Posts tagged SPRT
11/29/10 Midnight Report: EU Buys Ireland on Cyber Monday, Comes with Free Shipping, 6 Pack of Guinness, and Plenty of Broken Dreams
Hells yeah, Money McBags is back from his Thanksgiving break where he basted some turkeys, watched consumers run up more debt during Black Friday sales that they won’t be able to pay off until the dollar hyperinflates to whatever is just below infinity (perhaps Bernankity), and furiously read Wikileaks to learn that the US had a nuclear fuel standoff with Pakistan, was weary of Chinese computer hacking, and never puts the toilet seat back down after using it.
The big news on the Street today was that the market faltered despite strong holiday sales on everything from computers, to cars, to Ireland. Black Friday sales were up 6.4% and the market hopes consumers build on that with Cyber Monday, Five Finger Discount Tuesday, and “Oh Shit What are We Going to Do with All of this Inventory” Wednesday. As mentioned, the market failed to rally on this because congress returned to work (which means the economy is that much closer to combusting) and Ireland’s bailout became official for the 3rd time. Ireland will be getting 85B Euro under the conditions that they don’t spend it all in one place, stop giving loans to people who can’t pay them back (other than themselves, which is weird logic there, but the EU must know what they are doing, right?), and lend Jill Kelly to the IMF for just one night so the IMF can conclude their proper due diligence.
Of the 85B euro, 17.5B will be coming from the Irish government through money it has already raised by selling bonds and as proceeds from the pride of Limerick Tanya Trianta‘s car wash and Irish bagpipe booth. Of the rest, 22.5B will come from the IMF and 45B will come from bilateral loans from European nations (and the loans are so bilateral that they love other loans of the same denomination) and from two rescue funds set up by the EU in the Spring for either a rainy day or when shit is blowing up.
The debt will come with interest rates ~6% (or 0% once Ireland’s economy doesn’t recover and they can’t afford to pay interest) and Ireland has said they will try to cut the budget deficit from 32% of GDP to 3% of GDP by 2014 and hopes like the Special Olympics, they simply get credit for trying. That said, this is all completely cockposterous as with budget cuts coming (and not just because they were manipulated by Claire Tully), how the fuck is Ireland going to cut in to their debt since growth will be more strangled than OJ Simpson’s career, or his loved ones? Seriously, this is more of a contradiction than the liar’s paradox and not because it doesn’t make sense, but because they are all going to be fucking liars.
With the austerity plan aiming to cut $15B euro of spending over the next 3 years (which means HBO will be shut off in all government buildings and if Prime Minister Brian Cowen wants second breakfast and third lunch he will have to return to the Shire), Ireland is as likely to cut their deficit to 3% of GDP as Leslie Neilsen is to marry Crystal Mccahill (and not because he couldn’t have her, but because he’s dead, but surely you understood that, and yes, Money McBags will stop calling you Shirley). Luckily, the EU is already willing to extend Ireland’s deficit target until 2015 (until next year when they extend it to 2016), as the slippery slope has already been fucking slipped on and is set to leave Europe with more than just a broken coccyx.
But it’s not just Ireland, as once again the cost of debt in Spain and Portugal has risen from “too high” to “too fucking high” as Spain and Portugal may need a bailout worse than one of Stephen Seagal’s assistants. Noted turd in the punchbowl Nourel Roubini said Spain is the big elephant in the room (though they clearly aren’t standing in the same room as Lexington Steele) because there is not enough official money to bail Spain out (until more is printed, duh). As Roubini said: “..the stress tests were not stressful enough, if not a total fudge” before adding, “and that fudge was packed with care by Europe as they tried to keep this their dirty little secret.“
But then the master of disaster, the prince of pessimism, the modern day nabob of negativity, and the spitter in the oral scene if you will, had the quote of the month as he said this about QE2: ”The problems of the economy are not problems of liquidity, but problems of credit insolvency, and therefore monetary policy cannot resolve this.” And yes the bolding is intentional because when The Bernanke reads the award winning When Genius Prevailed tonight (and believe Money McBags, he will), Money McBags wants to make sure Benny B sees that quote and doesn’t miss it while skimming the column for the latest Sofia Vergara boob shot or the link to take him back to dickflash.
In the US, macro news was lighter than repeat traffic to any site dealing with the Blue Waffle (and google that at your own peril) with the only real news being that President Obama proposed a two year freeze in Federal work pay which means most Mailmen and tranny porn screeners will cost the American people only $150k a year in perpetuity.
