Wednesday, March 31, 2010

Tuesday, March 30, 2010

3/30/10 Midafternoon Report: Market rests today after spending all night trying to find the afikomen

Before we get to the market news, today marks an important achievement for mankind (perhaps an even more important achievement than Brooklyn Decker) as the Hadron particle collider is finally working sending two protons smashing in to each other at 99% the speed of light.  Results hope to answer some of the Universe's most essential questions such as the existence of the Higgs Boson, the presence of dark matter, and who the fuck the people are who actually watch American Idol.  So planet changing discoveries aside,  the market is flat today as international concerns temper the moderately better than expected US macro data.  Consumer confidence jumped thanks to the new health care bill, which has made it easy for people to buy deliriants.  The index reached 52 today, easily besting the 46 from February, which would be all the more impressive if we actually knew what a difference of 6 points meant.  Additionally, Home prices rose in the 20 city Case-Shiller index (named of course for "Hot" Karl Case and Bob Shiller) from "take this fucking thing off my hands" to "take this fucking thing off my hands but I am keeping the toaster."  The index was up .3% sequentially and down .7% from a year ago which is the smallest y/y decline in two years.  However, on an adjusted basis the index was down .4% sequentially due to the initial petering out (and yes, I said peter) of the government first time home buyer's tax credit and the realization that monopoly money is not a valid subsitute for cash or a claimable asset to mortgage guarantors.  That said, there was some really interesting news that tax receipts are now expected to rise in the 15 most populous states by 2011 which would be huge for the economy (no joke, it would literally be bigger than Manuel Uribe at an all you can eat taco bar.  Ok, maybe a little joke.).  California has already taken in 3.9% more in taxes than forecast since December while NY is $129MM above budget.  This is largely the result of higher sales tax receipts from increased consumer spend likely as a result of this rise in consumer confidence and the hiring of Jeffrey Skilling to audit all state tax records.

Internationally, S&P cut Iceland's local currency credit rating from BBB/A-2 to BBB/A-3 (and if Money McBags were rating Iceland, they would always be rated "frosty.).   And yes, those are the actual fucking ratings S&P uses which are about as helpful as chopsticks to a leper.  I mean really, BBB/A-2?  Even Heidi Montag's singing career and Poncaire's Conjecture are less confusing (especially if you are tone deaf or Grigori Perelman).  Money McBags hasn't seen anything so contrived since Ricky Martin acted straight in one of his videos.  That said, the downgrade made Magnus ver Magnussen, a man so important they named him twice, pick up a giant boulder and crush the S&P's entire Iceland office.  Anyway, Money McBags scoffs at any rating, no matter how confusing, by any rating agency due to the inherrent conflicts of interest and the piss poor track record of those ratings agencies (see US financial markets circa 2007). Of course this downgrade has caused investors throughout the world to not just try to locate Iceland on a map, but to learn for the first time that Iceland actually had credit ratings. In other international news, an auction of 1B euros of 12 year Greek bonds garnered interest in only 390MM euros worth of them which caused the offering to be more undersubscribed than Bernie Madoff's new investing magazine (tentatively titled, MisFortune).  The lack of interest in the bonds (well, technically the interest is actually quite high at 5.9%) has caused the yield spread between Greek debt and German debt to double.  Investors continue to worry about Greece's ability to fund themselves while Money mcBags bets in 1 year no one will remember any of this.

In stock news Apple is up on reports that they are designing an iPhone to be CDMA compatible thus potentially giving iPhone users a choice of carriers and not restricting them to AT&T.  AAPL allowing competition is a bit like North Korea alowing photographers or Ellen Degeneres allowing penetration, but it should be positive for consumers and thus positive for the stock.  In related news, RIMM announces earnings after the bell tomorrow and is limping in to that announcement.  While Money McBags likes owning the number two competitor in a market about as much as he likes country music, RIMM is cheap for its growth trading at less than 20x earnings estimates.  Money McBags is an owner of RIMM and will be holding it through the quarter because this should really be at least a $95 stock.  That said, if they miss, look out below because RIMM will go down faster than Hillary Duff after getting an engagement ring.

In small cap news, CRUS seems to be riding the news of the potential newly designed iPhone and is up 6%+.  Money McBags is an owner of CRUS (he mentioned he was buying in his 1/29 Midday Report where he said he "did dip his toe into the CRUS waters yesterday (and it was delightfully stripper piss warm))."  The original analysis of CRUS was done on 1/12/09 but the company basically produces ICs for two sectors, audio and energy.  In the audio market they won a chip in the iPhone a few quarters ago as their IC delivers better sound quality and as a result, that segment grew 83% last quarter and was 72% of sales.  In the energy market, their business was hit harder than a bottle of Mad Dog by Betty Ford in the 1970s as sales dropped ~40% in the downturn.  Their main energy segment involves selling chips that go into power meters and their biggest customer is Itron and Itron sales were up 10% last Q, so that could be a good indicator of this business coming back.  Of course a better indicator is that they have had two sequential up quarters in the energy segment after bottoming out and that segment is what delivered their positive earnings surprise last Q.  Money McBags thinks the company can earn ~$.65 in the fiscal year ending 3/2011 and that assumes just 10% growth in the audio segment (and remember they just grew 80% and could be getting more business if the Apple news from today is true) and 20% growth in the energy business.  The 20% energy business growth is a bit aggressive because it has been down so much, but that growth assumes $18MM in revenue per quarter and before the downturn they were regularly doing $20MM-$24MM.  The company has $2 in cash on it's balance sheet and is trading at ~13x Money McBags estimate (which may now be too low) including that cash.  They could also earn ~$50MM in EBITDA in this next fiscal year and thus are trading at only ~8x EV/EBITDA.  This stock is cheap and has a nice cash cushion (while Jessica Biel has a nice ass cushion).  Money McBags doesn't like to own cyclical companies, but CRUS is in the spanktasitc part of the cycle so it is worth owning at these levels.  In other small cap news, RICK continues to tumble (and remember, Money McBags sold last week, so phew) while KITD had their quarterly call and didn't disappoint.  Money McBags previewed KITD's Q yesterday but will break it down for you tomorrow.  Let's just say he found it titillating and is looking to add to his holdings.

