The market tumbled today like a broke Boy George on a floor covered with dong as consumer confidence continues to fade like LeBron James' Q score or Haiti. Consumer sentiment fell to 66.5 which is the lowest since August and below the most pessimistic guesses of those not paying attention (also known as economists). The drop in sentiment from June's made up reading of 76 was the biggest drop in two years and was well below the 75 guessed at by economists who eventually will understand that the old data they used to calibrate their regression models no longer holds in our fat tailed society. Newsflash economists: The world has fucking changed, people are all connected, and whatever correlations you saw in the past are now likely more spurious and outdated than civility, manners, and landing strips. Basically everything in the consumer sentiment survey got worse and that is as bad of a sign for future consumer spend as a "You must be 18 to enter" sign is at a NAMBLA convention.
According to a Bloomberg poll, seven out of ten Americans believe we are in a recession, but then again, four in ten believe in alien abductions and six in ten believe that Kathy Griffin is a woman, so whatever. The economic data has gone from marginal to whatever is worse than marginal and it's not clear what is going to stimulate the economy out of this except for maybe a Bobbi Eden promise to take care of businesses if they hire. In other macro news, inflation continues to be modest as consumer prices were down .1% spurring louder whispers about deflation where cash will be king, and not some lame ass king like George III, but a cool one like Henry VIII or Kong.
In other US news, the SEC pulled themselves away from their tranny porn just long enough to settle with Goldman for $550MM as related to GS's shady dealings with their Abacus mortgage CDO. The settlement will be among the largest in the history of the SEC with $15MM a result of the money GS made on the deal and $535MM as a punishment for GS being a bunch of asshats for the past 140 years. Of the fine, $300MM will go directly to the US Treasury where they can either buy 3 new planes for congress, help Timothey Geithner pay his back taxes, or hire Cintia Dicker to massage their data before they stick it in to a GDP model.
Along with a consumer nudging closer to life support (and unfortunately with a pre-existing spending condition, the consumer is no longer eligible for insurance to help them survive), earnings reports were marginally bad at best. BAC plummeted 9% and C dropped 6% after they released decent earnings but showed revenues to be more lacking than rhythm at a Republican convention or diction in an NBA lockerroom. BAC's revenues were down 11% and C's were flat but most worrisome was that the earnings beats were a result of reserving less for credit issues with BAC reserving $5B fewer than last year because apparently they developed retrograde amnesia sometime in June. Ugh. This is going to get uglier than an Amy Winehouse-Michael Berryman love child.
In other stock news, GOOG revenue beat guesses but EPS fell short by $.06 as they earned $6.45 per share vs. analyst guesses of $6.51. That <1% miss of made up numbers was enough to drop the stock 7% and the company has said the are going back in to investment mode which spooked investors as if investment mode were a book and investors were Dexter Manley. Even though the 24% rate of growth was a bit lower than last Q's, this company is still the dominant player in one of the biggest and growing industries on the planet (right after hand set makers, gold mines, and porn) so while Money McBags is scratching his head a bit at GOOG's continued fourth mover push in to things like handsets and social media, he is still a long term owner because if the consumer dies, they are still going to spend time online guessing muffs as a way for cheap entertainment, so online advertising is only going to get stronger.
In small cap news, everything was down today. JOEZ was out with their quarter and it was mostly inline with analyst guesses of $.01 eps but 50% below Money McBags guess of $.02 eps (and see how Money McBags used 50%, instead of $.01 to make it sound much worse than it was?). Anyway, JOEZ put up a nice topline number, growing revenue by 51% to $26MM but once again had earnings leverage more negative than the reviews for an M. Night Shyamalan movie. That's right, despite growing revenue 51%, net income dropped by greater than 50% from $1.3MM to $500k defying the laws of common sense and business savvy. With that kind of inverse operating performance, it's a good thing JOEZ didn't grow their business 75% because then they might have lost money.
It would be easy to blame the drop in net income on the tax rate which grew to 48% over last year's 14% thanks to a shareholder unfriendly earnout struck by management when they acquired Joes, so thanks for that guys, really (oh wait, Money McBags isn't a shareholder, so he doesn't really give a fuck that JOEZ management treated their stock owners like second class citizens in a third world country when structuring the acquisition), but operating income BEFORE TAXES was down 25% from $1.6MM to $1.2MM. So on the extra $8.7MM of revenue JOEZ brought in this Q compared to Q2 2009, they lost $400K before taxes. Wow. Now look, Money McBags is no Jack Welch (though he did manipulate his earnings this morning to Brooklyn Decker), but losing money on incremental revenue is so obviously bad that even business school professors know it is a failing strategy. It's ok to have a loss leader, but when your whole business is a loss leader, you may have a problem.
Anyway, the reason for the operating earnings decline was threefold: 1. Gross margins declined worse than Louis XVI's power in 1792 France or Yasmine Bleeth's career after Baywatch. 2. Operating costs jumped up as if they had seen a mouse, or Kevin Federline, scurry across their kitchen floor. 3. Their core denim business is witnessing a second derivative decline in growth.
As for gross margins, which continued their descent, this time from 51% to 44%, the company said that the drop resulted from the addition of new lower margin product categories such as the T, the Pant, and the Top. CEO Marc Crossman did say that as volume grows for these products, margins should go back up as they can take better advantage of the factories and thus he expects meaningful margin expansion.
As for the increase in operating costs, that is a bit more troubling as costs jumped up to ~$10MM from ~$7MM which they said was the result of new worker salaries, rent costs, and a big night out at their local Rick's Cabaret (ok, maybe not the third one, but whatever). The confusing thing though is that costs were up $400k sequentially when last Q JOEZ said operating costs were artificially higher due to $850k of one-time advertising expenses and the moving of their headquarters. If we strip out those numbers, operating costs were up by ~$1.2MM from Q1 or ~15% while sequential revenue was up only ~12%. So basically this company manages their cost structure about as well as Alan Greenspan managed interest rates, Bernie Madoff managed money, or Magic Johnson managed a condom. The company said with their new lines built out they don't expect operating costs to rise, but again, last Q they pretty much said the same thing and blamed the higher costs on one-time charges which either became two-time charges or were filled in by new costs.
And finally, they said their denim is now a single digit grower (though Money McBags wasn't sure if they just meant in department stores, or overall) so they are going to increasingly need to rely on new products to spur growth and to date, the new products have killed their margins. In a trendy business, continuing to hit on new products is more difficult than solving the Poincare Conjecture or listening to a Ray Romano stand-up routine and not wanting to cut out your ear drums, so this is getting to be a tricky proposition.
In terms of their balance sheet, cash is now down from $13MM at the beginning of the year to $8.5MM, driven by a $3.5MM burn from operations due to rising inventories and helped out by growing accounts payable (which sounds about as healthy as a cock sandwich with extra VD). While they aren't in imminent danger (though at the rate of their cash burn from operations they only have 12 months of leeway), Money McBags would not be shocked by some kind of secondary offering because unless they can get their operations in order and start GENERATING cash, their growth plans are going to have to be put on hold.
So how the fuck does one forecast a company whose growth rate over the past 4 years was 30%, 35%, 10%, and 16%, who sells an expensive discretionary good in the midst of GLOBAL RECESSION, whose management team has grown revenue 46% this year and yet had earnings decline because they understand costs like Donald Rumsfeld understands war strategy or Sheyla Hershey understands when enough is enough, who burned cash in both quarters this year and is getting to the point where the may need to reload faster than Peter North on a day he is filming a double feature, who is in a market that is all about fads and their biggest product is starting to have its growth slow, and who has been so shareholder unfriendly that they stuck shareholders with a 48% tax rate so the management could get a better earnout and thus order a second helping of caviar when they were done screwing equity owners?
One could annualize the $.02 they have made in the first half of the year and call their earnings run rate $.04 and slap some growth on that, but that would be the easy way out. Money McBags is in a good mood today (mostly because he recently discovered Sofia Vergara) so he'll assume JOEZ can kind of keep this up and grow revenue 35% for the rest of the year and 30% next year (assuming they don't run out of cash or can raise cash to continue to expand). He'll call gross margin 51%, operating margin 38%, and the tax rate 45% (though they say it will wind up closer to 40% sometime around the year infinity). Doing that, Money McBags gets to $.16 eps for next year at the high end because every single one of those estimates is giving them a fuckload more credit than they have earned. So next year the company should earn somewhere between their current $.04 run rate and $.16 assuming they don't have to issue more shares to help quell their cash burn. JOEZ is now trading at between 13x and a bazillion x those numbers.
So in short, Money McBags is glad not to be involved in this company as they have been able to deliver profits about as well as George Will delivers a punchline but if one believes what management says and not what they have actually done (like you know, lose money, mismanage costs, fuck over shareholders, and burn in cash), one could make an argument that 13x for a 40% grower is cheap, of course one could also make an argument that Tori Spelling is hot, so be careful to whom you listen. Money McBags remains fascinated by this little stock though as it's not often you find 40%+ topline growers who manage to consistetly shrink their profits.
Have a good weekend, and remember WGP is on facebook and twitter.
Showing posts with label GOOG. Show all posts
Showing posts with label GOOG. Show all posts
Friday, July 16, 2010
Thursday, July 15, 2010
7/15/10 Midevening Report: Senate approves financial reform only 5 years too late, next up, what to do about all of those indians
The Senate passed a sweeping financial reform bill today, though the only thing it is likely to sweep is more problems under the rug. After many compromises between Democrats and Republicans, the bill basically lets regulators feel the financial sector up but then caucusblocks them from going all the way. Sure there are now limits on how much banks can invest in hedge funds and sure some prop trading desks will be sold, but all this bill really did was create a fuckload more complexity in regulating the financial sector and The Street thrives on complexity since they make money by basically exploiting loopholes. So the bill gives the Fed more strength (and really, haven't they earned it?) to create a bunch of redundant regulatory groups and gives them power to do a bunch of shit that they will only do after the fact because pro-active regulation is more of an oxymoron than deafening silence or David Hasselhoff's talents. Money McBags gives the financial reform 3 yawns out of 4 as it's like thinking about putting a band aid on a gaping bullet wound.
In macro news, new claims for unemployment were the lowest they have been in 2 years, until the (No) Labor Department revises them upward next week. Claims dropped by 29k to 429k after they were once again manipulated upward from last week's 454k number to 458k. The large drop in claims is being attributed both to temporary layoffs at factories being postponed as companies like GM announced they will keep their plants open for most of the season, and just making up numbers. One reason the drop didn't move the market up is that the (No) Labor Department concentrates on seasonally adjusted numbers and their seasonal adjustment is likely as good as Sheyla Hershey's boob job so therefore if we look at unseasonallly adjusted numbers, we see that they rose by 45k to 513k, the highest number since January. Also, continuing claims jumped up by 247k to 4.68MM which is as healthy for the economy as smoking a cigarrette spiked with asbestos and Charlie Sheen's taint hair. Either way, Money McBags is sure that the 429k number will be revised upwards to something like 437k next week so it's hard to get excited about a big drop that is really due to a timing issue and will be changed anyway. And just to show that Money McBags is here for you in analyzing the numbers, remember that last week after claims were announced at 454k, Money McBags predicted that:
"The big macro news is that new claims for unemployment dropped to 454k or some number higher than that depending on how much the (No) Labor Department manipulates/readjusts numbers next week. Money McBags is not a betting man (unless there is money to be won or young ladies to impress) but he is willing to wager that next week we learn that new claims for this week should have actually been 459k."
And sure enough they were manipulated up to 458k so either Secretary of Labor Hilda Solis (though to be honest, Money McBags thought we did away with the word "secretary" and were now calling them "administrative assistants," but whatever) is using WGP to set her numbers or Money McBags' forecasting method which involves sticking his finger in the air while figuratively pulling a number out of Sofia Vergara's voluptuous ass is not just more delightful than the bullshit models used by the (No) Labor Department but also hella more accurate. See, anyone can make up numbers.
In other macro news, the NY Fed's Empire State Manufacturing index dropped like George Steinbrenner on Tuesday (too soon?). The index came in at 5.1, only slightly below the 18 economists had guessed, and while Money McBags has no idea what the difference between 5.1 and 18 is (other than 12.9), he's pretty sure something less than 1/3 of predictions isn't good in the same way that being the only female smurf or hiring MC Esher to design your staircase isn't good. Not only did manufacturing in New York decline, but it did in Philly as well where the Philly Fed's manufacturing index also fell to 5.1 which was below guesses of 10, though the 5 point miss was said to simply be stolen like everything else manufactured in Philly. While Money McBags finds it odd that two Fed manufacturing surveys would each register 5.1 in the same month (something about as likely as Paul Krugman winning a nobel prize), he does not find it surprising that manufacturing was starting to slip because we're in something called a GLOBAL FUCKING RECESSION.
