Wednesday, October 15, 2008
No Business... Like Show Business...
Three... yes you heard in right! Three Broadway Shows are closing the curtains early this year. This might have something to do the estimated 165,000 financial service workers in New York who have been added to the ranks of the unemployed. This city may never sleep. However, city officials could well be suffering from a case of insomnia thinking of a way to cover NYC's mountain of debt. One solution is to loan the city money. That's right, loan the city money in the form of bonds which are now paying an average of 6%. No these bonds are not backed by the U.S. government, but New York is good for it right? Since when has a city that size defaulted?
Speaking of real estate... I promised readers that we would look at this dead horse for investment ideas. Since it appears that the residential side of the industry has less down-side potential. Let's look at some of the losers that are out there. SPG down a mere 11.00 a share today. This commercial real estate business specializes in regional malls and outlet centers. VNO is another one to keep on the board. This lovely owns over 30 million feet of commercial property in New York City. Time shares... yes they made a nice come back when money was flowing like an endless river. Now times are different. Decisions, decisions, decisions...what to keep, what to dump. I guess if it is a choice of keeping the primary residence or a time share... you keep the residence. If it is a difference of sending Junior to school, or the time share, Junior is getting an education... you get the picture. I like HOT a.k.a. Starwood Hotels and Resorts as a big loser here. Act now and you get $100.00 off the Equinox Resort and Spa in Vermont. Not to be outdone, Wyndham Resorts WYN, boasts of over 200,000 vacation rental accommodations.
If you like the idea of shorting North, Central, and South America... and you think the consumer is dead like I do, then you will love Cinemark (CNK). While this one is only in the 8.00 range, there's a good chance that it could be heading all the way down to Davey Jone's Locker!!! After all, not everyone can go to the government for a bailout. You have to know somebody like the Honorable Barney Frank... By the way, CNK is at a -.52 cents per share earnings and this recession is going to be deeper.. and last longer than most people think.
Not to belabor the short side of things, readers should also consider the apparel industry. Ralph Lauren (RL), has specialty shops called Cashmere where ladies can spend a few grand on some clothing. Pink Pony shirts only run a mere $200.00 a piece. And let's not forget the namesake restaurant in Chicago. I am sure the line for that one is right out the door. Consider PVH as another play here. Consumers can't eat names like Bass, Izod, and name sake Van Hussen. I am convinced that this sector could hemorrhage for quite a while.
Last, Harley Davidson (HOG)is a luxury item. They may get good gas mileage, but many people will re-evaluate their need for a $40,000.00 motorcycle. Financing, job loss, and a tapped out consumer could easily send this classic into the single digits!!! The only hope for many of these companies is that the government tires to print their way out of this recession... Keep CMG on the board.
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Posted by at 4:51 PM