Archive for July, 2006

Foreign Exchange Rates for Humans

  • 15 Gazan Palestinians = 2 kidnapped Israeli soldiers or approximately 1/100th of a young white Alabman woman
  • 0.5 young white Alabman women = 5mm Rwandans
  • 1 Princess Di is worth 1.25 Africas
  • 500 Darfurians are worth approximately 2 US soldiers
  • 150,000 South Asian tsunami victims are worth 1800 Southeastern US hurricane victims
  • 1 JonBenet Ramsey = .738 Elizabeth Smarts
  • 10 US hostages = cargo plane full of “defensive arms”

Quotes Entirely Relevant to Investing

Gold is your chance. Gold is everyman’s opportunity… Every defect in a man and in others’ way of taking him, our agreement that gold has value, gives us power to rise above… The value I gave the gold restrained me, you see, your utility in connection with it. And because of my gold, those at the other tables deferred to my restraint… Gold confers power. Power comes to any man who has the color… That is our species hope. That uniformly agreeing on its value, we organize to seek the color.

-George Hearst, on Deadwood

Past Quotes Entirely Relevant to Investing


Long or Short Announces Q3’06 Dividend of $0.60

Following the release of Long or Short Capital’s Third Quarter financial performance, the company is offering a $0.60 dividend per a subscriberholder as of 4/30/2006. To qualify, all you need to be is a subscriber, either by XML or E-mail, as of 4/30/2006. For more information on how to collect your cash or cash equivalent dividend, please refer to our revised Dividend Policy. Given our float of 161 subscriberstakes (as of 4/30/2006), a 5% growth assumption and our dividends to date, our current capitalization is $22,181 using a dividend discount model.


Sexual Harassment Arbitrage

Attractive people have a unique arbitrage opportunity. All thing being equal, they are more likely to be hired for a given position than a less attractive peer. But all things remaining equal, they are also more likely to be sexually harassed by their superiors than a less attractive comparable employee. This gives attractive people the opportunity to “double dip,” so to speak. They can gain employment and the ensuing compensation by virtue of their looks; then they can compound their returns by getting sexually harassed and filing multi-million dollar suits (see past analysis of Diana Bianchi and Ms. Kobayashi of Toyota).

We recommend that firms re-evaluate the implied costs of hiring attractive labor. It’s possible that external benefits of having an “office hottie” outweigh the expected value of sexual harassment litigation, but we deem this to be unlikely. A study we conducted using sophisticated envelope trend analysis illustrated that an “office hottie” added 20% production growth to a firm vs a comparable employee, but all-in labor costs were twice that of a comparable employee. A firm should be able to achieve an improved cost structure just by hiring less attractive employees. On a long term basis, as markets converge to efficiency, attractive people assets should see declining valuations. On a short term basis, attractive people assets can seek to increase their earnings by wearing suggestive outfits (miniskirts for women, bow ties/suspenders for men) and enticing their superiors.


Quotes Entirely Relevant to Investing

During the first period of a man’s life the greatest danger is: not to take the risk. When once the risk has really been taken, then the greatest danger is to risk too much.

-Soren Kierkegaard

Past Quotes Entirely Relevant to Investing


Long or Short Capital Reports Q3’06 Results

Long or Short Capital’s fiscal 3rd quarter ended on 4/30/06, and the company reported their results in a press release on their site:

Mister Juggles: “Following our best quarter ever, Q3’06 occurred amongst a background of industrial turmoil, rising oil prices, the month of March and global uncertainty. In that context, we are satisfied with our results and if we continue to pour our beakers full of managerial brilliance into this frankenstein we are confident that our Q2 performance will be more predictive of our future results than Q3. While management’s options were underwater at quarter end, a board approved “Put the Options Back in the Black” KERP plan was initiated ensuring that management will continue to be properly incentivized.

We generated cash earnings per a subscriberholder of negative $0.22 a positive increase of negative 46% over last quarter. We were cash flow positive for the 1st time in history with $35.14 of cash flow before dividends and tax distributions; this is mainly attributable to an improvement in working capital. Revenue decreased 38% sequentially, but increased Div/0% year-over-year. We faced both a 50% decrease in our click through rates for our contextual advertising and a 50% decrease in revenue per click. Our suscribership increased from 85 to 161, almost doubling.

Operation Sir-Click-A-Lot was an abject failure, and had no effect on our top line. Traffic wise we performed in line with expectations. The first full quarter at our new storefront @ longorshortcapital.com has proven to be all we expected, and its strategic location between longorshortcapitak.com and longorshortcapitam.com has given us a steady flow of captive readers.

