RBD - Restaurant Brands

[COLIN]

Snoopy: I think the moral of the story is: "Be sure that the bull has actually been de-horned before you venture into the arena!"
But I give you full marks for bravery.

Cheers!

[Phaedrus]

More like "Make sure the Bear has been de-clawed before you enter the pit"!

[Phaedrus]

Volume indicators such as Accumulation/Distribution, Price/Volume Trend and On Balance Volume are all quite similar. Nevertheless I did manage to find a point in RBD history where they were not quite aligned. You can see here that the A/D indicator totally missed the nicely timed 2002 "Sell" step that the other 2 picked up.


Generally speaking, though, these three indicators are so much the same as to render comparisons all but irrelevant. Take a look at this comparative chart and tell me which volume indicator is "superior"!

Given such a high degree of correlation, it would be silly to argue strongly for (or against) any one of these indicators.

[Snoopy]

Snoopy it is very naughty of you to make false statements like that and attribute them to me. At NO stage did I EVER say that I "wouldn't join the uptrend".

No Phaedrus you didn't say, "I wouldn't join the uptrend" in those words However, we both know the process of investment is not tied up in the minuitae of semantics.

The concern occasioned by the flat OBV as expressed in this chart proved to be very well founded. In the days following that post, the RBD shareprice fell away, it again broke below the trendline and made a low at 78 cents before reversing, breaking the trendline yet again and moving into the current uptrend. (With, you will notice, a rising OBV).

For example in what you wrote above you haven't *said* that you would never buy a share at the trendline break without a rising OBV. However, I don't think any reasonable person reading that paragraph would suggest that buying a share on the trendline break *without* a rising OBV would be inside your circle of comfort.

Now Phaedrus, here is what you wrote six pages back, on a post dated 10th April which you subtitled: "RBD BUY SIGNAL!!!!!! Look Mum, no hindsight!"

Phaedrus wrote
"Dr Who,
For the first time in literally years, RBD has broken above its long-term trendline (blue arrow). It is quite possible that you are not the only one with fundamental concerns though, because this Buy signal remains unconfirmed, so far. Notice the dead flat On Balance Volume indicator (circled). There is precious little volume behind this event. Remember that volume confirms the trend. See how the trendline break was caused by RBD simply tracking sideways, rather than heading off Northward. Technically RBD is still in a downtrend, it is still making lower lows and lower highs.
Nevertheless, if you want some RBD, the time to buy just might be approaching - wait a little longer though. There is no hurry - is there?"

Then yesterday Phaedrus, you wrote
"No, it (the uptrend) is a 'weak' uptrend BECAUSE it isn't confirmed. Volume confirms price, and volume has been falling."

"That's unchanged, Snoopy. No-one is disputing the existence of a new uptrend. We are speculating here on its strength. Two separate issues."

OK, same story but with one key observational difference. The observation that RBD is now in an uptrend, albeit unconfirmed.

Now I'll reprise your conclusion from six pages ago from your post titled "RBD BUY SIGNAL!!!!!! Look Mum, no hindsight!".

Phaedrus wrote:
"Nevertheless, if you want some RBD, the time to buy just might be approaching - wait a little longer though. There is no hurry - is there?"

The above is the phrase I take issue with.

At that point the share price was 84c and when I wrote my post yesterday it was 92c. That may be just a few cents to you, but it amounts to nearly 10% of the company valuation. For those that bought in at the 80c support level at the time the results were announced on 10th April, the increase in share price has been more- 15%. The actual increase in operational EBITDA when the final results were announce was an EBITDA increase of 17.3%. From a fundamentalist perspective you could argue that belatedly, two months later, the market has caught up with the operational position of RBD. By ignoring this opportunity with your "There is no hurry - is there?" attitude you have given away almost all of the arbitrage available between after the result was announced (and the share price hardly moved) and yesterday.

If the OBV on RBD spiked tomorrow, perhaps you would then decide to buy? Perhaps it would be a good move? Only time would tell. But would it be a lower risk move because you are acting on a 'confirmed' uptrend, rather than just a trendline break? I would argue no. That's because ultimately you would be gambling on an *even higher* EBITDA performance or a PE rerating (a sentiment factor that is difficult to forecast ) in the medium term to justify your entry price. IMO, it is much safer to 'risk' your investment money on an existing EBITDA improvement that has already been banked which 'the market' hasn't noticed yet. By claiming there is 'no hurry' to act, you have given away 87% (so far) of the gains available to you on a platter!

