7/2/10 Midafternoon Report: More bad macro data leaves US worker in desperate need of a hand, job

Money McBags was initially in a good mood this morning as when he was scouring the internet for news/data/information, he learned that Wonder Woman was turning a delicious 69 (and it is news like that for which Money McBags lives), but then the jobs number came out and didn't just put a turd in his punchbowl, but took the punchbowl, spilled out all of the punch, and then proceeded to fill it with a cacophony of fetid bile made up of what had to be 10 year old kimchi, expired mayonnaise, and Lindsay Lohan's saliva.  The headline was that 81k private sector jobs were created despite 125k overall job losses due to the firing of 225k temporary census workers.  And while that is mostly true, it obfuscates exactly how bad the numbers were like Goldman has obfuscated their real derivatives dealings with AIG.  Money McBags doesn't usually drop tables here (instead he drops all kinds of rules of decorum, manners, and grammar) but he has to do it today to explain exactly how bad the jobs number was and why it is a terrible sign for the economy going forward.  So Money McBags went to the BLS' actual press release (and readers should know the "L" in "BLS" is silent) and broke out the numbers since financial reporters hate doing work like Kafka hates writing endings to novels.  That said, below is his table showing the actual jobs report numbers:

There are several things of note:

1.  The BLS said the Government lost 225k temporary census jobs but had total loss of only 208k jobs, so one can backsolve in to a 17k government job creation number ex. census workers, which is kind of like a pyrrhic victory only without the fucking victory.  Anyway, there is no way to know if those 17k job adds are temporary or permanent workers, but whatever, 208k net losses still sucks worse than a hooker with a bad case of  xerostomia.

2.  Of the 84k private sector jobs that the headline touts as somehow being positive, 21k of them were temporary, and the last time Money McBags checked his dictionary for "temporary" it hadn't changed to being a synonym for "permanent."  The point is, only 63k real "thank the great Nipsey Russell in the sky I don't have to look for another job in a month or so" jobs were created, not 84k. 

3.  The birth/death model plug which as noted before is the biggest black box Money McBags has seen since Vanessa Del Rio's in the 1980s, added 147k jobs to the total and it would be easier to verify that the meaning of life is in fact "42" than anything from the birth/death goalseek.  Again, you can read all about the model here but it is basically the BLS' way to rig the numbers, I mean estimate the number of jobs created/destroyed by new or dead businesses not in their survey.  Now look, Money McBags is no Dale T. Mortensen and wouldn't be able to debate the merits of the Beveridge curve or a backward bending labor supply curve (though he would like to give some beverages to Olivia Munn to see if she would bend backwards over his supplied curve), but how the fuck are more businesses being added now than are closing, when economy is going south faster than Mel Gibson's chances of winning an NAACP image award?  Yeah, Money McBags gets it, big businesses are no longer hiring so people are trying to start their own things, sure that could be one solution.  But what about all of the small businesses that are dying because people don't have fucking income?  Are we really supposed to believe that 144k more people started businesses or joined start-up businesses than were laid off because their companies died?  Sorry, but that doesn't pass Money McBags' sniff test and he's got a hella good olfactory system.  So taking out the fictitious birth/death model, 271k jobs were lost and 63k private sector jobs (temporary and/or permanent) were destroyed.  Feel free to believe the birth/death model is remotely accurate, but Money McBags has more faith in Alan Greenspan winning this year's Playgirl Man of the Year than he does that phony model.

4.  As always, and not sure why Money McBags even keeps pointing this out, but analysts missed the number by a margin wider than a Larry Craig stance.   Analysts guessed that 110k private sector jobs would be added and as you can see from above (and excluding the birth/death plug) only 84k or 63k were added, depending on if you give a shit about temporary workers.  So Wall Street, WHY ARE YOU PAYING THESE GUYS?  Money McBags is giving you better insight for free (well the cost of your dignity), so for the price you pay those highly distinguished economists, hire 20 people who are unemployed and Money McBags bets at least half of them come up with a better guess than the supposed experts.

So now that we know the jobs number was worse than reported, do we even bother debunking the drop in unemployment rate from 9.7% to 9.5%?  Yeah, it fell, but that's because the labor force participation number dropped by 652k as more people just gave the fuck up.   The drop in unemployment rate is more full of shit than the birth/death model, Eliot Spitzer, or a constipated elephant with an overactive liver.  Using what type of math can job losses increase, but the unemployment rate go down?  No really?  Is it some arcane rule of boolean algebra or perhaps Pythagoras' lost theorem that says A^2 + B^2 = Whatever the fuck you want?  The point is, the economy is not recovering (the real unemployment rate including discouraged workers was 16.5%) and with the stimulus running out, republicans denying extended unemployment benefits (so up to 4MM-5MM people potentially losing their safety nets), and retirement funds dropping daily as the market tries to find a new bottom (and as always, Money McBags only hopes it is Brooklyn Decker's bottom), we are now at the tipping point where either Uncle Obama steps in again or we double dip our way back to 666 or below.

In other US news, factory orders declined by 1.4% which was triple what analysts had guessed, though that shouldn't surprise anyone since we have already proved that the economy is getting worse and analysts suck at their jobs. 

Internationally, Europe's unemployment rate held at 10% (which Money McBags believes converts to 12.2% in American) but it's still the highest rate in 12 years since the great black jeans shortage of 1998.  Austria came in with the lowest unemployment rate of 4% which would be great if anyone actually lived there and Latvia came in with the highest rate at 20% which is great that no one lives there.

As for both large and small cap stock news, who really gives a crap today.  It's all going down right now so even though this is a party weekend, keep your shorts on as long as you can.  And remember, follow WGP on facebook and Twitter and enjoy the fireworks on this 4th of July weekend.

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.

