Posts tagged Goldman Sachs
1/3/11 Midnight Report: Just Another Panic Monday for Shorts, Will Tomorrow be Their Funday?
Jan 4th
The market ran today like Ben Bernanke was giving out free money (which um, he kind of is, as long as you have already proven that you are untrustworthy and have bad judgment), or giving out free shares of Facebook (which at this rate will be valued higher than an original copy of Birds of America, a dozen Faberge eggs, or Jessica Hall’s vulva, when they go public) as investors rejoice in the new year as if the new year were 1997. So we’ve now gone from “rally” to “FUCKING RALLY” because what goes up, doesn’t come down (except for some birds in Arkansas, an erection after seeing Kathy Griffin in a bikini, and well, everything fucking else in the world).
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But who cares because with a spree of relatively positive macro data, investors are willing to ignore that the unemployment rate is 10% (~18% including the discouraged, the beaten down, and the people who green lighted the Tron sequel), that the average stock ownership lasts just 22 seconds (or twice the time Money McBags would last with Kelly Brook), and that the dollar doesn’t buy what it used to anymore (except for dong, because one can currently buy a fuckload of dong for a dollar, which explains why Tom Cruise doesn’t work as much). Investors are willing to throw money in to the market because their memories are shorter than the line for handshakes will be at Thomas Hoenig’s upcoming retirement party. But great, really, with common sense now about as useful as Zsa Zsa Gabor’s leg (or her uterus), let the capitulation begin, just remember that capitulation isn’t just an anagram for “Anal pic I tout.” If the market can get back to 1500 with 10% unemployment, then Money McBags says we need to lay a fuckload more people off because clearly there is some strange inverse correlation here.
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In macro news today, the ISM’s manufacturing index for December rose to 57, which was slightly better than the 56.9 guessed by witch doctors and was the 17th consecutive month the index rose. Wow. Money McBags hasn’t seen something rise that consistently since the market for MBS CDOs right before the meltdown or Jessica Alba‘s popularity before she got married. Leading the way were faster rates of new orders, though unfortunately those new orders weren’t for jobs as factory sector employment dropped to a nine month low.
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In other US macro news, construction spending rose .4%, up from a .7% gain in October, and better than the .2% gain guessed at by analysts, as stimulus spending seeks to make sure every state has at least one bridge to nowhere. Federal spending rose 8.2% with the government investing in such things as schools, office buildings, and even water supply plants (and with $35B to spend, the government no doubt went all out and installed gold-plated pipes in to these facilities to make sure all showers will be golden). Absent government spend, which is a bit like reading Dickens (or Money McBags) absent run-on sentences, judging Alan Greenspan absent his interest rate policy, or giving a critical assessment of the work of Janine Lindemulder absent Where the Boys Aren’t 10, private construction was up only .3% and local government spend was down .1%. So as long as Uncle Barack and Aunt Timmy keep getting their spending on, everything should be ok (except for the dollar and the long-term economy, but those are just minor fucking details).
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Internationally, China’s manufacturing slipped a bit as the country has already produced an oversupply of pee-pee flavored Coke (and yes Money McBags is aware that he goes to that line way to often, but if you got anything better, let him know). The index fell from 55.2 to 53.9 as Premier Wen Jiabao seeks to tighten monetary policy to curb inflation and to not be such a dick.
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The big news of the day was the market though as stocks shot the fuck up like they were Heath Ledger on a bender. If you owned anything, you made money today so congratulations for playing, but unfortunately with success like that, none of you win the booby prize. Financials led the way today as all of a sudden investors believe whatever banks say they put on their balance sheet (and Money McBags trusts bank balance sheets about as much as Maria Menounos trusts bikinis). Bank of America pushed financials higher after they agreed to pay a $3B settlement to FNM and FRE for selling them some bad mortgages (or what is known at Goldman Sachs as “Tuesday”). That said, there are still likely to be $8B to $35B of claims against BAC from insurers and private investors who bought tainted loans from the bank after being misled by BAC’s shitacular credit approvals on mortgages, so buyer beware.
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The other big news was that Goldman invested ~$500MM in the Facebook, giving the Facebook a ~$50B valuation which is roughly equivalent to the GDP of Belarus, the personal fortune of Warren Buffett, or a week of trades by Brian Sack. The Facebook now promises to be the most overvalued thing on the internet since AOL or that fucking dancing baby shit. More importantly, with the Facebook’s cockposterous valuation, Money McBags is once again bringing to your attention that he has put the award winning When Genius Prevailed up for sale with a starting price of only $10MM. While a $10MM valuation may seem high, Money McBags can assure you it is actually quite low as it is only .02% of the value of the Facebook and if you all don’t get .02% of the enjoyment from the award winning When Genius Prevailed that you get out of the Facebook, then Money McBags is not this author’s real name. The point is, for $10MM you can have one of the hottest internet properties (though not as hot as this very very NSFW property) and not only that, but Money McBags will promise to keep running the place for the next 5ish years and will devote 100% of his time to it (and right now, Money McBags does this with only 50% of his time, so imagine how titriffic it would be with 2x the McBags). If you want to talk turkey, Money McBags is reachable at moneymcbags@gmail.com, serious offers only.
