Posts tagged EPV
The market rallied today as election booths underflowed with discontented voters, unemployed workers looking for a warm place to hang out during the day, and douchey hipsters who thought the lines were for the Apple store.
Apparently the Republicans are going to win back the House and thus have 1/4 of the decision making bodies in the US (the others of course being the Senate, the Executive Office, and Marisa Miller because Money McBags would do whatever her body decides) which is somehow a good thing even though their policies are what got us to where we are in the first place. So hoooooooooooofuckingray. Instead of the party who can’t get us out of this mess having all of the power, they can now share part of it with the party who got us in to this mess as the clusterfuck of bad ideas and incompetence will continue. So Rally fucking on.
To use a terrible analogy, it’s like when Bo and Luke Duke came back to the Dukes of Hazzard after their contract dispute led their gay cousins to take over for a season. While it might have been a marginal improvement, the show still fucking sucked and all anyone wanted to see was Daisy Duke anyway, so who fucking cared whose turn it was to drive the racist car. And that is like this election because no matter who wins, the economy will still suck and all anyone wants to see is real economic growth (and Daisy Duke), so who fucking cares which unoriginal, solution-less dickbag drives the figurative legislative car.
Hopefully you all did the sensible thing and voted for “None of The Above” and wrote in Money McBags of the BOGUS party (Bail Outs Get Us Savings) who will finally take this farce of an economic non-strategy all the way. Money McBags spent at least half the day writing his acceptance address (and the other half googling Cintia Dicker‘s address) and promises to return this country to fiscal prosperity through destroying it and building it back up with more bail outs, more TARP, and especially more PPIP (though what else would one pee?).
As for macro news, it was more non-existent than people who have read all of Middlemarch or Art Laffer’s credibility. The story remains QE2 and it will be very interesting to see how the market digests the size of it (perhaps they will ask Peter North’s co-stars for advice) because there still remains a lack of consensus as to how much the Fed will ease. Of course the silliest part of all of this (even sillier than this trend of giving up showering and deodorant and way the fuck sillier than suing Mcdonald’s for being fat), is that the prospect of QE2 has rallied the market when the whole reason for QE2 is that the economy is more fucked than Capri Anderson after an eight ball in Charlie Sheen’s hotel room. So while QE2 is somehow the panacea for the dying economy (just like QE1 was, and TARP was, and everything else that has led to cyclically low 2% GDP growth (until the 2% is revised lower) was), the market is acting like that panacea has already cured the disease when in fact it may exacerbate the disease like Mentos in a Diet Coke bottle. This is as confusing to Money McBags as men who look like lesbians and ergodic theory so as the market rallies, he is left scratching his head in amazement (or perhaps it just scabies).
Internationally, Australia and India both raised rates as their economies continue to be healthier than Gabourey Sidibe‘s appetite after skipping both first and second breakfasts. China’s unquenchable thirst (perhaps caused by too much soy sauce) for natural resources has helped drive Australia’s economy higher and as a result of the rate increase and Bernanke’s folly, the AUD reached its 28 year high last night achieving parity with the US dollar. Money McBags is now counting down the days until the dollar is no longer worth even a dong, which will be bad news for the Key West Vietnamese population.
Also, something to be aware of as your EPV etf drops faster than Abe Vigoda‘s balls in a steam room and that is that Spain’s 2nd largest bank is looking to Turkey for growth by buying a 25% stake in Turkish bank Garanti. Now look, Money McBags is well aware of the benefits of Turkey’s growing population, its youthful demographics, the the way it perfectly complements cranberry sauce, but something strikes Money McBags as being a bit fucked up when that is where Spain is turning to for growth. First of all, it means Spain realizes it is fucked for a long time and that is about as good for Europe as Lillian McEwen’s memoir will be for Clarence Thomas. But secondly, BBVA stretching for growth here opens up all kinds of risks because whenever Money McBags hears of a financial services company trying to buy growth, so many red flags go flying up that you would think he was part of a semaphorist circle jerk. So while Europe is running right now, be very very careful.
