(This company is not worth shorting unless its share price were a lot higher.)
Canadian Zinc’s flagship property is the Prairie Creek property. It used to be a mine that opened in 1982 and shut down the year after. It must have been a horribly uneconomic mine to have shut down so fast. Fast forward to today. CZN is trying to raise capital as it needs at least $234M to build a mine on the property (probably more).
Steve Madden (SHOO) is a shoe retailer with impressive shareholder returns. Its share price has compounded at roughly 20% a year since 1993. Currently the company is trading at a reasonable P/E (19.3) and has cheap call options. However, one of my rules is to avoid management teams with questionable integrity. Steve Madden, the founder of the company, is definitely a very sketchy dude.
(This post has very little to do with real investing.)
For some reason, I’ve been obsessed with beating Motley Fool’s stock picking system. I’m interested in beating it as an intellectual challenge and am not aware of any meaningful prizes. Motley Fool’s CAPS lets you pick up to 200 stocks and you get ranked based on how those stocks perform compared to the S&P 500. Unlike other stock contests, you are rewarded for diversification.
Normally in a stock contest, my strategy is to go for a portfolio with extreme concentration, correlation, and volatility. This greatly increases my chances of winning. It works. (Unfortunately at wallstreetsurvivor.com, I forgot to claim my prize one time.) This kind of strategy would still work in CAPS because you could setup multiple accounts and short bull or bear leveraged ETFs. But I want to make life difficult for myself and do things the hard way: only use one account.
Express Scripts (ESI) is the largest pharmacy benefit manager (PBM) in an industry where scale is a competitive advantage. It has been able to compound earnings, free cash flow, and free cash flow at very high rates (over 20%) over the past ten years. Fundamentally, I believe that Express Scripts’ returns are mostly driven by its CEO, George Paz, who has held the position since 2005. In the past, ESI never had the benefit of scale. Its success was driven by the quality of its management. In the future, ESI will begin to see advantages and disadvantages from its larger size.
On the other hand, the PBM industry has some dubious practices that creates regulatory risk. The PBMs are rarely transparent with their customers and have often taken kickbacks from drug manufacturers. There is a chance that future government intervention will target such practices.
Contango Ore is a mineral exploration company that spun off from Contango Oil and Gas (MCF). Brad Juneau, MCF’s long-time oil & gas exploration partner, is the CEO. Avalon Development Corporation provides geological services for the company. Contango Ore has interesting drill results though it’s too early to tell if it has an economic deposit.
CF produces nitrogen fertilizer. It is a bet on:
The current P/E is roughly 6.25. CF is buying back shares and building new capacity.
Crocs stock is down over 20% today as it released bad earnings. Its Japanese operations continued their decline and had terrible results. Comparable store sales for Japan dropped a whopping 19.5% quarter over quarter (on a constant currency basis). Something is seriously wrong with their Japanese operations and I haven’t been able to figure out why. As well, Crocs’ SG&A costs have gone up significantly while gross profits have stayed flat. The overall result is that net income has dropped a third from $73.8M last quarter to $49.6M this quarter (-33%).