4/8/10 Midday Report: Citi execs sorry they broke the economy, wipe their tears with their outsized bonuses

Money McBags is back and the markets are selling off a bit as apparently people somehow still care about Greece going bankrupt (but then again, some people also still care about the Poincare conjecture, the etymology of Star Wars languages, and saving the whales, so whatever).  Seeing as how Greece hasn't been relevant since the Battle of Corinth or the internet rumor of a Maria Menounos side boob shot, their financial crisis shouldn't be enough to derail the market from rallying back.  What should be enough is continued unemployment as new claims for unemployment rose last week by 18k to 460k which was worse than economists' guesses of a drop to 435k.  So once again supposed experts even got the coin flip direction wrong (Money McBags told them to call tails instead of heads).  Economists are blaming the Easter holiday for some of the variation in the jobs number because the floating holiday comes at a different time each year and seeing as how no calendar existed last year and the day Easter fell on this year was a complete fucking surprise, it makes sense that data to allow economists to properly seasonally adjust for Easter would be difficult to obtain.  The Easter excuse is about as plausible as a bunny laying colored eggs, Santa Claus, or a male friendly lesbian (shout out to Chasing Amy on that one, it's too bad Kevin Smith died shortly after that movie came out, he had such promise.  And if he didn't die, how does one explain Jersey Girl or you know, the last 10 fucking years of his supposed career?).  The positive news on the jobs report is that continuing claims decreased by 131k to 4.5MM which is the lowest it has been since December of 2008 and companies like Home Depot say they are starting to hire more workers.  Money McBags is more positive on the economy than he has been in months and is looking to add to his exposures if the market consolidates here.

Internatonally, as mentioned before Greece is still taking up all of the headlines as they try to boost their resume from reality star to working actress status, and if this debt issue doesn't work, they're either going to adopt a Malawan kid or try to get Crete drunk and have octuplets.  Bonds of the country are slumping worse than sales of Alan Greenspan's new book:  Bubbles for Dummies:  How any Dummy can create one.  The premium for Greek bonds over German bonds is now 427bps, the highest it has been since the Euro was created and the great deodorant crisis of 1964.  Of course, Greece isn't going anywhere so hedge funds, asset managers, and Pete Rose can bet against them all they want, but if the country survived the release of My Big Fat Greek Wedding, it can survive anything.  In other international news, China is going to revise their currency policy where they will now let it float and perhaps appreciate as much as 2% against the dollar.  This is another small step in trying to prick the Chinese bubble but most importantly, China is trying to do this without using any MSG. Also, Europe is keeping their benchmark rate unchanged at 1% as they hope the cheap cost of capital can pull them out of recession by increasing the sales of black jeans.

In stock news, United and USAirways might be merging which is a little like if syphilis and gonorrhea had a baby and you had to spend 6 hours sitting next to that baby on an LA to NYC flight.  Of course this merger fits in with the old adage, two wrongs don't make right (though two Wrights make an airplane, three rights make a left, and I believe four rites make a Scientologist) as two crappy airlines don't make a good one.  Also, Citi's failed management team has been testifying before congress where they have promised to tell the truth about how they were more incompetent than Gabirelle Sidibe's dietician or John Edwards penis.  Charles Prince opened with:  “Let me start by saying I’m sorry,”  which was succinct, to the point, and no doubt a great solace to all of the people who lost money due to his criminal risk controls.  He then expanded on that by saying:  “I’m sorry the financial crisis has had such a devastating impact for our country. I’m sorry about the millions of people, average Americans, who lost their homes. And I’m sorry that our management team, starting with me, like so many others could not see the unprecedented market collapse that lay before us.”   Well thanks for that Chuck, really.  I am sure every average American will sleep better on their worn out mattresses knowing that you feel badly that you missed the biggest financial crises in the last 80 years even though you were in the fucking center of it.  Either you are blinder than Mr. fucking MaGoo after downing a bottle of Wild Turkey or you were just a greedy fuckwad, so let's just be up front about everything.  You didn't "not see the unprecedented market collapse" you didn't bother looking for it, which is you know, something on which someone running a bank is supposed to focus, it's called risk fucking management, jeesh.  So while you were out getting your teeth whitened for the 38th time, your company wrote, traded, and packaged enough bad loans to help sink the global economy, but Money McBags is glad you are so sorry that you have now permanently relocated to your multi-million dollar Florida mansion where you no doubt sadly eat caviar off of hookers' ass cheeks all day (and just a head's up, that stuff in the crack may not be beluga).  But hey, thanks for being sorry dickbag.

In small stock news, JOEZ has been rocketing up into their quarterly results release after hours tonight.  Money McBags broke the stock down after their last earnings call and will do so again tomorrow, but in the meantime the stock has become more fashionable than Giselle Bundchen in a pair of their jeans.  Money McBags does not get $150 jeans as he understands fads as well as prisoners understand game theory or Tiger Woods understands texting (hey, Tiger, your messages don't just disappear into thin fucking air.  A blind person leaves fewer tracks when walking through the mud than you did while cheating on your wife, but kudos to you for being more clueless than a colorblind synthesthesiac).  Money McBags will start breaking more stocks down again next week as he is evaluating a number of names.  KITD remains his top pick as they have more potential than a slightly overweight 18 year old girl with low self-esteem and no gag reflex.  What is interesting about KITD is that their smaller competitor, Brightcove, just raised another $12MM in their 4th round of financing.  Brightcove is barely breaking even (so is KITD, though this year KITD should earn at least $.55 and likely closer to $1) but this round of financing should allow them a nice private plane with all of the accoutrements for their likely upcoming IPO road show.  Money McBags is creaming at the possibility of Brightcove going public and thus giving analysts/the market/Pauly Shore a public comp for KITD to show how undervalued KITD remains.  So keep your eyes on Brightcove (while Money McBags will try to keep his eyes on Michelle Lombardo's not so bright cove) for any news to help with valuation.