Note that the financials below are unaudited and may contain non-GAAP measures. All numbers comply with Seldom Accepted Accounting Principles (SAAP).

Unaudited Financial Results for Q3’06

Income Statement

Contextual CPC Revenue $71.58
Static Ad Revenue $38.02
Other Revenue $11.00

Total Revenue $120.60

Cost of Sales $15.00
Marketing Expense $50.00
Operating Income $55.60

Balance Sheet
Cash $55.83
Accounts Receivable $88.10
Inventory $0.00
Prepaid Hosting $30.00
Accounts Payable $0
Cash Flow Statement
Operating Cash Flow $82.96
Tax Distributions to Partners $80.00
Capex $0.00
Dividends $X.00
Performance Metrics
Visits 13,950
Pageviews 26,150
Clicks on ads 90
Ad impressions served ~43,874
Subscribers by Email 34
Subscribers by XML 127
Inbound Links per Technorati 108
Inbound Links per Google ~40 sites

Past Results
Long or Short Capital Q1’06 Results
Long or Short Capital Q2’06 Results


Bianchi Downgraded to “Not Hot” by GF

Following the release of our report on Diana Bianchi my gf initiated coverage with a “Not Hot/Pretty” rating:

“She’s not hot. she’s pretty but hot is reserved for much more than what she is. but i’m sure she’ll be digitally altered in your boy magazines and you guys will be perfectly fine with it [editor’s note: and we will be].”


Financial Analysis of Diana Bianchi

Updated 8-8-2006:

What would it take to get you to cheat on Christy Brinkley? The answer is Diana Bianchi, the 19yo woman Brinkley’s husband had an affair with.

Comparable to Mariah Carey, a refined version without the busty PE ratio. Attractive features on the petite side, fit form and youthfulness lead to healthy free cash flow in the intermediate term. While earnings should be relatively stable, the current highly efficient structure will limit margin improvement and limit the upside of this asset’s appreciation. There is tick risk as her smile can be awkward (picture 2) and there will always be an “event risk” loss of youth type event. Also consider that as with any female asset there is always a risk of “the crazy.”

Recommendation: A valuable scarce asset in a heavily demanded market. Long Diana Bianchi but look for an exit point. We also maintain our market outperform rating for Christie Brinkley.

More pics of Diana Bianchi.


Disruptive Businesses: Taxistutes

The low cost carrier airlines have realized the power of selling to a needy captive customer. They price shots of crappy vodka at $10 each and the typical jackals and scoundrels who populate those flights buy them, as do people who want to drink their way to comfort amidst the tomfoolery. Customers have needs, the more trapped they are, the less price sensitive they become. Businesses can make a killing if they can find a way to get the customer exactly what they want in these situations.

Picture this situation: NYC business man, stuck in an NYC cab in the middle of NYC. There is no way he will make it to that meeting downtown with Skadden Arps, where his boss is waiting for him, judging him, and mentally trimming his bonus by the second. His Thomas Pink shirt feels like a $200 noose and his $ sign cuff-links look more like hand-cuffs. Stressed, lonely, rich and surrounded by ethnic people listening to bad music – what this man needs is a good hooker. But he’s stuck in traffic, in a cab! What can he do? Where can he go? If only someone could provide him the service he needs then he could just nut right there in the back seat and feel like a man again. Enter the Taxistute.

Taxistutes would drive around soliciting “rides” for targets who would be screened to have high conversion rates to whoring services (men with money, men without money, men with pulses, Charlie Sheen), then, mid-transit they would proposition the customer. The customer would benefit from high levels of anonymity, convenience and deniability (“where were you honey?” “Oh just taking a taxi home from work”). This would give pricing power to the taxistute. A typical low margin taxi ride of $25+tip and toll from La Guardia to midtown would turn into a high margin $225 + tip and toll with roughly the same cost structure and time (provided that there is both a driver and a fluffer). This will serve to bump valuation multiples for the entire transportation industry and any industry which can put their customer base in captivity. Future markets include airline and train travel, horese carriage rides, and waiting areas at the DMV and the dentist.

Relaxed and ready to get it done


How to Get People to Comment More: A Case for Giant Comments

We love commenters. Not all of them, but we love some of them, especially those which have our names. One of the many riddles we have solved is how to get more frequent non-spam comments. The best way?

GIANT COMMENTS.

