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Greenberg: Activist Stake May Make Clean Harbors Less Hazardous

04/25/14 - 09:30 AM EDT

Greenberg: Activist Stake May Make Clean Harbors Less Hazardous With Relational Investors taking a 9.08% stake in Clean Harbors, it would be absurd to keep it on the Watch List, where it has been red-flagged. (Activism and takeovers are always one way to make the red flags irrelevant.)Clean Harbors would appear to be the perfect activist stock. One mistake after another, or, as I wrote in my original piece when I red-flagged Clean Harbors last November, it's a comedy of errors.The company itself recognizes the problems. From its last earnings call, CEO Alan McKim:"...We're launching a broad strategic review of our operating structure, with a focus on how to better drive organic growth and improve our return on invested capital. We also have initiated a cost reduction program and are taking $75 million in additional costs out of the business and bringing our cost structure more in line with our current revenue profile. We are targeting areas ranging from our non-billable headcount, office consolidation, maintenance and logistics, with the goal of significantly reducing our overall expenses."


Greenberg: The Most Important Earnings Lesson from Chipotle

04/17/14 - 10:14 AM EDT

Greenberg: The Most Important Earnings Lesson from Chipotle With Chipotle's CMG same-store sales up an astonishing 13.5% during some of the worst winter months in recent or even distant memory: Think twice when you see any company from this point on in this earnings cycle blame the weather.Remember: If there were to ever be an earnings cycle retailers and restaurant operators use to blame the weather, it's this one. Even Chipotle, in the risk factors in the fine print of its earnings release, says that "the potential effects of inclement weather" could impact results.Reality: If the weather's not hurting Chipotle, then why is everybody else likely to gripe about it? Because this quarter it's a free pass. And for some companies, like truckers, railroads and airlines, it's real.But truth be told, consumers and even businesses often defer, and don't cancel, their purchases.


Greenberg: Even the Analysts are 'Confused' by IBM

04/17/14 - 07:39 AM EDT

Greenberg: Even the Analysts are 'Confused' by IBM The analysts finally appear to have lost their patience with IBM. As my pal @firstadopter on Twitter was first to point out: "MULTIPLE questions from $IBM analysts 'I'm confused' 'I don't understand' 'Sorry to re-visit' FCF/Net income/EPS guidance MAKES NO SENSE." At first I thought he was exaggerating, but the transcript doesn't lie. Let's start with confused. Barclays analyst Ben Reitzes gives us a twofer, given that he said both "confused" and "I don't understand": "I think investors are focused on this, so I'm going to just try to clarify it on the free cash flow side. What I'm really confused about is that the charge was about $100 million lower than I thought, then we have the tax rate impact and the accelerated buyback, which is probably more than I think you guys probably modeled in January. With all that, you could have almost $1 billion taken out of the net income the Street had and still guide to $18. And I wanted to know on cash flow, you said in your 10-K that you would grow cash flow by $1 billion year over year, and we just took out almost $1 billion of the net income versus where we were in January. I actually don't understand how we get to the free cash flow numbers previously guided in that -- taking it in that light. If you could just explain it that way, that would be really great. Thanks a lot."


Greenberg: Putting Lipstick on Ulta

04/16/14 - 03:23 PM EDT

Greenberg: Putting Lipstick on Ulta The saga continues: No stranger to readers of this blog or my Reality Check newsletter, where it has long been red-flagged, Ulta Salon's stock is one of the most confounding among retail stories.Its shares have remained remarkably resilient, even in the recent rout, as CEO Mary Dillon made the rounds with New York analysts this week to discuss the company's makeover. It's not that the company, in the midst of a strategic review, is broadcasting that it is making widespread changes.But in his report earlier this week reiterating his "outperform" on Ulta, after hosting investor meetings with Dillon, analyst Gary Balter said he was impressed with her plans to "reinvest in infrastructure, brand positioning, marketing and customer relationships..."In other words, a costly makeover that even Balter concedes "is on improving results over the next five years, not on the quarter."


Greenberg: The Reverse of Short-Squeeze Giddiness

04/10/14 - 03:45 PM EDT

Greenberg: The Reverse of Short-Squeeze Giddiness I've read and watched and listened to countless market pundits (me included) pontificate about what this market decline is all about and how it will end.I have no idea how it will end. Bulletin: Neither does anybody else. But as we watch momentum-in-reverse, as I like to call it, there's something else at work here: There don't appear to be natural buyers for many of these stocks. In fact, if I look at my screen (which I included in this tweet) some of those that have been squeezed up the most are among those hitting hardest.Topping the list: Education Management, off 67%.