Monday, March 29, 2010

3/29/10 Midday Report: Who needs yeast as market rises on Passover

Break out the menorahs as it's Passover and thus time to light the candles, forgo yeast, and drink Manischewitz until the market makes sense and Mayim Bialik becomes atttractive.  The market is up today as economists ponder their own four questions:  1.  "Why is this market different than any other market?"  2. "Why in this economy does the market not dip when in all other recessions it dips twice?"  3.  "Why does the market continue to go upright, instead of reclining for a bit as news has been only marginally not bad?"  4.  "What does a Jew have to do to get a table dance (And in honor of passover, Money McBags would only take table dances from fellow yids Nikki Reed, Bar Refaeli, Emmanuelle Chriqui, and Joan Rivers)?  That said, in macro news today consumer spending was up modestly by .3% which was a bit less than the .4% from January and a whole lot less than that of you know, a healthy fucking economy.  It could have been worse though with February snowstorms but luckily most people were still able to consume by staying inside and ordering shit they didn't need from QVC with money they don't really have.  Excluding food and fuel as the Fed likes to do when looking at consumer spend (which is a bit like excluding Enron when talking about financial fraud, excluding Fischer Black when talking about Myron Scholes, or exculding rhyming couplets when analyzing Dr. Seuss), spending was equal to last month's spending and up 1.8% from last year.  Salaries for the month were flatter than a Steve Forbes tax rate and household savings fell once again to 3.1% of disposable income or the lowest it has been in over 2 years.  It's good that people didn't learn anything in this downturn and continue to run their personal finances like the US government runs their Keynesian budget.  The difference of course being the government can't max out on their AMEX black card while consumers can only run up so much debt before getting BAC to renegotiate their mortgages.

In international news, Greece is selling 5B euros of 7 year bonds to try to pay for all of the shit it bought after having one ouzo too many and winding up face down on the floor of a Greek massage parlor in a puddle of it's own debenture.  This is the first bond offering since the EU and IMF said they would bail Greece out of their fiscal calamity and will likely to be the most expensive bond offering since the Quantum of Solace (and Jay Leno, feel free to steal that one when your Jaywalking bit becomes stale.  Oh wait, we're already five years late for that).  The good news is that the Greek government just needs to raise another 48B euros by the end of the year, the bad news is that the Greek government needs to raise 48B euros by the end of the year.  So I guess Greece's financial position depends on whether you see the glass as half full, half empty, or as cracked as Alexis Texas' backside.  The seven year offering should help extend the average maturity of Greece's debt and thus divert this crisis until the next remake of Clash of the Titans (and Money McBags eagerly awaits the parody to come out titled "Ass of the Titans" starring Kim Kardashian's better half). 

In stock news, the US Treasury announced that they are going to sell all 7.7B common shares of C they own sometime in 2010, as soon as they find a big enough sucker, I mean buyer.  The Treasury assures investors though that C is in good standing, at least that is what Money McBags thinks they said in between coughs that sounded like "bullshit."  In other stock news, Ford sold Volvo before it crashed (though if Volvo had crashed, at least no one would have been harmed).  Ford is getting $1.8B for Volvo from a Chinese conglomerate called Zhejiang Geely Holding Group and seeing as how Ford only paid $6B for Volvo 11 years ago, their -70% return makes it Ford's best business decision since cancelling the Edsel.  So good on you Ford.  Money McBags really likes this acquisition for China because if ever anybody needed a safe car (other than maybe Mary Jo Kopechne), it is asian drivers.

In small cap news QCOR continues to rise and Money McBags broke QCOR down for all of you after their earnings in the first week of March.  The company is up ~40% since then and there is still value there as they could earn $.70 this year and thus are trading at less than 12x that number and still at only ~.3 EV/sales.  They have a drug which people need (its demand is as inelasitic as the demand for medical care, an Olivia Munn nude scene, or chocolate Necco wafers) and are finding new markets for it to grow (multiple sclerosis spasms, nephrology spasms).  Money McBags is still waiting for a sell off to buy.  More importantly, KITD is having their earnings call tomorrow and Money McBags is anticipating this more eagerly than he is anticipating the movie Chloe which features Amanda Seyfried in all her sapphic glory.  Money McBags has broken KITD down on When Genius Prevailed more times than an Olsen twin has binged and purged and more times than Michael Lewis has inserted himself into his books.  This was the last detailed post on KITD but in a nut shell (and it's not clear why anyone would be in a nut shell, but whatever), the company has 99% recurring revenue, 99% retention rates, and this year is going to grow more than 99% (though almost half through acquisitions).  Of course there was a glaring error in Money McBags break down of KITD in the blog post to which he alluded, and for that he is more ashamed and embarrassed than Kathy Hilton on take your daughter to work day.  Money McBags took Google Finance's market cap as fact when in fact Google's calculation uses KITD's sharecount from the end of the previous quarter.  Since then, KITD has raised a number of shares for acquisitions and to pay off warrants so their actual share count is now 17.7MM which puts their actual market cap at $223MM, not the $125MM implied by Google Finance.  Therefore, KITD is trading at 11x their upside EBITDA for the year and isn't quite as cheap as an Albanian hooker, yet is still cheaper than 2010 Kansas Final Four t-shirts.  The company is going to book $85MM to $100MM of revenue this year and next year it is not inconceivable that they can grow by $50MM (or the same absolute amount they will grow this year).  They are in a market (IP video) which is 4% of the overall online video market and is cheaper than competing technologies such as digital video or simply hiring the people from online videos to perform live at your house.  Not only that, but even if they don't gain share from more expensive alternatives, the online video market is growing at a 38% CAGR (which isn't quite as exciting as a sorority kegger, but still pretty good) so just by inertia or as they say in business school "being in the fucking market" they should be able to grow.  So if they just grow at the market rate, that is $138MM in revenue next year and if they just gain a bit of share from the current 4% IP video market share increasing, they can get to that $150MM number.  Their EBITDA margins are 17.5%+ so let's say they get those to their 20% target , then the upside is $30MM of EBITDA next year, so they are trading at 6x to 7x EV/2011 EBITDA.  Not only that, they should become EPS positive.  With 48% gross margins at $150M in revenue they could earn $72M in gross profits.  SG&A has been running at $32-$35MM a year, but let's say they somehow have to increase their cost structure (even though they really don't in order to grow) and have $40MM in SG&A in 2011, that gets them to $32MM in operating earnings and since they have more NOLs than the Pythagorean theorem has proofs, that $32MM should all flow to the bottom line.  With 17.7MM shares, that is an upside of $1.80 eps which puts the stock at 7x 2011 earnings.  And honestly, that number is so fucktasticly low that surely Money McBags' maff must be wrong so feel free to run your own numbers.  As for downside, let's say they come in at a low $85MM in revenue this year and grow 20% off that to reach $100MM next year (as opposed to the $150MM upside).  Using the same cost structure, they would earn $.45 per share next year and be trading at ~25x that right now which would be a bit expensive for a 20% top line grower, but not outrageous.  So downside seems pretty limited if you trust the management of a company run out of Prague by guys who are in the business of building companies quickly and flipping them (and yes that last sentence made Money McBags want to throw up on his socks).  Tomorrow's earnings will be very interesting and if there is a guidance raise, Money McBags will likely be buying even more.  That said, if they disappoint, this stock could easily trade down 20% because they have to execute given their current business stage.