On a slightly more positive note, the Fed said industrial production creeped up .1% in June thanks to mining and utilities, on an even more positive note, Brooklyn Decker. Finally, producer prices fell again, this time by .5%, led by a steep 2.2% decline in food prices which were driven by an earlier weather-related jump in the price of tomatoes and an even earlier economy related dive in people's incomes.
Internationally, China's growth slowed in the Q to 10.3% from 11.9% in last year's Q1 while industrial production rose 13.7% which would be great if it weren't lower than what 26 out of 27 analysts on Bloomberg had guessed. Of course on WGP, Money McBags has shown both that analysts have no ability to forecast numbers and the numbers themselves as mostly fictitious like supply side economics, big foot, and Lauren Conrad's career, so ho fucking hum again. While China's growth was basically inline, it left investors hungry for more just twenty minutes later and thus asian markets were down.
In the market, JP Morgan beat estimates in their quarterly game of numbers roulette. Net income was up 76% to $4.8B despite an 8% decline in revenue thanks to a $1.5B reserve release which was the biggest release in NY since Stephon Marbury. That said, while the reserve release is a bit puzzling since the economy is nudging south like a wannabe hollywood actress on her first casting couch, JPM's credit card division turned profitable for the first time in several quarters and overall the company beat guesses by ~$.03 after stripping out one-timers. The biggest surprise though was WGP favorite Dick "Don't call me Richard" Bove who never saw a financial stock he couldn't misunderstand or artificially pump up, lowered his rating of JPM claiming revenue was weak and earnings were more manipulated than new claims for unemployment numbers or Tiger Woods' image. In other large cap news, the market braces for GOOG's earnings release and Money McBags is long the stock but he bets it will drop 8% regardless of whether they beat or not because high frequency traders hate growing companies with solid earnings and instead have calibrated their algorithms to find companies that are correlated to the phases of the moon and since HFTs control 50% of the market volume, they win most of the time.
In small cap news, JOEZ is set to report tonight and they will likely show more revenue growth, and yet declining earnings as their cost of operations and tax rate have them more set to fail than Amy Winehouse in a "girls I'd like to bone contest." Also, Money McBags favorite KITD had their buy rating reitirated by Janney Capital today. Janney maintained their $13 price target which is only ~50% too low, but remember, analysts are paid to just publish and not to be right or stick their necks out for anything. As Money McBags isn't getting paid for his research and has no constituency to please other than his own trading account and the lovely Teresa Palmer, he is not afraid to make big calls and unless KITD's management is completely and utterly full of shit (10% chance but moving up proportionally with their growing A/R), this company is more undervalued than sharing a chilli dog with Natalie Portman.
In macro news, new claims for unemployment were the lowest they have been in 2 years, until the (No) Labor Department revises them upward next week. Claims dropped by 29k to 429k after they were once again manipulated upward from last week's 454k number to 458k. The large drop in claims is being attributed both to temporary layoffs at factories being postponed as companies like GM announced they will keep their plants open for most of the season, and just making up numbers. One reason the drop didn't move the market up is that the (No) Labor Department concentrates on seasonally adjusted numbers and their seasonal adjustment is likely as good as Sheyla Hershey's boob job so therefore if we look at unseasonallly adjusted numbers, we see that they rose by 45k to 513k, the highest number since January. Also, continuing claims jumped up by 247k to 4.68MM which is as healthy for the economy as smoking a cigarrette spiked with asbestos and Charlie Sheen's taint hair. Either way, Money McBags is sure that the 429k number will be revised upwards to something like 437k next week so it's hard to get excited about a big drop that is really due to a timing issue and will be changed anyway. And just to show that Money McBags is here for you in analyzing the numbers, remember that last week after claims were announced at 454k, Money McBags predicted that:
"The big macro news is that new claims for unemployment dropped to 454k or some number higher than that depending on how much the (No) Labor Department manipulates/readjusts numbers next week. Money McBags is not a betting man (unless there is money to be won or young ladies to impress) but he is willing to wager that next week we learn that new claims for this week should have actually been 459k."
And sure enough they were manipulated up to 458k so either Secretary of Labor Hilda Solis (though to be honest, Money McBags thought we did away with the word "secretary" and were now calling them "administrative assistants," but whatever) is using WGP to set her numbers or Money McBags' forecasting method which involves sticking his finger in the air while figuratively pulling a number out of Sofia Vergara's voluptuous ass is not just more delightful than the bullshit models used by the (No) Labor Department but also hella more accurate. See, anyone can make up numbers.
In other macro news, the NY Fed's Empire State Manufacturing index dropped like George Steinbrenner on Tuesday (too soon?). The index came in at 5.1, only slightly below the 18 economists had guessed, and while Money McBags has no idea what the difference between 5.1 and 18 is (other than 12.9), he's pretty sure something less than 1/3 of predictions isn't good in the same way that being the only female smurf or hiring MC Esher to design your staircase isn't good. Not only did manufacturing in New York decline, but it did in Philly as well where the Philly Fed's manufacturing index also fell to 5.1 which was below guesses of 10, though the 5 point miss was said to simply be stolen like everything else manufactured in Philly. While Money McBags finds it odd that two Fed manufacturing surveys would each register 5.1 in the same month (something about as likely as Paul Krugman winning a nobel prize), he does not find it surprising that manufacturing was starting to slip because we're in something called a GLOBAL FUCKING RECESSION.
On a slightly more positive note, the Fed said industrial production creeped up .1% in June thanks to mining and utilities, on an even more positive note, Brooklyn Decker. Finally, producer prices fell again, this time by .5%, led by a steep 2.2% decline in food prices which were driven by an earlier weather-related jump in the price of tomatoes and an even earlier economy related dive in people's incomes.
Internationally, China's growth slowed in the Q to 10.3% from 11.9% in last year's Q1 while industrial production rose 13.7% which would be great if it weren't lower than what 26 out of 27 analysts on Bloomberg had guessed. Of course on WGP, Money McBags has shown both that analysts have no ability to forecast numbers and the numbers themselves as mostly fictitious like supply side economics, big foot, and Lauren Conrad's career, so ho fucking hum again. While China's growth was basically inline, it left investors hungry for more just twenty minutes later and thus asian markets were down.
In the market, JP Morgan beat estimates in their quarterly game of numbers roulette. Net income was up 76% to $4.8B despite an 8% decline in revenue thanks to a $1.5B reserve release which was the biggest release in NY since Stephon Marbury. That said, while the reserve release is a bit puzzling since the economy is nudging south like a wannabe hollywood actress on her first casting couch, JPM's credit card division turned profitable for the first time in several quarters and overall the company beat guesses by ~$.03 after stripping out one-timers. The biggest surprise though was WGP favorite Dick "Don't call me Richard" Bove who never saw a financial stock he couldn't misunderstand or artificially pump up, lowered his rating of JPM claiming revenue was weak and earnings were more manipulated than new claims for unemployment numbers or Tiger Woods' image. In other large cap news, the market braces for GOOG's earnings release and Money McBags is long the stock but he bets it will drop 8% regardless of whether they beat or not because high frequency traders hate growing companies with solid earnings and instead have calibrated their algorithms to find companies that are correlated to the phases of the moon and since HFTs control 50% of the market volume, they win most of the time.
In small cap news, JOEZ is set to report tonight and they will likely show more revenue growth, and yet declining earnings as their cost of operations and tax rate have them more set to fail than Amy Winehouse in a "girls I'd like to bone contest." Also, Money McBags favorite KITD had their buy rating reitirated by Janney Capital today. Janney maintained their $13 price target which is only ~50% too low, but remember, analysts are paid to just publish and not to be right or stick their necks out for anything. As Money McBags isn't getting paid for his research and has no constituency to please other than his own trading account and the lovely Teresa Palmer, he is not afraid to make big calls and unless KITD's management is completely and utterly full of shit (10% chance but moving up proportionally with their growing A/R), this company is more undervalued than sharing a chilli dog with Natalie Portman.
Tuesday, July 13, 2010
7/13/10 Midafternoon Report: The market is AA-ok as Alcoa foils bears
The market was off to the races today as if it the races were going to feature Usain Bolt taking on Sara Jane Underwood in the 100 meter dash with the loser having to run a lap in the buff. The big news of course was that Alcoa started off the earnings season by destroying analyst guesses of $.12 eps by earning a whopping $.13 per share in the last Q. That's right, the fact that a whole extra penny (with rounding) is the difference between a down market and an up 2% market makes as much sense as the theory that gravity is an illusion or candwiches.
Making it even more ridiculous is that as ZeroHedge points out, just last month Bloomberg showed consensus analyst guesses of $.16 for AA's Q. So with analysts lowering their guesses before the quarter, AA is now back to where it was when guesses were for $.16 so the would have been $.03 miss has been mitigated by strategic downgrades. Brilliant stuff. As the late great Kurt Vonnegut would say, "No damn cat, and no damn cradle." Analysts are now quickly dropping their guesses on companies across the board because they only get paid when the market goes up and with unemployment benefits going away, they need to keep their jobs like Kathy Griffin needs to keep off of HDTV. That said, AA did raise their guidance for aluminum consumption for the year from 10% to 12% and revenue was up 22% despite cratering aluminum prices as a result of demand slowing down and oversupply given that aluminum is the 3rd most prevalent element in the earth, behind only oxygen and whatever medal Mr. T wears around his neck. That said, the declining prices and rising energy costs are hurting overall profitability but with foreclosures up, demand may surge as the recently homeless grab sheet aluminum to build shanty towns to be known to future generations as WhothefucklentthosepeopleallofthatmoneyVilles or for short Goldmanvilles.
In macro news today, the US trade gap widened to 4.8% or $42B, which is the largest since November 2008 and a gap wider than between the antenna on a new Apple iPhone or the gap between Paris Hilton's legs on a Sunday morning. Not surprisingly, a trade gap is the exact opposite of what economists had guessed and thus once again proves that "economist" is not a real job, like rap music spell checker. Imports were up 3% thanks to a 12% increase in imports from China which, as pointed out yesterday, was driven by people not having any money and thus only being able to afford the cheap shit made overseas. US exports continued to see strength, which is a bit surprising given the weakness in the Euro last Q, as they were up 2.4% which was their best month since September 2008 when the US instituted buy one get one free Wednesdays for foreign countries.
And finally, the National Federation of Independent Business (known better as NFIB or "irrelevant") said optimism declined among small businesses by 3.2% in their monthly survey to which no one pays attention to anyway. NFIB's chief economist William Dunkelberg (who is still smarting from his decision to leave his hosting gig at Small Business Idol to pursue other career opportunities) opined that: “Confidence is lacking and the news out of Washington is discouraging. Until this changes, don’t expect small businesses to start hiring.” He then went and stole an ice cream cone from a little kid, told his wife she looked fat in those jeans, and ordered a ton of coal so he'll be prepared to adequately fill the stockings of everyone at the NFIB during Christmas time.
Internationally, Moody's cut Portugal's debt rating by two whole notches which means absolutely nothing to Money McBags as he cares what Moody's has to say about rating debt as much as he cares what Art Laffer has to say about tax policy, Jeffrey Dahmer has to say about cuisine, or Mel Gibson has to say about anything. Moody's dowgrade stems from Portugal's national debt having risen sharply relative to GDP as a result of stimulus measures and the 168 siesta hour work week. Moody's also warned that weak growth would weigh on government finances for two or three more years while Portugal warned that weak analysis would weigh on Moody's finances for eternity. European markets are up on this news as even they realize that Moody's is worse at their job than a eunuch sperm donor or Alan Greenspan.
In large cap stocks, just about everything was up as we move in to earnings season with INTC, C, BAC, and GOOG to report this week so hopefully analysts already lowered their guesses in order to keep the market moving. One interesting stock to note is AAPL as the company is down after Consumer Reports said it will not recommend the new iPhone 4 due to reception glitches, and Steve Jobs simply being a dick. In their defense, Apple maintains that any cellphone will lose reception if held a certain way, like in a toilet, at the bottom of Lechuguilla Cave, or up Candice Swanepoel's well chiseled buttocks (and Money McBags is volunteering to test that theory out) so there is really no big deal. Plus, to fix the problem, AAPL claims all one needs to do is wrap some duct tape around the iPhone where the gap in the antenna is and who doesn't want a piece of metallic tape draped around their sleek and expensive gadget? It would almost be like fixing a tear in the Mona Lisa by putting a SpongeBob Squarepants band aid over it.