4/1/10 Midafternoon Report: A disappointing RIMM job

Before we get to the markets, Money McBags found a picture of the hottest female in the history of history and wanted to share it with his readers as a sign of his gratitude.  This is the hottest female ever*, so you're welcome.  Anyway, stocks are up today as macro data was more encouraging than a Stephen Hawking pinky raise or Anne Sullivan Macy.  The ISM reported that manufacturing expanded at its fastest pace in 5 years to a whopping 59.6 (and if it had been 59.9 the market may have shot more loads than a Japanese bukakke film).  Prices paid (cough, inflation, cough) drove the index higher while the unemployment gauge slipped once again.  More importantly, first time jobless claims fell to 439k, while even more importantly, Audrina Patridge is hot.  The Street is hoping that the 6k drop in first time unemployment claims will bode well for the Labor Department's unemployment report to be released tommorow on paper made from the tears of the homeless.  However, providing the proverbial turd in the punchbowl, or the penis in the MFF scene, was a report released today by some firm called Challenger, Gray, and Christmas who bah humbugged on the labor market by reporting that job cuts accelerated in March.  The outplacment firm announced that the pace of job cuts had increased 61% sequentially from February but optimists will point out that the job cuts were down 55% from March of last year.  So hoo-fucking-ray.  The economy is either better or worse depending on your comparison.  It's like the old saying, in the land of the blind, the one-eyed man is king (though in the land of the blind, the one-eyed man better not develop macular degeneration because there sure as fuck won't be any ophthalmologists).

International markets are all a buzz today as Asia and Europe saw strong manufacturing reports which signal the recovery is coming.  China's manufacturing expanded for a 13th consecutive month, Europe's manufacturing industry expanded at its fastest pace in three years, and somethng in Japan called the Tankan index of sentiment jumped from minus 25 to minus 14.  April fucking fools!!!!!!!  Oh wait, that data is actually real.  Wow.  The international markets may have found their Viagra or Peter Gowland's private photo collection.

In stock news, RIMM missed their earnings estimates by $.01 eps and their revenue estimates by 6%.  So despite earning $1.27, showing better margins, and growing 18%, the stock is down 5%+.  Money McBags is actually surprised it isn't down more because when a growth stock in a competitive market needs to make their numbers and whiffs, nothing good can happen.  Goldman Sachs cut their rating on RIMM to sell and basically called them a has been in the handset market.  Their products are less differentiated than a Dahm triplet and a whole lot less delicious.  Money McBags puked out his RIMM shares because fool me once, shame on me, fool me twice and you can go fuck yourself.

In small cap news everything is up except for Chinese power generation company APWR who handed out fortune cookies with their earnings release yesterday that all read "suckers."  Their guidance was 30% below analyst guesses who apparently were just chasing windmills when covering the stock (and that is funny because APWR produces windmills, but you all knew that anyway, right?).  Also, there was a comment in yesterday's blog comment section asking about MLNK and Money McBags will address it here.  The reader wanted to know what was going on with MLNK and if it is still a hold.  Money McBags broke down their fuck awful quarter a few weeks ago and nothing has changed since then of which he is aware.  They earned $13MM of EBITDA and said this upcoming Q was going to be worse while they would see some sequential improvement after that.  Of course they also said that last quarter would be flat and it was down worse than a than a clinically depressed person who just lost their dog and had a virus wipe out their computer's porn collection, so who the fuck knows if management can be trusted.  Their excuse for missing the quarter is still a little squirrely as they blamed their clients for delaying decision making but Money McBags doesn't quite get that.  HP's revenues were up ~10% and HP is like 25% of MLNK's business, so why the fuck didn't that help drive revenues more?  And if MLNK is earlier in the cycle, why did they not see revenues jump by more in the previous Qs or why is their revenue being impacted by clients delaying their decision making now (since decisions should have already been made for this upcoming cycle).  The simple fact is the company is underperforming, but even so, they still earned $13MM of EBITDA in the Q.  They have a $163MM in cash and a $375MM market cap so an enterprise value of $210MM.  If you think their business bounces back after likely sucking this Q coming up (Money Mcbags' words, their guidance), then a $52MM EBITDA run rate is possible and thus they are trading at 4x that.  The stock is cheap on that basis, but on an EPS basis, they'll probably be lucky to earn $.45 this year so are trading at almost 20x that for no growth.  The EV/EBITDA and cash give us some downside protection so Money McBags sees no reason to sell, but he also thinks this is dead fucking money for a while.  Their business should ramp with electronics sales (though it didn't despite HP being up 10% as Money McBags said earlier, so if someone can explain that, Money McBags is all ears), so if the economy can really come back, they should be able to grow the business.  Look, it ain't fucking AAPL, but it is sort of cheap with a cash cushion that has some nice operating leverage.  So in short, the downside seems a bit limited but the upside may be further away than Paris Hilton's Academy Award (One Night in Paris excluded).

*April fucking fools'.

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

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

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

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

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

Until then, enjoy the weekend.

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

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

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

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

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

3/11/10 Midday Report: Yield curve spread continues to fatten, claims it wants to star in Precious sequel

The market is holding steady today as foreclosures in the US rose at their slowest pace in four years.  While slowing rates of foreclosures are sort of pyrrhic news similar to declining new cases of AIDS or slumping sales of country music cds, a slower rate means a slower rising homeless population and that can't be bad (unless you're scabies).  Though foreclosures were up 6% from last year, they were down 2% from January, and were aided by government legislation and loan modification programs such as helping homeowners to lower monthly payments, refi to lower rates, and break in to loan officers' file cabinets to burn original copies of their mortgage documents.  California saw default filings down 15% though still remained the state with the most default notices, but interestingly Florida's defaults rose by 16% and Michigan was up a ridonkulous 59% which begs the question "who knew people still lived in Michigan?"  Also making the market nervous today is investors increasing their bets on inflation with the yield curve within spitting distance of swallowing up its all time high.  The spread between thirty year bonds and two year bonds is now 377 bps as investors are starting to demand more yield for buying long term bonds thanks to the potentially Madoff-ian style recovery the US government is attempting to manufacture by borrowing $7ishT which they will pay back later once they raise some more debt or win the Powerball lottery just a few billion times.  Jobless claims were also out today and they fell by 6k to 462k which is also about the number of people who caught ear herpes from inadvertently turning on the radio to a Black Eyed Peas song.  Economists were expecting claims to fall by 8k, so the number was slightly disappointing but the difference between dropping by 1.3% instead of the expected 1.7% is less meaningful than William Henry Harrison's presidency or Tom Cruise's marriage.  While initial claims were slightly down, 4.56MM people continue to receive unemployment benefits and to put that number in perspective, it's more people than the entire population of Irleand and only slightly less than the number of "working" actresses Ron Jeremy and Peter North combined to bone in the 1980s.

