Thursday, March 4, 2010

3/4/10 Midafternoon Report: Market to Greece: "Your bonds are the one that I want," just hope they don't leave "Tears on My Pillow"

The market is bouncing around today as initial jobless claims were out and they fell by 29k to 469k, almost exactly the 470k number that economists estimated proving the old adage that "even a broken economist is almost right once a decade."  While the drop is positive, it didn't drop by as much as claims rose in the past two weeks which we were told was the result of "weather," an "administrative backlog," and "more people getting laid off than expected, stupid."  Also, pending sales of existing homes fell by 7.6% in January as an extension of the government tax credit for first time home buyers failed to spur sales (and Money McBags went through this before, but any first time buyer thinking about purchasing a house rushed to buy before the tax credit ran out last year and thus extending the tax credit now is like if California had reinstated same sex marriage a month after repealing it.  Anyone who wanted to get gay married had already done so, thus the remaining opportunity set was thinner than an aneroxic with food allergies.).  All of the data will continue to be lumpy as unemployment still remains higher than River Phoenix at the Viper Room and more stagnant than the writing here at When Genius Prevailed (but give Money McBags a break, 1k words of dick jokes and market analysis a day is more draining than being slowly exsanguinated by baby leeches and more draining (and infinitely less fun) than a 12 hour hummer, but Money McBags digresses).  In other macro news factory orders were up 1.7% last month and were slightly below estimates but still positive and driven once again by aircraft sales as people have to fly around the globe for job interviews.

In international news, Greece offered up 5 billion of euro denominated bonds or as antiquities dealers will call them in a mere 2 years, worthless relics.  Greece claimed there was actually demand for another 2B euros worth of the bonds, and seeing as how they need to raise 20B euros,  their decision to not offer the extra 2B fits right in with their previous budget management.  If I need $20, why would I sell you $5 worth of my shit when I could sell you $7 worth of it, I mean it doesn't take Euclid to fucking figure out the math here (and yes Money McBags understands the interest payments, etc., but we're talking about a country that needs money like Lindsay Lohan needs a case of Valtrex and a hot shower.)?  Meanwhile traders are seeking out the next Greece in Europe claiming that it is only logical another country would be close to collapse as for every Bear Stears there is a Lehman Brothers, for every American Home Mortgage there is a New Century Mortgage, and for every Disney World there is a Kingdom of the Little People.  Greek workers remain on strike as they are apparently protesting that the government overpaid them for the past several years.  Really a brilliant strategy, right up there with fully clothed strip clubs (and yes I am talking about you Manhattan) and the Segway.

In stock news, retail sales climbed in February from Heidi Montag's singing bad to Heidi Montag's acting bad (and that is a slight uptick if it isn't clear).  Same store sales were up 4% beating analyst estimates by 1% or so, but that rise was off of a 4.7% drop last year we so shouldn't lose perspective, like an MC Esher painting.  Most interestingly e-commerce sales were up 16% which should bode well for companies like ARTG, AMZN, and Vivid Video.  Large cap stocks moving up today include Disney, Coke, and Boeing, all receiving analyst upgrades.  Disney was upgraded by Bank of America-Merrill Lynch in anticipation of a strong advertising market, a strong film docket, and unemployment coming down thus making it easier for people to throw away money on a crappy amusement parks just so their kids can get an overpriced picture with a minimum wage worker dressed as Cinderella.  A UBS analyst upgraded KO based on the sell-off after they purchased their bottler and after reading When Genius Prevailed on 2/25/10 while UBS also upgraded Boeing because apparently airlines want more planes sooner than later.

In small cap news, RICK continues to drop and is making Money McBags feel emptier than he does after making it rain for an hour at his local Rick's Cabaret.  Kind readers, you all know Money McBags has been in RICK with you for this stimulating ride, and you all know of his $16 price target (which it bounced up to before collapsing like Taryn Thomas's anus after one too many cavity searches.  And yes, read the wikipedia page, it really did), but we all have to remember that when momentum stocks go bad, they really go bad.  Given that, and the fact that Money McBags thought their quarter was worse than a Dan Brown novel and their acquisition of VCGH could be a bit of a clusterfuck (and not in the literal sense, which would be good, but in the "oh shit, we paid what for that?" sense), Money McBags may be bailing on this momentarily and happily taking his profits.  He will likely sit it out for a day or two, but if it pops up above $15 again, that will likely be his selling floor.  In other small cap news, CRTX annonuced their earnings last night and put together a decent Q while maintaining their guidance.  Money McBags broke down CRTX a bit in December as a potential big upside company that needed to show some results.  Well this Q could be the start of those results as numbers were generally in-line with Curosurf coming in at $8MM in revenues for the 3 months which is a good sign.  While their reporting still seems to be a bit lacking (I mean for fucksake, would it kill you to put a table comparing sales of each product and maybe not lump in Spectracef sales with Factive sales since no one gives a fuck about Spectracef?) and their sales of Factive were probably a bit on the low end since they combined with Spectracef for $3.6MM in revenue and Factive should have been around $3MM by itself, this company continues to trade at around 1x estimated sales.  The company maintained their guidance of $115MM but their leading drugs continue to face headwinds so they need to be able to show strong sales of Factive and Curosurf.  Money McBags has not had a chance to listen to the call, but the quarter didn't contain any obvious misses and the company is cheap.  If you have some gambling money that you're itching to put into play, this is the kind of company it may be worth doing some work on because if they can maintain a $100MM+ revenue run rate, they should easily trade at 2x-3x that.  Plus they have a nice cash balance remaining to continue their acquisition strategy.  Not the best company in the world, but cheap with upside.

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