Long or Short Capital

California has looked down the fiscal precipice, and decided, in what will likely be its last act before it is broken off into the Ocean, that it will be to try and pay people with monopoly money. While former big 3, current Detroit 3 automakers have a certain distinctive bailoutable je ne sais quoi [Spanish Editor: CHE¿], top 10 global economies apparently lack that very same certain distinctive bailoutable quality. Alaska on the other hand, its keen efficiency likely stemming from its walrus population, is entirely bailoutable. So long as it is being bailed-out of rather than just bailed-out:

My decision was also fortified during this most recent trip to Kosovo and Landstuhl, to visit our wounded soldiers overseas, those who sacrifice themselves in war for our freedom and security… we can ALL learn from our selfless Troops… they’re bold, they don’t give up, they take a stand and know that life is short so they choose to not waste time.

…

If I have learned one thing: life is about choices!

And one chooses how to react to circumstances. You can choose to engage in things that tear down, or build up. I choose to work very hard on a path for fruitfulness and productivity. I choose not to tear down and waste precious time; but to build up this state and our country, and her industrious, generous, patriotic, free people!

…

So I choose, for my State and my family, more “freedom” to progress, all the way around… so that Alaska may progress… I will not seek re-election as Governor.

My mother always told me “When the going gets tough, you gotta get the fuck out…to progress” so it’s good to know that at least one elected official agrees with Ma D. Thank you Sarah Palin! She also told me if you want to build something up, you have to set it free by quitting your job with it. Mom was the best. Until she left us for lucrative book offers, TV positions and our continental Uncle Sam.

Recommendation: After Alaska’s bail-out, I can only imagine that Alaska will be on a roll. But will this Alaskan roll be superior to the California Roll? Because of the avocado overlap, the key angle for analysis will be the freshness of the salmon that is used in the Alaskan roll. For now we think the Alaskan roll looks promising but our analysis is subject to change based on the day of the week, the ability to source fresh salmon and the reputation of the sushi-chef.

Marijuana Firms are pushing Californian municipalities to tax them.

This week, Oakland began sending out ballots in a special mail-only election on four revenue-generating ballot measures, including Measure F, a tax on medical marijuana.

…

The clubs see the ballot measure as a way to help the broader cause of medical marijuana.

“Criminals don’t pay taxes,” said James Anthony, an attorney for Harborside Health Center, one of the dispensaries. “Law-abiding citizens do. We are nothing if not law-abiding citizens.”

The strategy at work is what is known as “Crack Strategy.” Crack Strategy can be broken down into four phases.

1. First one’s free: Give your customer product for free.
2. Get’em hooked: Wait for your customers return. If they are not suitably addicted, repeat Phase 1.
3. Kill your competition: Your profits are surging, but competition remains and is a constant threat. You must crush them.
4. Buy an Island: A place where you can retire to. Phase 4 is almost never reached before death.

Recommendation: California medical marijuana dispensaries are currently in Phase 1 of their Crack Strategy as they attempt to get the Government hooked on their tax money. As we know the Government has a very addictive personality. If the weed firms succeed in attaining addiction to the extent we expect, Phase 3 will occure and a rash of related violence will commence as larger firms seek to crush their competition. This would lead to a surge in demand for hemp garrotes, brass hackey sacks and kabongs (explosive bongs). It is here where you can build your position ahead of the inevitable gap up in prices. Phase 4 is a pipe dream so it shouldn’t be used in any of your modeling.

Everything is black and white. A sparse room lined with white tiles. Decrepit but also clean in a clinical way. Women are being herded into the room from a narrow entryway.

Close up on a woman’s famished face. Her eyes are tired, her cheeks gaunt. But she is strikingly beautiful. Her eyes are bright blue. A startling KABRUPT sound as the pipes are carrying something into the room. Water starts showering on her from above, her hair now pulled back in a tilt.

Voice comes over a tinny loudspeaker haltingly:

“Women! Do not be afraid! Let the Infusium 23 enter your hair!”

Floating bottles of Infusium 23 descend down dripping a viscous shampoo into our heroine’s hair. As the Infusium 23 hits her hair, it ceases being black and white and transforms into full color. She is seen shaking her hair in slow motion as its lavishness becomes apparent. Her whole face looks energized and she flashes a large knowing smile.

Narration provided by Miley Cyrus:

“Don’t let your hair be put to a dry death. Liberate your hair with Infusium 23’s new (moistur)ologie line of shampoos and conditioners. Infusium 23’s (moistur)ologie line corrects, restores, and structurizes your hair. It infuses hair with 23 essential pro-vitamin and treatment ingredients, and helps restore moisture for soft, silky feel. Infusium 23 — commit genocide against dry hair.”

Close up on a bottle that is coming towards the screen and growing in size.

End scene

Rejected advertising for Infusium 23.

Early morning bid/asks

Sentencing for Bernie Madoff: 57-61 years
Total number of Madoffs sentenced to jailtime by 2011: 1-3
“Life”* remaining for Madoff: 7-9 years
“Life”* remaining for Walter Noel: 3-4 years
Attempts on the life of a Noel male in the next five years: 2-3

*Life here refers to whether someone has not been deemed “legally dead.” As we know from the Kenneth Lay situation, if you time it correctly you can be legally dead but also still living. A great way to free yourself from jail time.