In international news, Greek workers have continued to strike with no flights, trains, or buses operating in Greece yesterday so it's good that tourism only accounts for 15% of their GDP (and yes that was sarcasm).  The Greeks contiue to cut their well chiseled greek noses just to spite their faces (and if they go near Maria Menounos's face, they will have to answer to Money McBags).  Courts also shut down while hospitals remained with just emergency staff.  Wow.  So with no transportation, no laws, and little medical attentions, Greece has just become the Detroit of Europe.  In other international news the Chinese CPI was up 2.7% which is below the government's 3% target but a bit higher than estimates.  Depending on which news source you read, the 2.7% number is either manageable or way too high, so draw your own conclusion (though if Money McBags were to draw a conclusion, it would probably look something like this(maybe NSFW)).

In stock news, financials continue to rally with AIG and C leading the way as Enron executives now lament not receiving a government bailout as they opine: "if only we had more time."  Money McBags remains less interested in owning C than he is in getting in to a tickle fight with Eric Massa (and honestly, Money McBags doesn't care if it's your 50th birthday but if you ever try to tickle him and your name isn't Kate Bosworth or you weren't born with a uterus, there will be a fucking problem).  In other stock news Navistar continues to plunge after driving itself off of a cliff with an earnings number the other day that was only 1/3 of what analysts were expecting ($.23 per share vs. expectations of $.85).  A spokesman for the company said "if you just round up the nearest dollar, we at least met expectations." He then pointed to a spot behind reporters and yelled "Hey look.  Kool Aid!" before bolting out of the room.

In small cap news, Money McBags still eagerly waits for a response from WILC COO Zwi Williger to the questions posed yesterday on When Genius Prevailed.  Money McBags' finger is now a Vern Troyer taint hair away from hitting the sell button on his computer to ditch his WILC shares.  IMAX was out with their 4Q results last night and posted a profit while forecasting a "very strong year" ahead.  Avatar helped fuel their profit for the year as people love getting motion sickness while not moving, yet it was not a huge contributor to Q4.  The company continues to perform well as box office receipts for the first two months of the year are up 6x to $187MM.  Additionally, their JV strategy has increased gross margins from 24% to 51% and they believe that they have a continued strong upcoming movie schedule with Alice in Wonderland, How to Train Your Dragon, and a 3D remake of Ishtar.  The company just earned $60MM of EBITDA for the year and $20MM in the quarter with about $30MM of net debt so they are trading at around 13x an $80MM annual EBITDA run rate which isn't crazy expensive for a compay producing these results.  Of course one could argue that the current EBITDA run rate is way too low based on recent performance and growth of JVs.  Now look, Money McBags has said the stock seems expensive, and it's certainly not cheap, but they just blew away his expectations.  They continue to outpace his skepticism so it is definitely worth doing more research on the name.  The 3D trend apears to have more staying power than an American Idol winner and the JV strategy is ridiculously profitable.  Money McBags only wishes they would show any of Gracie Glam's heartwarming movies in 3D, that is if he could have the theatre to himself.

3/10/10 Midafternoon Report: Is that a bank rally in your pants or are you just happy to see me?

The market is higher today on the strength of a banking sector rally, positive economic news from China, and a likely date tonight with Izabel Goulart (because why else would it be this excited?).  The macro news today has been slightly positive with wholesale inventories down only .2% sequentially in January after being down 1% in December.  While this is the 13th consecutive month of wholesale inventory declines, the second derivative continues to sink like John Meriwether's hedge fund career and a continued decline in the rate of inventory cuts is certinaly a positive sign.  The Commerce Department, led by esteemed Secretary Gary Faye "Reagan" Locke also said that sales were up 1.3% and that dropped the ratio of inventories to sales to a record low of 1.10.  This is an interesting metric as company inventories are now leaner than James Polk's credentials in 1844 or Adam Sandler's Oscar trophy shelf.  If the economy can somehow forget about the 10% unemployment rate, the mounds of money printed by the US government, and Hillary Swank's Academy Awards dress (and really, where did those come from?), and just start to gradually build back some inventories there could be some real recovery, despite what the great Roubini is out saying today about the increasing odds of a double dip recession (ugh).  New unemployment data is also out at the state level with the unemployment rate increasing in 30 states (though more if one includes the states of panic, fear, and pants shitting) and decreasing in 9.  One of the states to see declining unemployment was Michigan where the rate dropped from a national high of 14.5% to a still "you're fucked" rate of 14.3%.  But those three extra people who got hired to man the Burger King drive-through line in Kalamazoo could be a signal (unfortunately that signal is "we need some fucking jobs").

In international news, Greece's economic crisis is more over than Corey Haim (what, too soon?) according to Romano Prodi who is a former Italian Prime Minister, now teaching at a college in Shanghai.  Money McBags has always said if you can't trust an Italian Prime Minister, especially one who has been out of office for years and has had absolutley no real role in anything having to do with the Greek crisis, then you can't trust anyone.  Prodi will continue his "speaking out of my ass" tour by taking part in a roundtable on how global warming has finally ended before chairing a conference on the demise of the internet.  Also fueling the market today is that China's exports rose 46%.  This likely signals increased consumer demand for products that cause nervous system and kidney damage to infants, or as they are more commonly known as: toys.  Infant nephrologists across the nation are excited by this uptick in China and are anxiously awaiting orders of their new CT scan machines to be delivered.

