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Best Buy's Collapse Was Not A Surprise To This Man

Tyler Durden's picture




 

It would appear that the meteoric 300% rise of Best Buy's shares last year was promoted to the general investing public as the renaissance of the on-the-verge-of-bankruptcy warehouse store and sure enough, the world and his mom piled in to chase the momo higher and higher... until today. With a 30% tumble this morning, those momo-chasing moms and pops may be less enamored to buy-the-dip but there was one 'smart-money' insider who was selling as fast as retail was buying. Co-Founder Richard Schulze (who indicated in August he would be selling to 'diversify' his holdings) piled out of the stock through most of the fourth quarter (at a level well above this morning's opening print).

 

 

Chart: Bloomberg

 

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Thu, 01/16/2014 - 10:39 | 4337638 SilverIsKing
SilverIsKing's picture

This one was so obvious I'm mad at myself for not loading up on put options ahead of earnings.

Thu, 01/16/2014 - 10:41 | 4337651 Harlequin001
Harlequin001's picture

Bitcoined...

Thu, 01/16/2014 - 10:53 | 4337686 Stackers
Stackers's picture

about 4.5 million shares at +/- $40 -- Mr Schulze had himself a nice Christmas

Thu, 01/16/2014 - 11:09 | 4337739 CognacAndMencken
CognacAndMencken's picture

 

 

It's always interesting to see how the analysts on Wall Street had a stock rated shortly before a 30% collapse.  With BBY, 12 of the 19 analysts covering it had it rated "Strong Buy" this morning - overwhelmingly bullish. Only one guy had it at "Sell" which, unfortunately for him, he had since April 2012 before the stock ran up 300%.  These guys almost always have it EXACTLY wrong.  Given their proprietary profits, isn't funny how they have near PERFECT trading days, quarter after quarter, yet their recommendations are always wrong?  Either they're cheating, or they're trying to fool the retail public, or both.  It's impossible to deny...

http://www.nasdaq.com/symbol/bby/recommendations

 

 

 

Thu, 01/16/2014 - 11:15 | 4337774 markelshark
markelshark's picture

A strong buy would have been very profitable for 2012 and 2013, so those analysts had it right more often than not.

Thu, 01/16/2014 - 11:19 | 4337791 Debtonation
Debtonation's picture

Funny, Shulze was on the verge of taking Best Buy private just last December but was forced to give up when he couldn't raise enough capital to do so.  Well, if you can't buy then it's a slam dunk sell right. Where's the logic in that?

Thu, 01/16/2014 - 14:24 | 4338405 TaperProof
TaperProof's picture

If it wasn't going to be "his" business, he figured cash out, I completely understand, money isnt everything, but if you're forced to play the game, play it for the same reason everyone else plays it for...

Thu, 01/16/2014 - 11:34 | 4337837 CognacAndMencken
CognacAndMencken's picture

 

 

Here's the chart for BBY going back to 2006:

http://finviz.com/quote.ashx?t=BBY&ty=c&ta=0&p=m

Not knowing exactly when those analysts put their Strong Buy recommendations on, there was only a slight period of time when it shot to the moon, and that's only because it was rumored they'd get bought out.   

Goldman's Matthew Fassler raised his price target to $47 on Nov. 2, 2013, within days of the exact top. Seems you might be a bit sympathetic to the analysts, so if you want to congratulate him, please feel free:  Matt.Fassler@gs.com 

http://www.benzinga.com/analyst-ratings/analyst-color/13/11/4044340/upda...

 

 

Thu, 01/16/2014 - 11:39 | 4337854 TeMpTeK
TeMpTeK's picture

Best Bye

Thu, 01/16/2014 - 13:58 | 4338332 Bangin7GramRocks
Bangin7GramRocks's picture

I was done with them when they became an insurance company that sold electronics. You can't buy a pack of Hubba Bubba in that place without a blue-shirted kid trying to sell you a 3 year warranty. And they will not stand behind the products if you weren't dumb enough to buy the insurance. Fuck you sirs, I'll shop at Costco!

