Home Sweet Depot (continued): I merely
questioned a few days ago whether
was cannibalizing itself by opening so many new stores within miles of existing stores.
It was a throwaway line.
You'd think, based on the reaction, that it was a full-blast attack.
On one hand, there were the
of the world, who wonder why HD doesn't just add more registers to handle the long lines. (Because the parking lots would still be too crowded.) Others echoed
in Atlanta, who wrote, "The cannibalization issue was hashed over here several years ago in the newspaper with the HD critics deploring the strategy for the same reason you did, declining same-store sales. Guess what; it appears to work as they keep building. ... My observation here is that they are making sure you are never more than five miles from a store. And I'll bet that they will replicate that in every metro area. ... I suspect that a slight decline in SSS
same-store sales growth is a good tradeoff for increased sales, especially when
and HD are coexisting in many locations here." Could very well be gaining market share in the process.
But that's not why some folks are short the stock. Checked in with one person who is short HD, but
because of deteriorating fundamentals. ("Would you rather have one store that is doing $100 million where the shopping experience sucks or two stores doing $65 million where the shopping experience is great but the same-store comps are down?" he asks. "I'd rather have two stores doing $130 million than one store doing $100 million." And gaining market share, to boot.)
So tell us why he's short!!! He's short because of interest rates, which have already taken 20 points out of the stock. But doesn't home remodeling rise along with interest rates (or so they say)? Sure, but when interest rates go up "Home Depot isn't a company in Atlanta that operates stores," the short says. "It's a two-letter symbol that says, 'Sell me because I'm perceived to be sensitive to interest rates.' ... I'm a pattern recognizing person." ... And that's one pattern that repeats itself time after time. Interestingly,
writes that he thinks the
stock is oversold and the interest rate jitters are already factored in. ... The short, however, remains short because he is betting there's more interest rate news to come. (Two smart guys agree to disagree. Love it!) At the same time, the short says that a long-term HD investor might use current prices to add more for the future. "From a five-year perspective," he says, "it might be a great buy." (End of discussion!)
great piece on management change at
is a must-read. Snippet: "Warren Buffett has said that when a good manager meets a bad business, the manager normally fails. We will see in this case what happens when a good manager meets a good -- but broken -- business." ... Arf:
, lately trading at 3 3/16, can only dream that it's
(lately 19 1/2,) which is being bought.
More dinging of
: This time from Danny Lam of
, who says his research shows that Dell,
"will be experiencing a period of slower growth because they have not been successful in exporting their business model overseas to the fast growing PC Markets in Asia and Europe. ... At the same time, companies like
, who have preserved their indirect channels and their build-to-inventory systems even as they improved their efficiency and matched the direct model in key aspects, will likely see a period of strong and profitable growth like they have not seen in over 3 years." (Assuming you believe
PC players will do well.)
Donut or doughnut:
(no last name) is puzzled by
. "The doughnut maker," he writes, "has doubled in three weeks, sports a P/E over 100, yet it faces lower than average gross margins in its peer group and a growth rate of barely 20%." Agreed ... lots of holes in the story (I'm dying here, folks). ... Speaking of holes, time for a
: Now, with
turning into a key competitor of
Lernout & Hauspie
in the voice recognition biz -- rather than just a partner and investor -- the Microsoft part of the story from Lernout, er, from chief cheerleader Rob Stone of
, has suddenly changed. In a new report to clients, Stone writes Microsoft "was never central to the L&H story."
the story! (And thanks, Rob, for the perfect lead into our next item. ...)
Yesterday's comments on Jethro Clampett, er, Bodine, brought the Bodines out of the woodwork, including
subscriber whose username is "Jethrobodine." (Shazam!) And regarding yesterday's Hotline topic of knot vs. naught,
, from Texas, writes: "I think that may be naught, not knot. I live where people actually still talk like Jethro but they rarely spell anything so it is hard to tell. Finally,
writes, "The guy, after all, was a hillbilly!! You know there are some really rich hillbillies. Ever been to Tennessee?" Actually, spent a year living in Nashville in the mid-70s ... which about says it all for this topic -- and this edition of ... The Hotline.
Herb Greenberg writes daily for TheStreet.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks, though he owns stock in TheStreet.com. He also doesn't invest in hedge funds or other private investment partnerships. He welcomes your feedback at
email@example.com. Greenberg also writes a monthly column for Fortune.
Mark Martinez assisted with the reporting of this column.