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Yup! I predict that someone will eventually investigate "Seeking Alpha" as the primary destroyer of mReit prospects in the blogosphere. Someone is making money off all this manipulation, IMHO. Should be illegal... and probably is, if the right person connects the dots.
Sorry, dude, but I think you are nuts!
Looks like uncertainty continues to haunt all these mReits.
The "Witch" over at Annaly Capital should be boiled in oil or Dorothy should douse her with a bucket of water!
Taking a stroll down investment Memory Lane...
One of my most lucrative investments, ever, was in Albertson's Supermarkets when they moved into the Tampa, Florida market in the late 70's and took Winn-Dixie, Publix & Kash & Karry (now Sweet Bay in the Hannaford's portfolio) to the proverbial woodshed with dominant pricing, assortment and store layout superiority. I loved their stores, I bought their stock and it minted money for several years. It was a LOT like Walgreens stores and stock in the years under Walgreen family leadership and even to the time of Dave Bernhauer.
I sold Albertson's when I became worried about "willy nilly" store count growth by acquisition and their confusing deals to buy and sell Eckard/Brooks to stick the today debt-riddled Rite Aid with a true Trojan Horse of epic dimensions that just keeps draining poor RAD shareholders of any future. You would be hard put to find any RAD shareholders EVER drinking a toast to Jean Coutu!
As quickly as Albertson's rose... Albertson's sank under the weight of naiively valued acquisitions and deals that exceeded the company's ability to integrate and manage their treasure. Most of their middle-America acquisitions, so promising on paper, were sold for a pittance or simply shut down. When Supervalue bought the remnants for a song, many thought my old acquaintance Wayne Sales (of KMart pedigree) had scored a huge win. I ran and hid under the bed... for which I am most thankful.
There is a lot in the current Walgreens scene that reminds me of the Albertson's saga and how it eventually played out.
Caveat emptor!
Yank
Walmart layaway was PACKED, today. Pharmacy very busy. Shopping carts LOADED with Halloween stuff. Plenty of cashiers, but small lines at every register. The Garden Center is crammed with Holiday decorations. This store looks like it is ready to "POP" for the upcoming high season.
Other area retailers were NOT busy... Walgreens, KMart, Kohl's, Big Lots, several grocers all very quiet.
$80's are right around the corner!
Hi Milo,
Thanks for contributing to the discussion. Not sure if I qualify as a snow bird since I will be returning to Florida as a year 'round resident. Hey, I really like that extended Homestead Exemption allowance! I am looking forward to spending some time at the pool, grilling out and having lunch at Sharkey's on a regular basis. And, yes, I will still be actively investing.
I find the whole DEA thing rather interesting. I think robb was correct to keep bringing it back up because I dismissed it too quickly, earlier, and without proper consideration. I am considering taking a position in KKR as the likely, eventual beneficiary of the WAG/A/B deal. Robb thinks Pessina might have done the deal to take over WAG and go public, painlessly. I suspect other motives, including KKR possibly taking WAG private.
There is lots at play with this one! Reminds me of the board game "Clue" except I keep looking for Professor Plum and keep coming up with Nurse Rached dispensing flu vaccine in a Take Care Clinic.
GLTA,
Yank
I have been by three local Walgreens this week and noted much emptier than normal parking lots. The one store I entered is near a major hospital and is usually hopping... this time it was extremely quiet. What was especially disturing was the visible lack of Halloween candy, costumes or decorations, an empty-of-customers cold/flu aisle and nobody waiting at the pharmacy counter and nobody going through the drive-through.
I have never seen this store so empty during peak daytime hours and I have shopped there for 7 years on a regular basis.
The Walmart on the other side of town was packed, including a long line at the pharmacy counter.
This is far from a scientific study, but I would say that I found the "visibles" remarkable as a change from the norm when compared to visits, just a few weeks ago.
GLTA,
Yank
As a follow-up... my guess is that if Walgreens is banned from selling ALL controlled substances by the DEA, it would represent about 6.9% of their revenue line. That would represent about $4.7+ billion in topline sales revenue lost to CVS, RAD, WMT and Indies.
