Latest Thoughts: 1/24/18

Before I jump in, if you haven’t read my first post, please do. I want the changes I’ve made to be very clear to everyone (content, delivery, etc). As it pertains to content, you’ve already seen some changes. That will continue (if not tighten) going forward. My goal is to focus on pure research. In doing so, I wish to eliminate as much opinion and perception of bias/promotionalism as possible. This is the new normal.

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Long-time readers should note some significant changes in how I communicate in the public domain. The sole purpose of this forum is now to attract new contacts with professional industry expertise to share research and receive feedback (confirmation / refutation) regarding my investment theses. Accordingly, this document should not be construed as an endorsement of the companies or securities discussed herein. The disclosure below is critical to understanding the content of this document. Further, I frequently trade my positions and may buy, sell, or short the securities mentioned herein at any time, regardless of the facts or perceived implications of this article.

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Commentary. The stocks on my Interest List have done very well to start the year… just not the ones I’ve most-recently discussed. That tells me two things: 1) with the stocks I was most-actively writing about on Seeking Alpha, perhaps investors were too reliant on my writing and 2) with the stocks I haven’t been discussing, a different set of investors have been doing their homework and liking what they see.

Of course, there’s overlap between these two investor types. A good opportunity is a good opportunity, no matter who’s interested in it (or why).

The difference is that I never wanted a dependent audience. The associated pressure and legal liability exceeds anything I ever experienced as a Wall Street consultant (and that’s saying something).

My goal has always been to 1) share research, as a give-back for the blessing my life has been and 2) attract like-minded investors to help determine if my ideas are truly good ones. For proof, just look at the first article I ever wrote on Seeking Alpha (yes, most of my articles are still there if you know where to look). The tone of that 2009 article was no different than the tone I used in 2016 — a growing trend, a new product, and a greatly undervalued stock (which BTW went from $1 to a high of $7and was eventually acquired for $5.75).

Perhaps this is why I’ve been feeling a growing sense of relief over the end of my relationship with Seeking Alpha. It breaks my bond with folks who require a professional by their side. I’m not a registered investment advisor (and retired), so I’ve never been someone who could serve that role. If that’s what you need, you need to seek a registered investment advisor. There are many (on Seeking Alpha and elsewhere).

Instead, I’m now spending more time with people who have contacted me with their own research and findings. Collaborating and debating. Figuring out the truth. That was always the goal. I now feel that I’m closer to that goal than ever before.

FYI, for those who are wondering, I still own the same number of shares in my top two positions as I owned last week… and the week before that. In the absence of new news, my preferred inclination is to “buy low and sell high”. It is also not my inclination to repeat this paragraph in the future.

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Latest Thoughts On HMNY. On Seeking Alpha, Ben Rabizadeh has done a great job of researching MoviePass the way it should be researched. I don’t agree with 100% of his conclusions, but that’s a matter of his opinion versus mine. I respect him and his opinions. I know that he’s working with a complete set of publicly-available facts and that’s the most important thing.

Personally, I agree that getting into the business of investing in movies is a great move for MoviePass. All else being equal, I believe that the stock deserved a bump on that news (disclosure — I am neither long nor short).

In addition, the news should serve as a reminder to investors (especially those who tend to be skeptical) that one should never underestimate the ability of a management team to come up with great ways to monetize their strengths. From that perspective, the news isn’t just positive for what it is… it’s positive for what it says about Ted & Mitch’s ability to formulate new monetization strategies (and that might be the more valuable takeaway).

On the flip side, Ted & Mitch’s recent comments clearly validate my belief that the large theaters won’t be playing ball with them anytime soon. Their statements demonstrate unequivocal resignation to the reality that their near-term momentum will be limited to smaller theaters.

Netting the two sides, HMNY deserves its place on my Interest List (for now), but I’m still not inclined to buy back into the stock (for now).

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Regarding The Theaters. FYI, I believe that the major theaters are all benefiting from MoviePass and its relentless acquisition of new subscribers (disclaimer — that’s a business comment, not a stock comment).

I’m not going to name names (and none are on my Interest List, because I’m taking a pause from adding new names to it). However, MoviePass’ comments suggest that they are buying over 3 million (and growing) movie tickets per month. Their statistics also suggest that over half of those tickets would never have been purchased if MoviePass didn’t exist.

Further, each ticket (both, the ones that would and the ones that wouldn’t be sold without MoviePass) is driving 120% more concession revenue than the average ticket (also according to their publicly-stated stats).

This gives us everything we need to estimate the benefit to theaters. I encourage investors to do the math on all of that and figure out how much revenue, gross profit, and operating profit results. Per my new philosophy, I’m going to restrict myself to a certain level of financial / stock-related commentary, but everything required to do the math is out there and readily available to the public.

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Because Someone Asked. I’ve stated this publicly in a couple of places, but I still get asked. For the record, I have no intention of ever starting another pay service… or being part of a pay service… or being compensated in any way for anything I do… ever again. I’m retired and should have stayed that way, so let’s see if I can get it right this time.

As it relates to stocks, I have no intention to do anything accept share information (and I prefer to keep that focused on company-specific information). That means no recommendations, no price targets, and certainly nothing that can even be perceived as an attempt to promote a stock.

I’m doing this as a hobby and a source of collaboration. Period.

I hope that clarifies things… and I hope you’re all having a great week. Cheers!

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I wrote this article myself, and it expresses my own opinions. I am receiving no compensation for it, nor do I have a business relationship with any company whose stock is mentioned in this article.

The information in this article is for informational purposes only and should not be regarded as investment advice or as a recommendation regarding any particular security or course of action.  I am not a financial advisor.  Nor am I providing any recommendations, price targets, or opinions about valuation regarding the companies discussed herein.  Similarly, the disclosure above may state that I am long or short shares of the companies mentioned herein, but should not be construed as an endorsement of any particular investment or opinion of the stock’s current or future price. That disclosure is true as of the time the article is placed in queue for publication, but it is possible (or even likely) that I might be buying and/or selling the stocks mentioned herein immediately thereafter or at any other time, regardless of (and possibly contrary to) the content of this article or this website’s timing of its release.  The disclosure will not be updated following submission of the article and may be inaccurate thereafter.  Likewise, any opinions are as of the date of publication, and are subject to change without notice and may not be updated. I believe that the sources of information I use are accurate but there can be no assurance that they are.  I wrote this article myself and I receive no compensation for writing it.  All investments carry the risk of loss and the securities mentioned herein may entail a high level of risk. Investors considering an investment should perform their own research and consult with a qualified investment professional.