In small cap news, LHCG was down ~6% today after competitor AMED announced a shitactular Q and dropped nearly 25%. Money McBags broke LHCG down the other week after the SEC announced they were investigating AMED and AFAM for potential shadiness in how they were charging medicare for visits that may not ever have happened or visits that were unneeded. Anyway, guesses for AMED were for quarterly earnings of $1.37 per share and today they said that earnings will be closer to $1.12 which makes it almost as big of a miss as the Edsel or Glitter. Money McBags did not hear AMED's call but it is reported they said that their client base changed and they will need to reevaluate their structure and will hold off on full-year forecasts. Now look, without further color Money McBags isn't sure how this will affect LHCG because he has no idea what AMED means by their "client base changing" because either they stopped treating sick people (which would seem a silly thing to do for a home fucking healthcare company) or they started treating fewer sick people and thus had fewer home visits (which is a more likely scenario, especially with the SEC all in their business about charging for too many medicare visits). More concerning though is that shareholders have filed a suit against LHCG for an investigation from April into LHCG's reimbursement procedures, so fuck Money McBags on that one.
The industry makes sense longterm, the cost savings to insurance companies are too great, and home care is simply better, so it remains a good way to play the aging population trend but there is way too much fucking noise right now for an investor without access to industry insiders to get a leg up on the billing practices. As a result, Money McBags would stay the fuck away from this sector even though a few days ago he said LHCG was an interesting longterm buy (and it still remains that way but Money McBags needs more information to be able to make a sensible decision about the SEC investigations). Anyway, with all of this uncertainty, there are easier ways to make money (like TMRK which is a great takeout candidate and is getting a boost with MSFT's entry into cloud computing ) so keep watching LHCG but you probably want to avoid going long in the short term unless you have better contacts in the industry than Money McBags has. In times of turmoil, money can be made, but to do so, one needs to be confident that they have all of the information, so do your work here carefully.
Making it even more ridiculous is that as ZeroHedge points out, just last month Bloomberg showed consensus analyst guesses of $.16 for AA's Q. So with analysts lowering their guesses before the quarter, AA is now back to where it was when guesses were for $.16 so the would have been $.03 miss has been mitigated by strategic downgrades. Brilliant stuff. As the late great Kurt Vonnegut would say, "No damn cat, and no damn cradle." Analysts are now quickly dropping their guesses on companies across the board because they only get paid when the market goes up and with unemployment benefits going away, they need to keep their jobs like Kathy Griffin needs to keep off of HDTV. That said, AA did raise their guidance for aluminum consumption for the year from 10% to 12% and revenue was up 22% despite cratering aluminum prices as a result of demand slowing down and oversupply given that aluminum is the 3rd most prevalent element in the earth, behind only oxygen and whatever medal Mr. T wears around his neck. That said, the declining prices and rising energy costs are hurting overall profitability but with foreclosures up, demand may surge as the recently homeless grab sheet aluminum to build shanty towns to be known to future generations as WhothefucklentthosepeopleallofthatmoneyVilles or for short Goldmanvilles.
In macro news today, the US trade gap widened to 4.8% or $42B, which is the largest since November 2008 and a gap wider than between the antenna on a new Apple iPhone or the gap between Paris Hilton's legs on a Sunday morning. Not surprisingly, a trade gap is the exact opposite of what economists had guessed and thus once again proves that "economist" is not a real job, like rap music spell checker. Imports were up 3% thanks to a 12% increase in imports from China which, as pointed out yesterday, was driven by people not having any money and thus only being able to afford the cheap shit made overseas. US exports continued to see strength, which is a bit surprising given the weakness in the Euro last Q, as they were up 2.4% which was their best month since September 2008 when the US instituted buy one get one free Wednesdays for foreign countries.
And finally, the National Federation of Independent Business (known better as NFIB or "irrelevant") said optimism declined among small businesses by 3.2% in their monthly survey to which no one pays attention to anyway. NFIB's chief economist William Dunkelberg (who is still smarting from his decision to leave his hosting gig at Small Business Idol to pursue other career opportunities) opined that: “Confidence is lacking and the news out of Washington is discouraging. Until this changes, don’t expect small businesses to start hiring.” He then went and stole an ice cream cone from a little kid, told his wife she looked fat in those jeans, and ordered a ton of coal so he'll be prepared to adequately fill the stockings of everyone at the NFIB during Christmas time.
Internationally, Moody's cut Portugal's debt rating by two whole notches which means absolutely nothing to Money McBags as he cares what Moody's has to say about rating debt as much as he cares what Art Laffer has to say about tax policy, Jeffrey Dahmer has to say about cuisine, or Mel Gibson has to say about anything. Moody's dowgrade stems from Portugal's national debt having risen sharply relative to GDP as a result of stimulus measures and the 168 siesta hour work week. Moody's also warned that weak growth would weigh on government finances for two or three more years while Portugal warned that weak analysis would weigh on Moody's finances for eternity. European markets are up on this news as even they realize that Moody's is worse at their job than a eunuch sperm donor or Alan Greenspan.
In large cap stocks, just about everything was up as we move in to earnings season with INTC, C, BAC, and GOOG to report this week so hopefully analysts already lowered their guesses in order to keep the market moving. One interesting stock to note is AAPL as the company is down after Consumer Reports said it will not recommend the new iPhone 4 due to reception glitches, and Steve Jobs simply being a dick. In their defense, Apple maintains that any cellphone will lose reception if held a certain way, like in a toilet, at the bottom of Lechuguilla Cave, or up Candice Swanepoel's well chiseled buttocks (and Money McBags is volunteering to test that theory out) so there is really no big deal. Plus, to fix the problem, AAPL claims all one needs to do is wrap some duct tape around the iPhone where the gap in the antenna is and who doesn't want a piece of metallic tape draped around their sleek and expensive gadget? It would almost be like fixing a tear in the Mona Lisa by putting a SpongeBob Squarepants band aid over it.
In small cap news, LHCG was down ~6% today after competitor AMED announced a shitactular Q and dropped nearly 25%. Money McBags broke LHCG down the other week after the SEC announced they were investigating AMED and AFAM for potential shadiness in how they were charging medicare for visits that may not ever have happened or visits that were unneeded. Anyway, guesses for AMED were for quarterly earnings of $1.37 per share and today they said that earnings will be closer to $1.12 which makes it almost as big of a miss as the Edsel or Glitter. Money McBags did not hear AMED's call but it is reported they said that their client base changed and they will need to reevaluate their structure and will hold off on full-year forecasts. Now look, without further color Money McBags isn't sure how this will affect LHCG because he has no idea what AMED means by their "client base changing" because either they stopped treating sick people (which would seem a silly thing to do for a home fucking healthcare company) or they started treating fewer sick people and thus had fewer home visits (which is a more likely scenario, especially with the SEC all in their business about charging for too many medicare visits). More concerning though is that shareholders have filed a suit against LHCG for an investigation from April into LHCG's reimbursement procedures, so fuck Money McBags on that one.
The industry makes sense longterm, the cost savings to insurance companies are too great, and home care is simply better, so it remains a good way to play the aging population trend but there is way too much fucking noise right now for an investor without access to industry insiders to get a leg up on the billing practices. As a result, Money McBags would stay the fuck away from this sector even though a few days ago he said LHCG was an interesting longterm buy (and it still remains that way but Money McBags needs more information to be able to make a sensible decision about the SEC investigations). Anyway, with all of this uncertainty, there are easier ways to make money (like TMRK which is a great takeout candidate and is getting a boost with MSFT's entry into cloud computing ) so keep watching LHCG but you probably want to avoid going long in the short term unless you have better contacts in the industry than Money McBags has. In times of turmoil, money can be made, but to do so, one needs to be confident that they have all of the information, so do your work here carefully.
Monday, July 12, 2010
7/12/10 Midevening Report: Hefner bid titilates Playboy stock, shares bust out
There was little news in the market today as investors waited for AA's earnings tonight as a signal of things to come as everyone knows aluminum production is what really drives the economy (and yes that was sarcasm). Without much macro news other than shit continuing to get worse with temporary census jobs ending, republicans filibustering extended unemployment benefits to further punish the people who likely had little to do with the recession (other than likely borrowing way beyond their means), and no new actresses coming out as bisexual this week, we were left with a flurry of M&A driving the market (as opposed to a flurry of T&A, which likely would have led to a strong rise).
The biggest M&A deal occured between two companies about whom no one gives a fuck, as AON is purchasing Hewitt for $4.9B in cash, stock, and old actuarial tables signed by Elizur Wright. While AON will be in flux for a bit, they should be able to immediately make use of Hewitt's human resource and outsourcing capabilities to fire the appropriate amount of people while making sure that everyone gets a smiley face cupcake. Once done, they can further get value out of Hewitt's consulting business by leveraging them for a business case to try figure out why the hell anyone would have paid a 41% premium of 7.5x forward EBITDA for Hewitt. Of course using their now fully owned Hewitt for that study would either be considered a virtuous circle, a vicious circle, or the least fun daisy chain since full bush was still in style.
In other M&A news, Hugh Hefner wants to take Playboy private (after years of taking it to his privates) at a 40% premium to current price, or about what he pays to the Shannon sisters. Playboy magazine sales were down 48% in Q1 as the business continues to struggle with the invention of a little something called the internet where people can now read the hard hitting and biting journalism Playboy offers for free. The company has gone through a major facelift over the past year by laying off staff, streamlining functions, and putting out bigger and more well-rounded (and very NSFW) articles. The fact is, Playboy still has a recognizable and aspirational (as well as ass-pirational) brand and now that Hefner is opening up his robe for the company, there appear to be multiple bidders including PE firms, top competitor Friend Finder, and the creepy guy in the airport gift shop. The company is definitely at a tipping point with the internet producing more free porn per minute than David Duchovny can view, but in the right hands, and with a stroke of luck, the brand could come strongly back.
In other M&A news, BP may be selling assets in order to pay for a new Gulf. The company is said to be in negotiations with Apache to divest $18B worth of some of the largest Alaskan assets in the world. Finally, JNJ is buying MEND, a company that makes a device for treating brain aneurysms in stroke victims just in time to catch the growing popularity of the KFC Double Down.
Internationally, the European Commission came out with a reform package to boost consumer confiidence from "holy fuck we're screwed" to "at least we're not Kazakhstan." The package includes EU-wide measures to protect bank account holders by guaranteeing savings accounts up to 100k euro and investment accounts up to 50k euro while promising to pay account holders within seven days of the almost certain to come bank failures. Lastly, China anounced exports grew by 44% as more people sink to poverty and can only afford the cheap shit made in China.
In large cap stocks, MSFT is up on news that they are going to make it rain in the cloud computing space by teaming up with Fujitsu to invest money in the growing cloud technology sector while GOOG continues to rise after having their license renewed in China. Money McBags was told that to get their license renewed, GOOG just had to follow the chinese road rules of stopping at yellow lights, driving 20 miles under the speed limit, and using their turn signal sparingly.
In small cap stocks, NLS is up 16% on no news that Money McBags could find other than people hate making money. If you remember back in December, longtime reader Matty McSacks hypothesized that NLS was worth ~$4 per share and it was trading at $1.85 at the time. Money McBags looked in to the matter and thought those estimates seemed high since the company sells expensive discretionary items during a little bit of a recession and after a hella confusing quarterly release and a jump up, NLS has settled back to where it was at the beginning of the year with today's run up. In their last Q, NLS trimmed their losses to only a loss of $.08 per share but their biggest segment, retail, shed 30% of their revenues as if revenue had spent the entire Q working out on a Mobia. The drop in direct business was driven by a 37% drop in credit approvals from their finance partner and while Money McBags is no Fair Isaacs, it doesn't take Isaac Hayes to see that credit isn't going to get better anytime soon. With the direct business lagging, gross margin dropped to 50% from 56% but thanks to restructuring, the company did away with $10MM of operating expenses which allowed them to lose only $2MM and have near breakeven EBITDA. The company hasn't made money since 2006 and with the economy sputtering again, it's not clear who the fuck is going to be out looking for a new Universal machine to build muscle since they won't be able to afford to buy supplements to help maintain that muscle. The only arguments that can be made for this company are that it is trading at ~.35 of sales, they didn't burn cash last Q, and they have ~$12MM of unrestricted cash which is ~20% of their market cap. That said, rat tails, hammer pants, and Bea Arthur will come back before this company does as gyms aren't upgrading their equipment, people continue to get lazier and fatter, and those who used to be able to afford expensive clothes holders for their bedroom (which NLS machines invariably windup being), remember they have something less expensive called a closet and a floor. So even though the stock is up big today signalling something is happening (like potentially a big short investor getting a capital call), Money McBags would not be a buyer because the consumer remains weaker than a virgin tequila shot.