This would actually make the Rx loss from the ESRX impasse look small in comparison.
JMHO,
Yank
robb,
My answer on potential revenue loss would depend on how extreme a DEA action might be; if it only precludes oxycontin and oxycodone sales, that is one case. If it precludes all opiate-derivative medications then that is a much more extreme case.
The better outcome would be for Walgreens to settle this mess, pay a fine and get on with life in concert with the DEA initiative and not be in the forward sights of actions going forward.
GLTA,
Yank
Remember that this all began as in administrative action back in April with 6 Walgreens stores being probed in a non-criminal action by the DEA. It just seems to keep escalating. It would be prudent IMHO for Walgreens to attempt to resolve this matter before it rises to a catastrophic height for shareholders and life, as Walgreens stores have known it, is forever altered. It is not impossible that perceived corporate intransigence in Deerfield might lead the DEA to an extreme conclusion that all Walgreens must be considered a hazard to their communities and, thus, be enjoined from selling or carrying any opiate-derivative medications in their retail pharmacies... or even via mailorder.
I am not trying to be dramatic, nor am I predicting that the DEA will take such actions... I am simply stating that there is risk in the air as WAG Corporate conducts its usual sabre-rattling exercise when governmental agencies affront their enormous egos. One of these days someone is going to call their bluff and maybe this is that time in history.
GLTA,
Yank
Actually, Skinner has an alibi... he just arrived. However, Wasson, Crawford and Miquelon have no such excuse. All three need to GO!
WAG has 2 new Board members, neither of which have been confirmed by shareholders. HUGE proxy fights have been waged and won over way less than this apparent oversight (or slight, if you prefer), IMHO.
I just continue to be amazed by the seeming lack of accountability by operating management who makes huge moves involving enormous amounts of shareholder equity and then never seems to comment or report on how these investments worked out to benefit those whose money they so grandiosely spent. To wit: Home Infusion, Clinics, Drugstore.com... ad nauseum.
I really respect Skinner and his stellar track record of success at MCD. I hope that he can re-steer this leviathon to a more prudent course before it sinks faster than the Costa Concordia.
GLTA,
Yank
Walgreens hard-copy annual report was just released and has a few addenda that were not in the 10-K. There is a brief recap in Friday's "Crain's Chicago Business" which details their first-ever decline in Rx Market Share, thanks to the pigheaded stand-off with Express Scripts... and a few, other goodies.
WAG's PR "juggernaut" seems to have had some of the wind luffed out of its sails, lately. Some of the analysts like over at Barclay's are starting to note the lack of detail, specificity or even content, such as the lame prediction of "One billion dollars in integration savings with Alliance Boots" that sounds remarkably similar to the "Rewiring" PR extravaganza that supposedly succeeded, but the metrics never quite seemed to be visibly accounted for in reported SGA numbers.
GLTA,
Yank
Thanks for the update, robb. It was me that assumed from your post that Gilbert was representing Walgreens. My mistake, not yours.
The "wires" are abuzz about Governmental actions targeting retail pharma! CVS is back in the news, as well. I find it interesting that Walmart, with all its low-cost-driven shortcuts, has been thus far exempted from the inquisition. Maybe they focused on the right stuff and ignored the "corporate PR fluff"?
Regards,
Yank
robb,
Walgreens picked a powerhouse legal team to represent them. There is a lot on Google about John Gilbert, former senior counsel at the DEA, who is now in private practice with some very high-profile partners. Such representation does not come cheap and does help reveal the magnitude of issues at play, here.
I brought up FOR YEARS on the Yahoo Message Board the continuum of missing pills, LP weakness and deficient controls at Walgreens in dealing with controlled substances. All my posts were deleted, met with derision and contempt from a vocal cadre of self-described WAG RPH's who routinely "pooh-poohed" such issues as anomalies and immaterial to investors or the future. I wonder if the DEA will subpoena these records to see if "the fix was in" and if WAG Corporate encouraged or paid outside sources for such actions?