In market news, the always delightful Dick "Don't call me Richard" Bove (with the last syllable of Bove pronounced like the last syllable of oy-vey), was on CNBC talking up the financial sector.  Mr. Bove (Money McBags refuses to call anyone Dick), said he thinks bank dividends will go back up to their previous levels in the next two years and he gave a vote of confidence to Citi.  And let Money McBags tell you, getting a vote of confidence from an analyst who missed the symptoms of the ride down is as valuable as being dong-less in Vietnam (though to be fair, they all missed the ride down except perhaps the lovely Meredith Whitney whom Money McBags has such a crush on that he would body slam Mr. Whitney and put him in the Camel Clutch were he ever to meet him).

In small cap news, WILC had their quarter last week and Money McBags promised he would break it down for all of you this week.  Unfortunately, Money McBags needed a fucking talmudic scholar to decipher WILC's press release as it was more confusing than a plague of frogs (no really, you're doling out 10 plagues and frogs is the best you can do for one of them?  Really?  You ever hear of small pox, syphilis, or grizzly bears?).  Money McBags wonders if he should have read the release from right to left to better understand exactly which numbers were real numbers and what went in to them.  Unsurprisingly, WILC's conference call contained enough jibberish and was hard enough to hear that it made the press release look like a fucking Dr. Seuss book.  Between COO Zwi Williger's accent and the fact that they refused to take questions, WILC's conference call was as helpful as giving a band aid to a hemophiliac or an all expense paid trip to the Mustang Ranch to a eunuch.  Seriously guys, you're running a fucking public company, can you at least, you know, present the information in a user friendly manner to your shareholders (and Money McBags is a shareholder).  Anyway, on the surface, their Q was pretty good.  They grew sales 12% in NIS (New Israel Shekels) and increased their gross margins which they said was the result of continuing to introduce new higher margin products.  They said they earned $.20 per share in US which puts them at $.80 for the year.  They have $26MM of cash on the balance sheet which is roughly 1/3 of their market cap.  That said, their selling expense was up as a % of sales from 11% to 15% which they attribute to promotions, and their G&A was up as a % of sales as a result of management bonuses.  On the call they also talked about product launches to a big box US/Canadian retailer but ZWI's accent was thicker than the always lovely Carmella Bing so Money McBags could not make out to whom or to what he was referring.  Now look, Money McBags is also a Jew and while his hebrew language skills are more non-existent than Satyrs, weapons of mass destruction in Iraq, or money shots in lesbian porn, he honestly feels he would have got more out of the call had ZWI just spoken in his native language.  The most confounding part was that he did not take any questions, citing their pending share offering of $20MM.  Come on Zwi let's sit down and talk about this yid to yid.  We can kibbitz a bit about the old days and all of the shiksas we'd like to have boned, but just be fucking honest with me so we can avoid any Jew on Jew crime.  If you're not going to take questions on the call, then perhaps you'll answer them here for your shareholders.  Below are things investors need to know:

1.  Why is there no quarterly income statement or cash flow statement?  Why only give the annual summary?  For fucksake, even in your share registration statement you filed with the SEC the day of the earnings release, you only include Q3 numbers.  WTF?  Can you give your shareholders a break and just give us the information without making us break out excel and remember how to run a fucking vlookup table?

2.  Along those lines, you quote a $.20 eps and a net income of $2.12MM.  Yet in the same paragraph you say income before taxes was $1.84MM.  Now look, I'm no Harry Markopolos, but how the fuck is your net income higher than income before taxes seeing as how you are a tax payer?  Honestly, this is more confusing than a Thomas Pynchon novel or trying to figure out exactly of what Captain Crunch is the captain (and don't say crunch).  Money McBags broke out his proverbial magnifying glass and it looks like $.04 of your $.20 eps this Q was from discontinued operations.  And that extra $.04 is almost enough to meet the discrepancy.  Even if that is not the discrepancy, why the fuck are you quoting earnings of $.20 when only $.16 of it was from continuing operations??  As of 9/30/09 you had earned $.59 per share with $0 from discontinued operations and for the year you earned $.79 with $.04 coming from discontinued operations.  So that sounds like a $.16 Q4 to me.  So why would you quote the $.20 number?  Work with me here.

3.  How much of your increased gross margin was due to currency effects?   It's great that margins are rising but you have talked about the advantage you get through currency differences between your costs and revenues, so would it kill you to break that out for us?  You said some of the margin increase was due to selling higher margin products, but how much?  Could you do shareholders a mitzvah here and let us know how the actual business is tracking ex. currency effects?

4.  Why did your cash balance go down in the quarter if you were profitable?  Since there was no cash flow statement, Money McBags had to copy/paste the last two balance sheets into his outdated excel and use the delicious text-to-columns feature just to figure out what was going on and let me tell you, when Money McBags has to start breaking out old school excel functions, he is less happy than Mark Sanford's wife on a family trip to Argentina.  You earned $2.1MM from continued and discontinued operations and yet your cash balance was down by about $2MM.  With your PP&E remaining about the same (and in Money McBags younger club days, he would often see people pee-peeing some E) it looks like the cash outflow was from a $4.5MM increase in inventory and $2.5MM increase in trade receivables.  Hmmmmmmmm.  Care to answer WTF caused this cash decline?

5.  As related to what we found in question 4, why did inventories go up by more than 50%?  Seriously, can you help me on this one?  Is this a normal seasonal inventory tick-up of matzo, gefilte fish, and grape juice for the upcoming Passover seders or is something else going on here? You said you are launching more products so is this the ramp up of that?

6.  Why are you raising $20MM?  Is this really related to expansion or does this have to do with the declining cash balance in the quarter?  You have $26MM of cash on your balance sheet and are a $75MM market cap company, why do you need to dilute share holders by 20%ish to bring in $20MM?  You have stated that you are looking to buy a distribution center in the US or form a JV, but do you really need to an additional $20MM for that kind of acquisition?

