Overvalued FedEx Stock

Discussion in 'FedEx Discussions' started by MrFedEx, Feb 19, 2013.

  1. MrFedEx

    MrFedEx Engorged Member

    Right now, FedEx stock is riding high, rising approximately 40% in value since October. Fred is happy, and those who bought-in early are also happy. But will they be happy a year from now, when the reality of the "new" Express and Ground take hold?

    I think not, and here's why investors need to be wary. All of Fred's "savings" right now are simply claims, not concrete. In fact, right now he is spending huge money on airplanes, buyouts, and new Ground infrastructure. All of the savings are theoretical and hypothetical until they actually happen, and I don't think Fredward is going to make his numbers.

    Look at the dual disasters of ROADS and it's baby brother DRA. Neither of these abysmal failures will ever realize the level of savings they are expecting. Consider the new Express employee. You know, the one who could give a crap about customer service or SPH. It could take 2 of the new breed to do what one experienced courier used to do, or maybe it will be "1.4", or "1.7" FTE's to equal the productivity power of one competent FTE.

    Ground? Wait until these assclowns have on-calls, and then watch the fun and non-productivity begin. When Borat is forced to mix pickups in with his formerly straightline delivery route, watch the feces hit the fan. He could have gotten off 8-10 deliveries in the time it takes him to find an address and make a pickup. That is lost profit, Uncle Fred. Borat's lowered productivity will also cost the ISP, reducing their profit margins.

    Besides the RLA, the biggest money-saving factor Fred has realized from his labor force is their high levels of productivity relative to what they're being paid. If you have a competent courier who can integrate his deliveries and pickups well, you have an employee who generates a high level of revenue. That is simply no longer going to be the case, because good employees are leaving, and will continue to leave, and they will be replaced by people who chose FedEx as a last resort or second choice. Word is getting out that FedEx is a low-quality employer, and that equates to incompetency and inefficiency at both the hourly and management levels.

    As the economy improves, the same thing wlll happen at Ground. Why would you put yourself through that indignity when a real job is available with a company that pays more and also has benefits? This is where on-calls will drive a nail into Ground's huge cost advantage. When Borat sees all of the extra crap he has to endure every day, maybe he'll apply somewhere else where he doesn't have to work so hard for so little in return. Eventually, Borat's ISP is going to have to pay more, which means Fred will save less as he pays the ISP a higher percentage to maintain the ISP's profit margin.

    Investors beware. Maybe you should dump your stock before Wall Street realizes that Fred has pulled a fast one.
  2. Cactus

    Cactus Just telling it like it is

    Yes indeed.

    It'll be awhile before the fat lady sings. Plenty of time for things go awry.
  3. STFXG

    STFXG Well-Known Member

    Since you're so confident why don't you short the stock with your 401k funds.
  4. thedownhillEXPRESS

    thedownhillEXPRESS Well-Known Member

    Yeah because you can "short" stocks in a 401k
  5. STFXG

    STFXG Well-Known Member

    Never had a 401k. But I'm sure you could pull cash out of it and find a way if you feel so strongly about a stock.
  6. MrFedEx

    MrFedEx Engorged Member

    Yes, please explain how I can do this without incurring a huge early withdrawal penalty.
  7. thedownhillEXPRESS

    thedownhillEXPRESS Well-Known Member

    Well you can't .
  8. thedownhillEXPRESS

    thedownhillEXPRESS Well-Known Member

    Of course you wouldn't know anything about providing benefits to your wage slave employees, so I guess I'm not surprised.
  9. STFXG

    STFXG Well-Known Member

    Take a loan out against your 401k. Pay the interest while you short the stock. With how overvalued you believe the stock is you will make more when it tanks than you will pay in interest. Is it that difficult? Come on...

    MAKAVELI Well-Known Member

    Why don't you try talking about something you actually know about ? If you take out a loan it doesn't decrease your balance it is a loan. The amount of shares doesn't decrease.
  11. MrFedEx

    MrFedEx Engorged Member

    401k loans usually are not a good idea.

    MAKAVELI Well-Known Member

    It's actually the best way to get a loan. It's tax free you get all the interest and you don't have to worry about getting approved from a bank.
  13. STFXG

    STFXG Well-Known Member

    Uh... Ok. I don't even know where you came up with that. Obviously it's a loan. Try reading it again?
  14. STFXG

    STFXG Well-Known Member

    Right. In the event you might not be able to pay it back. But this is a sure thing! Right?

    MAKAVELI Well-Known Member

    It was your idea you still haven't explain how taking a loan out would short a stock.
  16. STFXG

    STFXG Well-Known Member

    take out loan. Use cash from loan to short stock. Cover short sale and sell all the stock. Repay loan. Party with all your profits.

    That good enough or do you need me to explain how to set up an account with a brokerage and the rest of the baby steps?

    MAKAVELI Well-Known Member


    You make as much sense as a screen door on a submarine.
  18. TheJackal

    TheJackal Active Member

    I withdrew money in 2007, just before the crash, without penalties. It can only be done once and only up to 50% of the amount you have in there.


    Well, to give MFE's original post credit, here is an interesting article on the subject worth reading:
    Is FedEx Still an Outperform? | Wall St. Cheat Sheet

    My favorite comments are:

    "FedEx has a knack for doing whatever it takes to make shareholders happy". I kinda had a minor suspicion.

    "In a way, shareholders come before employees at FedEx". REALLY? Please tell me something I already don't know.

    "Whether that’s a positive or a negative depends on your situation". Of course is a huge negative to each and every one of FedEx's 290,000 employees! Even more when it's thanks to many of those hard working, purple-blooded employees that made FedEx what it is today, putting the company in its current strong financial position, although top brass denies any wrong doing...
  20. 1989

    1989 Well-Known Member

    Typically you can only take out a hardship loan, in which you will have to prove a hardship. Now to open a brokerage account with shorting privileges you may quite a bit of cash. You need 25K to day trade. With all the cash out there, you could get wiped out if someone decides to offer lets say 40 billion. Much safer to mortgage the farm and buy puts.