Posts tagged India
The market rallied today as election booths underflowed with discontented voters, unemployed workers looking for a warm place to hang out during the day, and douchey hipsters who thought the lines were for the Apple store.
Apparently the Republicans are going to win back the House and thus have 1/4 of the decision making bodies in the US (the others of course being the Senate, the Executive Office, and Marisa Miller because Money McBags would do whatever her body decides) which is somehow a good thing even though their policies are what got us to where we are in the first place. So hoooooooooooofuckingray. Instead of the party who can’t get us out of this mess having all of the power, they can now share part of it with the party who got us in to this mess as the clusterfuck of bad ideas and incompetence will continue. So Rally fucking on.
To use a terrible analogy, it’s like when Bo and Luke Duke came back to the Dukes of Hazzard after their contract dispute led their gay cousins to take over for a season. While it might have been a marginal improvement, the show still fucking sucked and all anyone wanted to see was Daisy Duke anyway, so who fucking cared whose turn it was to drive the racist car. And that is like this election because no matter who wins, the economy will still suck and all anyone wants to see is real economic growth (and Daisy Duke), so who fucking cares which unoriginal, solution-less dickbag drives the figurative legislative car.
Hopefully you all did the sensible thing and voted for “None of The Above” and wrote in Money McBags of the BOGUS party (Bail Outs Get Us Savings) who will finally take this farce of an economic non-strategy all the way. Money McBags spent at least half the day writing his acceptance address (and the other half googling Cintia Dicker‘s address) and promises to return this country to fiscal prosperity through destroying it and building it back up with more bail outs, more TARP, and especially more PPIP (though what else would one pee?).
As for macro news, it was more non-existent than people who have read all of Middlemarch or Art Laffer’s credibility. The story remains QE2 and it will be very interesting to see how the market digests the size of it (perhaps they will ask Peter North’s co-stars for advice) because there still remains a lack of consensus as to how much the Fed will ease. Of course the silliest part of all of this (even sillier than this trend of giving up showering and deodorant and way the fuck sillier than suing Mcdonald’s for being fat), is that the prospect of QE2 has rallied the market when the whole reason for QE2 is that the economy is more fucked than Capri Anderson after an eight ball in Charlie Sheen’s hotel room. So while QE2 is somehow the panacea for the dying economy (just like QE1 was, and TARP was, and everything else that has led to cyclically low 2% GDP growth (until the 2% is revised lower) was), the market is acting like that panacea has already cured the disease when in fact it may exacerbate the disease like Mentos in a Diet Coke bottle. This is as confusing to Money McBags as men who look like lesbians and ergodic theory so as the market rallies, he is left scratching his head in amazement (or perhaps it just scabies).
Internationally, Australia and India both raised rates as their economies continue to be healthier than Gabourey Sidibe‘s appetite after skipping both first and second breakfasts. China’s unquenchable thirst (perhaps caused by too much soy sauce) for natural resources has helped drive Australia’s economy higher and as a result of the rate increase and Bernanke’s folly, the AUD reached its 28 year high last night achieving parity with the US dollar. Money McBags is now counting down the days until the dollar is no longer worth even a dong, which will be bad news for the Key West Vietnamese population.
Also, something to be aware of as your EPV etf drops faster than Abe Vigoda‘s balls in a steam room and that is that Spain’s 2nd largest bank is looking to Turkey for growth by buying a 25% stake in Turkish bank Garanti. Now look, Money McBags is well aware of the benefits of Turkey’s growing population, its youthful demographics, the the way it perfectly complements cranberry sauce, but something strikes Money McBags as being a bit fucked up when that is where Spain is turning to for growth. First of all, it means Spain realizes it is fucked for a long time and that is about as good for Europe as Lillian McEwen’s memoir will be for Clarence Thomas. But secondly, BBVA stretching for growth here opens up all kinds of risks because whenever Money McBags hears of a financial services company trying to buy growth, so many red flags go flying up that you would think he was part of a semaphorist circle jerk. So while Europe is running right now, be very very careful.
In the market today, PFE had what Money McBags calls a a Jennifer Lopez Q as they put up a good bottom line but a weak top line. The company sold off ~1% as their revenue was below analyst guesses thanks to a stronger dollar and Lipitor sales falling by 11% due to increased competition from generics and fat people being unable to afford to eat as much. Also in the health care space, MHS put up a good Q and rose ~9% as they were able to grow their business and maintain margins which the Street thought would be less likely than Paul Krugman exhibiting modesty (or common sense) or Money McBags caring which of the Bernaola twins was tickling his taint.
Elsewhere, MA put up a nice Q and rose ~5% as eps of $3.94 grew 15% and beat analyst guesses of $3.54 as consumers max out their 1% cash back credit cards in order to earn income (like that is any stupider than continually borrowing from China?). ADM got cropped on as profits dropped due to weak grain merchandising margins and CLX tumbled by ~4% after the conglomerate posted disappointing earnings and lowered full year numbers as apparently all 800 of their categories sucked.
