Archive for the ‘Personal Performance’ Category
Aeropostale Hits the Value Bull's-Eye
Posted: February 3, 2012 at 4:57 pm
Tom is a member of The Motley Fool Blog Network -- entries represent the personal opinions of our bloggers and are not formally edited.
The teen fashion market is not generally an investing niche geared toward value-focused opportunities. The industry contains very little, if any, barriers to entry, and is thus highly fragmented with many players all targeting the same customer base. Likewise, as with most fashion sectors, teen apparel is subject to large swings in popularity. Most brands are therefore largely fad-fueled, and the door for new entrants and those leaving the industry is ever-revolving.
Aeropostale (NYSE: ARO), which targets the market with highly sellable active wear geared towards the so-called “universal teen,” represents a potentially lucrative value investment at its recent market price of $16.80.
Why So Cheap?
At $16.80, ARO trades inexpensively on both an absolute and relative basis.
Largely due to a generally weak retail sector over the past several quarters and the new breed of value-conscious buyers, as well as rising commodity costs, nearly all players in the consumer apparel industry have been subject to “perfect storm” like conditions.
ARO, which markets products at a lower price point than other premium-priced competitors like Abercrombie & Fitch (NYSE: ANF), American Eagle Outfitters (NYSE: AEO), and Urban Outfitters (NASDAQ: URBN), has maintained modest sales growth but largely at the expense of slowly dipping margins.
Average 10-year gross and operating margins – 32.4% and 11.2%, respectively – have decreased nearly 5.5 and 6.6 percentage points, respectively, over the past three quarters. ARO’s stock price fell over 65% within the first nine months of 2011 as a result, and prices have recently stabilized nearly 37% off their early 2010 highs.
ARO Past Performance
An investment in ARO more or less follows a return to normalcy hypothesis. By no means is the recent slump deeply ingrained in the corporation’s operations, as some sort of gross inefficiency. In looking at the past performance of the company, quite the opposite is actually true.
SSS = Same Store Sales
ARO’s past five year performance is much more consistent than that of the competition, despite the unfavorable economic climate. Likewise, its strong performance over the past decade hints that ARO contains a degree of lasting value and is by no means a passing fad – sales have grown at a 20.2% CAGR between 2003 and 2011, gross and operating margins both increased nearly 700 basis points over the same time period, and the growth was largely organic:
Between 2003 and 2011:
Number of stores increased 275% Average SSS growth was 5.7% Sales/square foot increased 33%
Although the retailer’s past three quarters performance has disappointed the market, a normalization scenario under which ARO shares revert back to their early 2010 highs in the mid $20s is not farfetched.
First, the sector will not continue to operate with depressed margins indefinitely. ARO has historically been priced on a lower tier than premium priced brands – ANF’s five year gross margins averaged 66% -- and margins have recently been squeezed from both ends as higher-level brands utilized uncharacteristically prolonged periods of promotion and input prices skyrocketed.
In order for brands like ANF to retain their premium images and their premium pricing powers, prices will need to return to normalized levels. As the general state of the retail sector improves and consumers’ willingness (and ability) to spend increases, prices will follow suit. Cotton prices, although still elevated, have fallen from their mid-2011 peaks. With margins at near all-time lows, even a slight improvement will tend to revamp the market’s confidence in the brand and the stock.
Next, the retailer has been accused of missing recent changes in fashion. Inventory levels, in relation to the seasonal nature of the corporation’s sales, have returned to very manageable levels. Management’s stated plans of heavy product focus and slight store redesigns to better highlight products should help to strengthen margins as inventory would be better tailored to consumer tastes. Likewise, seeing that there is no longer a gross overabundance of inventory, and taking into account the slowly strengthening retail market, chances of another fire sale-like operating environment are low.