I know you remember like I do the HUGE volume of posts at Yahoo/WAG Message Board that were deleted with no apparent justification except that they questioned WAG's perfection as an investment.
GLTA,
Yank
I believe that the answer to your question is "Yes" but not for the reason you might think. There is NO direct link that I am aware of, but much of what drives both share price and bond ratings from Moody's and the like is event and PR driven. In this sense, a major announcement such as an acquisition will have an immediate effect on both.
So it would be my view that an indirect relationship does often exist. JMHO.
Yank
Great update on Medicare Part D improvements in market share and client capture.
Does anyone follow this stock?
But, robb, here's the real question of the day...
Will the appetizer be SUSHI?
LOL.
Yank
The carnage for this week is over. Back to normal volume after the 40,000,000 share dump and rebuy, the other day, to flush the toilet. Some hedgie b*stard should go to the Club Fed for a few years for raping the small market players with fear and the wipe out concern of a 6%+ early market decline.
The greedy turds got what they wanted by crushing the bit players trying to eke out some divvies on which to retire. Hey, Mitt, this is the one percent that you want to take care of with further tax cuts so they can pillage more orphans and widows.
Pond scum.
Yank
The Preferred Networks octopus spreads its tentacles to Medicare Part D... anyone looked at the Humana/Walmart figures released a few days ago? 50% growth in Medicare enrolee's in the last 12 months... huge customer count capture... NO WALGREENS, just Walmart and Indies, or mailorder which includes zero-copay on a huge list of generics...
Humana shares are trading near a 52 week high... shoulda listened to my earlier instincts and bought it way back then when this deal was first announced and ridiculed by WAG pharmacist/activists on the Yahoo Board. All those losers have departed that media, too! JERKS!
GLTA,
Yank
Must have been a mighty big "goof" to have slipped in a few "client priviledge" items by mistake and immediately have the Jupiter D.C. shut down. Bet somebody broke a sweat over that one!
In legal matters, "actions beget reactions" and this whole affair smacks of who will up the ante and to what level of eventual pain. I think Cardinal played coreectly by folding and settling for a fine and stricter controls and purview. But then there's that corporate ego in Deerfield...
GLTA,
Yank
Did you read the text of the interview with Annaly's CEO? She helped create the obliteration of mReits by claiming that QE3 put the government in competition with them and, thus, were tanking the trust's business plan. I have not had enough to time to study her conclusions, but I sure have been a victim of her claims.
Yank
Thanks, johnsyn. I really like this sector which I have traded in and out of for many years. I'll probably be back when the gamesters move on and find a new cadre of victims. The action of late with mReits is reminiscent of the destruction of the ethanol market, a few years back. Big money and big oil joined forces to crush a promising, fledgeling industry that almost totally collapsed under the assault of major market movers. $ billions were pillaged and thousands of great jobs were lost.
Then the pundits and talking heads on CNBC moan and lament the exit of many investors from the stock market. Contributions to 401K (and similar plans) moved out of stocks to bonds after 2007, and most remain invested there despite paltry returns below the rate of inflation. Ghouls on Wall Street come out 12 months out of the year, not just at Halloween.
GLTA.
They shook me out at $30.25. I have been holding since $28.50. When it creased 40 million shares I knew the big guys were savaging the small investors and, in my case, it succeded. I also sold my Two Harbors. I sold all my other reits two weeks ago for a nice gain after their ex-div dates. I think that this sector will be manipulated as a plaything by HFT action for the foreseeable future. I am moving on... made some great dividend returns here for many, many years.
GLTA.
Hi, robb. That Bloomberg article was a real eye-opener. I actually did some DD on a Chinese pharmacy company touted by Red Chip awhile back and found some of the same pitfalls in that market as well.
When I read Wasson's bragodocio about the $ billion in integration savings after the AB deal, I kept telling myself that this is not going to be that easy to implement. I once worked for a company that bought two, major European competitors, then tried to merge and purge them; it was an unmitigated disaster that helped push a multi-billion dollar company into BK. A major component in that demise was the company's abject failure to discern and respect the cultural and legal differences that divide countries in Europe. A common currency does NOT create other commonalities.
