True Religion is in a very interesting position. I invested in this stock in late 2005 to early 2006 based on solid fundamentals and heavy buying volume. I got out in 2006 before I went abroad for a year but have always kept an eye on this stock. What is so interesting is that this stock was last seen with a short interest of 60-70% of its total float. What I don’t understand is this company has raised guidance again and again. They did it once in May, and now again. Even after raising guidance they posted earnings of 39 cents, beating street estimates of 32 cents and beating revenue estimates by 14 million. The company has year over year earnings increase of 86% and a projected 5 year growth rate of 20%. TRLG also opened up its NYC store in union square and will have 5 new stores by the end of this year. Ratio wise, ROE and Profit margin are ridiculously good. So why is everyone short on this stock? Previous articles have mentioned how this stock is in perfect position for a short squeeze. They were right. The stock has jumped to 28 from 23 when the articles were written. I don’t have direct numbers on how many people got squeezed out but according to shortsqueeze.com there are still 10,505,300 shares short, 66% of the float. What the hell do you guys all know that I don’t? The PE ratio of 23.40 is also lower than most high-end retailers who aren’t posting solid numbers. I think this will be squeezed some more but TRLG just got downgraded for hell knows why and is down 5% afterhours. Buying opp?

I usually have a gut feeling about consumer electronics probably due to the fact that I am of the generation that grew up with DSL, laptops and mp3 players. My gut feeling with stand alone GPS devices is that in a couple of years, only ones that are built in to your car will exist, and they will pretty standard. For Garmin, this is not good news. These units are only going to get cheaper which will cut margins even more and integrated with phones which have already started integrating mp3 players. Apple and some other companies have been doing this already.

So what is Garmin trying to do now? The Nuvifone. THE NUVIFONE HAS THIS AND THAT BLAH BLAH. Come on, can it really compete with the IPhone. Does it really have any features that will make someone say “you know what, go to hell iPhone, I’m buying the NUVIFONE!!”. No. Tim Weidman wrote that the coolest feature is that you can talk on the phone and still get directions. WOW! How about just saying hold on or when the voice command comes on just ignore your phone or even better, just look at where you need to turn with your eyes.

Anyway, those are just my impressions, if I didn’t back this piece up with any facts about why I think Garmin is done, there would be no credibility.

1. Garmin is the leading portable GPS unit maker (56% market share), but its margins are slimming every single quarter (down 15%). The CEO thinks units prices will drop another 20% this year

2. SiRF Technology (SIRF), a GPS chip maker, is cutting jobs because of softening consumer demand

3. Delayed Nuvifone. Putting your eggs in one basket and then delaying the release to ‘sometime’ in the first half of 2009 isn’t going to cut it. Steven Halpern must be going OOPs as he released an article yesterday praising the Nuvifone and rated the stock a buy.

4. Revised revenues for 2008 see 3.9 billion instead of 4.5. Eps down to 4.13 from 4.40. COGS and SG&A have also increased by more than 25% each.

Should you short this ?? I think so in the long run, this is a short. In the short run… this just bonked 20%, it may recover a little with all the indicators pointing at oversold.

I recommended this stock on June 6th at 17 link . Its at 23 now after a nice earnings report in which profits jumped 57% and the company raised guidance. The Olympics will help them beat this raised guidance since there will be more subway riders in Beijing.

I came across an interesting video from my friends at ino.com (original link) that showed
why buying Apple Computer at the 149 range after the stock was down 10% afterhours was
not a big risk.

I know this site is named Bull Ringer and most of the time I do write about stocks in a bullish uptrend. But more importantly, this site is about making choices that will help our portfolios build. After reading a recent piece by Timothy Sykes on PokerTek, I couldn’t help but agree based on my own experience and the evidence at hand. I am an online poker player and frequent the popular forums. This past Spring Break I went on a cruise and had a chance to play on PokerPro, PokerTek’s digital poker table. The user interface was decent but the whole experience was an overall let down. If I want to play poker using a computer, I will do just that at home. The purpose of playing poker in Vegas or anywhere else is to interact with live players, dealers and to enjoy oneself in that environment. Everybody looking at a computer screen defeats this purpose. The other problem was people weren’t used to it and unless they stared at their computer screens the whole time they wouldn’t even know it was their turn to bet. Also, proponents like to say it speeds up game time. Then why not have the screen split up into 4 screens so they can play 4 tournaments at a time? Again, if your at a casino, your main purpose probably isn’t to get as many hands in as possible, its to have fun and try to make some money by studying your opposition
Fundamentally, PokerTek is flawed as well. The company has not made a dime -1.14EOS. They have been funding their tables through large loans reducing their credit and putting the company in immediate danger. The recent run up was based on some Goldman Sachs executives (not poker players) being impressed and internet message board hype. I am not sure how this company will do in the future. I guess if Casinos want to save money on labor they could keep installing these although I don’t see moderately serious player sitting down.
Technically, I think shorting this stock for the next month or so is a smart move. The recent gains in the stock price should retract to the support levels.

Note I wrote this post yesterday and it has already dropped 10%