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Elsewhere in the market, ODP and SPLS rose strongly on upgrades from Janney which shows the preposterousness of the market since it marks the first time any stock has moved because of a Janney analyst’s recommendation. Also, BKS jumped 10% after reporting same store sales were up ~10% in the holiday season thanks to their e-reader (the awfully named Nook) and strong sales of Economics for Dummies in their South Side of Chicago book store.
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In small cap stocks, pretty much everything was up led by micro cap crappy names such as NLS and LOV where shorts were likely covering as fast as their prime brokers would let them. Money McBags did start a new position today in RICK (though unfortunately that position was not a royal blumpkin) as the stock is trading at only 8x to 10x earnings despite reasonable growth and a likely strong Q coming up with the Super Bowl in Dallas as RICK has a club on every street corner in the area. With stocks at ridiculous valuations right now, RICK is one that remains reasonably priced because there is always a good deal of headline risk with the company.
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That said, that stock should be worth at least $12 as Money McBags guesses the company should earn between $.83 per share and $1.00 per share next year using the same growth the company had during the recession (and Money McBags broke this all down for you after their last Q). So feel free to join Money McBags in this investment which should not only make you some money, but will also allow you to give your lady friends a new excuse for going to Rick’s besides claiming you just have a huge amygdala. It’s called hands on due diligence, what all great analysts aspire to accomplish.
12/15/10 Midnight Report: Rich Guys Vote To Extend Tax Cuts For Rich, Laughter Trickles Down to Middle Class
Dec 16th
The market continued to move sideways today as economic data was less relevant than Bernie Madoff’s thoughts on the CAPM and fund managers don’t want to rock the boat (though they’ll happily tickle the little man inside of it) this close to year end bonuses. This lack of volatility in the market is less surprising than John Boehner crying over a paper cut (or a tax cut) or finding out that old men still want sex (and you really needed to do a study to for that?).
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The big news of the day was that the Senate passed the tax cut plan ensuring the “spend and don’t tax” policies of George W. Bush will continue to bankrupt this country for generations to come. It is the Government’s ultimate fuck you to anyone who still believes in the Ricardian equivalence proposition or the mathematical concept of compounding.
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The bill extends all of the tax cuts that were enacted in 2001 and 2003 for another two years (until they will be extended again so Wall Street traders who make billions of dollars by hitting a button won’t ever have to downgrade from their daily diet of five unicorn fetuses to only four) and it extends expanded unemployment insurance benefits through 2011 (so the unemployed can eat for another few months while employers tell them their skills have become more obsolete than rotary phones, penny-farthings, and full bush). The compromise will also cut payroll taxes by 2% (which might stimulate hiring if margins weren’t going down like Gayle King at Oprah Winfrey’s house) and will allow businesses to write off 100% of capital investments until 2011 which means executive suites will all soon be redone with neorests, rockstars, and Ashley Dupre. At this rate, Wesley Snipes will be let out of jail early, and not for good behavior, but rather for paying too much in taxes over the past 10 years. But party on, politicians, party on.
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In macro news, both the core and actual CPI rose by .1%, slightly below analyst guesses of .2% and completely irrelevant to anything. Industrial output rose by .4% which was its biggest gain since July as a spike in utilities partly offset a 6% decline in the production of motor vehicles and a 15% reduction in hope. Finally, applications for home loans fell last week as mortgage rates rose to 7 week highs and people still don’t have any fucking money to waste on expensive declining assets (which is terrible news for Elizabeth Taylor’s vagina).
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The only other bit of interesting US market news was that the inconceivable Lloyd Blankfein and his fellow warlords are slated to get $111MM in bonuses from this year and 2007 as a reward for destroying the economy but having enough political pull to stay afloat. Wow. And who said only massages have happy endings? Blankfein will net $24.3MM by himself which he promises to put towards world peace, making sure all of Camille Crimson’s classes (probably NSFW) at the Learning Annex are free, and developing a vaccine for iocaine powder. Just kidding, he’s probably going to put it all in a pile in the middle of his bedroom and dance naked around it as he wildly cackles at the robbery he got away with in front of everyone’s eyes. Damn it feels good to be a Banksta.
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Internationally, fears of European defaults are once again rising (though it’s unclear why they ever sank) as Moody’s said they are putting their credit rating of Spain on review for a possible downgrade. While this would have more credibility if Moody’s hadn’t both missed the biggest global financial meltdown in 80 years and also been complicit in it, it was enough to spook the markets (and Money McBags means spook in the literal sense, so don’t go all Coleman Silk on him). This news, coupled with violent worker strikes in Greece (and Money McBags would have coupled that news with a nice Chianti, and not worker strikes, but whatever), sent the Euro down and once again made people realize that like RuPaul, Europe’s banking system may be hiding something underneath.
