The e-commerce satisfaction index ForeSee created has a maximum score of 100.

The results are especially troubling for Neiman Marcus which has posted 18 months of declining retail sales. It had a score in the ForeSee research of 73. Sears, which has struggled with a turnaround since buying K-Mart, had a relatively low score of 75.

Gas (NYSE:GPS), Overstock (NASDAQ:OSTK), Target (NYSE:TGT), Best Buy (NYSE:BBY), and SonyStyle (NYSE:SNE) posted numbers below the survey’s median number.

It would not surprise anyone that Amazon (NASDAQ:AMZN) finished first in the poll with at satisfaction rating of 87, or that Apple (NASDAQ:AAPL) and NetFlix (NASDAQ:NFLX) did well. The firm’s with the best reputations for taking care of customers seem to be keeping those reputations. The weak retailers, in the meantime, are not doing themselves any favors by fumbling their online operations.

Douglas A. McIntyre

Reuters:   An SEC attorney raised concern about a Madoff report in 2004.

Reuters:   Auto parts supplier Lear filed for bankruptcy.

Reuters:   NYC apartment sales are down more than 50%.

Reuters:   Beijing Automotive will bid for Opel.

Reuters:   GM told a judge asset sales was its only option.

Reuters:   The Treasury will name 9 managers for its toxic asset plan.

Reuters:   Investors are turning to stock picking after the big rally.

Reuters:   Domestic cars sales were down again and Ford (F) picked up share.

Reuters:   The rights offering for Rio Tinto (RTP) had a strong demand and Chinalco kept its percentage steady.

Reuters:   Madoff customers have gotten $231 million so far.

WSJ:   The appointment of the president of the NY Fed shows how little power regional directors have.

WSJ:   Big pay packages are back on Wall St. and Goldman Sachs (GS) workers may get an average of $700k this year.

WSJ:   Boeing (BA) is tightening its grip on 787 production.

WSJ:   Housing and ISM data lifted stocks.

WSJ:   Beazer (BZH) will pay up to $53 million in fines to settle mortgage fraud charges.

WSJ:   GM will aim at an IPO next year.

WSJ:   GM sales show the importance of China.

WSJ:   A law cutting mobile phone fees in the EU took effect.

WSJ:   Sirius (SIRI) raised the compensation of CEO Mel Karmazin.

WSJ:   Inflation is unlikely because unemployment is so high.

WSJ:   BP (BP) bid to build oil field in Iraq faces challenges.

WSJ:   The price of the AIG (AIG) investment unit appears to be falling.

WSJ:   NYSE (NYX) has cut trading times to five milliseconds.

WSJ:   S&P’s (MHP) bond rating chief left.

WSJ:   China’s massive loan expansion may become a problem.

WSJ:   Roche cut the Tamiflu price for developing countries.

WSJ:   Dow Chemical (DOW) will cut three plants.

WSJ:   Overstock (OSTK) dropped affiliates in four states to protest taxes.

WSJ:   The new president of News Corp (NWS) could earn $43 million in his first year.

NY Times:   GM must complete the sales of its assets by July 10 or it could lose government financing.

NY Times:   A cut in risk at Morgan Stanley (MS) may lead to a loss.

NY Times:   Banks are increasing fees to offset losses.

NY Times:   Anti-smoking drugs Chantix, made by Pfizer (PFE), and Zyban, made by GlaxoSmithKline (GSK), can could lead to suicide and mental illness in some cases.

NY Times:   Facebook will offer new features to help users maintain privacy.

FT:   Data are showing signs of a global recovery.

FT:   SEC is urging rewarding whistle blowers.

FT:   K-Mart (SHLD) will offer discounts to the unemployed.

FT:   WPP’s CEO sees no signs of an economic recovery.

Bloomberg:   The stimulus package is probably not improving hiring.

Douglas A. McIntyre

The company ended the quarter with $78.607 million in cash on hand and managed to trim its net inventory from $17.723 million at December 31 down to $11.695 million at the end of March.