I took the html which controlled the “Comments” link which is appended on every post and made the font twice as large. As for the results, I will let empiriscm do the talking. Here is a chart with the number of comments we had per post before our Giant Comment initiative was undertaken, and after it was fully in place. As you can see, the pro-forma C:P ratio is much larger.

Note that that chart was constructed with Microsoft’s Excel, none of this Star Office/Open Office intern level software, so you know those numbers are legit.

Recommendation: Screw going large, go GIANT.


Long Mnemonic Devices

Few things have been as revolutionary as the mnemonic device. Until the 20th century, modern science and mathematics as we know it were impossible because no one could remember their important rules. With the introduction of LEO-GER, SOH-CAH-TOA, and pimp Roy G BV, scientists were finally able to make breakthroughs such as microwave ovens, VOIP and lasers.

Why hasn’t the financial community applied these techniques to improve efficiency and increase memory? Surely, the use of exponentially increased complexity to memorize simple strings can be seen as potential value-add by banks and investing institutions whose main function is to exponentially increase complexity on simple transactions so they can collect a fee on them. (I’m half tempted to syndicate that sentence and charge you 50bps. Maybe I can interest in you some Long or Short Capital CDS products or our algorithimic trading platform?)

Cutting out the middlemen before they get involved, let’s make your understaning of financial terms more whole with the introduction of JDMDFKIF’s:

EBITDA: As Paulie Walnuts would say “EARNINGS BEFORE INTEREST TAXES DEPRECIATION AND AMORTIZATION…Gives the true picture of a company’s profitability.” A good way to remember what it means is to memorize this sentence. Eff Bitches In The Dairy Air.

ARPU means Average Revenue Per User. Artful Robbing, Possibly Useless. You also get a handy description of the value of this metric.

EPS means Earnings Per Share. How can you remember that as a CFA with an MBA from Kellogg? Easy. Eat Padma’s Salad. She won’t mind, she is trying to lose weight so her parents will find her a husband before she is 30 and she can get out of the banking world and into the kitchen. Samosa!

LFL is a term that is synonymous with SSS in certain situations. In other situations, it is not. The best way to remember LFL is this (letters in parentheses are silent): (L)same (F)store (L)sales.

The beauty of this system is that you can use these mnemonic devices to cut through all the typical Wall Street BS and lingo, and mainline the truth into your mini-baller IV. So if you see this:

Comcast lowered its EPS guidance today on news that its LFL growth had turned negative due to a decrease in ARPU. The company also lowered their EBITDA target to the low end of their previous range.

You know that that really means (translation smoothed for context)

Comcast did not eat padma’s salad today on news that its same store sales growth had turned negative due to an increase in artful robbing, possibly useless. The company also effed b*tches in the dairy air.

Recommendation: Unlock the power of your mind with Dianetics. Increase complexity as much as possible at all times; it is the only way to get simple things done.


Quotes Entirely Relevant to Investing

I, at least, do not learn from mistakes. I have to learn from successes.

-Peter Drucker

Past Quotes Entirely Relevant to Investing


An Analyst’s Nightmare

First of all, in response to reader’s questions, you are right: NOTHING I WROTE LAST MONTH SPECIFICALLY APPLIES TO ZAMBIA. Thanks for writing in. Now, back to the topic at hand.

I had the worst nightmare of my life last night. I dreamt I was going to Harvard Business School. I packed my apartment, said goodbye to my roommate, and left for school the next day. HBS was filled with annoying types, attempting to network their way to a decent career. But the worst part of the dream was when I realized that the only reason I was at Harvard was that I hadn’t killed it in the market during the previous year.
Needless to say it was terrifying.


Short Europe

So I’m in Berlin on the day of the World Cup Final and it’s the busiest day in the city since World War II and I think these people hate money.

I’ve been trying to buy a French jersey:

  • Went to big department store but they only carry German jerseys.
  • Went to the largest sporting goods store and “World Cup Merchandise Headquarters” but they are closed because it’s Sunday.
  • There is no one selling jerseys on the street, only lanyards. The supply demand balance in lanyards in Berlin is completely out of whack; I predict a 300% decline in lanyard prices.
  • Went to Nike Town – they are open but they don’t sponsor France, adidas does.
  • Went to adidas brand store and they are open but have 0 supply of anything french; they have been sold out for 3 days. I asked if they knew what FedEx was and they said ‘nine’
  • Tried bribing a guy on the street with 100 euros for the smelly Zidane jersey he was wearing and he told me I was a typical American trying to buy everything. He told me Zidane hates Americans. I said that’s ok because at least he likes money.

Long: Anyone with a brain and ambition in Europe.
Short: Lanyards


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