Tag Archives: NILE

Insider Selling at NILE Continues, Company Enters Settlement Discussions with Diascience Corp. (aka Yehuda Diamonds)

January 7, 2010 – 1:34 pm

We wanted to highlight a few noteworthy developments related to our pair trade recommendation of long SIG/short NILE.  First, we wanted to provide you with some detail on insider selling by Blue Nile executives over the past 6-9 months.  Second, it appears that NILE has entered into settlement discussions with Diascience Corp. (aka Yehuda Diamonds).
Insider [...]

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Channel Checks With Independent Jewelers Indicate Trends Might Not Be As Bad as the Zales November Comp Would Have You Believe

December 16, 2009 – 3:40 pm

Shares of SIG have pulled back in the past 10-days following ZLC’s 10-Q filing, in which Zale’s reported that November comparable store sales declined 18.6% YOY.  Historically, November sales have represented as much as 25% of total annual revenues. For Zale Corporation, this is nothing short of a disaster. The broader question from our perspective is: what [...]

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An Update on Blue Nile’s “Operating Margin Conundrum” and Thoughts on Upcoming 3Q09 Results

November 4, 2009 – 3:44 pm

We introduced a pair trade idea in June to go long Signet Jewelers against a short position in Blue Nile.  Although we characterized the idea as a “Pair Trade with Some Sparkle“, it has been anything but that so far.  The trade has generated a 1.3% net loss since the original date of recommendation.  Our [...]

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The Blue Nile/Diascience Corp. (Yehuda Diamonds) Legal Battle Heats Up

November 2, 2009 – 2:22 pm

In our original report on our pair trade idea: long Signet Jewelers/short Blue Nile, we highlighted the risk that a lawsuit against Blue Nile could pose to the company.  Earlier this year, Diascience Corp., (aka Yehuda Diamonds) filed a lawsuit against Blue Nile alleging that the company’s website: “does not disclose for each and every [...]

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Signet Jewelers (SIG) Remains the Best Investment Vehicle in the Specialty Jewelery Space

September 9, 2009 – 1:34 pm

SIG reported 2Q10 results this morning.  You can find the full press release here.  Overall, the company handily beat consensus expectations and the stock has reacted commensurately.  Here are some of the key highlights from the quarter:

US same store sales declined 5.5% YOY. However, SIG’s US mall brands (Kay) witnessed an 8% YOY increase in [...]

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Introducing the PAA Research SMid-Cap Portfolio

September 3, 2009 – 8:40 am

One of the biggest issues we have struggled with since inception at PAA Research is how to manage the difficulties of providing static recommendations in a dynamic market.  For example, we introduced short recommendations for SWHC and RGR based on our view that the ”Obama effect” on firearms sales was poised to wane and that both stocks [...]

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Are Polished Diamond Prices About to Increase?

August 25, 2009 – 4:59 pm

In a recent post on NILE, we discussed the primary fundamental short thesis on the stock, which included among other things the company’s “operating margin conundrum”.  In short, it is our view that NILE’s gross margins will be pressured by more promotional activity in a downturn and squeezed by commodity costs in an upturn.  The company [...]

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A Closer Look at Blue Nile’s Promotion Strategy and the Company’s Operating Margin Conundrum – The Fundamental Short Thesis

August 12, 2009 – 6:20 pm

Approximately 6-weeks ago we introduced a pair trade recommendation Long Signet Jewelers/Short Blue Nile.  Thus far it has not yielded positive results.  The total return for the trade as of today’s close was -14.0%.  We wanted to provide some additional details on what we view as the fundamental short thesis for NILE. We recognize the stock [...]

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Taking a Closer Look at Citi’s Blue Nile Upgrade and An Update on the Diascience Corp. Lawsuit

July 16, 2009 – 1:58 pm

NILE shares have rallied 17.9% in the past 5-trading days following a series of analyst upgrades from William Blair and Company and CitigroupInvestment Research. We wanted to spend a few moments to take a closer look at the Citigroup upgrade, which single handedly drove an 11.6% increase in the price of NILE shares. [...]

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A Pair Trade with Some Sparkle – Long Signet Jewelers/Short Blue Nile

June 25, 2009 – 8:17 am

Over the past few months there have been some nascent signs of stabilization in consumer spending. For the most part we have avoided the entire consumer sector during the rebound in the market in the past three-months. It has been our view that consumer spending will remain considerably strained for several years. [...]

By PAA Research | Posted in Initial Investment Idea Write-ups, Jewelry | Also tagged , , , , | Comments (4)