Wednesday, February 3, 2010

2/3/10 Midafternoon Report: Market seeking direction like troubled teen in ABC afterschool special, though with less crying and less Meredith Baxter Birney

The market is mostly lower today despite some moderately postive macro reports (moderately positive in the way that learning you have syphilis is moderately more positive than learning you have nut cancer).  The ISM said the service industry expanded in January for the first time in three months, which may be one reason RICK is bouncing back today since they provide the type of service into which all industries should be expanding.  While the ISM's index for the service industry rose to a whopping 50.5 (and again, for those of you playing at home, anything above 50 signals growth, so 50.5 signals about as much growth as Ben Bernanke's cranium follicles), it was slightly below analyst estimates.  Also, ADP came out with their job data for January showing only 22k jobs had been cut which was inline with forecasts and the smallest drop in two years which is good news for everyone but those 22k people who lost their jobs or the 15MM or 20MM (what's 5MM among friends)  people who remain unemployed.

In world news, the EU is getting all up in Greece's souvlaki telling Greece that they are ok with the deficit reduction plan but will be watching them closer than a 25 year old virgin watches the lovely Amanda Seyfried at a movie premier (and as an aside, Money McBags had never heard of the delightful Ms. Seyfried until yesterday but he will now be investigating her full body of work which we can all assume is spanktacular.  Unexpectedly finding this charming young lass is like finding that that undervalued small cap stock with no analyst coverage, growing at 40%, and trading at less than 4x cash flow).  The EU commissioner for economic and monetary affairs called the Greek government’s objectives and targets "ambitious" but"“achievable."  He added, "every time we observe slippages we will ask the Greek authorities to adopt additional measures such as putting less tzatzki sauce on their gyros, conserving water by showering only twice a month instead of their usual three times, and allowing Maria Menounos to man the Athens welcome center kissing booth."

In stock news, investors are getting less confident in the market with the expectations that the market will fall 10% or more at its highest level since 1984 according to a survey of investment writers.  Of course those investment writers also thought 2008 would be a banner year for the S&P, Dewey would defeat Truman, and Fermat's last thereom would go unsolved (hey guys, all you had to do was carry the 1).  Money McBags was happily not one of the writers polled because he refuses to be associated with other financial writers and their groupthink (plus there was that incident last year at the Financial Writers of America Conference involving a punch bowl and a Money McBags' turd, so it's not clear he is welcome anyway).  Also, Time Warner and AOL both put up good quarters, just not together, as they proved that two heads are often better than one (unless the head in question is Bar Refaeli's, and then one is perfectly acceptable).  Time Warner not only beat estimates, but they raised their dividend thanks to strength in their film and cable business which was able to provide a boost for continuing publishing declines (why buy an investment magazine when you can read Money McBags for free?).  AOL's earnings were $.01 per share, though their revenue shrunk by 17% because people don't use fucking dial-up internet service anymore.  Jeesh.  To diversify out of the dial-up business, AOL is said to be working on an updated abacus (featuring different colored beads), tins for dageurreotypes, and a re-invention of the wheel (they are apparently making it square).

In small cap news, HDIX (aptly named H sucks a DIX by Money McBags who owned them for a while last year) is up 89% on a buyout proposal from a Japanese company named Nipro (or as it's pronounced in the US, Nipple).  HDIX makes cheap over the counter diabetes blood test readers that sell for less than half the price of competitor's products and work just as well.  It was that thesis that led Money McBags to buy the stock last year as the recession should have caused people to trade down, of course it was HDIX's shitty performance that caused Money McBags to sell well before today's payoff.  In other news,  CKSW is down after their inline Q though guidance was for slighly above street revenue estimates for 2010.  Money McBags has yet to fully go through their quarter but the sell-off is likely because license revenue did not grow.  That said, their book to bill was greater than 1 (and book to bill is a strong leading indicator of future performance, like packs of unopened condoms at the beginning of a gang bang), they are forecasting near 20% growth, and are trading at 16x or so 2010 earnings or 3x revenues.  The company isn't terribly cheap, but they are growing, their fleet optimization software is supposed to be the best in the business, and they have a burgeoning partnership with SAP to deliver this software.  Money McBags will look in to their Q a bit more tonight, but this is another watch list stock for all of you out there because they have a market leading technology in a growing market and a huge partner (SAP).  This smells more of an acquisition candidate than Paris Hilton smells of AIDS.

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