Long or Short Capital

Gisele Bundchen is the richest, most powerful and the most currency-savvy supermodel in the world. Ben Bernanke is the current head of Fed and an afficianado on helicoptering. Below is a short excerpt from a debate between Gisele Bundchen and Ben Bernanke on the topic of the US economy, the weak dollar and the sub-prime loan crisis. Hosted by Jim Lehrer.

Jim Lehrer: First question for Gisele. Gisele you’ve recently announced you will no longer accept payment from modeling jobs in dollars. Can you talk about that decision?

Gisele: Well I was partying at Bugee in London recently and an American was trying to grease the bouncer to get in. He dropped one of the dollars he had in his hand on the ground and the bouncer looked at him and said. ‘Hey, pick up that trash’. I thought it was funny because the same guy had just thrown his cigarette butt on the ground and the bouncer didn’t seem to care about that. I got to thinking – are cigarette butts more valuable than dollar bills? So I changed my policy to protect my assets. Like gold and oil my hot assets have intrinsic value and are immune to inflation, I thought my contracts should reflect that.

J: Ben, your rebuttal?

B: I believe that the Federal Reserve’s success in reducing and stabilizing inflation and inflation expectations is a major reason for this improved economic performance.

J: Ok, good one Ben, but if inflation is under control why is everyone selling their dollars?

B: The Federal Reserve is committed to maintaining low and stable inflation and I’m very confident that we’ll be able to do that.

J: Genius. Gisele, back to you. Exactly how hot are?

G: Well that’s interesting because I’ve been trying to decide that myself. My old answer used to be “pretty f*cking hot”. But when I tried to have my assets insured the insurance company wanted a “more meaningful agency rating”. So I showed my assets to S&P and they rated them AAA which I felt was pretty good until I found out subprime loans have the same rating. Now I’m just a dumb model but come on I’m WAY hotter than a basket of subprime loans –

J: Great points. Ben, would you rather have a basket of subprime loans or have Gisele show you her assets?

B: Decisions of the Fed are made in conjunction with all the members of the board and I am not in a position to comment on future actions. But I will — YES.

J: It was an either or question.

B: I know. My answer remains YES.

Fin

Do you see this? This is the Book of the Dead. All of you are going to be in this book someday, have you thought about that? You’re going to die and all that’s left is your name in this book. So what do you want to do between now and then?”
A Catholic pastor

Past Quotes Entirely Relevant to Investing

PetroChina’s value in US ADR: ~$500bn
PetroChina’s value priced at Shanghai IPO two days later: ~$1,000bn or $1 trillion dollars

Alibaba’s value priced at IPO: $9bn
Alibaba’s value priced in Hong Kong after first day of trading: $26.6bn

Long or Short Capital’s dividend discount valuation in US: $241,315
Long or Short Capital’s valuation post listing in Shanghai: $?? bn

For some time, we have felt that the market was not giving us credit for our Asian exposure. In fact, given the number of times we have exposed our self in Asia and to Asians, we are surprised we have not received more attention, especially from the relevant authorities. Our upcoming Shanghai A-shares IPO should rectify this situation and ensure that we garner the attention and valuation that we deserve.

I’ve always felt that macroeconomics was not economics the way astrology is not astronomy.
M. Hodak of hodakvalue.com in a post on Marginal Revolution

Past Quotes Entirely Relevant to Investing

Felix Salmon’s Market Moves blog has seen the light and has created a one-off pseudo dividend policy for his readers, loosely modeled off of Long or Short Capital’s own dividend policy.

This is actually the eighth quarterly dividend that Long or Short Capital has paid, which is all the proof I need that this is an excellent business model. Readers of Market Movers are therefore hereby invited to send an email to blogonomics@gmail.com, stating the payment that they wish to receive. At the end of this week, the senders of the five lowest bids will receive the sum they requested via PayPal.

While others may pratter on about game theory or strategy, LoS will not bore you to death with any such thing. We submitted a completely dominant bid that will likely out dominate all other bids. Furthermore, in collecting this dividend we can offset our own substantial divident costs and use the money saved to make investments which will generate substantial returns.*

*Disclosure: These returns are contingent on actually making such investments, which LoS has yet to actually do. LoS modeled returns remain substantial and will continue do to so. If LoS modeled returns start becoming insubstantial, LoS will adjust LoS’s model accordingly, until such insubstantial returns are made to be substantial.

