Posts tagged AIG
While there may have been a tsunami in Japan (and Money McBags heard rumors that it was caused by everything from Godzilla and Mothra learning that they had invested their savings with Bernie Madoff to a rush to the Apple stores to buy the new Hello Kitty themed iPad2), there was a spoogenami in the market as investors once again proved to be symphorophiliacs and fondled their long assets over the economy and geo-political peace getting ready to explode like a bad case of beaver fever (and unfortunately not the fever Money McBags has for Kate Upton’s beaver). Middle East uprisings? Jizzzzz. Falling consumer sentiment? Double jizzzzzzzzzzzzz. Job openings drying up worse than Tony Danza’s marriage? Who’s the fucking boss jizzzzzzzzzzzzzzzzzzzz. The worse the news, the more investors buy the fucking dip because, well, because Uncle Bennie would want it that way so just remember that the next time NFLX drops below $200 or support levels get blown more than Enrico Ponzo’s cover.
As for macro news on Friday, the University of Michigan’s consumer sentiment index fell to a 5 month low as people realize they need money to actually buy shit (well, at least until the crash of the ponzeconomy™ and the return to the barter system). The preliminary March reading came in at 68.2, down from 77.5 in February, and well off the median forecast of 76.5 among economists who once again show there is not one data point to which they can’t find the fat tail. That said, Money McBags gives a shit about anything that comes out of the University of Michigan (except for maybe Selma Blair) because there is a reason it is a safety school.
In other macro news, job openings dropped 161k to 2.76MM which was a 5,.5% fall and means there are fewer openings than in an imperfortate anus. The data points to 5 people now vying for every position, though twice that if the position is the rusty bike pump. When the recession began in December 2007, there we 1.8 people going for every job so if the (No)Labor Department can just remember to carry the one and continue to cut the labor force participation rate in Money McBags’ “Fuck Off Strategy”, we should be back there in no time.
Elsewhere, business inventories rose 0.9% in January to their highest level in two years which might be meaningful news if this weren’t already March. Also, retail sales posted their largest gain in four months as consumers increased purchases of autos, apparel, tiger’s blood, and bras to hold their monkeys (and um, really? Shit Money McBags has heard of a titmouse, but a titmonkey? What the fuck is this world coming to (other than Brooklyn Decker)?). The rise in retail sales was the largest gain since October and the eighth consecutive monthly advance as rising oil prices did nothing to dissuade rich assholes from spending some of the paper profits they have made thanks to the Federal Reserve/White House/Wall Street money printing cartel where greenbacks flow like Clarence Thomas threesomes. But just imagine how much stronger retail spending would have been if Warren Buffett hadn’t only paid himself $100k (and note to assholes writing that story who make it seem like Mr. Boofay is some kind of fucking saint and man of the people for taking such a low salary. 1. The guy is worth $50B so um, real fucking magnanimous of him there, really, it’s like applauding Hugh Hefner for not sucking every tit. 2. The guy is living high off the hog thanks to the government bail outs so if he were really magnanimous, he would give that $100k to Hammerin’ Hank Paulson. 3. As Charles Barkely would say” “Shut the hell up.“).
Internationally, consumer prices rose in China by 4.9% thanks to food prices rising 11% in February which means more people will have to opt for the cheaper non-pee pee flavored Coke. Additionally, Chinese PPI was up 7.2% and the rise in prices across the board is more worrisome than being David Davis’ barber. With China fueling global growth, any attempt by the government to curb inflation may cause a slowdown in the world economy which would be as helpful to this recession as a right sleeve is to Aron Ralston so this bears watching (while this really bears watching, and this bear is watching).
In the market Ann Taylor jumped up 12% after a good Q (and Money McBags just spent 30 minutes trying to write an Ann Taylor joke and all he could come up with is that it is an anagram for “try on anal,” so do with that as you will). Steel manufacturers rose across the board after Steel Dynamics increased their dividend and gave good guidance thanks to strong demand in their rail business and they hope to continue to prove that whoever smelt it, dealt it. Finally AIG was up ~2% after offering to buy back $15.7B in MBS the government took from them during the financial crisis. When asked about the risk, AIG’s CEO reminded investors that if the MBS fail, the government will just re-take them from AIG so the company has less downside than a blumpkin from Maria Fowler because that is what happens once you slide down the slippery slope of moral hazard.
In small cap news, Money McBags favorite SAAS put up a “meh” Q as their growth was a bit shittier than Money McBags had guessed (this is Money McBags’ initial break down of their business, and this is Sarah Shahi), their marketing spend should continue to sink eps as they try to grow faster than Sex.com’s valuation, and their software growth guidance failed to reach prior growth levels (they said growth will get back to 25% to 30% by year end and it was at >40% for the three years prior to this one). Below are the quick positives from the call:
1. Booking revenue grew by 98% on the same number of deals closed, which means they are moving more upmarket than Bree Olson. On the call they said they recently closed two deals with Fortune 500 companies so this is fucking great news, though not as great as finding out that Jessica Biel is now single again. Not only that, but one of their larger deals came from their joint relationship with salesforce.com so if that partnership can continue to be fruitful, that will be jizztastic.
2. Their legacy telephony business is done eating dick. That business should level off or grow from here as >50% of telephony revenue is now coming from their software customers, so that is a marginal positive.
3. They continue growing in Europe and the Philippines and the Philippines has a fuck load of call centers so that is a market they need to penetrate.
4. They have 20 sales people but open recs for another 13-15 more and this is one reason why their marketing spend keeps increasing but Money McBags loves when growing companies expand their salesforces because you need to get the word out to bring in businsess (of course if the word they are getting out is “harder” and they are Jennifer Ellison, then even better).
So what do we do here? Keep holding the fuck on. Seriously, nothing about the story changed and as long as this company can keep growing the software business, there is ~$1 of earnings power here 3 to 4 years out and the company is trading at 3.5x that which is cheaper than sardines in Redondo Beach. The bad news is that in the short term costs are going to be above Money McBags’ expectations and revenues aren’t growing as fast as he would like, so he is taking down his 2011 eps guess from $.17 to $.03, but it sort of doesn’t matter and that is the point. They could easily spend less on marketing and be profitable, but they want to grow faster and bigger than a Victor Conte client so it is what it is. This is a name Money McBags just owns and doesn’t really give a fuck about the day to day or Q to Q because as long as they don’t fuck anything up, this will be more of a long-term winner than Diane Lane‘s husband.