Friday, March 26, 2010

3/26/10 Midday Report: GDP revised down, Market revised up

The market is up again today and as far as Money McBags can tell the main reason is that it is open.  There was a flurry of economic data released today, all of it inline, further signalling the stagnation of the recovery from a potential V-shape to a Bea Arthur-esque flatline (which is of course because she's dead).  Consumer sentiment remained unchanged from the previous month at 73.6 which was slightly higher than economist guesses of 73 (we are told the Albanian judge scored it a 75 due to difficulty, imagination, and grace under pressure which helped drive up the score).  Fourth quarter GDP was revised downward for the third time proving that three times isn't always a charm (unless of course you're the Dahm triplets).  GDP for Q4 is now said to have grown at 5.6%, down from the last guess of 5.9%, and the initial guess of 5.7% growth.  Economists had expected it to be unchanged but they also expected markets to be efficient and the overvaluation of the financial sector in the 2000s and undervaluation of Hayley Atwell easily disprove that theory.  GDP was driven by business spend and exports with US consumers largely remaining keeled over in the fetal position hoping the mortgage man won't come touch them in their foreclosure.  Money McBags anxiously awaits GDP to be further revised next month, pehaps becoming just DP by dropping the barely politically correct and bad for its self-esteem, "Gross" moniker.  And Alan Greenspan is at it again.  The 84 year old pontificated on the threat of rising long-term interest rates on the housing market right after wife Andrea Mitchell changed his depends and cut his food into little pieces to make it easier for him to chew.  Greenspan said he is "very much concerned about the fiscal situation," because the "last boob in charge really fucked things up."  When he was reminded that he was that boob, he simply replied that he has always been a breast man.  His concerns about longterm rates rising are that they "will make the housing recovery very difficult to implement and put a dampening on capital investment as well” whereas holding them low indefinitely will only create a bubble and lead to one of the worst global recessions in history, so I guess you're damned if you don't and you're damned if you do, which describes the philosophy of Roman Polanski in a nut shell (though it's unclear how or why he would be in a nut shell).  But all is not despair as unemployment rates fell in 7 US states including Michigan where now only 14.1% instead of 14.4% of people are out of work.  Of course unemployment rose in 27 states, but that is just a minor detail, like remembering to pull the rip cord on your parachute or always remembering to check for an adam's apple.  Overall, unemployment held flat at 9.7% furthering driving home the sluggishness of the recovery.

Internationally, Greece is still fucked, though maybe a bit less fucked as the EU and IMF finally have come to some sort of nebulous agreement on a bail out plan until next week when they will likely start all over again.  The IMF and EU are respecting Greece's personal choices and allowing them to take their funds anyway they want by making the funds bi-lateral.

In US stock news, Radio Shack, or as it has been rebranded "The Shack" after it's first rebrand of "Irrelevant" didn't work is rumored to be in the process of selling themselves and is up 8%+ on that news.  The company is armed with $900MM of cash and thinks they are worth $3B which is about where they are currently trading.  Potential buyers include PE firms, Best Buy, and anyone else looking for outdated business models.  Seriously, Money McBags doesn't get Radio Shack.  They sell batteries and cable cords and wires when we are like 18 months away from everything being wireless.  If you want to buy a tv/stereo/computer, you go to the internet or Best Buy or Circuit City (and see that's funny, because Circuit City is no longer in existence, so you get my point), not to a RadioShack.  Money McBags is a bit flummoxed by this one, perhaps there is some real estate value but otherwise he can't think of one reason for a company like this to exist.

In small cap news, KITD is set to have their earnings call next week and Money McBags is expecting big things or at least updated guidance to reflect their Multicast deal.  If guidance is only 10% as positively surprising as logging on to the not safe for work and perhaps not even safe for home spankwire.com and seeing a video starring, Hannah Hilton and Faye Reagan (and yes, that happened today), then KITD should rally.  It's been a pretty quiet week in small cap world and Money McBags has been very busy so he apologizes for the lack of analysis.  He will be back next week breaking down more companies for you and trying to continue to find good values.

Until then, enjoy the weekend.

Thursday, March 25, 2010

3/25/10 Midafternoon Report: Bailouts, stimulus, and earnings. Oh My!

The rally is on again as Germany says they will back Greece, earnings are crushing estimates, and Bernanke is going to continue to stimulate the economy like he's the delightful young actress Jessica Pare (moderately safe for work) and the economy is Money McBags.  Bernanke spoke to the House Financial Services Committee today and he tried his best to use small words so the elected officials could understand him.  Bernanke reiterated that "The economy continues to require the support of accommodative monetary policies" and cited the high unemployment numbers, the weak housing market, and the decline of Paul Reubens' career.  He did say that the Fed has a plan to tighten monetary policy and he will do so at the appropriate time even if it causes Alan Greenspan to roll over in his grave.  More importantly, new claims for unemployment fell by 14k to 442k which was 8k below economists' forecasts (forecasts called for it to be overcast with a chance for showers and instead it was sunny and thus caused the showers to be golden to the delight of urolagniacs everywhere).  11.1MM people are still claming unemployment which is only slightly fewer than the number of people in Ohio or the number of pornstars claiming to have seen Tiger's wood, so it is still a big fucking number.  Economists think that if the new claims for unmeployment can drop to 425k, that could signal job growth, of course most of these same economists also thought that home prices could go up forever, that steady state unemployment could be achieved, and that Adam Smith actually had an invisible hand, so be careful to whom you listen (and as an aside, if Money McBags had an invisible hand it would be firmly attached to Bar Refaeli at all times).