Thu, 01/16/2014 - 14:46 | 4338467 Thisson
Thisson's picture

You too can have 100% perfect trading days when you only sell your winners and when you mark your losers as "held to maturity, not available for sale".

Thu, 01/16/2014 - 11:02 | 4337733 Gringo Viejo
Gringo Viejo's picture

"If God had not wanted them shorn, He would not have made them sheep"..........Calvera (The Magnificent Seven)

Thu, 01/16/2014 - 11:45 | 4337874 Exponere Mendaces
Exponere Mendaces's picture

@Harlequin

You mean it will rally again and make new highs?

I doubt it...

 

Thu, 01/16/2014 - 14:45 | 4338463 Harlequin001
Harlequin001's picture

No, I mean it's a pump and dump just like bitcoin...

Thu, 01/16/2014 - 14:15 | 4338380 Landrew
Landrew's picture

There was no way to do that unless you where lucky to hold near the money days before. At any month prior you lost your ass. That is the problem with buying the rising peak of crazy. The real test will be to buy the dead cat bounce. That takes as much courage with the craziness BTFD that has happened over the last few years.

Thu, 01/16/2014 - 10:39 | 4337640 lemarche
lemarche's picture

NICELY DONE !! HEY, THERE MUST BE AT LEAST SOME ADVANTAGES TO BEING AN INSIDER...

Thu, 01/16/2014 - 10:40 | 4337641 new game
new game's picture

repeat

i am near the peak. i see a corpse, ah it is best buy! many oxygen cylinders! is that amazon or is that twitter using the last of the oxygen or is it a the last gasp. plant the flag and desend quickly...

netflix has a flag, many others(too)with shredded masts.

facebook eagerly asending towards the peak of everst too.

in fact the asent is dotted with climbers! woow, soo many going to the summit all at once!

oh, look one lost its hold on the face; falling to krags of jagged death below!

I see a storm brewing with -70 wind chills, oh such a way to die...

Thu, 01/16/2014 - 10:56 | 4337701 CheapBastard
CheapBastard's picture
Health care job losses for first time in decade

 

http://money.cnn.com/2014/01/10/news/economy/health-care-jobs/

 

 

...moar 'recovery' here....

Thu, 01/16/2014 - 11:15 | 4337773 Save_America1st
Save_America1st's picture

I work network and telecom for a pretty large national HMO based outta the Southeast.  The medical professions may be losing their doctors and nurses, but my company has been hiring tons of them on the administrative side.  I think we're going to end up with shit tons of doctors and nurses in America who won't want to be real doctors or nurses in hospitals and clinics anymore.  They're bailing out and taking the easy route in the consulting, coding, claims running, and administrative side within the so-called healthcare insurance industry. 

My guess is eventually the entire medical treatment side of things is going to totally collapse.  There won't be any doctors or nurses who will want to work for nothing under the iron fist of the new O-Fuck-You-We-Don't-Care system.  Those left will be worthless hacks and probabaly very dangerous for patients and there will be many deaths and further collapse, etc.

While the insurance "health care" side of things will be bloated with those who bailed out of the hospitals and that's going to turn into a total fucking nightmare as well.  And it's already really bad.

That imbalance is going to be like the Titanic going down after one side fills with water.  I don't see a solution until the whole thing implodes and then gets worse than that. 

Unfortunately, that's what these Marxist scumbags in government want to happen.  Just gives them more power, control, and money to continue the corruption with. 

The whole country in nearly all sectors of the economy are going to go down this way...that's how it always goes.  The whole country will end up looking like Detroit eventually and ripe for a either a major foreign takeover or a massive civil war.

How do you like getting those dots connected! lol

keep stackin' Ag, Au, Pb, Cu, and PbCu delivery systems folks...and get yourselves supplied up with food and water and hunkered down for the long haul and a helluva a fight! 

