April Idea of the Month: License to Generate Cash
by Travis Johnson, Stock Gumshoe | April 17, 2015 5:02 pm
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Source URL: https://www.stockgumshoe.com/2015/04/april-idea-of-the-month-license-to-generate-cash/
Interesting:
…..Iconix Brand Group COO Seth Horowitz Resigns Effective April 13 * (Friday 04/17/2015 04:34 PM ET – Dow Jones News)
…..Iconix Brand Group Doesn’t Intend to Seek New COO at This Time * ( Iconix Brand Group Doesn’t Intend to Seek New COO at This Time *)
Copy and Paste went awry – It is SO hard to get good help these days!
Second news bit should have been
…..Iconix Brand Group Doesn’t Intend to Seek New COO at This Time * (Friday 04/17/2015 04:34 PM ET – Dow Jones News)
Sheesh, that’s rude — COO quitting just when I publish my article! Maybe no one likes working with CEO/Founder David Cole, that’s a lot of turnover in the c-suite for one year.
Though really, I wonder why on earth they have a COO — the CEO should be able to do that job, they’ve only got 150 employees and they pretty much only manage acquisitions/dispositions of brands and marketing campaigns.
The guy was an introveert and went nuts when he came out of his shell . . .
Awww! I was wanting one in gunmetal gray that turned out $100 bills…….but, I see they
don’t have anything like that. Drat!
WestTexasLawrence
Thanks for the idea, Travis. I have added ICON to my watch list as well. If Peanuts reaches Frozen’s popularity level, investors should do very well on that brand alone.
And, speaking of Target and its partnerships with designer brands, a limited-edition Lilly Pulitzer collection will be on the shelves and online beginning Sunday. I predict a sell-out within hours! I’m a Lilly fan and own pieces dating back to the 60’s. Oxford Industries (OXM) now owns the brand. I finally bought a few shares last December after waiting for a good entry point for over a year. The price has moved up nicely since Q4 announcement in late March.
It almost certainly won’t even come close to that popularity level, Frozen is one of the top five grossing movies of all time, in the rarefied billion-dollar club. I’d be delighted at a quarter of that, and it could be a complete flop — but Peanuts will still endure as a valuable cultural icon. I’ve come close to buying Disney several times but never did, regretfully — they do brands better than anyone on earth. Probably still a better “forever” buy here than ICON or lots of other ideas, but it sure is pricey right now.
Hi, Travis! Disclosure: I have purchased DIS several times in recent years, and each time I ask myself if I am nuts, because each purchase is at a higher price! I keep buying it because I do believe that it, DIS, is the KING OF CONTENT. Are most of us investors interested in the internet?? Well, I think that DIS may be the best internet play over the long-haul. ((Plus they are involved with a number of other profitable areas.)) Their newest dividend was remarkable. Be forewarned: they pay only once a year.
ICON has an awful chart. https://finance.yahoo.com/echarts?s=ICON+Interactive#
The trend is down. With a Peanuts Movie, you should at least see some positive signs on the chart. I read the comic strip in the newspaper. It was not funny 40 years ago and is less relevant now. If that is their best hope, I would skip this.
It’s one of their better hopes for growth, but is currently probably substantially less than 10 percent of revenue. And yes, the stock has fallen apart over the last six months — definitely not much optimism or momentum. I like a bit of pessimism sometimes, but it definitely doesn’t work out every time.
Thanks Travis,
When I see a lousy looking chart and large short interest it reminds me of LGND and look what that chart looks like now. Misunderstood companies at a good value usually turn around and the reward can be wonderful. I appreciate your hard work and honest opinions, both good and bad. Have a great day.
Irrespective of the COO resigning, losing 3 CFOs in a little over a year is a HUGE red flag to me. Wouldn’t touch it with the proverbial pole. — Curt
CFO’s / COO, and Sequential brought on some executives from Iconix.
Definitely a management problem going on, plus accounting issues! High put interest on the May 35 options. Five per cent insider ownership and 120 percent institutional ownership can lead to gaming in my mind (and in the real world). Big money will be made here, only question is in what direction. Perhaps a straddle is the correct play.