With nothing happening today in the market, Money McBags decided to use the Twitter to get his market on in 140 characters or fewer (and none of the characters were Humbert Humbert, Gloria Delgado-Pritchett, or Mr. Horton). Below is what you may have missed:
1. MMB back tomorrow. spent today shoveling, wondering who keeps giving AIG cash, and buying Hef gift for his new bride http://fxn.ws/glPm3j
2. AIG gets lines from 30 banks http://bit.ly/fJ7APb in order to repay those banks. also being sued by ponzi family for trademark infringement.
Twas the night before Christmas, when all through the White House
Not a politician was stirring, not even a louse;
The economy was flung by Timmy without care,
In hopes that St. Bernanke soon would be there;
The regulators were nestled all snug in their beds,
While visions of trannies danced in their heads;
And Obama in his ‘kerchief, listening to his rap,
Had just started contemplating the US debt trap;
When out on the lawn there arose such a clatter,
Tea partiers? Femen? What was the matter?
Away to the window Obama flew like TARP cash,
Which even Kashkari now admits was too rash.
The buffoon with the breasts, you know the dodo
Was heard in the back, cackling on her fake news show,
When, what to Bill Clinton’s wandering eyes should appear,
But a man with no toupee, who loved to interfere,
This bald little man, who kept the economy in the tank,
Obama knew in a moment, it must be St. Bernank.
More rapid than quant easings his governors they came,
And he whistled, and shouted, and called them by name;
“Now Dudley! now, Bullard! now, Tarullo and Yellen!
On, Duke! On, Raskin! Leave Hoenig, don’t tell him!
To the top of the press! We hear the call!
Print money! Print money! Print money for all!”
The policies of Keynes they say will certainly fly,
And if it meets with an obstacle, make Greenspan the fall guy.
So up to the money printing press, the governors they flew,
The sleigh full of jobless; Goldman bonuses too.
And then, with a crashing, Obama heard on the roof,
The crumbling of Fannie Mae, gone with a poof.
As Obama drew in his head, PIIGS falling all around,
Down the chimney St. Bernanke came, holding interest rates cockposterously down.
He brought a wealth transfer, the middle class under foot,
But hoped to keep the market rising with the Bernanke put;
A bundle of papers he had flung on his back,
Shares of Netflix and Apple, T-Bills in a stack.
His policies confounded, his balance sheet so scary!
Mortgages under foreclosure, tax payers be wary!
His droll bankster friends, who thought up CDOs,
Could be heard partying in back, with their lobbyist hos.
Fillings of gold he held tight in his teeth,
While visions of Japan circled his head like a wreath.
He had a currency to debase, it was said on the Telly,
And lucky for taxpayers, a bowlful of jelly!
The economy he would hump, like another old elf,
And Obama laughed when he saw him, as if he sold an AIG shelf!
A wink of his eye and a nod to the Fed,
Mo’ money, mo’ money, mo’ money to dread.
He spiked the yield curve, claiming that surely will work,
And created moral hazard for banks, what a fucking jerk.
And laying his middle finger aside of his nose,
And laughing at the suckers, up the printing press he rose!
He sprang to his sleigh, to his team gave a whistle,
And away they all flew, giving common sense a dismissal.
But Obama heard him exclaim, ‘ere he drove out of sight,
“Buy the fucking dip, and it all will be right!”
Editor’s Note: Money McBags will be off until next week for the holidays, though it is possible he will do something on the twitter or the facebook or Lisa Ann‘s face between now and then (though hopefully the later of the three). While loyal readers know Money McBags lights the menorah, he is happy to join in the pagan festivities right now (such as Jebus’ birthday, Kwanza, and Festivus) and spend a little time on himself. That said, Money McBags does firmly believe in the holiday spirit, and the charity he will be supporting this year is Charity Hodges. He hopes you all find causes to give to that are as near and dear to your hearts as Ms. Hodges is to his. If you need to get in touch with Money McBags before then, he can always be reached at email@example.com or just leave a comment. And if you liked the poem, forward it on to friends, siblings, and Natalie Portman (or just forward it on to her) as a way to spread cheer during this holiday season.
The market was relatively flat today as investors were focused on figuring out how to build rocket ships to reach the newly found Goldilocks planet (where the distance from a star, surface area, and moon position are all just right to make it potentially habitable) to start a new economy as the current one is more fucked than Greg Giraldo’s liver (too soon?).
There were a flurry of economic reports led by Money McBags’ favorite, the (No) Labor Department’s release of new claims for unemployment which dropped to 453k (until it is revised upwards next week) from 465k (or the newly revised upwards 468k, feel free to use whichever made up number you please and avoid the government’s “Hold the shock, and hope for no awe” strategy entirely). Analysts had guessed that the number would drop by 5k to 460k or 463k, whichever fits your fancy (and this fits Money McBags’ fancy), so the new data can be viewed as a slight positive, well, except for the 9MM people still receiving unemployment, the ~20MM people who remain unemployed, and anyone deluded enough to to think a marginal relative beat by one number makes up for that number being not just fuck awful in absolute terms, but Jennifer Connelly‘s acting fuck awful.
In other slightly positive news, Q2 GDP was revised up from 1.6% to 1.7% after the Commerce Department misread the memo where they are supposed to announce good numbers and then revise them down as opposed to announcing bad numbers and then revise them up (that is if either 1.6% or 1.7% growth were actually good numbers, but you understand about what Money McBags is talking). Americans saved 5.9% of their disposable income in the Q, which at the rate of potential hyperinflation and the potential death of fiat currency should be enough to at least provide a week’s worth of tinder to keep consumers warm as the recession moseys on in perpetuity (or at least until after the global ponzi scheme crumbles and is rebuilt, so shall we say, Friday?).
Also, according the Chicago ISM, business activity picked up as the business barometer climbed to 60.4 with only a slight chance of showers while not one of the 57 analysts thought the number would be above 58.3. So we have four choices here as to what happened: 1. The number was completely fabricated. 2. Analyst models are no longer calibrated to what is happening because for the 42nd time in the past month, those models are based off past data when the economy appeared to mimic a normal gaussian bell curve and that quaint view of the economy died with increased global correlation and the exponential effects of compounding causing fatter tails than the one on Ines Sainz. 3. Manufacturing in Chicago was up because the fucking Bears are 3-0 and everyone wants to buy Jay Cutler jersey before he implodes like, well, like Jay Cutler. 4. All of the above.
