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.

5/13/10 Midafternoon Report: Market down as Prozac prescription runs out, or common sense prevails, take your pick

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5/12/10 Midevening Report: Gold hits record high causing a run on Flavor Flav's teeth

The markets were on fucking fire today as investors shook off the historic drop last Thursday, apparently confident that the SEC looking in to the causes of the sell off will yield answers other than the current ones whch include:  "Beats me," "How the fuck should I know," "and hey look, it's Enrico Pallazzo!"  The head of the SEC, Mary Schapiro, who in her short time leading the never distinguished agency has already instituted sweeping reform including such things as following up on leads, proactively going after market manipulators, and clamping down on tranny porn at the office, has called last week's market failure “profoundly disappointing and troubling.”   She then added, "I haven't been this disappointed with anything since Meaghan Chung worked at the SEC or since I bought a slap chop."  Luckily regulators are getting closer to finding out what was wrong with the market by ruling out several potential causes such as erroneous fat finger trades (known here on WGP as Portia De Rossis), unusual trading in P&G stock, hackers, terrorist activity, and Noriel Roubini shouting "Beetle Juice" three times quickly.  The SEC has sent out subpoenas to further look into this matter, though they have not said to whom they have sent them, but Mary Schapiro was seen asking Goldman's CEO if his first name is spelled with one "L" or two.  While equities are bouncing back, it is still showering gold in the markets as gold has hit an all-time high which means Mt. T's neck is now the richest person in America (and he pities the fool who told him all that jewelry was silly).  The fact that investors are rushing in to gold is not a good sign for the markets as it signals little faith in currencies and a fear that escalating debt will continue to cause gevernments to run their printing presses more rapidly than drunk Hollywood wannabes run through Paris Hilton's panties.  Money McBags remains very afraid.

Helping drive the markets up today is that Spain has announced an austerity plan that will involve cutting wages of government employees, reducing public investment spend, and increasing the use of home grown green technologies such as spanish fly.  There is real fear that workers may strike throughout the countrty, but economists are fairly certain strikes won't come to fruition because strikes would cut in to workers' daily siestas.  In addition to Spain making like they are serious about their budget, in much the same way that James McGreevey made like he was serious about Dina Matos, Portugal sold the fuck out of some bonds.  Portugal raised 1B euro (though the euro isn't worth what it used to be) which is a good sign for the markets, though the fact that they need to raise another ~20B by the end of the year is a sign worse than waking up pantsless in a West Hollywood alley with a sore rear end and rainbow colored socks.  Joining in on all of the debt lip service in Europe (and Money McBags wishes Faye Reagan would give his growing debt some lip service), is Britain who is instituting budget cuts as unemploymnet spikes to its highest level in 16 years.  The new fiscal policies could include a tax on banks, black jeans, and Lucy Pinder downloads.  Also, data came out today showing GDP in Europe was up modestly in Q1, growing .2%, or as it's better known as: a rounding error. 


In the US, markets rocketed up thanks to positive forecasts from tech companies who said they expect it to be sunny with a chance of silicon.  Tech giants IBM and INTC both gave positive outlooks today with IBM saying they expect to earn at least $20 per share by 2015 which is double their current business and INTC's CEO saying he expects a double digit percent rise in revenues and earnings.  Additionally, MSFT was up today after they said they will offer Microsoft Office free online so the whole world can spend their days dicking around with PowerPoint for no charge.  Wow.  Technology hasn't received news this good since Number 5 was found to be alive.  Also, the US trade deficit widened to a 15 month high as exports were up 3.2% and imports were up 3.1%  For March, the rise in exports reflected increased sales of American farm products, a wide range of heavy machinery, and dollars.  The rise in imports was driven by a 26% jump in crude oil shipments (though not nearly as crude as Dice Clay CD shipments).