Greenberg: 'Blame the Weather' Season in Full Swing

04/09/14 - 10:34 AM EDT

Greenberg: 'Blame the Weather' Season in Full Swing With earnings "season" officially under way, so is "blame the weather."In many cases, including retail, restaurants and construction, it's justified. The Northeast got blasted and that, on occasion, kept people from getting where they were going.One of the most legitimate weather-related claims was Alcoa, whose CEO Klaus Kleinfeld said:"Let me also address one other thing that has been discussed quite a bit. And we also saw it in our order intake in the first quarter here in the US, where it slowed down. It slowed down -- the order intake there slowed down -- and this has pretty much single-handedly been driven by the extremely cold weather.So what do we see now? We're seeing on those sites now, as the sites got delayed, the concrete couldn't get poured, people are now trying to catch up, and trying to make the dates that they had projected for their projects. So, we continue to be optimistic in the recovery of that market and don't believe that there's any substantial change in this. It was really weather that hit there."Of course, that merely means deferred or delayed revenue, not cancelled revenue.Which brings us to Intuitive Surgical.


Greenberg: Questcor Smart Seller, Mallinckrodt Dumb Buyer?

04/07/14 - 09:43 AM EDT

Greenberg: Questcor Smart Seller, Mallinckrodt Dumb Buyer? Whenever you see a deal like Mallinckrodt buying Questcor, you have to ask: Is this a case of smart seller, dumb buyer? I've done zero work on Questcor, but over the past few years I've talked to a few very serious short-sellers who have. When I saw the news this morning, the first thing that crossed my mind: Mattel buying The Learning Company....Hewlett Packard buying Autonomy...Medtronic buying Arterial Vascular Engineering. All three of the targets were the focus of short-sellers, and all three famously blew up, or otherwise caused havoc, once inside the new parent -- for the very reason the short-sellers had been short. Mattel was perhaps the most wounded, and almost taken down by what it found once it owned The Learning Company. No idea if that will happen here, but a quick peek at Mallinckrodt's history sure is a twisted tale....


Greenberg: My Worst Mistakes

04/04/14 - 09:00 AM EDT

Greenberg: My Worst Mistakes Nobody's always right when it comes to stocks.I've learned that the hard way more than a few times in decades of reporting, researching and writing about companies. Even the smartest -- yes, that includes Warren Buffett -- sometimes get it wrong.In the end, when I mess up, I fess up -- and I always do a personal post-mortem. It's humbling, but it helps and often comes in handy as a reference point, and hopefully a lesson learned.If there's any theme, it's this: The worst mistakes often come from being too smart for your own good, especially when putting too much trust in your experience, perspective and instincts. It's important to trust your instincts, and I think mine are very good when supported by what I believe to be solid research -- and often just common sense. But every now and then, they steer me wrong. (Moral: Trust, but verify -- and verify, again!)These are a few of my biggest blunders, which also turned into big stocks.


Greenberg: Why I'm OK With Google Investors Having No Voice

04/04/14 - 08:32 AM EDT

Greenberg: Why I'm OK With Google Investors Having No Voice I have a confession: I'm all for shareholder rights, and generally side with the corporate governance crowd on almost everything. But when it comes to two or even the three classes of shares -- the latter being the route Google has just gone -- I just don't get exorcised. Class A and B shares are a growing trend, especially in Silicon Valley. Insiders tend to have the voting shares; everybody else (you and me) don't. By going so far as to create Class C shares, Google's not-so-subtle main goal is to ensure that founders Sergey Brin and Larry Page retain majority control. The downside of the A-B structure, of course, is that it can protect complacent management. I abhor management being run for the sake of protecting management. Shame on them! That's why, in general, I'm a fan of activists. But I equally abhor the rise of overzealous activists who swoop in, seeking some kind of short-term financial engineering to get a short-term pop in the stock, because they see an easy mark.


Greenberg: What You May Have Missed

04/02/14 - 09:33 AM EDT

Greenberg: What You May Have Missed What you may have missed, including takes on Micron, SolarCity, Zagg, Fastenal, Family Dollar, Sysco and Nu Skin from the past week or so. When Micron reports earnings Thursday, expect a lot of focus on pricing in dynamic random-access memory (DRAM). In a piece on Reality Check headlined, Is Micron headed for a Tumble?, the issue in focus was whether DRAM capacity is quietly increasing -- and, if so, whether prices could start to slide. The battle lines, involving some very smart people, have been drawn: Bulls think prices could show surprising resilience, and bears don't. But, as I wrote, the answer isn't likely to come with this quarter's earnings. This is something that, if you believe the bears, is currently evolving. The bigger question is whether there is a new world order in memory.....


Herb Greenberg is the editor of Herb Greenberg's Reality Check, a subscription newsletter designed to help investors better manage risk.

Greenberg has been a financial journalist for more than 30 years, working most recently as a senior stocks commentator on CNBC's business day programming and on He was also co-president of Greenberg Meritz Research & Analytics. He is a former weekend investor columnist for The Wall Street Journal and a former senior columnist for MarketWatch.

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Prior to joining MarketWatch, Greenberg was senior columnist forTheStreet. He previously spent 10 years as the "Business Insider" columnist for the San Francisco Chronicle and nearly seven years asFortune magazine's monthly "Against the Grain" columnist. Before that, he was the New York financial correspondent for the Chicago Tribune and a financial reporter in its Chicago newsroom. Greenberg has held various positions at other media outlets including Crain's Chicago Business and the St. Paul Pioneer Press.

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