General Motors (GM) is buying Americredit (ACF) for $3.5 billion. It was two factors that got GM into trouble in 2008. First was its huge foray into consumer lending, particularly subprime lending. Second, were problems with its core auto manufacturing business.

Out of political and social necessity, along came the US Government and bailed out GM and GMAC. GMAC is trying to rebrand itself under the brand name “ally”. GM was supposed to slim itself down, get away from risky financing and get back to making cars that the public wanted to own. Last years “cash for clunkers “ program helped to kick start sales of US made cars. 

So, now GM relapses and get deeper into higher risk financing. Where is the outrage? Why is the US Taxpayer, Congress and the White House allowing GM to buy ACF?

It just goes to show you that credit is cheap and in the midst of a major bull market.

At the time of this Blog entry Scott Rothbort, his family and or clients of LakeView Asset Management, LLC owned GMAC debt securities --- although positions can change at any time.

For more information on investing with LakeView Asset Management, LLC please visit the company's website

You can subscribe to The LakeView Restaurant and Food Chain Report newsletter at Restaurantstox.com

Posted By Scott Rothbort at July 22, 2010

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Some thoughts about IBM (IBM) now that we are pretty much a full trading day removed from the earnings release.

First, IBM is no longer as relevant as it one was for the overall market or for the technology sector. IBM's heyday was the 1960s and 1970s. IBM was then replaced by Microsoft (MSFT) in the 1980s and 1990s. Now, MSFT has ceded its technological leadership to Apple (AAPL). Someday some other company will supplant AAPL. We may be years off from that happening.

Second, the revenue for IBM miss was not a miss at all. It was a failure on the part of analysts to properly factor in the impact of foreign exchange on their revenue estimates. Either the analysts are lazy or incompetent. The excuse that they do not have enough revenue data and geographic breakdowns for IBM sales is a “dog ate my homework” defense. It is not acceptable to me.

Third, IBM, the largest component in the Dow Jones Industrials (DJIA), a price weighted index, just proves how antiquated and out of touch with the investing public that the DJIA is. 

Posted By Scott Rothbort at July 20, 2010

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Biglari Holdings (BH) is getting smoked once again today. This restaurant chain / wannabe roll-up conglomerate reported very disappointing results on Friday after the market close. BH earned $3.84 versus $1.58 last year and the sole covering analysts’ expectations of $5.97. I have warned that this company is a disaster in the making and have short positions on. The stock has lost just over 1/3 of its value since peaking in early April at $418.  

BH was a short pick for my newsletter, The LakeView Restaurant & Food Chain Report several weeks ago. Is it too late to short BH? I believe that this stock could trade into the 100s, especially if the chairman makes another nonsensical offer for stock of another company. The company should earn between $15 and $16 dollars in FY10. What kind of multiple would you want to put on this stock? Does it deserve a multiple like McDonald’s (MCD) or Yum Brands (YUM)? I think not. BH deserves a multiple of 10 to 12 and I am being generous. 

At the time of this Blog entry Scott Rothbort, his family and or clients of LakeView Asset Management, LLC was long shares of MCD and short shares of BH--- although positions can change at any time.

For more information on investing with LakeView Asset Management, LLC please visit the company's website

You can subscribe to The LakeView Restaurant and Food Chain Report newsletter at Restaurantstox.com

Posted By Scott Rothbort at May 24, 2010

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Dick’s Sporting Goods increased it guidance for the 4th quarter and FY09. The company jacked up EPS guidance to AT LEAST 54 cents from a previous estimate of 41 to 46 cents. This would bring FY09 EPS to at least $1.17 versus $1.19 last year. Given the fact that the golf business is in a cyclical recession, these are excellent results. I would not that DKS has bettered analysts’ estimates for the past 4 quarters. With this announcement we have to consider it a 5th consecutive beat.

Furthermore, same store sales are expected to decline only 2% rather than a 3 to 4% drop that was previously expected.
The company’s FY10 should return the company to the double digit growth that we were accustomed to prior to the Great Recession. DKS is the dominant independent sporting goods and apparel retailer in the country. There is still plenty of geography into which DKS can continue to expand for several years. 

I began purchasing DKS upon its IPO several years ago. I constantly add to DKS upon receiving new client assets for our accounts at LakeView Asset Management, LLC. DKS might not be as exciting as a fast growing teen retailer but it is also far more stable.

I would also point out that sales of Jets merchandise soared as the football team made its run to the AFC championship. The company has 19 stores in the states of Indiana (17) and Louisiana (2) which houses the teams participating in the Super Bowl. The company currently operated 420 stores in 40 states.

Currently, I am valuing DKS at $28.5 or 22 times my expected FY10 EPS of $1.30.

At the time of this Blog entry Scott Rothbort, his family and or clients of LakeView Asset Management, LLC was long shares of DKS --- although positions can change at any time.

For more information on investing with LakeView Asset Management, LLC please visit the company's website

Posted By Scott Rothbort at January 27, 2010

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Government is not a solution to our problem, government is the problem – Ronald Reagan

President Obama just does not get it. Does he know that Goldman Sach’s (GS) provision for income taxes in 2009 was the most that company ever recorded!

Here is the tax provision for GS retrieved from its financial statements (in $ millions):

2009:      6,444
2008           14
2007       6,005
2006       5,023
2005       2,647

Government’s view of the economy could be summed up in a few short phrases. If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.  – Ronald Reagan

How many other companies pay as much income tax? There is always Exxon (XOM) but the administration loves to hate XOM as well. It certainly is not the Government Sponsored entities, AIG, Chrysler or General Motors. All of those companies are sucking the life out of successful and profitable corporations.

We need true tax reform that will at least make a start toward restoring for our children the American Dream that wealth is denied to no one, that each individual has the right to fly as high as his strength and ability will take him. . . . But we cannot have such reform while our tax policy is engineered by people who view the tax as a means of achieving changes in our social structure. – Ronald Reagan

Martin Luther King started a social dream. Ronald Reagan started an economic dream. Obama is destroying both. 

At the time of this Blog entry Scott Rothbort, his family and or clients of LakeView Asset Management, LLC was long shares of GS --- although positions can change at any time.

For more information on investing with LakeView Asset Management, LLC please visit the company's website     

Posted By Scott Rothbort at January 21, 2010

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