In small cap stocks, everything rode up like a hand on Alexis Texas' ample thighs.  CRUS, TMRK, and KITD continue to rally even though Money McBags ditched them for liquidity reasons last week.  Money McBags did buy back some KITD today in the $12.90s in anticipation of a good earnings call on Monday.  If the market structure is healthy, KITD remains a high upside company.  Also, QCOR is holding a conference call this afternoon to discuss the FDA panel's ruling on Acthar last week where the drug was found to be both less filling and taste great by a panel of experts.  The FDA panel voted 22-1 in favor of Acthar's efficacy in treating IS but there was some concern over how manageable and reversible the complications were.  Money McBags is sure QCOR will delve into all of this this afternoon, but on the surface it seems like very positive news since it points to the FDA putting IS on label for Acthar and thus allowing QCOR to market to IS doctors, something they have been unable to do despite being the favored IS treatment.  Money McBags promised some analysis today and he has FHCO's Q on his to do list (though it is much behind Alice Eve and Ashley on his to do list), but time ran short today so tomorrow he will try to hit you up with some micro to go with the macro.

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.

4/27/10 Midafternoon Report: If Greece is now junk, what does that make Haiti?

The market is down today as Standard and Poor's downgraded Portugal to a principality and Greek to junk and not the the kind in a trunk that most investors love, but good old fashioned junk.  It was the first time since the advent of the Euro that a European country has lost its investment grade status and Money McBags would be concerned if the rating cut hadn't coming from an agency who missed something called the subprime mortgage meltdown which only caused the biggest financial collapse in 80 years.  The real fear is that the EU can not handle this situation and it spreads throughout Europe like the bubonic plague in the 1600s or black jeans in the last half of the 20th century.  Consider the market spooked as it was looking for a reason to consolidate down anyway and now we have it.

In the US, consumer confidence rose to its highest level since Lehman Brothers collapsed and the highest level since the pet rock fad (because seriously, if people were willing to throw money away on fucking rocks, they must have been hella confident that things were going ok).  The consumer confidence index came in at 57.9 beating even the highest of forecasts after getting those forecasts in a camel clutch and having them submit.  People are generally starting to feel better and the fact that most Americans don't read the news and have no idea that Europe is teetering on the brink of bankruptcy while their own government printed more money than humanly possible to count (again, the "too big to count" strategy) can only help the blissful ignorance.  In other macro news, the Case-Shiller index showed that home prices were up from a year ago but declined on adjusted basis by .1% sequentially.  This still beat analyst guesses though prices are basically stagnant which is better than them dropping but is still a long way from a recovery.  And grabbing most headlines today were Goldman Sachs executives and Fabulous Fab Tourre who never saw shitty CDOs they couldn't pawn off on investors, testifying in front of congress about their alleged fraudulent behavior.  After hours of questions and answers, all we learned is that Senators don't have a fucking clue about the financial system and Senator Claire McCaskill, to quote another great Fabulous Fab, "Girl you know it's true, ooo, ooo, ooo."  Today's hearings accomplished nothing other than letting some rich assturds (the Senators) grandstand and belittle the richer assturds (GS executives).  Excuse me while Money McBags yawns through this part of the saga.  The fact is GS did some shady shit as did the whole fucking financial system so unless GS gets more than a slap on the wrist, nothing is going to change.  Money McBags is close buying long dated out of the money puts on MCO because when the smoke clears from this cock off, the rating agencies are going to be the musician to the regulators' very rusty trombone.

In stock news, Ford reported their 4th consecutive profitable quarter and earned $.46 per share which easily blew by analyst guesses of $.31.  In the Q, Ford outsold GM for the first time in 50 years and gained 2.7% market share thanks to the Toyota recall and vibrating seat warmers.  The stock is getting clobbered though as it had a huge run up and they still sell Fords.