Internationally, Irish eyes aren’t smiling anymore as Ireland is taking over another bank, this time it is Allied Irish Bank which is the country’s 2nd largest bank (though Ireland’s second largest bank is a bit like being Lance Armstrong’s second largest testicle, but whatever) and the 4th bank that Ireland has nationalized. The bank still needs to raise ~5.4B Euro and to do so will consider selling its shares of M&T bank, selling shares of its own stock, and selling Ireland’s own Claire Tully to the highest bidder. But it’s not just Ireland that is continuing to teeter under an increasingly growing debt burden, as Spain’s likely inability to maintain their current economy is so fucking obvious that even Moody’s downgraded the country, and remember, Moody’s is so bad at their job that they missed the biggest financial meltdown of the past ~70 years, so if they are pre-blow up downgrading a country, that country must be more fucked than the girl at the bottom of a fat camp cheerleading pyramid. Money McBags said it yesterday, be very fucking wary of what is going on in Europe right now because the market doesn’t match the economy like Lindsay Lohan‘s carpet unlikely matches her drapes.
In the market, AIG was up 4.5% as they came to an agreement to along with Goldman Sachs (Money McBags means the US government, sorry he always gets those two confused) to repay tax payers the money used to bail AIG out. The deal is a bit convoluted with the government exchanging their preferred shares for common shares and then hoping to issue those common shares in to the market in blocks over an 18 to 24 month period which makes the US government the middleman, or the lucky pierre if you will, of this entire sordid transaction. Until the shares are sold, the US taxpayers will own ~92% of AIG which means the company may need to order double the lady fingers and punch for the annual shareholder meeting. Elsewhere, Hertz was down ~9% after Dollar Thrifty shareholders crashed the proposed offer by Hertz to buy the company.
In small cap stocks, CRUS dropped ~6% after yesterday’s rise as fears are that AAPL will be replacing them in the iPhone 5 and iPad 2 and this has been the issue with this company. AAPL basically drives their revenues right now so if they lose their slotting, they will be more fucked than Heather Mills and her partner in a three legged race. This is the reason the company is so cheap despite the fact that they have been putting up huge quarters and will put up another huge quarter shortly. Where there is smoke, there is usually Paris Hilton, but there is also usually fire and Money McBags would be trimming like shit in to this news because if it is accurate, CRUS will tumble. Just ask yourself, would I feel stupider?
In other news, DGIT rocketed up by 8.5% to $21.75 and remember Money McBags told you about this company a month ago when it was ~$16 after an unwarranted sell off. The news today was an initiation by Northland Securities at Outperform (and yes, that was funny because the thought that something called Northland Securities can move a stock is as ridiculous as thinking that lovely lady you paid $20 for a dance with last night was going to use that $ on her college education) and an announced acquisition of something called Match Media Point for $26MM (~6.5x TTM EV/EBIDTA and ~1.5x revenue) which somehow gets them further digitizing the direct response advertising market.
They should now have ~$53MM cash and with EBITDA guidance of ~$105MM (not including the new acquisition) are back up to trading ~5.5x EV/EBITDA despite revenue growing 20%+, EPS doubling last Q, and EBIDTA expected to rise from ~$74MM. Plus they are the market leader in a growing space as HD adoption continues to gain steam (especially internationally). So despite a reader in the award winning When Genius Prevailed’s comment section not making cogent arguments, not understanding the profitable growth of this company, and using outdated stats to somehow try to make an argument that DGIT does not create value (and citing their 2009 FY FCF of $35MM to make a point is like using a 2005 pic of Heidi Montag to claim she has small boobs since the company has already brought in ~$35MM in FCF in the first 6 months of this year using ~$42MM CFO and ~$7MM investing cash flows as a proxy). The company remains oversold and should probably trade up into the mid $20s before you want to seriously re-evaluate and take some risk off the table. Extreme Reach and Ascent Media do likely pose some threat to their business but that is way out in the future so be happy with your ~30% monthly gain, and if you want, take some profits, but there is still at least ~10%-20% upside here.
8/6/10 Midafternoon Report: Jobs number disappoints again as people ask “Brother, can you spare a dime, and maybe a 401k?”
The market fell for most of the day before being bizarrely bailed out at the close for no reason other than to seemingly allow Money McBags to write that alliterative phrase. The big news was that the jobs report once again disappointed like the other side of a Goldman CDO deal or Tara Reid’s plastic surgeon. The July jobs report showed the economy lost 131k jobs driven by a 143k decline in temporary census workers, a 59k decline in other government workers, and a 99% decline in hope. The positive spin is that private employers added 71k jobs though that was below the 90k analysts guessed but up from the DOWNWARDLY REVISED June made up number of 31k (and that was DOWNWARDLY REVISED from the bogus 83k number which Money McBags eviscerated last month and means that at least 221k jobs were lost last month, not 125k, but what’s another 100k to the 16.4MM people unemployed?).
With all of the revisions, the headlines and the numbers are less believable than Lawrence Fishburne ever being up for Father of the Year or the Laffer curve. Rather than trusting the headline, Money McBags once again went to the BLS’ actual press release (and as always the “L” in BLS is silent) to look at the numbers since headline writers and financial analysts treat due diligence as if it were going to give them herpes of the brain (and not regular herpes, but porn star herpes).
The most interesting thing that Money McBags found is that the fictitious birth/death model, which may be the most famous black box Robert DeNiro has never entered, had little impact on the manipulated numbers. The birth/death model adjustment was only 6k so the 131k reported number was likely at worst 137k. That said, in breaking down the numbers we see that 59k non-census government jobs were lost, and those may or may not have been permanent and may or may not include Maxine Waters’ husbands’ bank auditors, but it is something that has been glossed over by the media. Sure seeing private sector job growth is important, but if it is at the same level as lost government jobs, we’re just robbing Peter to pay Paul or robbing Spitzer to pay Dupre (which actually, wouldn’t be so bad).
Money McBags did find one discrepancy as the BLS report says that:
“Employment in professional and business services was little changed (-13,000) in July. The number of jobs in temporary help services showed little movement (-6,000) over the month.”
And as you can see in the above chart, Money McBags did not factor in the 6k reduction of temporary jobs, assuming them to have been grouped in with the professional and businesses services (though they weren’t last month), so one might be able to further increase the jobs lost number by 6k, but people care less about 6k more job losses than Economists care about how their ideas work in practice (the answer is not good) or Britney Spears cares about underwear.