Sales figures on four quarter run, and DSI on four quarter averages, to adjust for seasonality
Lastly, from a long-term perspective, ARO’s largely-organic growth strategy has been efficient, and more importantly, safe. Unlike the past five year operating history of competitors like ANF, AEO, and GPS, ARO’s system of stores has not appeared to be affected by severe cannibalization. New store openings per year have slowed to a conservative level, and per-store metrics have continued to improve despite the opposite effect most competitors have experienced. Likewise, as previously mentioned, ARO is hardly a passing fad. Its “universal teen” product focus is once again effective yet safe, and its performance shows that the style resonates with a large portion of the younger generation despite their tendency to frequently change tastes.
Valuation
What does the market’s current price imply about the growth prospects of the brand, and what would it take for the stock to appreciate 40+ % to its early-2010 high in the mid $20s?
*Look at footnote for additional information
Aside from the sales, margin expansion, and same-store metrics that ARO has improved over the past several years, the corporation has created superior shareholder value through the growth of residual earnings – above and beyond its cost of capital requirements – on its core operating assets. Residual operating income over the last twelve month period, $90.1 million, is severely dampened by the market conditions already discussed.
Residual operating income grew at a 24.4% CAGR between 2004 and 2011, and at a 10.2% CAGR between 2004 and the last twelve months. What is the market assuming?
_________________________________________________________________________
Market Price Per Share = Net Operating Assets Per Share – Net Financial Obligations Per Share + [Residual Earnings Per Share / ((1 + Cost of Capital) * (Cost of Capital – Growth Rate))]
$16.80 = $3.75 - (-$0.99) + [($1.12) / ((1.15)*(.15 - G))]
G = 6.9%
_________________________________________________________________________
The current market price, which assumes a very pessimistic 6.9% future growth rate for ARO’s residual operating income, offers one of the best entry points for the stock over the past several years. Even with the recent cyclical downturn, which can be assumed to occur once every decade, the corporation’s residual growth rate has averaged 10.2% per year. Assuming that ARO continues at this average trajectory – although its growth rate prior to the recent downturn averaged near 25% per year – a market price of $24/share is very realistic (plug 10% growth rate into equation above).
Considering that margins are at near all-time lows and the retailer’s residual operating earnings are at trough levels, even a slight improvement in performance should yield residual earnings growth in excess of the market’s assumptions. The recent ARO sell off, from a long-term, value-focused perspective, is well overdone.
* Footnote
NOA, net operating assets = (total assets – financial assets) – (total liabilities – financial liabilities). NFO, net financial assets = (total liabilities – operating liabilities) – (total assets – operating assets) CSE, common shareholders’ equity = NOA - NFO 5% of each year’s sales is assumed to be needed for operations, and the remaining cash/equivalents balance is considered excess financial assets. Financial assets, because the firm has never taken on any debt, is zero for each year. The firm is essentially a net creditor, as its financial assets outweigh its financial obligations. Post-Tax is post tax operating income. RNOA = return on net operating assets = (post tax operating income / average net operating assets) Residual operating income = (RNOA – 15% cost of capital) * average net operating assets
The Motley Fool owns shares of Aeropostale and has the following options: long JAN 2014 $10.00 calls on Aeropostale, long JAN 2014 $15.00 calls on Aeropostale and long JAN 2014 $20.00 calls on Aeropostale. gibbstom13 has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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Tom Gibbs
Tom Gibbs is a member of The Motley Fool Blog Network.
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Aeropostale Hits the Value Bull's-Eye
Jamming to KevinKookyumjian’s Street Performance Fisherman’s Warf – Video
Posted: February 2, 2012 at 9:43 pm
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Performance gives perspective on revolution
Posted: at 9:43 pm
While most students have heard about the uprisings in Egypt and Tunisia through various media outlets, four students went straight to the source to gain perspective on the events.
Last night in Stewart Theater, the group Poetic Portraits of a Revolution presented its first public performance of their discoveries while in Egypt and Tunisia. The group includes four young men with a strong purpose to display through art. They spent last summer traveling through Egypt and Tunisia to observe the revolutions and created art based off the experience.