In small cap news, NTRI cut some dead weight by lowering costs and rose ~9% as they raised full year guidance. Money McBags has talked about this name many times here as they have plenty of leverage in their model but management has executed worse than a San Diego TV station’s news cast. Money McBags hopes to break down their Q in more detail if he gets time later in the week but with revenue down 4%, he isn’t itching to buy any. Also, ININ released their Q3 after their pre-announcement the other week and shot up ~9%. Remember, Money McBags broke them down the other week and pointed them out as an interesting company and told readers to listen to their call to see if they discussed what this new leg of growth was (Money McBags would call it a third leg of growth, but that would be way too easy). Money McBags also hopes to get to their call later in the week but they did mention that their cloud-based communications orders are seeing strong increases.
Which of course brings us to TMRK. If Money McBags were to write a ballad for TMRK, it would be called “To all the small cap companies he has loved before” because TMRK exhibits many of the traits he looks for in a small growing company. They are in the early stages of a huge multi-year growth market that continues to consolidate, they have a niche advantage (for now) with government business because Uncle Sam wants his servers the fuck out of Washington in case one of those Al Qaeda fucks gets on the loose (and by colocating their shit down in TMRK’s Miami centers, the government’s data is hella safe because even Al Qaeda loves them some South Beach), their revenues should continue to grow 20%+, and fund managers have been sitting on their hands on this one waiting for it to take off so they can jump in like lemmings (seriously, over the past 4 to 5 months Money McBags has spoken with 3 to 4 fund managers who all said they like the name, but are tired of it never moving. Well guess what motherfuckers, it’s moving now. And Money McBags means motherfuckers in the nicest way since he’d be happy to do some one off due diligence for you, or even perform at your kids’ upcoming bar mitzvah, for a few shekels).
The only things that worry Money McBags about this company are the debt and the fact that they have no earnings (and Money McBags rarely buys a company with no earnings (you hear that SPRT?) but they have solid EBITDA and cash flows) but the CFO said he expects positive EPS to hit in fiscal 2012 and this was fiscal Q2 2011, so in the next 4ish Qs.
As for this Q, revenue was up 22% to ~$85MM, EBITDA was up ~28% to ~$23MM, and guidance was raised from $345MM to $350MM on the top line to $350MM to $353MM with the low end of EBITDA guidance increased by a nut hair to $100MM to $102MM. But the most exciting part of this business, the sizzle to their steak or the rust to their trombone if you will, is that their cloud computing revenue was up another 15% sequentially to a $30MM annual run rate. So sure it is <10% of their top line, but Money McBags is more convinced that cloud computing is the way of the future than he is that the market is structurally broken or that Molly Sims is hot. So this is the little growth engine that in time can propel this kind of boring colocation company to new heights.
The company is now trading ~11.5x 2011 fiscal year EBIDTA guidance which is not cheap and around where take-outs have been happening but as Money McBags said, this is a long-term play, kind of like the Indian outsourcers 10-15 years ago or Jennifer Lawrence. So as long as valuation doesn’t go haywire, Money McBags could give a shit if it is trading at 9x EV/EBITDA or 13x EV/EBITDA because he fully expects EBITDA to keep growing in the double digits for several years so this is a company he just kind of lets sit there and in five+ year he’ll collect his profits (that is if we still have an economy).
Money McBags is busy today so just a few quick shout outs as the market goes through a bit of a sell off due to concerns over increased taxes in the health care bill, Germany backing out of bailing out Greece, and the officiating in the Robert Morris-Villanova basketball game yesterday which was so bad that investors are questioning the integrity of all markets (though it surely left Nova alum Tim Donaghy very proud).