The unemployment rate remained at 9.5% thanks largely to another 350k people simply leaving the labor force (yes, the math is that convoluted) and thus causing that stagnant metric to be more misleading than the movie titled The Banger Sisters. But hey, as long as we keep losing jobs and the unemployment rate only gets better or stays the same, everything is fine. In fact, Money McBags suggests a radical, though more honest strategy, were everyone just leaves the fucking labor force by claiming they don’t want a job and thus the unemployment rate will artificially drop to zero and the government can pat themselves on their filibusters about what a great job they have done. Problem solved, election won.
Anyway, the real unemployment rate which includes those people who have become more discouraged about finding a job than Sisyphus was pushing that fucking boulder or Heidi Montag’s singing coach was trying to teach her to sing on key, remained unchanged at 16.5%. So the economy remains about as healthy as Dick Cheney’s fictitious heart.
Internationally, there wasn’t much news today other than that Russia continues to herd themselves some grains as the country faces it’s worst drought since Rasputin’s liver was fully functioning. The ban on exports of grain has caused a global spike in wheat prices and led to a rally among companies specialized in fertilizer (and Money McBags would love to fertilize her).
In stock news, KFT put up a nice quarter with profit up 13% thanks to their recently acquired Cadbury business which saw gum sales bubble up in Latin America, chocolate sales sweeten in Asia, and loads of soggy biscuit sales metabolize in Europe. Taking out the Cadbury acquisition, sales were up 2.2% but the company moved the low end of their organic growth guidance from 4% to 3% due to aggressive promotions in the US and the fact that people don’t have any money.
In other market news, AIG annonuced earnings and they either beat, missed, or came in-line with analyst guesses. The company’s financials remain more obfuscated than Caster Semenya’s gender and Money McBags would rather calculate pi to the 1MMth decimal using only a slide rule, a broken abacus, and Abe Vigoda’s nut hairs than analyze an AIG earnings release. The company claims their adjusted net income was $1.2MM on $2.2MM of operating earnings leaving adjusted eps of $1.99 but Money McBags trusts any of those adjustments about as much as he trusts Leprechauns.
In small cap news, TMRK traded off after a big jump yesterday on it’s quarterly earnings release. Money McBags wrote about TMRK yesterday and thinks it is an attractive long term hold (though not as attractive of a long term hold as Alice Eve), so he certainly likes today’s entry point better than yesterday’s which was likely inflated a bit by short covering. Like he said in his analysis, he is unconcerned by quarterly or even daily fluctuations as this is a core small cap position. QCOR also sold off today before recovering near the end of the day as the market is basically punishing any company that ran up on good earnings. Keep an eye on QCOR as you may get a very attractive entry point (though not as attractive of an entry point as Jenn Sterger‘s mouth).
In other small cap news, a tiny little company which Money McBags has written about before, FHCO (use the search box for his break out of their last Q and earlier company deep dive), announced their earnings today and the number was so bad that not even an FC2 could prevent it from giving someone AIDS. Revenue was down ~70% in the Q to $1.8MM and operating income was down 99% to $21k leaving the company with a whopping $0.00 eps. Wow. That sounds worse than the melodic stylings of Celine Dion and yet the company was only down ~5% because according to the company 2 big orders simply got pushed back. Whew.
The good news is that the the company said Q4 is proceeding as expected and that “the two pending orders represent significantly larger quantities than the customers’ most recent previous orders.” So in every thing but practice, the top line should be growing.
The bad news is that it’s not clear when the delayed orders will actually hit the bottom or top line as management also said “The Company cannot predict when the pending orders will be received or which quarters they will impact.” In addition to saying: “Delays such as these, which are usually due to bureaucratic issues, politics and/or changes in personnel, generally may last from 3-4 weeks to 6 or more months.” Money McBags likes that explanation a fuck load less than if they could have just said “we’ll send those orders out in Q4″ because it highlights that they have about zero control of their sales process as they are dealing with large public sector entities who either have or don’t have the funding. Since they have no idea when these orders will come in, they dropped their operating earnings growth from 30%-40% for 2010 to 10%-20%.
Again, Money McBags finds this to be an interesting, yet highly bizarre little company that actually has a decent business model and should start seeing some earnings momentum with the switch to the lower cost product. Their gross margins went up from 48% last year to 54% in this Q, though they were down from 58% last Q which Money McBags will assume is the result of underutilized factories due to having orders pushed back, but one should keep an eye on that (one should also keep an eye on Sofia Vergara).
Anyway, lets assume the company is telling the truth and the delayed orders are some bureaucratic snag because dealing with governments and public sector funding is more of a pain in the ass than a thrombosed hemorrhoid. The company was earning ~$7MM per Q in revenue but on the call they said an order of 12MM units had doubled to 24MM units so there is some growth to the top line. Therefore, let’s say they hit no more delays and can earn ~7.5MM in revenue per Q at a 54% margin with operating costs of ~$2MM (slightly higher than where they have been) and the company still doesn’t paying taxes. With those numbers, the company should earn ~$.28 next fiscal year (excluding any increase from these delayed orders being shipped in 2011) and it’s now trading at ~17x that but they pay a $.05 quarterly dividend (~4% yield) and have a decent enough balance sheet with $3.9MM in cash and no debt (though if orders keep getting pushed out, it will become harder to pay that quarterly dividend).
Last quarter when the stock was trading >30% above where it is today, Money McBags said “this stock is a bit ahead of itself unless they can continue to grow earnings at 20%+” so he certainly is a lot more interested in the company now than he was then, but the delayed orders do make him nervous enough to not yet take a position in the name (unless that position is reverse cowboy and the name is Sara Jean Underwood), so he’s going to hold off again on this low liquidity stock while the economy gets worse. In theory, they should actually do well in a bad economy because their funding is set, but Money McBags would rather buy it when their delays are fixed and he’s not left wondering if they will have the capacity to make up for the delayed orders while filling their new increased orders. If it gets to <$4, Money McBags will likely take a closer look at buying a position.
Anyway, have a good weekend and remember to tell a friend or 10k about Money McBags and the award winning When Genius Prevailed.
