Archive for May, 2007

Vegetable Arbitrage

Baby carrots are hot right now. So hot. Chicks love them. Metrosexuals love them. This why they’re hot: uniform appearance, small, cute, and crunchy.

At your local grocery store, baby carrots command a price premium — normally around 100% — to regular carrots. However, it turns out that they are made from “culls, which are carrots that are too twisted, knobby, bent or broken to sell.” Not only that, they “are made out of a variety of carrot known as the Imperator. They are bred to grow faster and ripen quickly, and because of this, they only have 70% of the beta carotene of a normal carrot.”

Recommendation: Go long carrots and short baby carrots. We expect the pricing spread to narrow as regular carrots are repackaged as babies. Eventually, all non-snowman-production-related carrot consumption will involve baby carrots and, at that point, they will be priced like regular carrots.

Save These Hot Boobs From Cancer – TRUMPED!

Only a few short months after announcing our Save These Hot Boobs From Cancer (STHBC) campaign our idea has been pirated by real live people. “For the Love of Boobs” was kicked off in London this month with these bus adds creating a boobylicious buzz all over town.for-love.jpg

If there was any doubt that this campaign was designed specifically to preempt our imminent launch of STHBFC I suggest you look at the facts:

Our premise was two fold a) Have a catchy title that made explicit use of the word ‘boobs’. b) Deploy a collection model based on our primary research into hot boobs:

“The best people in the world at getting/raising/borrowing/stealing money are smoking hot chicks. Chartible organizations need to penetrate the industry leaders in solicitation— beautiful women. A first mover will have an enormous market opportunity.”

For the Love of Boobs has leapfrogged our own clever titty cancer launch and now we are playing catch up. Following our advice they then hired Sophie Dahl as the spokeswoman. She is famous for her raunchy perfume adds that were banned from the streets of London. In Paris (where they were not banned) they were famous for sending homeless men into a frenzy. Those are the kind of boobs we need to employ if we hope to put an end to breast cancer.

This deliberate plagiarism is calling into question LoS’s entire business model. Until now we had assumed that coming up with genius business plans and investment ideas and then writing about them online = profits. Apparently we were wrong, we have initiated an extensive internal strategic review to figure out who got it wrong, who hired the guy who got it wrong and then to fire both of them and start getting it right. We will be back to you with the results on our next quarterly call.

Until then you should probably go buy some hot boobs t-shirts to tell the woman you love that sure you care about her, but mainly you care about the health and safety of her “groceries*”

*Insert any noun here and add an “s”. Everyone will know what you mean.

Bored? What about a drink? Or an incredibly helpful survey?

In order to more efficiently exploit our subscriberholders, we need to know more about them. In this vein, we urge you to take this reader demographic survey. We promise there will be beer and alcohol involved. And strippers*.

*Strippers are conditional on you doing the survey within the confines of a participating strip club.

Quick Serve Restaurant Righteousness: CKE Restaurants

Burgers aren't all I eatCKE (NYSE: CKR), franchiser and operator of Carl’s JR and Hardee’s, gets it. CEO Andy Puzder of CKE wants to give people delicious food, health concerns be damned. In doing so, he demonstrates the crucial tenant of “don’t listen to what your customer says, listen to what your customer does.”

My opinion is that the media is the main supporter of healthy eating. We’re certainly not hearing it from our customers,” said Andrew Puzder, who is the CEO of CKE Restaurants, the parent company of Carl’s Jr. and Hardee’s.”And [surveys] show that while consumers say they want to eat healthier, what they actually want is a big juicy burger,” Puzder said during an interview Tuesday with

Puzder said he will continue to use edgy advertising, such as the infamous Paris Hilton ad for Carl’s Jr ., to make the brand stand out in consumers’ minds.
Indeed, while bigger competitors like McDonald’s, Burger King and Wendy’s are rushing to introduce salads, fresh fruits, low-fat yogurt and chicken wraps in an effort to appease an anti-obesity lobby that blames fast-food menu for the nation’s battle with the bulge, Puzder makes no apology for selling what he called “decadent” food.

