Robert Abalos is the author of Investing in Land, the most widely sold real estate book in publishing history with sales in more than 91 countries around the world. This blog offers news and advice for real estate investors and land developers.
The Pep Boys (ticker PBY) have not been meeting Wall Street targets for some time. A deal to sell the company to the Gores Group fell through to much embarrassment.
The stock has been crushed by investors, losing 25% of its value today alone. The stock closed today at $8.89 per share.
All this makes this automobile maintenance chain a natural investment for me. I'm a huge bull on this stock going forward. I view the current share price of $8.89 an infinite call on the company's common stock. To me, these are the perfect investments no matter what happens next, win or lose.
The loss is clearly defined in advance and the upside has major potential.
So why do I like the Pep Boys?
PBY has lots of real estate. Nearly $12 a share in real estate. Here are some of Pep Boys current sales listings to give you some idea of what they own. Just imagine lots of their stores.
Plus $1 a share in cash with no great cash burn ahead.
Plus the company just got a $50 million breakup fee from Gores.
Plus the average age of an American car is getting older. Believe it or not, the current average is over eleven years. Someone has to fix all those old cars, put new tires and batteries in them, and replace all those mufflers.
Gores offered to pay $15 per share. Someone will come along with a similar offer. In the meantime, enjoy the 1.1% dividend yield. What LEAP call do you know that pays a dividend?
Every once in a while comes a just about perfect book, the kind of volume that can make jaded readers like myself feel like a kid again.
NO NAILS, NO LUMBER is the true story of architect Wallace Neff and his Airform bubble homes which he promoted for nearly half a century starting in 1941.
Neff's bubble homes could be constructed in less than two days without a single nail or piece of framing. These buildings were completely impervious to fire, earthquakes, and hurricanes. Neff himself created the homes to relieve the global housing crisis and especially saw an opportunity when World War II ended and millions of GIs came home.
Made of nothing more than reinforced concrete sprayed over an inflatable balloon, these homes were cheap to build and fast to erect. As author Jeffrey Head notes, Neff and others built hundreds of them all over the world for use as homes and other uses including gas stations and grain storage.
I loved this book on every level. It's elaborate construction details on how these homes were erected will appeal to the building nerds among us. The photos of 1940s and 1950s houses and their interior designs are stunning. This book is part history lesson, part biography of Neff himself, and most of all, just a lot of fun to read. Neff was far ahead of his time and this book shows just how far.
This highly illustrated volume has a picture of a bubble house on almost every page, making this more a tiny coffee table book than something an owner should put on a shelf.
Sometimes authors read my book reviews and send me emails in thanks. I would like to thank Mr. Head in advance for writing this book. He should know that a copy of his book sits on my coffee table at home and virtually everyone who visits picks it up and asks about the bubble houses. I am writing this article because everyone who sees a bubble house seems to want one. Ask Madonna. She's owned one for years. Actress Diane Keaton also has a thing for original Neff bubble houses.
I honestly can't wait to see one of them! There are not many left in the United States. Below is one from Hobes Sound, Florida. Until I saw this awesome book by Jeffrey Head on a bookshelf, I never knew what a bubble house looked like or heard of Wallace Neff. Now I can't get enough of either.
Was it Wall Street who warned retail investors about the Facebook IPO? ARE YOU KIDDING? Here's an article that now says that Facebook's falling share price "doesn't matter" because Facebook is a "special kind of company."
That special? Really? Ask the losers who bought FB on the private market months before the IPO in a range from $42 to $48 per share. The average private FB sale price was $40. Notice this price is 5% below the IPO and now nearly 20% underwater in just two days. I'm sure all these investors looking at hundreds of thousands of dollars in losses (or more) did not care about money and just wanted to help build a more connected world.
Who was warning America about this corporate mess? It was me (along with a few others) but I actually took the time and wrote a book about the Facebook IPO three weeks before it happened warning America to avoid this IPO and stock. As I said in the book (which you buy for just 99 cents on Amazon), I don't believe I'm the next Nostradamus but hey, on this issue I'm batting 1.000%.
The road show failed.
General Motors realized the obvious and pulled their advertising on FB just three days before the IPO.
Facebook's inexperienced management let their investment bankers manage the IPO into a disaster by not only raising the IPO price but the number of shares being sold.
FB listed on NASDAQ to be cool instead of the NYSE who could handle the IPO demand. (Didn't FB management learn from the recent BATS IPO disaster?)
By the way, who called the Facebook IPO a flop (for retail investors) before it flopped?
Here are my words carved in stone (sort of) nearly one month before the IPO in my book, Facebook as a Public Company.
I have an $8 target price for this stock. I am a going long on FB when (and if) it breaks $10. There will be major institutional and technical support at that level so I don't see a filled trade coming anytime soon. (In a year, maybe.)