3/15/10 Midday Report: March Madness is officially here as Moody’s thinks people actually care about what they say
The market is flattish today, likely taking a breather to fill out its NCAA bracket while trying to sleep off the headache caused by Dick Vitale’s pontifications yesterday on how loving Mike Krzyzewski is post-coitus. That said, Moody’s is out warning that major economies such as the US, Germany, the UK, and Vivid Video may be closer to having their debt ratings lowered as growth may not be enough to “resolve an increasingly complicated debt equation.” Hey Moody’s, Money McBags has your increasingly complicated debt equation right here and it equals “go fuck yourself.” No really, do it. Money McBags is going to sit here and wait until you take your credit scoring model and shove it right up your asset backed security and wherever else the CDO doesn’t shine. Here’s the deal Moody’s, you are not very good at what you do, you are as good at your job as Bernie Madoff is at investing or Kirstie Alley is at dieting. You completely missed the whole fucking sub-prime collapse and you know what? That was your only fuckng job. It’s like if Robert Newman forgot to bring lanterns to the steeple of Old North Church on 4/18/1775 or US intelligence never found weapons of mass destruction in Iraq (umm, ok, scratch that one). So pardon Money McBags if he doesn’t give two shits about what you have to say, even if those shits are from a homeless AIDS patient with diarrhea and a massive anal fissure. Having you continue to rate debt is like if Ford re-hired the guy who designed the Edsel to produce a follow up called the Edsel Deuce or if Alan Greenspan were put back in charge at the Fed. The point is, even a blind microeconomist can see that the world economy might go to hell, so shut your fucking yaps and go crawl back in to the financial hole which you created. While Moody’s is rating credits, Senator Christopher Dodd is set to announce a tougher financial reform bill today. Unless that bill requires Moody’s and other credit rating agencies to put a disclaimer saying “We suck at our jobs” on every report they release, requires companies writing CDS to actually hold reserves on those CDS since, you know, they’re fucking insurance policies, and requires current and former Goldman Sachs executives to win popular elections before running the country, the reforms will simply be more government lip service (though if it’s lip service from Raven Alexis, then that is the kind of government action Money McBags can support). In other US macro news, industrial production rose .1% in February signaling a continued demand for computers and communications equipment. It doesn’t take a genius like Bill Gates or the guy who created the next great Olympic event (though NSFW) of muff guessing, to understand that technology is going to continue to grow and regardless of the global economy, people are going to continue to use it. Cell phones, computers, iPads, etc. are going to keep driving the way people interact with each other until we finally all just get chips put in to our brains (which is sometime in the next 30 years according to Ray Kurzweil) so being long technology even if this recession double dips is not the worst idea one has ever had (though it is slightly worse than taint tickling Tuesdays or the theory of general relativity).
In stock news, Phillips-Van Heusen acquired Tommy Hilfiger for $3B cash and stock as they apparently woke up thinking it was still 1991. PVH CEO, Ripped Off Van Winkle, said “Well we wanted to buy JAMZ and the company that makes those awesome Hammer Pants all the kids are wearing these days, but if we could only buy one of the three it was going to be Hilfiger. We just want to let people know that PVH is down with OPP.” Also, AIG is talking about cutting their previously announced bonuses by 30% in order to hopefully quiet controversy while still keeping the employees who almost caused a total global economic collapse. Whew. How would AIG ever operate without the people who fucking ruined it? In other news, LA county just retroactively gave Marcia Clark and Cristopher Darden bonuses for their handling of the OJ Simpson case while Tara Reid rehired her plastic surgeons. Siemens is shooting themselves in the face today by pulling the sale of their hearing aid unit. There is absolutely no reason you should care but Money McBags just wanted to see if he could type Siemens while keeping a straight face (and if you’re keeping score at home, he didn’t). Finally, WMT is up after a C analyst upgraded them to buy based on the potential for WMT to gain share from supermarkets and their pending world domination.
In small cap news today, FHCO is getting some national press as the city of Washington DC is handing out 500k of the new and improved FC2 which is not only cheaper to produce with higher margins, but it also tastes great. Money McBags wrote about FHCO about 2 months ago and all they have done since then is go up like a 45 year old virgin’s johnson after viewing this delightful NSFW shot of Money McBags favorite Alice Eve. The company has probably run a little too much but good things are still happening with a potential retail partner still out there and country specific AIDS programs just getting traction. Plus there is that little thing about AIDS not going away. In other small cap stocks, IBKR got downgraded today by KBW due to the ratio of actual to implied volatility in the options market showing no rebound and due to another little thing called “having no actual control over your business model revenue stream.” IBKR is both a market maker for options (though taking on no counterparty risk) and provider of a trading platform for day traders. The problem they have been running in to is that the options market requires them to hedge the volatility and when the actual vol differs greatly from the implied vol, they can find themselves in a situation where they don’t make any money as their margins get thinner than John Edwards’ excuses. Their CEO claims they have $2 in annual earnings power and over a long time horizon their earnings should be smoother than Olivia Munn after a cocoa butter bath, but that long time time horizon may be 100 years at this rate. The fact is they have lumpy quarters and less ability to control the lumpiness than Michael Jackson has the abilty to moonwalk ever again. So if you believe over the long run that those quarters will even out and there really is $2 of earnings potential, buying this stock at 8x those earnings on a down day due to a downgrade is not a terrible entry point. That said, value investors have loved this stock all the way down from $35 and it’s one of the few companies not to have participated in the rally.
3/11/10 Midday Report: Yield curve spread continues to fatten, claims it wants to star in Precious sequel
The market is holding steady today as foreclosures in the US rose at their slowest pace in four years. While slowing rates of foreclosures are sort of pyrrhic news similar to declining new cases of AIDS or slumping sales of country music cds, a slower rate means a slower rising homeless population and that can’t be bad (unless you’re scabies). Though foreclosures were up 6% from last year, they were down 2% from January, and were aided by government legislation and loan modification programs such as helping homeowners to lower monthly payments, refi to lower rates, and break in to loan officers’ file cabinets to burn original copies of their mortgage documents. California saw default filings down 15% though still remained the state with the most default notices, but interestingly Florida’s defaults rose by 16% and Michigan was up a ridonkulous 59% which begs the question “who knew people still lived in Michigan?” Also making the market nervous today is investors increasing their bets on inflation with the yield curve within spitting distance of swallowing up its all time high. The spread between thirty year bonds and two year bonds is now 377 bps as investors are starting to demand more yield for buying long term bonds thanks to the potentially Madoff-ian style recovery the US government is attempting to manufacture by borrowing $7ishT which they will pay back later once they raise some more debt or win the Powerball lottery just a few billion times. Jobless claims were also out today and they fell by 6k to 462k which is also about the number of people who caught ear herpes from inadvertently turning on the radio to a Black Eyed Peas song. Economists were expecting claims to fall by 8k, so the number was slightly disappointing but the difference between dropping by 1.3% instead of the expected 1.7% is less meaningful than William Henry Harrison’s presidency or Tom Cruise’s marriage. While initial claims were slightly down, 4.56MM people continue to receive unemployment benefits and to put that number in perspective, it’s more people than the entire population of Irleand and only slightly less than the number of “working” actresses Ron Jeremy and Peter North combined to bone in the 1980s.