In small cap news CRUS put up a huge quarter and Money McBags is an owner of CRUS and has talked about it many times on When Genius Prevailed.  He first alerted all of you to the company on 1/12/10, told you all he was buying on 1/28/10, and it is now up 75%+ which is enough to take Hayley Atwell out for a nice dinner of tea and my crumpets.  CRUS's Q was way better than Money McBags was expecting though and their guidance pissed all over Money McBags' estimates as if it suffered from bladder incontinence and had just downed a two liter of Mountain Dew and a box of Franzia.  For the Q, CRUS earned $.16 non-GAAP and Money McBags was expecting $.11 with their revenue coming in ~15% stronger than they had indicated.  They said all segments were pretty much up, but energy rebouned to $22MM up from $14MM last year and back to where it was before the economy bent over and starting catching pitches from pitchers with low hanging FICOs.  Guidance is for $78MM-$84MM in revenue for next Q (Fiscal Q1) with 55% margins and ~$26MM non-gaap operating expenses.  With ~65MM shares and enough NOLs to make Wesley Snipes salivate and thus not pay taxes for real, that gets to an eps estimate of ~$.29 if Money McBags is doing the math correctly (and it has been suggested that the correct way to do math is with a reverse cowboy).  CRUS didn't give detailed full year guidance as visibility in to Qs 3 and 4 is low (though hopefully not lower than Stevie Wonder's visibility in trying to see a shooting star without a telescope) but they gave full year revenue growth guidance of 30%.  Of course, guidance for fiscal Q1 already puts them at that 30% revenue growth and it is unlikely that the next 3 quarters will be flat with last year given the audio growth and return of the energy business.  Plus, they said none of their new products figured in to their backlog and thus there could be some upside if some of the new applications start taking off.  So how the fuck should we value this company?  As said previously, Heather Vandeven is hot, but as also said previously, Money McBags had an ~$.85 eps for CRUS for this upcoming fiscal year with ~$.19 coming next Q.   So we could assume they will be inline with Money McBags estimates for the rest of the year and gross up his previous $.85 with the $.10 beat in Q1 their gudiance implies and thus get a $.95 fiscal year eps estimate.  Alternatively, we can take Q1 estimates as a baseline, say they get an uptick in September's Q like usual, and the other Qs will all come in the same as Q1 guidance.  So 3 Qs at $.29 and one slightly higher gets us to $1.20.  Either way, just call earnings somewhere between $1.00 and $1.20 per share and given that, the company is still fairly cheap trading at 10x to 12x fiscal 2011 with $2 of cash on the balance sheet (of course some of that cash is going out the door because on the call they said they were buying a building to relocate their headquarters and it's not clear what real estate in Austin is going for these days).  The point is, this company just grew revenue 87% and the trends are still in their favor as their 35% customer which is AAPL is still selling the fuck out of some iPhones.  So hopefully you all bought with Money McBags, and if you didn't, the stock should consolidate down a bit over the next few days and it is still relatively cheap, so you'll get another chance.  Throw a 15x multiple on $1.00 of earnings and you get a $15 stock and that seems to be a fair low end price.

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.

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

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

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

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

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

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

2/11/10 Midday Report: EU says they will bail Greek out but offers few details, claims they were drunk at the time

The Greek debt crisis in Europe is still causing uncertainty in the markets as the leaders of the EU gave a tepid, vague, and Spicoli-ian response to their discussions and plans to bailout the Greeks.  The president of the EU, some guy named Jose Barroso who also doubles as the Prime Minister of some place called Portugal where he is said to survive off of the magic lillies from the river Tejo opined: “There is an accord."   He then went on to give a little more detail by saying: "it's a Honda Accord, but still it's an accord.  Oh I keed I keed.  We have a great accord, for me to poop on" as apparently Triumph the Insult Comic Dog is big in Portugal these days.  German Chancellor Angela Merkel then said: “Greece won’t be left alone but there are rules and these rules must be adhered to. On this basis we will agree on a statement.”  Of course the rules are that Greece has to drastically cut its spending, increase many of its taxes, and be home before 9pm, but the good news is that the leaders of the EU have finally agreed on a statement.  So whoop-de-dam-doo, we have a statement.  Unfortunately Money McBags has yet to find that statement anywhere and unless the statement is "we're bailing out Greece, now pass the saganaki," it is unclear what has actually been accomplished despite Herman Von Rompuy claiming that the EU will provide "determined and coordinated action if needed."  That's great to know, really, but if you could provide that action BEFORE THE FUCKING EU IMPLODES, that would be much appreciated.  You know Mr. Von Rompuy, if that's even your real name, the rest of the world is trying to run an economic recovery here so could you stop pussyfooting around (unless it's your foot and Abbey Lee's pussy, then please take your time) and lend the Greeks some fucking money already.  Jeesh.  I haven't seen a supposed plan with fewer details since Hank Paulson scribbled his TARP strategy on the back of a napkin using only ketchup packets and Alan Greenspan's tears.  The EU leaders are being so vague they are making Sorities paradox look easier to reach a conclusion about than Sarah Jessica Parker's gender (trick question, because she's a tranny).

