The Greek debt crisis in Europe is still causing uncertainty in the markets as the leaders of the EU gave a tepid, vague, and Spicoli-ian response to their discussions and plans to bailout the Greeks.  The president of the EU, some guy named Jose Barroso who also doubles as the Prime Minister of some place called Portugal where he is said to survive off of the magic lillies from the river Tejo opined: “There is an accord.”   He then went on to give a little more detail by saying: “it’s a Honda Accord, but still it’s an accord.  Oh I keed I keed.  We have a great accord, for me to poop on” as apparently Triumph the Insult Comic Dog is big in Portugal these days.  German Chancellor Angela Merkel then said: “Greece won’t be left alone but there are rules and these rules must be adhered to. On this basis we will agree on a statement.”  Of course the rules are that Greece has to drastically cut its spending, increase many of its taxes, and be home before 9pm, but the good news is that the leaders of the EU have finally agreed on a statement.  So whoop-de-dam-doo, we have a statement.  Unfortunately Money McBags has yet to find that statement anywhere and unless the statement is “we’re bailing out Greece, now pass the saganaki,” it is unclear what has actually been accomplished despite Herman Von Rompuy claiming that the EU will provide “determined and coordinated action if needed.”  That’s great to know, really, but if you could provide that action BEFORE THE FUCKING EU IMPLODES, that would be much appreciated.  You know Mr. Von Rompuy, if that’s even your real name, the rest of the world is trying to run an economic recovery here so could you stop pussyfooting around (unless it’s your foot and Abbey Lee’s pussy, then please take your time) and lend the Greeks some fucking money already.  Jeesh.  I haven’t seen a supposed plan with fewer details since Hank Paulson scribbled his TARP strategy on the back of a napkin using only ketchup packets and Alan Greenspan’s tears.  The EU leaders are being so vague they are making Sorities paradox look easier to reach a conclusion about than Sarah Jessica Parker’s gender (trick question, because she’s a tranny).

As for the US macro economy, initial claims for unemployment were out today showing a drop of 43k last week to 440k overall.  This is lowest level in five weeks and may signal a “drop in the administrative backlog” which of course was likely caused by not having enough administrators to process the claims since most of the administrators had been laid off.  The US economy appears to be stagnant right now and the question remains how long any recovery will take. 

As for stocks, Pepsi reported an inline quarter and reaffirmed guidance and announced they will be increasing their share buy backs due to stronger than expected free cash flow.  Earnings were driven by their snacks business line which feature such products as Doritos, Lays, and their new launch of Cheetos’s Atherosclerosis sticks with the slogan “turning even your heart attacks orange.”  The company thinks they will have low teens 2010 earnings growth and is currently trading at a perfectly respectable 15x 2010 estimates.  If Money McBags did not pick KO in the Pepsi challenge, he might consider adding a little PEP here.

In small cap news, not a lot is going on today as WGO is about to drop through ther support levels and EBIX is about to test the $14 level.  As far as new information, an analyst from SocGen initiated coverage on KITD with a sell rating and a $9 price target citing concerns about KITD’s lack of profitability, potential future goodwill impairments, and receivables growth outpacing revenue growth.  Now just two weeks ago Money McBags broke down KITD for all of you with the main points being that they are in a growing market and are forecasting $13.5MM of EBITDA next year while trading at cheap EV/EBITDA and revenue multiples.  As for SocGen’s criticisms, first of all, a bank that almost went under due to a fraudulent trade shouldn’t throw stones, unless those stones are made of diamonds, gold bullion, and Alexs Texas’s behind and aimed at those investors who lost money.  Secondly, KITD’s receiveables did rise as they made several acquisitions and consolidated those receivables.  The hope is that their collections will be better than the acquiree’s and that they can churn out better revenue growth.  Money McBags does agree that it is something which needs to be watched.  However, SocGen’s valuation might as well have been written in French because it makes less sense than people who give a crap about the Sports Illustrated Swimsuit issue (not that Money McBags is against scantily clad lovely ladies, but we have something called the internet which makes the SI Swimsuit model look about as risque as a Nun showing some ankle or Jay Leno’s monolgues.  Honestly, the most entertaining part of the SI Swimuit issue this year was finding out there is a model named Cintia Dicker (dicker?  Money McBags doesn’t even know her.  Though to be honest, he would do more than just dick her)).  The analyst’s $9 valuation is achieved by taking some weighted valuations (including a $10.60 value derived from a DCF, which is higher than the current $10 price) and applying some sort of sector, company, and speculative discounts to that weighted valuation (why the discount isn’t just put into the actual discount rate of the valuation is beyond Money McBags, but then again, so is the appeal of American Idol, so what do I know?).  Anyway, Money McBags hasn’t seen anything that contrived since Michael Jackson married Elvis’s granddaughter.  The analyst took down the valuation by 5% based on “company appeal” because of KITD’s low liquidity.  Excuse-moi?  Comment t’appelles tu?  Merde Tete?  The main point is KITD is a speculative play, something which Money McBags said in his initial review of them and that is why Money McBags is not yet an owner.  That said, the company is a market leader in a fast growing market.  Yes, the acquisition model is a bit worrisome and the management team is a bit too salesy, but there is real potential for a company like this with locked in recurring revenues from Fortune 100 companies, to be a big winner.  It is worth following KITD and maybe even buying if you can comfortable with the risks, that said, it is not a “sell” as SocGen so daintily pulled out of their derrieres.

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