In the market, Morgan Stanley’s Mary Meeker was hired by Kleiner Perkins after she spent 4 years on a 424 page research report that concluded mobile technology was the next big thing. Holy shit, excuse Money McBags while he punches himself in the nuts over that one. Wow, he now anxiously awaits her next opus to be published around 2015 concluding that “the suns is really hot” to be followed up by her 2020 piece de resistance concluding that “Tits Sell.” And Money McBags thought Cindy Margolis was the most washed up chick on the internet.
In stock news, there weren’t a lot of big movers (or as they are known as on the award winning When Genius Prevailed, Gabourey Sidibes) today. Fed Ex delivered ~4% returns to investors after an upgrade from Credit Suisse because Credit Suisse finally figured out that people around the world need shit delivered. Walmart announced that they intend to buy 51% of South Africa’s Massmart which is already being protested by South Africa’s largest labor union. So jjust to clarify how shitty Walmart treats employees, a country that didn’t find Apartheid oppressive until 1994 immediately found WMT’s labor tactics to be too onerous, so umm, yeah. And finally, SBUX told Kraft to eat a venti dick as they claim Kraft has been mismanaging sales of SBUX coffee in grocery stores.
In small cap news, Money McBags only has time for a quick overview tonight, but JOEZ continues to blow falling to ~$1.60 per share and this is what Money McBags said after their last quarter: “…Money McBags doesn’t expect any big Qs soon, so while it is difficult to short a stock trading under $2, you can probably get a decent return here.“ ZAGG somehow zigged up 5% despite their competitive advantage being whittled away faster than Minnie Driver’s looks (and yes that is funny because ZAGG has no competitive advantage and Minnie Driver never had looks). And finally SPRT rose ~2% because apparently trading at a bazillion times earnings (assuming they have earnings by growing 150% while slashing margins and thinking happy thoughts) is the new trend, just ask NFLX or Melissa Giraldo‘s vagina (and Money McBags is not entirely sure what that means, but you all must admit it was a good note on which to end).
9/2/10 Midevening Report: Investors no longer need toilet paper as economy continues to slide along bottoms
It was a relatively quiet day in the market today as bears picked up their shorts and hoped the bad men would stop pulling their alpha after yesterday’s strong move higher left their portfolios with shrinkage. The big macro news of the day was that new claims for unemployment dropped by 6k to 472k and beat analyst guesses of 475k which would usually be grounds for a market rally, yet 472k new claims for unemployment still signal an economy less healthy than Michael Douglas’ throat (too soon?). The most unsurprising news was that last week’s 473k reported number was revised up to 478k which means the (No) Labor Department continues to fully buy in to the “hold the shock and hope for no awe” strategy. Money McBags is sure Hilda Solis, the lovely Head of the (No) Labor Department, will be able to pull herself away from Mario Lopez (and yes, that picture appears to be real) just long enough to continue to save the numbers from their final bell.
While claims were down moderately, productivity (measured by output per hours worked) fell by 1.8% even as hours worked grew by 3.5% as workers spend more of their days on chatroulette (no doubt trying to find the one girl without a penis) instead of producing whatever it is they are supposed to produce (like cars, houses, and love notes to Karissa Shannon. Dear Karissa, Roses are red, violets are blue, come lie by the beach, and bring your sister too). It was the largest drop in productivity in four years, or since the Kim Kardashian sex tape came out (and Money McBags will assume that when she recently called that cinematic masterpiece “humiliating”, she meant “delicious”) and was inline with recent analyst guesses of a 1.9% contraction but much worse than their initial guesses of a .9% expansion.
Nearly 10MM Americans continue to be unemployed, longterm unemployed, and pissed off unemployed but according to the brilliant insight of some guy named Ethan Harris who is BofA’s Head Economist (and yes, that is like being the guy who drives the clown car or the smartest kid on the short bus, but whatever), the chances of avoiding a double dip recession are pretty good because data can’t get much worse, no really, that is his logic. It’s like saying a patient with the beginning stages AIDS can’t get sicker, because he’s already got AIDS. First of all, Money McBags will start listening to guys who formerly held the post of Chief Economist for Lehman Brothers sometime around the time he starts listening to Bernie Madoff for investment advice, Joseph Hazelwood for sailing advice, or John Edwards for marital advice. But whatever. The point is, data remains bad because maybe WE NEVER REALLY MADE IT OUT OF THE FIRST RECESSION. Ugh. Dr. Harris (and I use that term loosely, like Pam Anderson uses her “charm” loosely), has it ever occurred to you that the bad fucking data signals we’re still in a recession (ex. the stimulus of course) especially with GDP trending to an unmanipulated contraction? It’s like he’s missing the forest through the trees or the other 8 guys around him at the gang bang. But hey, great job at Lehman Brothers Dr. Harris, Money McBags is sure BAC is happy to have you, but please don’t forget to turn the lights out when you leave.