Consider the “Original Six Dollar Burger” on the Carl’s Jr. menu. It consists of a charbroiled, 100-percent Angus beef patty with two slices of melted American cheese, lettuce, tomato, onions, pickle, mustard, mayonnaise and ketchup on a toasted sesame seed bun. Total calories:1,010. That’s almost half of the recommended daily calorie intake for an adult.

Recommendation: Giving the people what they want, ignoring the hysteria of the media, sexually provocative advertising, thickburgers. How can we not be long CKE? Additionally, it’s strong satanic fundamentals make it a candidate for inclusion in the LoS Satan’s Portfolio Index, which would further stimulate demand from all those institutions who would be forced to stick CKE in their portfolios.

Hat tip to reader Dan

Best Sentence I Read Yesterday on Blackstone and China

China to Reinvest Bubble Proceeds in New, Larger Bubble

From Kevin Depew’s piece on China and Blackstone. Later in this piece is this gem “Anyway, it’s a good deal for Blackstone, because nothing says ensured profitability, prosperity and success like giving up an 8% stake of your firm to communists.”

Corn Too Expensive? Turn Pigs into Ethanol

The WSJ yesterday reported how pig farmers are using fatty non-corn based substitutes to feed their pork assets as a response to surging corn prices. Corn prices are surging because the US Government thinks what the people want more than anything is to give money to large agribusinesses, like future Satan’s Portfolio member Archer-Daniels-Midland (NYSE: ADM). The domestic production of corn is directly subsidized. Corn based ethanol production is further subsidized. Sugar faces import tariffs but sugar cane is a far cheaper and more efficient feedstock for ethanol production. Lastly, the US gov straps a tariff on imports of sugar cane based ethanol from Brazil. What does this add up to? 4 sentences and a recipe for lucre for corn producers…and pig farmers.

The staid thinking would be that pigs must be turned into delicious bacon and pulled pork products and thus the pig farmers should switch from the more expensive corn to the cheaper substitute feeds to continue to supply these vital end markets. But there is a huge opportunity for pig farmers who think out of the box, which will in turn benefit the supply and demand situation for the entire pork industry.

If people want ethanol, then give the people ethanol….made from pigs: Piganol. The technology is still under development and we are under a myriad of NDAs so we can’t speak to the science behind it but it’s a fact that piganol is on it’s way. The picture we provided in our previous article was from an actual field test and the bike not only gets great mileage, but the only thing it pollutes is bacon. The firm developing the product has achieved some important milestones indicating enhanced viability of a piganol based consumer energy source.

Recommendation: We maintain our “Delicious” position on Bacon and increase our rating on piganol from “Suspicious” to “Delicious”.

Motivated Prostitutes, the Opposite of Lazy Unions

Italy has prostitutes and these prostitutes have rights. One small Italian mayor is trying to eclipse those rights. Last week he passed a law making it illegal to obstruct or slow traffic for the purpose of soliciting sex. The soliciting sex part is fine, it’s the obstructing traffic part that concerns him enough to slap the offense with a €50 fine. Well the prostitutes of Padua had enough so they decided they’re not going to take this sitting down, they are going to take this lying down, on their backs. The upset ladies are protesting by offering sex for the low low price of “on the house.” That’s right, to protest this injustice they are going to bang, constantly for zip, zilch, zero, nada, goose egg, perf – perf, 0 euros. The women participating will be wearing pink ribbons to let their customers know. Sidenote: These are just the kind of girls we need for the Save these Hot Boobs from Cancer campaign.