Shares have reacted positively to earnings so far with a gain today of 11% at $12.59; its 52-week trading range is $6.34 to $29.59.  Many consider Overstock a hybrid company that falls somewhere in between Amazon.com and eBay.  They key difference is that the company is still losing money each quarter, and the others are not.

JON C. OGG

A fair accusation perhaps: but where are the buyouts? In the decade or so since naked short selling became the red herring for underperformance, we’ve seen dozens of companies complain loudly about market manipulation: from penny stock pump and dump Universal Express to subprime blowup Novastar Financial, to the perpetual money losing but still solvent Overstock.com OSTK).

Here’s what I don’t understand: if markets are reasonably efficient when they aren’t being manipulated, which most people would agree is true, then surely widespread naked short selling would drive stocks down below their intrinsic values. If it didn’t, what would be the problem? And if it does, then why aren’t we seeing purported naked short selling targets popping up as buyout targets.

Even highly-respected investors like Marty Whitman have accused short sellers of conducting a "bear raid" on companies like MBIA (MBI) and Ambac (ABK): MBIA has gone from $68 to $5 per share in the past year, with nary a rumor of a private equity, sovereign wealth, or strategic buyer being interested. Given that, it seems likely that the stock was wildly overvalued at $68, and investors have the short-sellers to thank for bringing them back into line.

The ability of companies to make bids for public companies should place a floor on the ability of market manipulators to drive down stocks: beat it up enough and it’ll get bought out at a premium. The fact that that almost never happens indicates that the whole naked short selling scandal is a farce. But we already knew that.

Zac Bissonnette

The company site can be accessed at http://realestate.overstock.com.  Overstock believes the site is unique as it helps shoppers identify great deals from more than three million classified, foreclosure, and hard-to-find auction homes for sale.  The site is supposed to automatically highlight auction, distressed, and foreclosed properties.

If you are seeing tools like this launched, you have to wonder if perhaps the foreclosures, auction, and other troubles are very close to reaching their own bubbles.

Jon C. Ogg
June 10, 2008

Chairman & CEO Patrick Byrne: "Jason co-founded the company and helped build it before retiring the first time.  When I screwed it up a couple years ago, he came out of retirement and has played a decisive role getting it back on track… He’s done a superb job. Now that it is back in a solid trailing twelve month cash-flow-positive position, he wishes to return to our previous arrangement…. he will still oversee special projects in a part-time capacity."

The good news is that Patrick Byrne recognizes the mistakes of the past.  The bad news is that Jason Lindsey was thought of as "the adult supervision" by many on Wall Street.  A value manager at the recent VALUE INVESTING CONGRESS noted how much he had accomplished there when offering her viewpoint on Overstock.com.  Patrick Byrne had also recently noted how margins had been down on discounts.

OSTK closed down almost 3% at $15.10 today in a very weak market, and the 52-week trading range is $14.05 to $39.39.  There have been very few prints after the close.  The print we saw in after-hours was higher, although this is indicated lower after the news.

Jon C. Ogg
January 2, 2008

For people from households above $100,000, the increase is 28%. That is likely to create some big winners and losers in the e-commerce sector.

Wal-Mart’s (WMT) online business is not likely to be helped. Neither is Target’s (TGT). Deep discounter Overstock (OSTK) probably gets beaten up as well. The online businesses for Macy’s (M) and Sears (SHLD) are not likely to be helped.

RedEnvelop (REDE) may be in for a good holiday period. Ditto Blue Nile (NILE)

Douglas A. McIntyre

Lisa Rapuano, portfolio manager and founder of Lane Five Capital Management, discussed several key value stocks and gave the notion that one of the best screens in finding value stocks is by searching the list of "new lows" (similar to our own "52 Week Low Club" we issue daily), and then looking for the companies that can avoid "going to zero."  When she presented Overstock.com (NASDAQ:OSTK), there were many expressions of surprise from the large audience at the Value Investing Congress.

