Posts tagged Germany
3/28/11 Midnight Report: Same Shit, Different Day
Mar 29th
The market rose for most of the day like the radiation readings from the Fukushima Dai-ichi Nuclear Power Plant (where engineers recently found plutonium in the soil which is either from the nuclear melt down or a broken flux capacitor) until it sagged in the afternoon like Dez Bryant’s shorts (and perhaps his bank account and credibility), as investors realized that perhaps the Middle East imploding like Chris Lee’s political career, Europe figuratively sweeping their monetary problems under a rug larger than Burt Reynolds‘ thanks to Portugal’s latest downgrade, Tokyo being more of a threat to shut down than that likely assawful Spiderman musical, and AAPL reporting a bomb in one of their distrubution centers (though it turned out to just be an employee downloading a Nicolas Cage film on a company iPad), may not bode well for the ponzeconomy™. So while Larry Summers continues to pick the remnants of the economy out of his triple chin, it is important to be more careful than Fergie‘s gynecologist (because herpes are forever) as shit still sucks in the real world. Or just buy the fucking dip. Your choice.
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As for US macro news, consumer spending was up .7%, though up only .2% not including food and energy so that should make the Fed happy since they continue to believe food and energy are as relevant to consumers as old man smell is to Andrea Mitchell or carding is to Lawrence Taylor (even if Fed Governor Dennis P. Lockhart wrote “…contrary to popular opinion, Fed officials actually do eat and fill up their gas tanks.“ Of course what he left out is they fill up their gas with the tears of the poor and unfortunate, so inflate away economy, inflate away). That said, the rise in consumer spend was driven by people in California loading up on geiger counters, iodine pills, and back issues of Shanna Marie Mclaughlin‘s Playboy spread, just in case the wind blows the nuclear radiation across the ocean and they are forced in to quarantine. It was the 8th consecutive month consumer spend rose, though the rise was higher than wage growth of .3% (or 0% for the 18MM+ unemployed, discouraged, and fucking discouraged workers) which caused the savings rate to contract like the soon to be readership of the NY Times.
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In other macro news, pending homesales gained 2.1% in February which beat estimates of a drop of 1% (so at least analysts would have been directionally correct had they used the absolute value sign, and yes, that was sarcasm). The index is still down 8% for the year and as soon as foreclosures, shadow inventory, cardboard boxes, and Karin Mackaliunas’ vagina are off the market, which should be sometime around 20infinity, home sales should once again start to rise (and note to Ms. Mackaliunas: Really? Money McBags can almost understand the heroin, but $.22? It does beg the question of if it was 4 nickels and two pennies, 2 dimes and 2 pennies, 22 pennies, or whatever. Though perhaps she was on her way to First CityWide).
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Internationally, shit is still so fucked up that even 3 year olds have taken to the drink. Portugal may be downgraded by S&P from “kind of fucked” to “just fucking collapse already,” Germany saw something called the Green Party win power in one of their States (that state of course being the state of confusion and despair), and Italy’s 74 year old prime minister still maintains he was too old for all the sex he was accused of having by claiming, he’s not 69 anymore. In addition to Europe, the Middle East is in more disarray than the Fed’s balance sheet (but shhhhhhh, don’t tell anyone about that) or Newt Gingrch’s policy stands as not only are unified forces bombing Libya in support of the rebels but Syria is getting serious about not wanting a dictator all up in their Damascuses. Syrian forces opened fire to disperse hundreds of protesters as the government discusses repealing the decades long rule of emergency just as an emergency hits, so go figure.
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In the market, EBAY announced they are buying GSIG for $2.4B after waiting until the last millisecond and hitting the bid button. They are paying a 51% cash premium for GSIG after checking the seller’s ratings and now just need to wait for GSIG to open a Paypal account to deliver payment. Elsewhere, ALU was up 10% after Goldman raised them to a strong buy based on the fact that the analyst’s coin flip came up heads and GS also upgraded NOK to buy citing a run on shitty mobile companies.
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Finally, Kodak was up 6% after a US trade panel agreed to rule on whether or not AAPL and RIMM are infringing on Kodak’s patents. If Kodak is successful in this case, they say they will next bring patent suits up against Borders, subprime lenders, and Mickey Rooney, for mimicking Kodak’s patented drop in to obsolescence. That said, if Kodak wins in this suit it could bring them ~$1B which should be enough to allow them to stay afloat until their next big idea fails.
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In small cap news, holy fuck did shit go awry in the ~1.5 weeks Money McBags was busy doing funbagmental research on Russia (and he stresses the funbag). EBIX continues to drop after some dude got his short on on SeekingAlpha by laying out the same case Money McBags laid out months ago only instead of dick jokes and links to Teagan Presley, they used actual data. That said, their opening line was “Winston Churchill’s famous quote, “a riddle wrapped in a mystery inside an enigma,” might as well have been targeting Ebix Inc” and loyal readers know on many occasions Money McBags has referred to EBIX as “enigma wrapped in a riddle and covered with feces,” so um, once again Money McBags is not only way ahead of the Street, but one of its few sources of original thought (and here is another original thought). As Money McBags said, a long straddle of EBIX is the only way to trade it since it is either complete fraud or worth a multiple of for what it is trading (with either scenario equally likely), so if you did that, congratufuckinglations.
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In other small cap news COOL continues to run up and Money McBags told you about this trade less than three weeks and ~50% ago, so hopefully you all got yours. If shit works out, this company is probably worth ~$4.50 to $6.00 so there is still upside from here. That said, Money McBags never bought (as he told you) because he doesn’t get involved in shitty companies, even if good shit is going on. That said, they have one game which is currently working and launching in Europe and while it may be more of a one hit wonder than Young MC, John Kennedy Toole, and Estella Warren, it is fucking working.
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Also, Money McBags knows he owes all of you a full breakout of KITD, and he hopes to accomplish that tomorrow (he also hopes to accomplish cold fusion and a rusty trombone from Lucy Clarkson, so take that for what it is worth). While KITD has sold off more than a Jose Canseco rookie card and their management continues to buy companies as if they will have unlimited access to equity markets, Money McBags still believes in owning companies who have 30%+ market share in markets growing 35%+, no matter how bizarre of a company it is.
2/7/11 Midnight Report: Support Levels Blown as Market Spits Out Concerns
Feb 8th
Stocks hit their two and a half year highs today as confidence in the markets skyrockets thanks to hackers penetrating NASDAQ computers (proving if you drink enough red bull and vodka, you’ll penetrate anything), insider selling continuing to outpace insider buying at a cockposterous rate as company executives show as much faith in their businesses as Egyptians showed faith in Mubarak or the Sheyla Hershey showed faith in moderation (or her personality), and commercial mortgage securitizations start to get shittier than a Black Eyed Peas halftime performance. Oh wait, those three things all point to why investors shouldn’t have confidence in the markets, but fuck logic and just buy the fucking rip. (Sidenote: Money McBags isn’t saying the Black Eyed Peas don’t have any talent, he’s saying that they don’t have talent and they cause more visits to otolaryngologists than tinnitus. Shit, they sounded so fuck awful that even Marlee Maitlin put her TV on mute).