Among those who took the journey were University students Mohammad Moussa, who served as translator, and Sameer Abdel-khalek, who served as photographer. Will McInerney and Kane Smego are part of the group as well.
The group compiled many forms of media during their trip in hopes of sharing what they saw and felt while in a country experiencing a lot of change.
The goal of the project was simple: inform the world about the events and revolutions occurring in Egypt and Tunisia in a way that would truly capture what the citizens of the countries were experiencing. Unlike the average early morning news reports, Poetic Portraits of a Revolution spoke to average people and presented their findings in a way that is not sensationalized.
"On one hand you want to make sure that you captured the stories in the right way and on the other hand you want to give the stories justice and portray them in a light that the people who were telling these stories would appreciate and approve of," Moussa said.
Sharing and teaching the audience about their experiences is one of the main goals of the group. They aim to encourage others to change as well, according to Moussa.
"The performance is a challenge to the audience, to continue this work. It's an idea that stories are powerful and human stories can rely understanding and we can use art to help us creatively express that, but at the end of the day it all boils down to human stories," McInerney said.
Josie Miller, freshman in international studies, came to the performance after hearing about its strong message.
"I think it's good to make college kids aware of the outside world because we don't really travel outside of our campus," Miller said.
The theater performance complied their findings into a moving masterpiece, filled with poetry, interviews, photographs and video footage.
The performance began with a story to introduce the American stereotype of Egypt and Tunisia and then followed a script that included interviews of Egyptians and Tunisians, spoken prose and personal testimonies.
Miller said she was especially interested in the project because people who are in college or recently graduated created it.
"When people are that passionate about something, it's hard not to be affected by it. It's so powerful especially when you see some people my age doing that," Miller said.
The performance concluded with a question and answer session that allowed students and others in attendance to learn even more about the project. The speakers carefully addressed all questions to give everyone a full understanding and presented a charge to the audience.
"Don't let the inspiration stop after the show ends; take it and make it your own," Moussa said.
The photographs of their journey are still on display in the Craft Center until March 2. If you missed the event and would like to see it, the group will present it again at N.C. State for University Scholars in late February. This will be followed by a more theatrical performance at The Arts Center in Carrboro.
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Performance gives perspective on revolution
Eazy-E – Arsenio Hall Interview + Live Performance Of Real Compton City G’s.wmv – Video
Posted: at 3:37 pm
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Eazy-E - Arsenio Hall Interview + Live Performance Of Real Compton City G's.wmv - Video
Preety Bhalla’s Personal Collection of Jagjit Singh’s Live Performance Of "Tere Khusboo Main". – Video
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Preety Bhalla's Personal Collection of Jagjit Singh's Live Performance Of "Tere Khusboo Main". - Video
Lending Club Surpasses $500 Million in Personal Loans
Posted: at 3:37 pm
SAN FRANCISCO, Feb. 2, 2012 /PRNewswire/ -- Lending Club (http://www.lendingclub.com), the leading platform for investing in and obtaining personal loans, today announced that $500 million in loans have been originated via the platform since inception. Lending Club serves the needs of prime consumers who choose the lower interest rate loans available through Lending Club over more expensive credit cards.
(Photo: http://photos.prnewswire.com/prnh/20120202/SF46378)
The San Francisco-based company commenced operations in 2007 and has exceeded 100 percent growth in loan volume each year since. More than a quarter-billion dollars in loans were originated on the platform in 2011, more than doubling the previous four years combined. Lending Club now averages more than $1 million in loan originations per day, with an average loan size of $10,945. The majority of borrowers (66.7 percent) say they use Lending Club's fixed-rate personal loan platform to pay off their high-interest credit cards.
