The market was up briefly in the morning before investors could pull themselves away from watching NSFW art films (and Money McBags does not know the plot of that film but believes it is about the unbelievably wonderful place people in heaven go to after they die in heaven) and realize that the emperor has no clothes (and unfortunately this is not the emperor).  With the Fed announcement from yesterday beginning to sink in that QE2 is most likely on the way (and it is not the kind of QE2 that comes with a full wet bar and toga night on the poop deck), investors once again must face the realization that growth is more likely to be L-shaped (or backslash-shaped) than the U-shape those on CNBC constantly shout about through their foaming mandibles.  So be careful out there as the market whipsaws around as it tries to comprehend where the economy goes from here.

In macro news, home prices fell by .5% from June and by 3.3% from last year and in the least surprising move since Kirsten Gillibrand was voted hottest Senator (though that’s really only because since he turned 65, Joe Lieberman totally lost his bikini body), last month’s numbers were revised down from a .3% decline to a 1.2% decline as the “hold the shock and hope for no awe” strategy once again rears its ugly head.  The new home price numbers were worse than analyst guesses and there is now 12.5 months of housing inventory on the market (which is a 10 year high) not including all of the shadow inventory, upside down mortgages, and places the Quaids are squatting.

And even with record low mortgage rates, home loan demand continues to fall as applications for purchase mortgages were down 3.3% last week and refis were down .9% as the housing market witnesses the demand curve shift left while the supply curve shifts right in the housing market’s attempt to recreate the graph of Betamax purchases in the early 1990s or sales of Heidi Montag‘s debut album.  The housing market remains unhealthier than Ted Kennedy’s liver (and not because he was a drunk, but because he’s dead) and with people no longer able to lever up with HELOCs or even be in possession of the H to get their ELOC on, consumer spend will remain more stunted than Edward Nino Hernandez‘s growth.


Internationally, Spanish Prime Minister José Luis Rodríguez Ramirez Gonzalez Quinones Zapatero dialed up a page from the NBER and claimed that the European debt crisis is over, whew, it’s about time, Money McBags feels much better now.  Of course after claiming the end of the crisis, Mr. Rodríguez Ramirez Gonzalez Quinones Zapatero went on to claim that the rain in Spain does not stay mainly in the plain and the Sagrada Familia will be finished any day now.  Look, if Money McBags were the Prime Minister of Spain, the first thing he would do is hire Eva Gonzalez to take some hard dictation, the second thing he would do is order up a round of fucking seafood paella, and the third thing he would do, especially if he were sinking in the popularity polls and dealing with 20%+ unemployment rates, debt running at 12% of GDP, and more labor cuts on the way, would be to tell everyone everything is going to be ok.  People like being kissed before being fucked so claiming the debt crisis is over is really just the gentlemanly thing to do.

In the market, ADBE was down ~20% on guidance more disappointing than the end to Gogol’s Dead Souls (mainly because it had no end) or that hide the button trick Bishop Eddie Long liked to show his altar boys in private and about which they couldn’t tell anyone else.  The company said they were experiencing weaker sales in their Creative Solutions segment with US educators and with all products in Japan where they failed to produce bukkake friendly products.  While they actually had fairly strong performance in the Q, revenue guidance for next Q of $950MM to $1B was below analyst guesses of $1.03B and eps guidance of $.48 to $.54 was also mostly lower than analyst guesses of $.53 and caused a flurry of downgrades by the sell side who hope they can make enough noise and print enough gibberish to get institutions to trade with them.

In other market news, newspaper stocks were down big stemming from NYT’s shitastic forecast where CEO Janet Robinson addressed investors and analysts at a conference by simply saying “hey dingbats, you’ve heard of the internet, right?  Well they do what we do only for free and probably with less plagiariasm, so we’ve got that going for us.”  Money McBags would rather go on a date with Nadja Benaissa than own a newspaper stock, so whatever.


As for things moving up, KMX rose ~7% as they crashed through estimates thanks to something called a recession making used cars the preferred choice of the downwardly mobile (or more commonly known as: “Americans”) and NFLX continues to soar after BBI claimed bankruptcy.  Money McBags has said it before, but if you want beta in the consumer space in your portfolio, NFLX is the way to go.  The valuation is ridiculous but they are clearly winning in a growing space by focusing on video delivery and aren’t content with a simple stagnant through the mail DVD business.  These guys are fucking innovators and if Money McBags is going to expose himself to hyper growth in this current market, it is only going to be with companies on the cutting edge and selling products that people will use even as their pay checks dwindle (and yes, streaming videos should really pick up as more people stay home and take advantage of their 50 inch flat screen TVs before Rent-A-Center comes and repossess them).

In small cap news, Money McBags ran a bunch of screens yesterday to find new ideas and one of the companies that looked promising is breaking out today for no fucking reason that Money McBags can tell other than perhaps investors caught Money McBags’ scent on the case (and that scent is a nice lilac mixed in a honey pot).  That company is HSTM and they provide some kind of internet research and training to the health care sector.  Money McBags was going to look in to them later this week as right now he has no fucking idea if they are a buy or a sell but they popped up so much today on heavy volume (they traded over 200k shares, something they have only done once in the last year) that he thought he’d throw this one out there to his readers as a half-baked idea to see if they know anything about this company.

In the 20 minutes of research Money McBags has done, he likes that revenues have been growing, he likes their returns (though he hasn’t yet thoroughly dug in to their financials), he likes the $18MM cash and no debt on the balance sheet, he likes that they somehow had a greater than 100% customer renewal rate (no really, it says so in their last earnings release), he conceptually likes their segment of being in the health care training space as that seems like a good opportunity given the constant training and retraining physicians need, he likes their institutional ownership (T Rowe owns ~11% and Wellington owns ~3%), and most importantly (though perhaps unrelated) he likes Malin Akerman.   That said, he knows about 5% of what he would need to know to understand this company as he hasn’t even read their investor presentation because Money McBags’ computer for some reason doesn’t want to read Adobe Acrobat files today (no wonder that shitstain of a company was down today).

Here are the obvious questions that need to be answered:

1.  What segments does HSTM sell to and how big is that target market?

2.  What makes HSTM’s product/offering different from or better than competition?  And who the fuck is competition anyway?

3.  What is driving growth and is that a long-term trend or is there some short term catalyst?  Revenue was up 14% last Q and it looks like that was driven by internet-based subscriptions, so is that the growth driver?  (And Money McBags loves internet based subscription models with their low fixed costs and easy distribution).

4.  What the fuck is this SimVentures thing that HSTM is investing in right now?  Are they struggling for growth in their core business or is this a complementary opportunity?

Those are just the most basic questions.  It looks like the company is on ~$14MM EBITDA run rate and has ~$95MM enterprise value so trading ~6x current year EV/EBIDTA and they are on ~$.35 eps run rate so they are trading ~15x current year earnings, but top line growth was 10%+ and operating earnings grew 25%+ so perhaps we’re on to something here.  Money McBags is going to do more research over the next few days in to HSTM, and in to Emily Scott, but if you know anything about either of them, hit Money McBags up in the comments section or at