SNOOPY

discl: hold RBD, and *did* buy more at 80c while RBD shares were trading around that 80c support point.

[Phaedrus]

Now Phaedrus, here is what you wrote six pages back, on a post dated 10th April which you subtitled: "RBD BUY SIGNAL!!!!!! Look Mum, no hindsight!" "For the first time in literally years, RBD has broken above its long-term trendline (blue arrow). It is quite possible that you are not the only one with fundamental concerns though, because this Buy signal remains unconfirmed, so far. Notice the dead flat On Balance Volume indicator (circled). There is precious little volume behind this event. Remember that volume confirms the trend. See how the trendline break was caused by RBD simply tracking sideways, rather than heading off Northward. Technically RBD is still in a downtrend, it is still making lower lows and lower highs. Nevertheless, if you want some RBD, the time to buy just might be approaching - wait a little longer though. There is no hurry - is there?"

Snoopy, you are still being very naughty and continue to wilfully misquote me. Here's what I REALLY wrote on April 10th (Post #978, page 66) :- "RBD BUY SIGNAL!!!!!! Look Mum, no hindsight! RBD has been in a downtrend for 3 years, but this morning broke above its longterm confirmed trendline, giving a Buy signal (marked by the green arrow). The red dots mark where fundamental analysts bought, mainly on the basis that the shareprice at that point was well below RBD's theoretical "value". As circumstances changed, these valuations were progressively reduced, but the market price was always below RBD's calculated "worth", so the buying continued - all the way down. A simpleton with a chart, pencil and ruler would have done better. Wouldn't it make you spit?." That's it - the full text.

My next post was two weeks later on 23/4/08 (#997, page 67) by which time RBD had made a bearish double top formation and the OBV had demonstrably failed to rise. The breakout was not looking so good by then. That's why I advised those that were still wanting to buy RBD to wait a little longer. Good advice as it turned out, because RBD continued to drop right back to 78 cents, with the OBV falling quite sharply.

Then yesterday Phaedrus, you wrote "No, it (the uptrend) is a 'weak' uptrend BECAUSE it isn't confirmed. Volume confirms price, and volume has been falling." OK, same story but with one key observational difference. The observation that RBD is now in an uptrend, albeit unconfirmed.

The "key observational difference" stems from the fact that this comment came 5 weeks after I had stated that RBD was "still in a downtrend" - by then the trend HAD changed.

Snoopy, here is a chronology of when and why people may have got into RBD on technical grounds :-
10/4/08 Trendline break. Entry at 84 cents. (Signal posted on ST before the Close)
18/4/08 Trendline break (2). Entry at 84 cents.
12/5/08. Trendline break (3). Entry at 81 cents.
14/5/08. Volume spike and rising OBV. Entry at 85 cents.
23/5/08. RBD now in uptrend. Entry at 86 cents.
27/5/08. OBV now in confirmed uptrend. Entry at 87 cents.

You need to compare these technical entry points with those based on fundamentals such as "EBITDA performance or PE rerating based valuations". Fundamentally derived "value" based entry points have given abysmal results with this stock. Here, for example, are some 2005 quotes from Snoopy's RBD posts, from a thread with the unfortunate title "RBD - Bad Sales numbers" :-
"Even at $1.65, the shares are still cheap IMO, which perhaps explains why I bought a few more RBD shares in the market today at $1.60."
"I'm picking $1.65 as below the bottom of the fair value range".
"My latest RBD purchase locked in a very attractive equivalent bond coupon rate of 9.3% (gross) on those new shares. I'll get that return on those funds whatever Mr Market does or does not do!"
"I'm not worried by a drifting share price." (I had been helpfully pointing out the fact that Snoopy was buying into a downtrend.)
"If the share price ever falls back towards $1.35, *that* will be the time to buy." (It did, and he did!)

[Snoopy]

Snoopy, you are still being very naughty and continue to wilfully misquote me. Here's what I REALLY wrote on April 10th (Post #978, page 66)
<snip>

My next post was two weeks later on 23/4/08 (#997, page 67) by which time RBD had made a bearish double top formation and the OBV had demonstrably failed to rise. The breakout was not looking so good by then. That's why I advised those that were still wanting to buy RBD to wait a little longer. Good advice as it turned out, because RBD continued to drop right back to 78 cents, with the OBV falling quite sharply.