Investments are also soaring: Lending Club now receives more than $30 million a month in new investments from a base of over 50,000 retail investors and a rapidly growing pool of institutional investors, with more than 50 investor accounts over $1 million and several accounts over $10 million. By focusing on loan originations to prime and super-prime quality borrowers and with less than 10 percent of submitted loan applications approved, Lending Club has established a four and a half-year track record in which its Prime Consumer Notes generated 18 consecutive quarters of positive returns and average annual returns of 5.8 percent to 12.3 percent depending on loan grades.(1) The company's wholly-owned subsidiary LC Advisors, an SEC Registered Investment Advisor, launched two funds in 2011 that rapidly grew to more than $80 million in assets under management.
Lending Club's year-over-year revenue more than doubled with calendar 2011 revenue reaching $12.8 million. The Lending Club team has expanded rapidly, with more than 25 new employees hired in 2011 bringing the company total to 78. Key hires included Chief Risk Officer Chaomei Chen, formerly chief risk officer with JP Morgan Chase Card Services and LC Advisors President Brad Pattelli, formerly co-portfolio manager of the levered loan group at New York-based hedge fund Angelo Gordon.
"Lending Club is a radically simple, new idea that is delivering value. We put the consumer back in the driver's seat and use technology to lower costs," said Lending Club CEO Renaud Laplanche. "Our process whereby investors provide capital to invest in loans made to borrowers is the simplest, most transparent and most efficient form of lending. Lending Club takes banking back to its roots."
About Lending Club
Lending Club utilizes technology and innovation to reduce the cost of traditional lending and offer borrowers better rates and investors better returns. Founded in 2006 and based in San Francisco, CA, Lending Club has been recognized for its results and innovation by the Harvard Business Review and Dow Jones, was named one of Forbes' America's Most Promising Companies in 2011 and recognized as a 2012 World Economic Forum Technology Pioneer. More information is available at: http://www.lendingclub.com.
Additional information about Lending Club is available in the prospectus for Lending Club's notes, which can be obtained on Lending Club's website at https://www.lendingclub.com/info/prospectus.action.
Information in this press release is not an offer to sell securities or the solicitation of an offer to buy securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction. Some of the statements in this above are "forward-looking statements." The words "anticipate," "believe," "estimate," "expect," "intend," "may," "plan," "predict," "project," "will," "would" and similar expressions may identify forward-looking statements, although not all forward-looking statements contain these identifying words. The Company may not actually achieve the plans, intentions or expectations disclosed in forward-looking statements, and you should not place undue reliance on forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in forward-looking statements. The Company does not assume any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
Currently only residents of the following states may invest in Lending Club notes: CA, CO, CT, DE, FL, GA, HI, ID, IL, KY (accredited investors), LA, ME, MN, MO, MS, MT, NH, NV, NY, RI, SC, SD, UT, VA, WA, WI, WV, or WY.
(1) Past performance is no guarantee of future performance. Investments may lose value.
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Lending Club Surpasses $500 Million in Personal Loans
Prosper.com Funds More Than $300 Million in P2P Personal Loans
Posted: at 3:37 pm
SAN FRANCISCO, CA--(Marketwire -02/02/12)- Prosper.com, a peer-to-peer lending marketplace for personal loans and investments, announced today that it has funded more than $300 million in P2P consumer loans since inception. The company also announced that it funded a record $10.8 million in loans in January alone. This latest monthly milestone continues a streak of 12 consecutive months of record growth, a 178% year-over-year increase in personal loans funded.
"Our record growth is a true testament to our category-best seasoned returns for lenders," said Chris Larsen, Prosper's chief executive officer and co-founder. "Investors are turning to us for our high-yield returns and our transparent, trusted marketplace. We look forward to continued growth in 2012."
Highlights for January 2012 include:
Record monthly origination volumes of $10.8 million; 14% monthly growth in originations from December 2011; 11.4% compound monthly growth rate over the last 12 months; Borrower listings increased 30%; Growth achieved while maintaining strong risk return metrics: average credit score of 724(2) and estimated loss of 5.69%(1) while delivering a 10.46%(1) ROI.