As for the US macro economy, initial claims for unemployment were out today showing a drop of 43k last week to 440k overall.  This is lowest level in five weeks and may signal a "drop in the administrative backlog" which of course was likely caused by not having enough administrators to process the claims since most of the administrators had been laid off.  The US economy appears to be stagnant right now and the question remains how long any recovery will take. 

As for stocks, Pepsi reported an inline quarter and reaffirmed guidance and announced they will be increasing their share buy backs due to stronger than expected free cash flow.  Earnings were driven by their snacks business line which feature such products as Doritos, Lays, and their new launch of Cheetos's Atherosclerosis sticks with the slogan "turning even your heart attacks orange."  The company thinks they will have low teens 2010 earnings growth and is currently trading at a perfectly respectable 15x 2010 estimates.  If Money McBags did not pick KO in the Pepsi challenge, he might consider adding a little PEP here.

In small cap news, not a lot is going on today as WGO is about to drop through ther support levels and EBIX is about to test the $14 level.  As far as new information, an analyst from SocGen initiated coverage on KITD with a sell rating and a $9 price target citing concerns about KITD's lack of profitability, potential future goodwill impairments, and receivables growth outpacing revenue growth.  Now just two weeks ago Money McBags broke down KITD for all of you with the main points being that they are in a growing market and are forecasting $13.5MM of EBITDA next year while trading at cheap EV/EBITDA and revenue multiples.  As for SocGen's criticisms, first of all, a bank that almost went under due to a fraudulent trade shouldn't throw stones, unless those stones are made of diamonds, gold bullion, and Alexs Texas's behind and aimed at those investors who lost money.  Secondly, KITD's receiveables did rise as they made several acquisitions and consolidated those receivables.  The hope is that their collections will be better than the acquiree's and that they can churn out better revenue growth.  Money McBags does agree that it is something which needs to be watched.  However, SocGen's valuation might as well have been written in French because it makes less sense than people who give a crap about the Sports Illustrated Swimsuit issue (not that Money McBags is against scantily clad lovely ladies, but we have something called the internet which makes the SI Swimsuit model look about as risque as a Nun showing some ankle or Jay Leno's monolgues.  Honestly, the most entertaining part of the SI Swimuit issue this year was finding out there is a model named Cintia Dicker (dicker?  Money McBags doesn't even know her.  Though to be honest, he would do more than just dick her)).  The analyst's $9 valuation is achieved by taking some weighted valuations (including a $10.60 value derived from a DCF, which is higher than the current $10 price) and applying some sort of sector, company, and speculative discounts to that weighted valuation (why the discount isn't just put into the actual discount rate of the valuation is beyond Money McBags, but then again, so is the appeal of American Idol, so what do I know?).  Anyway, Money McBags hasn't seen anything that contrived since Michael Jackson married Elvis's granddaughter.  The analyst took down the valuation by 5% based on "company appeal" because of KITD's low liquidity.  Excuse-moi?  Comment t'appelles tu?  Merde Tete?  The main point is KITD is a speculative play, something which Money McBags said in his initial review of them and that is why Money McBags is not yet an owner.  That said, the company is a market leader in a fast growing market.  Yes, the acquisition model is a bit worrisome and the management team is a bit too salesy, but there is real potential for a company like this with locked in recurring revenues from Fortune 100 companies, to be a big winner.  It is worth following KITD and maybe even buying if you can comfortable with the risks, that said, it is not a "sell" as SocGen so daintily pulled out of their derrieres.