Infectious Greed posted about a blog which is harvesting 1930’s WSJ news pieces and headlines. The natural inclination from reading these frequently spot-on pieces is as a commentary on how history either repeats or rhymes. This natural inclination, just like the natural inclination to be overwhelmingly attracted to Gadget from Rescue Rangers, is wrong. History doesn’t repeat or rhyme, IT RAPS. And this is how it raps.

Jay-Z rapped 99 Problems to this historical current

The year is ’09 and your world is gone
You’ve just realized you’re alone, broke an’ one dumb pawn.
The financial forces y’all trusted are total shit,
That Ben behind the Fed curtain is not legit.
I ain’t trying to see no returns erased with Me.
We’ll head now to your situation, cut to the chase quickly.
Broker calls, “Son, do you know why your statements say zero”
‘Cause I’m young and I’m dumb and from Toledo?
Do I look like a mind reader sir, I don’t know.
Are you jerkin’ me off or should I guess some mo’
“Well you was overweight emerging markets like a schmoe.
Now you’re broke, and can’t afford your new McHouse or car.
Are you hidin’ any cash in your mattress, I know a lot of you are”
‘I ain’t done nothin’ wrong, it is someone else’s bullshit.’
“Well do you mind if I look at your finances a little bit.”
‘Well my car is leased and my house is underwater,
And I know my rights so the Govt gonna bail me out o’ there.’
“Aren’t you dumb like Nails, you some type of retard or something?”
Or a real mouth-breather or somethin’?”
Nah, I ain’t no rere, I passed my GED,
Smart enough to work for Ohio’s DMV.
“We’ll see how smart you are when the squid lord comes”
You got eleven trillion problems and squid is THE one.

Tinderbox Capital LLC, an incendiary investment management firm and subsidiary of Long or Short Capital LLC, announces its first fund, Dangerous Fund I.

Dangerous Fund I will specialize in positions that lack defensible absolute return theses. Assets will be allocated so as to leverage Tinderbox Capital’s expertise in trades of which they have little understanding, so-called “dangerous” trades. These trades will include vega convergence bets, investments in opaque levered pass-through instruments, naked red/black hedge trades, and proprietary coin-in straddles. Their due diligence process will include a rigorous “bottoms up” analysis that is comparable to the processes of Fairfield Greenwich Group and other top investment management firms.

Tinderbox Spokesman Johnny Debacle:

“We see a clear need for an investment vehicle for people who want to lose all their money. Competitors out there have lost on average 30-40% in this cycle. We think we can lose more, especially with our so-called ‘dangerous’ trades. Our trades are dangerous because we don’t fully understand them. Frankly, we may not understand them at all. Take a vega convergence bet wherein we form a pair trade with options with two assets with similar, but not the same, underlying. We make that trade and we’re pretty sure something happens, we just don’t know what that is. Does anyone? I may not have the details of that trade correct either. That is a core strength of our investment process.

Scores and Scores of bottoms up due diligence will strengthen everything we do. We aren’t content to just sit on our haunches, while someone else just dances about doing work on our junk [bond portfolio]. No, we plan to do that and more, which is what makes our “bottoms up” approach so powerful. We will spend money and get the most bangs for your buck. We will get our hands dirty and our pinkies stinky if that’s what it takes to better understand the trades we make and ascertain their appropriateness.

We know that young risk-seeking investors demand places to put their money to work, places where they can allocate $10,000 and potentially lose it all. This is the niche that Dangerous Fund I will fill. We give you all the risk you will ever need and guarantee that we will potentially lose it all. Additionally, Dangerous Fund I will be appropriate for investors whose portfolios are overweight return and underweight risk and are thus seeking proper balance.

We just need your money to fuel our fire.”

Tinderbox Capital LLC is an investment firm that offers a focused set of investment products to a global institutional and high net worth client base. Tinderbox Capital LLC is currently structured to directly manage strategies in so-called “dangerous” trades. Despite this structure Tinderbox Capital is uniquely unqualified to manage your money well and uniquely qualified to manage your money poorly. You would do well to simply light your money on fire instead because at least then you get the benefit of the heat it generates. Or you could just wait for Dangerous Fund II which Tinderbox Capital LLC is in the process of registering. It will seek to disintermediate the middleman from the process of lighting money on fire by physically igniting investors’ dollars for them. It will charge a traditional 2 and 20 fee structure.

It seems that the Mexican cocaine industry has responded to Chilean cocaine producers’ efforts to win the 2010 Copa della Coca. Mexicans responded to the Chileans’ cocaine baggage by smuggling cocaine in sharks.

The Mexican Navy says it has seized more than a tonne of cocaine hidden inside the carcasses of frozen sharks.

Armed officers found slabs of cocaine inside more than 20 sharks aboard a freight ship in the Gulf coast port of Progreso in Yucatan state.

Recommendation: We still think Chile’s creativity and ability to craft “the beautiful coca”, makes them the odds on favorite for the 2010 Copa della Coca, but you can’t count out Mexico or Bolivia. Perennial favorite Colombia is likely to have an off year, but it will come down to the draw.