In international news, Germany's Chancelor Angela Merkel told the EU and Greece that Germany would support aid to Greece if the IMF were to be involved and if the Greeks finally cleaned up the Parthenon (I mean seriously, it's been around for 2,500 years.  Can someone in Greece do like 1 days work and just dust around the edges a bit?).  France is backing the German plan which marks the first time these two countries have worked together since their ill-fated Broadway run in the musical Les Miserables Time We Had On Das Boot: A Love Story.  Not only did Greece get positive news, but Dubai is putting up to $9.5B in to Dubai World and it's failing real estate business to make sure that the illusion of grandeur can continue.  Dubai World creditors will be paid back in 5 to 8 years or just in time for the next bubble.

The big news of the day has been in the US stock markets where earnings have continued to impress like Beethoven on "Take your kid to work day" or Salma Hayek at a treasure chest convention.  Best Buy easily beat their numbers posting a profit of $1.82 per share vs. analyst guesses of $1.79.  They also gave full year guidance of $3.45 to $3.60 per share which is well above the $3.36 consensus analyst guess.  Same store sales rose by 7% after the company cut prices on flat panel TVs and started offering free taint massages for any purchases over $2,500.  Best Buy also announced further international expansion, continued stock buybacks, and Olivia Munn to be in charge of the Geek Squad's free "modem adujstment" promotion.  In other stock news Qualcomm is off to the races after they raised their expectations for the second time.  They now think Q2 earnings will be between $.56 and $.58 per share which is higher than analyst guesses of $.53 and higher than previous guidance of $.49 to $.53.  They cited better licensing revenues and the addition of crack cocaine directly into their Snapdragon chipset.  Both QCOM and BBY are up 7%+ on the day as investors run to chase good news like Alabamans chase leprechauns.

In small cap news, Money McBags ditched his RICK shares and it really hurt him to do so.  The easy money had been made, though in positive news for those still holding RICK, Money McBags will be putting a portion of his >50% profits back in to Rick's business through the purchase of many Jack and Cokes without the Coke while watching the fine classically trained dancers.  In other small cap news, you might be able to make a momentum trade on CRTX.  Money McBags wrote about CRTX after their Q in the first week of March and they seem to have picked up some steam since then.  They are up 7% today on no news and slightly higher than average volume, but they have been steadily rising for the past couple of weeks.  The company still has a ton of risk as their top selling drugs are in decline, they gave away controlling interest of the company to Italian pharma company Chiesi last year in order to help their balance sheet and acquire new drugs, and their operating record is thinner than Keira Knightley.  If you believe their projections though, they are trading at only ~1.5x sales and that is way too low for a real company to be valued (of course this may not be a real company like, Nohjay Nimpson may not be a real name, oh wait, scratch that).  So if you're feeling lucky, this is a total momentum trade with absolutely no news behind it other than valuation seems relatively cheap and thus your downside should be limited (that is if the company's proections are accurate).

Wednesday, March 24, 2010

3/24/10 Midday Report: Port-Ugh-al

The market is down a bit today on news that some country in Europe named Portugal has had their debt rating lowered by a whole minus sign (yikes, imagine if it had been a minus sign and a frowny face) and slightly negative US macro news.  New home sales came out today and boy were existing home sales surprised by that, though it does explain why their come-ons were never returned and why new homes have so many closets.  Sales in february fell to a record low partially due to blizzards and partially due to people not having any fucking jobs.  Puchases were down 2.2% and were projected to moderately increase, so once again, nice job economists, don't let the assumed door hit you on the way out.  In other macro news, US durable good orders rose by .5%, but less than expected by economists.  However, exlcuding aircraft, military orders, and wrecking balls to demolish foreclosed upon houses, durable goods were down .6%.  Once again the economy is putting out marginally good data followed by marginally bad data and thus remaining at more of a stand still than a value destruction debate between John Meriwether and Bernie Madoff.  It's good that we appear to be at a new equilibrium, though it's bad that that equilibrium appears to be stagnant growth and no dessert after dinner.

In international news, Japan passed a $1T budget to stimulate growth while hoping to avoid fiscal hari kari as their debt is twice the size of their economy.  As part of the legislation, the government is trying to create more jobs by building more pachinko centers (they are now required to have three on every block instead of just two), hiring Mr. Miyagi to help train youngsters on how to paint fences, and by requiring 10 "shooters" in all future bukakke films as opposed to the usual 5.  In Europe, Portugal was downgraded by Fitch ratings from a country to I guess a principality.  Their debt moved from AA to AA- and we all know how drastic that - is from Fitch ratings, in fact Money McBags has nightmares about getting a - from Fitch like he has nightmares about losing his Michelin Star or about waking up next to Lady Gaga with the Ellen Degeneres show blasting on his TV.  So now we're going from Greece to Portugal, with their tasty sweet bread, their delicious salt cod, and their lovely export Vanessa Marcil.  Look, what Money McBags knows about Portugal can fit into an empty bottle of Taylor Fladgate or a small Portuguese hot plate, in fact, though he is a world traveler, Money McBags has never actually been to Portugal or it's capital Lisbon (though he hopes to find it's mythical sister city of Lesbian one day), but he does know that Fitch ratings are about as relevant as the Know-Nothing party, the steady state theory of the universe, or Robert Guillaume, so who cares.

Starbucks announced a $.10 cent dividend which will allow shareholders to finally have something to drop in to the tip jars when ordering their grande mocachino lattofcrape.  Dick Bove is out today saying bank stocks may quadruple by 2012 due to reduced loan losses and new math (where quadruple means something at least four times less than it does now).  Of course this is the same Dick who raised Lehman Brothers to a buy 3 weeks before their bankruptcy so either that was a glaring typo or nobody should give a fuck what Mr. Bove guesses.  Also, MF Global is rallying on news that John Corzine, the former head of Goldman Sachs and New Jersey governor will be taking over as CEO.  MF board members are hoping Corzine can bring the kind of profitability to MF Global that he brought to Trenton, Newark, and every other near bankrupt place in New Jersey.  More importantly, his Goldman background will now assure MF of a government bail out should they ever experience another rogue trader.

