About the only surprise about Clean Harbors, the waste management company, is that almost every analyst who follows it still rates is as a Buy. That's even after the company's most-recently-reported quarter, which included yet another in a series of sliced guidance, missed expectations or a combo of both.Yet this is the same company: That is still hoping for the best from its Safety-Kleen acquisition late last year, which hasn't generated the margin growth the company forecast. That bought into the oilfield waste disposal and services business at the peak of the oil cycle. Whose CFO (on the job when Safety-Kleen was bought) quit in February after less than a year on the job. He was replaced by the company's former CFO, who is also president. (It's often best when those two jobs are split.)What many on Wall Street don't appear to have fully grasped is that thanks to a series of acquisitions...
Much earlier today I tweeted out: "New wave of greenmail?:Take-Two buys back Icahn's shares. This is becoming a trend w/activists. Should same deal be given all investors?"Now, in 140 characters or more: Today it was Take-Two buying back shares from Carl Icahn. Yesterday it was ADT buying back shares from Corvex Capital. Earlier it was Yahoo buying back Third Point's stake.And in each case, the activist investors, who had rattled the cage for change, were on the board -- making them insiders.Is this a new-age form of greenmail? Greenmail, for those of you not around in the fun old junk-bond days of the 1980s, was when companies would pay corporate raiders (like Icahn at the time) to go away. Typically the raiders would take big stakes in companies with the threat of taking them over.This, of course, isn't quite the same, but it clearly rubs some investors the wrong way. Among them, longtime hedge-fund manager John Levin of Levin Capital Strategies, who told me: "While there is nothing wrong apparently with an activist going on board and selling stock back to the company - and apparently nothing wrong with the company buying it - I don't feel it's good public policy and fee the public should have a chance to participate in these transactions." He has a point:
Monday's piece questioning whether Cramer really said what I heard him say prompted this response from him:Perhaps I misspoke. Or perhaps Herb Greenberg misheard me. But I have never in my life believed you should "forget the fundamentals" when it comes to Herbalife HLFor Green Mountain GMCR. Because what I meant to say, or did say, frankly, is that all that matters is the fundamentals and they simply aren't as bad as the short sellers think they are.1 - Herbalife is a company that sells a product that you may or may not care for, in a way that you may or may not care for, with a point system you may or may not care for.
The company trades like its former self, but for how long?
How the company got caught flat-footed.
At some point in time a rollup -- companies that grow by acquisition -- can't keep up the pace of acquisitions. It happens to the best of them and when it does you get what I like to call The Reset. That's what appears to be happening to Nuance Communications, the voice-recognition company and one of the the longest-running of all rollups. And like many rollups, when the acquisitions stop, so does the growth. Or put another way, the businesses it acquired aren't growing, either. Last quarter revenue growth at Nuance barely budged ahead at 1%. That compares with 8.8% the prior quarter and 27.7% the year before.Worse, strip out more recent acquisitions organic growth tumbled by 9%. And, for what I believe is the first time, it was negative for each of the company's four segments. And suggesting the commoditization of speech recognition, Nuance turned in an operating margin of just 2.6%, roughly half that of the quarter before and a fraction of the 12.8% a year earlier.
Sitting there watching Jim Cramer at 36,000 feet Friday morning, on my way back to San Diego from New York, it was a good thing I was buckled in. The turbulence in my head, sparked by what he said, was greater than the turbulence we were flying through.What he said in a rapid-fire segment on CNBC's Squawk on the Street (and I'm paraphrasing): Forget the fundamentals, the crummy earnings quality, the business model concerns -- all of that kind of stuff short-sellers talk about. All that really matters is that "Green Mountain is selling Keurigs" and that "Herbalife is generating cash flow" and that the "hedge funds short it are only talking their books, so best to ignore them." He didn't mention my name, but by mentioning those two companies, and by pronouncing the "H" in Herbalife, he might as well have -- especially since I have written and commented critically about both and since he and I had gone back-and-forth earlier in the morning via email about Green Mountain.
Little known fact: When I was first writing the "Herb on TheStreet" column for TheStreet in 1998 Dow Jones protested. They claimed it was a rip-off of Heard on TheStreet. TheStreet fought back with a simple argument: My name is Herb and I write for the Street. Which gets us to where we are today: The formal return of Herb on TheStreet at TheStreet.This is where you'll find pretty much everything I do in 140 characters or more. Below this piece is pretty much everything I've written since I rejoined TheStreet. Above - everything new. Once the Reality Check newsletter starts, you'll also find light versions of what appear in the newsletter. It'll be a juggle that will evolve. You can subscribe through an RSS Feed or, if you prefer to have it pushed to your email, simply email me at firstname.lastname@example.org and we'll add you to the list. As always, I welcome your comments, criticisms, observations, tips and ideas.
In this excerpt from Thursday morning's Columnist Conversation on RealMoney, Jim Cramer and Herb Greenberg battled over investing in GMCR.
Confession: I had never heard of Voxeljet, the 3-D printing company, until yesterday. That's when the stock collapsed after Citron Research wrote a scathing report. Voxeljet's crash landing pulled down the other 3-D printing companies in classic knee-jerk fashion. Could they all bounce back? Today all but Voxeljet did.In the end, as even Green Mountain shows today, in this market it's more about the story than the substance. Make no mistake about it: 3-D printing is real and will likely revolutionize manufacturing as we know it today. Who knows, maybe soon the 3-D printing and Green Mountain stories will morph to Green Mountain using 3-D printers to create its K-Cups. Then there's Tesla. No talk of 3-D created Tesla cars, yet, but no dispute that the Tesla is a really cool car that has already turned the auto world on its head. But any of these companies really worth what they're trading at? Of course not. Certainly not now.