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February 2016

While only very partial guidance, it looks pretty promising:

We have had a very strong start to the first quarter with January sales up approximately 35 percent compared to January 2015 as well as a strong first week of February. Our backlogs are up 9.5 percent at December 31, 2015, which were impacted by some distributors pulling forward orders from January to December. During the fourth quarter, our distributor sales increased 91.6 percent as compared to the same period last year.

SKECHERS Announces Fourth Quarter and Fiscal Year 2015 Financial Results | Seeking Alpha



Well, SKX is up 10% after the market closed on the Q4 figures and outlook, that's a little better than we expected, but in this market it might not last very long as there seem to be bigger forces at work.

Still, it's good to know the company is still humming, it's pretty hard to find 30% revenue growth these days.



While the rest of the (financial) world is in full blown panic mode over the Chinese slowdown and possible devaluation, meanwhile in China..

China’s consumers are still feeling confident and upbeat despite the nation’s economic downturn. “Chinese consumers seem to be holding up despite the volatility we’re seeing in markets,” Louise Keely, president of the Demand Institute and the lead author of Nielsen’s quarterly global survey on consumer confidence, told The Wall Street Journal. “Retail sales continue to be quite strong…and consistent with that, consumer confidence in China remains stable and high,” she said. China’s consumer confidence ticked up in the final quarter of 2015, according to a survey by market research firm Nielsen, beating the global average and outperforming most regional peers.

Chinese Consumer Confidence Remains Strong Amid Economic Uncertainty



Risks are increasing almost everywhere..

The root cause of this debacle is the way the eurozone is designed. We don’t have a mutualisation of the risks. That is why this is escalating,” said Mr Guglielmi. Europe’s leaders agreed in June 2012 to break the “vicious circle between banks and sovereigns” but Germany, Holland, Austria and Finland later walked away from this crucial pledge. The chief cost of rescuing banks still falls on the shoulders of each sovereign state. The Sword of Damocles still hangs over the weakest countries.

Europe's 'doom-loop' returns as credit markets seize up - Telegraph

Peter Schaffrik, from RBC Capital Markets, said there is a nagging concern among investors that the ECB is running low on ammunition. “How much further can the ECB go before it becomes outright harmful?” Peter Schaffrik, from RBC Capital Markets It cannot usefully cut interest rates any deeper into negative territory since the current level of -0.3pc is already burning up the “net interest margin’ of lenders and eroding bank profits.

Europe's 'doom-loop' returns as credit markets seize up - Telegraph



We have to say, things are looking very bleak:

  • Debt levels are too high almost everywhere.
  • This matters especially where (public or private) debt isn't denominated in the home currency, like much private debt in emerging markets or public debt in the eurozone.
  • China is slowing down busting up commodity and oil exporting emerging markets
  • China itself is plagued by unsustainable capital outflows and will be forced to devalue if this continues, throwing another round of deflation into the world economy.
  • The oil crash hasn't turned out to be a boon for the world economy as the negative effects have such dire consequences on many producers that it looks likely this is overwhelming the positives
  • The eurozone is under enormous strains, the euro is already rising again as the outlook for US rate rises softens, and stress is emerging in banks and public debt levels are unsustainable under the present low inflation/ low growth scenario, let alone if that worsens.
  • The eurozone is already cracking up under the political strain caused by the refugee crisis and there is a wild card in the form of the UK referendum on Brexit.
  • It is almost generally perceived as the world's authorities are basically left with little or no policy instruments to fight all this if it gets worse.

Which is why we're mostly in cash still here and closed two of our four VIX futures (luckily with a nice profit, although the remaining two are not faring so well and might very well have to be rolled over).



Sort of funny, markets down big time but two of our biggest holdings (SKX and ELLI) are actually up. At least momentarily Smile

No, this doesn't mean much, although SKX had good figures out and ELLI will report after the close.



But as you can see, we missed a glorious opportunity to sell ELLI last week when it hit $75:

ELLI Ellie Mae, Inc. daily Stock Chart

Curious about figures tonight though, if they fail to beat the downside could be substantial.



Well, we already alluded to the fleeting glory of the moment.. after having risen 10%+ SKX is now down 2%. Nothing lasts in this market..



Here is why we didn't sell ELLI last week (although we didn't see the steep sudden fall as collateral damage to the LNKD and DATA earnings disasters coming either). We argued ELLI has a history of large beats. How about this one..

  • Ellie Mae (NYSE:ELLI): Q4 EPS of $0.44 beats by $0.23.
  • Revenue of $64.9M (+39.3% Y/Y) beats by $3.55M.


Due to the general market circumstances we didn't buy more either, and guidance might be a tad on the soft side:

  • For the full year 2016, revenue is expected to be in the range of $317.0 million to $321.0 million.
  • Net income is expected to be $22.2 million to $24.2 million, or $0.71 to $0.76 per diluted share.
  • Adjusted net income is expected to be in the range of $56.1 million to $59.1 million, or $1.79 to $1.86 per diluted share. Adjusted EBITDA is expected to be in the range of $90.0 million to $94.5 million.

Ellie Mae Reports Fourth Quarter and Full Year 2015 Results | Seeking Alpha

Compare that to 2015 figures:

Full Year 2015 Highlights

  • Record revenue of $253.9 million, up 57% from $161.5 million in 2014
  • Adjusted EBITDA of $74.7 million, up 62% from $46.0 million in 2014
  • Net income of $22.3 million, compared to $14.8 million in 2014

But then again, this guidance might very well be smashed, as they have a habit of doing..


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