Tilson: Not covering GMCR

Whitney Tilson was right about GMCR even as it ran parabolically above 100 a year ago. Today, it closed at 49, then cratered after the bell on a horrendous earnings report. GMCR reopened at 35 and continued to sink, now trading at 28.81. 

Tilson was also right about NFLX awhile ago. He shorted it and gave up while NFLX was near its peak last year, but it eventually broke down and sank big time. I don't know if he continued to add short powder to it at those nosebleed levels, but it sounds like it. 

Tilson's fundamental analysis is supreme and inspiring. It might be too late to short GMCR, but a bullshit stock is a bullshit stock. I might actually short something one day. 

Microsoft, travel and thinness (updated)

7:48 am (Hawaii) Barnes & Noble is up 61% on Microsoft's play for the Nook tablet. I like visiting B&N locally, but as an investment, it's been a dud for years going back to the war with Amazon. Now BKS is at 22.14, off its high today of 26, after Microsoft's move. 

Whitney Tilson was on Fast Money. He went long BKS last week, says it was 87% short. That's incredible and explains the run today. He says BKS was much less a value play at 26, but is "very attractive" at 22. Total of $605 mil from Microsoft. 

Also surprised by the move in EXPE, up 7.3% on top of last week's gain. All three indices are in the red moderately, and EXPE is up almost 3 bucks to 43.26. 

ZAGG, one of the AAPL plays, is up 6.7% to 13.11. I had my eyes on this last week at 11.99 and 12.29 and opted to wait until today. So even with a down market, ZAGG is rising fast with earnings due Thursday. 

AMZN is up another 2.5% to 232.41. I sold this at 219 last week, and the P/E is outlandish. The questions about the company's accounting maneuvers are not holding this back, it seems. 

AAPL is down 2.5% to 587.92 after one of the New York newspapers blasted the company for its tax strategy. Legal, but chastised anyway. I still would like to see AAPL at 546 (Fibonacci retrace), and with big money chasing other trades, it still might happen. AAPL got down to 555 last week before spiking. 

Light volume overall. No catalyst in the near term. Just a cool morning and an opportunity to sip a beverage, get work done and wait patiently. That would not be Monster energy drink (MNST), though, which is up 10% on rumored buyout talks (Coca-Cola) worth as much as $15 billion.

Update 8:19 am Fib retrace for BKS (based on today's gain off Friday's close) is 21.29. It sold off early in the day off the humongous gain down to 21.75. This was a broke company with negative EPS before this deal. Watching but not touching.

MNST Fib retrace is at 76.56, which it has breached easily. It got down to 71.47 before moving back to its current level at 76+.

Update 11:05 am I liked ZAGG on Friday, but didn't enter because of weekend wackiness worries in the general market. I passed at 11.99. ZAGG, an Apple play, closed up 6% today in a down market. Earnings out on Thursday; anticipation is high. But this run-up might translate into a selloff on the news. Today, ZAGG's intraday high was 13.27. A Fib retrace would've been at 12.89, and sure enough, the stock pulled back to 12.90 mid-day. I entered a half position at 13.02 just before the close.

This comes with some risk, of course. ZAGG has made a massive move from 10.66 at the close last Tuesday. That's a gain of more than 24% to today's high. How much upside is left? If today's modest pullback was a breather and the market takes off tomorrow and/or Wednesday, it would probably be good for ZAGG and other earnings plays. But I don't view this is a long-term hold, though maybe I should. Closing no doors just yet.

Update 11:40 am More info on ZAGG.

P/E 20.68, forward P/E 12.77
Shares outstanding: 30.04M
Float: 21.93M
Short interest: 47.7% (of float)

Tie that together with the Apple relationship and it's no wonder this has been combustible. ZAGG hit a one-year high of 17.10 on Aug 15 last year, just nine days after it had dipped to 11.40. But that's not the one-year low; the low of 6.67 was on Dec 28. This is a radical stock. Question is when to get out, and that answer will be dictated by price action and trading discipline. In other words, a decision would be best determined by stop loss rather than panic and/or greed.

Whitney Tilson as Spock

Is there really anyone on Wall Street who is as logical and stoic as Mr. Whitney Tilson. Sure, he screwed up on the Netflix trade, but he wasn't wrong. He was too early. Then there was that short position on housing before the subprime mess. He was quite right on that.

Somewhere, Whitney Tilson is smiling

11:30 am (Hawaii) NFLX closed the session at 281 and is now at 254 after hours. The company announced slowing growth due to rising costs during its earnings report press conference, and the stock is being bitch slapped across the room. Whitney Tilson and all the shorts were right, of course. Most of them, however, jumped off the short train at 100, 150, 200, 250. Tilson's reasoning was simple enough. How can a company that relied on virtually free content in its first few years maintain the same rate of growth having to pay hundreds of millions, for continued content acquisition?

Impossible. So, Netflix raised rates recently. Subscribers balked, canceling subs en masse. The collapse was due. Anybody who rode NFLX from 70 last year to almost 300 cannot possibly be a whiner. Looking forward, there's been talk about promising expansion in Central and South Americas. Okay. But how will that overcome rising competition from Apple and Amazon.

I don't think I ever traded NFLX, not being a subscriber and not knowing the joy (?) of low-price, unlimited access to content. Such is the nature of the beast. Yesterday, it was Blockbuster. Tomorrow, who knows? Here's how it shook out in February, when NFLX was at 222 and Tilson pulled out.