Always interesting. Thanks Travis for shining the light here.
Dramatic clobbering of the shares this morning after the COO departed — I don’t think I’ve ever written an article where something this dramatic happened at the company overnight after I wrote it up.
Certainly be careful, I am not convinced that there’s a major accounting problem but I’m not a forensic accountant — and that is a lot of C-suite folks to lose in one year. I like the business as reported, and I like their assets, but if they’re pulling a fast one those assets can lose value very quickly. Will let you know if I decide to buy shares after reading up on all of the latest assessments (and it would have to be after Thursday because of my trading restrictions, and I’m traveling later this week so it won’t happen in a rush regardless).
$ICON is trading an enormous amount of shares after today’s announcement of investigation into financial practices. Guess that explains the departure of COO.
If by investigation you mean the press releases about law firms investigating class action suits against ICON, those are really reactions to the price drop, not the cause of it. The press releases came out several hours after the stock price cratered.
Every time a company issues surprising or negative news and creates at least the appearance of a problem with accounting or disclosures and the share price drops, you’ll see at least a few press releases from law firms trolling for clients to sue the company. That’s most of what those are. That doesn’t mean the possible concerns they’re trying to bring up in court are meritless, but these firms are overwhelmingly reactionary — lawyers aren’t hiring forensic accountants and looking for nefarious activity, they’re looking for stocks that collapse on surprising news and then finding a reason to sue those companies because stocks that drop have angry shareholders who are good potential customers for lawyers. Sometimes that takes a few hours, but they can usually get a boilerplate press release out pretty quickly.
There have been questions about the accounting at ICON, as I mentioned above, this stock price drop is a panicked reaction to the COO leaving on top of the CFO departure and those accounting questions…. the same general sense of “something bad” that’s probably a large part of the reason the stock has been down in recent months, but those questions aren’t new with the surprise departure of the COO. I was comfortable with their change to how they handle cash flow reporting as they talked about it in their last conference call, and with their cash generation ability and future income potential, but I’m sure I’ll be looking that over again as I decide whether to invest personally over the coming weeks. Thanks for the comment.
Travis, you are not alone. Chris Mayer of Capital & Crises had just added this one too. I sold yesterday but willl keep on watch.
For those who are curious, I’m still sitting on the sidelines thinking about this one after their surprise COO departure — since earnings are coming out after the market tomorrow, I will hold off on sharing updated thoughts until then.
Any new thoughts on this one, now that you have the earning data, Travis?
Disappointing that core revenues declined, which probably means even more weight is put on the pressure to continue making new deals (and means the Peanuts movie better be a big hit), but I will write some more about this on Friday when I plan to take updated looks at a bunch of companies.
I’ll wait for more news on this one. Thanks to everyone for their thoughts.
SQBG-Is one of Daily Trade Alert – 3 Stocks to Buy on the Verge of Breakouts in 2016
December 26, 2015 By Bret Jensen, Small Cap Gems: Next up is Sequential Brands Group (NASDAQ: SQBG).
This brand manager and licensor of myriad retail products has been punished due to poor sales throughout the retail sector and building inventory levels heading into Christmas.
Investors seem to be forgetting that Sequential does not hold inventory or manufacturer products.
It markets its various brands and gets a royalty percentage off of every sale. The stock goes for $8.00 a share after being up over $18.00 a share earlier in the year. I have recently doubled my stake in Sequential on its pull back.
The company is going to be transformed by the integration of the Martha Stewart Omnimedia (NYSE: MSO) group when that purchase closes in early 2016. Management recently upped its guidance based on incorporating Martha Stewart’s brands within its own portfolio.
Revenues are expected to jump from approximately $85 million in FY2016 to some $150 million in FY2016. EBITDA should move from just over $50 million this year to north of $90 million next year. Three years out the company sees $250 million in annual revenue and $175 million in EBITDA. For a company with a market capitalization of just $650 million, that is a major growth trajectory. If Sequential comes anywhere close to hitting those projections, the stock is a double or triple from current levels two to three years out. Best2All-Ben