In small cap news RICK continues to get hammered after hitting Money McBags' $16 sell point several weeks ago.   Unfortunately Money McBags did not not sell and for the first time in his life he is regretting a decision involving Rick's Cabaret that didn't center around leaving or not getting another dance.  There was a lot of momentum in the stock and their quarter was pretty awful on top of a questionable acquisition, so the sell off is not unwarranted.  Money McBags will likely lock in his gains and buy back later when the stock settles back down.  Also, long time value trap IBKR was downgraded to underperform by Zack's, though luckily for IBKR Slater and Screech still have them at Market Perform (while Money McBags has Kelly Kapowski at a Strong Buy).  Their downgrade was based on lower options trading volumes in the next few quarters and the recent piss poor performance.  IBKR's CEO still maintains that the company has $2 of annual earnings power if you smooth out their performance over the long run (though that long run is looking like Eons as opposed to years) and the company is trading at 8x that.  They get hit when volatility works against them as their hedges become more expensive when implied volatility is much different from actual volatility.  Money McBags mentioned this name the other week and it is worth keeping an eye on, though it is worth keeping two eyes on Olivia Munn, so not sure where you'll get the extra eye to follow IBKR.

And readers, if there are small names you would like Money McBags to look in to, let him know.  He's here for you, well for you and Riley Steele.

Tuesday, March 23, 2010

3/23/10 Midday Report: Health care bill passes causing market to turn its head and cough

Money McBags was unable to provide market insight yesterday because he was waiting in line at his doctor's office to receive his now monthly health care rations (sorry, couldn't resist).  Since like 99.9% of Americans Money McBags hasn't read the health care bill (though he eagerly awaits the movie, especially if Alice Eve stars as the naughty nurse and Jessica Biel as her saliva deficient patient), nor does he desire to (Money McBags would rather get a colonoscopy with no anesthesia and a rusty camera), he has absolutely no idea what congress passed but he is 100% sure it is neither as onerous as teabaggers grunt about while flexing their abnormally large brow ridges, nor as ball ticklingly fantastic as democrats pontificate while using their unusually acicular heads for ring toss targets.  More than likely, it will have no effect on anything other than giving people with too much free time (talk radio hosts, congressmen, Rosie O'Donnell's dietician) something about which to get their panties in a bunch (and if it is Brooklyn Decker's panties that are bunched, Money McBags will unselfishlessly volunteer to unbunch them).  So big fucking yawn to health care.  If this country could survive slavery, Andrew Johnson, and Ronald Reagan Jr. in the White House, it can survive an undefined program that accomplishes some good and some bad.  Money McBags will now get off his high horse (mainly because the horse has the munchies from being so high) and get to investing.  Interestingly, the market seems to be unconcerned with the death of America and their 37th ranked health care system in the world as the rally continues despite moderately negative macro economic news.  Existing home sales numbers came out and were down .6% to an eight month low, though in line with the median analyst forecast.  Interestingly, the number of previously owned homes on the market jumped up 9.8% which National Association of Realtors Chief Economist Lawrence Yun claimed was "unusual."  Wow, really Larry?  An increase in homes on the market in a 10% unemployment economy with no job growth and a weakening currency is "unusual?"  It's like calling a rise in the death rate during to the bubonic plague a bit "strange."  Or the increase in internet usage if a Kate Bosworth-Blake Lively college shower scene leaked out as "confusing."  To quote the New York Times (and as always, it may all be made up), "Mr. Yun also cited the winter weather as a reason for some of February’s lackluster results, although sales were strongest in the storm-plagued Northeast and Midwest and weakest in the West."  Great job again Larry.  Apparently the National Association of Realtors has been trolling craigslist for their economic hires and Money McBags only wonders if the pay Mr. Yun in "roses."

In stock news, Google and China are continuing their game of find the button as China has moved to restrict access of mainland users to Hong Kong's Google site.  This is after Google gave a big middle finger to China's censorship and redirected mainland users to their Hong Kong site which features uncensored web access and thus allows mainland Chinese to guess muffs to their hearts content (and if you don't check out the NSFW 1465, you clearly hate life).  Money McBags couldn't be more excited by any of this and eagerly awaits the upcoming pillow fight.  For investors, this should create a buying opportunity for GOOG as Money McBags has said before, China is a small part of their revenues and by the time it can become material, all of this censorship crap will have worked its way out.  In other stock news, KB Homes came out today and said their loss for the Q narrowed from $.75 per share to $.71 per share, so whoop de dam doo.  That's like going from getting your name right on the SATs to getting your name and address right (not so fast Derrick Rose).  Chairman, CEO, and fantasy world dweller Jeffery Mezger said "Encouraging data in recent months suggest that a number of housing markets may be stabilizing or starting to rebound."  He then went on to say those housing markets showing a rebound include Park Place and Ventnor Avenue, but not the B&O railroad.  But fear not for he predicted KBH will return to profitability in the latter part of this year as apparently they will now be building homes out of hopes and dreams.  Finally, Walgreen's posted a 4.6% increase in profits as restructuring charges were less and prescriptions filled were up 6% (no doubt due to people stocking up on prescription drugs ahead of the health care legislation, and yes that is a joke).

In small cap news, Digimarc (DMRC) continues its push upward after signing an agreement with Arbitron ending their lawsuit and requiring Arbitron to pay DMRC $4.5MM and to license DMRC's digital watermarketing patents in DMRC's quest to be a pain in everyone's ass.  DMRC is a very interesting little company which basically has a huge patent portfolio, a bunch of lawyers, and a fuckload of time.  Their most important patents revolve around digital watermarking (and Money McBags would break this market and technology down for you but everytime he thinks about it he teeters on the precipice of catatonia) and they basically go after any company needing to use some kind of digital tracking since DMRC has patented that space like Carrie Prejean has patented stupidity and Thomas Pynchon has patented gibberish.  The point is, this company really doesn't do anything other than litigate the hell out of any real company trying to enforce security or fend off the pirating of their actual online/digital content by claiming patent infringement on whatever security/tracking measures the real company enacts.  In this way DMRC confrontationally secures rev shares for themselves while impeding real innovation in the anti-piracy space (so good on you DMRC for being the digital watermarking bully).  They have around 1/3 of their market cap in cash but no real earnings stream until some of their deals start kicking in in the next few years.  One could argue there is a ton of value here as online piracy picks up and DMRC's patents will get more use, but one could also argue that Weekend At Bernie's should have won an Academy Award.  The point is, this is a very interesting company that holds the keys to a potentially huge market, but their revenue model is not quite there, difficult to fully grasp, and not something in which they have a lot of control.  For anyone who wants to really dig in to a business and an idea, this is a good place to start.  For those of you who don't, this is a good pace to start.

