Archive for May, 2007

More Evidence: Vice is Best

Vice Wins!
Source: NY Post

More evidence, this time from the NYPost, that Vice funds are better than Green or Socially Responsible funds. When you’re goal is to make money, give your money to the guys without scruples.

Wisdom of Crowds: Help Me Short

Here are three sectors with terrible fundamentals:

  1. Autos — No demand. Terrible labor relations. Rising gas prices. EPA is about to crack down.
  2. Paper — China is killing paper pricing.
  3. Housing — As mortgage financing falls apart, so does the housing sector.

The most surefire way to make money shorting a stock would to be to find a company that somehow participated in all three of these known negative trends. Therefore, I appeal to you, the crowd to help me find a manfacturer of RVs made out of paper. Or an operator of garages for paper automobiles. Or a home builder who designs and sells houses made out of paper made out of automobiles.

I am desperate. If these companies don’t exist, perhaps we should start one so we can then short it?

Another Reason Not to Fear the French

Their new president plans to implement controversial legislation by waiting until all his citizens leave for their (long) vacation. Brilliant and yet pathetic, a la meme fois.

Parliament usually is away from mid-July to October, but Mr. Sarkozy has suggested he would call a special session to push through legislation while most of the French are vacationing — and when it would be hard for unions to mobilize them.

The unions warned against it. “Whoever is elected president, if he or she thinks there are things that must be decided very fast, in a flash, and pass them in July, watch out,” said Mr. Mailly of the Force Ouvrière federation. “There’ll eventually be a boomerang effect.”

Absurd. The US equivalent to this would be traders running up the price of thinly-traded and heavily-shorted stocks during August when the entire financial community is out in the Hamptons. Oh wait…

Recommendation: Long summer vacations, short France and the Hamptons.

Going Private’s Equity Private’s Real Private Identity

As you may or may not know, the esteemed Dealbreaker released a blind item hinting at the identity of the anonymous author of Going Private. That hint pointed to Kimberly Kravis, daughted of KKR founder, Henry Kravis. Having developed a website relationship with Going Private which includes internet tea parties, anonymous post swapping, and a friendly give and take, we too have come to know the true identity of the industrious and using-word-a-lotty Equity Private. It is this knowledge that allows us to strike down the Dealbreaker’s false claim of her identity and instead let the world know who Equity Private is through pictures.

Here is shot of Equity Privateer with Armin, her boss.

She goes by the nickname “Birdie”.

A candid shot of Equity Private engaging in one of her most favorite hobbies that don’t include anonymous blogging or being “very wordy”.

Here Equity Private is in the Hamptons after one too many. Never trust a man who wears a mask and steals hamburgers, ladies. If he has no problem stealing a burger, he has no problem stealing your heart.

And here she is at one of her private equity firms soirees discussing deals and getting sauced on expensive drinks. The Debt Bitch is the pink one with the siren-song eyes.

As you can see Birdie comes with a certain amount of pedigree. She has always been an “early bird” doing well enough to get accepted to Hamburger University and later getting her MBA from HBS, in this case the tastily named Hamburger Business School. As we have exchanged emails with Birdie, and gotten to know her, we have found her to be one of the good ones not like that horrible Hamburglar or that Grimace looking purple bastard, so we hope that despite our outing of her real real identity she will continue her noble goal of bettering the world one 5000 word sardonic memoir post at a time.

Readers Please Make a Market

I have a wedding to attend and need to know the correct amount to spend on a wedding gift. They are registered in places online such that I can buy gifts ranging from $10-200 and more than one gift, to achieve the exact basket of flatware, plates, toaster ovens and bedding I desire to give as a gift.

What is the market price to balance the rational desire not to spend money and the rational desire not to insult a friend and his whore of a wife. I’m setting the price at $150 (too much, too little?) for what I should spend and will adjust it for whatever amount the comments indicate, ignoring extreme outliers. I will spend whatever the adjusted amount is as of market close May 9th 2006. Help me find my optimal level of wedding gift expenditure.

Price as of May 9th, 4:00PM: $140, down 15 points since market close yesterday, down 10 pts from its opening level at May 8th 1:45PM, down 5 pts since May 8th 3:45PM, up 5pts from the opening bell of May 9th on light volume

May 15th is Gas Day

From a friend, I received this forward yesterday morning:

Subject: No gas on May 15

NO GAS…On May 15th 2007

Don’t pump gas on MAY 15th

In April 1997, there was a “gas out” conducted nationwide in protest of gas prices. Gasoline prices dropped 30 cents a gallon overnight.

On May 15th 2007, all internet users are to not go to a gas station in protest of high gas prices. Gas is now over $3.00 a gallon in most places.

There are 73,000,000+ American members currently on the internet network, and the average car takes about 30 to 50 dollars to fill up.

If all users did not go to the pump on the 15th, it would take $2,292,000,000.00 (that’s almost 3 BILLION) out of the oil companies pockets for just one day, so please do not go to the gas station on May 15th and lets try to put a dent in the Middle Eastern oil industry for at least one day.

If you agree (which I can’t see why you wouldn’t) resend this to all your contact list. With it saying, ”Don’t pump gas on May 15th”

Chug Chug ChugThe idiocy in this message is rampant. You cannot drop the price of gas by $0.30 by having some small % of drivers effectively defer their purchases a day. Drivers do not even make up the whole gasoline market! And that’s a 10% move in price per a gallon! Also the concept of “protesting gas prices” is akin to “protesting gravity.” These things aren’t set to gouge you, they are set to balance supply and demand for people who need gas even more than you do.