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In the market, Goldman and Nomura cut EPS guesses for Morgan Stanley from “made-up” to “made-up and shitty.” Joy global was up~7% after a better than expected Q which saw profits rise 18% as the CEO said they “simply dug the fuck out of some more shit.” Elsewhere, Honeywell fell a bit after they gave below guesses 2011 earnings guidance even though profits are supposed to rise 17% to 24% thanks to the production of huge cockpits. And finally, Best Buy continued to get pounded as this is one dip investors refuse to buy (and this is another dip investors refuse to buy).
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In small caps, an old Money McBags favorite that we all made money on earlier in the year put up an ok quarter today and jumped up ~7%. That stock is of course RICK, where we were once proud not just to be owners, but also to be clients, especially when we basked in the greater than 50% returns we had before selling at the beginning of March. One of the reasons we sold was their announced acquisition of competitor VCG Holdings but apparently RICK pulled out of that early as they didn’t have proper protection, so that makes this company much more interesting again.
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On the call, they said the economy is still too hit or miss to give guidance, but November was on par with October after seeing a ~10% drop in that time period last year. Other positives include the Las Vegas club not leaking money anymore (because right now all of the Vegas club owners have a truce on not paying cabbies too much to bring people in) and coming up basically EBIDTA breakeven (ok, it’s bad that this club is still eating a dick, unless it were Money McBags’ dick the lovely entertainers were eating, but whatever). They’ve also started having success with promotions such as $2 drink night. The CEO said $2 drink night packs the clubs so much that they are able to upsell more VIP tables so guys can get away from the mass of cock crowding the main floor and enjoy their tits in a much more refined area. As bottle service is usually about $500 per in these VIP areas (and Money McBags has the credit card bills to prove so), that certainly makes up for the cheap drink promotion.
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Other positive include the announcement that they are buying two more clubs (one in Indianapolis and one by the Dallas airport) and have been snatching up (pun intended) shares in the market at ~$6 (or .3 lap dances, and for the rest of this piece, Money McBags will be using his preferred denomination of lap dances). And oh yeah, the Super Bowl is in Dallas this year where RICK’s will have 7 clubs so that January weekend will likely make it rain in RICK’s P&L like the P&L were in Tutunendo, Colombia.
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So look, RICK’s top line has shown it can hold up in the recession having grown ~11% for this fiscal year with same club sales up ~7%. Even unemployment officers understand lap dances aren’t discretionary but rather therapeutic distractions to help people forget that they live in a cruel and angry world. For the year, RICK had a GAAP loss of ~400k lap dances but taking out the 1MM lap dance impairment of assets they took on their Las Vegas club (for buying it at the top of the fucking market a few years ago), they would have earned ~485k lap dances and taxing that at 35% would have equaled ~.033 lap dances per share so the stock is trading at ~11.5x that trailing number which is not bad for a consistent grower.
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They also earned ~880k lap dances of adjusted EBITDA for the year which means they are trading at just over 5x EV/EBITDA (and they have been buying shittier clubs on sale for only 3x EBITDA). So the stock is actually pretty fucking cheap. That said, this stock will always trade at a discount just because one toothy hummer in the champagne room to the wrong Senator and they could be shut down in a second.
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That said, if they can grow top line 10%, have operating costs only grow 7.5% (like they did in 2010, though they just upgraded their systems so operating costs shouldn’t grow as much), lose 200k lap dance in interest expense and pay a 35% tax rate, they will earn ~.044 lap dance per share and they are currently trading at only 9x that. This company has all of a sudden become interesting again with a solid year.
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Yeah, it’s a bit of a shady business, and sure they have made some bad acquisitions (which is why walking away from the VCG Holdings deal makes Money McBags feel a fuckload better), and of course it is a bit disconcerting that the economy is so fucked that they can’t get a proper read on next year, but as long as the company can maintain the same pace that they have had throughout the downturn, it is pretty fucking cheap. Should this sell off and get back down to ~.3 lap dances per share, it is certainly worth buying.
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Anyway, pay attention for the next couple of days to see if it can build a new base, and if it does, that could mean a good entry point (though not as good as this entry point) and should provide enough returns for plenty of champagne in the champagne room.
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Editors Note: As the next 2.5 weeks promise to be duller than amish porn or a Henry James novel (and Money McBags still hasn’t forgiven Mr. James for the 4ish hours of his life he wasted reading The Bostonians which had all of the action, intrigue, and humor of a shriveled taint hair), Money McBags may struggle a bit to make this shit interesting. He could just post pictures of Rosie Jones, fabricate stories like other great media outlets, or simply try to write in only rhyming iambic pentameter (Today nothing went on in the market, news was lighter than a tiny ant’s shit) but those are all gimmicks and you all know Money McBags is cockposterously against gimmicks and all for originality. So bear with Money McBags for the next few weeks as he navigates the dulldrums (misspelling intended) of the end of the year, and tries to continue to take the market from boring and stuffy, to boring and slightly less stuffy.