When unions get wronged, mad, or bored they protest by REFUSING to work and they STILL get paid. Then there’s prostitutes, when they get pissed they get even by STILL going to work and REFUSING pay. That is getting it done. There is the one small problem which is that this method of protest doesn’t really set up the right incentive structure: “So what you’re telling me is you’re going to have sex with me for free until I repeal this law? And if I repeal this law then you’ll go back to charging me? Ok, yeah let me think about what my best option is but first why don’t you get in my car so you don’t get a 50 euro ticket you pretty little thing.”

Even though sometimes they’re not the smartest I’m still long hookers and obviously short unions.

Quotes Entirely Relevant to Investing 05-20-07

Why would the majority favor policies that hurt the majority? … The majority favors these policies because the average person underestimates the social benefits of the free market, especially for international and labor markets. In a phrase, the public suffers from anti-market bias.
Bryan Caplan GMU Economics Professor

Past Quotes Entirely Relevant to Investing

Reader Email: Baller or Mini-Baller?

From reader “Butters” in the suicide capital of the world:

Jalen Rose of the Phoenix Suns recently commented on ESPN that without Amare Stoudemire they, “gotta find a way to get it done.” I immediately began to wonder: Is Rose a baller or a mini-baller? His command of the mini-baller language obviously indicates mini, but he does pull down 1.5MM a year and is by definition a basketBALLER.

Is there some forum where public figures can be judged on their mini-baller status? If not, albeit off-topic, I believe LoS’s market leadership in mini-baller affairs would make them a prime candidate to initiate such a forum. Make it happen.

We’ll proceed on a case by case basis. Jalen Rose is most definitely a baller, he can say “Get it done” because the man has done a lot of getting it done in his life. He probably got it done with 4 girls hotter than any you have ever seen simultaneous with his appearance on ESPN. Plus, as you point out, he is a basketBALLER on the grand stage of the NBA, so even if you stick to the epistemological roots of the term, he is a baller. This analysis cost you $4,999. Please send your check to the house to the right of, right next to

Pox Infested Blankets for Time Warner

This degree is purely honorary and it showsAccording to this ABC News article, Time Warner had this to say at last week’s National Cable & Telecommunications Association conference:

[My] favorite quote of the week came from Richard Parsons, CEO of Time Warner Inc., speaking at the annual National Cable & Telecommunications Association conference in Las Vegas.

According to Reuters — a fact that may give Parsons plausible deniability — Parsons said, incredibly, “The Googles of the world, they are the Custer of the modern world. We are the Sioux nation. They will lose this war if they go to war. The notion that the new kids on the block have taken over is a false notion.”

No one can say for sure, but the fact that the Sioux are all dead indicates that the Sioux didn’t quite win the war. I guess it really depends on what your definition of “win” is. Mine would include “not being exterminated with pox infested blankets” and “not having my land taken away and being forced into concentration camps in Oklahoma” and also “not being all dead by the hand of the white man.” I guess that makes me a purist.

Recommendation: When management doesn’t even know when they are about to be genocided, it’s probably time to short. Short Time Warner (NYSE: TWX). A catalyst for doubling down would be any raid on Google (NASDAQ:GOOG) initiated by Time Warner which results in the slaughter of 300 Googlites and one of Sergey Brin or Larry Page.

Hat tip to the value creating Newmark’s Door.

Better Ways to Spend $7.4 billion than buying Chrysler

  • Donating $1,000 in malt liquor money to each member of the US homeless population
  • Making Spiderman 3 24.67 times
  • Drowning a stripper by making it rain with $7.4 billion in singles. Sacagawea singles.
  • Buying decaying shark corpse art for all your closest friends. Your 1,000 closest friends assuming you get a discount for buying decaying shark corpses in bulk (we have little information on the dynamics of the decaying shark art market).
  • Purchasing Manchester United, Arsenal, AC Milan, Real Madrid, the New York Yankees, the Boston Red Sox, the LA Dodgers, the Chicago Cubs and the New York Mets with enough cash to probably buy half the NHL.
  • Lifetime bottle service
  • 1.75 billion golf balls to prep for that management consulting interview question
  • A money bonfire