Over the next month FB will get much institutional buying as index funds and other investors buy the stock for their needs. On the flip side, when FB insiders get permission to sell they will be dumping shares by the millions. This insider selling-institutional buying will support the stock through the summer. But major earnings disappointments are coming and Zuckerberg's arrogant attitude that FB is somehow "different" or "special" has already worn thin. Shareholders expect $$$$$ and I do not see how Facebook delivers, at least under the current set of conditions outlined in the S-1.
Within a year, I expect to get filled on this order filled at $8. If not, so what? I can wait longer than FB can exist.
As to Jim Cramer, here he is yesterday on MEET THE PRESS calling the Facebook IPO "a fiasco" and "one of the worst things he has ever seen" and a "SELL SELL SELL" rating on the stock.
His fans don't care about the accuracy of his calls or making money either, for that matter. Here is one estimate that has a Cramer correctness rating just 44.9% of the time.
In other words, a coin toss at 50% is more accurate than taking stock picks from Jim Cramer.
Even a comedian like Jon Stewart knows that Cramer's MAD MONEY calls are just that---MAD. Watch Cramer defend Bear Sterns three days before the company filed for bankruptcy and Stewart ridicule him for his rightly ridiculous calls.
At 3.79% you have to go back to 1953 to borrow on the 30-year at that rate.
The recent technical support described as "The Wall" at 3.85% was broken and it's now gone.
This may look like good news if you are borrowing. And it is, sort of.
But ask yourself in the current inflationary environment where today gold had its best rally since January 25th would you loan money out for THIRTY YEARS at less than 4%?
Better yet, would you like to own this coupon in five years or ten years? Watch this video if you think otherwise.
Since publishing my first Amazon Kindle book, Facebook as a Public Company, I have been answering a great many questions about the Facebook IPO from friends and associates and also website visitors.
The book is currently #44 on Amazon's Kindle business finance area and I want to thank everyone who is buying this first of many Kindle releases by me and my investing team. It costs 99 cents and can save you a fortune. You don't need a Kindle device to read it either. Any computer, smart phone, tablet, or whatever else will do.
Over the last ten days since the book's release, everything I wrote about has (so far) come true.
The Facebook road show has gone poorly. Zuckerberg tried to woo the investment press with a fluff movie and then an appearance in his now trademark (and long in the tooth) hoodie. The media and investment class was not impressed who regarded Zuckerberg as immature. He would not answer questions and then would not answer follow-ups either.
But Facebook does not really care since retail investor demand for the stock is off-the-charts high. They just raised the IPO open price range today as proof of investor appetite. The increase alone could be worth another $2 billion by the close of business this Friday.
In all my years of investing, I have never seen a stock with such a great split from professional investors who know that the shares are overpriced (I think by a multiple of at least 500%) from average John and Jane Doe investors who think Facebook is the greatest thing since the last coming of the Messiah.
Think I'm exaggerating. Read this article from the Wall Street Journal on Facebook mania and the father who is taking the money he has saved to put his eleven year old girl through college and putting the cash into FB shares.
Henry Blodget calls FB shares "muppet bait" and he's right. Who do you think the muppets are?
I wrote my book in the hopes of preventing at least some of this madness.
Facebook the social network is fun. Use it. Have fun.
Facebook the public company is an overpriced mess with expectations so high they can never be met and an entrenched management that has a less-than-stellar track record of monetizing their registered user base. It's easy to give something away for free to a billion people once you reach a critical mass. It's really hard to make money off those same people because they came to you for free.
This is my Facebook Page. I enjoy posting information about real estate and investing there.
At a press conference held in Seattle on May 2, 2012 I announced a number of educational initiatives that will change the face of financial education in the United States.
Today, the first of nearly forty of these initiatives becomes real. My first new e-book is on sale now.
You do not need a Amazon Kindle to read this book!
You can read Kindle books on your computer, phone, tablet, and just about every type and brand of electronic device.
I don't care about how much money I make on this book. Obviously for 99 cents I don't expect to make a killing. I wrote it for an important purpose.
A great many of people who should not be buying Facebook shares are going to do just that. Some will be pressured by others to do so. My goal is to stop some of this abuse.
My job as an investment writer is to see issues and inform the public about them. I enjoy Facebook the company where I post pictures for free, but Facebook the public company is another story.
Here is my Facebook Page. I have fun there but I have a feeling the stock will not be as much fun for some.
I believe that Facebook's real valuation has likely peaked and investors are buying a less than stellar investment.
As I explained at my press conference, Facebook as a Public Company is just the first of hundreds of Kindle Books that my writing team and I are going to putting up on Amazon as an affordable resource of information for investors. We hope to put up a new book every two or three days.
For those that are curious, some of the press conference highlights will be up online very soon. It was a fun time and I answered many questions about many subjects.
I want to thank everyone who showed me how Kindle works. I'm still a Luddite.
Look forward to 39 other initiatives that are going to change the face of investment information in the United States.
The goal of financial writers should be to inform the public, not boast as gurus as how much money the public is making them.
