The market was up modestly today as earnings were mixed and macro data was as non-existent as leprechauns, free will, and married women who swallow.  Seriously, macro data was more fallow than Betty White’s uterus so investors were left to sift through earnings reports and finally get around to petitioning the CFA society for their money back for wasting their time getting that worthless designation.

The only moderately interesting macro news was that mortgage refi demand reached a 15 month high thanks to record low rates, homeowners needing to find a way to lower monthly payments, and ingesting a shitload of those funny looking mushrooms.  Refi applications were up 17% which is the most since May of 2009 and indicates that homeowners are looking to get more liquid (and when Money McBags looks to get more liquid, he usually reaches for a Jack and Coke hold the Coke).  Of course the banks are likely to reject the majority of those refi applications as most are likely coming from already horrible credit risks and are going to be foreclosed upon anyway, so I guess the market has that going for it, so that’s nice.

Internationally, not much shit was going on either except in Germany where shit is always going on as scat films are the national past time (along with losing wars and slow dancing to the musical stylings of David Hasselhoff).  Germany’s retail sales were revised upwards after the Federal Statistics Office Destasis (which Money McBags is obligated to point out is an anagram for “AIDS Test,” something Europe’s economy clearly wouldn’t pass with flying colors) saw an uptick in furniture sales, household appliances, and cheese platters (and don’t shoot the messenger on that one, Money McBags is just reporting the news).  With most of Europe descending back in to a recession out of which they may never have ascended, Germany is going to be a key driver of the continent’s economy so an upwardly revised retail sales number is obviously good news (though not as good news as free Julia Stegner Calendars).

In stock news, BJs choked on earnings today spitting out $.67 eps for the Q which was below analyst guesses of $.73 for which they blamed WMT’s aggressive price cuts where for $10 customers can now get everything they want.  It wasn’t just a bad Q that made BJs go down, but it was also bad guidance as the company took it on the chin and cut their forecast to a range of $2.40 to $2.50 per share from $2.58 to $2.68 and analysts were guessing it would be $2.67.   This sloppy BJs Q should make investors a bit more nervous as BJs sells cheap shit and if they are seeing a slow down as competitors cut prices even more, no matter how bulls try to spin it or phrase it, not even a cunning linguist can be happy with this BJs result and guidance.

Deere hopped to a good Q but disappointed the street when they said the dough they will be bringing in from Europe will be down 15%-20% due to weakness in the livestock and dairy sectors (which is strange because Money McBags has been to Europe and has seen tons of pigs and cows there).  They did see strength in US and Canada thanks to sales of harvesters and big tractors as farmers prepare for the coming apocalypse (or they just build up machinery while commodity prices are high and their earnings are rising, take your pick).

Finally Target hit the mark by matching analysts’ earning guesses of $.92 per share despite lower than guessed revenue.   This story is becoming more familiar than Snow White, a Christmas Carol, or any Penthouse forum letter as companies continue to beat or meet earnings due to operational efficiencies (read: firing more people) while missing on the top line (read: the fired people can’t afford to buy shit any more).  Target’s new growth strategy is to offer 5% off to customers using a Target credit card (and Money McBags sees that ending horribly as Target’s demographics probably skew subprime and their credit scoring models probably skew shitty, so look out for bad debt expense), to emphasize food sales, and to change their name to WalMart.


In small cap news, American Apparrel is dropping to zero as they are breaching all sorts of loan covenants and have internal controls about as solid as the proof of supply side economics.  The company has had declining same store sales in 11 out of the last 12 months, is forecasting more negative cash flow, and is run by a guy who has had more sexual harassment charges against him than Mark Hurd, former Senator Bob Packwood (and Money McBags derives much glee from a man named “pack wood” so vehemently trying to pack females with his wood), and Abe Vigoda combined.  Money McBags has never followed this company closely but even Meaghan Chung could probably have been able to tell that things weren’t going to end well for them, especially after their auditors quit on them earlier this year.  That said, before this company ceases to exist, we need to recognize the influence they have had on society such as bringing Porn Stars to the mainstream including WGP favorite Faye Reagan.

And Money McBags finally got to breaking down KITD’s Q earlier today and the analysis was so thought provoking that even the CEO tweeted about it (no really, he did).  So Mr. Tuzman, Money McBags is glad you enjoyed his work and trust me that when he called you a hermaphrodite (well your “aggressive humility” strategy to be exact), he meant it in the nicest way.  That said, Money McBags would welcome you to come on WGP and answer his questions about KITD and talk strategy.  If you strip out the dick jokes and the boob pics from WGP (which would be a bit like stripping the color blue out of the paintings from Picasso’s Blue Period or stripping the money shots out of bukkake films), you will find that Money McBags’ analysis is more thoughtful and even handed than the shit you find on the street as not only did he spend 5 years working for funds on the buy side, but his agenda isn’t to get institutional investors to trade through him, rather it’s to shed some light on interesting companies and make money on those companies in order to afford a threesome with the lovely Hanna Hilton and Alice Eve while slowly sipping on chilled baby unicorn tears through a straw made of gold and the dreams of the innocent and hopeful.

That said, these are things he’d like to understand in more detail about KITD:


1.  The competition.   Yeah, you can make fun of the online video platform providers for having a commodity business, but what about your business isn’t a commodity?  What is it that you do better than others?   Or is this really a land grab game and you are in the best position to grab the land given your balance sheet and brand equity.  You have talked about this in generalities, but Money McBags would like to better understand.  For instance, you said you grew your relationship with GM by 3x once you acquired that customer relationship.  What services/solutions did you sell them to grow that relationship that the previous provider could not offer them?

2.  If the market is growing 40% per some industry reports, how the fuck are you able to pay the low multiples you have been for acquisitions?  Why would those companies not hold out for more, or just grow 40% with the market?  Again, what is it that you do to these businesses to energize growth?

—-

3.  What the fuck is going on with even hinting at a share buy back after you diluted Money McBags and other shareholders the other month because you saw such great opportunities and wanted to have a war chest for presumably when Brightcove goes public?  Money McBags gets that your stock is cheap (just re-read his analysis), but WTF?


4.  What are operating margins going to be like going forward and what kind of leverage can you get in SG&A and marketing costs?  And didn’t that question sound as boring and douchey as a sell side analyst?  Should I next say it is for my model (though this is my model so that should make it ok)?

5.  Is it true what they say about the girls in Prague and do they really like playing chess?

6.  What is the real deal with DSOs?  Let’s talk shareholder to CEO about this.  What would DSOs have been last Q without the statistical aberration and if that is all it was, why didn’t you explain it then?  You’re certainly articulate enough to do so, so what happened?


7.  Whose idea was the video conference in front of a bunch of TVs and how can Money McBags get The Price Is Right, Baywatch, and Barney and Friends on them next time you have a video conference?  Should he send his requests to the forgotten Daniel Goodfellow?

Those are just off the top of Money Mcbags’ head, but he will have plenty more when you are available.  Shoot Money McBags an email at moneymcbags@gmail.com and let him know what works best for you.

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