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That said, there was little macro news out today as data is still recovering from the excitement of yesterday’s Super Bowl where apparently it had to drink every time Ben Roethlisberger raped someone, including Steelers fans with the interceptions he threw. The only real news was that consumer borrowing rose for the 3rd consecutive month as Americans run up debt so they can pay it back with inflated dollars later (just kidding, people are way too fucking stupid to do that, instead they have likely exhausted their unemployment checks and are now fraudulently charging everything to the Underhills). Credit rose by $6.1B to $2.41T after increasing a revised $2.02B in November as people load back up on debt in their attempts to reinflate the bubble before it bursts again (it did burst, right?). Elsewhere, President Obama wants to lower the corporate tax rate and eliminate tax loopholes to pay for that and Money McBags is all in favor of getting rid of ridiculous tax loopholes such as the “Double Irish,” the “Dutch Sandwich,” and the lesser well known “Lithuanian Typewriter.” If Money McBags were in charge, first he would hire Jessica Bratich as his undersecretary focusing on taking dictation, and second, he would have all businesses pay the same rate unless they were really asshats, like Blackwater or Al Sharpton.
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Internationally, not much happened other than the Middle East going through some growing pains that Alan Thicke likely won’t be able to solve and a weak German manufacturing report which caused the Euro to continue to slide like Mervyn King’s reputation and Kirsten Dunst’s chin. Germany’s government said factory orders fell by 3.4% in December led by weak demand for new vehicles, a 9% drop in demand for German goods in developing countries, and an oxymoronic shortage of large orders.
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The real news of the day though was M&A as Danagher bought Beckman Coulter for $6.8B, EnsCo will acquire Pride international for $7.3B (forming the world’s third largest driller after Transocean and Lexington Steele), Sanofi-Aventis may buy Genzyme for $20B and a disease to be named later, and AOL bought The Huffington Post for an absurd $315MM as apparently it’s 1999 again and internet properties are all worth a Google. At the same valuation per user as what The Huffington Post received, the award winning When Genius Prevailed would be worth ~$1MM (no fucking joke, so any interested buyer should shoot Money Mcbags an email at moneymcbags@gmail.com and we can negotiate up from there), Angry Birds would be worth $500MM, and the life-changing and back from the dead NSFW Guess Her Muff would be worth infinity (because really, you can’t put a price on happiness). The point of all of this is companies are sitting on cash and as their earnings are all about to stagnate with input prices rising and an inability to initially pass costs on to the consumer (because um, the average consumer can’t afford shit), buying revenue and earnings is going to be the best growth strategy other than watching Trisha Brill movies or coming to terms with their pasts. Companies could take the excess cash and invest in R&D or hiring people, but that would mean they thought the economy is getting better, so consider the signal received.
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Finally, in earnings Loews’ profit rose 16% as their insurance unit CNA Financial saw earnings surge 23% and reinstated their quarterly dividend as they apparently insured the fuck out of some shit. And Apple rose after brokerage firm Susquehanna raised its price target on the company to $465 from $445. Just kidding, we all know Susquehanna’s analyst has as much effect on Apple stock as whistling has on gravity or grammar rules have on a Palin. Apple stock was up simply because the market was open.
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In small cap news, Money McBags wants to dig in a bit to old favorite QCOR here as the stock dropped ~7% on a complete hatchet job by some mentally deficient dickbag at Barron’s who wrote one of the most intellectually bankrupt pieces Money McBags has read since he skimmed the first paragraph of a Chuck Klosterman essay. To read the article, you need a subscription to Barron’s and since the advent of Spankwire, Money McBags no longer buys subscriptions to anything, so he can’t link to the article here. That said, someone on the Yahoo! message board for QCOR posted the whole column, so fuck you very much Barron’s.
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The gist of the column is that QCOR is fucked because they will now have to reimburse medicaid patients 100% of the cost of their drug Achtar and this will cause them to raise a fuckload of reserves, at least according to some guy named Mark Roberts at some dickbag paid research firm specializing in shorts. Roberts then goes on to claim that Achtar growth in MS will slow “after some doctors and patients try the $50,000 treatment after failing with the standard treatment of methylprednisolone, which costs less than $1,000.“ And then the column ends by trying to point out people associated with QCOR 10 years ago were somehow fraudulent with some Italian pharma company transactions 7 years before owning QCOR. Unfucking believable. It’s like blaming President Obama for Watergate or the current head of ABC for Cop Rock.
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So lets just look at these points individually:
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1. The 100% rebate is going to cause a reserve boost and kill profitability. The only factual part about this statement is that QCOR does have to reimburse 100% of the cost of Acthar for medicaid, but, and make sure you are all sitting for this because it is a good one, THEY PREVIOUSLY WERE FORCED TO REBATE 110% of THE DRUG. Yeah, they closed a fucking loophole months ago that had them reimbursing more than the actual price of the drug so um, having to reimburse a lower fucking price actually helps their margins. So claiming the big federal overhaul to health care is going to fuck with QCOR’s reimbursement is more misleading than calling Keely Shaye Smith a bit full figured or Charlie Sheen a bit of a drinker.
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As for the reserving, QCOR already upped the fuck out of their reserves about a year ago to handle this shit and will be adding another $2.6MM of reserves in Q4 (and that will be on ~$46MM of sales, so not a fucking deal breaker, ~$.03 per fucking share). Money McBags used to talk with their CEO quite a bit when Money McBags worked for the man on the buy side and the CEO is one of the most straightforward, no-nonsense, not full of shit, shareholder friendly CEO’s Money McBags dealt with so Money McBags doesn’t believe the CEO would somehow be “under reserving” based on his current information. Oh, and by the way, fewer MS patients use medicaid and as that market grows for QCOR, these fucking reimbursements become less material.
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2. As for growth in MS to slow “after some doctors and patients try the $50,000 treatment after failing with the standard treatment of methylprednisolone, which costs less than $1,000,” does that statement even complete the thought? Either the copy of the column posted on the YHOO! message board fucked this part up, or the author is completely clueless. See, that statement is EXACTLY WHY MS WILL KEEP GROWING, because doctors and patients keep failing with the other cheaper drugs. QCOR can charge such a high price for this drug because it is a DRUG OF LAST RESORT meaning it is used after nothing else fucking works so the demand curve is more inelastic than Joan River’s sphincter. And ummm, hey dickbag, you realize MS has been growing ~100% a fucking year and is now half of their fucking business and the price hasn’t come down, right? Now look, Money McBags has pointed out that despite 123% y/y growth in Q3, MS was only up 6% sequentially and in the pre-announcement for this Q, MS was up only 55% or 9% sequentially, but they just doubled the salesforce and only ~9% of MS doctors have been penetrated, so Money McBags expects sales to pick up again in 2011. And this of course doesn’t even consider the fact that they may have found a market bigger than MS for Acthar with NS.
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3. As for trying to smear QCOR’s management team because of past large shareholders who by the way, DID NOTHING FRAUDULENT WITH QCOR, that is not just intellectually bankrupt but morally bankrupt. First of all, Money McBags doesn’t believe those investors, Sigma Tau, own shares anymore. They don’t show up on lists of largest holders and if they own anything, it’s a Vern Troyer nuthair’s worth. Secondly, as Money McBags said, this is a fucking good CEO. The guy took over a business that was about to fail and has built it in to a $1B company by simply raising the fucking price and being smart enough to realize there was still demand in some segments. These guys are shareholder friendly and good fucking operators. The last two paragraphs of the Barron’s article were so non-sensical that Money McBags is embarrassed to refer to himself as a financial writer (which is of course why he refers to himself as a dick joke writer).