But all was not negative in macro news as retail sales were up 3.3% which was better than analyst guesses of 2.5% and the result of deep discounts, a favorable comp from August last year, and heavy promotions. The biggest winners were Nordstrom up 6.3%, Limited Brands up 8%, and Zumiez up 10%, while the biggest loser was fashion. In other positive macro news, pending home sales rose by 5.2% and analysts had guessed they would fall by 1%. Money McBags has absolutely no way to interpret that number other than that either prices dropped or the boxes being used to ship retail products now count as homes. And finally, orders placed at US factories rose only .1% (and remember in yesterday’s manufacturing report new orders declined) which was slightly below analyst guesses and was driven by a drop in machinery orders and common sense. Either way, none of this macro data matters as the market awaits tomorrow’s jobs report with expectations for ~110k job losses and all the unemployment the government can dole out.
Internationally, the ECB left their benchmark interest rate unchanged while Sweden upped their’s causing initial panic among investors who didn’t realize Sweden isn’t one of the 16 countries in the Eurozone. Sweden’s economy has managed to bounce back quicker than some of their European peers thanks to strong exports, a resurgence in housing, and native Swede Caroline Winberg promoting business growth.
In the market, Burger King was up 25% after PE firm 3G Capital agreed to pay ~$3.3B to acquire them. 3G thinks they can turn the company’s fortunes around for the long term by better streamlining the franchises and by changing Burger King’s name to McDonalds. Also in M&A, DELL finally told HP to talk to the hand and dropped out of the bidding for 3Par, leaving HP’s offer of $33 a share as the winning bid in what was a more tightly contested bidding war than a “win a date with Katie Cassidy” auction. And finally, Allergan is paying a $600MM settlement for what botox did to Jenna Jameson’s face (or something like that).
Finally in small cap news, FIRE continues to rally and Money McBags has not had a chance to dive in to this company yet but they are now back to trading at a ridonkulous multiple thanks to M&A rumors in the security space. It’s an interesting company of which to keep abreast (though not as interesting as Melissa Archer is to keep abreast) as security software becomes more important and they certainly offer what seems to be a nice solution with their business network software running off of the opensource Snort code (whereas Paris Hilton runs off of snort coke). When Money McBags gets time he’d like to do a deeper dive of this company as well as the even more expensive SFSF to discuss if SFSF deserves a 100x earnings multiple (and the short answer is no, the longer answer of course would be noooooooooooo). One other small name that was up 10%+ today is SPRT and Money McBags has mentioned it before but there is something about this name that doesn’t seem right to him (besides the fact that they are not going to have earnings in the next few years). They are basically trying to get consumers to prepay for IT support so when pc owners download too many Cameron Diaz photos or accidentally download the checking account for that Nigerian Prince, SPRT technicians can remotely log in to the computer and clean up any viruses. It’s an interesting proposition, but involves getting consumers to buy a form of insurance they don’t currently buy and at a price on an annual basis that is not far off from just taking the infected computer to the Geek Squad to fix or simple buying a new one. Just some quick thoughts on small cap “S” names today (FIRE is the ticker for Sourcefire) on which Money McBags is ruminating, tomorrow perhaps Money McBags will hit the “T” names (like Taylor or Tyler if he is lucky).
It’s quadruple witching Friday today in the market which is unfortunately just the day where stock index futures, stock index options, stock options, and single stock futures all expire and not the day where the market finally gets a 5-some with Elizabeth Montgomery, Barbara Eden, Melissa Joan Hart, and Omarrosa. While this is usually a volatile day, the market has been quieter than the Clinton’s bedroom as there has been little macro or company news released today. That said, owners of gold are being showered with rewards as gold has reached a record high today thanks to investors betting against the current fiat system remaining viable. While it’s likely we’ll hit a deflationary period before inflation takes off like Shawn Kemp from a delivery room, holding gold as part of your portfolio right now as a hedge against volatility and the potential crash of the Euro makes more sense than pairing Suaterenes with a nice foie gras. In other US news, Tim Geithner is apparently getting new and more power which he has easily earned given how he has revived this economy from dead to about to die again and helped to bail out the firms who caused this mess. Geithner is set to lead a new council run by the Treasury Department to identify companies that might be shut down because they pose a risk to the financial system. So does that mean the government is going to shut down the SEC, FCIC, FINRA, FDIC, and NAMBLA? Don’t they all do the same fucking thing? Hey, I know how to solve a problem, let’s just create other fucking groups to do the same thing that current groups do but hope they do it better. Unbelievable. Money McBags just wants to know when more bureaucracy has ever fixed anything other than creating meaningless jobs. Somewhere Josef K. is scratching his head.
