are trading at cheap enough valuations that if Ultra-Violet takes off some of these stocks are likely poised to be revalued at higher multiples in the future.

Lions Gate (LGF) — Lion’s Gate looks quite expensive to us at 63X earnings and we would avoid the stock based on valuation and also industry trends from the devaluation of the product through the relationships with SVOD, Netflix (NFLX), and Redbox. We think the race to the pricing and window bottom will eventually hurt film studio margins as production companies find it harder and harder to penetrate the lucrative home media market. We think the studios have “Killed the Golden Goose” by letting mom and pop retail die off almost completely. In order to drive margin, the movie industry was a lifestyle product and now it’s pretty much just a commodity industry with little in the way of product differentiation happening.

Read More Here: http://seekingalpha.com/article/452221-hollywood-drama-4-movie-stocks-for-your-watch-list

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Could Netflix Eventually Go Bust?

January 4, 2012 Equities

NOTE: Hedgephone would NEVER short Netflix here! It’s not a sure bet like shorting it at $300 was… While we are bearish on the long term prospects for the company, the near term could prove rewarding for investors — in other words Netflix is WAAAAAY too hard to figure out long or short…. Rebound, dead cat bounce rallies can be fast and violent!

Netflix has long been a thorn in the side of the movie studios, could they finally put the Red Envelope out to pasture? Look, I know it has been a while since we discussed Netflix here at Hedgephone. We aren’t one to discuss only our winners and we make mistakes often! NFLX net tangible book is actually negative and this is troublesome for fundamental investors.

Here are ten Negatives for Netfix:

1. Too much debt and leverage

2. Negative tangible book

3. Studios dramatically increasing streaming costs and working to stop piracy and internet delivery in general because of margins when they can sell a blu ray DVD for $15 bucks.

4. Studios penalizing Netflix and Redbox for devaluing their products may choose to raise prices on NFLX and Redbox but also increase their viewing window.

5. A Netflix bankruptcy would be positive for movie studios bottom line because demand is still there (for now, think internet piracy).

6. Renewing content deals may cost more than they can recoup net of debt servive.

7. Consumers may simply torrent their streaming video for free.

8. Netflix raised prices to shore up their finances, but it may be too late.

9. This was a company which expanded quickly with stars but can’t obtain projected growth.

10. Because it would be pretty funny and would probably create some jobs for the industry.

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5 Stocks Cramer Says to Sell

December 23, 2011 Equities

       While many investors and fund managers bash Jim Cramer, and many times he gets behind speculative, overvalued stocks, “Mad Money” offers great entertainment value and can teach investors a thing or two because Cramer is a solid top down investor with decades of experience. Sometimes Cramer speaks of value and yield while other times, he delves into the macro picture and the technical aspects of trading stocks and commodity markets.

       In an era where most financial experts have become highly specialized, it is refreshing to hear thoughts from someone who is more of a generalist in his approach to trading markets. While many in the hedge fund and mutual fund industry focus on specific industry groups or geographic localities, Cramer has a knack for being an all-terrain and all-weather guy.

       Most investors and traders would expect Cramer to remain bullish in the midst of a profoundly negative tape, but Cramer tends to cut his losses, and in a recent segment suggested avoiding the falling knife in the gold and silver markets.

Read the rest of this article at Seeking Alpha:

http://seekingalpha.com/article/315724-5-stocks-cramer-says-to-sell

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6 Investments to Sell or Short Now

December 19, 2011 Equities

       While the stock market is well off of the 2011 lows set in August, the market is by no means a sure bet going forward. While longer term, I believe the stock market is pretty unloved and over many decades I expect the markets to rise 5% or so per annum at the very least. In the short run, however, I see many stocks that I would consider short selling here and while bargains abound long-term investing can take, well, a very long time to pay off. By selling near-month or quarterly bear call spreads on these 6 investments, investors can make some serious money for current income needs even if a bull market should set in for stocks in the very near term, which I believe is rather unlikely given the moving parts involved in the European crisis in the modern age of global sovereign debt realities.

       With the shaky economy not showing a whole lot in the way of green shoots, investors may consider selling call spreads and buying put spreads (I would be selling near-the-money calls and buying out-of-the-money calls and would be buying in-the-money put options and selling at-the-money put options or simply selling near-the-money call options and buying calls at a 30% premium to current prices instead of directly shorting something). When shorting index funds, it often pays to do your business rather quickly. When you are sitting on profits, feel free to take them off of the table.

