Sunday, January 31, 2016

Under Armour Cash Flow Should Have Investors Running Away

"Stocklemon believes that is one of the best stock advisory sites on the web.  It judges companies based on a proprietary OPS rating and covers both long and short positions."---------September 22,2003 Andrew Left founder of Citron Research

(my former twitter handle was @GFNNStock)
"From time to time I'm asked about analysts, diggers whose work I really respect, who do things well. Tom Renna, @GFNNstock, is a must follow— Roddy Boyd (@BoydRoddy) September 7, 2013

Feb. 5,2015 -- Under Armour CEO Kevin Plank talks about why he's buying the MyFitnessPal and Endomondo apps for a total of about $560 million.
         Equities Research Looks at Under Armour

*Negative Cash Flow (~goodwill $472 million)
*Class Action Lawsuit Settlement
*CEO New Stock Trading Plan
*Series Class C Shares
CFO/COO Departure
*Morgan Stanley Downgrade $62 (1/30/16) 

On Thursday morning Under Armour (NYSE: UA) reported FY2015 earnings sending the stock $20 higher from $65.58 to close the week @ $85.43. Up 30% in two days.

Record Sales and earnings were super impressive, but a close look at the cash flow statement raises a RED FLAG.

note: As of Sunday (1/31/16) Under Armour has not yet filed their 10K annual report with the Securities and Exchange Commission as of this morning so we are not able to dig deep into footnotes and other exhibits at this time.

A look at the 8K filed on Thursday can be found here. 

Before I jump to the FY2015 Negative $44 Million Operational Cash Flow, lets look at 2 recent SEC filings that should make investors wonder how many total shares are really outstanding when including Class A, Class  B and Class C shares.

Shares Fall 8.5% in 1 day
On November 12,2015 Under Armour traded at $94.16 with volume of 3 million shares.
On November 13,2015 Under Armour traded at $86.08 with volume of 7 million shares.
What happened?
At 10am November 12th CEO Kevin Plank filed this SC 13D/A with the Securities and Exchange Commission.
"(Kevin Plank) entered into a pre-arranged stock trading plan to sell shares of the Issuer’s Class B Common Stock and, if and when issued, the Issuer’s Class C Common Stock."
"If the Reporting Person completes all the planned sales under this trading plan, he would beneficially own 35,700,000 shares of Class B Common Stock and Class A Common Stock, representing approximately 16.6% of the total shares of Class A and Class B Common Stock outstanding as of September 30, 2015 and representing approximately 66.5% of the combined voting power of the Issuer outstanding as of September 30, 2015". 

Consolidated Class Action Lawsuit
August 14,2015 this DEFA 14A filing with the Securities and Exchange Commission was filed.
"Under Armour currently involved in a consolidated class action lawsuit brought against the Company and the members of the Company’s Board of Directors on behalf of purported stockholders of the Company in connection with the creation by the Company of a new class of common stock, referred to as the Class C common stock, par value $0.0003 1/3 per share"
Shares declined from an all time high above $100 in October to a 52 week low in January 2016 

October 7,2015 8K Settlement

October 13,2015 8K COO/CFO Departure

Are You Still Long?
Operational Cash Flow for FY2015 was NEGATIVE $44 Million!
Operational Cash Flow FY2014 of Positive $219 Million.

Year over Year Operational Cash Flow declined by $263 Million

Operational Cash Flow
FY2010: $50 million
FY2011: $15 million
Fy2012: $200million
FY2013: $120 million
FY2014: $219 million
FY2015: NEGATIVE ($44 Million)

Cash Flow used in 2 Acquisitions during 2015.
$475 million for
$85 million for Endomondo
$560 Million total cost, 
$472 million GOODWILL 

Under Armour 
Stock Price has had a History of Following Cash Flow.
November 18,2005 IPO
 Under Writer: Goldman Sachs. 9.5 million shares @ $13 (adj for 2 (2 for 1)splits $3.25).

Shares went from $13 to $68 on August 21,2007.

Enter Equities Research

Equities Research went bearish (A-E) on UA at $68 to $15 before going Bullish.(F)

Short $68  (70% profit in 15 months)
Hottest Stock with Weakest Cash FLow August 21,2007 $68
B.Short $48  (58% profit in 1 year)
Large Caps May Not Always Be Less Speculative

C. Short $ 45 (55% profit in 9 months)
Love Your Valentine, Not Your Stocks

D. Short $38   (47% profit in 3 months)
Beware:  Standard & Poors Adds A Poor Quality Stock to Index

E. Short $33   (40% profit in 3 months)

F. long $15 GFNN news story upgrade

Tuesday, July 24, 2012

December 2012: Stockdiagnostics the Utility
Finding Stocks that Fall 30% to 99%

29 GFNN STOCKDIAGNOSTICS Portfolios created by Equities Research founder , Tom Renna

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