So ZWI, if you're reading this, and I know you are, can you help a fellow semite out a bit?  I mean it's not like I am asking you where the afikoman is (don't tell me, it's in the bookcase?), just help me analyze your actual business.  Money McBags wants to be a longterm shareholder but he is thinking about selling despite the ridiculously cheap valuation because he is not clear what the actual earnings power is.  You said you will answer questions after the share offering which will likely include or be followed shortly thereafter by some "important announcement" (hopefully that announcement isn't that you have run off with the cash), but can you tickle Money McBags' balls just a bit here and give some real information?  And let Money McBags be brutally honest with you, if you ever quote your eps/net income number again and include discontinued operations, Money McBags will go to the Wailing Wall and pray for someone else to take over the company.  The whole press release/call/equity raise is just so fucking meshugganah that shareholders need to know you are not boozing on Manischewitz and can actually run a public company.

The dreidle is in your court Zwi.  You know where to reach me.  MoneyMcbags@gmail.com or www.twitter.com/moneymcbags.  I'll be here all day.

3/9/10 Midafternoon Report: Happy birthday bear market low, now go fuck yourself

Today marks the one year anniversary of the bear market's devilish low of 666.  To celebrate the nearly 70% rise since then, unemployed workers throughout the country are taking a day off from job hunting to resole their well worn and tattered shoes while Wall Street bankers are wiping their delicate behinds with their beluga caviar scented toilet paper made from the eyelashes of the Dalai Lama as a symbol of their spoils.  That said, macro news is more non-existent today than John Edwards' ethics.  The only slight news comes from Federal Reserve Bank of Chicago President Charles Evans saying that weakness in the job market will cause the Fed to keep rates low for some time and they will continue to be more accommodative than Mr. Roarke was to Heather Locklear when she visited Fantasy Island (and one can only imagine the fantasies Tattoo had about her islands).  Mr. Evans also said that as a result of the deep recession, policy makers may need to shift their view of full employment to correspond to a 5.25% unemployment rate as opposed to the 4.75% they currently use as a base line.  So good on you Charles.  Way to lower the bar instead of trying to find proactive solutions.  It's like if Perfect 10 magazine(NSFW) all of a sudden started putting 9s in their photo spreads or if Einstein rejiggered his theory of general relativity by adding some fictitious comological constant (umm, ok, maybe scratch that last one).  At least we now know why Charles Evans is considered to be one of the Fed's fluff girls as he is a Federal Reserve Bank President and yet not a voting member of the FOMC.

In international news Greek Prime Minister George Papadopolis is supposed to meet with President Obama, though there is no word as to whether Mr. Papadopolis will be bringing Webster along with him.  In the meeting, the Greek Prime Minister will walk through his detailed plans of economic recovery with President Obama which will include vilifying hedge funds who bet against Greece and their faltering economy while placing the rest of the blame on a faulty johnson rod Greece had installed last year.

In stock news, Burger King had disappointing same store sales numbers for the first two months of the year posting 8% declines across the US and Canada.  They blamed 3% of the decline on bad weather and the other 5% on shitty food.  This comes a day after McDonalds posted slightly up US same store sales.  Burger King's CFO Ben Wells said "For us weather is a big deal because you don't stroll to a Burger King restaurant, you have to be in an automobile."  Now look, Money McBags is no Le Corbusier so he is not an authority on how cities are laid out, but if the weather is bad, wouldn't more people be getting in to their fucking cars and driving places than walking?  Yeah, I get that if you're snowed in you're not going anywhere, but that should have hit McDonalds too.  Consider Money McBags skeptical of that excuse.

In small cap news MLNK came out with their earnings last night and to call their earnings crappy would be an insult to crap everywhere.  Now Money McBags is an owner of MLNK and has been touting them on When Genius Prevailed from time to time, so this just shows that nobody is perfect (except for maybe Jayde Nicole).  This was Money McBags' break down of MLNK last Q, the key part being management said this Q (their fiscal Q2) would be flat with fiscal Q1 and the end of the year would see an uptick.  So they earned $18MM of EBITDA in fiscal Q1 and taking their guidance that put them at a $72MM run rate or an EV/EBITDA so ridonkuously cheap that even Matthew Lesko couldn't believe it.  That said, they fell short of their guidance this Q and earned only $13MM of EBITDA and then took down guidance for next Q (fiscal Q3) saying it will be flat to lower than fiscal Q2, with fiscal Q4 then being up sequentially from fiscal Q3 (though unclear if it will be up from this Q).  Oy, fucking vey.  So let's use $13MM as the new EBITDA run rate assuming it drops next Q but picks up to this level again in 2Qs, with anything after that being unknown (though it should be up).  So a $52MM annual EBITDA run rate with $163MM in cash on the balance sheet and no debt yields an EV/EBITDA of still only 5.5x after today's drop.  So it is still cheap and Money McBags has no intention of selling, but the fact that they were down when ther biggest customer HP had revenue up 8% this Q (and HP is 28% of revenue) is a bit head scratching (though if it were Money McBags' head and Destiny Dixon were doing the scratching, everything would be ok).  MLNK revenues in the Q were down 9% Y/Y and 4.5% sequentially, but those numbers include $4.8MM of revenue from their acquisition of Tech For Less, so comparable revenues were actually down about 2% more than that (though they said this is usually a sequentially down Q).  The good news is that gross margins were up 100bps and they generated about $30MM of FCF and guided to positive FCF for the year.  Europe was a main driver of weakness, down 16%, as were getting new engagements which were down 62% from last year's fiscal Q2 which probably isn't a great sign unless you hate making money.  They said this was "a direct result of our clients delayed decision-making due to the economic headwinds in the spring and summer of 2009" but then later they say that the six month lead times they get should put them at the front of the cycle.  Hmm, Money McBags is now more confused about their business cycle than Larry Craig is about his sexuality (or at least publicly about his sexuality, because he knows in private he loves burgling turds).  Luckily, Money McBags is not the only astute one out there as some guy from Harvest Capital Strategies spoke up on the conference call and asked: "you initially had expected Q2 to be flattish with Q1 and then a gradual uptick in Q3 and Q4 to now a down Q2 versus Q1 and the subsequent down Q3 versus Q2 before we see a resumption of sequential growth. Maybe if you can can just provide a little more color around what changed in the last three months?”   Management said there were three reasons for the change:  1. Volumes were simply less than they expected in their base business.  2.  Start-up activity is taking longer to get up and running so new business that was supposed to be in Q2 will now be in late Q3 and early Q4.  3.  A little something called "Shut the fuck up" (ok, maybe they didn't say this one).  Anyway, to sum this all up Money McBags can't be right all of the time.  With consumer technology spending bottoming out, he though MLNK would see the benefits (as did their management) and they didn't.  That said, the company remains cheap (thanks to the 10% drop today) but their growth may now take longer to come back than John Travolta's career after Staying Alive or Tiger Woods' dignity (ok, hopefully not that long).  Money McBags is not selling here, but he's not buying either.  This company simply should have done better.

