These are my notes and instant reactions from a presentation at the Value Investing Congress, the notes below might contain errors, paraphrases, incorrect quotes, or misinterpretations.
We got a big dose of Whitney Tilson yesterday, but today he’s presenting mostly about SodaStream (SODA), which is one of his newer positions.
This is the company that sells home soda makers — carbonating bottles, CO2 cylinders, and the flavorings that you can put into the carbonated water to make soda. They make selling all four of those things (machine, bottle, CO2, flavor).
The consumer proposition is good — cost effective, convenient, lots of flavor choice, 70% cheaper than buying bottled soda water. They use cane sugar instead of corn syrup for their flavorings, so there’s some argument that they’re a bit healthier, and they use Splenda instead of aspartame. It’s also environmentally friendly, not so many water bottles being wasted.
The core hard-core users are people who like sparkling water, and it gives a household variety of flavors. They are not really competing against Coke and Pepsi (Tilson says their colas are almost undrinkable).
They have exclusive rights to some brands — Ocean Spray, Welches, Crystal Light, etc.
He thinks SodaStream will be his next Deckers (DECK). Deckers had a bad 2012 and a big short interest and inventory problems — he thought they had a good brand and were just temporarily suffering, he bought in early 2013 and sold after it doubled in a year.
Beaten down stock, high short interest.
-This is one of the few stocks that’s nowhere near it’s 52-week highs, down near the IPO price again, might have been a great short at $75 but he thinks shorts are making a mistake to still be short. Short sellers are often right and it’s hard to bet agains heavily shorted stocks… but every once in a while they can be huge winners.
Short sellers think it’s a fad, but he thinks it is not
-The shorts think the company is a fad because it has low penetration in the US. He did a survey, nonscientific, that gave him confidence that hardcore users and regular users love their SodaStream machines, and non-users had some interest in buying one.
-They had a bad holiday season, their worst since 2008 (and it was bad for everyone else, too). Have generally been ...