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Chuck Royce: Five Key Questions For Investors

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  • I'm not sure what good news Royce is hearing from companies. Lately all companies seem to be reporting earnings below estimates. I guess we don't know what time of the year Royce was interviewed.

    I think we are just slaves to what's reported in the media. Einhorn shorts CMG, mouths off, all his cronies also short CMG, stock tanks, Einhorn makes tremendous profit in just one day and exits his short position. What a !@#$%^&* business.

    Simply too much financial Pron out there. I don't believe anyone anymore.
  • edited October 2012
    Reply to @VintageFreak: Einhorn was/is right. Chipotle is the frozen yogurt store from that episode of "Seinfeld". I don't know if anyone else has had it, but I don't understand the hype. I'm also fascinated that people call it "healthier fast food." The quality may be better but that doesn't make it healthy.

    There's a website that calculates nutrition information - a tortilla with rice, beans, chicken (not even cheese, sour cream, etc) has 65% of the daily allowance of sodium. Add cheese, sour cream, guac and salsa (13" Tortilla,Rice,Brown Rice,Black Beans,Chicken (4oz),Cheese,Sour Cream,Guacamole (4oz),Tomato Salsa) and:
    Calories 1240 Cal from Fat 495
    % Daily Value*
    Total Fat 54g 83%
    Saturated Fat 20g 100%
    Trans Fat 0g
    Cholesterol 185mg 62%
    Sodium 2420mg 101%
    Total Carbs 128g 43%
    Dietary Fiber 21g 82%
    Sugars 9g
    Protein 64g

    The fact that GM tanked because people thought he was going to talk negatively about it because it had the same first two letters of the symbol as a stock he shorted (GMCR) is not his fault, but how foolish some market participants are.

    "“For Example, Racing To Short A Stock I Mention Because It Contains Two Of The Letters Of A Stock I Shorted Last Year. That Would Be Example Of You Guys Acting Like Jo Jo The Idiot Circus Boy.”"
    http://dealbreaker.com/2012/10/david-einhorn-appears-to-be-mildly-weirded-out-by-legions-of-blind-faith-followers-who-in-fairness-occasionally-resemble-jo-jo-the-idiot-circus-boy/

    I also highly doubt that Einhorn exited his position after the other day.

    As for Royce, the market is climbing a wall of printed money and data hasn't been great. There's a ton of money out there looking for a place. I think there are sectors that are exciting and working, but this sort of "happy days are here again" optimism is unwarranted. I'm sure he'd like to see investors stop withdrawing money from funds, but it isn't going to happen anytime soon. I do think equities are a better place than fixed income for the mid-to-long term, but people need to be really selective and pick their spots.



  • Why does Einhorn come and tell everyone CMG is going to tank, if he didn't intend to sell his position after it tanked. Nothing anyone can tell me will make me believe he didn't.

    The smart investor doesn't tell anyone CMG is going to have impending problem. However, the really smart investor does and cashes out. "Really Smart Investor" = I'm being unnecessarily flattering. I smell rats real good. Sorry.
  • Reply to @VintageFreak: this is annual value congress during which managers talk about one position each which they build for a while and hold for a period of time... einhorn happened to like short positions. he is an activist and a short seller -- long term guy, he wouldn't exit a position after a day's run. In terms of herd acting and blind following, this is not just in investing -- it's in the everyday life. that's the reality.
  • edited October 2012
    Reply to @fundalarm: He held his St Joe short for years and was short before and after the hilariously titled ("Field of Schemes: If You Build It, They Won't Come") report he presented at the 2010 Value Investing Congress.

  • edited October 2012
    Reply to @VintageFreak: I didn't think he sold the short and I hope for his sake he didn't -

    CMG
    After Hours
    $247.53
    Change
    -38.40 -13.43%

    Additionally, I thought this was kind of an interesting tidbit: ***"Investors need to remember that Chipotle's stores are 100% company owned***, which does not allow it to withstand rising commodities cost. Unlike a franchise system in which the franchisee, not the parent, buys the commodities, a corporate-owned system forces the parent to buy the commodity, subjecting it to rising commodity costs. "

    http://seekingalpha.com/article/923541-chipotle-q3-earnings-preview-comp-sale-food-inflation-rising-competition-in-focus
  • Reply to @scott: "I didn't think he sold the short" u mean he didn't cover i suppose.:))
  • Reply to @fundalarm: Right. Wasn't thinking when I posted.
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