Also, WILC is up almost 10% today on big volume after their Q last week.  Money McBags will break that Q down in the next couple of days, but he has let you know many times that this company isn't just chopped liver.

3/5/10 Midafternoon Report: With Oscars approaching, the market is "Up" as economists "Blind Side"d by fewer job losses while strength of recovery remains "Up in the Air"

The market is running again as a result of the jobs report and inertia.  According to the (No)Labor Department, the economy lost 36k jobs in February while the unemployment rate stayed steady (and for those cunning linuists or Nabokov fans, that is back to back anagrams) at 9.7%.  This was better than the estimates of 68k job losses but is not a definitive enough number (like 42) to give investors a real read on the direction of the economy.  However, beating estimates is all that matters even though we know estimates are inherrently flawed like a supermodel with a hairy ass.  Some economists partially blamed snowstorms for the job losses, while others blamed companies for wanting to be profitable.  The (No)Labor Department chimed in and said job losses from snowstorms were unquantifiable like the square root of a negative number (imaginary numbers be damned), the number of one night stands by Paris Hilton, or how many licks it takes to get to the center of a tootsie pop.

In international markets, the Greeks are still protesting their loss of free lunches (and if those lunches were chicken gyros with a dollop of tzatzki sauce, who can blame them?) but now they are rioting in the street causing police to employ Greek helmets for protection.  German Chancellor Angela Merkel pulled herself away from the daily German scat film break to say she feels Greece has done enough to cut their deficit which has made the market guess as to whether the EU will continue to provide support.  This was not helped by Germany's economic minister Rainer Bruederle who tried to "rainer" on Greece's parade (and since it has been sunny in Greece today, it was quite a golden shower) by saying Germany "does not intend to give a cent" to Greece.  Of course Money McBags isn't falling for that sleight of language, knowing that Greece wants euros and not cents, so it was only an idle threat by Herr Bruederle.  Also, some guy named Jean-Claude Juncker (and one can only hope he isn't a bond sales man because Juncker bonds would be a name almost as unfortunate as if Mary Turdy sold bottled water, hence Turdy Water) who heads a group of euro-area finance ministers is soothing the market by saying “We’re telling financial markets: Look out, we’re not abandoning Greece." Money McBags has been saying all along that Greece isn't going anywhere (well unless the Anatolian plate keeps moving westward) and the EU will be there to bail them out regardless.  This Greek default hysteria has been a more overblown news story than Tiger Wood's love of filth or anything having to do with tea baggers that doesn't involve Kim Kardashian.

In stock news, Apple has announced that April 3rd will be the launch of their unfortunately named iPad (no word on when their super powered iPad, to be known as the Max-iPad, will come out to sop up sales) while financials continue to shoot up like Robert Downey Jr. in the 1990s.  The market is in full blast off mode as the economy is not getting worse today, just getting sideways.

In small stock news, everything is fucking up so good on you for owning anything that is publicly traded.  Money McBags promised to take a look at NTRI the other day after their craptastic guidance and he has finally had a chance to go through their call.  The stock is down 50% in the past 3 months after a massive rally on expected sales improvement.  Unfortunately, performance has not accelerated as hoped as investors remember that fat people are fucking lazy and thus are not apt to sign up for dieting even if they feel that the economy is getting better (though to be fair, NTRI costs less than actually buying groceries, but the up front costs are prohibitive for some).  NTRI's Q was actually not too bad.  Without one time charges they earned $.18 on a shrinking sales decline of only 7%.  These numbers were better than estimates with the company also earning $14.5MM of EBITDA in the Q and a delicious $69MM of EBITDA for the year.  The stock traded down though as their guidance for Q1 was so far below estimates that estimates needed an electron microscope to see it.  The company said that ad rates in Q1 have gone up by 50% to 100% in some cases as companies come back into the advertising market and drive up prices for everyone.  They guided to $.10 to $.13 for Q1 eps and analysts were estimating $.54 eps.  That is a bigger let down than for a gold digger who married into the Madoff family.  Not only is that guidance bad, but they said earnings will be negatively impacted by around $.17 in the Q with 60% of it coming from the marketing spend uptick and 40% coming from sunk costs to build out their retail channel.  So even if we add back those one time charges, guidance would have been around $.30 or still way fucking below estimates.  Revenue guidance is for around $155MM which is only 10% below expectations but the company said their retail sales partnerships other than Costco (Walmart, Walgreens, Old Country Buffet) posted disappointing and immaterial results.  While Nutri System D (geared towards diabetics) performed well and they saw new customers sign-ups flat and not down for the first time in over two years, their profitability crumbled like a Taco Bell Chalupa in the hands of one of their target customers.  Look, I'm no Norman Einstein but if you want to sell shit to fat people, why not sell some fucking Oreos instead of diets?  Really.  It's like trying to sell an agoraphobic Super Bowl tickets instead of indoor furniture.  Either way, the company is back down to where it was in October before the anticipation of better things to come.  That said, if we step back for a second and look at the company, it's actually not a terrible buy right now.  Earnings guidance is basically flat with the midpoint being $1.07 for the year, so it is trading at 15x that.  NTRI has a 4.5% dividend yield and spits out a ton of cash.  The company is trading at an EV/EBITDA of around 6x last year's EBITDA and with guidance for 2010 in the same range, the multiple should be the same.  Sure they have not grown in a while (while pseudo competitors like MED are growing like weeds on anabolic steroids), and sure they are facing huge headwinds and uncertainties with more expensive marketing costs and their retail sales programs belly flopping from the high dive, but the time to buy companies with decent track records, good returns, and solid balance sheets, is when every one fucking hates them.  NTRI has fixed some of their operations and still has solid brand equity and remains profitable.  It may be too early to get in to this, but it is worth keeping on your radar as this country will remain chock full o' fat people and thus there will always be potential customers (though if I were NTRI, I would partner like fuck with insurance providers and businesses as a way to get employees to lose weight and thus get premiums and high risk patients down).  Anyway, do your own research here but more than anything, enjoy the weekend.