The big news of the day is that Alan Greenspan is out with a begrudging mea culpa in the form of a paper titled “The Crisis or: How I Learned to Stop Worrying and Love the Bubble.” He’s presenting this paper to the Brookings Institute and when he’s done, the institute will likely use it to replace their dwindling toilet paper reserves. In the paper, he says about letting banks get bigger than Kirstie Allie’s tuchus after a week long Sizzler binge:“Regrettably, we did little to address the problem.” Wow, you think Captain Obvious? I hear Joseph Hazelwood also regrets doing little to avoid crashing into Bligh Reef and Lady Gaga regrets doing little contain this country’s noise pollution problem. About creating the housing bubble, Greenspan said “We had been lulled into a sense of complacency.” Awesome, really just awesome. The market had its biggest crash in 80 years because the guy in charge of trying to regulate it was lulled into inaction like a John after a post-coitis taint massage (of course that kind of inaction just leads to your wallet getting stolen while Greenspan’s inaction led to 10% unemployment). But Greenspan still refuses to take full responsibility and to quote the NYTimes article (notice how Money McBags sources his material, even when it is from the NYTimes so probably all made up anyway) he believes the housing bubble was caused by “a sharp drop in long-term interest rates from 2000 to 2005, brought about by export-oriented growth in developing economies, especially China, after the end of the cold war.” He then went on to blame the Chinese for stealing WMDs from Iraq before the US invaded, for any movie starring Adam Sandler, and for putting way too much pee pee in his coke. But to further drive home his innocence (upcoming bolding from Money McBags), he said “it was long term mortgage rates that galvanized prices, not the overnight rates of central banks, as has become the seeming conventional wisdom.” He then further decried conventional wisdom by saying it is ok to run with scissors, to swim fewer than 20 minutes after eating, and to say “Beetlejuice” 3 times quickly. He did lay out some ways to help curb another financial meltdown and those included higher capital requirements and liquidity ratios (which wouldn’t have mattered since there were no capital requirements on CDS), having debt convert to equity when capital levels fall to a certain level, and never to hire him to make policy decisions. He ended by placing the blame solely on the shoulders of capitalism: “Unless there is a societal choice to abandon dynamic markets and leverage for some form of central planning, I fear that preventing bubbles will in the end turn out to be infeasible.. Assuaging their aftermath seems the best we can hope for.” Ok, look, first of all Money McBags was not an English major and he admits he only read his copy of Strunk and White for the pictures (though he is still a bit scarred from the centerfold featuring the longest dangling particple he has ever seen) but Mr. Greenspan, you can’t end a sentence with a fucking preposition. “Assuaging their aftermath seems the best for which we can hope” fixes that problem, I mean for fucksake you have proofreaders, right? But diction aside (and Money McBags would love to serve Hayley Atwell a side of his diction), Greenspan gets all human nature on us by basically saying as long as people are greedy, bad shit is going to happen. And you know what? That is one thing about which this guy is right. No matter what regulations are put in to place, people will always find ways around them so it is up to the regulators to be pro-fucking-active to try to quell this rather than being lolled in to complacency by their Wall Street tickle friends like Senior Greenspan was during his reign of error. And if the Fed can’t do it, Money McBags would be happy to bring Warren G. in to regulate shit because Wall Street bankers aren’t going to fuck with the LBC.
In international news, Germany conjured up their second most famous citizen in history, Sargeant Shultz, by telling Greece, “I see nothing, I hear nothing, and I know nothing” and therefore, “you get nothing.” Germany basically called Greece out in their game of chicken and told them they won’t support a bail out and to take their problems to the IMF. It is embarrassing for Greece to be shunned by daddy like this but they shouldn’t have spent their whole allowance on ouzo and a night with Julia Alexandratou while still ordering those CDs from Columbia House (and if you’re going to order CDs from Columbia House, at least use a fake name like Richard Hertz from Holden, MA). France disagrees with this move citing the desire for the EU to remain united and reminding people what happened the last time everyone followed the Germans. In other international news, India surprisingly raised their interest rates today by 25bps to try to curb inflation brought on by their continued growth. Money McBags has no jokes for this, sometimes one just has to report the news.
In small stock news, PALM once again put up a quarter so bad that even Bernie Madoff questioned their integrity. They lost $.61 per share which was much worse than analyst estimates of a $.42 loss per share and gave revenue guidance for next Q of $150MM which is less than half of estimates. Wow. This has driven the stock down 20%+ and caused several analysts to question the company as an ongoing concern. Canaccord Adams’ analyst dropped his stock price to $0 and said “Palm’s troubles will only accelerate as carriers and suppliers increasingly question the company’s solvency and withdraw their support.” That is just awesome. Money McBags fully supports any analyst who comes out with a $0 price target for anything. Also, Money McBags unloaded his shares of WILC today. He made a small profit and believes the company has huge upside if you can believe anything management says. The problem is, their actions go against everything they say (which Money McBags broke down for you last week) so why bother fighting this one when there are easier ways to make money?
