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?

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.

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.

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.

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.


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.

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.

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.

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.

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.


*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.