Sony - Drive the truck away as fast as possible.
Disclaimer: I am up late and am very tired. I have done absolutely so fundamental, technical, or any research at all on this. Basically a mental model.
Can anyone name one product that Sony is relevant in right now? Maybe video cameras? TVs? I guess. Oh well. I think Sony is a short. IMO, the name brand carries zero cache. And it is a name brand company. There use to be a day when if I went to Best Buy to buy a piece of equipment, it was a no brainer, I bought Sony every time. Now, I am buying on price and design. In the Nebraska Furniture Mart with Fresh, people were looking at TV brands I have never even heard of from China not Sony. The brand is lost.
Then the Play Station is also done. Irrelevant. Nintendo and MSFT are going to crush them. Blue Ray could be the single dumbest idea anyone has ever had. There will be people jumping out of buildings in Tokyo over this one. Why in the world would anyone pay more for the Sony system, for the blue ray technology which basically means that you can only watch DVDs from Sony on your new Playstation. People buy systems for the games not movies. DVD players cost $20 at Wal-Mart. When was the last time you heard someone say "Boy this DVD technology sucks hard, I cant wait until the Blue Ray comes out, that will blow me away" You would think that they would have learned with Betamax, the Mini Discs, the memory cards, and every other time they have tried this. People go the cheapest route. If by cheapest that means standard due to switching costs, then they go with the industry standard. Blue Ray will never be the stadard. Ever. So now they have this meaningless technology. And apparently the contract manufactureres cannot make it fast enough? So they cant put out their money making game systems. Wow. Talk about incompetance. Do you know why everyone loved the previous play station? Because they let everyone make games for it. Now only some movies will have Blue Ray, some will not. What a clusterfuck.
I like Will Smith, and Jacko. The entertainment assets definately have value. But short Sony. Since I have done zero research, I have no clue when you cover. But short it none the less.
Brey- Did you see Goldman had a stake in that hedge fund that blew up. I thought that they were short commodities? Goldman - the biggest hedge fund. I wonder if Wokash had that hedge fund in his model.
MK
Can anyone name one product that Sony is relevant in right now? Maybe video cameras? TVs? I guess. Oh well. I think Sony is a short. IMO, the name brand carries zero cache. And it is a name brand company. There use to be a day when if I went to Best Buy to buy a piece of equipment, it was a no brainer, I bought Sony every time. Now, I am buying on price and design. In the Nebraska Furniture Mart with Fresh, people were looking at TV brands I have never even heard of from China not Sony. The brand is lost.
Then the Play Station is also done. Irrelevant. Nintendo and MSFT are going to crush them. Blue Ray could be the single dumbest idea anyone has ever had. There will be people jumping out of buildings in Tokyo over this one. Why in the world would anyone pay more for the Sony system, for the blue ray technology which basically means that you can only watch DVDs from Sony on your new Playstation. People buy systems for the games not movies. DVD players cost $20 at Wal-Mart. When was the last time you heard someone say "Boy this DVD technology sucks hard, I cant wait until the Blue Ray comes out, that will blow me away" You would think that they would have learned with Betamax, the Mini Discs, the memory cards, and every other time they have tried this. People go the cheapest route. If by cheapest that means standard due to switching costs, then they go with the industry standard. Blue Ray will never be the stadard. Ever. So now they have this meaningless technology. And apparently the contract manufactureres cannot make it fast enough? So they cant put out their money making game systems. Wow. Talk about incompetance. Do you know why everyone loved the previous play station? Because they let everyone make games for it. Now only some movies will have Blue Ray, some will not. What a clusterfuck.
I like Will Smith, and Jacko. The entertainment assets definately have value. But short Sony. Since I have done zero research, I have no clue when you cover. But short it none the less.
Brey- Did you see Goldman had a stake in that hedge fund that blew up. I thought that they were short commodities? Goldman - the biggest hedge fund. I wonder if Wokash had that hedge fund in his model.
MK
posted by MattKelly54 at
11:10 PM
6 Comments:
I think you're on to something re: Sony. They now build stores called Sony style. In general, I am short brands that compete with themselves (why go to Sony Style when I can just go to Best Buy? reminds me of mother's work).
How exactly do you lose 50% of your asset base in one week on natural gas? 1.) What kind of leverage are we talking? 2.) Who is in charge of risk controls?
Sony has been bad for awhile; ever since the second generation VAIO and losing the MP3 war to Apple the company has gotten crushed. However, their TVs are still the best, but not by much.
In regards to why they would open their own store; think Apple Stores, NikeTown, Adidas Stores, Ralph Lauren Stores, Gucci, Louis Vuitton, etc. Brands associated with quality are smart to open retail b/c they can manage their brand, merchandise, and image much better. The apple stores are doing great - shit I was at the one in NYC two weeks ago and it was absolutely packed. In addition they are provide incremental margin improvement and new business opportunity - aka servicing their customers, which in turn also helps the image and quality of their brand. The sony style stores are a weak response to the rollout of Apple stores across the globe.
Finally, natural gas not gold was what those guys lost on; goldman is short gold but not commodities in general. In fact, their commodity index is probably the most popular out there - even more so than the original CRB.
In regards to the leverage, I mean when you trade futures on commodities you usually only need about 2% to 5% of the total contract, which means 50x to 20x leverage inherent in the contract itself. That doesn't mean they couldn't take on normal leverage and add that on top. In regards to risk controls, those guys probably knew exactly what their bet was and were unable to get out. Derivative markets are tricky in that it is tough when you trade options and futures - unless you trade the front month in futures- to get the liquidity, especially when your talking about 100billion + in contract value. But their idea was genius - something Paul and I have been trying to do. Since there is such a premium between the NGI06 and NGZ06 contracts there is a huge storage play - long the near term and short the long term, but in their case the short dropped significantly more than the long end - thus 50% loss of equity. Anyways, Greg's post on Biomet was hilarious.
Gateway Country stores did pretty well.
You and Paul should lever up and take on the trade with Citadel. Good luck storing Natural Gas tho. Maybe you could just put it in a big balloon and store it with your pennies.
Yeah, Nat.Gas storage was the problem. I guess I thought it sounded good but don't know enough about it and am glad I didn't try it and up up like those poor scmucks.
I read that the reason that Amaranth went bust was because they were basically holding the price of the commodity contracts that they were long up by buying more. When they ran out of cash, they took on leverage so that they could continue to hold the price up. When they ran out of leverage, the market fell apart.
RE: Sony Style. I understand why THEY say they are doing it. I just happen to think that there is a major difference between Sony and most of the other brands you mentioned. Namely, market saturation.
I can buy Sony anywhere (not true of Louis Vuitton). Why do I need to go to their store?
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