Many days late and dollars short.

Nothing personal but this is bad even for "Old Wall Street."

You may remember we used BBQ grills as a playful example in helping to understand the massive fundamental issues the market was facing after the COVID disruptions of 2020 and 2021.

I wasn’t surprised to see Weber WEBR poop the bed this morning with terrible results, a suspended dividend, and a firing of their CEO.

What was a surprise was an analyst downgrade on the “news,” which was so widely known for so long that most people were tired of talking about it. At least he didn’t have a “buy” on it. I underestimated the downside risk partly because it seemed like everyone was already short Weber and the shares were down to $8. But today, they gapped down to a new low.

WEBR Weber downgraded to Underperform from Neutral at BofA Securities; tgt lowered to $5 (6.46 -1.05)

BofA Securities downgrades WEBR to Underperform from Neutral and lowers their tgt to $5 from $9. Analyst Robert Ohmes added, "We downgrade WEBR to Underperform (from Neutral) and lowering our PO to $5 (from $9) based on an EV of 12-13X (from 13-14X) our F23E adj. EBITDA estimate of $204mm (from $271mm). WEBR reported preliminary F3Q22 net sales of $525-$530mm (in line with our estimate) but expects a net loss (vs. our +$72mm adj. EBITDA estimate) due to significant currency devaluations, promotional activity to enhance retail sell-through, negative mix impact from lower-margin regions and products, as well as significant freight cost increases. We also lower our F22 adj. EBITDA estimate to $0.3mm (from $159.5mm) as WEBR expects full-year adj. EBITDA to now be "marginally profitable" given that slower retail traffic patterns are expected to continue into F4Q on rising inflation, supply-chain constraints, and geopolitical uncertainty. Our income/dividend rating moves from 7 (same/higher) to 9 (pays no cash dividend) as WEBR suspended its quarterly cash dividend. WEBR is also pursuing a number of financial transformation initiatives, including (1) reducing its workforce; 2) reducing other COGS and SG&A expenses; and (3) tightening its global inventory levels and working capital positions."

I know how hard it is to be a publishing analyst, and I made many of these mistakes when I started. But that was almost 30 years ago! Today we have all kinds of data, and other analysts on this stock saw these results six months ago. In fact, the results reported today could have been obtained using nothing but a calculator.

You will not be a useful sell-side analyst on a well-followed stock, sector, or macro unless you have a substantial proprietary data and information advantage. This no longer springs from access to management like it did 30 years ago but from novel and innovative forms of data sourcing and analysis.

If you don’t have this, at least take the other side of the argument. Weber is a complete disaster at this point, to be sure. Nothing to add there. Piling on does nothing. But what about the brand? The business will stabilize at some point, they can be fixed in a few quarters. With a sub-$350M market cap on a strong consumer brand, there’s something to be done with it.

There are some other ways to have a real information advantage, like having very deep industry expertise in a complicated area or finding unfollowed or misunderstood stocks where investors have little to no information or analysis.

I expect to continue shifting to alternative sources for market analysis, equity research, and sector coverage. Large banks haven’t been in a position to produce real stock-focused research for about 20 years now.