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Usually Money McBags hates when companies respond to shit like this but the column was so egregiously misleading, that he applauds this 8k release by QCOR in reference to this hatchet job where they basically tell the Barron’s writer and this short analyst to eat a fat dick (and the analyst by the way needs to sell more work and thus needs the stock to go down so thus needs to spew shit out in public that will cause investors not paying attention to worry). Honestly, Money McBags can’t remember ever seeing such shoddy, one way, slanted reporting in any name he has ever covered.
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If you read Money McBags’ last detailed analysis of QCOR, he has them earning ~$.91 per share next year (though he ammended that to ~$.89 per share after their pre-announcement) and after their pre-announcement, he recommended taking some profits off the table as the company was trading ~17x that. Even with today’s sell off, the company isn’t cheap but it is not going down to $6.50 per share as the analyst in the Barron’s article suggests because they are still fucking growing.
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Anyway, Money McBags gets to his numbers by assuming MS will grow 30% next year (~7% sequentially per Q which is where it is now and with a doubling of the sales force, one would expect that to be conservative) and IS/NS will grow 20% as they are now on fucking label for IS. He also said “Q4 is going to suck so take your profits and buy back if you want when the stock sells off since it has had a monster run and is due for a bit of disappointment.“ So given that, and this shitstain of an article by Barron’s, the stock could get really cheap again after Q4 when people sell on the disappointing Q and thus it could provide a nice entry point (though not as nice as this entry point). Money McBags isn’t a buyer here (which has nothing to do with the Barron’s article, and everything to due with the multiple), so he’d be happy if it sold off and he could buy some cheaper, that said, he can’t just sit here and read blatant misinformation.
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As Money McBags warned last Q: “Just be very careful with medicare reimbursements and headline risk as this is one of the 5 most expensive drugs on the market so there is always a chance for some bureaucrat to get their panties in a bunch about the pricing (though if it is republican congresswoman Mary Bono Black whose panties get bunched, that will certainly dull the pain).” So now you know what he meant.
9/27/10 Midnight Report: M&A market remains hotter than Sasha Grey in Grand Theft Anal (though with slightly less hair pulling)
Sep 27th
Money McBags is back after taking a mental health day on Friday because writing 1k-1.5k words a day of fresh material, analysis, and dick jokes about the market is not quite as easy as it sounds, especially as Money McBags takes his work very seriously (see, he could throw up just any picture of Odette Yustman, but instead he seeks perfection, and we all know perfection takes time, effort, and an unwavering spirit). But Money McBags is back tonight, so did he miss anything on Friday?
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Oh yeah, the market jumped about a bazillion percent as US durable goods orders were up 2% (taking out transportation and whatever else needed to be taken out in order to make the number seem good, since overall orders fell by 1.3%, but darn you pesky transportation and your unfettered volatility), sentiment in Germany unexpectedly picked up despite Thursday’s Euro PMI showing output in Germany slowed to an 8 month low (so things are getting worse, yet people are feeling better, so schadenfreude must be ripping through Germany), and we had the first previews of the soon to be released Karissa Shannon sex tape*. So no wonder the market jumped as if it were trying out for a Jennifer Nicole Lee fitness video.
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That said, the big news today is acquisitions, acquisitions, acquisitions as even the award winning When Genius Prevailed is starting to get offers (and those offers are from a Zemblan Prince who promises great riches for Money McBags and WGP if Money McBags will just lend him some money first to free his father, the rightful King to the throne). Southwest is swooping in to buy Airtran for $1.4B and a lifetime supply of those free drink cards. The takeover finally allows Southwest to move in to the Atlanta market and reach places that have been out of their range such as Mexico, which should be good for Atlanta gardeners everywhere.
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In other acquisition news, Walmart made a $4.6MM offer to buy Massmart, in order to help bring WMT’s unique sense of style to South Africa. With WMT’s US sames store sales down for 5 consecutive quarters now, the company needs international expansion more than Segways apparently need instructions (though “hey dickbag, don’t drive this off a fucking cliff,” should be fairly obvious) or Jim Cramer needs an enema because that guy is completely full of shit. But this follows the trend which Money McBags has talked about here many times, and Money McBags isn’t talking about Rainbow Parties (though that is certainly a trend he would follow), rather he is talking about “investing in growth” dying out faster than the quagga in the 1870s or Lindsay Lohan‘s career.
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Finally, Unilever is buying Alberto Culver for $3.7B to enhance their hair and skin care business as part of Unilever’s strategy to grow through bolt-ons and not transformational acquisitions. Alberto Culver is known for their hair conditioning products that are so good they can even give merkins that oh so natural shine and Unilever is hoping to to use Culver’s product to energize their emerging market growth where personal care products are taking off faster than Gabouray Sidibe‘s last blind date.
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Internationally, Moody’s cut their debt rating on Ireland’s Anglo Irish Bank by three notches to Baa3 from BS, but as always, Money McBags cares about anything Moody’s has to say about as much as he cares about a Paul Krugman OpEd piece or anything on VH1.
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In small cap news, NTZ, which Money McBags has mentioned several times here in the past as one of the dumbest yet cheapest companies around, had their earnings announcement today and finally answered the question: If a company has an earnings release and no one is around to read it, does it still trade down? And it appear that the answer is yes. Even though the earnings release was today, NTZ’s call isn’t until tomorrow as NTZ is an Italian company and thus they can only work an hour a day.
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As for their results, they were pretty mediocre mixed in with a dash of yawn and a healthy side of ho hum (and Money McBags would love to hear this ho hum). Money McBags really wasn’t expecting much (like Michael Jackson’s wife in their bridal suite), and the company solidly followed through on those expectations. The good news is that topline grew by 8.7% while the bad news is that COGS grew slightly more than that by 9% as the company said they faced higher raw material prices (especially with leather) and higher transportation costs with an increase in freight fares. That said, operating earnings were positive for the 5th consecutive quarter, EBITDA grew slightly to 8.2MM Euro, and they didn’t go out of business. Other negatives include net earnings being negative as they had a 3.2MM Euro tax burden despite .5MM pre-tax Euros in earnings (as apparently Italy taxes off of gross income and whatever Uncle Vito feels like that day) and for the past 6 months their working capital has dropped by ~22MM Euro driving an ~7MM Euro cash burn. And this is one of the problems with this company which is that Money McBags trusts Italian company financials about as much as he trusts leprechauns or women with Adam’s apples. With Europe in the midst of austerity plans, who the fuck knows what NTZ is going to pay in taxes next year so there is enough uncertainty to keep investors more nervous than Lexington Steele’s girlfriend’s uterus.
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So what do we do with this company other than point and laugh at anyone who owns it? It’s really unclear. In the first half of the year they have had 16.1MM euro of EBIDTA which using a 1.34 exchange rates translates to ~$21.5MM of EBITA so that puts them at a ~$43MM annual run rate and that doesn’t take in to account the fact that Q4 is usually their biggest Q (though Q3 is usually their smallest) and that Elisabetta Canalis is still fucking hot. The market cap is ~$201MM and their net debt is ~$64MM if you want to use that 1.34 exchange rate once again to translate it, so the company is still trading ~3.5x EV/EBITDA and remains cheaper than a sack of balls in the Castro on a Saturday night, but it is cheap for a reason.