Friday, March 19, 2010

3/19/10 Midafternoon Report: When Greenspan talks, people shouldn't listen

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?

Enjoy the weekend.

Thursday, March 18, 2010

3/18/10 Midday Report: Market pauses to watch NCAA tournament, hopes boss isn't looking

There was a flurry of economic data released today but unfortunately it was less decisive than a sugar addict with a severe case of ADD in a candy store with only $.50 to spend.  Consumer prices remain unchanged, rising only .1% sequentially excluding food and fuel (or as they're better known as, essentials).  Consumer prices are now up 2.1% since last year but that is not enough for policy makers to be concerned about inflation as they they continue to test their thesis that if they ignore it, it will just go away.  In other macro news, the index of leading economic indicators was up .1% which was the smallest gain in a year and could signal slower growth ahead.  Of course since this is a ridiculous metric Money McBags could give a shit what it says.  He cares about as much about the leading economic indicators index as he does about creationism, show tunes, or Roseanne Barr's vagina.  New claims for unemployment  also came out and were down 5k to 457k which is still too high to signal a recovery (though no longer as high as Ron Washington during the seventh inning stretch).  Unemployment remains stagnant but at least the volatility has abated for now which is good news for anyone who still has a job, though remains bad news for those looking for one. Finally, manufacturing in the Philadelphia region rose again and at the fastest pace this year which should be good for handgun owners and anyone brave enough to drive into Philly to pick up whatever is being produced there.

In international news, Greece is dong a worse job of staying out of headlines than Peggy Eaton in 1829 (and for the record, Money McBags would love to have seen her petticoat).  Oh Greece, Money McBags thought he was done with you but you keep coming back like indigestion from a saganaki appetizer.  We all really wanted to believe in your austerity plan and the EU's tacit promise to back you up (thus figuratively taking you the Greek Way), but now there are doubts that the EU will really bail you out and Money McBags is stuck trying to think of more jokes about Hellenic culture.  Ugh.  Honestly, Money McBags may be more tapped out than Pheidippides during the Persian Wars.  So please EU, just bail these fuckers out or let them collapse but finish it already.  Otherwise Money McBags is going to have to start dipping into his Socrates pedophile jokes ("Did you know Socrates tried to start a clown college?  Yeah, he let his students juggle his balls.") and noboby wants to hear those.  Making things worse is Greek Prime Minister George Papadapolis trying to engage in some type of bail out game of chicken with the EU and German leader Angela Merkel (who in this pic gives a new definition to Merkle's boner) by claiming if the EU does not commit to a bail out plan, he will run like a jilted lover to the IMF to get some of that sweet sweet sugar.  The IMF coming to bail out Greece would be a blow to the solidarity of the Euro Union and not a delightful full tongue and lip blow, but one with lots of teeth.  In other international news, US ambassador to China John Huntsman spoke to students in China and said that China needs to let their currency rise because with the renminbi pegged to the US dollar, Chinese exports remain cheaper than Gary Coleman's rate sheet.

In stock news, Nike just did it (see look, Money McBags can write lame mainstream puns as well as anyone employed by Jay Leno) by putting up a huge quarter and reporting a jump in future orders (see, another mainstream pun).  Nike beat analysts estimates of $.89 eps by posting earnings of $1.01 per share as sales in the US and China were robust as more people are walking places after having their cars reposessed.  Also,  Teva is buying German drug maker Ratiofarm for $5B and the rights to their leading generic drug scatagra which is said to increase bowel movements and thus is widely used in Germany's top industry of scat film making. Finally, telecom company Vimpel was popped like a puss filled whitehead after missing analyst earnings estimates by $.14 per share.

In small cap news, Money McBags' short WGO announced their Q and surprised the whole investing world by actually putting up a profit of a whopping $.02 if you read the headlines.  Though apparently those same headline writers gave you Dewey defeats Truman and Four Stars for Ishtar because WGO only earned a profit due to a tax benefit of $2.2MM.  Take out the tax benefit and the company had an operating loss of $.07 which plays in to Money Mcbags thesis which he broke down for you all in December which is that this company will not make money in 2010.   Sure they put up a decent Q on the top line (short of analyst estimates though above Money McBags' estimates) as revenues were up 247% to $110.5MM as a result of increased orders for Class A vehicles (A standing for "Absolutely ridiculous that anyone would buy one of these things new," as the used market is more flooded than Faye Reagan's eye socket after the final scene of her last bukakke film).  WGO's sales order backlog was also up 250% and they now have $50MM in cash and short term investments thanks to the plethora of government tax benefits.  Even with this seemingly strong balance sheet (though apparently strong in the way that Richard Simmons is strong), they filed a shelf to raise $35MM.  Ummm, excuse me?  Guess what people, you don't dilute equity holders to raise $35MM of cash if the business is turning around.  It's not like they're going to acquire a smaller company so why do they need the $35MM?  Are they going to have a blow out night at Rick's Cabaret or are they going to try to blow up their vertical integration and build out more nimble production facilities?  Their overall cash was up $5MM in the past 6 months but if you strip out the $15MM tax benefit and the $5MM from sale of securities, they blew through $15MM.  With only $50MM left on the balance sheet (or a year and half worth at this rate), it's no wonder they are seeking to raise capital.  Inventories and receivables alone in the past 6 months have been a negative $21MM hit to their cash flow which I guess is good in that they are taking orders and building back up, but it's bad from you know, a fucking working capital standpoint.  Not only that, but their EBITDA was $0 for the Q which is better than the negative EBITDA they have been running but you know what zero EBITDA buys you?  It buys you a mix tape of Vern Troyer's greatest basketball dunks or a copy of Jessica Simpson's MENSA acceptance letter.  Look, it's good for their business that the Class A market is seemingly coming back, and it's good that they no longer have negative gross margins, but if anyone can tell Money McBags what valuation metric gets this company to their current $13.50 price (other than a 30x P/E multiple on FOS estimates, with FOS of course being "full of shit," or the new DCF type-valuation where the terminal value denominator is determined by picking the smallest known positive number), he'll buy you a share of ZAGG.  Look, Money McBags does not think WGO is going out of business, especially if they can raise another $35MM, but unless you think the recovery will be strong and unless you are using 2015 made-up estimates, there is just no way to defend the current valuation.  Fuck, Jim Bowie had an easier time defending the Alamo than anyone can in defending the WGO valuation.  Money McBags maintains that this is a $7 to $8 stock based on at best 15x their not going to make $.50 2011 EPS.  Money McBags has yet to listen to the call, so perhaps they shed light on the equity raise but he would rather own a used Magic Johnson leaky condom than WGO.

