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Author: TMFDoraemon Big red star, 1000 posts Old School Fool CAPS All Star Global Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 154  
Subject: Just a thought Date: 11/23/2011 8:48 AM
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Since I'm long Nintendo I'm considering this myself, so I'll share the idea first. The biggest concern with Nintendo is that smartphones and tablets eat away at its base of gamers. This is particularly the case for Nintendo's portable offerings.

A potential way to hedge that risk is to take a partial (or full) offsetting short in GameStop. They are just as leveraged to physical sales of systems and titles, so as games move online they're just as at risk, but unlike Nintendo they don't have the balance sheet strength or the valuable brands and innovation behind them.

Just a thought....

Nathan
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Author: anuragupta Big gold star, 5000 posts Top Favorite Fools Old School Fool Ticker Guide CAPS All Star Global Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 140 of 154
Subject: Re: Just a thought Date: 11/23/2011 1:57 PM
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I would not short GME - a company that has > 5% cash flow and has been actively buying shares. I have read RAM article on Fool where he gives GME the middle finger but I think this is a mistake. I am not bullish on GME but I won't risk shorting them. GME has been a fast mover that does not hesitate to change its model. It is already doing that my going aggressive on online stuff.

NTDOY is in many ways similar. It has shown ability to reinvent itself. Like GME it is coming off a great run. Future is bit tentative. The major positive for both, in my book, is excellent financials and reasonably ok management.

Anurag

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Author: TMFDoraemon Big red star, 1000 posts Old School Fool CAPS All Star Global Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 141 of 154
Subject: Re: Just a thought Date: 11/23/2011 2:43 PM
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I am not bullish on GME but I won't risk shorting them. GME has been a fast mover that does not hesitate to change its model. It is already doing that my going aggressive on online stuff.

Anurag,

I completely understand that argument. I'm not certain I will use GME as a hedge, but I do think it is an interesting idea worth considering and I'm not as repulsed by the idea for the following reasons.

With GME's financial strength, we have to remember that there are lease commitments in addition to the debt. So all of its commitments/liabilities aren't on the balance sheet. This, of course, is the same for any physical retailer and something I'll need to size up before taking any action. As far as going online goes, that's a good idea, but puts them more directly up against Amazon, Wal-Mart, and others with deeper pockets and additional product lines to support their online software sales.

Still kicking the idea around,

Nathan

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Author: anuragupta Big gold star, 5000 posts Top Favorite Fools Old School Fool Ticker Guide CAPS All Star Global Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 142 of 154
Subject: Re: Just a thought Date: 11/23/2011 2:58 PM
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I have used GME sparingly but I can say that WMT and AMZN can't compete to kill it primarily due to warranty, trade-off and access to physical stores for these issues. This is quite a big deal, I feel. Now that they are expanding into used Apple products as well, it should be an additional revenue stream. I would be more comfortable buying a warranty based used Apple product from them for some extra buck than just an online purchase from AMZN or elsewhere. That said, I have to say that customer service from AMZN on any item that ships from their store is top notch but that is all new merchandise. So GME has a niche here

Anurag

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