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Money McBags doesn’t imagine anything too interesting will come out of their call tomorrow and remains unclear what to do with this company. By most metrics the company is way too fucking cheap, but by common sense, the company should be more fucked than Paris Hilton‘s septum (or her vagina on yeast infection Sunday at the Viper Room) because they are still selling an expensive, completely discretionary consumer product to Europe in the midst of an unrivaled debt crisis. Money Mcbags sees no reason why this company should move up any time soon, but if they can just tread water long enough for the global economy to recover (which should definitely be sometime in the next 20 years, give or take 100), they should fly after that.
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*Here is a very very NSFW preview (unless you work in your bedroom or as Larry Flynt’s bedpan changer) of the earlier referenced Karissa Shannon sex tape. Ordinarily, Money McBags does not like link to stuff this risque, but this is very important news and sometimes one must sacrifice their standards a bit for the good of the people and for the sake of the arts.
9/14/10 Midevening Report: Bigger retail sales fail to stimulate market as market prefers motion of the ocean
Sep 14th
The market closed down after being up most of the day as US retail sales were a bit better than guessed at by analysts thanks to bigger back to school discounts, some states offering tax-free holidays (or as they are more commonly known as: paycations), and consumers having more money after skimping on their water bills. Retail sales were up .3% from July and core retail sales which exclude autos, building materials, and hope were up .6%, doubling the .3% guessed at by analysts who once again prove to be as accurate as the contestants in the Alabama State Spelling Bee (where both buying a vowel and using the right letter in the wrong place are legal). Categories that showed the biggest increases included grocery stores (likely a result of extended unemployment benefits, higher food costs, and the fact that people need to fucking eat), gas stations (likely a result of higher oil prices), and the Ines Sainz fan club (likely the result of pure awesomeness). So if one were to believe the numbers, the economy is not quite dead and should continue to peter along indefinitely if the government can keep borrowing from China or making up the data (and Money McBags votes for making up data because he’d rather be lied to than fucked).
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In the only other US economic news today, wholesale inventories rose at their fastest pace in two years thanks to retailers stocking up on items for the back to school shopping season and Vivid Video stocking up on the highly anticipated Karissa Shannon sex tape for the skipping school shopping season. Wholesale inventories rising should be good news for GDP in the short run, though if the consumer remains on life support and only breathing through the government supplied money tube, inventories may be building up too early.
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Internationally, expectations for Germany’s economy dropped dramatically as the ZEW economic-research institute reported that their economic expectations index for the country fell to -4.3 in September from 14 in August which is the lowest in over a year since the great maultaschen shortage of 2009. Economists’ tarot cards predicted that the index would come in at 9, thereby proving that fortune tellers/economists suck at their jobs regardless of the language. Elsewhere Eurozone production was flat for the month (even with a rise in dutch ovens) while housing prices in Britain dropped more than some guy named Wayne Rooney’s Q score after a saturday night on the town. Finally, Turkey’s economy grew by 10% after pairing up with a nice gravy and side of cranberry sauce (and don’t forget to tip your writer)
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In the market, BBY jumped ~6% today after profits were up 61% as a result of better gross margins driven by mobile phone sales as customers rush to get the newest smart phones to be able to watch porn in any location. Analysts guesses were that earnings would be $.44 per share and BBY demolished those guesses by earning $.60 per share, despite flat same store sales growth, and they raised their full year guidance by $.10 to $3.55 to $3.70 per share. Like most other companies who beat, the outperformance was caused by margin expansion and not sales and that can only happen for so long. Other companies moving up included CSCO who announced a 2% dividend (as apparently investing for growth is becoming more passé than MySpace and full bush), KR who posted higher earnings and maintained profit guidance as they crank out more sales of Ramen Noodles, and JCP after their CEO said the company exceeded their back to school sales projections (and Money McBags has no joke for this as he is more puzzled by all of the retail strength than he is by Michael Chabon’s popularity or midget porn).
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In small cap news, DGIT was up 4% today and Money McBags still thinks this is a buy. Remember the other week they gave guidance below the street which caused investors to get their panties all in a bunch as they worry that the potential work around solutions to DGIT’s ad serving box (or whatever you want to call it) by Ascent Media and Extreme Reach will start to hurt DGIT’s business. That said, it’s not an extreme reach (or any kind of reach to be honest) to say DGIT will hit their guidance of ~$100MM EBITDA and thus they are trading at ~3.5x because their core business is not just fine for the time being, but still growing (so more than fine, perhaps fine+ or titriffic) as the HD market remains stronger than Portia di Rossi‘s breath on a Sunday morning. Yeah, the street hates DGIT’s management team and sure, the former head of Fastchannel which merged with DGIT loves talking about how his Extreme Reach is going take business from DGIT, but guess what? That isn’t happening anytime soon and the Street can go fuck themselves. Honestly, the shorts are having a misinformation-fest with this name right now and the only thing that is going to quiet them down is the next couple of quarters from DGIT. Look, the Extreme Reach/Ascent media story has been out there for years now and DGIT’s management has been a bunch of asshats from day one, so what has fucking changed to bring this stock from ~$44 to ~$16? Nothing other than shorts getting louder than a pair of JAMS and DGIT actually giving guidance which was a bit below some douchelicking analyst’s overinflated targets but still ridonkulously good. The business is still GROWING, HD is still gaining share, and they still have the primo real estate to serve ads to TV stations so if you can deal with a bit of volatility, this company should at least bounce back to $20+ in the next few quarters.
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Editorial Note:
Kind readers, Money McBags has an admission to make. You see, as the writer, editor, and lead muff guesser of the award winning When Genius Prevailed, Money McBags has to wear many hats when running this site and sometimes it is difficult to reconcile all of them. Given that, editor Money McBags is tasked with the very difficult role of trying to reign in writer Money McBags from potentially crossing the line between really bad taste and really really bad taste and yesterday was one of the few times that editor Money McBags won. That said, the writer runs this place and he refuses to let his work be corrupted by the political correctness of his editor.
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Long story short, yesterday’s headline read: “9/13/10 Midevening Report: You can’t spell “unstable” without BASEL” when in fact the original, and likely funnier version, read: “9/13/10 Midevening Report: You can’t spell “unstable” (or “anal beads”) without BASEL.”
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You can see the difficult editorial decisions Money McBags must make on a daily (or hourly to be more exact) basis. To be fair, editor Money McBags did think the anal beads reference was funny, but deemed it unnecessary, too far out of left field, and something that might not appeal to mainstream readers. He of course forgot that everything about WGP is far out of left field and unappealing to mainstream readers so censoring Money McBags’ writing will only lead to watered down analysis and a gentle stroking of the sellside instead of the complete ass fucking which Money McBags lays on them daily. So forgive that transgression and know that in his heart, editor Money McBags really wanted you to enjoy the anal beads and he will never keep any anal beads from you again.