Internationally, the Eurozone added Estonia as the lastest member in their global ponzi scheme. Estonia now has to pay $1B to Greece, and then Greece will pay 80% of that up to Spain, who will then pay 80% of that up to Germany. Funding problems solved. While it is certainly odd timing for a country to be joining the eurozone, Estonia said they had no choice after the University of Texas decided to stay in the Big 12 and and Utah beat them out for the last spot in the Pac 10. “It’s a great day for Estonia,” remarked Estonian prime minister Andrus Ansip, who was perhaps (an)sipping on a little too much Saku Originaal as getting in to the Eurozone right now is about as desirable as joining a tv show co-starring Ted McGinley or being drafted by the Washington Generals. Anyway, for those of you unfamiliar with Estonia, here are some quick facts: They were 4th out of 173 countries in the Worldwide Press Freedom Index narrowly being edged out by Canada and their NSFW Naked News, they’ve previously been occupied by more countries than Zsa Zsa Gabor’s vagina, and the person they most admire is Yosemite Sam. They’ve been independent since 1991 and are finally looking to settle down after 20 years of hard drinking and nordic flirtations in order to raise their favorite offspring Tiiu Kuik in a stronger family environment. So welcome to the Euro Estonia, just don’t burn all those Kroons quite yet. In other international news, the IMF backed Spain’s austerity measures after downing one sangria too many and learning about imaginary numbers.
In stock news, C is planning on raising $3B because they haven’t lost enough investor capital already. Just remember, this bank is so poorly run and has such bad judgment that they fired someone for being too hot, and she’s not even really that hot, I mean we’re not talking about Sara Carbonero for fucksake. And the best part about this is that they are raising money for their private equity and hedge fund groups right before Paul Volcker slaps his rule on the table and bans banks from owning those type of funds. Wow. Good for the funds but that makes about as much sense for C as it did for Saddam Hussein to build a new palace in Baghdad in March of 2003 or Simona Halep to go bra shopping right before the summer of 2009. Money McBags is sure C’s CEO Vikram Pandit will retain some type of personal interest in these funds when the Volcker Rule takes effect so I guess it makes sense for him but for C shareholders it seems like a whole lot of wasted time and energy (though if you’re a C shareholder, you have bigger problems to worry about than the company raising money for funds they are going to have to give up soon). In other news, CVS and WAG decided to end their snit over prescription drug benefit reimbursement and just go back to screwing Medicare and the American health care system together. Finally Moody’s lowered their ratings of BP by 3 notches from the unintelligible Aa2 to the just as unintelligible A2 (or maybe it was the other way around, who the fuck knows). It’s nice to see that weeks in to one of the biggest environmental disasters in history, Moody’s is still on the ball. Good job guys, Money McBags eagerly awaits your downgrade of daguerreotype companies within the next 6 months. Though to be honest, any investor who needs Moody’s to tell them BP is more fucked than a cupcake in Kirstie Alley’s house probably shouldn’t be investing.
In small cap news CRUS continues to rocket up. Money McBags believes $24 (20x his $1.20 estimates) is a plenty fair price but at $20 he’d start to think about trimming to take some of the hella sweet profits you’ve made off the table (and rememeber Money McBags first brought CRUS to your attention when they were trading under $8 and he told you he bought them shortly thereafter. The fact that he dumped them after the “Flash crash” for liquidity reasons doesn’t change his valuation, it only makes him angrier that he believes the market structure is so broken that fundamentals may not matter). And if any of you are interested in a high flying small volatile momentum name, check out SPRT. Money McBags will try to break them down next week but they are basically outsourced and remote computer repair. It’s like Geek Squad only you don’t have to have a fat smelly skeevy fuck show up at your house and stink the place up while he wipes all of the porn off your computer to clean up whatever virus you downloaded while searching for that Miley Cyrus upskirt pic (and Money McBags will not be linking to the pic since he believes in the legal system). It’s certainly an interesting and potential low cost business model and the company is currently scaling up their technicians faster than a young hollywood starlet scales up her ambitions. It is doubtful that in this market Money McBags would ever own this stock because a lot has to go right for it to be valued even near what it is trading today, but it has a nice story has some real opportunity, and more than anything it has strong momentum and a rapidly accelerating business. If you have money you don’t care about, send it to Money McBags for a night out at Rick’s, otherwise, do some research here as this might be a good trade.