Thu, 01/16/2014 - 11:25 | 4337810 F em all but 6
F em all but 6's picture

YOU JUST HIT THE NAIL DIRECTLY ON THE HEAD

Thu, 01/16/2014 - 16:52 | 4338588 SafelyGraze
SafelyGraze's picture

Save_America1st (if that is your Real Name) -

thanks aplenty for the depressing post

+10

here's a little puzzle du jour: the answer is 'chicago'

http://en.wikipedia.org/wiki/Hospital_administration
health systems management program was established in 1934 at the University of Chicago 

http://en.wikipedia.org/wiki/American_College_of_Healthcare_Executives
The American College of Healthcare Executives (ACHE) is an international professional association of healthcare executives (high-level hospital administrators, CEOs, COOs, health system officers, etc.) Its central offices are located at 1 N. Franklin Street in Chicago, Illinois, 

http://en.wikipedia.org/wiki/Healthcare_Information_and_Management_Syste...
The Healthcare Information and Management Systems Society (HIMSS) is a not-for-profit organization dedicated to improving healthcare quality, safety, cost-effectiveness, and access, .. headquartered in Chicago, Illinois

http://en.wikipedia.org/wiki/American_Hospital_Association
The American Hospital Association (AHA) is a professional association that seeks to promote quality health care provision by hospitals and health care networks through public policy and providing information about health care and health administration to health care providers and the public. Founded in 1898 with offices in Chicago, Illinois and Washington, D.C., 

Thu, 01/16/2014 - 11:46 | 4337884 Cookie
Cookie's picture

Bullish for hospital shares in SE Asia

Thu, 01/16/2014 - 15:32 | 4338594 Fuh Querada
Fuh Querada's picture

So where do the 0.1% go for medical treatment?

Thu, 01/16/2014 - 10:56 | 4337706 eclectic syncretist
eclectic syncretist's picture

netflix reports next Wednesday.

Thu, 01/16/2014 - 10:43 | 4337656 Spungo
Spungo's picture

Why did idiots buy this company? Google Finance says it lost money last year, and every quarter since then has seen negative cash flow.

Thu, 01/16/2014 - 10:58 | 4337716 firstdivision
firstdivision's picture

Why do you think 401k's were pushed upon the masses, someone's gotta snatch up the dog shit.

Thu, 01/16/2014 - 11:11 | 4337764 adr
adr's picture

Sears has seen negative sales for 27 straight quarters but people still pump the stock.

Thu, 01/16/2014 - 11:16 | 4337781 Spungo
Spungo's picture

Because sears is becoming an insurance company that is lead by one of the greatest investors of all time

Thu, 01/16/2014 - 14:01 | 4338344 ebworthen
ebworthen's picture

I went into Best Cry this week for the first time in a year.

The change was drastic; less inventory, more phones and huckster-ism.

It had a clear resemblance to Radio Shack.

Thu, 01/16/2014 - 15:13 | 4338530 Not_Sure
Not_Sure's picture

Less inventory is right. I never had to worry about needing and getting a hard drive before but I went to BB on Sat, looking for a firewire drive that I needed on Monday. The sales guy said they don't don't have them but he could order one. I told him not to bother cause I could order and get it just as fast as he could...and probably cheaper, overall.

 

Brick and mortars HAVE to have inventory. Otherwise, there is no purpose to them.

 

Unfortunately, the inventory is what kills them. I don't see a happy ending to this.

Thu, 01/16/2014 - 10:44 | 4337660 oklaboy
oklaboy's picture

who's next?

Thu, 01/16/2014 - 10:44 | 4337661 oklaboy
oklaboy's picture

who's next?

Thu, 01/16/2014 - 11:19 | 4337788 Groundhog Day
Groundhog Day's picture

AMAZON!.....

1) uber razor thin margins to begin with

2)no must have hot electronic product this past holiday season

3)lost tax savings benefit of buying online

4)lost discounting power as nearly all brick and mortar stores will price match

Thu, 01/16/2014 - 13:17 | 4338191 aerojet
aerojet's picture

I saw XBOX Ones, supposedly the hot (but way overpriced) game console available right up to Dec. 25.  No takers.  Saw a palette of them at Costco last weekend, not deeply discounted, but still probably marked down some.