8/19/10 Midnight Report: No work and no pay makes the market a dull buy
Aug 19th
Look out belowwwwwwwwwwwwwwwwww as the market is falling faster than Eliot Spitzer’s pants at the Mayflower hotel. Investors have finally decided to ignore the marginally good earnings data this quarter which was a lot of bottom line growth with weak toplines and instead pay some attention to macro data which is trending worse than Club Muzique‘s rating among Chubby Chaser’s members (and yes, Money McBags had to do way too much heavy lifting for that joke with not much payoff, but it is what it is).
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The big news today was that new claims for unemployment were out and were unsurprisingly worse than analyst guesses (though obviously they were surprising to analysts who made those bad guesses, but Money McBags has discounted analyst/economist models moreso than he has discounted Bernie Madoff’s advice on investing, Roger Clemens‘ advice on testifying in front of congress, or Antonio Cromartie‘s advice on how to practice safe sex). Analysts predicted that claims would fall by 8k but instead they rose by 12k (or 16k if you are using the ANNOUNCED fucking number from last week before it was UPWARDLY revised again) since apparently there is no “common sense” function in Microsoft Excel’s data pack. Overall, new claims rose to an even 500k, that is until next week when they are once again revised up in the “hold the shock and hope for no awe strategy” which appears to be backfiring worse than abstinence speeches in Alaskan high schools. Look, it doesn’t take Nostrafuckingdamus to see that things are getting worse now that the stimulus money has left the economy and the job market remains more touch and go than a dancer at Rick’s Cabaret. Things are getting bad enough that Money McBags predicts a new stimulus package to be announced in the next several months since no politician wants the economy to die on their watch (except for maybe Herbert Hoover and look how that wound up for him).
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In other macro news, the Philly Fed announced that manufacturing in the Mid-Atlantic region fell by 7.7% dropping to its lowest level in a year and reaffirming Philadelphia as the Detroit of the East Coast, or the “Armpit of America” if you will. Analysts guessed that the index would rise by 7% so their guess was better than usual as they were only off by a fucking “-” sign. When asked to explain the drop, the Philly Fed spokesman said “Hey, it’s Philly. Anything produced here is going to get stolen anyway so it’s a huge deterrent to businesses.” And it wasn’t just Philly that showed the economy heading down faster than Jillian Grace on a casting couch, but the Conference Board’s index of leading economic indicators showed that the only place economic indicators are leading us is in to the shitter. The index was up .1% in July, and was 50% below analyst guesses (see how Money McBags says 50% below to make it seem worse than it was?), as half of the indicators declined including building permits, the money supply, and hope.
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Finally, the Congressional Budget Office was out today with a revised budget deficit claiming the deficit will now only be $1.34T instead of $1.35T in 2010 as the White House finally hired a plumber to fix the toilets from constantly running. While that might sound like moderately good news (like learning your rectal bleeding is the result of anal warts and not colon cancer), Money McBags doesn’t believe anything the head of the CBO, Douglas Elmendorf, says because Money McBags doesn’t trust anyone with a beard. While the deficit may be a nut hair lower this year, next year’s estimate was revised upwards from $980B to $1.07T and assumes the Bush tax cuts expire, there is no further stimulus, and the CBO’s forecasting models are even remotely correct (and Money McBags would bet a night with Abigail Clancy that those projections are off by at least two standard deviations as his confidence interval in anything done by an economist is narrower than a termite’s sphincter, and while Money McBags is no entomologist, he is pretty sure if termites have sphincters, they are very narrow). Other cheery news from the CBO includes the deficit amounting to 9.1% of GDP, unemployment not returning to 5% until 2014 (or until all of the unemployed people simply become discouraged and give up looking for work, thus lowering the labor force participation rate and artificially lowering the unemployment rate), GDP growth of only 2% for 2011, and a deficit so unmanageable that it can’t even be balanced on Carmella Bing‘s generous assets. All in all, macro news today was worse than a shit sandwich without the lettuce.
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Internationally, Britain’s budget deficit shrank faster than economists guessed after the government cut off the Queen’s access to the Playboy channel on demand. Net borrowing narrowed by ~1/3 to $5B and retail sales were up 1.1% thanks to Harrods getting in a new shipment of black jeans. That said, the smaller budget deficit in July was mainly the result of higher corporate tax revenue as banks and other companies returned to profit after cutting costs so given the topline stagnation and the fact that companies can only cut costs so much, the budget deficit isn’t likely to shrink anymore unless it is doused in cold water and shown a picture of Kathy Bates. Also internationally, Germany raised their GDP forecast to 3.0% from 1.9% on the strength of their last Q and their desire to round up to the nearest 3.
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In the market, GM filed to go public again, hoping everyone who lost money on them last time will forget what a shitty company they are. GM won’t receive any of the proceeds from the offering, rather they will go to current shareholders like the government who hopes to get their holdings in GM down to below 50% so they can stop focusing on what features to include in the 2011 Hummer (and Money McBags suggest all hummers come with extra traction control and front airbags) and start focusing on fixing the fucking economy. In other news, INTC announced plans to buy McAfee, or at least that’s what Money McBags thinks happened but a virus seems to have eaten the press release. The deal is valued at $7.7B, a 60% premium to McAfee’s closing price yesterday and INTC hopes the deal will allow them to combine McAfee’s software with their hardware and somehow make their chips operate faster and with fewer requests for money from Nigerian princes.
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As for earnings, Sears put up a shitacular quarter, sending their shares down 10% as part of their strategy to make everything at the company a blue light special. EPS was a $.36 loss, double the $.18 loss guessed at by analysts with revenues down slightly year over year and a bit below guesses. Same store sales overall were down 2.2% and the company blamed poor food sales at Kmart, poor home and garden sales at Sears, and poor people.
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SPLS also announced their Q and in a trend more prevalent (and less delicious) than jeggings they grew their profits by ~40% despite flat top line growth resulting from the need to increase coupons, discounting, and special offers (though if those special offers had involved Riley Steele and stain remover, they might have done much better). The company is forecasting a modest recovery in the second half as apparently they employ the same shitty economists as the US government and the sell side. Finally, PetSmart shares were unleashed today and they rose strongly thanks to a solid quarter which consisted of a 6% rise in sales, a 24% rise in profits, and a 50% rise in bones after Jessica Alba stopped by to shop for pet supplies. The company earned $.41 per share which beat guesses of $.36 per share and gave full year guidance of $1.91 to $1.99 per share which was better than analyst guesses of $1.90 leading the company to remark that even in tough times, people still like to make sure their pets are properly taken care of and that they continue with the latest doggie style.
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In small cap news, a number of Money McBags’ favorite names got pounded today as if they were auditioning for Seymour Butts’ next opus. QCOR down 7%, CRUS down 7%, KITD down 7%, heck the only thing that treaded water was TMRK. But that’s the thing with these little low liquidity names on days when the market is going to zero, it only takes one PM to get a bit nervous and puke some shares out to absolutely crush the stock. And once that big seller leaves, the optics start looking shitty and new buyers are harder to attract, like anyone who has dated Charlie Sheen. So Money McBags looks at times like this as a buying opportunity as nothing about KITD or QCOR’s businesses have changed (CRUS being more consumer focused is a bit more tenuous). That said, WGO continues to drop and remember months ago Money McBags told you this stock was at most worth $7.50 and while it has taken awhile for them to start breaking down, we are making money on it and think it still has room to drop (because really, who the fuck is going to be dumping $40k-$100k on a new Winnebago when the used market is cheaper and discretionary income is shriveling up like Lindsay Lohan‘s career, and her liver?). So be patient with these names and be ready for some ugliness if the market trades down. Money McBags will sure as fuck let you all know if his opinion on a name changes as he did with his brief fling with LHCG and his top ticking of RICK.