GLTA,
Yank
The prescription for gross market manipulation... take an mReit that normally trades <7m shares per day... slam the exchange with huge sell orders to drive the price through the floor... drive all the "little people" out of the stock. Then buy it back at a low cost and higher divvy yeild so YOU GET YOURS by scaring and screwing everyone else. Then Mr. Market wonders why so many citizens left the market and buy bonds or stodgy old blue chips.
It's like the bank run set off by Mr. Potter in "It's A Wonderful Life" except there is no Jimmy Stewart to save the little man, any more. Just big hedgies and high frequency trading to unlevel the playing field.
Sad.
Very sad.
Why do you want to shoot poor Milo? He seems a decent sort, to me.
I look at all these sectors on a regular basis, so I am "game" as long as no one plunks me to claim a prize. I am actually suggesting you add another category which I have had an interest in for some time... elder homecare... like Gentiva and several others, as a cost-effective alternative to nursing home costs and Medicaid that afflicts both Uncle and the States that co-opt for payment.
GLTA,
Yank
I agree that younger insureds must pay part of the cost going forward or the cost of the baby boomer spike will corrupt the economics of the system. I have heard this described as the mesa effect, meaning that costs rise as boomers near retirement and flatten into about a 12 year cycle of deficit spend before the boomers begin to die off and the spend returns to a more normalized rate that is more easily managed. What the Ryan budget proposes is throwing the system permanently and irrevocably under the bus to avoid simply dealing with the 12 year cylic abberation spawned by WWII. Not too bright, in my opinion.
The "fly in the ointment" is runaway healthcare cost inflation. This is usually blamed on the high costs of new technology and pharmacology. That is a totally LAME excuse, IMHO. A LOT of new technology, and surely the diagnostics it supports, costs way less than previous regimens. ISRG is just one example which you and I previously discussed. The real Achilles Heel in healthcare spend is driven by a generation of young people ignoring wellness, proper diet, weight management, unwillingness to have diagnosed or pharmacology-controlled challenges treated and American's sad unwillingness to exercise. Many of them bleat and moan about mandatory healthcare costs (cuts into their spend on video games and recreational drugs)... but guess who will be the first in line at the ER in 15-20 years when diabetes, heart disease or stroke creates a medical emergency of enormous dimension.
I have a friend who is an MD and on the board of a local hospital. He tells me recurrently about HIS patients that decline to treat curable conditions by either taking prescriptions or applying discipline to their lifestyle. He recently had one die in the ER on his shift. He is HAUNTED by the experience.
"W" in his tenure had a really great idea... give younger taxpayers an opportunity to opt out of Social Security and invest in the stock market. It suffered from the same fatal flaw as Romney/Ryan's voucher adventure... it ignored the boomer mesa, and would serve to abandon those that fought in WWII to preserve the Free World for them to enjoy.
Just my personal ramblings...
Yank
Good morning, everyone! On the topic of ACA, I guess the real question is will it get repealed? AARP put out a really balanced analysis awhile back which concluded that Obamacare was extremely helpful both to retirees and especially to those looking to retire earlier than age 65. At first blush you would think that having coverage for 30 million new patients would be attractive to everyone in the healthcare business. That would be true EXCEPT that ACA promises to kill off a few Holy Grails as it is implemented.
The big insurers hate it because it allows for bidding to lower cost. Doctors hate it because it caps reimbursements for procedures. The one percenters hate it because it will tax their deluxe benefit perks. And many small business owners hate it because it forces tham to cover employee counts above 30 workers and they don't want to spend the money. Last and most important, Republicans hate it because Obama drove it through Congress, and because their big lobbying, PAC and campaign donor constituency is comprised largely of the previous groups I mentioned.
I personally think ACA was long overdue and a terrific first step in the right direction towards wellness for everyone. It is not perfect. It could stand some changes which will happen over time... unless the RNC succeeds in killing it.