Avocado. A crucial good for delicious sushi rolls, salads, and the king of mole, guacamole. Avocado crops were partially destroyed by the San Diego fires.

More than 20,000 acres of avocado trees in northern San Diego County have been lost, at least a third of the state’s crop, with another 15,000 acres threatened by flames, emergency officials said.

State farmers usually plant about 62,000 acres of avocados, and the industry is worth about $276 million annually, said state Department of Agriculture spokesman Jay Van Rein.

Recommendation: The hysteria may be dying down, but we think it’s still a great time to go long Avocado. For those who don’t want exposure to the latin snacks market, it would be appropriate to hedge avocado exposure (guacamole) with a short salsa position. We advise buying avocados on, or in, any dip.

Hat tip to reader Terminal Value

Anyone who heeded our advice squeezed tremendous hypothetical returns out of the citrus trade.
Mr. Juggles

Past Quotes Entirely Relevant to Investing

Long or Short Capital’s third quarter of fiscal year 2007 closed on July 31st, 2007. After reviewing our financials, we have determined that the quarterly dividend will be at the formula level of $0.80 per a subscriberholder as of 7/31/2007. To qualify, all you need to be is a subscriber, either by XML or E-mail, as of 7/31/2007. If you were not, you will not be eligible.

For more information on how to collect your cash or cash equivalent dividend for Q4, please refer to our Dividend Policy. Given our float of 1216 subscriberstakes (as of 7/31/2007), a 5% growth assumption and our trailing twelve months total of dividends of $3.78 per subscriber, our current capitalization is $241,315 using a dividend discount model.

Top Articles from the Fourth Quarter

1. How to Say All Their Money is Gone
2. Motivated Prostitutes, the Opposite of Lazy Unions
   
3. Zimbambwenomics and Mugabe Efficiency Theory
   
4. If Only Water Wasn’t So Fattening
   
5. The Ring of Greenspan
6. I’m Calling the Top, today. My ten signs
   
7. Vegetable Arbitrage
   

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 FY’07
Income Statement

Contextual CPC Revenue $861
CPA Revenue $236
Static Ad Revenue $2483
Other Revenue $84
Total Revenue $3668

Cost of Sales $78
SAAP Income $3437

Balance Sheet

Cash $2914
Accounts Receivable $463
Inventory $0.00
Prepaid Marketing/Hosting/Reg $142
Accounts Payable $0

Cash Flow Statement

Operating Cash Flow $3146
Capex $0.00
Dividends $X.00

Performance Metrics

Visits 247,156
Pageviews 509,143
Clicks on ads 1224
Subscribers by Email 195
Subscribers by XML 1021
Technorati Rank 36,949
Inbound Links per Google ~403 sites
Google PageRank 5

Past Results (due to our reliance on SAAP, previous unaudited financial results are not reliable)

Long or Short Capital Q1’07 Results
Long or Short Capital Q2’07 Results
Long or Short Capital Q3’07 Results
Long or Short Capital Q4’07 Results

Long or Short Capital’s fiscal 4th Quarter ended on 7/31/07, and the company reported its results in a press release:

Mr Juggles: “Greetings. We like numbers because they are objective. As the saying goes, opinions can lie, but numbers can’t. So let’s start the call off with some numbers. Number of quarters in Long or Short history with more revenue than Q4 2007? 0. Q over Q revenue growth? 850%. Q over Q traffic increase? 360%. As you are accustomed to hearing, this quarter was our best quarter ever by any metric, even made up ones like Mugabe references per a perf words.

The actions collectively taken in the third quarter, paid off handsomely. If you were to make a list of what we set out to achieve you could probably check off every single thing; we actually tried to do this but we found out that the list we wrote everything down on had been lost. We are working on this, and know that we take keeping track of lists to be among our top focuses in H1’08.

A lot of our subscriberholders have been concerned about our accounting situation and our delayed delivery of our Q and K. Let me tell you, we have been concerned too which is why we have mostly been ignoring the situation and hoping that it would go away. This did not turn out to be an effective solution and we are still having unable to reconcile our trailing quarterly results with our fiscal year results. What we did find out is that this situation is entirely consistent with SAAP, and thus, it is no impediment to filing.

Ssiztah, SSST, our measure of organic traffic, grew 19% sequentially, compared to only a 5% sequential improvement in Q3. Our proprietary “Eyeball Monetization Conversion” ratio, a non-pageview measure of revenue generated per customer, rebounded to $15.56 after dipping to $14.49 in Q3, as we the gains we picked up in text link ads more than offset our losses in referral revenue. Our EMCr increased 110% compared to Q4 2006.