In international news, Greek workers have continued to strike with no flights, trains, or buses operating in Greece yesterday so it’s good that tourism only accounts for 15% of their GDP (and yes that was sarcasm). The Greeks contiue to cut their well chiseled greek noses just to spite their faces (and if they go near Maria Menounos‘s face, they will have to answer to Money McBags). Courts also shut down while hospitals remained with just emergency staff. Wow. So with no transportation, no laws, and little medical attentions, Greece has just become the Detroit of Europe. In other international news the Chinese CPI was up 2.7% which is below the government’s 3% target but a bit higher than estimates. Depending on which news source you read, the 2.7% number is either manageable or way too high, so draw your own conclusion (though if Money McBags were to draw a conclusion, it would probably look something like this(maybe NSFW)).
In stock news, financials continue to rally with AIG and C leading the way as Enron executives now lament not receiving a government bailout as they opine: “if only we had more time.” Money McBags remains less interested in owning C than he is in getting in to a tickle fight with Eric Massa (and honestly, Money McBags doesn’t care if it’s your 50th birthday but if you ever try to tickle him and your name isn’t Kate Bosworth or you weren’t born with a uterus, there will be a fucking problem). In other stock news Navistar continues to plunge after driving itself off of a cliff with an earnings number the other day that was only 1/3 of what analysts were expecting ($.23 per share vs. expectations of $.85). A spokesman for the company said “if you just round up the nearest dollar, we at least met expectations.” He then pointed to a spot behind reporters and yelled “Hey look. Kool Aid!” before bolting out of the room.
In small cap news, Money McBags still eagerly waits for a response from WILC COO Zwi Williger to the questions posed yesterday on When Genius Prevailed. Money McBags’ finger is now a Vern Troyer taint hair away from hitting the sell button on his computer to ditch his WILC shares. IMAX was out with their 4Q results last night and posted a profit while forecasting a “very strong year” ahead. Avatar helped fuel their profit for the year as people love getting motion sickness while not moving, yet it was not a huge contributor to Q4. The company continues to perform well as box office receipts for the first two months of the year are up 6x to $187MM. Additionally, their JV strategy has increased gross margins from 24% to 51% and they believe that they have a continued strong upcoming movie schedule with Alice in Wonderland, How to Train Your Dragon, and a 3D remake of Ishtar. The company just earned $60MM of EBITDA for the year and $20MM in the quarter with about $30MM of net debt so they are trading at around 13x an $80MM annual EBITDA run rate which isn’t crazy expensive for a compay producing these results. Of course one could argue that the current EBITDA run rate is way too low based on recent performance and growth of JVs. Now look, Money McBags has said the stock seems expensive, and it’s certainly not cheap, but they just blew away his expectations. They continue to outpace his skepticism so it is definitely worth doing more research on the name. The 3D trend apears to have more staying power than an American Idol winner and the JV strategy is ridiculously profitable. Money McBags only wishes they would show any of Gracie Glam‘s heartwarming movies in 3D, that is if he could have the theatre to himself.
3/8/10 Midafternoon Report: Market more mixed than reviews of Oscar telecast (and for the record, Money McBags gave it two thumbs in the ears)
The market is quiet today, likely still in bed after staying up all night to watch something called The Hurt Locker win so many Oscars that that the people who couldn’t get tickets to Avatar may now go see it (that is if Alice in Wonderland is also sold out and they hate fun). The biggest news in the markets today is that AIG sold the second of its crown jewels, their foreign life insurance business Alico, to Met Life for $15B and with both of the AIG family jewels gone, they now qualify for a spot in the 2010 Eunuch Olympics. A business hasn’t sold off two profitable units like this since Pam Anderson downsized her boobs (of course she had them re-inserted faster than Warren Buffett talks up his own book because you always have to keep the things that make you money). This sale gives AIG enough cash to pay some of their debt back to Uncle Sam and thus keeps their proverbial kneecaps intact for at least another couple of months because Uncle Sam doesn’t play when you have his money, just ask Wesley Snipes. Unfortunately, AIG still owes the US government another $50B and seeing as how they have now sold off two of their biggest profit centers and their business won’t generate $50B in profits until sometime around the year “two thousand and go fuck yourself,” it is unclear what tricks they will do next to appease Uncle Sam (Perhaps Uncle Sam will “lend out” some of AIG’s CDS expertise to China to try to smooth over relations and yield a happy ending for the two super powers). You just don’t take daddy’s money and get away with it.
In stock news MCD same store sales were up 4.8% in February driven by overseas sales and the $1 menu in the US. Money McBags is an owner of MCD as he believes in their affordability and brand equity in the fast growing developing nations. So even if Money McBags won’t get high off his own supply by refusing to eat the swill that they serve at McDonald’s (he would rather eat a Gabourey Sidibe burger out of the bun than whatever it is they serve at MCD’s), Money McBags believes in the company. In other large cap names, RIMM got an upgrade from the Bank of Montreal today which has driven the stock up almost 5%. The BMO analyst raised his price target to $88 citing expected strong Q4 sales, a potential guidance raise, and Apple aboot (BMO and RIMM are Canadian after all, eh?) to go out of business because iPhones are for sissies (ok, that last one may have been made up). Now look, Money McBags is never a fan of owning the second best competitor in a space (he’ll go Bang Bus any day over Backseat Bangers), but he will admit that he owns some RIMM simply because it is as cheap as a homless man’s balls for it’s growth as it is trading at less than 20x 2010 EPS estimates and less than 15x 2011 eps estimates despite continuing to dominate the business handset market like Nipsey Russell dominated the 1970s game show circuit (where he did more than just fill in Brett Somers‘ blanks). RIMM is getting 20% topline growth and 30%+ bottomline growth and you’re only paying 15x for that. The stock is still a reasonable buy but it is unlikely to be a longterm holding for Money McBags as their end game is becoming more challenging than playing herpes roulette with Paris Hilton.