And before we go, on Friday Money McBags told you about TSYS and the opportunity it presented for a short term trade. The company was up 3.5% today (though on light volume) with IWO down ~120bps so something seems to be going on there. The company is hella cheap and while their earnings releases and segment financials are more complicated to decipher than a Rube Goldberg contraption or what the fuck your lady friend is actually saying to you, they are in growing markets and seem to be winning business. Money McBags doesn't have a great longterm feel for the company since he doesn't quite get the step function revenue stream of their text messaging business and why they never seem to make that next step up, but if they can really hit their guidance of $80MM-$85MM of EBITDA this year, this stock should see solid appreciation now that it has seemingly bottomed.
The biggest M&A deal occured between two companies about whom no one gives a fuck, as AON is purchasing Hewitt for $4.9B in cash, stock, and old actuarial tables signed by Elizur Wright. While AON will be in flux for a bit, they should be able to immediately make use of Hewitt's human resource and outsourcing capabilities to fire the appropriate amount of people while making sure that everyone gets a smiley face cupcake. Once done, they can further get value out of Hewitt's consulting business by leveraging them for a business case to try figure out why the hell anyone would have paid a 41% premium of 7.5x forward EBITDA for Hewitt. Of course using their now fully owned Hewitt for that study would either be considered a virtuous circle, a vicious circle, or the least fun daisy chain since full bush was still in style.
In other M&A news, Hugh Hefner wants to take Playboy private (after years of taking it to his privates) at a 40% premium to current price, or about what he pays to the Shannon sisters. Playboy magazine sales were down 48% in Q1 as the business continues to struggle with the invention of a little something called the internet where people can now read the hard hitting and biting journalism Playboy offers for free. The company has gone through a major facelift over the past year by laying off staff, streamlining functions, and putting out bigger and more well-rounded (and very NSFW) articles. The fact is, Playboy still has a recognizable and aspirational (as well as ass-pirational) brand and now that Hefner is opening up his robe for the company, there appear to be multiple bidders including PE firms, top competitor Friend Finder, and the creepy guy in the airport gift shop. The company is definitely at a tipping point with the internet producing more free porn per minute than David Duchovny can view, but in the right hands, and with a stroke of luck, the brand could come strongly back.
In other M&A news, BP may be selling assets in order to pay for a new Gulf. The company is said to be in negotiations with Apache to divest $18B worth of some of the largest Alaskan assets in the world. Finally, JNJ is buying MEND, a company that makes a device for treating brain aneurysms in stroke victims just in time to catch the growing popularity of the KFC Double Down.
Internationally, the European Commission came out with a reform package to boost consumer confiidence from "holy fuck we're screwed" to "at least we're not Kazakhstan." The package includes EU-wide measures to protect bank account holders by guaranteeing savings accounts up to 100k euro and investment accounts up to 50k euro while promising to pay account holders within seven days of the almost certain to come bank failures. Lastly, China anounced exports grew by 44% as more people sink to poverty and can only afford the cheap shit made in China.
In large cap stocks, MSFT is up on news that they are going to make it rain in the cloud computing space by teaming up with Fujitsu to invest money in the growing cloud technology sector while GOOG continues to rise after having their license renewed in China. Money McBags was told that to get their license renewed, GOOG just had to follow the chinese road rules of stopping at yellow lights, driving 20 miles under the speed limit, and using their turn signal sparingly.
In small cap stocks, NLS is up 16% on no news that Money McBags could find other than people hate making money. If you remember back in December, longtime reader Matty McSacks hypothesized that NLS was worth ~$4 per share and it was trading at $1.85 at the time. Money McBags looked in to the matter and thought those estimates seemed high since the company sells expensive discretionary items during a little bit of a recession and after a hella confusing quarterly release and a jump up, NLS has settled back to where it was at the beginning of the year with today's run up. In their last Q, NLS trimmed their losses to only a loss of $.08 per share but their biggest segment, retail, shed 30% of their revenues as if revenue had spent the entire Q working out on a Mobia. The drop in direct business was driven by a 37% drop in credit approvals from their finance partner and while Money McBags is no Fair Isaacs, it doesn't take Isaac Hayes to see that credit isn't going to get better anytime soon. With the direct business lagging, gross margin dropped to 50% from 56% but thanks to restructuring, the company did away with $10MM of operating expenses which allowed them to lose only $2MM and have near breakeven EBITDA. The company hasn't made money since 2006 and with the economy sputtering again, it's not clear who the fuck is going to be out looking for a new Universal machine to build muscle since they won't be able to afford to buy supplements to help maintain that muscle. The only arguments that can be made for this company are that it is trading at ~.35 of sales, they didn't burn cash last Q, and they have ~$12MM of unrestricted cash which is ~20% of their market cap. That said, rat tails, hammer pants, and Bea Arthur will come back before this company does as gyms aren't upgrading their equipment, people continue to get lazier and fatter, and those who used to be able to afford expensive clothes holders for their bedroom (which NLS machines invariably windup being), remember they have something less expensive called a closet and a floor. So even though the stock is up big today signalling something is happening (like potentially a big short investor getting a capital call), Money McBags would not be a buyer because the consumer remains weaker than a virgin tequila shot.
And before we go, on Friday Money McBags told you about TSYS and the opportunity it presented for a short term trade. The company was up 3.5% today (though on light volume) with IWO down ~120bps so something seems to be going on there. The company is hella cheap and while their earnings releases and segment financials are more complicated to decipher than a Rube Goldberg contraption or what the fuck your lady friend is actually saying to you, they are in growing markets and seem to be winning business. Money McBags doesn't have a great longterm feel for the company since he doesn't quite get the step function revenue stream of their text messaging business and why they never seem to make that next step up, but if they can really hit their guidance of $80MM-$85MM of EBITDA this year, this stock should see solid appreciation now that it has seemingly bottomed.
Friday, July 9, 2010
7/9/2010 Midafternoon Report: Investors get excited and take off their shorts to allow long exposure to grow
It's a quiet day newswise and thus the market is deader than the Cleveland Cavaliers as it awaits the start of earnings season next week. Dominating the news today are non-financial matters like LeBron James betraying his home town team (and Cavs owner Dan Gilbert is said to have slept with his johnson in a freezer as he has promised revenge and literally believes in the old adage that it is a dish best served cold), the US and Russia are trading captured spies (and it's a good thing Money McBags never ran in to accused spy Anna Chapman because he would have spilled his state secrets right to her face, and her chest), and as always, Hannah Hilton remains retired.
Internationally, other than a sumo wrestling gambling scandal throwing Japan in to a tizzy (and Money McBags would hate to be the officer in charge of the cavity searches in that case), news remains light. Jean-Claude Trichet was out talking again about the EU's financial crisis and he said that it is too early to claim the crisis is over, that bank stress tests should help the recovery process (wink, wink), and that there needs to be stricter penalties for countries who ignore the EU's deficit limits such as having to move to Latvia, having to hand copy the entire novel Pride and Prejudice while listening to the melodic soul singing of Celine Dion, and having all pictures of Zita Gorog taken away. Most interestingly, Monsieur Trichet maintained that austerity measures and cutting government spending will not hinder economic growth thereby figuratively pissing on John Maynard Keynes' ashes and Paul Krugman's soul (though Krugman clearly sold his soul to Mephistopheles years ago as it is the only way to explain his ascent to NYTimes columnist).
In the market, China renewed Google's license to operate in the country instead of revoking it or simply giving it to Sum Dum Gai. Google could have been forced to shut down their chinese operations but instead they will continue to allow users to opt-in to receive either censored or NSFW uncensored search results. In other news, RIMM is rocketing up today as NTP has filed a lawsuit against AAPL, GOOG, and others claiming their wireless handsets infringe on NTP's patent of awesomeness. RIMM had settled previously with NTP for $612MM so they are free from this round of lawsuits and thus, for a day at least, can enjoy their declining market share and substandard product in peace.
In small cap news, two ridiculously cheap stocks that Money McBags has written about before have started rallying proving the old value investor theory that what goes down, must go up (unless it's ZAGG). One of those is NTZ which a month ago and 20% above its open today, Money McBags said:
"buying shares of NTZ is dumber than jumping in to a Hot Tub Time Machine set for the 1980s and then going Lucky Pierre between Magic Johnson and Rock Hudson. You might as well have bought shares of Amercian Home Mortgage right as the subprime mortgage market was melting down, invested in Daguerreotypes in the mid 19th century, or hired Bernie Madoff to manage your assets."
As Money McBags explained before, NTZ (or more commonly known to longterm holders as NTZero) sells high end furniture, mainly in Europe, and seeing as how Europe is instituting a little something called austerity measures and high end furniture is a more expensive and discretionary purchase than caviar infused lobster tails or a night with Heather Vandeven, that doesn't bode well for the company. That said, NTZ is trading at <3.5x EV/EBITDA and has 1/3 of their market cap in cash (even though they burned some last Q). The point remains that this company is either going to blow through their cash and go out of business (5% chance), is eventually going to come out of this and be worth a fuckload more than it is today (70% chance), or is a total fraud since Italy's version of the SEC is likely more hands off than Richard Simmons at a Rick's Cabaret (25% chance). Money McBags will wager a couple of Vietnamese dongs (as always, his currency of choice) that this is a real company and while he has absolutely no idea when it will turn around, has no faith in the global economy rebounding, and still thinks owning a high end furniture maker in a global recession/depression is as wise as covering yourself in chocolate and shouting "fire" while standing in the doorway of a crowded theatre filled with overweight arsonphobia sufferers, at some point this stock should trade for at least 7x EV/EBITDA which makes it a double from here (unless the EBITDA falls off a cliff, though if it does, there is more of a cusion right now than in Jessica Biel's pants) but that may not happen until 2025, so act accordingly.
The other name that is runnning now is TSYS and Money McBags first wrote about them in February and since then they have done nothing but go down like they were auditioning for a role in The Curious Taste of Benjamin's Button. Their last quarter was decent enough and their guidance has been fine but margins have been compressing, there has been concern about government spending drying up, and it is harder to get one's arms around their business than it is for a young lass to get her arms around Whitezilla's "business" (and you can google that at your own risk). They have a number of sort of related yet disparate businesses including a mobile location based software business, a text message enabling license selling business, and a government satellite communications software business. The company announced a new deal with the Army last night that could pay them as much as $9.8MM through 8/2011. TSYS's EV is ~$325MM and their guidance remains for $80MM-$85MM EBITDA, so it is currently trading at ~4x EV/EBIDTA and oh by the way, they just grew EBITDA by 45% last Q and revenue was up by 30% (though most of it was driven by acquisitions in the commercial segment). Again, this is a bit of a confusing company and portfolio managers just don't want to spend the time learning the different businesses and the complicated way in which results are reported (honestly, try reading one of their quarterly earnings releases, it makes Thomas Pynchon seem like Dr. fucking Seuss). That said, it is ridiculously cheap and with the new contract, perhaps there is more faith that government spending for their technology will continue. The stock has pretty much spent all of 2010 dropping but it may finally have bottomed out (because how much lower can it really go?) so this might make a nice short term trade.
With the market rallying, if you're itching to go long it's best to pick up these already beaten down names than ones that can still fall when the rally ends next week. So if Money McBags were you, the first thing he would do is empty your bank account and take one hella long trip to Vegas, but the second thing he would do is spend some time this weekend trying to get a better handle on TSYS because there is a very good chance of a solid return at these levels.
So enjoy your weekend and remember to follow WGP on Facebook and Twitter.
Tuesday, June 1, 2010
6/1/10 Midafternoon Report: Market adopts new tagline "Sell the rumor, sell the news"
Stocks bounced around today like BP's excuses for the Gulf oil spill or like Kelly Brook's "oil domes" while she jumps on a trampoline. Solid US economic data pushed the market in to positive territory in the morning, giving investors a slight glimmer of hope before that hope was flushed away like a 3 story building in a Guatelamian sink hole or the Sears Tower in Paris Hilton's pants. Leading off the slew of economic reports was that manufacturing in the US grew at a faster pace than analysts guessed with the ISM index coming in at 59.7, a whopping .7 above expectations. The rounding error was driven by increased demand for exports which will clearly be short lived as the dollar strengthens against the Euro. That said, the ISM's employment gauge climbed to its highest level since May 2004 when the subprime boom was still just a twinkle in Alan Greenspan's eye. Factories did add 101k workers through the first four months of the year which is likely a huge relief for the 20MM americans still unemployed, and yes, that was sarcasm. Construction spend in the US also rose by 2.7% which was the most since April of 2000 but it was likely spurred by the ending of the first time home buyers tax credit so it is more likely an outlier (like the straight Wiggle) than a sign of real recovery.