Earnings per subscriberholder was $0.99 and we think the $0.90 to 1.10 level is sustainable. Despite its sustainability, we still expect to beat that going forward. That is how we do. We generated $1209 in revenue for the quarter, and as I mentioned earlier, that was an 850% increase year over year. The upside in our business is largely leveraging traffic growth over our advertising.

We see some additional opportunities for growth in text link ads which are not sensitive to traffic swings, but we expect short term volatility due to operational issues with one of our text link ad suppliers (Text-Link-Ads.com). Their ads are not functioning properly, and the vendor has been unhelpful and disinterested in assisting our tech team in rectifying the issue; our last 5 e-mails have gone unanswered. This is the same vendor who has in the past sold our ads on a discounted basis, without permission, at permanent and unalterable rates.

This pricing strategy of theirs is antithetical to our strategy of planning for future growth. Given their contractual 50% share on the revenue the ads they place generate from our site, this represents a fire sale of valuable site real estate. We are 100% against discounting and have no intentions to be a discount provider of satirical financial research. As such, we are actively exploring discontinuing our relationship with this ad vendor due to the fact that they are “sneaky terrible”.

Long or Short is as ad saturated as we are comfortable with. Our comfort level, in regards to this, is dependent on opportunities for marginal revenue and is, frankly, easily swayed. We do expect a pickup in CPA initiatives as the holiday season approaches, but the form of those initiatives has not firmed yet.

Our subscribership increased from 1012 to 1206. As could be expected, our FCF decreased to $1,026, after last quarter’s timing boosted $1,417. As to the excess cash we had on the balance sheet at quarter end, because of some accounting fraud issues we are finding that the best use of the cash on the balance sheet will almost certainly be on acquiring an appropriately prestigious corporate pen. We are still exploring what corporate pen is most consistent with producing the levels of prestige commeasurate with what Long or Short Capital subscriberholders would expect. Additionally, we expect the accounting fraud issue to have an impact of well under one million [inaudible] and as such, we do [inaudible] to get into it further.

Returning to the metaphor I used on the last call, we were that 7 coming out of college, and we spent Q3 and Q4 exercising, investing in our wardrobe, blonding our hair and not-eating three healthy meals a day. Now we are a 9 and everyone wants us. The question is, what do we do now that we have successfully transitioned? The answer? We embark on a career as a CNBC or Fox Business News reporter or anchor. With our ten cent head and our million dollar body, this is our clear next step and Long or Short is pursuing this to its fullest. We will update you on our efforts in this vein on our next call. Thanks and let me say on behalf of management that we will continue to make ‘Long or Short Equity Ownership Experience. â„¢’ as amazing for you as it is has been for our yacht collection.”

Top Articles from the Fourth Quarter

1. How to Say All Their Money is Gone
2. Motivated Prostitutes, the Opposite of Lazy Unions
   
3. Zimbambwenomics and Mugabe Efficiency Theory
   
4. If Only Water Wasn’t So Fattening
   
5. The Ring of Greenspan
6. I’m Calling the Top, today. My ten signs
   
7. Vegetable Arbitrage
   

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

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 Q4’07
Income Statement

Contextual CPC Revenue $283
CPA Revenue $7
Static Ad Revenue $891
Other Revenue $28
Total Revenue $1209

Cost of Sales $19.55
SAAP Income $1190

Balance Sheet

Cash $2914
Accounts Receivable $463
Inventory $0.00
Prepaid Marketing/Hosting/Reg $142
Accounts Payable $0

Cash Flow Statement

Operating Cash Flow $1032
Capex $0.00
Dividends $X.00

Performance Metrics

Visits 77,671
Pageviews 157,529
Clicks on ads 491
Subscribers by Email 195
Subscribers by XML 1021
Technorati Rank 36,949
Inbound Links per Google ~403 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
Long or Short Capital Q3’07 Results

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

The call was supposed to start at 3:30pm. It’s 5:28 as I type this, and the blood that has been pouring out of my ears and onto the print-out of your deck is the direct result of actions you took. I would offer that this is not a desirable event in your capital raising efforts.

I was mostly minding my own business, which generally is what I mostly do, telling the conference coordinator my name and such. When I was finished with her, I was mentally prepared to spend the next 10 minutes readying for the call so I could ask you some amazing questions about bad debt expense or perhaps about your ability to pass on increases in commodity prices to your customers, especially significant when one considers your untoward exposure to tungsten.