Phaedrus, I wasn't willfully misquoting you. Those charts on successive pages (66 and 67) are effectively the same. Even you hadn't taken off the red spot purchase dots from p66 when you reposted the chart on p67 with OBV added. Nor had you removed the 'Average Capital Loss 25&#37;, Dividend Yield 7%' graphics. Nor I would suggest should you have removed these things. Interchange the comments you made on p66 and p67 with the respective graphics and your main points still make sense. The only difference is that the p66 chart showed the first trendline break at 83c, and the p67 chart with the addition of a tiny squiggle (representing the time period from the first chart posted on 10th April and the second on 23rd April) shows a second trendline break at 82c. These tiny differences are real, but they make no difference to *my* F/A argument or what *I* was trying to say.

The "key observational difference" stems from the fact that this comment came 5 weeks after I had stated that RBD was "still in a downtrend" - by then the trend HAD changed.

Yes, I never meant to suggest you changed your mind for no good reason Phaedrus. I only ever meant to suggest that the data had changed with time and you changed your observation accordingly

Snoopy, here is a chronology of when and why people may have got into RBD on technical grounds :-
10/4/08 Trendline break. Entry at 84 cents. (Signal posted on ST before the Close)
18/4/08 Trendline break (2). Entry at 84 cents.
12/5/08. Trendline break (3). Entry at 81 cents.
14/5/08. Volume spike and rising OBV. Entry at 85 cents.
23/5/08. RBD now in uptrend. Entry at 86 cents.
27/5/08. OBV now in confirmed uptrend. Entry at 87 cents.

You need to compare these technical entry points with those based on fundamentals such as "EBITDA performance or PE rerating based valuations".

Yes you do, but not for the reasons you think Phaedrus. I introduced the 'EBITDA Performance Improvement' and 'PE Re-ratings' as possible reasons for the share price turning. These are not 'alternative' entry points I have dreamed up to be compared with yours. I know that you T/A exponents do not need to understand the reason behind stock movements. But as an F/A exponent, I *do* have to understand what is going on, or at least try to explain it as I see it.

A 10% improvement in operating performance means the market will generally mark up the share price by 10%. If the market is very efficient you cannot make any profit out of this because the share price will have gone up 10% already, in anticipation of the result being 10% better. But the market isn't always efficient, because as in this case that share price rise took two months to happen. Thus the shrewd F/A operator had a value arbitrage play with RBD just sitting there for some weeks and no careful timing or use of T/A required. The use of T/A in this instance simply got you in at a higher price for the same reward, and thus a lower return. T/A was not helpful, *in this instance*.

Your argument that over the longer term timing your entry using T/A would have been better than simply buying an equal number of shares or dollar value at the 'red dot points' is fair enough. But as far as I am concerned that is a straw man argument, because that is not what I advocated doing and not what I did.

SNOOPY

[Steve]

Even Subway is going the way of the pizza chains and canabilising stores thru competition...

Subway franchisee faces bankruptcy
A Christchurch Subway store owner is accusing the multi-national sandwich chain of flooding the city with too many stores, bringing her to the brink of bankruptcy.

[BRICKS]

http://www.bizjournals.com/columbus/...0/daily17.html

YES read early this morn and nothing to do with NZ,, in the store at Hamilton had a lovely time meet the lady manager and she said thing where just FINE what I like was the mini Que of 3 to 4 people waiting to be served at about 1.00 pm..

Still a BARGAIN..

[Deev8]

http://www.bizjournals.com/columbus/...0/daily17.html

It was disappointing to read that "Details on how the closures will affect Central Ohio, which has more than 90 shops and kiosks, weren't available." We will be on the edge of our seats awaiting those details.

[BRICKS]

It was disappointing to read that "Details on how the closures will affect Central Ohio, which has more than 90 shops and kiosks, weren't available." We will be on the edge of our seats awaiting those details.

THEY are going to open USA 200 more before September but are closing 600 non performers back in NZ we should shut all the non making money Pizza joints that's the HEADACK..

BUY the BARGAIN..