While US economic reports were as positive as a Pam Anderson hepatitis test, international macro data was as negative as an antithalian at a county fair. Leading the way was data on unemployment in Europe where the 16 countries who use the Euro saw unemployment rise from 10% to 10.1% with Spain coming in at a robust 19.7%. Making matter worse was that the Euro fell to a four year low against the dollar, though it claims it is just low because it is practicing its limbo technique for its 18th birthday bash also honoring the Treaty of Maastricht and Kaya Scodelario. The Euro remains on shakier ground than Al Gore's marriage as it drops towards $1.20. In other international developments, China's manufacturing grew at a slower pace than guessed as the government tries to curb its bubblicious growth. China's Purchasing Manager's Index fell to 53.9 which was lower than the 54.5 estimates even though it included an ample dose of MSG. The government is said to be introducing taxes on property holdings, cutting back loans provided by state owned banks, and only allowing one chopstick to be used at all meals. China has simply grown too fast as the government unleashed huge spending programs last year so efforts to reign in the economy now are better than trying to do it later when it's too late, you hear that Bernanke? Finally, the Bank of Canada raised the country's interest rate by 25 bps to 50bps causing the loonie to weaken a bit against the US dollar. It was the first rate hike by Canada in three years and Canada now becomes the first G7 country to raise rates as inflation begins to rear its ugly head.
In stock news, HP is set to cut 9k jobs due to automation and CEO Mark Hurd's cold heart while AAPL is rising on reports that it has sold 2MM iPads and those are just the ones purchased by Steve Jobs' ego. GOOG is also up today and they announced that they will only allow employees to use Linux operating systems blaming the overall crappiness of MSFT Windows for their Chinese operations being hacked. The dumping of MSFT has made Bill Gates feel like he was back in high school. Finally, BP is getting shit canned again, as they should be, with their "top kill" attempt to stop the oil leak failing worse than Gary Coleman's liver (what, still too soon?). Money McBags has avoided writing about this catastrophe because thinking about it makes him wonder if he has been incorrectly using the word "clusterfuck" for all of his years.
In small cap news, QCOR continues to rally with investors awaiting FDA approval for QCOR to be able to market their Acthar drug to the infantile spasm market. You know, the market in which they already have the leading fucking market share. Money McBags has broken down this stock many times (just put QCOR into the fancy search box up top) and is excited for their nascent NS market but he is still confused as to why their Net Sales were such a high % of their Gross Sales last Q. Also, a small crappy company Money McBags follows yet has been embarrassed to bring up before, NTZ, put up a decent quarter on Friday but is now continuing its slide to $0. NTZ produces high end upholstered furniture like sofas, love seats, and bondage benches (ok, maybe not the last one but the definition of "love seat" can be so nebulous). But here's the kicker, NTZ is an Italian company with ~50% of their sales coming from Europe. So it sells a high end, highly discretionary consumer product targeted to european clients with Europe in the midst of bail outs, a crumbling Euro, and record unemployment. Wow. Investing in this company is like those old SNL Bad Idea Jeans commercials. Honestly, buying shares of NTZ is dumber than jumping in to a Hot Tub Time Machine set for the 1980s and then going Lucky Pierre between Magic Johnson and Rock Hudson. You might as well have bought shares of Amercian Home Mortgage right as the subprime mortgage market was melting down, invested in Daguerreotypes in the mid 19th century, or hired Bernie Madoff to manage your assets. So why is Money McBags following/writing about this company seeing as how it is apparently more fucked than Taylor Rain in a Monsters of Cock video? Simple, because it is cheaper than balls in the Castro. The company just put up a quarter where they actually had revenue growth, but to be fair, revenue had fallen more than Eliot Spitzer's dignity after emptying his "mini-bar" at the Hotel Mayflower so the comps were easier than winning a spelling bee on a short bus. Their net sales grew 14% to 126 Euro and their margin was up y/y from 25.5% to 38.5% which was inline with last Q. This was enough to give them a .5MM euro operating income which is still piss awful (and not regular piss, but burning gonorrhea piss), but at least it is positive. Of course, after taxes they lost 1.3 euro but tax rates in Italy are about as predictable as Lindsay Lohan's behavior after taking a powder break and as far as Money McBags can tell more spuriously correlated to profits than the market currently is to company fundamentals. So lets throw out the taxes and look at EBITDA. NTZ had ~8MM euro of EBITDA this Q and translating that to dollars is about $.99 or enough to buy a pack of M&Ms. Actually, with the Euro now settling in around $1.20, that would be ~$9.6MM in EBITDA and the company has a $196MM market cap and $66MM of net cash (55MM euro) so ~$130MM enterprise value. So if you annualize their EBITDA, it's trading at ~3.5 EV/EBITDA and less than .5 sales. Sure they burned through a little cash this quarter, sure annualizing that EBITDA is giving them credit they may not deserve, sure they have one year of profitability in the last five, and sure they are selling one of the stupidest fucking items in one of the worst possible markets in the last 100 years, but how much worse can things get? They cut selling expenses by ~15% for the year last year and are running at about that same rate so they have seen nice operating improvement and if sales can level off, there is no reason this company shouldn't trade at more than 3.5x EBITDA. The point is, despite their CEO dropping another turd in the punchbowl by saying on the quarterly call that "the economic crisis and the worsening market conditions are not yet over and the Group order flows for the first months of 2010 with respect to the last months of 2009 confirm a slow down as compared to the previous positive trend," this company is trading as if its business is going to zero, which may well be the case, but they still have $66MM net cash and decent brand equity. Even if Europe crumbles like Alan Greenspan's reputation, rich people are still going to spend on shit they don't need and as long as this company can stay afloat and keep their cash burn to a minimum, there should be long term upside. Money McBags is not saying you should buy today, or even ever, but this is a stock that will shoot up faster than a heroin addict going through the DTs if and when the global economy stabilizes. So put this on your watch list, be glad you haven't owned it, but be ready to pounce if shit starts gettting better.
While US economic reports were as positive as a Pam Anderson hepatitis test, international macro data was as negative as an antithalian at a county fair. Leading the way was data on unemployment in Europe where the 16 countries who use the Euro saw unemployment rise from 10% to 10.1% with Spain coming in at a robust 19.7%. Making matter worse was that the Euro fell to a four year low against the dollar, though it claims it is just low because it is practicing its limbo technique for its 18th birthday bash also honoring the Treaty of Maastricht and Kaya Scodelario. The Euro remains on shakier ground than Al Gore's marriage as it drops towards $1.20. In other international developments, China's manufacturing grew at a slower pace than guessed as the government tries to curb its bubblicious growth. China's Purchasing Manager's Index fell to 53.9 which was lower than the 54.5 estimates even though it included an ample dose of MSG. The government is said to be introducing taxes on property holdings, cutting back loans provided by state owned banks, and only allowing one chopstick to be used at all meals. China has simply grown too fast as the government unleashed huge spending programs last year so efforts to reign in the economy now are better than trying to do it later when it's too late, you hear that Bernanke? Finally, the Bank of Canada raised the country's interest rate by 25 bps to 50bps causing the loonie to weaken a bit against the US dollar. It was the first rate hike by Canada in three years and Canada now becomes the first G7 country to raise rates as inflation begins to rear its ugly head.
In stock news, HP is set to cut 9k jobs due to automation and CEO Mark Hurd's cold heart while AAPL is rising on reports that it has sold 2MM iPads and those are just the ones purchased by Steve Jobs' ego. GOOG is also up today and they announced that they will only allow employees to use Linux operating systems blaming the overall crappiness of MSFT Windows for their Chinese operations being hacked. The dumping of MSFT has made Bill Gates feel like he was back in high school. Finally, BP is getting shit canned again, as they should be, with their "top kill" attempt to stop the oil leak failing worse than Gary Coleman's liver (what, still too soon?). Money McBags has avoided writing about this catastrophe because thinking about it makes him wonder if he has been incorrectly using the word "clusterfuck" for all of his years.
In small cap news, QCOR continues to rally with investors awaiting FDA approval for QCOR to be able to market their Acthar drug to the infantile spasm market. You know, the market in which they already have the leading fucking market share. Money McBags has broken down this stock many times (just put QCOR into the fancy search box up top) and is excited for their nascent NS market but he is still confused as to why their Net Sales were such a high % of their Gross Sales last Q. Also, a small crappy company Money McBags follows yet has been embarrassed to bring up before, NTZ, put up a decent quarter on Friday but is now continuing its slide to $0. NTZ produces high end upholstered furniture like sofas, love seats, and bondage benches (ok, maybe not the last one but the definition of "love seat" can be so nebulous). But here's the kicker, NTZ is an Italian company with ~50% of their sales coming from Europe. So it sells a high end, highly discretionary consumer product targeted to european clients with Europe in the midst of bail outs, a crumbling Euro, and record unemployment. Wow. Investing in this company is like those old SNL Bad Idea Jeans commercials. Honestly, buying shares of NTZ is dumber than jumping in to a Hot Tub Time Machine set for the 1980s and then going Lucky Pierre between Magic Johnson and Rock Hudson. You might as well have bought shares of Amercian Home Mortgage right as the subprime mortgage market was melting down, invested in Daguerreotypes in the mid 19th century, or hired Bernie Madoff to manage your assets. So why is Money McBags following/writing about this company seeing as how it is apparently more fucked than Taylor Rain in a Monsters of Cock video? Simple, because it is cheaper than balls in the Castro. The company just put up a quarter where they actually had revenue growth, but to be fair, revenue had fallen more than Eliot Spitzer's dignity after emptying his "mini-bar" at the Hotel Mayflower so the comps were easier than winning a spelling bee on a short bus. Their net sales grew 14% to 126 Euro and their margin was up y/y from 25.5% to 38.5% which was inline with last Q. This was enough to give them a .5MM euro operating income which is still piss awful (and not regular piss, but burning gonorrhea piss), but at least it is positive. Of course, after taxes they lost 1.3 euro but tax rates in Italy are about as predictable as Lindsay Lohan's behavior after taking a powder break and as far as Money McBags can tell more spuriously correlated to profits than the market currently is to company fundamentals. So lets throw out the taxes and look at EBITDA. NTZ had ~8MM euro of EBITDA this Q and translating that to dollars is about $.99 or enough to buy a pack of M&Ms. Actually, with the Euro now settling in around $1.20, that would be ~$9.6MM in EBITDA and the company has a $196MM market cap and $66MM of net cash (55MM euro) so ~$130MM enterprise value. So if you annualize their EBITDA, it's trading at ~3.5 EV/EBITDA and less than .5 sales. Sure they burned through a little cash this quarter, sure annualizing that EBITDA is giving them credit they may not deserve, sure they have one year of profitability in the last five, and sure they are selling one of the stupidest fucking items in one of the worst possible markets in the last 100 years, but how much worse can things get? They cut selling expenses by ~15% for the year last year and are running at about that same rate so they have seen nice operating improvement and if sales can level off, there is no reason this company shouldn't trade at more than 3.5x EBITDA. The point is, despite their CEO dropping another turd in the punchbowl by saying on the quarterly call that "the economic crisis and the worsening market conditions are not yet over and the Group order flows for the first months of 2010 with respect to the last months of 2009 confirm a slow down as compared to the previous positive trend," this company is trading as if its business is going to zero, which may well be the case, but they still have $66MM net cash and decent brand equity. Even if Europe crumbles like Alan Greenspan's reputation, rich people are still going to spend on shit they don't need and as long as this company can stay afloat and keep their cash burn to a minimum, there should be long term upside. Money McBags is not saying you should buy today, or even ever, but this is a stock that will shoot up faster than a heroin addict going through the DTs if and when the global economy stabilizes. So put this on your watch list, be glad you haven't owned it, but be ready to pounce if shit starts gettting better.