Thu, 01/16/2014 - 13:58 | 4338331 nflux
nflux's picture

while i do agree that this pig is VERY overpriced, it seems no matter how shitty the quarter was this stock refuses to drop

 

but on that note, I see short interest is currently under 2%, maybe this time will be different...

Thu, 01/16/2014 - 14:42 | 4338452 syntaxterror
syntaxterror's picture

Amazon was also offering free 30-day trials of Amazon Prime, which provides free 2-day shipping. How many used free amazon Prime for holiday shopping and then cancelled the trial? So, while Amazon's holiday sales might be boosted due to Amazon Prime free trials. How much is the bottom line going to be impacted by all of the shipping charges they're stuck with?

Thu, 01/16/2014 - 14:53 | 4338481 Thisson
Thisson's picture

I agree with your first 3, but I tried to get Staples to price match on a comodity product (a LAN cable) and they wouldn't do it because the $4 product on Amazon wasn't the same brand of product as the $40 cable in the Staples store (it was a staples-branded cable, duh).  I bought the $4 cable and its a perfect substitute for the Staples one.  So Amazon still has that advantage, and what does it say about Staples that they are price gouging their customers to this degree?  Customers under the pressure of declining real income won't remain ignorant that they're being overcharged.

Thu, 01/16/2014 - 10:45 | 4337666 doomandbloom
doomandbloom's picture

who's next?

Thu, 01/16/2014 - 10:46 | 4337670 therover
therover's picture

Doing some rough math in my head, what's that, about 5 mil shares at about $40 per share. Not bad considering the shit storm coming today. Way to diversify Schulzey boy.

Thu, 01/16/2014 - 10:46 | 4337671 GIABO
GIABO's picture

Come on America. Buy some more shit that you don't need with money you don't have. USA USA USA 

Thu, 01/16/2014 - 10:58 | 4337714 william114085
william114085's picture

just trying to beat those terrorist folks

Thu, 01/16/2014 - 15:02 | 4338503 Not_Sure
Not_Sure's picture

FREEDUMB!

Thu, 01/16/2014 - 15:51 | 4338669 Thisson
Thisson's picture

... to impress people you don't like!

You gotta have the entire fight club reference in there!

Thu, 01/16/2014 - 10:47 | 4337675 Dr. Engali
Dr. Engali's picture

But CNBS says to ignore insider selling. As a matter of fact they are quick to point out when an insider buys 100 shares. Some how they never seem to notice when they sell thousands.....I don't know what's up with that.

Thu, 01/16/2014 - 11:46 | 4337871 game theory
game theory's picture

CNBC is a giant propaganda machine. The people on the show don't "report" or "investigate". They are advertisers.

Thu, 01/16/2014 - 11:52 | 4337900 j0nx
j0nx's picture

They are actors - FIFY

Thu, 01/16/2014 - 13:18 | 4338197 aerojet
aerojet's picture

Those channels and people like Jim Cramer exist to shear the sheep.  No other reason whatsoever.

Thu, 01/16/2014 - 10:47 | 4337676 Shizzmoney
Shizzmoney's picture

This will not be the last stock that is "goose necked".

In poker, we call this a "cold deck". 

Thu, 01/16/2014 - 15:36 | 4338610 Fuh Querada
Fuh Querada's picture

"Stack me a cooler! "
Doyle Lonnigan after the 1st half of the Century Express poker game in "The Sting"

Thu, 01/16/2014 - 10:55 | 4337702 pragmatic hobo
pragmatic hobo's picture

oh, and don't forget jeffery's upgrading the stock to "buy" that pumped the stock back up to $40's in early december ...

Thu, 01/16/2014 - 10:57 | 4337707 firstdivision
firstdivision's picture

I'm sure there was no price manipulation going on during the last quarter to assist Mr. Schulze in his unloading either.

 

Pretty sure this article could also use a chart showing largest instutional holdings that increased their stake last quarter.

