Post of the Day
August 11, 1998

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Subject: CBUK edge
Author: shakestheclown

I own a number of CBUK shirts from various tracks I've played around the country. I also own shares of their stock. The shirts are traditionally $65-$80. And every time I coughed up the green for the shirt, it was easy (relatively) because the fabric, pattern, construction and crest are top dog; even if the shirt is priced out at 30%-40% above its mass-retial market equivalent (good for shareholders). But that's the rub, their channel. They are well positioned in resort and high end pro shops, where customers expect to shell out some dough. They'd think the resort a no-talent lot if their wallets and handbags weren't getting bruised on the goods they bought there. And, CBUK is sitting on displays next to other vendors in the pro shops who are charging the same $65-$80 and cannot approach CBUK's quality and styling.

ASHW is the only real competitor for my $ and ASHW has demonstrated design idea "cramp" (getting weak) in recent history. Thier fabric, construction and crest also do not meet CBUK's challenge. They are selling name, more than product, in many instances. CBUK sells product, the name will come.

  "CBUK's financials come out and slap you in the chops, like, 'how come this isn't trading at some stupid PE?' "

From the perspective of financial fundamentals, it hurts to look at ASHW. They have a high appeal product, and a good one, but management knocks me over with how poorly they have addressed inventory and cash flow througout history. ASHW got punished recently for having to announce that thier BASICS line, which accounts for 25% of revenues, will not be shipped to retailers because the quality was below grade. Therefore, the next Q's earnings are expected to be around .07, instead of .13. This effect will spill into the following Q as well. This was on the heels of ASHW's recent decision to go overseas for the production of the BASICS line, in the interest of greater margins. Ouch! The stock was at 17 or so, then 13, then 6 and change. Brutal.

CBUK's financials come out and slap you in the chops, like, "how come this isn't trading at some stupid PE?" I don't like the history of cash flow deficits or the collection on a/rec., but the cash flow has turned to positive and can be attributed to funding emerging growth. They apparently have not outrun their liquidity.

Also, there was a June insider sell by the VP of sales, of over 50% of his position, @ 27. Yikes...if he's selling, what is he looking at that we should know about? But be cool. Investor relations was kind and instructed "not to read too much into that." It's evidently one of the first sales by insiders since the IPO and he had the "personal reasons", etc. Okay, I'm biting.

I'm travelling the country for this entire year as part of a novel writing gig. A focus is the game of golf. I have played a bunch, as well as caddied, and seen the CBUK shirts on brokers from Goldman Sachs, LPGA tour golfers and corporate outing guests. This shirt has appeal and it delivers with a valid product.

  "I believe TMF Keeler pointed out that CBUK's management is the pot o' gold. And that's it, in simplest terms."

I believe TMF Keeler pointed out that CBUK's management is the pot o' gold. And that's it, in simplest terms. These folks have been making good decsions at every level and it has been reflected in the financial statements. Please ladies and gentelmen, keep the train 'a runnin' down that same track.

Earnings are due for Q1, hold your breath, it's a "Godzilla comin' to Tokyo" market and CBUK simply needs to continue its path to avoid a short term stompin' by the lizard king.

For me, CBUK is the simplest and most vivid example of a "Lycnh-stock", in a golfer's portfolio. One day I put together "hey, these shirts are F-I-N-E, fine" and "are they a public company?" After a review of the financials, news and SEC filings, it was the only buy signal Lynch suggests that you need - I found a good company.

Now, to dodge Godzilla as Q1 is announced.

In order to avoid any mojo being slung CBUK's way, by virtue of my endearing missive here, I will install the Delta Mojo Remover, as administered by Muddy Waters and The Wolf, in the CD platter.


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