Wednesday, May 5, 2010
5/5/10 Midday Report: Investors celebrate May 5th with Sink-o de Marketo celebration
Buenos dias on this lovely Cinqo de Mayo as investors smack the market like a pinata in hopes of breaking it open to catch some falling CDS. Things remain ugly today as Europe is still on the verge of going bankrupt thanks to Greece's steroidal Wimpy strategy of having a gyro today while promising to pay for five of them on Tuesday. Unfortunately this strategy is finally coming back to bite Greece on its hairy proktos. Fear continues that Spain and Portugal will be next to need bailouts while even more fear continues that Heidi Montag will put out a new album or Alan Greenspan will find someone to listen to him again. Moody's put Portugal on review telling the country that they need to start paying down their debts, show up to class on time, and stop throwing spitballs at Spain. Moody's is threatening to cut Portugal by two notches from the contrived "Aa2" to the less contrived "AaYour'efucked." Of course as always, Money McBags cares what the rating agencies have to say as much as he cares about John Meriwether's advice on starting a hedge fund or Fabulous Fab Tourre's sales pitch for subprime bonds. Moody's will likely be late once again to the dance with their downgrade of Portugal as by the time Moody's figures it out, Portugal will long have fled the prom in a fit of tears after busting out of their prom dress and leaving their assets exposed and devalued. Making matters worse in Europe is that Europeans hate to shower and it's getting hot outside, but making matters even worse than that is that three people were killed when Greek workers protested the new austerity measures yesterday. On the bright side, that is one way for the government to extinguish the debt, though on the negative side it's a bit morally lacking. In the protests a bank branch also burned to the ground, luckily, the bank only held subprime debt and thus was worth more as ash than as a solvent entity. And finally, EU central banker Axel Foley Weber warned about “grave contagion effects” of the Greek debt crisis for the rest of Europe but added that it doesn't mean the EU should use every instrument necessary to quell it such as more bailouts, rate changes, or sticking bananas in tailpipes (though if it is Kristin Bell's tailpipe and Money McBags' banana, Money McBags will heartily disagree).
In US macro news, ADP reported that 32k jobs were added to the economy and it was the third month in a row of increases while Challenger, Gray & Christmas stopped by for some milk and cookies before reporting that planned layoffs decreased by 40% from the previous month. Also, mortgage applications soared to a 7 month high thanks to the ending of the federal home buyer tax credit and an extra strong dose of meth while the ISM reported that service industry expanded at the same pace as last month as a result of a Viagra milkshake and being shown Carmen Electra workout videos.
In stock news, News Corp put up a good quarter thanks to revenues from Avatar which Money McBags will see as soon as he grows a vagina. The company is trading down 5% though as they warned of a likely fourth quarter profit decline due to rising costs and lower revenues in their Fox network TV business, decelerating revenue in their cable business, and lower revenues in their film division as they are replacing Avatar with a film slate including the sequeals Alvin and The Chipmunks Get Rabies, The Thunder From Down Under Presents: What Happens in Vegas, and My Big Fat Greek Bankruptcy. In other market news, GOOG is up today on news they are going to start selling e-books and investors realizing that GOOG is only a nut hair away from world domination.
In small cap stocks, Money McBags' biggest small cap holding KITD is getting pounded like they walked up to Brock Lesnar and told him not only is his mom a whore, but she's like a shotgun because one cock and she blows. KITD has ~70% international revenue so with Europe about to join Atlantis and Chritsina Applegate's breasts in the annals of fictional places that once really existed, it is not a surprise that there is some movement down. That said, Money McBags believes in this company and is in it for the long term (and by long term, he means until CEO Kaleil Tuzman sells to CSCO or whomever). Tomorrow pay attention to EBIX reporting quarterly results which Money McBags is sure will look good but will lack any semblance of detail as that business is more obfuscated than John Goodman's belly button or Tiger Woods' sense of dignity. On any metric the company is a screaming buy yet the red flags with CEO's disdain of the Street, his self promotional nature that makes Kim Kardashian seem like a recluse, and his penchant for changing auditors like Ben Roethlisberger changes alibis, is alarming. Money McBags is going to stay away but if any of you can get comfortable with whatever it is in the insurance business they are doing other than installing johnson rods, you could have some nice upside. FHCO also reports tomorrow and with any luck they will have been protected from the European debt disease. FHCO has had a nice run on good earnings and a newly declared dividend and remains a strange and small company which Money McBags likes. He doesn't own it as it ran a bit too much for him but he's going to reconsider after they report the Q. Money McBags did make a couple of trades today by hedging his portfolio with EPV and selling his CIT shares for no reason other than to take profits and get some risk off the table. CIT should actually fare well with new CEO John Thain, a cleaner balance sheet (but who really knows for sure how clean it is no matter what the 10k says), and a valuation of right around book value. Should the market continue to drop, Money McBags will look to re-enter CIT while should Abigail Clancy's knickers drop, he will look to re-enter her.
In US macro news, ADP reported that 32k jobs were added to the economy and it was the third month in a row of increases while Challenger, Gray & Christmas stopped by for some milk and cookies before reporting that planned layoffs decreased by 40% from the previous month. Also, mortgage applications soared to a 7 month high thanks to the ending of the federal home buyer tax credit and an extra strong dose of meth while the ISM reported that service industry expanded at the same pace as last month as a result of a Viagra milkshake and being shown Carmen Electra workout videos.
In stock news, News Corp put up a good quarter thanks to revenues from Avatar which Money McBags will see as soon as he grows a vagina. The company is trading down 5% though as they warned of a likely fourth quarter profit decline due to rising costs and lower revenues in their Fox network TV business, decelerating revenue in their cable business, and lower revenues in their film division as they are replacing Avatar with a film slate including the sequeals Alvin and The Chipmunks Get Rabies, The Thunder From Down Under Presents: What Happens in Vegas, and My Big Fat Greek Bankruptcy. In other market news, GOOG is up today on news they are going to start selling e-books and investors realizing that GOOG is only a nut hair away from world domination.
In small cap stocks, Money McBags' biggest small cap holding KITD is getting pounded like they walked up to Brock Lesnar and told him not only is his mom a whore, but she's like a shotgun because one cock and she blows. KITD has ~70% international revenue so with Europe about to join Atlantis and Chritsina Applegate's breasts in the annals of fictional places that once really existed, it is not a surprise that there is some movement down. That said, Money McBags believes in this company and is in it for the long term (and by long term, he means until CEO Kaleil Tuzman sells to CSCO or whomever). Tomorrow pay attention to EBIX reporting quarterly results which Money McBags is sure will look good but will lack any semblance of detail as that business is more obfuscated than John Goodman's belly button or Tiger Woods' sense of dignity. On any metric the company is a screaming buy yet the red flags with CEO's disdain of the Street, his self promotional nature that makes Kim Kardashian seem like a recluse, and his penchant for changing auditors like Ben Roethlisberger changes alibis, is alarming. Money McBags is going to stay away but if any of you can get comfortable with whatever it is in the insurance business they are doing other than installing johnson rods, you could have some nice upside. FHCO also reports tomorrow and with any luck they will have been protected from the European debt disease. FHCO has had a nice run on good earnings and a newly declared dividend and remains a strange and small company which Money McBags likes. He doesn't own it as it ran a bit too much for him but he's going to reconsider after they report the Q. Money McBags did make a couple of trades today by hedging his portfolio with EPV and selling his CIT shares for no reason other than to take profits and get some risk off the table. CIT should actually fare well with new CEO John Thain, a cleaner balance sheet (but who really knows for sure how clean it is no matter what the 10k says), and a valuation of right around book value. Should the market continue to drop, Money McBags will look to re-enter CIT while should Abigail Clancy's knickers drop, he will look to re-enter her.
Monday, April 26, 2010
4/26/10 Midafternoon Report: Financial reform bill coming after Senators talk dirty to it
The markets were relatively flat today despite the financial sector reaching down for its cankles as the Senate prepares to probe the sectors' cavernous derivatives loophole. Financial reform is coming, the only question is if it will be weak or really weak but until then financials should be a bit volatile with a downward bias. While it is likely any Senate bill will be more toothless than Amy Winehouse after downing a box of pixie sticks, smoking a case Stallion cigarettes, and getting punched in the fucking mouth, the markets hate uncertainty like Ron Paul hates the Fed, Hemingway hates adjectives, and females hate giving blumpkins. That said, the US Treasury is apparently going to start dumping their shares of C before C once again becomes too big and fails. At current prices the government stands to make $11B which should be enough to finally get new drapes in the Lincoln Bedroom, something other than Natty Light in the White House fridge, and enough tech support to clean all of the SEC computers of porn. C is trading down 4% on the news but is still above book value and still above zero so it's too early for Money McBags to buy.
Internationally, Greek bonds are still plunging lower than necklines at the AVN awards or on German Chancellor Angela Merkel at the Lolas. Merkel is out shouting "nein" to the Greek bailout until Greece shows a "sustainable and credible" plan for fiscal responsibility as opposed to their current plan which involves stealing underwear and then somehow profiting. Germany keeps hedging on their support for Greece and nothing German has been this indecisive since Aschenbach eyed little Tadzio for days on a beach in Venice. But it's no longer just Greece that has the EU's panties all in a bunch as CDS in Portugal have hit record highs. Portuguese Foreign Minister Luis Amado said "We are not in such a critical situation as Greece. We didn't cheat with our statistics" he then went on to say "that's right, we fucked up the old fashioned way, we earned it." It looks like JFK's old Domino Theory in foreign policy may finally be coming to fruition but instead of the spread of communism, bankruptcy is spreading from one country to the next.
In stock news Catepillar put up a nice quarter which would likely have sent noted lepidopterist Vladmir Nabokov into a tizzy. Revenue fell but the company earned a profit and raised 2010 guidance as they were able to metamorphosize their operations to a leaner cost structure. Guidance for 2010 was raised from $2.50 per share to $2.50 to $3.25 per share as the company cited rebounding mining and construction especially in China and Heidi Montag's pants. Whirlpool also put up a ginormous quarter and is up 10%+ as the emerging middle classes in China and Latin America drove appliance sales. The company earned $2.51 per share demolishing analyst guesses of $1.33 per share and they raised their full year guidance to 4% to 6% growth and eps to $8.00 to $8.50 from $6.50 to $7.00. Interestingly, what helped drive sales in the US was people ordering refrigerators in order to use the boxes as shelters once their homes were foreclosed upon. Finally GOOG is down today after some research showed their market share dropped in China and after they dropped Verizon as the provider of wireless access for their Nexus One phone. GOOG is now dropping to Money McBags "add fucking more price" as the company is getting very cheap for an entity that is dominating the world like Rasputin dominated young Russian lasses in the early 1900s. Money McBags is going to wait for the stock to settle but will likely be adding more in the next few days.
In small cap stocks, TMRK raised $50MM through 12% senior secured notes which is actually pretty big for the company. Money McBags has talked about this stock quite a bit but has continued to hold out as he was pretty sure they were going to have to raise capital in the next year and wasn't sure what their plan was to do so. Well now we know and the stock is up 4% on the news. They are in a terrific growth area as cloud computing is as certain as death, taxes, and Heather Vandeven being hot. TMRK is trading at ~9x 2011 EV/EBITDA and ~15x Money McBags' 2011 eps estimate so it's not wicked cheap but it is more reasonably priced than dignity in reality TV or a date with Jessica Pare.
Internationally, Greek bonds are still plunging lower than necklines at the AVN awards or on German Chancellor Angela Merkel at the Lolas. Merkel is out shouting "nein" to the Greek bailout until Greece shows a "sustainable and credible" plan for fiscal responsibility as opposed to their current plan which involves stealing underwear and then somehow profiting. Germany keeps hedging on their support for Greece and nothing German has been this indecisive since Aschenbach eyed little Tadzio for days on a beach in Venice. But it's no longer just Greece that has the EU's panties all in a bunch as CDS in Portugal have hit record highs. Portuguese Foreign Minister Luis Amado said "We are not in such a critical situation as Greece. We didn't cheat with our statistics" he then went on to say "that's right, we fucked up the old fashioned way, we earned it." It looks like JFK's old Domino Theory in foreign policy may finally be coming to fruition but instead of the spread of communism, bankruptcy is spreading from one country to the next.
In stock news Catepillar put up a nice quarter which would likely have sent noted lepidopterist Vladmir Nabokov into a tizzy. Revenue fell but the company earned a profit and raised 2010 guidance as they were able to metamorphosize their operations to a leaner cost structure. Guidance for 2010 was raised from $2.50 per share to $2.50 to $3.25 per share as the company cited rebounding mining and construction especially in China and Heidi Montag's pants. Whirlpool also put up a ginormous quarter and is up 10%+ as the emerging middle classes in China and Latin America drove appliance sales. The company earned $2.51 per share demolishing analyst guesses of $1.33 per share and they raised their full year guidance to 4% to 6% growth and eps to $8.00 to $8.50 from $6.50 to $7.00. Interestingly, what helped drive sales in the US was people ordering refrigerators in order to use the boxes as shelters once their homes were foreclosed upon. Finally GOOG is down today after some research showed their market share dropped in China and after they dropped Verizon as the provider of wireless access for their Nexus One phone. GOOG is now dropping to Money McBags "add fucking more price" as the company is getting very cheap for an entity that is dominating the world like Rasputin dominated young Russian lasses in the early 1900s. Money McBags is going to wait for the stock to settle but will likely be adding more in the next few days.