Wednesday, March 17, 2010

3/17/10 Midday Report: With PPI down, optometrists now try to tackle conjunctivitis

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Tuesday, March 16, 2010

3/16/10 Midday Report: The Fed is coming! The Fed is coming!

The market is largely in neutral today as investors await the Fed's decision on interest rates this afternoon.  With the lilkelihood of the Fed keeping rates at their current low levels somewhere between the likelihood of Michael Lewis droning on about his bond trading days in his new book or the likelihood of getting herpes from a night of snorkeling Paris Hilton (and that of course is a trick analogy, since the odds of both of those are 100%), investors are anxiously waiting to see if the language of the Fed will change (and as always, Money McBags votes for a change to Esperanto or perhaps even pig latin, you hear that Enbay Ernankebay?).  It is likely that the Fed will tweak the language just enough to hint that their accomodative stance (though not as wide or accomodative as a Larry Craig stance) will only last for so long, but there is unlikely to be enough detail for anyone to feel confident in a time frame.  If by now you haven't figured out that rates are eventually going to go up, Money McBags can't do anything for you other than to help you strap your helmet back on and buy one of your handmade potholders.  In US macro news released today, US housing starts were down in February by 5.9% to 575k, but that was slightly better than the 570k economists were guessing.  Multi-family dwelling construction was down 30% which is probably bad news for Mormons and John Edwards.  The decline in housing starts though is largely being blamed on snow storms in the South and Northeast where construction was down 15.5% and 9.6% respectively, though construction of igloos was up 58% in both geographies.  Surprisingly, the West and Midwest both showed greater than 7.5% increases in new home starts, or on an absolute level, 2 houses.

In international news, the 16 EU countries (there used to be 17 but they kicked out Grumpy) agreed to back Greece with loans if needed.  While the plan was almost as vague as a Nostradamus prophecy, the term "sexual relations" to Bill Clinton, or the US's bank bailout plan, European markets greeted it with open arms and one of those cheek to cheek kissing things they so much love to do.  The issue could come to a head in April or May when Greece faces more than 20B euros in debt redemptions which is one hell of a night out in Athens.  For 20B Euros there should have a been a huge Greek fiesta with Daniela Eleftheraki serving up plenty of pancakes and ouzo.  Bouying this positive news in Europe was German investor sentiment which fell less than expected from "heilige Scheisse" to just a case of schadenfreude.  Apparently the Germans are slightly more confident that their weiners will produce adequate amounts of schnitzel.

In stock news, GOOG is once again rumored to be pulling out of China which would put them in the same catergory as Sean Waltman.  Money McBags will likely buy any dip caused by these rumors as China is a small part of Goog's current earnings and even if they were to exit, it would likely only be temporary (forest through the trees my friends, forest through the trees).  GE is up on a JP Morgan analyst upgrade as well as comments from their CFO.  The analyst thinks credit losses have topped out while the CFO said GE will resume growing their dividend in 2011 (if we still have a global financial market) and will use excess cash for buybacks and acquistions (as opposed to hookers and blow I guess).  As long as they aren't acquiring a crappy network TV station or AIDS, Money McBags is all for them trying to grow the business again.

In small cap news KITD is beginning to run (and remember Money McBags told you all to buy and bought in himself in the low 10s the other week) as they presented at a Roth small cap conference yesterday and also announced a new acquisition and that they are buying back 4MM of their outstanding in-the-money warrants.  They are buying a firm called Multicast Media Technologies for $18MM of cash and stock ($4.9MM cash, 1.3MM shares) and post deal will have $15MM in cash and 17.7MM shares outstanding.  Now Multicast said they earn around $12MM a year in revenues from annualized recurring licensing fees for its IP video management software and KITD expects the acquisition to be immediately accretive.  Now remember, KITD guided to at least 60% revenue growth to more than $75MM and EBITDA margin exceeding 17.5%.  They're now adding $12MM to that revenue and should be able to hit those EBITDA margins because they take out cost quickly in this business as all they really need to do is transfer the data to their platform and then fire everyone at Multicast (Sorry guys, but hey, you'll have company).  But let's not give KITD the benefit of the doubt and we'll say they only get 10% EBITDA margins on this acquisition in the first year.  So now their EBITDA will go up by $1.2MM to $14.2MM.  They are currently trading at $125MM market cap with $15MM cash, so on an EV/EBITDA basis that is around 8x in a worst case scenario.  If they can get to the 17.5%+ margin on the acquisition, EBITDA will be at least $15MM and would put them at a 7x EV/EBITDA multiple.  The company is trading at 1.5x revenues (and analysts and the company maintain that their competitor Brightcove was valued at 12x revenue, though it's unclear where that rumor started so it should be discounted by as much as one discounts Donald Rumsfeld's war strategies or Lehman Brother's book keeping).  The only thing holding this company back is that it just has some fundamentally weird things about it that serve as red flags to old and stuffy institutional investors. They have a promotional CEO (not to say he is bad, but he is clearly only in this business for the short run so the higher he can sell it for and the sooner, the better), they were located in Dubai and now have moved to Prague, they rely on acquisitions, and they are still almost as small as He Pingping (and as an aside, the whole editorial staff here at When Genius Prevailed poured out a thimble this morning for the passing of the great Mr. Pingping who died at the age of 21, thus he both figuratively and literally led a short life.  Even though he was only 29 inches tall, he lived life to the fullest.  So I ask you all to take a short moment of silence now for Mr. Pingping).  That said, the numbers don't lie (well unless you're Enron, AIG, Refco, etc.) and this company is headed in the right direction.  They could easily get their EBITDA in 2010 to $20MM (remember, their guidance says revenue of at least $75MM and EBITA margins of at least 17.5%, so if we call revenue $100MM since its already at $87 after the acquisition and call margins 20%, because it's a nice round number, we're at $20MM of EBITDA) and if they just trade at 8x that, there is almost 50% upside.  Plus they think the worldwide online video market is $10B and is only 4% penetrated by the cheaper than digitial video IP solution which they provide.   Money McBags may buy some more today or tomorrow as the story remains intriguing and the new acquisition will help them beat their already lowballed numbers (though probably not as low as Abe Vigoda's balls).