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That said, Money McBags apologizes for not getting to a more detailed small cap analysis today. He has been swamped for time (dick jokes don’t write themselves, nor does research, unless it is from the sell side) and as all he charges for his analysis is your dignity, he sometimes needs to focus elsewhere. That said, welcome everyone from college humor where Money McBags’ attempt to get a facebook account was linked to today. Money McBags hopes you play around on the site a bit and even if you don’t understand finance, you at least enjoy the Sofia Vergara.
8/18/10 Midnight Report: Market flatter than 13 year old girl in honor of Roman Polanski’s birthday
Aug 18th
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.
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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.
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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).
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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.
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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).
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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.
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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.
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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.
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That said, these are things he’d like to understand in more detail about KITD:
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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?
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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?
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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?
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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)?
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5. Is it true what they say about the girls in Prague and do they really like playing chess?
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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?
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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?
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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.
8/17/10 Midevening Report: Market gets higher thanks to POT
Aug 17th
Money McBags is back today after technical difficulties kept him from dropping some market knowledge yesterday. He’d like to say his absence was because he was busy trying to solve some of the world’s greatest problems such as auditing the recent proof of P vs NP (which showed that P does not equal NP, though to be honest, Money McBags could have told you that in about 1 second, unless of course N =1) and figuring out once and for all who stole the cookie from the cookie jar (not so fast Jessica Simpson), but it was nothing so interesting. Unfortunately, the other day Money McBags’ 7 year old laptop refused to turn on no matter how hard he coaxed it, jiggled it, or promised it he would download more pictures of Heather Vandeven for it to scan on its hard drive. So today Money McBags is on a new machine with a keyboard that has keys spread wider than Larry Craig’s feet in an airport bathroom stall, so please excuse any typos as this keyboard seems to like fat fingers more than Portia Di Rossi does. Either way, thank you all kindly for still checking out the site yesterday. Money McBags is now only a nut hair away from his goal of 1MM readers (though it is a nut hair from Whitezilla after he downs a carton of propecia and then awakens from a 100 year sleep), so remember to tell a friend, a kind of friend, or just some douchenozzle you want to annoy, about the great When Genius Prevailed.
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Anyway, the market was up huge today, figuratively poking bears in the eye as if they were watching a new Japanese 3D movie, thanks largely to earnings from WMT and HD, a take out bid piped in for POT, and a continued disbelief in macro economic news which has been trending worse than Nouriel Roubini’s Q score at a meeting of the Fed. PPI rose for the first time in 4 months due to higher prices for food, consumer goods, and Playboy thanks to Kelly Brook’s very NSFW appearance. The .2% rise was inline with analyst guesses which makes analysts 1 for the last millenium and shows that inflation is currently in check. In other macro news, industrial production beat analyst guesses by rising 1% as factories churned out more computers, appliances, automobiles and shit most people can no longer afford. Of course the number released by the Fed is about as believable as Enron’s accounting or OJ’s alibi (umm, he had an alibi, right?) since as part of their “hold the shock and hope for no awe” strategy, they revised last week’s number downwards from a .1% increase to a .1% decline. Given that, Money McBags predicts next month the Fed will revise this number down to something less than 1% but no one will care because backwards looking revisions are never as fun as false hope (or backwards looking visions).
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Finally in US macro news, housing starts were up 1.7% but slightly below analyst guesses, building permits dropped by 3.1%, and last month’s 5% housing start decline was downwardly revised to an 8.7% decline which was less surprising than learning most smurfs suffer from blue balls (and not just because their skin is blue, but because there is only one fucking female smurf). Home builder sentiment is now at a 17 month low as they wait for new government home buyer tax credits, a full nationalization of the entire mortgage finance industry per Bil Gross’ suggestion (which just happens to help his bond book, so weird why he would want that), or the economy magically recovering (and Money McBags bets that will be the the third of those three things to happen).
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Internationally, Germany’s Zew monthly confidence index fell after both a huge Q2 that is not likely replicable and after remembering it had failed to use protection when sleeping with Nadja Benaissa. That said, the indicator still predicts modest growth in the second half of the year thanks to Germany’s surging exports led by machinery, automobiles, and Sonya Kraus calendars.
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The big news of the day though was that BHP put in a $38B take out offer for POT making it potentially the biggest pot sale since Snoop Dogg got his last royalty check. The bid of $130 was 16% above POT’s closing price on Monday and the stock was up >25% after the company rejected the offer and was rumored to have told BHP that it wouldn’t sell for anything less than $100B. POT controls ~20% of the world’s potash supply which is key to helping farmlands become more fertile as witnessed by that piggy Octomom lady who was seen feasting on a plate of potash before her pregnancy. The market obviously thinks the bidding will continue to go higher, with potentially more bidders entering, which means POT will likely leave potential acquirers hungry and red-eyed after staying up all night crunching numbers rushing to get a deal done.
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In other earnings news, WMT beat estimates and raised their earnings outlook as a result of cost cutting and strong global growth in China, Brazil, and Mexico. That said, their US same store sales fell by 1.8% which was the 5th consecutive quarter it declined as US consumers look for cheaper products at places such as dumpsters, the ground, and Stephen Baldwin’s house. WMT’s revenue was up 2.7% which was slightly below analyst guesses while their eps of $.96 beat analyst guesses by $.01 and the company raised their 2010 EPS forecast to $3.95 to $4.05 from a previous forecast of $3.90 to $4.00 with analyst guesses of $3.99 being right in the middle like a less noisy lucky pierre.
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Finally, Home Depot saw profits jump 6.8% and raised their full year EPS guidance by $.02 to $1.90. That said, their top line was weak and they lowered their fiscal year revenue guidance to 2.6% growth (down from 3.5%) but the market applauded that as the implied same store sales growth was in line with Lowe’s and that somehow gives the market confidence that things are not getting shittier.
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In small cap stocks, JOEZ jumped 14% after it apparently got some kind of shout out on CNBC (Money McBags isn’t quite sure what the shout out was as he watches CNBC like he watches tranny porn which is with both eyes closed, the sound off, and only in the presence of the SEC. Money McBags broke JOEZ down after their last Q and his opinion hasn’t changed since then that this company is likely too expensive right now even with their strong growth because they manage their bottom line as well as Gabourey Sidibe manages her waist line (though perhaps with less of a Cheetos smell). More interesting is that KITD was up another 3%+ after being up 10%+ yesterday after their strong Q. Money McBags has not wavered in his love of this little company that has done nothing but go down on him despite putting up solid numbers (and not the good kind of going down, but the bad kind, like with extra teeth, braces, and canker sores).
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Money McBags is going to have a more in depth analysis of KITD’s Q in a separate post either tonight or tomorrow morning. He apologizes for not getting to it today but things in the McBags’ mansion have been hectic as of late as Money is working on a book proposal (in which he proposes to electronically find and replace “Benjamin Graham” with “Money McBags” all across the internet), talking with hedge funds about providing them with his services (and for you small cap hedge funds out there looking, Money McBags is happy to listen to offers (no really, he is, he cleans up remarkably well), especially if they involve double bonuses), and trying to track down the greatest works of Carmen Kinsley.