In small cap stocks, TMRK raised $50MM through 12% senior secured notes which is actually pretty big for the company. Money McBags has talked about this stock quite a bit but has continued to hold out as he was pretty sure they were going to have to raise capital in the next year and wasn't sure what their plan was to do so. Well now we know and the stock is up 4% on the news. They are in a terrific growth area as cloud computing is as certain as death, taxes, and Heather Vandeven being hot. TMRK is trading at ~9x 2011 EV/EBITDA and ~15x Money McBags' 2011 eps estimate so it's not wicked cheap but it is more reasonably priced than dignity in reality TV or a date with Jessica Pare.
Friday, April 16, 2010
4/16/10 Midafternoon Report: Goldman Craps
Oh no they didn't. The SEC apparently found their shriveled ballsac hidden in Meaghan Cheung's now empty desk and hired Faye Reagan to skillfully tickle it back to life which has led the re-testosteroned agency to go after the biggest turd in the punchbowl, Goldman fucking Sachs. Holy shit is it on. The government hasn't gone after one of their own like this since Bill Clinton misplaced a cigar in the Oval Office (and yes, Money McBags considers GS one of the government's own since they are more intertwined than chocolate and vanilla in a marble cake or Wilford Brimley and Betty White sharing an electric blanket). The SEC is claiming that Goldman Sachs defrauded investors by misleading them about the subprime mortgages they were packaging and selling as part of CDOs. The government's case centers around the fact that Goldman is full of shit, and less importantly, around the fact that Goldman let John A. Paulson (no relation to former GS CEO and US Treasury Secretary Hank Paulson, and also no relation to other famous frauds such as Bernie Madoff) pick and choose which mortgages were going in to those CDOs despite the fact that Goldman knew Paulson was betting against those securities. To be more precise, the issue centers around a subprime CDO called Abacus, whose name apparently signifies the sophisticaiton of investors who bought this fraud because they apparently were using an ancient roman abacus to calculate the likely value of the CDO after losses as we all know roman numerals and hence roman abacuses, don't contain a zero. It is the classic case of heads I win, tales you lose, now go get me a fucking vodka tonic and hold the fucking lemon. GS led investors to believe that an independent third party picked the subprime mortgages for their CDOs which was such a boldfaced lie that Money McBags is now going to rename them Boldman Sachs, or BS for short. The suit by the SEC also names Boldman trader "Fabulous" Fabrice Tourre with helping perpetuate this fraud which now vaults him past Milli Vanilli's Fabrice Morvan as the most famous fraudster named Fabrice. One only wonders if Mr. Touree will also blame it on the rain.
In their defense, Goldman referred to the SEC accusations as “completely unfounded in law and fact” unless you are "talking about securities law and irrefutable details." The firm did say they will “vigorously contest" the charges "and defend the firm and its reputation.” When reporters reminded them that after the financial crisis and their ties to Washington, their reputation might have already been blown, the Goldman lawyers simply responded with "That's what she said."
Taking Boldman out of the equation today, which is a bit like taking Modigliani out of the Modigliani-Miller thereom, jelly out of a PB&J, or facials out of porn, US macro data was positive. Housing starts beat forecasts and rose to their highest level since November of 2008 when everyone was putting up new cardboard boxes. New home starts rose 1.6% to a seasonally adjusted annual rate of 626,000 units and economists were guessing that they would come in at only 610k. Even more interesting is that February’s housing starts were revised up from a 5.9% drop to a 1.1% increase which is a bigger revision than Texas school text books are going through in the school board's attempt to reverse natural selection.
In earnings news, Bank of America became profitable once again thanks to their trading portfolio. BAC earned $.28 a share which easily beat analyst guesses of $.10 but like JPM, earnings were driven by investment banking and trading profits as profit from the investment bank was $3.2B while overall net income was also $3.2B. So if one does the math, the consumer is still a little bit dicey while paper gains are leading to positive returns. It seems like we have seen this somewhere else before, but Money McBags can't exactly remember where. Oh yeah, the last 15 fucking years of the financial sector. But don't worry, nothing to see here, these guys have it all under control this time around. Afterall, 30 day delinquent credit cards fell from 7.23% to 7.07% and the bank wrote off only 12.5% of their card portfolio as uncollectible, so phew. Money McBags was a bit worried that they wouldn't be able to create enough phony revenue through trading gains to be positive, but as long as credit card delinquencies are only 7.07%, then everything is hunky fucking dory.
In other stock news, GE beat forecasts by besting analyst guesses of $.16 per share and earning $.21. CEO Jeffrey Immelt said "We saw encouraging economic signs, including increases in airline passenger miles and freight loadings, declines in receivables delinquencies, and growth in local advertising markets.” He then said, and "even if we hadn't seen markets pick up, we spent an inordinate amount of time relearning how Jack Welch "managed" earnings for so long and will be implementing that system once again." That said, it wasn't all lobster tails and BJs in Jeffrey Immelt's exectuive suite as GE Capital's earning dropped 41% as they couldn't manipulate paper trades to hide their consumer lending portfolio like the recently profitable banks.
Finally, GOOG reported and is down 6% despite growing earnings by 38% with a 23% increse in revenues. Even though they beat analyst estimates, GOOG apparently missed the whisper number for earnings of $7 and to be honest, the only whisper Money McBags wants to hear is from Lucy Pinder and includes the words "no" and "gag reflex." GOOG's call was also notable because CEO Eric Schmidt did not take part in it which caused investors to worry that he may be leaving the company because apparently dominating the world has become less appealing. Money McBags is looking at this as a buy opportunity and if Goog drops into the $530s, he will be adding to his position.
In small cap news, everything is down except CRTX has strangely continued to rally. Money McBags mentioned this the other day and the stock has maintained it's perky-ness. If you can believe management, the stock is probably 30%+ too cheap, but they have exectued poorly and had to buy growth at high prices in order to stave off the decline of their main drugs. The company reamins cheap if you believe them, but Money McBags is gong to keep sitting this one out as it feels more like a lottery ticket than an investment. That said, if you have some money about which you don't care and don't live close enough to a Rick's Cabaret, doing some work on CRTX and dipping a toe in might not be a horrible idea. They are trading at around 1.5x revenue and are just starting to get the sales team ramped up on the acquired drugs so there could be some decent growth in their portfolio.
Until next week, enjoy your days off.
In their defense, Goldman referred to the SEC accusations as “completely unfounded in law and fact” unless you are "talking about securities law and irrefutable details." The firm did say they will “vigorously contest" the charges "and defend the firm and its reputation.” When reporters reminded them that after the financial crisis and their ties to Washington, their reputation might have already been blown, the Goldman lawyers simply responded with "That's what she said."
Taking Boldman out of the equation today, which is a bit like taking Modigliani out of the Modigliani-Miller thereom, jelly out of a PB&J, or facials out of porn, US macro data was positive. Housing starts beat forecasts and rose to their highest level since November of 2008 when everyone was putting up new cardboard boxes. New home starts rose 1.6% to a seasonally adjusted annual rate of 626,000 units and economists were guessing that they would come in at only 610k. Even more interesting is that February’s housing starts were revised up from a 5.9% drop to a 1.1% increase which is a bigger revision than Texas school text books are going through in the school board's attempt to reverse natural selection.
In earnings news, Bank of America became profitable once again thanks to their trading portfolio. BAC earned $.28 a share which easily beat analyst guesses of $.10 but like JPM, earnings were driven by investment banking and trading profits as profit from the investment bank was $3.2B while overall net income was also $3.2B. So if one does the math, the consumer is still a little bit dicey while paper gains are leading to positive returns. It seems like we have seen this somewhere else before, but Money McBags can't exactly remember where. Oh yeah, the last 15 fucking years of the financial sector. But don't worry, nothing to see here, these guys have it all under control this time around. Afterall, 30 day delinquent credit cards fell from 7.23% to 7.07% and the bank wrote off only 12.5% of their card portfolio as uncollectible, so phew. Money McBags was a bit worried that they wouldn't be able to create enough phony revenue through trading gains to be positive, but as long as credit card delinquencies are only 7.07%, then everything is hunky fucking dory.
In other stock news, GE beat forecasts by besting analyst guesses of $.16 per share and earning $.21. CEO Jeffrey Immelt said "We saw encouraging economic signs, including increases in airline passenger miles and freight loadings, declines in receivables delinquencies, and growth in local advertising markets.” He then said, and "even if we hadn't seen markets pick up, we spent an inordinate amount of time relearning how Jack Welch "managed" earnings for so long and will be implementing that system once again." That said, it wasn't all lobster tails and BJs in Jeffrey Immelt's exectuive suite as GE Capital's earning dropped 41% as they couldn't manipulate paper trades to hide their consumer lending portfolio like the recently profitable banks.
Finally, GOOG reported and is down 6% despite growing earnings by 38% with a 23% increse in revenues. Even though they beat analyst estimates, GOOG apparently missed the whisper number for earnings of $7 and to be honest, the only whisper Money McBags wants to hear is from Lucy Pinder and includes the words "no" and "gag reflex." GOOG's call was also notable because CEO Eric Schmidt did not take part in it which caused investors to worry that he may be leaving the company because apparently dominating the world has become less appealing. Money McBags is looking at this as a buy opportunity and if Goog drops into the $530s, he will be adding to his position.
In small cap news, everything is down except CRTX has strangely continued to rally. Money McBags mentioned this the other day and the stock has maintained it's perky-ness. If you can believe management, the stock is probably 30%+ too cheap, but they have exectued poorly and had to buy growth at high prices in order to stave off the decline of their main drugs. The company reamins cheap if you believe them, but Money McBags is gong to keep sitting this one out as it feels more like a lottery ticket than an investment. That said, if you have some money about which you don't care and don't live close enough to a Rick's Cabaret, doing some work on CRTX and dipping a toe in might not be a horrible idea. They are trading at around 1.5x revenue and are just starting to get the sales team ramped up on the acquired drugs so there could be some decent growth in their portfolio.
Until next week, enjoy your days off.
Thursday, April 15, 2010
4/15/10 Midday Report: Tax day causes 53% of the US population to be pissed, other 47% pissed every day about being broke
Oh shit, just when the economy was looking better than a threesome with Hayley Atwell and Alice Eve, new jobless claims for last week rose for the second week in a row and economists didn't have Easter to blame this time. Well, actually they did, as a government analyst once again warned that the numbers could be skewed since Easter falls on a different day each year. Wow, really? You're going with that excuse again? Umm, if Money McBags is correct the numbers are seasonally fucking adjusted and since calendars have existed since shortly after the fucking neanderthals were exterminated (which was caused by too much contaminated dinosaur meat since those smallbrained fuckers never learned how to fucking use fire), shouldn't that seasonal adjustment adjust for Easter? Seriously, it's not like the day it fell on surprised anyone last year or this year (well, except for maybe Amy Winehouse or the hippocamus-ly challenged), so that excuse is lamer than Spectacular Bid or Boy Meets World reruns. Claims rose by 24k to 484k which is the highest since late February and the highest since the Great Walmart Lockout of 2006. There are still over 10MM people receiving some kind of unemployment benefit and since those benefits don't include being tucked in by Ashley Dupree (very NSFW, but required viewing), that's not good. In other macro news, defaults doubled in the government's loan modification program which is weird to think that people who couldn't afford mortgage payments still can't, even at lower rates. It's like being surprised that a kleptomaniac might want to steal again after being released from jail or that Tiger Woods is likely boning skanks again despite going to the laughable sex therapy (by the way, it's not called "sex addiction," it's called "having a penis"). In positive news, manufacturing production in the US gained as output of factories rose .9% with companies building back inventory while the Empire State manufacturing report demolished expectations. The survey came in at 32%, well above the expected 24%, and Money McBags has no idea what that means other than beating expectations is good and at least New Yorkers have something to cheer themselves up about while watching the Mets.
Internationally, Greece is back in the news again trying to screw up something good we all had going with the markets. It's like we'd been asking the markets out for 2 years, finally got her to come to dinner, got her home, and as we were about to inspect her large Sharpe ratios, the ruphies wore off. So thank you Greece for scaring the markets again with your rising interest rate spread. Of course there is more of a chance of the Laffer Curve being right than there is of Greece going bankrupt, so Money McBags will be buying at any big market dislocation caused by rumors of our Hellenic friends going to take a ride on the river Styx (though if they go to Styx, they should give a big "domo arigato" to Hades).