2/24/10 Midafternoon Report: Bernanke channels his inner Greenspan and promises to keep rates low until the next bubble

Dizzam, Benny B went in front of the House Financial Services Commitee today and let everyone know that rates will be kept low for a more "extended period" than a menometrorrhagia sufferer.  Despite last week's back and forth between Bernanke and his henchman Thomas "T-Ho" Hoenig about the language used by the Fed in their minutes (and Money McBags would vote for Esperanto just to switch things up), Benny B held to his guns and let congress know he isn't going to raise rates until he sees the whites of the recovery's eyes (or the P in their GDP).  Bernanke also said he believes the recent uptick in business growth was just an inventory restocking which is exactly what Money McBags has been yelling through the gold-plated window of his ivory tower for the past several months.

Bernanke stated: “As the impetus provided by the inventory cycle is temporary, and as the fiscal support for economic growth likely will diminish later this year, a sustained recovery will depend on continued growth in private-sector final demand for goods and services." (Bolding is from Money McBags, multisyllabic, excessive, and painfully boring verbiage is from Bernanke as apparently he gets paid by the snore).

Bernanke cited the diminishing skills of workers who have been forced into long term unemployment, the current deficit, and Hannah Hilton's apparent cinematic retirement as concerns potentially inhibiting a full recovery.  He did say he expected the unemployment rate to drop to 7% by 2012, but he didn't say that it was likely going to be as a result of a massive numerator shift caused by those currently longterm unemployed workers starving to death in the new Dust Bowl, or aptly named for our times, The Capital One Mortgage Bowl:  What Used to Be in Your Wallet?  Bernanke also said that inflation would be "subdued" for some time as the US printed so much money that investors are still trying to count it to figure out exactly how much there is, so until that time, the market will remain blissfully ignorant.  Call it the "Too Big To Count" theory. 

In other macro news, prices of new homes fell surprising everyone except for the 15MM to 20MM unemployed Americans.  Despite the government extending the tax credit for first time home buyers, purchases still declined by 11% and fell to their all-time low as any first time home buyers had likely already taken advantage of the tax credit last year by rushing in to buy before the previous deadline.  Therefore extending the tax credit was like offering lunch to the Nathan's Hot Dog Eating Contest contestants immediately after the final gag sounded.  There is currently a 9 month inventory of houses on the market and 3MM more houses are forecast to be foreclosed upon this year which is great for vermin, but not so great for the economy.

In stock news, Dollar Tree destroyed their analyst estimates as if those estimates were Joanie's rectum and they were Chachi after a blue-balled night of doing body shots off of Pinky Tuscadero.  DLTR beat estimates of $1.44 eps by $.08 thanks to better gross margins and gave guidance well above analyst estimates for Q1 and the full year with EPS slated to be $3.96 to $4.23 for 2010.  They also generate a ton of cash and for those who have been on the planet Melmac for the past few years living off of toasted feline (and to be honest, if it were Jayde Nicole's "cat" being served on Melmac, Money McBags would immediately build a spaceship) and aren't familiar with the company, they sell incredibly cheap shit in a recessionary environment.  They are now trading at around 14x 2010 guidance but this environment for them should be as profitable as the guy operating the lifeboat booth on the Titanic or whoever was selling bullets at the Alamo.  Money McBags has not followed DLTR as closely as he should have, but the story makes sense and the valuation isn't horrible.  They'll probably trade down tomorrow after today's jump, but this stock is worth investigating further.

As for small caps, CTGX reported their quarter last night and it was inline but their guidance was better than Money McBags was expecting.  Money McBags previewed ther quarter the other day and was perfectly content with their release last night as he was just expecting more of the same for now in their core business and that is what he got.  Their revenue for the Q was down 19% with equal declines in their solutions and staffing business.  Honestly, Money McBags can't do anything but yawn about this as it is completly irrelevant to the story as he previously outlined.  As long as the core business doesn't blow up (and there is really no reason it should), the EMR business CTGX is in should provide the real growth for this company over the next 3 to 5 years.  This was Money McBags favorite quote from their press release (he'd quote their call, but it was fantastically bland, like a primetime sitcom or anything written by that Michael Crichton guy):


"Looking further out, with the billions of dollars in federal stimulus money for EMRs from ARRA, Medicare, and Medicaid still unspent, we expect demand for EMR implementation support will steadily accelerate as these funds become available and access to the credit markets opens up for providers.  Based on our deep EMR experience for large providers and communitywide health information exchanges, we are confident in our ability to secure significant new EMR work over the next three years, particularly as the 2014 deadline for having systems meeting meaningful use criteria in place draws closer."  (Bolding again from Money McBags).

That is pretty much all you need to know.  Now guidance for 2010 is for eps of $.46-$.56 on 11% revenue growth.  So they are trading at around 15.5x the midpoint of guidance and they actually see their staffing business picking up into the year and have begun hiring.  Also, their balance sheet is cleaner than the grout on germaphobe's tiled bathroom floor and they are buying back shares.  There is not much reason for the company to take off right now, but EMR is coming so this stock is the definition of buy and hold, especially as it isn't horribly priced (it isn't all that cheap though).

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.