2/5/2010 Midday Report: Unemployment rate drops as more jobs are lost, for next trick, unemployment rate to solve world peace by creating more wars

The market is down again today as Europe's sovereign debt problem keeps rearing it's ugly head like Mayim Bialik on the ABC Family network.  The big news in the US markets is that the unemployment rate fell to a measly 9.7% (though if you include people who stopped looking for work and those working part time, it was 16.5%, but that is just a minor detail, like needing to keep your eyes on the road when you drive or not crossing the streams).  The economy lost 20k jobs in January while totals for November were revised up by 60k (to 64k jobs created) and the totals for December were revised down by 65k (to 150k jobs lost, or as they say on the streets, a "fuckload").  While the revised numbers essentially cancel each other out, it does leave us wondering if any of these numbers are reliable at all, like the brakes on that shiny new Prius you just bought.  Money McBags will wager Alan Geenspan's credibility and Eliot Spitzer's dignity (and since both of those are non-existent, it may be a bit of a sucker's bet) that the 20k number released today is not within 20k of the actual revised number to come out in two months when no one will really care.  The point is, people are not working regardless of what made up number Hilda Solis and her No-Labor Department release.

In international news, potential sovereign debt defaults in Greece, Portugal, and Spain have investors questioning the viability of the Euro like people with working auditory canals question Heidi Montag's singing career.  European Central Bank President Jean-Claude Trichet (or as he's known in investment circles,  "deluded") has said there is nothing to worry about as the budget shortfall will be smaller than that of Japan and the US.  He then called Haiti and said not to worry because their recent earthquake was smaller than the Chile earthquake in 1960, and later was heard telling NBC President Dick Ebersol not to worry because ad revenue is way overrated.  With the debt of Greece, Spain, and Portugal all forecast to be near or above their GDPs by 2011, investors are questioning if/when the EU will bail them out.  The good news is that the Greeks are trying their best to help out in all of this mess by going on a two day worker's strike, which means they will be working three more days than they usually do (though to be honest, a worker's strike to protest an economy in the shitter is like the state of Alabama burning books to protest their high illiteracy rates or Noise Free America blasting anything by the Black Eyed Peas to protest noise pollution).

In business news Toyota is apologizing for selling you a car that could kill you but reminding you that even if your brakes went out causing you to plummet to an early death, at least you would have cut down on your carbon footprint while you were alive by owning a Prius.  Berkshire Hathaway is selling $8B of debt to finance their acquisition of BNI and outfit executives with their own conductor caps (of course those conductor caps will be made 100% from the shards of Giaocometti's "The Walking Man I").  Finally, AETNA missed on earnings as their medical costs grew 14% as a result of increased brain aneurysms for those who sat through an entire screening of Avatar (that joke was brought to you by the Jay Leno Appreciation Society, making comedy dull and unfunny one observation at a time).

In small cap news TSYS beat their quarterly esimates thanks to 15% revenue growth and 17% EBITDA growth to $10MM.  For the year EBITDA was $50MM and 2010 guidance was for $80MM-$85MM EBITDA with revenue guidance for over 40% growth (though they are an acquisitive company so that is not all organic).  The company is now trading at around 7x 2010 EV/EBITDA and continues to be in growth markets and consistently beats estimates.  Of course it is down 5% today despite the solid Q and the good backlog because apparently people hate owning businesses that work.  Some analysts are concerned about their long term net interest margins but the company is getting cheap enough for those concerns to be less worrisome than a back hair on Marissa Miller.  Money McBags is not yet an owner of TSYS, as he is going to let the market creep down a bit before he gets his invesment on, but this company is worth all of you digging in and trying to get a better feel for their organic growth and competitive advantage in the location based software and military businesses.

Money McBags is off until Monday, so enjoy the Super Bowl.