Also interntationally, China's economy is surging like William the Conqueror's popularity among the French in 1066. GDP was up 11.9% from last year which is more bubble-icious than Gonzo Grape. Not only that, but investment in real estate was up 35.1% and housing prices were up 11.7% in March alone. Wow. China is definitely hitting on all cylinders and their economy is busting out more than Lina Li thanks to the ginormous government stimulus, the artificially deflated currency value, and the accelerating population growth.
In stock news GOOG is running up in to earnings since, you know, they are fucking GOOG. Money McBags should have bought more but it is already an outsized position for him so he'll root for the best with their earnings report and likely buy any dip. UPS pre-reported their earnings today and grew profit by 37%. They earned $.71 per share, well above analyst guesses of $.58, and upped their full year EPS guidance from $2.70-$3.05 to $3.05-$3.30. Wow. Apparently people really want to ship some shit that can't be attached in an e-mail. This is a huge signal to the strength of a business rebound. International shipping was up 18% and while US shipping volumes were up less than 1%, it was the first growth in US shipping in two years. So yeah, it is barely up from a much lower base, but this is how things start out. A very encouraging quarter from UPS.
In small cap news, NTRI is starting to run and Money McBags has broken their business down a number of times here. They are cheap but operational issues keep Money McBags from owning this stock. Also, MLNK is trying to rally back from a huge sell off after missing their quarter. Money McBags has analyzed the fuck out of this company but it is ridonkulously cheap on an EV/EBITDA basis, trading at ~4x with a bigger cash cushion than Jennifer Lopez's ass cushion. This is a small holding of Money McBags and he is currently down ~10% on it but is thinking about nibbling at some more. The biggest issue is that their excuse for missing the quarter made less sense than Kathy Griffin's career as HP is their biggest customer and was up 10%, yet MLNK's sales were down 9% even including revenue from an acquisition. It is more head scratching than crabs as to why their revenues performed so poorly and why their guidance was down as the global economy and the consumer are picking up so this company should be seeing revenue growth off of such depressed numbers. That said, the stock has started acting better, so it is worth watching.
Internationally, Greece is back in the news again trying to screw up something good we all had going with the markets. It's like we'd been asking the markets out for 2 years, finally got her to come to dinner, got her home, and as we were about to inspect her large Sharpe ratios, the ruphies wore off. So thank you Greece for scaring the markets again with your rising interest rate spread. Of course there is more of a chance of the Laffer Curve being right than there is of Greece going bankrupt, so Money McBags will be buying at any big market dislocation caused by rumors of our Hellenic friends going to take a ride on the river Styx (though if they go to Styx, they should give a big "domo arigato" to Hades).
Also interntationally, China's economy is surging like William the Conqueror's popularity among the French in 1066. GDP was up 11.9% from last year which is more bubble-icious than Gonzo Grape. Not only that, but investment in real estate was up 35.1% and housing prices were up 11.7% in March alone. Wow. China is definitely hitting on all cylinders and their economy is busting out more than Lina Li thanks to the ginormous government stimulus, the artificially deflated currency value, and the accelerating population growth.
In stock news GOOG is running up in to earnings since, you know, they are fucking GOOG. Money McBags should have bought more but it is already an outsized position for him so he'll root for the best with their earnings report and likely buy any dip. UPS pre-reported their earnings today and grew profit by 37%. They earned $.71 per share, well above analyst guesses of $.58, and upped their full year EPS guidance from $2.70-$3.05 to $3.05-$3.30. Wow. Apparently people really want to ship some shit that can't be attached in an e-mail. This is a huge signal to the strength of a business rebound. International shipping was up 18% and while US shipping volumes were up less than 1%, it was the first growth in US shipping in two years. So yeah, it is barely up from a much lower base, but this is how things start out. A very encouraging quarter from UPS.
In small cap news, NTRI is starting to run and Money McBags has broken their business down a number of times here. They are cheap but operational issues keep Money McBags from owning this stock. Also, MLNK is trying to rally back from a huge sell off after missing their quarter. Money McBags has analyzed the fuck out of this company but it is ridonkulously cheap on an EV/EBITDA basis, trading at ~4x with a bigger cash cushion than Jennifer Lopez's ass cushion. This is a small holding of Money McBags and he is currently down ~10% on it but is thinking about nibbling at some more. The biggest issue is that their excuse for missing the quarter made less sense than Kathy Griffin's career as HP is their biggest customer and was up 10%, yet MLNK's sales were down 9% even including revenue from an acquisition. It is more head scratching than crabs as to why their revenues performed so poorly and why their guidance was down as the global economy and the consumer are picking up so this company should be seeing revenue growth off of such depressed numbers. That said, the stock has started acting better, so it is worth watching.
Tuesday, April 13, 2010
4/13/10 Midafternoon Report: Alcoa opens earnings season not with a bang but a whimper
The market sold off at the open today but is climbing back like a Phoenix from the ashes or Paul Volcker's economic reputation. Alcoa's earnings initially brought the market down as they were a bit disappointing and Alcoa is considered to be the first bellweather company to report in this critical earnings season where baked in expectations are greater than they were for Ulysses S. Grant's presidency, the launch of the Space Shuttle Challenger, or Jay Leno's 10pm time slot. Alcoa missed on revenues earning only $4.9B instead of analyst guesses of $5.2B while putting up an inline earnings per share number. The company blamed the top line miss on the fact that they sell a fucking commodity and on Canada. Interestingly, even though they were short of analyst guesses on revenue, they still grew the topline by 18% thanks to a 49% surge in the price of aluminum off of the depressed levels of last year (apparently aluminum was depressed because it found copper cheating on him with silver. It's his own fault though, as steel tried to warn aluminum that copper was a whore and would smelt anything, but he didn't want to listen). That said, shipments of aluminum slid 3% so demand still has quite a way to go. In other macro news, the US trade deficit widened in February like a hooker's purse when seeing Eliot Spitzer walk by her after he has hit the ATM. The trade deficit was up 7.4% to $39B and signaled that US consumers are getting stronger as they once again pass up American made goods for shit produced overseas. Imports surged 1.7% with the majority of that coming from electronics, aparrel, and Laetitia Casta posters.
In international news, Greece had a bond offering to raise capital to help ease their budget deficit and the bonds are seeing stronger demand than Sarah Palin at a tea bag convention, potatoes during the great Irish famine, or Ann Darrow on Skull Island. The latest bond offering was more than 6x oversubscribed which is more oversubscribed than a New Century subprime mortgage B tranche in 2004, the theory of intelligent design in Texas, or the rumored Jessica Simpson Juggs magazine photo shoot. With the EU and IMF backing up Greece (and we all know the Greeks love getting backed-up), investors should have faith that the country won't go bankrupt and thus the incremental yield being offered by these Greek bonds should be solid investments.
In other stock news, the markets eagerly await the earnings of large cap banks tomorrow while UBS's regional bank anlayst is getting in front of those numbers by downgrading mid-sized banks. The analyst thinks banks' earnings and valuations are unsustainable and they are due for a "meaningful pullback" as investors somehow forgot that normalized bank earnings no longer exist thanks to something called banks not lending any fucking money and reserving the shit out of their balance sheets. Ford announced revenues are tracking ahead of last year, though that is like being smarter than Carrie Prejean, creepier than Larry Craig, or less herpe-ridden than Paris Hilton. Ford has done a solid job of managing through the downturn and thinks the economy continues to get marginally better, like day old chinese food and the Winter Olympics. The market is not only anticipating bank earnings, but GOOG is trading up into their earnings release on Thursday after hours. Money McBags is long GOOG as the online advertising market isn't going anywhere and they dominate it like Tony Danza dominated Judith Light in showing her who was the boss.
In small cap news, PALM is tumbling because potential buyers must be coming to their senses or must have read When Genius Prevailed yesterday to realize that buying the #6 player (and likely dropping with Microsoft introducing the Kin) in a competitive and near commodity market is about as good of a business decision as investing with Bernie Madoff or letting Dexter Manley write your presentations. In other small cap news, JOEZ is apparently still not fitting investors well despite offering a nice booty fit as it trades down another 4% to $2.60. Money McBags has put some analysis behind JOEZ numbers over the past couple of days and thinks it is getting to a more reasonable valuation (of course being down almost 30% in 4 days will do that to you). What is interesting is that the analyst from Roth Capital came out with an upgrade of JOEZ yesterday and had close to the same numbers as Money McBags with ~$.07 eps for 2010 and $.13 for fiscal 2011. The key difference being that Money McBags thinks $.13 is a bit of a stretch, though possible (In fact $.15 wouldn't be out of the realm of possibilties), and that even if they were to hit $.13, they shouldn't trade at 28x that which is where the Roth analyst's price target is. The stock is now trading at 20x the fiscal 2011 $.13 estimate which is a reasonable valuation for JOEZ growth if you think $.13 is attainable. If Money McBags were a betting man, he'd bet that the butler did it, but he'd also bet that JOEZ will earn somewhere between $.10 and $.15 per share in fiscal 2011 which is actually not a very small range but he just doesn't have a good feel for management's ability to execute a business since their margins have yet to show the leverage associated with scale. Either way, the valuation is becoming more reasonable and if it were to drop a bit more, Money McBags might think about buying some. Until then, he's going to wait for the institutions to finish puking this thing out and see where it is when the smoke clears as volume over the past few days has been higher than Lindsay Lohan on a Columbian vacation as people just want to get the fuck out of this stock right now.
In international news, Greece had a bond offering to raise capital to help ease their budget deficit and the bonds are seeing stronger demand than Sarah Palin at a tea bag convention, potatoes during the great Irish famine, or Ann Darrow on Skull Island. The latest bond offering was more than 6x oversubscribed which is more oversubscribed than a New Century subprime mortgage B tranche in 2004, the theory of intelligent design in Texas, or the rumored Jessica Simpson Juggs magazine photo shoot. With the EU and IMF backing up Greece (and we all know the Greeks love getting backed-up), investors should have faith that the country won't go bankrupt and thus the incremental yield being offered by these Greek bonds should be solid investments.
In other stock news, the markets eagerly await the earnings of large cap banks tomorrow while UBS's regional bank anlayst is getting in front of those numbers by downgrading mid-sized banks. The analyst thinks banks' earnings and valuations are unsustainable and they are due for a "meaningful pullback" as investors somehow forgot that normalized bank earnings no longer exist thanks to something called banks not lending any fucking money and reserving the shit out of their balance sheets. Ford announced revenues are tracking ahead of last year, though that is like being smarter than Carrie Prejean, creepier than Larry Craig, or less herpe-ridden than Paris Hilton. Ford has done a solid job of managing through the downturn and thinks the economy continues to get marginally better, like day old chinese food and the Winter Olympics. The market is not only anticipating bank earnings, but GOOG is trading up into their earnings release on Thursday after hours. Money McBags is long GOOG as the online advertising market isn't going anywhere and they dominate it like Tony Danza dominated Judith Light in showing her who was the boss.
In small cap news, PALM is tumbling because potential buyers must be coming to their senses or must have read When Genius Prevailed yesterday to realize that buying the #6 player (and likely dropping with Microsoft introducing the Kin) in a competitive and near commodity market is about as good of a business decision as investing with Bernie Madoff or letting Dexter Manley write your presentations. In other small cap news, JOEZ is apparently still not fitting investors well despite offering a nice booty fit as it trades down another 4% to $2.60. Money McBags has put some analysis behind JOEZ numbers over the past couple of days and thinks it is getting to a more reasonable valuation (of course being down almost 30% in 4 days will do that to you). What is interesting is that the analyst from Roth Capital came out with an upgrade of JOEZ yesterday and had close to the same numbers as Money McBags with ~$.07 eps for 2010 and $.13 for fiscal 2011. The key difference being that Money McBags thinks $.13 is a bit of a stretch, though possible (In fact $.15 wouldn't be out of the realm of possibilties), and that even if they were to hit $.13, they shouldn't trade at 28x that which is where the Roth analyst's price target is. The stock is now trading at 20x the fiscal 2011 $.13 estimate which is a reasonable valuation for JOEZ growth if you think $.13 is attainable. If Money McBags were a betting man, he'd bet that the butler did it, but he'd also bet that JOEZ will earn somewhere between $.10 and $.15 per share in fiscal 2011 which is actually not a very small range but he just doesn't have a good feel for management's ability to execute a business since their margins have yet to show the leverage associated with scale. Either way, the valuation is becoming more reasonable and if it were to drop a bit more, Money McBags might think about buying some. Until then, he's going to wait for the institutions to finish puking this thing out and see where it is when the smoke clears as volume over the past few days has been higher than Lindsay Lohan on a Columbian vacation as people just want to get the fuck out of this stock right now.
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