This election is just too close to call... or to choose investment candidates based on its outcome. At least for me.
GLTA,
Yank
p.s. Joe Biden rocked the house!
Hi guys! This is a work-in-progress. I think that the outcome is variable... could be huge, could be a non-event. However, I would like to thank robb for keeping it to the forefront because I was way too dismissive at the onset, and after further review I think this could be a major influence on S/P in the weeks ahead.
As I stated earlier, I once worked for a company that took on the Feds and the price paid by the "confronters" was extreme.
GLTA,
Yank
milo, I think the likely consequence would have been requiring another DC with better controls to ship the Jupiter DC's service area. Higher cost, but not like CVS where stores were actually barred from filling Rx's for controlled substances.
robb, I too have experience working with a company that took on the U.S. Attorney's Office to preserve its cozy way of operating and I watched a cadre of corporate attornies and those counselors representing key executives challenge the Feds. They teed off the wrong people. The CEO went to Federal prison for 10 years, the COO got 5 years and the CFO got a short sentence, huge fine and never worked in finance again, as far as I know. All because huge egos couldn't grasp the stark reality of risk in attacking vs. resolving a dispute with the Feds.
I am not an attorney, either, but I see extreme risk to WAG by their filing a specific action against the Attorney General of the United States... not quite the same thing as telling Officer Krupke: "Krup You" in West Side Story. Walgreens could have filed an appeal to the DEA decision without initiating a suit against the senior official in Federal law enforcement.
If Eric Holder decides that he has had enough nitpicky crap thrown at him and responds with a full frontal Federal Action against Walgreens, I do not think you will see HHS or less toothsome agencies taking the lead in the action. I think you could potentially see a bludgeoning ensue in the public forum because the details of the original complaint seem to me to be impossible for Walgreens to refute and could be highly damaging to the corporate reputation if aired extensively in the media.
GLTA,
Yank
Jamie looks even better when you compare him to the deposed "suits" at Lehman or Bear-Stearns. I admire Pandit, too.
robb, Walgreens has always had a tendency to file suit when affronted by either state or federal government actions it deems harmful. Dana Green built a very lucrative career at Walgreens by formally challenging, and often winning such actions to WAG's betterment. Now there is a new General Counsel, so I am not surprised that he might want to assert his credentials in a similar way.
What is strange to me is the timing of the action and Walgreens specifically naming Eric Holder in its legal filing. There is an election in exactly one month. If Obama loses, The RNC has openly stated their disapproval of Holder for his actions in "Fast & Furious" and thus a certainty to the end of his tenure as Attorney General. Since Holder obviously is acutely aware of this fact, why not wait until after the election to file such an action? Walgreens has set itself up for a potentially lethal, lame-duck payback if Holder is exiting the office AG on Inauguration Day.
The timing makes no sense to me. Then, again, maybe Romney will win and make it all a moot point. You are fully correct that this is a very serious and potentially very costly showdown with the DEA if Walgreens fails to prevail. CAH, who SETTLED wih the DEA, got slammed with penalties. Can you imagine the incremental pain which could be inflicted if Holder is retained in an Obama second term and decides to return the favor of recompense?
Youch! Almost regardless of the election's outcome, there is a huge risk to WAG by taking this action at this time, IMHO. Should have waited before stomping on Holder's sore toe.
GLTA,
Yank
This mega-store mirage flies in the face of contemporary retailing logic. Best Buy is all but finished, Barnes & Noble, KMart and Sears are at death's doorstep, Supervalue is closing Albertsons right and left and Circuit City, Tweeter, Linens & Things and countless others have been wiped off the face of the earth. Walmart has radically slowed the growth of super centers, opting for smaller... not bigger footprints.