In the market today, PFE had what Money McBags calls a a Jennifer Lopez Q as they put up a good bottom line but a weak top line. The company sold off ~1% as their revenue was below analyst guesses thanks to a stronger dollar and Lipitor sales falling by 11% due to increased competition from generics and fat people being unable to afford to eat as much. Also in the health care space, MHS put up a good Q and rose ~9% as they were able to grow their business and maintain margins which the Street thought would be less likely than Paul Krugman exhibiting modesty (or common sense) or Money McBags caring which of the Bernaola twins was tickling his taint.
Elsewhere, MA put up a nice Q and rose ~5% as eps of $3.94 grew 15% and beat analyst guesses of $3.54 as consumers max out their 1% cash back credit cards in order to earn income (like that is any stupider than continually borrowing from China?). ADM got cropped on as profits dropped due to weak grain merchandising margins and CLX tumbled by ~4% after the conglomerate posted disappointing earnings and lowered full year numbers as apparently all 800 of their categories sucked.
In small cap news, NTRI cut some dead weight by lowering costs and rose ~9% as they raised full year guidance. Money McBags has talked about this name many times here as they have plenty of leverage in their model but management has executed worse than a San Diego TV station’s news cast. Money McBags hopes to break down their Q in more detail if he gets time later in the week but with revenue down 4%, he isn’t itching to buy any. Also, ININ released their Q3 after their pre-announcement the other week and shot up ~9%. Remember, Money McBags broke them down the other week and pointed them out as an interesting company and told readers to listen to their call to see if they discussed what this new leg of growth was (Money McBags would call it a third leg of growth, but that would be way too easy). Money McBags also hopes to get to their call later in the week but they did mention that their cloud-based communications orders are seeing strong increases.
Which of course brings us to TMRK. If Money McBags were to write a ballad for TMRK, it would be called “To all the small cap companies he has loved before” because TMRK exhibits many of the traits he looks for in a small growing company. They are in the early stages of a huge multi-year growth market that continues to consolidate, they have a niche advantage (for now) with government business because Uncle Sam wants his servers the fuck out of Washington in case one of those Al Qaeda fucks gets on the loose (and by colocating their shit down in TMRK’s Miami centers, the government’s data is hella safe because even Al Qaeda loves them some South Beach), their revenues should continue to grow 20%+, and fund managers have been sitting on their hands on this one waiting for it to take off so they can jump in like lemmings (seriously, over the past 4 to 5 months Money McBags has spoken with 3 to 4 fund managers who all said they like the name, but are tired of it never moving. Well guess what motherfuckers, it’s moving now. And Money McBags means motherfuckers in the nicest way since he’d be happy to do some one off due diligence for you, or even perform at your kids’ upcoming bar mitzvah, for a few shekels).
The only things that worry Money McBags about this company are the debt and the fact that they have no earnings (and Money McBags rarely buys a company with no earnings (you hear that SPRT?) but they have solid EBITDA and cash flows) but the CFO said he expects positive EPS to hit in fiscal 2012 and this was fiscal Q2 2011, so in the next 4ish Qs.
As for this Q, revenue was up 22% to ~$85MM, EBITDA was up ~28% to ~$23MM, and guidance was raised from $345MM to $350MM on the top line to $350MM to $353MM with the low end of EBITDA guidance increased by a nut hair to $100MM to $102MM. But the most exciting part of this business, the sizzle to their steak or the rust to their trombone if you will, is that their cloud computing revenue was up another 15% sequentially to a $30MM annual run rate. So sure it is <10% of their top line, but Money McBags is more convinced that cloud computing is the way of the future than he is that the market is structurally broken or that Molly Sims is hot. So this is the little growth engine that in time can propel this kind of boring colocation company to new heights.
The company is now trading ~11.5x 2011 fiscal year EBIDTA guidance which is not cheap and around where take-outs have been happening but as Money McBags said, this is a long-term play, kind of like the Indian outsourcers 10-15 years ago or Jennifer Lawrence. So as long as valuation doesn’t go haywire, Money McBags could give a shit if it is trading at 9x EV/EBITDA or 13x EV/EBITDA because he fully expects EBITDA to keep growing in the double digits for several years so this is a company he just kind of lets sit there and in five+ year he’ll collect his profits (that is if we still have an economy).
