Talking Vail Resorts, More Oklo and a Bit of Buffett Banter
Plus, my new quest for what I call Seinfeld Press Releases.
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From Red to Green…
My Red Flag Alerts is a list of companies that are likely to lag the market. The timeframe can vary months to years to forever, depending on how fundamentally flawed the company’s business model is or how inept its management is or how potentially fraudulent it is... or simply how overvalued it becomes.
That last part, on valuation, can be the flimsiest of all reasons to red flag a stock, especially if its growth prospects transcend whatever concerns investors might have – especially in momentum-driven markets seemingly ruled by emotion, like this one. What’s clear is that aside from the truly provable frauds, which are few and far between, it’s not uncommon for a good “short” to become a good “long”... just as fantastic longs can become good shorts. Also known as stocks that likely lag or lead the market.
One example is ski resort operator Vail Resorts, which I first red-flagged in December 2023. To say it has lagged the market would be an understatement...
But Vail is one of those companies where things had devolved into such a mess that it was begging for something to happen.
A little more than a year later a little-known activist, Late Apex Partners, which doesn’t file with the SEC, showed up with a thoughtful letter to the board along with a compelling slide presentation urging change, including a “reset” of the board and management.
By March of this year, with an activist as a backstop, I wrote...
A short turning into a long? That’s the question with Vail Resorts MTN 14.44%↑ , which has been on my Red Flag Alerts list since I wrote “Let it Snow” in December 2023. If you missed it, an activist has shown up in Vail. No surprise since the same screens that attract shorts can also attract longs.
Within a few days Apex surfaced with a follow-up letter to the board. Among other things, Late Apex suggested a “reset" of management and the board.
That was then... Enter yesterday’s news that a mere week before earnings Vail’s CEO was gone, replaced by the old CEO, who also happens to be the chairman, Rob Katz.
Investors cheered the news, and suddenly Vail’s stock sprung to life. Not surprisingly, Late Apex applauded the move, saying, “Rob’s return provides the opportunity for a reset, and to reignite an era of operational excellence.” Never mind that the group had not just been calling for the CEO’s ouster, but for Katz’s, as well.
The big question is... what happens next?
Late Apex lays out what would appear to be a solid game plan, including slicing the 6% dividend, buying back shares and pouring money back into the business. Whether management and the board do any of that remains to be seen, but as a friend who had been negatively predisposed to the company told me back in March, “It’s certainly not a short here because the best longs are ones where the story has played out or someone came up with a logical strategy to fix its structural issues.” And, it appears, someone did – assuming management doesn’t let ego and hubris get in the way.
Paging Jerry Seinfeld…
Yesterday’s stock-goosing Oklo press release is what I call a "Seinfeld press release," or SPR. That’s because – it's a press release about nothing... In this case, it was a press release announcing little more than a Memo of Understanding with Korea Hydro and Nuclear Power Co. that the two companies "intend to explore..."
Since when is “intend to explore” worthy of a press release? Korea Hydro didn’t even announce it. (And if it did, it’s not on its website.)
What I do know is this: If you believe what I wrote the other day about Korean retail investors, I’m sure it doesn’t hurt that this arrangement is with a company based in Korea.
My guess is that we’ll see more of these SPRs from all kinds of speculative companies as the market squeezes higher.
If you see any, don’t hesitate passing them along.
Finally, Some Buffett Banter…
This from my friend Bob Howard, who writes the always fabulous Positive Patterns investor newsletter. It’s his view on what he believes Berkshire plans to do with its cash hoard. I’ve done a screenshot since he writes in colors and it’s not quite the same if it’s in black-and-white...
Oh, and I’m reprinting this with Bob’s permission, with this caveat, in his words: “But like I say - it's AN OPINION from a hillbilly living in the Ozarks.” I’ll add: A wise hillbilly and longtime Berkshire owner and Buffett watcher who hasn’t always lived in the hills and been around longer than most anybody reading this.
DISCLAIMER: This is solely my opinion based on my observations and interpretations of events, based on published facts and filings, and should not be construed as personal investment advice. (Because it isn’t!) I have no positions in any stocks mentioned here. I’m under no obligation to update or alert subscribers if and when I make changes to any of my holdings.
Feel free to contact me at herb@herbgreenberg.com.