Then we get to the math. There are 78 million “internet network members” and it costs $30-50 to fill up a tank so that it would cost $2.3bn (since when is $2.3bn close to $3bn????) to the “Middle Eastern oil industry”. Except that the avg consumer fills up their tank about every other week, or 1 in 14 days. So if everyone who was likely to fill up their tank on May15th were to not fill up their tank on May 15th, ceteris paribas, there would be a ~$165 million impact. But what would this impact really entail? It’s likely that the majority of the people who didn’t buy gas on May 15th would have to buy it at some point, right? Or else how are the going to get to their job as Chief Pastry Engineer at Au Bon Pain? So say that 90% of that gas is deferred until at most two weeks in the future. Now we are down to a $16.5 million impact.

Who would this hurt? The “Middle Eastern oil industry”? Probably not, whoever that is. The most likely people hurt would be retail gas locations which are frequently run by individual entrepreneurs. These storefronts are are the dominant source of gasoline for consumers. Say there are 150,000 retail gas station in the US. On May 15th, they would have a normal business day except they would lose some small percentage of their normal volume despite having the same overhead costs. This volume would be mostly recouped later in the next two weeks. They would lose money. About $120 each. Way to stick it to the man…the middleman.

Recommendation: In order to combat the FUD of anti-market practitioners, we urge all Americans and all patriots to fill up your tank on May 15th. In fact, fill up all your tanks, your lawnmower, your scooter, your jetski, your gas power snow blower, everything that consumes gasoline should be topped off on May 15th. Let’s see how high we get these prices to go. Make May 15th national gas day. For every person you forward this post to, Microsoft’s Bill Gates will pay you $245 in naira.

Quotes Entirely Relevant to Investing 05-07-07

We Spaniards know a sickness of the heart that only gold can cure.
Hernándo Cortés

Past Quotes Entirely Relevant to Investing

Cinco de Mayo: A Celebration of Kicking a French Debt Collector’s Ass

Mexico's Abraham LincolnMexico was “independent” indepedent after 1821 and none of the relevant dates associated with this independence fell in May. So unbeknownst to many tequila addled revelers, they are not drinking to Mexican independence. No, Cinco de Mayo is the celebration of a man, the Mexican Abraham Lincoln, my buddy Benny Juarez, and his success in dealing with the 18th century credit card countries.

Post 1821, Mexican government was volatile and fiscally imprudent. They didn’t have the tax collection revenue to support all the spending they were doing, so by 1861 their credit score was crap and they were way late on their payments to France, England and Spain. They wanted to handle it the right way, so they called up those countries and let them know “Hey, we can’t make the payments now, but we will work out a payment plan starting in two years so we can get our house in order. We’re good for it, our new president is Benito Juarez and he is basically the shit.” France, England and Spain sent armed representations to Mexico, and England and Spain walked away appeased after some negotiations.

France however planned to foreclose on all of Mexico because that was just how Emperor Napoleon III did things. They came en force and this was back before they were soft. The Mexicans needed to demonstrate to their collection agents that they weren’t gonna go down without a scuffle, and that collecting on their debt was bad business for any credit card country. General Zaragoza, who every US schoolchild doesn’t learn about, led a collection of Indians and Mexican soldiers to fight back and crush a French force that was 15-25x as large. That is an exaggeration but it is true. It was like the Alamo, but if we won and were also Mexican. It was a rough and tumble few years, but this victory, Benito Juarez and later the support of the United States, brought Mexico into good times.

The above is 100% truth 74% of the time.

Short The Hilltop Children’s Center

I'm from space, dude, from SPACEOr at least short the kids graduating from this school. Their teachers have banned Legos on the grounds that they promote capitalistic behavior. These kids are going to have no clue when they graduate when they have to enter the real world which happens to be mostly capitalistic. And every child economy needs lego exchange, well defined lego property rights and functioning lego markets if it ever hopes to experience sustainable growth.

From the article Why We Banned Legos:

[The children playing with Legos] turned their attention to complex negotiations among themselves about what sorts of structures to build, whether these ought to be primarily privately owned or collectively used, and how “cool pieces” would be distributed and protected. These negotiations gave rise to heated conflict and to insightful conversation. Into their coffee shops and houses, the children were building their assumptions about ownership and the social power it conveys — assumptions that mirrored those of a class-based, capitalist society — a society that we teachers believe to be unjust and oppressive.

Recommendation: Short the Hilltop Children’s Center ETF, in size. For maximum exposure to this trade, travel to Seattle and barter directly with the children. Initial research suggests that 1 snack pack can be turned into 4 Ho-Ho’s and 3 apples can be arbitraged for a bag of Doritos AND 6 gummi worms. Ridiculous.

Citibank is the Mini-Baller Bank

Amongst all the deals that are fit to print, Deal Book reported yesterday that Citigroup (NYSE: C) has come out with a slogan that they hope can “Make it Happen” like the tagline of Royal Bank of Scotland (LSE: RBS) has made it happen (whatever “it” is). The slogan? A call to mini-ballers world around, “Let’s Get It Done”.

Cititgoup’s new tagline, “Let’s Get It Done”, could double as a rallying cry for the bank’s chief Charles O. Prince III.

Citigroup is expected to introduce the tagline and advertising campaign next Sunday in the company’s first global branding effort since it was formed nearly a decade ago.

The new tagline and campaign seems to be a call for action at a crucial time for the company and Mr. Prince.

Sounds familiar. Straight from Point 4 of How to be a Mini-Baller:

4. You say “get it done” all the time. You’re not sure what this means, but you know its important, and when you say it . . . you mean it.

This is a clear call to the mini-baller demographic:

Recommendation: The mini-baller portfolio now should have only two stocks in it. RBS and Citigroup. These companies make it happen and get it done, and that’s all mini-ballers need to hear to buy something.

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