6/7/10 Midafternoon Report: Hold on to your shorts as market continues on wild ride down
Jun 7th
The market was chugging along today, taking a brief respite to lick its wounds after Friday’s jobs report gave even the most virulent Bull a bad case of Foot in the Mouth disease, until it dropped precipitously in the last half hour like Helen Thomas’ reputation at a B’nai B’rith fundraiser. With Europe’s ongoing debt problems and the US’ stagnant at best job growth, investing long in the market remains more perilous than fighting a land war in Russia in the deepest of winters (though not as deep as Money McBags would go in Ophelie Winter) or challenging Anamika Veeramani to a spelling bee (or just challening Anamika Veeramani to spell her name). The US news that had the most effect on the markets early today was that Goldman Sachs was issued a subpoena from the FCIC, also known as the “too little, too late” commission. Money McBags eagerly awaits the FCIC’s findings in several years, after no doubt much excrutiatingly toilsome research and much tax payer money has been spent, where they will 100% determine that we are fucked (of course we could save the time and money and just look for the reset button, but that would be too easy). Seriously, that we need a 10 member commisson to figure this out makes as much sense as firing an employee because she is too hot (reason #989 why C is going to $0. And as an aside, if Money McBags owned a bank, he would hire Ms. Lorenzana to manage his branch deposits anyday). Anyway, the subpeona was issued as Goldman refused to submit documents the commission requested and when reached for comment, a Goldman spokesman said they just wanted to see if FCIC Commissioner Heather H. Murren would deliver the subpoena in person. All along, Goldman Sachs has maintained that the suit is “unfounded in law and fact” and if one can’t believe what a company that has manipulated the market while bringing in absorbitant profits and destroying value for average citizens thanks to their buddy-buddy taint tickling relationship with the federal government says, then whom can one trust? As Money McBags has maintained all along, Goldman and every other Wall Street bank were complicit in the destruction of the US financial system and it would be easier to find incriminating evidence on them than it is to find rolls of back fat on a topless, sunbathing Kathy Bates, you just need to find someone with the stomach to do that dirty job. So it’s good that the FCIC is trying to grow a sac and go after them, but until they actually make some charges, this is all still lip service (though if the lip service is coming from the aforementioned Heather Murren, perhaps it’s not all that bad).
Internationally, German factory orders apparently grew faster than the cells of Henrietta Lacks as they surged due to the weaker Euro, increased private sector investment, and the uptick in demand for industrial strength floor buffers to help clean up the sets of Germany’s growing scat film industry. Orders were up 2.9% in April from the 5% they were up in March which for the first time ever makes Germany Europe’s shining example. Also, Hungary is still in the news as investors continue to try to find it on a map and wonder if to solve their financial crisis they should just gobble up Turkey. Hungary’s financial crisis is the biggest turd to hit the country since the famous Diet of Turda in 1558 which established the freedom to practice Catholicism, Lutheranism, or by the name, apparently coprophagia. Finally, fears are starting up again that China is increasing prices which will cause world wide inflation as they raise the minimum wage by 20%, though it will still leave workers wanting more half an hour after they receive their paychecks. However, if China unpegs their difficult to spell renminbi from the dollar and allows their currency to appreciate while the their own product prices increase, foreign exports could become more competitve than Alan Greenspan at a bubble blowing contest.
In stock news, BP is showing their first signs of progress in stopping the oil leak which is destroying the Gulf and causing the slogan “drill baby drill” to be returned to Peter North where it rightfully belongs. At this rate, the oil leak will be stopped and cleaned up somewhere around the time Paris Hilton finds some dignity. Also, Money McBags favorite Dick “don’t call me Richard, or Rich, or Rick, or Rightaboutanything” Bove (and again, Bove rhymes with “Oy vey”) lowered his price target on BAC yet maintained his buy rating, mimicking his brilliant market call of Lehman right before they collpased. Bove cited increased regulation, foreign exposure, and his lack of understanding of the financial markets for the price target cut. Finally, BMY shares are taking off today as they announced that their experimental drug for skin cancer was found to extend the lives of patients with incurable melanoma by 4 months. Patients were ecstatic, until they were told that four months that were being extended were Winter.
In small cap news today ISLE is falling back to where it was pre-earnings and after earnings Money McBags said the jump up was likely a quick short squeeze as the stock wasn’t cheap and the company is debt-ridden, and features bleaker properties than the Detroit version of Monopoly. Not only is ISLE falling but WGO is finally ticking down under $11 on its way to $7.50. The price of this stock makes less sense than the 11 dimensions of M theory or any song by the Black Eyed Peas. And look out tomorrow for MLNK earnings. Money McBags has written about this company many times as it is cheaper than a kissing booth being manned by Gabourey Sidibe after she downed a gallon of extra spicy garlic fries and 2 liter of Dr. Pepper. It is trading at 3x a run rate EV/EBITDA with 50% of their market cap in cash. They key to tomorrow’s release will be their cash flow statement to see if they were able to avoid burning cash as their business will likely have another sluggish quarter (according to them, though Money McBags doesn’t quite understand why, since their biggest customer HP had a good Q, but perhaps tomorrow they’ll make it more clear). So look for the release because when the markets get better (which is sometime between 2015 and the next Galactic Empire), this stock should have some nice upside with its current limited downside (again, barring a huge cash burn this quarter).
5/21/10 Midafternoon Report: Market rebounds, now it needs to stop missing shots
May 21st
The market was up today as apparently it has been corrected like Stevie Wonder’s vision or Larry Craig’s family values. With Europe now fixed, unemployment shrinking, and monkeys flying out Money McBags butt, it should be back to lobster tails and BJs in no time. The good news is that nothing has really changed between today and yesterday, while the bad news is that nothing has really changed between today and yesterday. Money McBags remains more fearful of the markets than he is of supply side economics, Sylvester Stallone’s face, and girls with bacne so he is just trying to ride today out until the next correction begins.
In US news, the Senate passed a financial reform bill, despite the protestations of Senator Maria Cantwell who won the Huffington Post’s sexiest Senator competition, narrowly edging out Senators Barbara Mikulski (who shocked the judges with a daring hail mary by sporting a thong in the swimsuit competion) and the delightful Mary Landrieu (who tittillated the judges in the talent competition with her pig hunting calls. Soowee indeed.). In the bill, financials will have to go back to their room and think about how they have made the market feel. The legislation includes restrictions on predatory lending (which is bad news for cougars like Kelly Madison who are among the fiercest predators in the animal kingdom), a way to liquidate failed banks without bail outs (like um, doing fucking nothing), and restrictions on derivatives trading (like maybe making sure they all have underlying assets, and Money McBags would love to lie under Lisa Ann‘s assets). It also creates a “financial stability oversight council” which will exist until it fucks up by watching too much trannie porn like the SEC and a new council is created in ten years to clean up this mess. This council reads like a who’s who of economic red tape and includes the Treasury secretary, the chairman of the Federal Reserve, the comptroller of the currency, The “Million Dollar Man” Ted Dibiase, the director of the new consumer financial protection bureau, the heads of the Securities and Exchange Commission and the Federal Deposit Insurance Corporation, Scrooge McDuck, the director of the Federal Housing Finance Agency, an independent appointee of the president, and Malachi Constant so it goes. Wow. It’s like a mental masturbation all-star team where the head of every shitty bureaucracy in the US can get together to form a super bureaucracy and fight off the Legion of Boom. One troubling sign for the markets is that LIBOR rose to a ten month high as risk aversion is back like herpes, since it will never really go away.