Read the rest of this article, at SeekingAlpha:

http://seekingalpha.com/article/314772-6-investments-to-sell-or-short-now

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Hedgephone Turns 1 Yrs. Old…

December 18, 2011 Equities

Happy to celebrate the birth of this blog, which now has amassed 700 posts (basically everything that randomly came to the top of my head over the past year) countless spam comments, a number of threats, volumes of hate mail, a few squandered leads, and a whole lot of fun for me in my spare time. While things are slow going here, we had fun breaking “Siga Gate” dissing Netflix and calling it Scamflix, shorting the market in late July, telling people to stick with Gold, dissing Yoku, NFLX, OPEN, CRM, SINA, LNKD, and many other high flyers and helping readers make a fortune, and most of all giving readers sound frames of reasoning in their stock market endeavors.

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Pump-Flix Blows up… NFL-X Was Pumped Now Dumped

September 16, 2011 www.hedgephone.com/network

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Starz to Netflix: “Thanks, But No Thanks….”

September 1, 2011 Scams

Well, it seems every levered beta manager is hitting the bottle tonight in afterhours after Creamer Fav. Netflix loses a solid 11% and was trading around $210 or so last I checked. The sheeple will be fleeced ladies and gentlemen, but thanks to Hedgephone you readers know the true value of the stock has a 1 handle or even a double digit price over the medium to long term because NFLX was a one trick pony (STARZ) who tried to corner the home entertainment market and so far has lost.

 

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Netflix Tanks After Hours: Lessons Learned

July 25, 2011 Equities

SO Netflix is finally falling apart… The momentum scam stock that everyone but shortsellers loves finally had it’s face ripped off for a change and is now a full 15% below its recent highs at $304 or so per share. We nailed this one for readers and even published a short article on Seekingalpha about the stock and why it would fall apart.

I think the name has much further to drop, but I will likely be holding what I have short the name versus adding to the position…

One thing we learned here was the importance of the phrase “If you’re right, sit tight…” That comes to us fro Jesse Livermore… Anwyays, NFLX is down 8% or so after hourse and we are psyched about it after strarting a position int he $274 area, adding to it at 285, and again at 295 and so on… basically, start small and work into a full position… that’s my lesson for today… Also our “gap and crap” trade worked for readers but in reverse today… The morning gap lower was filled at which point you could short the index funds for a nice afternoon “ay hedge” lower… Is AMZN next?

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Sony Tells Netflix: Adios, Amigo

June 17, 2011 Equities

It’s pretty amazing that it took Sony, which is the maker of the Blu Ray disc, this long to stop doing business with Netflix which is the biggest enemy of the home media market (arguably besides Coinstar )

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Finally, the studio executives might be figuring it out that handing their enemies free money is a bad corporate strategy. I expect to see much more of this type of realization among studios who are starting to figure out that the “disruptive” models of Netflix and Coinstar are really only disruptive for the studios! The fears behind “the death of brick and mortar rentailers” after the stupid debt moves of Blockbuster and Movie Gallery have led the studios to cut off their hands to spite their feet.

By working with Netflix, Coinstar, Hulu, Amazon, Apple, etc… and not the brick and mortar retail community the studios have ensured their own demise…. I will be anxious to see more developments such as these in the home entertainment market and hopefully a Blu Ray based rental market that includes mom and pop video stores and not just kiosks which provide no jobs and no profits for Movie producers.

Disclosure: I’m short NFLX call options

From Home Media Magazine:

Sony Pictures Home Entertainment quietly has pulled its movies from Netflix’s streaming queue due to contract issues with aggregator Starz Entertainment. In a post on Netflix’s blog (blog.netflix.com), Pauline Fischer, VP of content acquisition with Netflix, confirmed the situation between two “valued” content providers without elaboration. Indeed, Sony’s top-grossing films since 1984, which include Spider-Man, Spider-Man 2, Spider-Man 3, Men in Black, Ghostbusters, Hancock, The Da Vinci Code, Terminator 2: Judgment Day, Men in Black 2 and Hitch, are available on Netflix only via DVD and/or Blu-ray Disc. Starz, which distributes Sony and Disney movies, among others, to multichannel video distributors such as cable and satellite TV, sub-licensed content to Netflix streaming several years ago for $30 million annually. That agreement — now widely panned by media executives as a give-away to Netflix — expires early next year. Renewal is expected to fetch Starz a tenfold increase in license fees from Netflix. Richard Greenfield, analyst with BTIG Research in New York, said the pullback by Sony appears to be due to a clause in the original output deal as it relates to digital rights and the number of third-party (Netflix) digital streaming subscribers created. Netflix’s burgeoning subscriber growth (and stock valuation) throughout the past few years has been due to its market-leading streaming service. “We suspect Starz wants to have a sense of what its new Netflix deal looks like, before it renegotiates with Sony in terms of how much of the dollar upside goes to Sony versus [them],” Greenfield wrote in a June 17 post.

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