In small cap news, apparently a fuckload of people dropped some acid this weekend and went down to the local IMAX to see Alice in Wonderland (and Money McBags would march his hairs to the IMAX if it were Alice Eve‘s wonderland they were showing. He’d definitely let young Ms. Eve mock his turtle while he chesired her cat.). IMAX theatres pulled in nearly $12MM this weekend as this 3D spectacle eclipsed even Avatar’s opening run and led IMAX to sell out every seat they had for the entire weekend. This has sent IMAX stock up 9% but Money McBags is still not buying as the stock is expensive and the movement today is likely retail money on the announced headlines. IMAX could run some more as its momentum coming out of Oscar weekend could be so great that it attempts to defy the laws of physics and create a coefficient of restitution greater than 1, but this story is longer in the tooth than Kirsten Dunst. In other small cap news, EBIX annonuced their quarter and is trading down despite a 55% increase in revenue, a 53% increase in net income (operating leverage be damned), a 99.5% customer retention rate for the year, $12MM in cash flow for the Q, and a forward p/e less than 15x. Money McBags has written about EBIX many times as nothing about the company makes sense and their financials and business are more opaquely complex than the Weiner process of Brownian motion (and I can assure you that is nowhere as dirty as it sounds). The stock is ridiculously cheap based on the fundamentals of the business but shorts have been all over it due to aggressive acquisition accounting, receivables growth outpacing revenue, the CEO having a bigger ego than Joe Francis has, and a proclivity to switch auditors at the drop of a questionable debit. Short activity was addressed on the call as a caller brought up that short exposure has climbed from 200k shares to 10MM in six months and the fact that EBIX has changed their auditors more times than Heidi Montag changed her face. CEO Robin Raina addressed this with some kind of Jedi mind trick ping pong analogy (no really he did) and a quote from some Latin American intellect whose name yields zero google hits (the transcript from the call has Robin “Making it” Raina quoting some guy named Joe Moppi which is either spelled wrong or more fictitious than EBIX’s growth rate, can we get an auditor on this?). Kidding aside, Money McBags still has no idea what to do with this company. He has a hard time believing it is total fraud but there is enough smoke to just keep him away from it. That said, if you can get comfortable with their numbers, the stock is ridonkuously cheap. Money McBags wouldn’t short it, but as always, there are easier ways to make money (like KITD, MLNK, or CRUS).
Wow. The market ripped up today like it was competing for the Ansari X Prize in 2004 or like it was rushing to claim the last seat in a dream Hayley Atwell-Kate Bosworth Ultimate Surrender match (nsfw, unless your work doesn’t suck). Technology led the way thanks to an upbeat report on chip sales and the fact that we are at the inflection point of exponential technological growth, regardless of the economy (or at least Ray Kurzweil’s fancy graphs say so*). Chip sales were up 47% from last year and .3% from December leaving Semiconductor Industry Association President George Scalise (whose last name is an unfortunate anagram for one of the world’s worst afflictions, “ass lice”) to explain that sales were helped by “growing demand for semiconductors used in personal computers, cell phones, automobiles and industrial applications.” He then pointed to the reporter and while being egged on by his minions used the old SIA favorite line, “Is that a pre-Moore’s Law semiconductor in your pants or are you just happy to see me.” Along wth a positive report on semi sales, consumer spending was up .5% despite incomes only being up .1% which led to the lowest savings rate since January of 2008, you know, back when the market was crashing because EVERYONE WAS FUCKING OVERLEVERAGED. So at least it looks like that problem has been solved. This country continues to treat savings like Lindsay Lohan treats vaginal hygiene or Larry Craig treats truthfulness, but hey, at least spending more than one earned sent the market on an orgiastic run today, so damn you common sense. In other macro news today, the ISM’s factory index fell to 56.5 from January’s 58.4, which was a 5 year high. While a number falling is usually a bad thing, unless it’s the number of times Sweet Homa Alabama is played on the radio, the ISM index was still above 50 and that magical made-up line of delineation apparently indicates the economy is still in expansion based on the at times subjective inputs of the purchasing managers reporting to the ISM. However, according to the ISM website, a “PMI in excess of 42 percent, over a period of time, generally indicates an expansion of the overall economy,” so that magical 50 number that people are claiming is good, could be as low as 42 and everything would still be ok. Whew, I am glad we have an arbitrarily declining scale to measure whatever it is the PMI measures, though perhaps they should hire some of the 20MM unemployed people to take more exact readings on what managers are purchasing.
In stock news, AIG sold their Asian life insurance unit to Prudential for $35.5B and PRU’s promise to love them long time. The sale will allow AIG to pay back the government and strategically rids them of one of their most profitable companies, thereby continuing AIG’s policy of doing things that suck. While selling assets is something AIG needs to do to get out of debt, selling their profitable business is a bit like McDonalds selling Burger King the rights to the Big Mac and thus leaving them with just the Filet O’Fish and Salmonella McNuggets. AIG is also determined to sell their US life business to MET, which means they can focus on their prized P&C business which was only one of the biggest reasons they underperformed last quarter. In other large cap news, Sandisk was up 11% today after raising their first quarter revenue guidance by 6% during Friday’s analyst day. This caused analysts to upgrade the stock including Wedbush’s Betsy Van Hees who had a sell on the company but was able to finally get the sand(isk) out of her vagina and raise SNDK to neutral.
In small cap news, Money McBags favorite MLNK shot up 6% likely on the positive semi news which should augur well for the computer market. MLNK still remains more undervalued than a taint licking. Money McBags broke MLNK down for all of you in January, but the company has treaded water since then despite the fact that their $.17 quarterly eps can easily turn into $.22 with just continued cost cutting. Add in just a Pam Anderson‘s dignity amount of growth and you’re at $.25 per quarter eps or $1 for the year. So with very little positive news, MLNK could take off and rise out of it’s way too cheap valuation of 10.5x eps and 4x-5x EBITDA with a ton of cash on the balance sheet. This stock should be owned by anyone who hates being poor, so Mickey Rourke need not apply. Also, another Money McBags stock which is frequently blogged about on When Genius Prevailed, RICK, briefly bounced up to Money McBags sell target of $16 today before getting absolutely ass raped around noon. No one has witnessed a nooner that violent since David Carradine dined alone in his hotel closet. Look at the chart below and notice right at 12:45 someone wanted to get the fuck out like RICK was two girls and they were the one cup. Huge volume. The stock usually trades about 200k shares a day and in a 15 minute span almost 600k shares blew out on the market. Perhaps every quant fund had Money McBags $16 price target hardwired in as the sell time as we all know Money McBags moves markets, or perhaps one of the 20 funds who own 600k+ shares had a little too much champagne in the chanmpagne room, but fuck did someone want out of this thing.