What was interesting was that she also noted how she was an Amazon.com (NASDAQ:AMZN) loyalist that buys many items from the online e-tail and retail giant.  She noted how Overstock.com was a stock that back when her firm started screening it was hitting new daily lows and had all the recipes in place to go to zero.  But then she noted how controversial CEO Patrick Byrne was now being kept at bay by the fairly new President & COO Jason Lindsey being thought of as "adult supervision."  She also noted how the company blew out its old stale inventory without concern of the immediate charges so that it could focus on longer-term turnaround plans, noted how the company was able to raise cash via a financing (which surprised her), how the company trashed the old crummy ad campaign, and how it has been able to focus on a more attractive inventory mix and product offering that could fill a niche that Amazon.com wasn’t in.

In the presentation, she also described a site visit to Overstock.com’s facilities, noted insider ownership and a high a short interest, and had many tongue-in-cheek comments for believers and skeptics alike.  She also noted how difficult it was to make that decision and to evaluate the stock because its financial losses at the time were such that it wouldn’t fit into most VALUE INVESTING screens.  This is also not a brand new investment or a breaking call as Lane Five has been in the position, but this was a considerable surprise to the audience (and to yours truly).

One of the similar stocks that Rapuano rode up was Blue Nile Inc. (NASDAQ:NILE) as a pick from the prior year, and it sounded like Lane Five has lightened up considerably in that position.  But she did note that before the recent sell-off there that the company’s internal performance was at the higher-end of her best case scenario from the start, and she noted that Blue Nile’s stock could actually reach the vicinty of $150 per share if the company can fully execute on its plan.  So Lisa Rapuano isn’t treading into an entirely new space, and I sure didn’t get any impression that she was making any hasty decisions.

As reminder, opinions are opinions.  Sometimes they work quite well and sometimes they don’t.  I didn’t hear any exact price targets or time frame given, although Lisa Rapuano takes a long-term view and doesn’t panic out of her funds positions when the underlying thesis remains intact.  With such a huge short interest of more than 5 million shares on last look, it is always interesting to see various points of view.  They say "beauty is in the eye of the beholder," and it has been shown through time that financial metrics are as well. 

As 24/7 Wall St. enjoys screening value stocks for our Special Situation Investing Newsletter, this certainly gave us a different way of looking at some stock screens in a different light compared to traditional value screens. 

The next VALUE INVESTING CONGRESS takes place in May 6 & 7, 2008 in Pasadena, California, and 24/7 Wall St. would recommend that any value investing strategists and managers consider attending.  Sometimes a simple idea or new way of thinking about a situation can be worth millions, and there was far more than one simple idea and more than one way of thinking differently about a situation.

• Also from the conference: Freddie Mac Moves Into the Value Investing Circle.

Jon C. Ogg
November 30, 2007

DD cut to Hold at Citigroup.
DFS cut to Equal Weight at Lehman.
DLTR cut to Underweight at JPMorgan.
FTEK cut to Sell at Merriman Curhan Ford.
IMB cut to Equal Weight at Lehman.
IPG raised to Outperform at Bear Stearns.
MO raised to Buy at UBS.
NNI cut to Underperform at FBR.
OSTK raised to Outperform at Piper Jaffray.
PMI cut to Underweight at Lehman.
RHI cut to Neutral at B of A.
RTSX cut to Hold at Deutsche Bank.
RTP cut to Hold at Citigroup.
RX raised to Outperform at FBR.
SEPR cut to Sell at UBS.
SRCL raised to Overweight at JPMorgan.
WM cut to Equal Weight at Lehman.
XRX raised to Hold at Citigroup.

Jon C. Ogg
October 22, 2007

On an operating cash flow basis, Overstock posted a $5.9 million positive cash flow, and that is critical since that was a Q3 number rather than just a Q4 holiday quarter.  On an EBITDA basis, the company posted a positive $4.1 million.

The big upside on revenues compared to estimates combined with lower sales marketing costs (down 49%) appear to have paid off.  The stock is trading up over 14% to $34.00, well above the $13.40 lows of the last year and just under the $35.96 52-week high. At the end of September, the NASDAQ short interest in Overstock was listed as 4.611 million shares, about 15.5 days to cover.

Jon C. Ogg
October 19, 2007