Monday, March 15, 2010

3/15/10 Midday Report: March Madness is officially here as Moody's thinks people actually care about what they say

The market is flattish today, likely taking a breather to fill out its NCAA bracket while trying to sleep off the headache caused by Dick Vitale's pontifications yesterday on how loving Mike Krzyzewski is post-coitus.  That said, Moody's is out warning that major economies such as the US, Germany, the UK, and Vivid Video may be closer to having their debt ratings lowered as growth may not be enough to "resolve an increasingly complicated debt equation."  Hey Moody's, Money McBags has your increasingly complicated debt equation right here and it equals "go fuck yourself."  No really, do it.  Money McBags is going to sit here and wait until you take your credit scoring model and shove it right up your asset backed security and wherever else the CDO doesn't shine.  Here's the deal Moody's, you are not very good at what you do, you are as good at your job as Bernie Madoff is at investing or Kirstie Alley is at dieting.  You completely missed the whole fucking sub-prime collapse and you know what?  That was your only fuckng job.  It's like if Robert Newman forgot to bring lanterns to the steeple of Old North Church on 4/18/1775 or US intelligence never found weapons of mass destruction in Iraq (umm, ok, scratch that one).  So pardon Money McBags if he doesn't give two shits about what you have to say, even if those shits are from a homeless AIDS patient with diarrhea and a massive anal fissure.  Having you continue to rate debt is like if Ford re-hired the guy who designed the Edsel to produce a follow up called the Edsel Deuce or if Alan Greenspan were put back in charge at the Fed.  The point is, even a blind microeconomist can see that the world economy might go to hell, so shut your fucking yaps and go crawl back in to the financial hole which you created.  While Moody's is rating credits, Senator Christopher Dodd is set to announce a tougher financial reform bill today.  Unless that bill requires Moody's and other credit rating agencies to put a disclaimer saying "We suck at our jobs" on every report they release, requires companies writing CDS to actually hold reserves on those CDS since, you know, they're fucking insurance policies, and requires current and former Goldman Sachs executives to win popular elections before running the country, the reforms will simply be more government lip service (though if it's lip service from Raven Alexis, then that is the kind of government action Money McBags can support).  In other US macro news, industrial production rose .1% in February signaling a continued demand for computers and communications equipment.  It doesn't take a genius like Bill Gates or the guy who created the next great Olympic event (though NSFW) of muff guessing, to understand that technology is going to continue to grow and regardless of the global economy, people are going to continue to use it.  Cell phones, computers, iPads, etc. are going to keep driving the way people interact with each other until we finally all just get chips put in to our brains (which is sometime in the next 30 years according to Ray Kurzweil) so being long technology even if this recession double dips is not the worst idea one has ever had (though it is slightly worse than taint tickling Tuesdays or the theory of general relativity).

In stock news, Phillips-Van Heusen acquired Tommy Hilfiger for $3B cash and stock as they apparently woke up thinking it was still 1991.  PVH CEO, Ripped Off Van Winkle, said "Well we wanted to buy JAMZ and the company that makes those awesome Hammer Pants all the kids are wearing these days, but if we could only buy one of the three it was going to be Hilfiger.  We just want to let people know that PVH is down with OPP."  Also, AIG is talking about cutting their previously announced bonuses by 30% in order to hopefully quiet controversy while still keeping the employees who almost caused a total global economic collapse.  Whew.  How would AIG ever operate without the people who fucking ruined it?  In other news, LA county just retroactively gave Marcia Clark and Cristopher Darden bonuses for their handling of the OJ Simpson case while Tara Reid rehired her plastic surgeons.  Siemens is shooting themselves in the face today by pulling the sale of their hearing aid unit.  There is absolutely no reason you should care but Money McBags just wanted to see if he could type Siemens while keeping a straight face (and if you're keeping score at home, he didn't).  Finally, WMT is up after a C analyst upgraded them to buy based on the potential for WMT to gain share from supermarkets and their pending world domination.

In small cap news today, FHCO is getting some national press as the city of Washington DC is handing out 500k of the new and improved FC2 which is not only cheaper to produce with higher margins, but it also tastes great.  Money McBags wrote about FHCO about 2 months ago and all they have done since then is go up like a 45 year old virgin's johnson after viewing this delightful NSFW shot of Money McBags favorite Alice Eve.   The company has probably run a little too much but good things are still happening with a potential retail partner still out there and country specific AIDS programs just getting traction.  Plus there is that little thing about AIDS not going away.  In other small cap stocks, IBKR got downgraded today by KBW due to the ratio of actual to implied volatility in the options market showing no rebound and due to another little thing called "having no actual control over your business model revenue stream."  IBKR is both a market maker for options (though taking on no counterparty risk) and provider of a trading platform for day traders.  The problem they have been running in to is that the options market requires them to hedge the volatility and when the actual vol differs greatly from the implied vol, they can find themselves in a situation where they don't make any money as their margins get thinner than John Edwards' excuses.  Their CEO claims they have $2 in annual earnings power and over a long time horizon their earnings should be smoother than Olivia Munn after a cocoa butter bath, but that long time time horizon may be 100 years at this rate.  The fact is they have lumpy quarters and less ability to control the lumpiness than Michael Jackson has the abilty to moonwalk ever again.  So if you believe over the long run that those quarters will even out and there really is $2 of earnings potential, buying this stock at 8x those earnings on a down day due to a downgrade is not a terrible entry point.  That said, value investors have loved this stock all the way down from $35 and it's one of the few companies not to have participated in the rally.