3/2/10 Midevening Report: Market rises as member of the Fed retires, economists worried more retirements could cause bubble
The Fed is getting all jiggy with the markets today and the markets seem to like it. First Ben Bernanke’s number one henchman, the honorable Donald L. Kohn who in 40 years of service at the Fed never saw a market he couldn’t inflate, announced he is resigning from his position as Vice Chairman of the Fed in order to pursue other ventures more productive to society like finding out where the all the bees went, calculating Pi to the 1 billionth decimal (hint: 7), or figuring out how to get a money shot in lesbian porn (and squirting is not an acceptable answer). When asked why he was retiring, Kohn cited his age, his family, and his annoyance at always having to leave the seat down for Janet Yellen in the Federal Reserve bathroom (and I am told the right stall still contains the graffiti from 1934 of former Fed Chairman Eugene Black stating “Once you go Black, rates will never come back,” which helps explain why he was only in that position for only 1 year). Journalists have begun speculating on who Obama will nominate to fill Kohn’s seat at the Fed with leading candidates being the esteemed former President of Harvard Larry Summers who was forced to resign from that position due to a vote of “no confidence” (and seeing how the Fed is supposed to help instill confidence in to the economy, Summer’s “no confidence” vote may be a bit of a red flag), some lady named Christina Romer who actually looks a bit like Larry Summers in drag (no really, check it out, this is Larry Summers, this is Christina Romer, have you ever seen them in the same room?), and of course When Genius Prevailed’s own Money McBags (and Money McBags will certainly turn down the nomination as it would impede on his time at his not safe for working at the Fed, yet imminently important, hobby of guessing muffs (NSFW)). Not only is Donald Kohn retiring, but rogue Federal Reserve Board Member Thomas “T-Ho” Hoenig who is the yin to Bernanke’s yang, the Mary Kate to Bernanke’s Ashley, and the turd to Bernanke’s punchbowl, is out again saying rates need to move up sooner rather than later. While Benny B seemingly dissed T-Ho last week when congress axed him about rates and he said they would be kept low for an extended period of time, T-Ho got all upitty on Benny B and went on CNBC to air his grievances about indefinite low rates, inflation, and Benny B not keeping it real (rates that is). T-Ho said: “You are inviting future problems” and then removed his gold teef, took a swig on his 40 of Mickeys, and reiterated that a zero percent fed-funds rate is “inviting future excesses, and we all know my baby momma ain’t need no more excesses.” But he didn’t stop there, T-Ho took it one step further, opining “I think we shouldn’t be guaranteeing markets a zero rate for an extended period.” Rates “could be higher, and the effects would be minor” and “We should start that process sooner rather than later.” He then lamented that that “Bitch ass Benny B better recognize and check himself before he wrecks himself, because this aint no round the way girl he’s messing with, this is Uncle fucking Sam.”
In international news, continued hopes of a Greek bailout and a rally in India hepled the US market today. Greece was expected to release their austerity plan which was to shave $3.5B off of their deficit and was to include an increase in their value-added sales tax on things such as Ouzo, saganaki, and greek sodas. India’s government reported increases in manufacturing and exports, which along with strong sales from leading auto producer TaTa Motors (who are now said to beoffering lube jobs with their TaTas), helped send the market to it’s high for the month.
In US stock news, Ford became the top auto seller for the month with a 43% increase in sales thanks to the Toyota recall and consumers apparently not giving a shit about buying crappy cars. This was the first time in 12 years Ford has outsold GM in a month which means they are 3 years ahead of their 15 year plan. In earnings, Staples Q4 profit dropped 18% as a result of restructuring and disappointing sales of big ticket items like furniture and oversized checks for lottery winners. The stock dropped 10% as their guidance of $1.23 to $1.33 per share was worse than Rosie O’Donnell’s girlfriend’s breath after downing a lipsmacking day old tuna fish sandwich. Estimates were for $1.40 per share and anytime a company lowers earnings by greater than 10%, nothing good happens. Also, QCOM was up 7% after taking shareholder friendly actions of raising their dividend, announcing a big share buyback, and booking Hannah Hilton as the lunchtime entertainment for their next shareholder meeting (and Money McBags wishes she would hold his shares).
In small cap news a flurry of companies reported today with QCOR shaking off their string of bad quarters while NTRI and NLS helped their shareholders lose weight by making them hurl after each company put up craptastic quarters. Money McBags will dive into NTRI and NLS a bit later in the week, though he welcomes NLS supporter and long time When Genius Prevailed reader Matty McSacks to chime in and help Money McBags understand which of the 4 earnings from continuing operations numbers realeased today is best to use to evaluate NLS’s business. Money McBags hasn’t seen a release so confusing since he hit puberty and shot his first load to the imagined Lisa Whelchel-Nancy McKeon tryst which would have redefined Edna’s Edibles. As for QCOR, Money McBags broke them down in December concluding that “they could have real upside if they continue to penetrate the MS market and can get on-label IS approval.” Money McBags was waiting to see some more results though before buying as they had run in to reimbursement issues and some sales hiccups and today they certainly put up some strong results with 223% growth in their MS segment and 56% growth in their paid commercial IS segment, plus they had some sales into the nephrotic syndrome market. Money McBags will break QCOR down later in the week as well as he is pressed for time today but today’s 18% rise was likely a short squeeze (and Money McBags realizes he said that about the last time QCOR rallied, but there is something to say about consistency), that said, if they are now back up to a $.52 annual eps run rate with their $.13 eps quarter today, there is no reason they shouldn’t trade at 15x that and thus put their value at around $7.50 per share. The company has been well run and is shareholder friendly, but they need to continue to execute.