Wednesday, April 30, 2014

Panera PNRA Sell

Panera (PNRA), sold half at $152
- Q1 (4/29/14) net income $42.2m (-12% y2y), included $2.2m tax legal benefit
- Q1 revenue $605m (+8% y2y), included $2.2m tax legal benefit
- Q1 "severe weather impacted same-store sales" > probable
- “Investors should view Q1 against the backdrop of Panera’s comprehensive effort - extending over multiple years - to shape the future of our company” CEO Ron Shaich > probable but next few quarters seem grim.
- “narrowing” its full-year 2014 EPS guidance to a range of 6.80 to $7.00 (5% lower)
- Local stores in downtown Burlington has large tears in seats after only 1 year, wuwt?
- Local staff regularly makes mistakes on orders, not particularly friendly, even rude on occasion.
+ Multi-year effort to stream line order process to accommodate 40% of take-out orders.

Conclusion: Ron Shaich is a great CEO and I think he will turn Panera around but it will take a few quarters, no need to hold the stock in the interim. Sell half and wait up to 2 weeks to see if there is a post announcement run-up like for last 2 quarters that also disappointed.

Thursday, April 24, 2014

Panera CEO skips bonus

According the Saint Louis Dispatch...

Panera Bread Chief Executive Ronald Shaich voluntarily skipped his annual bonus last year, causing his total pay to fall 39 percent to $2.7 million. Shaich and Moreton "elected to forgo any incentive bonus payment for 2013 in order to increase the bonus pool available to the Company’s executive officers and other eligible associates," the document says.

Other top executives received bonuses equal to 65 percent of their target level, but they would have received just 16 percent if Panera had strictly followed its bonus formula. The compensation committee says it adjusted the bonuses upward because Panera "undertook significant investments during 2013 that impacted its financial results."

I've been thinking of selling due to poor service and upkeep at Burlington, VT area Panera, but this is a good reason to wait for April 29th Q4 results.

Buy Apple (APPL)

Bought Apple (AAPL) at $566 pre-split.
+ Quarterly earnings well ahead of expectations.
+ Analysts have been bearish over last 2 years setting up a buying opportunity.
+ iPhone 6 should see it's debut this fall which should drive strong expectations.
- Android continues to take market share surpassing Apple in US tablet sales.
- Chromebooks continue to erode premium price laptop business.
- No major new products since death of Steve Job.

Thursday, April 3, 2014

Good Time to Invest in India?

There as been an uptick in the Indian stock market (BSE Sensex) over the last 2 months. Any index with the word "sex" in it is worth keeping an eye so I've been following ETFs like the Indian Fund (IFN) which is up 25% since February 3rd.

Is this a flash in the pan or a sustainable rally?

One of the main factors driving the rally is hopes of a better business climate after general elections which are scheduled for May.

According to Wikipedia...
By constitutional requirement, elections to the Lok Sabha must be held at most every five years or whenever parliament is dissolved by the president. The previous election, to the 15th Lok Sabha, was conducted in April–May 2009, and its term will naturally expire on 31 May 2014... 
Since the last general election in 2009, the 2011 Indian anti-corruption movement by Anna Hazare, and other similar moves by Baba Ramdev, have gathered momentum and political interest. 

ETF's focused on India have underperformed those focused on China over the last five years. This may be setting up a buying opportunity.

Emerging markets have been under pressure over the last few months as tensions heighten in the Ukraine and money flows back into the US. But not everybody agrees...
BlackRock’s Sam Vecht says investors are following the herd in selling emerging markets to invest in the most-developed economies, a strategy that has historically yielded “underwhelming” results. Bloomberg

Conclusion: Buy
In the next two months prices should go up in anticipation of the new government's arrival. During the next year, the government will probably take strong measures to stimulate the economy and people will be hopeful they work. 
Indians value education, hard work and are outward looking, so the long term trend should be positive. Some have blamed recent stagnation on government bureaucracy and corruption. With a new party gaining ground on fixing those issues, meaningful change may be in the cards.
This is out of favor sector with good long term potential. Recent events have set up a buying opportunity.