Prosper is the only P2P lender to report seasoned and audited returns. Seasoned returns are a more conservative and accurate indicator of returns, reflecting a loan or portfolio of loans that has matured enough for the performance to have stabilized. This return is thought to more accurately reflect the true underlying return of the asset.
Prosper contracted Ashland & Partners to conduct a comprehensive audit of its individual loans and operational infrastructure. The independent audit represents a first in P2P lending, setting the stage for full transparency and return on investment (ROI) verification. Ashland examined a specified Schedule of Performance for the Prosper All Rated Notes by Vintage Month Performance Record for the period July 1, 2009 through September 30, 2011.
Debt consolidation, home improvement and small business-related loans remain the leading loan categories on Prosper.com. To learn more about Prosper's lender returns and competitive personal loans, visit http://www.prosper.com.
About Prosper
Prosper Marketplace Inc., a peer-to-peer lending marketplace that brings together creditworthy borrowers with individual and institutional investors, allows people to invest in each other in a way that is financially and socially rewarding. Individual and institutional investors invest in minimum increments of $25 on loan listings they select. In addition to credit scores, ratings and histories, investors can consider borrowers' personal loan descriptions, endorsements from friends, and community affiliations. Prosper handles the servicing of the loan on behalf of the matched borrowers and investors. Prosper was co-founded by Chris Larsen, co-founder of E-LOAN. Prosper has raised $83.85 million in venture capital and is backed by financial and technology luminaries including, Tim Draper of Draper Fisher Jurvetson; David Silverman of Crosslink Capital, Accel Partners; CompuCredit; Omidyar Network; Capital One Co-founder Nigel Morris of QED Investors; Court Coursey of TomorrowVentures; Larry Cheng of Volition Capital.
Notes offered by Prospectus.
(1) Seasoned Return and annual loss rate calculations represent historical performance data for the Borrower Payment Dependent Notes ("Notes") issued and sold by Prosper since July 15, 2009. To be included in the calculations, Notes must be associated with a borrower loan originated more than 10 months ago; these calculations use loans originated through February 28, 2011. Our research shows that Prosper Note returns historically have shown increased stability after they've reached ten months of age. For that reason, we provide "Seasoned Returns", defined as the Return for Notes aged 10 months or more. To calculate the Return, all payments received on borrower loans, net of principal repayment, credit losses, and servicing costs for such loans, are aggregated and then divided by the average daily amount of aggregate outstanding principal. To annualize this cumulative return, it is divided by the dollar-weighted average age of the loans in days and then multiplied by 365. Returns have been audited by a 3rd party for all data through September 30, 2011. Seasoned Return is not necessarily indicative of the future performance on any Notes. The annual loss rate represents the actual losses on Notes. To calculate the annual loss rate, the net credit losses corresponding to eligible Notes are aggregated then divided by the average daily amount of aggregate outstanding principal for such loans. To annualize this rate, the cumulative number is divided by the dollar-weighted average age of the loans in days and then multiplied by 365. The forecast loss rate represents the Estimated Annual Loss Rates we provided for the borrower listings corresponding to the Notes included in the calculation of annual loss rate. All calculations were made as of December 31, 2011.
(2) Average Experian Scorex PLUS credit score of loans originated on the platform from July 15, 2009 through January 31, 2012. The average is weighted by the originated dollar amount of the loan.
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Prosper.com Funds More Than $300 Million in P2P Personal Loans
Raw Competitive S2E01: First Competitive Scrim on Dome CTF – Video
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Michael Jackson Prison Performance in the Philippines – Video
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Michael Jackson Prison Performance in the Philippines - Video
Test Drive The Hendrick Performance 2010 Chevrolet Camaro SS HO (Start Up, Exhaust, Brief Tour) – Video
Posted: February 1, 2012 at 11:44 am
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Test Drive The Hendrick Performance 2010 Chevrolet Camaro SS HO (Start Up, Exhaust, Brief Tour) - Video