Tag Archives: pair trade

When the Castle Is Under Siege It Helps To Have a Wide Moat: Long CSGP/Short LOOP

February 11, 2010 – 10:09 am

A few years ago, Warren Buffet stated to Fortune magazine:
“The key to investing is not assessing how much an industry is going to affect society, or how much it will grow, but rather determining the competitive advantage of any given company, and above all, the durability of that advantage. The products or services that have [...]

By PAA Research | Posted in Commercial real estate | Also tagged , , , , | Comments (0)

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 [...]

By PAA Research | Posted in Jewelry | Also tagged , , , , , , , | Comments (0)

Shedding Some “Light” On a New Pair Trade Idea: Long Acuity Brands (AYI)/Short Hubbell Inc. (HUBB)

December 3, 2009 – 10:18 am

We have been long-time admirers of the business models of the leading electrical product manufacturers including: Cooper Industries, Thomas and Betts, Hubbell Incorporated and Acuity Brands, Inc.  The stocks are not widely followed, but they have compelling business models from a financial perspective.  All four of these companies have traditionally generated free cash flow in excess [...]

By PAA Research | Posted in Industrials | Also tagged , , , , , , , , , , | Comments (0)

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 [...]

By PAA Research | Posted in Jewelry | Also tagged , , , , , , , , | Comments (1)

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 [...]

By PAA Research | Posted in Jewelry | Also tagged , , , , , , | Comments (0)

The State of the Office Furniture Market – Still Recommending Long MLHR/Short HNI

September 10, 2009 – 1:26 pm

In our original report on the office furniture market entitled: “Generating Returns in an Industry in a Deep Freeze” we advocated going long Herman Miller against a short position in HNI Corporation.  Thus far the trade has generated a negative return of 3.3% compared to a 9.9% gain for the S&P 500 – not exactly [...]

By PAA Research | Posted in Office Furniture | Also tagged , , , , , , , | Comments (0)

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 [...]

By PAA Research | Posted in Jewelry | Also tagged , , , , , , , | Comments (0)

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 [...]

By PAA Research | Posted in Jewelry | Also tagged , , , , , , | Comments (0)

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 [...]

By PAA Research | Posted in Jewelry | Also tagged , , , , , , | Comments (1)

Our Long MLHR/Short HNI Has Gone From a Catalyst Driven Trade to a Relative Value Trade, but We Still Like it

July 26, 2009 – 8:36 pm

Our pair trade recommendation to go long Herman Miller Inc. and Short HNI Corporation got off to a bumpy start.   The trade has returned -6.4% compared to a 4.1% gain for the S&P 500 -  it’s not working on an absoute or relative return basis.  When we introduced our pair trade recommendation to go long MLHR against a [...]

By PAA Research | Posted in Office Furniture | Also tagged , , , , , | Comments (0)