Thu, 01/16/2014 - 11:00 | 4337727 Billy Sol Estes
Billy Sol Estes's picture

Man when even your own co-founder doesn't like your company you know shit is bad.

I guess the same was true for JCPenney, Ron Johnson hated them so much he became their CEO

Thu, 01/16/2014 - 11:03 | 4337738 Bosch
Bosch's picture

Can't blame him, not his fault morons were running this DOA POS up to the moon. 

Thu, 01/16/2014 - 11:09 | 4337758 adr
adr's picture

Corporate manipulation to scam investors at its finest.

When the fucking stock shot up like a rocket last year I said it was all bullshit. You want to know the health of a company, talk to someone who sells products to them. The increase in profit that was touted as the reason for the stock surge was not do to increased sales but cost cutting. Best Buy cut millions from their buying dollars and barely purchased anything all year.

The store remodel hid the fact that there was almost nothing on the floor. A person looking at the company only for the purpose of buhing stock would see a remodeled store with great presentation. A real customer would see the same computer and TV placed in ten different spots. It makes it look like the PC section is full, but really there is nothing there.

All the big box stores are playing the same game. Cutting buying dollars to boost short term profit. It works for a few quarters, but how can you increase revenue if you bought less product than the uear before?

Thu, 01/16/2014 - 12:02 | 4337937 RKDS
RKDS's picture

Because in all aspects of life these days, the short-term is all that matters.

Thu, 01/16/2014 - 12:02 | 4337938 therover
therover's picture

As Lewis Black would say...'It's an illuuuuuuusion'

Thu, 01/16/2014 - 11:25 | 4337808 Fix It Again Timmy
Fix It Again Timmy's picture

Be careful as Best Buy morphs into Best Bye................

Thu, 01/16/2014 - 11:51 | 4337896 j0nx
j0nx's picture

Yeah I'm sure there was no inside info here. Move along, nothing to see here folks.

Thu, 01/16/2014 - 12:11 | 4337967 Spungo
Spungo's picture

A lady of the evening. Working girl. She turns illusions for money.

Thu, 01/16/2014 - 13:16 | 4338183 Omen IV
Omen IV's picture

Best Buy is merely a showroom for electronics for testing by the consumers - then off to the internet to buy the goods - retail is going to be  complete nuclear disaster - macys / jcp firing thousands - loehmans off the air for the third time /  sears cannot sustain themselves with appliances and no merchant running the show / staples margins are dramatically shrinking - almost every category is going to the Net

this christmas was the death nell   - accelerating trend - inventories cannot be maintained locally and compete with depth of Net warehouse with enough margin to take the risks -  too many SKU's

the collapse of retail will be cancerous to local, county and state government sales tax, commercial property taxes and eventually the shift to residential taxes to make up the difference will kill single family ownership. State User taxes on the Net to become the leading edge of tax collections to be enforced coming up.

 

  

Thu, 01/16/2014 - 13:20 | 4338208 aerojet
aerojet's picture

Oddly, I bought less shit off Amazon this past year and did more local shopping.  I think our overall amount was lower, however.  The shippers could not keep up with the volume of packages in the system, so there's that indicator.

Thu, 01/16/2014 - 13:35 | 4338243 Took Red Pill
Took Red Pill's picture

apparently it was a surprise to Cramer who said on November 20th about Best Buy ....

 "All three chain stores -- Home Depot, Dick's and Best Buy -- are pictures of strength, not weakness. All three stocks should be bought, not sold, on share weakness, despite whatever the "action" says about how well the companies performed. They have performed superbly against both their fields and against retail in general."
Thu, 01/16/2014 - 16:09 | 4338720 hairball48
hairball48's picture

Cramer? That fuckin' moron? LOL !!

He can buy this current "dip".

Thu, 01/16/2014 - 16:07 | 4338716 hairball48
hairball48's picture

"Co-Founder Richard Schulze (who indicated in August he would be selling to 'diversify' his holdings) piled out of the stock through most of the fourth quarter (at a level well above this morning's opening print)."

Buy/get given...whatever LOW and sell HIGH. What's the problem?

 

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