In Europe, Germany’s lower house (the Bundestag) voted to contribute to Europe’s bail out followed by their upper house (the Bundesrat) agreeing as well which made Chancellor Angela Merkel (the Bundeshag) unpopular among the German people. Causing concern in Europe today was that the Markit composite purchasing managers’ index fell in May to 56.2 from 57.3 a month earlier. It was the sharpest fall since February 2009 when managers’ subscriptions to Nuts magazine were taken out of the index.
In stock news, DELL beat earnings and revenue guesses but gross margin disappointed like William Henry Harrison’s almost neverending inaugural address (I mean I know there was no televsion or movies or Spankwire to get home to, but really Will, couldn’t you have skipped all of that Roman history crap and just gone with some war stories and then got the fuck out of there? You know it was fucking snowing, right?) or the Pam Anderson-Tommy Lee sex tape (and calling it a sex tape is phonier advertising than the Ed Asner workout video). Dell not only missed on margins, but they tempered investor expectations by pointing out that the iPad is really fucking cool. In other stock news both Ann Taylor and the GAP put up good quarters and gave solid guidance as mediocre fasion is the new style.
As for small caps, TSYS continues to get hammered and Money McBags will investigate next week. This company should be growing as they offer mobile location based software and text message licenses so it is curious that their performance seems to be more stagnant than Mitt Romney’s political career. Money McBags has had a busy day so he apologizes for the lack of new research, next week he will get back to analyzing companies and trying to make money in a market that is rigged against retail investors. He remains very concerned about a big market drop next week but until then, he hopes you have a good weekend and tell a few thousand friends about When Genius Prevailed.
5/19/10 Midafternoon Report: VIX shoots up, claims it doesn’t have a problem, just wants to try to take its mind off global recession
May 19th
The market got clobbered again today (until a closing minutes rally) like it insulted Preston Brooks’ uncle or like it had one too many shots of tequila while watching the donkey show. Investors continue to fear the impending doom of Europe with their quaint monetary system, silly accents, and love of black jeans. However, macro news in the US was marginal today with inflation at its lowest level in 44 years which should allow the Fed to keep rates at historic lows until it causes the next bubble. Core inflation, which takes out the effects of things on which people actually spend their money like food, energy, and lap dances, was flat and thus led to the lowest 12 month gain since LBJ was president, yo-yos were a fad, and full muff was the style. Overall though, consumer prices fell by .1% so on average the little money you have left will now get you .1% closer to buying some shit you can’t afford. On the housing front, mortgage demand shriveled up worse than your “jumbo arm” after diving into the arctic ocean immediately after viewing a Hanna Hilton opus. With the federal tax credit for homebuying now expired, mortgage purchase applications fell by 27% despite record low rates and home sellers making sure all of their carpets match their drapes (and for the record, Money McBags is not in favor of carpeting for his hardwood). Making matters worse is that foreclosures rose to a record high 4.63% and now 1 out of every 7 homes is either in foreclosure or delinquency or as it’s known on the Street “a AAA rated Goldman MBS CDO.” Finally, the SEC is trying to put in circuit breakers for all S&P 500 stocks to combat the stranglehold high frequency traders have on the market (and as always, Money McBags is a big proponent of the Camel Clutch as the best stranglehold). While these measures may have the effect of bringing a knife to a gun fight or hiring Magic Johnson to judge a grammar contest, the circuit breakers will seek to pause trading for five minutes if the price of a stock moves by 10% or more in a five-minute period or if Bar Refaeli show up on the floor of any exchange.
Internationally, investors are still freaked out by Angela Merkel’s preemptive strike on naked short sellers and will make sure they have an extra pair of pants with them at all times just in case. Germany’s new shortng regulation has caused investors to wonder what exactly German leaders know that is not public as German bank stocks have yet to come under attack and usually politicians wait for things to crumble before acting. Strangely, the rest of Europe has not followed what could now be the biggest Merkel boner since Fred failed to touch second base (and Money McBags would never fail to touch Angela‘s second base). The failure of other european countries to follow Germany’s lead in regulating their markets is causing investors to question the strength of the EU while applauding Europe’s sanity because we all know what happened last time Europe followed the Germans.
In stock news, does anyone really care? No seriously. The market is not trading on fundamentals right now as forecasts for next year are more dubious than receiving a letter from Ted Kaczynski. Money McBags has been harping on analysts using normalized earnings as a valuation metric for awhile now since normalized went out the door with subprime CDOs, easy credit, and the advent of the very NSFW muff guessing (though Money McBags does use normalized earnings in his EPAX valuation, but there is something to be said about being logically inconsistent, just ask Mark Souder who apparently values families so much, he has more than one). Anyway, HPQ put up a nice quarter last night, beating analyst estimates and raising guidance thanks to strong demand for their PCs, a resurgence of their printer business, and absolutely no influence from Carly Fiorina in the past five years. The company earned $1.09 per share, beating analyst guesses by $.04 and gave full year guidance of $4.45 eps to $4.50 eps which topped analyst guesses of $4.45, or by about the amount of their beat this Q. The printing division grew revenue by 8% as they apparently supply the US Treasury with laser printers to spit out more dollars. In other stocks, TGT put up a solid quarter though not nearly as delightful as BJ’s who swallowed up the competition. BJ’s beat estimates and saw a 4% increase in customer traffic thanks to higher sales of candy, cigarettes and awesomeness.
In small cap news, once again Money McBags favorite KITD is getting demolished on high volume. Either a large owner had a margin call, a Portia De Rossi fat finger, or just wants the fuck out like Ricky Martin trapped in a closet. Here is what Money McBags knows:
1. CEO Kaleil Tuzman bought 100k shares the other week. When a CEO is buying, that usually means good news unless the CEO is Ken Lay and he is buying Enron. That said, this should be at worst slightly positive.
2. Their Q was ok by Money McBags’ standards but caused analysts to increase targets. This should be a slight positive as obviously, analysts are just guessing.
3. They diluted the shit out of shareholders last month and have yet to put the majority of that money to work. This is a big negative.
4. They are levered to EU revenues. Another big negative, like hiring Bernie Madoff to help allocate your assets.
5. Kelly Madison puts the ILF in MILF. And that is a huge positive for everyone involved.
6. When the markets are diving, nobody wants to own a weird little company posting negative eps (thanks to one timers and derivative charges) with a promotional CEO who just wants to build something big enough and quick enough to sell. There is obviously risk, that is why they call it gambling, I mean investing.
A lot of little stocks are taking it in the yingus right now. Look at former Money McBags favorite RICK which is down around 30% from where we sold and almost 40% from the top (and it is definitely time to start the due diligence on this stock again, especially if it invloves doing a stress test of their performers’ assets). Heck, FHCO was down 5% today, which was not unforseen by Money McBags, but their business is fine. The point is, no one wants to own dinky little companies when the world is going to zero, so take a deep breath and do some real due dilligence now because when the market stops falling, there will be some very good buys.