Unions are the Best: Part 0.000002

I’m back and fired up about organized labor again.  In their most recent display of genius employees at Chrysler have been attempting to secure financing in order to fund an employee sponsored bid for the automaker which is in being sold by the parent, Daimler-Chrysler (NYSE: DCX).  They claim that the interest of the employees would best be served if they themselves were the owners of the business.  I think this is the best idea I have ever heard.  I would love nothing more than the employees to buy Chrysler (Ed Note: too late, as the denizens of the 7th circle of Hell, Cerberus just acquired the Chrysler for $7.4bn), realize they are completely uncompetitive because of their own retirement benefits and wage structure and then proceed to lose billions of dollars while they sit around, point fingers and refuse to give up their ludicrous pension and healthcare benefits.

I think we should mobilize the capitalists and entrepreneurs of the world to help these employees along.  They deserve to be financially responsible for the disaster they created, they earned it, literally.  I am announcing a campaign to raise money to help these people buy their P.o.S. company.  I pledge $1,000.  Who’s with me?  Just think to yourself – how much would I pay to be part of a comedy of errors that bankrupts the UAW and embarrasses unions forever?  Then make a pledge.  Remember the money you’re pledging won’t get you a piece of Chrysler equity – it’s a pure donation.  I have however arranged for pledging members to get the rights to the reality TV mini-series “My Little Squirrely Union Boss” which will air immediately after “The Real World Detroit”.  These rights are likely to be worth division by zero percent more than the Chrysler equity anyway.

Quotes Entirely Relevant to Investing 05-13-07

I cannot give you a sure-fire formula for success, but I can give you the formula for failure, which is: Try to please everybody.
Herbert B. Swope

Past Quotes Entirely Relevant to Investing

Long or Short Capital Reports Q3’07 Results

Long or Short Capital’s fiscal 3rd Quarter ended on 4/30/07, and the company reported its results in a press release:

Mr Juggles: “Morning all. The third quarter was a transitional one for Long or Short. We took part in initiatives which had a negative short term impact on our financials, but which will position us for a higher level of long term sustainable earnings. Additionally, we put less focus on unadulterated traffic growth and more focus on user interaction. Lastly, we worked with our customers to squeeze working capital down to more efficient levels to drive cash flow. Any quarter would have been disappointment following the milestones we were able to blow out of the water in Q2’07, but I am proud to say that I think management proved in Q3 that we will not pander to short term financial metrics, unless it will increase value to subscriberholders, in which case we will pander to short term financial metrics.

Sequential same store traffic, our measure of organic traffic, showed a 5% positive trend against Q2. Considering that last quarter was our historical peak, it means this quarter is now our historical peak, and this is, clearly, historical. Our proprietary “Eyeball Monetization Conversion” ratio, a non-pageview measure of revenue generated per customer, decreased from $18.43 to $14.49, expected due to a scale-back in static advertising and other strategic initiatives which I will address later. Our EMCr still improved 67% on a year over year basis.

We generated earnings per subscriberholder of $0.91 compared to $2.12 in the second quarter and $0.60 in Q1. We generated $947 in revenue for the quarter, a 685% increase year over year, and slightly down sequentially. Our dosey-doe with Google Adsense and Yahoo Publisher resulted in yet another switch, this time from Yahoo to Adsense at the beginning of April. We made the switch due to our dissatisfaction with the relevance of Yahoo’s ads, as well as cost-per-click levels which were sub-twenty cents. We will continue to dynamically adjust to changes in the contextual ad market.

Text link advertising remains the stalwart of our topline, but it experienced a diminution. We sold a full load of Text Link Ads inventory in the second quarter. Subsequently, management determined that a substantial portion of that ad inventory was being delivered at sub-market rates with unreasonable contractual terms. We elected to reduce the ad inventory sold through that channel from 10 links to 1 link. This had a negative $350 impact on our topline. Management believes it is in Long or Short’s long term best interest to hold back supply while pushing for Google Page Rank 6, and then seek out premium pricing selectively. If you have the ability to link to us or coerce high page rank friends to link to us, this will help greatly in our efforts to achieve Page Rank 6, and only further the growth the amount of money we dividend to our readers and get us a step closer to feeling ok buying iPhones for our children’s stuffed animals.