This SUSHI thing just drives me crazy as an apparent lynchpin in Walgreens "new" strategy; sushi is NOT even a healthy food item that approaches the "wellness" mantra, except for a very few veggie items which almost all are low in cholesterol but out to lunch in hypertensive sodium content. And the overhead cost of sushi chefs, ingredients, spoilage write-offs and required and expensive HACCP food safety training make such a strategy ridiculous except in a true restaurant setting that serves huge volumes of Japanese entree's. Even Dunkin' Donuts learned the lesson (the hard way) that you could not afford the overhead to make fresh donuts in all those little stores, and went to the food equivalent of a central fill pharmacy... area bakeries with local, logistic deliveries to stock the shelves.
I actually LIKE sushi, but this ridiculous infatuation at Walgreens is both disturbing and stupid. What's next... fried Twinkies? Alfalfa sprout smoothies? Leech therapy in the pharmacy? Dried cuttlefish in the munchies aisle?
Walgreens is a pharmacy. When it grows up, it needs to find a way to make money for shareholders as a pharmacy. Until management has an Epiphany and decides to chart a pragmatic, cost-effective restrategizing of its business plan to address such an objective, investors will flounder and face huge risks because the competition in this sector is NOT stagnant.
Sorry if I ranted. But this is just, plain STUPID for an iconic large cap player with a heritage it is abandoning at the speed of sound for arcane, lunatic adventures in Lalaland. Maybe Pessina can rein in some sanity in forward planning before the empire collapses under the extreme weight of management at the top of "the (sushi) food chain"?
GLTA.
Yank
The spin doctors are having a field day in Bentonville, today, at the investor's symposium.
WINNER, WINNER... but no chicken dinner. Looks more like steak night, tonight, with some 1986 Stags Leap SLV!
GLTA.
Today's action corroborates your comments. No news. S/P declining vs. broader market. They love to shake the weak hands out... meaning most of us retail traders. When it creased $36, I expected the "hit" would come any day now... as it does with every rights offering announcement.
I am not adding more to most equities at the moment, and I did exit a few mReits to finance another investment. However, I have a strong AGNC position that would have enormous tax consequences if I sold it, so I will not sell without some news or expected negative event (increase in interest rates, e.g.) which I, frankly, do not see happening. The dividend here is just too stellar to ignore or walk away from.
GLTA.
Short interest at a scant 1.2% says Mr. Market disagrees with you.
There was no point to further easing except, maybe, that it is an election year and there is a growing element within the Blue side that wants to gut the FED and dump Ben.
I think much of the AGNC weakness has been driven by negative bloggers like Seeking Alpha, and an over-reaction to the possible impact on all dividend paying stocks as we near "The Fiscal Cliff" which media like CNBC have beaten to near death as the likely demise of the bull market run. The Morgan Stanley opinion on agency vs. non-agency holdings did not help any, either.
GLTA.
I believe that a big portion of the topline growth at Wally is being driven by drought-related food price inflation. Walmart is able to cope better with rising prices than most grocery competitors based on size, geographic omnipresence and buying office skills and leverage. I am seeing the Walmart retail price edge on grocery staples widening vs. Kroger, Supervalue and others, inevitably leading to increased market share on the grocery side.
A secondary driver is on the pharmacy/HBA side where Walmart's $4 generic program has been enhanced by the emergence of new, high volume generic drugs and the lingering affect of a dispute between Express Scripts and Walgreens. WMT has been the beneficiary of a big chunk of Walgreens Rx clientele which also buys general merchandise items while they are in the store. The margins on generics, while heavily discounted, are actually better than typical grocery margins which partially offsets the lag of retail food prices catching up to inflation.
In terms of consumer spend, Q4 is the one quarter where grocery volume is relatively impervious to the weakened economy and, in fact, tends to drag along the sale of a lot of higher margin goodies as shoppers may cut spending on discretionary gifts but will ALWAYS put a great spread on the table for the holidays.
I think that Walmart is going to close out the year on a high note and remain heavily invested in WMT stock.
But, wickedone, you are ignoring the huge profit potential of Taylor Swift branded training bras, tampons and gummy bears. What's wrong with you? You obviously are a generation behind the WAG leadership and the cutting edge that impels them to greatness!
GLTA,
Yank