Money McBags is a bit flummoxed by the need to puke out so many shares and it reeks of a capital call, except funds should be relatively stable now, so this run for the door is more perplexing (and nowhere near as delicious) as teenage girls claiming that having anal sex still leaves them virgins.
Tomorrow’s blog may be out late, so follow Money McBags on twitter for updates.
*For those futurist tech geeks out ther Money McBags hopes to put his singularity near Kurzweil’s prophesized spiritual machines, especially if they’re as frisky as Riley Steele. So keep grokking Spock, my friends, keep grokking Spock).
2/26/10 Midafternoon Report: AIG loses more in Q4 than entire GDP of Malta, warns Botswana they’re up next
The market is a bit mixed today like the drug cocktail found in Brittany Murphy’s stomach. Sales of existing homes dropped for the second consecutive month, this time by 7.2% which is the second largest decline ever and is creating more of a buyers market than the internet did for newspapers. The decline was caused by the government tax credit winding down, the high unemployment rate, and the disappearance of the barter system. Economists actually expected existing home sales to rise so it’s good to see they are once again about as good at their predictions as Stevie Wonder is at being the seeker in a game of hide and seek (or as he calls it “life”). An interesting data point is that 38% of all homes sold were distressed sales. That is a remarkable number. So homeowners, look to the house on your left and look to the house on your right, because on average one of those houses is being foreclosed upon and your new neighbors may be a few tax brackets below you. In more positive macro news, business activity grew more than anticipated and its most since 2005 according to the Chicago Purchasing Managers Index, or as its now more commonly known as: “Fiction.” Unless the index was measuring coffee sold while waiting in line at the unemployment office or tickets sold for the proposed Julia Mancuso/Lindsey Vonn catfight (and Money McBags would love to ski down Julia Mancuso’s hills), the data is perplexing to say the least. Also, GDP was revised up to 5.9% growth from 5.7% in the last Q. However, most of that growth was a result of inventory restocking. Looking at GDP without the change in private inventories, growth was a He Ping Ping-esque 1.9% and consumer spending was revised down from 2.0% to 1.7%. The point of all of this is that the economy is about as healthy as Mark Sanford’s marriage or Money McBags’ new found love of Alice Eve so until jobs can be created, we are going to have more and more marginal to disappointing economic news.
European markets were off to a better start today as the British Statistics Office revised up their estimate of UK economic growth in the fourth quarter to 0.3% from 0.1% citing the long awaited introduction of dental floss, while Asian markets advanced after figures showed that Japanese factory output, rose by 2.5% in anticipation of Nintendo’s new game console, tentatively called “Wii’re Fucked.”
The big stock news today is that investors are not down with AIG and their craptastic quarter. AIG posted an $8.57B loss or to make it seem smaller, $65 per share (and remember, shares are currently trading at $25, so that is a neat fucking trick). At least analysts were close as operating loss per share was estimated to be $3.94 and it just missed that number by coming in at whopping $53.23 a share. So estimates were only off by a factor of 14ish or as they say in the forecasting business, a nut hair (that is if it were one of Lexington Steele’s nut hairs, and not a regular Lexington Steele, but one who had grown to be 30 feet tall as a result of radiation poisoning from his last scene with Gianna Michaels). Shareholders should have faith though as CEO Robert Benmosche said in a pre-recorded (in order to duck questions) call: “While we are not out of the woods by any stretch, these numbers represent a substantial improvement from just one year ago…we believe we are on our way to regaining our stature as one of the world’s largest and most successful property-casualty insurance operations.” He then stated that he thinks Roman Polanksi is also on his way to regaining his stature as a successful babysitter and Bernie Madoff is on his way to regaining his stature as a first class investor. While $6.2B of losses can be chalked up to paying back the government, the addition of $1.8B to their property-casualty reserves can be chalked up to being bad at the insurance business, whch would be fine, if insurance weren’t their main fucking business. Money McBags knows it’s easy to kick someone when they are down, unless you’re Oscar Pistorius (and in that case you just knee them), but AIG’s situation is more convolutedly complex than the 11 dimensions needed in M-Theory or trying to figure out where the pictures come from for the still deliciously not safe for work Guesshermuff (and all my guesses remain “fantastic”). Trying to analyze AIG is a lot like taking your car to a mechanic, it’s always something and you have no way to prove the guy wrong. Money McBags is eagerly waiting AIG to come out and just blame their losses on a faulty johnson rod. There are easier ways to make money so pay attention to AIG only for any market risk insight you may get. In other stock news, C is replacing 3 of its directors as apparently Colombia Pictures has hired them back to shoot a remake of their long running hit Monkey Business.
In small cap news today RICK continues to show the market its tits by climbing another 3%. CEO Eric Langan announced yesterday that he expects the VCGH deal to add $50MM of revenue by 2011 to bring RICK’s revenues to $150MM. He also said they would be consolidating brands in an attempt to streamline their image so they can better promote it through television commercials on such channels as ESPN. Now look, Money McBags loves everything RICK is about, really he does, he loves the business, he loves the growth, and most of all he loves every coked-out part of their inventory. That said, the idea of turning it into some Hooters-esque national chain is the worst thing they can do. Strip clubs were not meant to be Walmarts or McDonalds and advertising them on prime TV channels is the wrong place and the wrong audience. Anyone who wants to go to a strip club knows exactly where they are and which ones are best, they don’t need a fucking TV commercial with some likely dopey jingle (Rick’s Cabaret: Plop, plop, jizz, jizz, oh what a relief it is) reminding them that they love vagina. So a TV ad campaign worries Money McBags like a parent learning their daughter will be going to Cancun for spring break. This company should stick to what it knows and put marketing dollars into the girls, airport billboards, and hotel concierges’ pockets. Money McBags is still awaiting more detail on VCGH’s financials, but the stock is nearing his price target. In other small cap news, PMFG, a company that provides separation and filtration products mainly for natural gas and which Money McBags has followed off and on for the past couple of years announced a secondary offering today at a price a measly 30%ish below their close on Thursday causing investors to collectively utter a befuddled “What the fuck?” They are selling 1.3MM shares for about 10% dilution at $11.50 and net proceeds from the offering will go towards repaying a portion of their outstanding borrowings in connection with their poorly timed acquisition of Nitram Energy, towards working capital, and also towards general corporate purposes such as settling the likely shareholder lawsuit to be filed against them for such a diltuive and poorly priced secondary. Wow. Money McBags is glad he doesn’t currently own PMFG and can only scratch his well-coiffed head and wonder what is going on in their Dallas headquarters.