We had one successful CPA campaign which we launched late in Q2 with Everybody’s Gonna Get Laid Except You and followed with “Buy Your GF Flowers Now. Get It Done“.

Our subscribership increased from 508 to 1012. Approximately half that is organic growth and half that resulted from a change in the way Google Reader shows up in susbscriber stats, namely that it does show up now.

Our free cash flow is something I am really proud of and thanks to the good work our finance department did in reaching out and shaking changes out of our customers (laughs), those slow paying mother (expletive), (laughs) (inaudible), we generated free cash flow of $1,417, an increase of 200% sequentially, and higher than our cumulative free cash flow up until the beginning of this quarter. We set a target on last quarter’s call for working capital to run in the 30-35% range and we like the progress we were able to achieve in just one quarter. We are exploring uses for our cash which include but are not limited to investments in regional financial humor producers, acquisition of competitors, complicated structures involving SPEs that would allow us to mislead potential investors, or one really nice corporate pen.

Transition doesn’t sound sexy, but let me tell you, it will be. By way of example, we are like that 7 coming out of college, you know the one, brunette with an ok body ok face and has never really put it altogether. Two years out of college, she is exercising twice a day, not-eating three healthy meals a day, she blondes her hair and learns how to get it done with makeup, and now she is a 9 plus and everyone is bidding up her assets. And how does she get that done? She transitions. And that is what Long or Short is doing, transitioning. Thanks for your time, and have a great night.”

Top Articles from the Third Quarter

  1. Four Simple Steps to Becoming a Thousandaire
  2. Jacob, Son of Isaac, the First Value Investor
  3. Adjusted GPA on a Pro Forma Basis
  4. Pomegranate Capital Thinks Women Can Run Money Better Than Men, Is Wrong
  5. Crazy Person or Bluetooth Headset?: The Home Game
  6. The Market, She’s a Bitch
  7. Dogs Can Smell Fake DVDs and Other Malaysian Lies

Top Articles from the Second Quarter

  1. Vertizontal Consolidation
  2. Stop Global Warming, Make Emissions More Delicious
  3. 2×2 Matrix: Less is More
  4. Accounting in My Refrigerator
  5. Joe Theismann Presents Monday Morning Investing
  6. Critical Mass Supplier
  7. Kaiser Falcon Eyes

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 Q3’07
Income Statement

Contextual CPC Revenue $229
CPA Revenue $109
Static Ad Revenue $594
Other Revenue $15

Total Revenue $947

Cost of Sales $19.55
SAAP Income $926.9

Balance Sheet

Cash $1962
Accounts Receivable $302
Inventory $0.00
Prepaid Marketing/Hosting/Reg $146
Accounts Payable $0

Cash Flow Statement

Operating Cash Flow $1417
Capex $0.00
Dividends $X.00

Performance Metrics

Visits 65,290
Pageviews 133,960
Clicks on ads 282
Subscribers by Email 159
Subscribers by XML 853
Inbound Links per Technorati 394 from 148 Sites
Technorati Rank 27,274
Inbound Links per Google ~399 sites
Google PageRank 5

Past Results (due to our reliance on SAAP, previous unaudited financial results are not reliable)
Long or Short Capital Q1’06 Results
Long or Short Capital Q2’06 Results
Long or Short Capital Q3’06 Results
Long or Short Capital Q4’06 Results
Long or Short Capital Q1’07 Results
Long or Short Capital Q2’07 Results

Also here is a look at our Google Spreadsheet Financials spread out quarterly. As you can see, we strictly adhere to SAAP.

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