Holy fucking shit. You’ll have to excuse Money McBags today because he is still trying to put his limbs back on after jumping from his penthouse apartment during yesterday’s volatility which saw the market drop by 9% in 20 minutes. Whether it was spurred by riots in Greece, a fat finger (or as Portia Di Rossi would call it, “heaven”), or a broken flux capacitor, it is clear that high frequency trading exacerbated the problem and Money McBags is freaked the fuck out. As a dedicated reader of zerohedge, Money McBags applauds their foresight into, and explanation of, this problem and it is enough to make anyone want to pack it up and join the circus (though if Money McBags were to join the circus, he hopes it would be the Circus of the Stars so he could have the lovely Brooke Shields tame his lion). Anyway, all of you should read this explanation or simply watch this as Money McBags can offer no better insight in to what happened yesterday and frankly, is liquidating a lot of his shit right now because playing a game where the rules change at any time and you have no control over them is not something Money McBags wants to be a part of unless the game involves Heather Vandeven and the rule changes all involve tickling. What happened yesterday has made Money McBags feel sicker and more disgusted than he imagines Rosie O’Donnell’s kids will feel when they find out where their other mother puts her mouth at night. If you want more proof of what a sham the current market is, NASDAQ is cancelling the trades of 296 stocks from yesterday. So if you bought at the drop and made a fuckload of money, you are now left holding a dick sandwich without the bread. But hey, Money McBags has lost money on trades before so why won’t NASDAQ go back and retroactively cancel those? Who the fuck does Money McBags have to market manipulate or high frequency trade with to get someone to throw him a fucking trade break? Something about this whole thing smells fishier than Oprah Winfrey’s tampon after a 5k. The market as we know it might be dead, so be smart, and be ready.
In macro news, who gives a shit, but if you do, the US added 290k jobs and yet unemployment rose to 9.9%, as apparently they hired one person to do all 290k jobs. Economists guessed that 190k jobs would be added so the report was slightly better than expectations but 66k of the jobs added were temporary government jobs to deal with the census so before we reach for any bottles of Dom over a growth in jobs, lets be realistic about what is actually happening. And to try to keep people’s minds off of what happened to the market yesterday, the government revised the jobs numbers from each of the last 2 months upwards. That’s right, March’s job adds were revised upward from 162k to 230k and February was revised up from a loss of 14k to a gain of 39k. Hey, why not just revise each month to a gain of fucking 1MM as long as we are making shit up. Money McBags believes any of those numbers like he believes in the Lochness monster, dividing by zero, or the existence money shots in lesbian porn.
In stock news today, it doesn’t matter. Everything is being manipulated. Money McBags hedged his portfolio earlier this week with EPV and has been adding FAZ and GLD. He has also sold his favorite little companies for fear of liquidity issues. So bye bye CRUS, KITD, and CTGX. It is a sad sad day but one must not fight the market. Money McBags still believes in their stories and will buy them back once (and if) the market settles. If it settles up from here, he’s ok with that. Money McBags made good money on all of those so lets take some profits off the table while the market drops like John Edwards’ popularity or Hillary Duff on her engagement night. Money McBags needs some time off rigt now because what he thought was real may be faker than Tom Cruise’s marriage. So try to enjoy the weekend. Money Mcbags will likely be back Monday and will try to analyze companies and perhaps the market will have rallied all the way back by then and all of you who are buying right now will be enjoying bottles of Cristal and blumpkins in your seaside cabana, but be careful out there, because the retail investor is the sucker in this game and it is always better to be the suckee, than it is to be the sucker (unless you are from Transylvania).
And remember to speak well of Money McBags.