When I was done with the conference coordinator, I was put into the call, dropped into that nebulous space that just hangs as I just hang. It was here where it happened. Where you did IT. His plodding, mellow, secretly insidious words began butterknifing through my ear into my brain’s grey machinery.

Oh, father and mother, sister and brother

You slipped James Taylor into one of my ear drums. His words crush free will, their internal beat an urge to commit the most heinous crimes.

If it feels nice, don’t think twice

It was this moment, where I could no longer think twice.

Just shower the people you love with love

My hands took to trembling and my ears took to pleading. Mercy. Some things, JD, are so horrible, you can’t unhear them. We are are your ears, please trust us. End us. End the sounds. We can never go back to what we were JD, every sound in the future will be tainted by what has happened today at 3:31pm.

Show them the way that you feel

The cheap metal tip jutted into my right eardrum, injecting its green ink into my brain. With a conductorial flurry, I struck the the tip cross-handed into my left eardrum. The pain was replaced by a liberating silence.

Unburdened, I was ready to receive your pitch. And then there was darkness.

Maybe your investment proposition was a good one, maybe it was a bad one, but with the congealing maroon pool dancing across the top of your prospectus, and sensation making a flight (from my body) to quality, it doesn’t seem likely that that will be known.

Dear Alan,

During your time at the Fed, you were famously circumspect. Now you can’t shut up. Please do so.

Yesterday, I was reading an article on Bloomberg detailing a recent talk you gave. You made a lot of points, probably a few too many. Let’s address a few.

• “Obviously there is a limit to the extent that obligations to foreigners can reach,” Greenspan said in a speech in Washington yesterday. The dollar’s decline to its lowest since 1997 may be “an indication America is approaching this limit.”

  Thanks for the crack analysis, Alan. I don’t think I could have figured out that foreigners have finite resources. Also, I thought the dollars weakness might be somewhat related to the fact that you have encouraged rampant inflation by 1) artificially suppressing interest rates and 2) rigging the government statistics to make sure said inflation didn’t appear to the public other than in their weekly bills and (lack of) savings accounts.

• Greenspan first predicted that investors abroad would tire of financing the U.S. current-account deficit in a Nov. 19, 2004, speech in Frankfurt. “A diminished appetite for adding to dollar balances must occur at some point.”

  Well thanks for addressing this issue while you still had some clout.

• Greenspan also said yesterday that the August surge in the cost of credit following increased defaults on U.S. subprime mortgages was an “accident waiting to happen,” given that investors were pricing risk too cheaply.

  Again, Alan, I think you’re trying to rewrite history here, no? Were you not on watch while interest rates were held down. Does the Fed not have oversight of the banking and lending system? So I guess you are pretty much responsible for not forcing lenders to focus on credit quality.

• The former Fed chief said central banks increasingly appear to have “lost control” of market interest rates beyond three to five years of maturity. Before departing the central bank in January 2006, he said the lack of increase in long-term Treasury note yields during a period of rising Fed rates was a “conundrum.”

  Alan, dude, this is not a conundrum. You don’t affect long-term interest rates any more because the markets don’t believe you. You are the central banker who cried wolf.

In conclusion, I would appreciate it if you would shut up, Alan. Ben has a hard enough job and is mucking it up enough already without you wading in every three days to provide running commentary. Your sonorous book has compensated you richly. Please retire to somewhere secluded, stocked with Ayn Rand pinups and preferably without a phone.

Sincerely,
Mr Juggles
CEO and Head Commissary
Long or Short Capital

Jack Donaghy: Lemon, I’m impressed! you’re starting to think like a businessman.
Liz Lemon: A businesswoman.
Jack Donaghy: I don’t think that’s a word.
From 30 Rock

Past Quotes Entirely Relevant to Investing

Yes, I realize that a sieve is used to separate desired objects from unwanted material. However, it also has colloquial meanings: “in metaphor and simile, sieve may often be used to refer to things that are leaky…In particular, in hockey, a goaltender who lets a lot of goals through is sometimes compared to a sieve.” This is is a vehicle people that people should put their money into? A SIeVe?

Recommendation: Do not invest in vehicles (SIVs) that are named after leaky containers or goalies who allow too many pucks into the net. That is dumb. Do not even ask about Super SIeVes. And we won’t mention anything about SLUT either.