Buenos dias on this lovely Cinqo de Mayo as investors smack the market like a pinata in hopes of breaking it open to catch some falling CDS. Things remain ugly today as Europe is still on the verge of going bankrupt thanks to Greece’s steroidal Wimpy strategy of having a gyro today while promising to pay for five of them on Tuesday. Unfortunately this strategy is finally coming back to bite Greece on its hairy proktos. Fear continues that Spain and Portugal will be next to need bailouts while even more fear continues that Heidi Montag will put out a new album or Alan Greenspan will find someone to listen to him again. Moody’s put Portugal on review telling the country that they need to start paying down their debts, show up to class on time, and stop throwing spitballs at Spain. Moody’s is threatening to cut Portugal by two notches from the contrived “Aa2″ to the less contrived “AaYour’efucked.” Of course as always, Money McBags cares what the rating agencies have to say as much as he cares about John Meriwether’s advice on starting a hedge fund or Fabulous Fab Tourre’s sales pitch for subprime bonds. Moody’s will likely be late once again to the dance with their downgrade of Portugal as by the time Moody’s figures it out, Portugal will long have fled the prom in a fit of tears after busting out of their prom dress and leaving their assets exposed and devalued. Making matters worse in Europe is that Europeans hate to shower and it’s getting hot outside, but making matters even worse than that is that three people were killed when Greek workers protested the new austerity measures yesterday. On the bright side, that is one way for the government to extinguish the debt, though on the negative side it’s a bit morally lacking. In the protests a bank branch also burned to the ground, luckily, the bank only held subprime debt and thus was worth more as ash than as a solvent entity. And finally, EU central banker Axel Foley Weber warned about “grave contagion effects” of the Greek debt crisis for the rest of Europe but added that it doesn’t mean the EU should use every instrument necessary to quell it such as more bailouts, rate changes, or sticking bananas in tailpipes (though if it is Kristin Bell‘s tailpipe and Money McBags’ banana, Money McBags will heartily disagree).
In US macro news, ADP reported that 32k jobs were added to the economy and it was the third month in a row of increases while Challenger, Gray & Christmas stopped by for some milk and cookies before reporting that planned layoffs decreased by 40% from the previous month. Also, mortgage applications soared to a 7 month high thanks to the ending of the federal home buyer tax credit and an extra strong dose of meth while the ISM reported that service industry expanded at the same pace as last month as a result of a Viagra milkshake and being shown Carmen Electra workout videos.
In stock news, News Corp put up a good quarter thanks to revenues from Avatar which Money McBags will see as soon as he grows a vagina. The company is trading down 5% though as they warned of a likely fourth quarter profit decline due to rising costs and lower revenues in their Fox network TV business, decelerating revenue in their cable business, and lower revenues in their film division as they are replacing Avatar with a film slate including the sequeals Alvin and The Chipmunks Get Rabies, The Thunder From Down Under Presents: What Happens in Vegas, and My Big Fat Greek Bankruptcy. In other market news, GOOG is up today on news they are going to start selling e-books and investors realizing that GOOG is only a nut hair away from world domination.
In small cap stocks, Money McBags’ biggest small cap holding KITD is getting pounded like they walked up to Brock Lesnar and told him not only is his mom a whore, but she’s like a shotgun because one cock and she blows. KITD has ~70% international revenue so with Europe about to join Atlantis and Chritsina Applegate’s breasts in the annals of fictional places that once really existed, it is not a surprise that there is some movement down. That said, Money McBags believes in this company and is in it for the long term (and by long term, he means until CEO Kaleil Tuzman sells to CSCO or whomever). Tomorrow pay attention to EBIX reporting quarterly results which Money McBags is sure will look good but will lack any semblance of detail as that business is more obfuscated than John Goodman’s belly button or Tiger Woods’ sense of dignity. On any metric the company is a screaming buy yet the red flags with CEO’s disdain of the Street, his self promotional nature that makes Kim Kardashian seem like a recluse, and his penchant for changing auditors like Ben Roethlisberger changes alibis, is alarming. Money McBags is going to stay away but if any of you can get comfortable with whatever it is in the insurance business they are doing other than installing johnson rods, you could have some nice upside. FHCO also reports tomorrow and with any luck they will have been protected from the European debt disease. FHCO has had a nice run on good earnings and a newly declared dividend and remains a strange and small company which Money McBags likes. He doesn’t own it as it ran a bit too much for him but he’s going to reconsider after they report the Q. Money McBags did make a couple of trades today by hedging his portfolio with EPV and selling his CIT shares for no reason other than to take profits and get some risk off the table. CIT should actually fare well with new CEO John Thain, a cleaner balance sheet (but who really knows for sure how clean it is no matter what the 10k says), and a valuation of right around book value. Should the market continue to drop, Money McBags will look to re-enter CIT while should Abigail Clancy‘s knickers drop, he will look to re-enter her.