Author’s note: This story was especially personal for me and difficult to write. As many of you may know, my Mexican grandfather was smuggled into this country in a shark in 1952. That experience would go on to shape his entire life. When he was young, before the shark experience, he was gregarious, charming, the kind of hombre who could saunter into a room and turn it into a fiesta. But after being smuggled in a shark, he was much darker and he’d often drift off into thought mid-sentence, never to return…as if swallowed by a shark. When we’d go to the beach, sitting enjoying churros, his mood would change as soon as I approached the water. “Don’t get eaten by any sharks, Johnny! If you do you’ll never be the same!” he’d shout warningly at me as I stepped into the ocean. I blame that shark for why I never really knew my grandfather.

HT to FuManChu

Operator: Good morning Ladies and Gentlemen, welcome to the Piratery Corp Inc first quarter update call. Please note that today’s conference is being recorded. Following the presentation, we will conduct a question and answer session. I would now like to turn the conference over to Captain Bigdee Mofapalous.

Captain Bigdee Mofapalous: Thanks be to ye operator wench. Firstly, if it be pleasin’ ye, I would indeed be likin’ to apologize for not releasin’ our Q4 numbers to ye sell-side sons of merbitches. But there be good reason!

Ye see, we failed to report our Q4 due to certain affairs pertaining to our accounting crew. Ye may be awares that on a piratery ship, the sailors be keepin all CPAs n’ all accountin’ staffers in a dingy, dragging behind the boat. Aye it be true, to be keepin them from contaminating the crew with their ways. But we be a courteous folk, and as such, we always dispensed their fair share o’ the rum, as well as one thoroughly depreciated whore, for the purposes of retainin their manity. Well, they got on with their drinkin’ n’ whorin’ to such excess, that they fullly created a reinvention of the double-entry accounting system, if ye know what I be sayin!!!! Whilst all this debitin’ n’ creditin’ was goin’ on and about both entry points, they was entirely forgettin’ to mind the astral calendar and let us pirates be knowin’ that fiscal year 2009 had ended indeed! Verily, an honest mistake which ‘as henceforth been fully rectified, astrally, if ye know what I be sayin’. HAR HAR. HAR!

Aye, and to show ye the good faith, we were intendin’ to be havin’ a PRE-release of our earnings, followin’ on our no-release of Q4 and fiscal year 2008. But we had been bein a-worried that any premature earnings release would spook ye investors, not knowin’ that it just be somethin that be a-happenin’ to a man so accustomed to whorin’ and not knowin’ that our situation held an entirely reasonable explanation! We be apologizin’ for these ‘ere delinquencies as enumerated above.

Secondly, I now be addressin’ our trends, which ‘ave become much less grave in character since our Q3. Aye the headwinds ‘ave abated, and now be blowin’ in an easternly fashion. We no longer be havin’ to tack for all hours o’ the day, a far more sailable sea than than the choppy waters o’ Q3 n’ Q4. Margin hatches ‘ave been batted down, but such’s pirate life in times like these. We be seein’ a resolute stabilization across the board. The wenches still be wenchin’ weakly, but the rate at which their wenchin’ was weakenin’ hasn’t worsened. When it comes to wench segment, we take what spread we can get, and they take what we be givin’ them!!!!

Lookin’ to the horizon over yonder, we’ve not seen nary a sight of the Spanish fleet that aligned itself with Captain Mopling Downstarable, one o’ our biggest competitors on all seven seas. We not be ablin’ to guarantee that nothing ruinous may happen to our fleet, except by assurin’ ye that we be the saltiest piratery dogs in this ‘ere entire piratery industry and that we not be interestin’ in doin’ anything but guttin’ that blubberours blabbering Downstarable from groin to gills!! We look to be flyin’ his intestines on our here flag ship! Expectations bein’ what they be, we point ye towards believin’ that we deliver a firm 4500 in dubloons for revenues in 2009, and earnings per share o’ 1.2 dubloons. Rapewise, 2800 be a good number to model about in ye spreadsheets, with our wench fleet at 2350 after some dispositions of the routine variety.

Operator wench kindly release the lines!

Operator: Your next question comes from Douglass Fairfundoffunds of Credit Suisse. Your line is open, please proceed.

Douglass Fairfundoffunds: Just wanted to say, great quarter guys. Just wanted to say, great quarters guys. Just wanted to say, great quarter guys. Just wanted–

Captain Bigdee Mofapalous: Operator wench, please cut off the line o’ the broken sell-siborg, the automaton be in possession o’ an infernal glitch.

Operator: Certainly sir. Our next question comes from the line of Morgan Crumpacker. Mr. Crumpacker, your line is now open.

Morgan Crumpacker: Hi, guys. I just want to echo what Doug said in congratulating you guys on a great quarter. I totally agree with him.

Captain Bigdee Mofapalous: ARGH BE GETTIN’ ON WITH IT.

Morgan Crumpacker: Sure. Just a quick question for my model. When you put our your 2007 guidance in 2006, you indicated that 2009 should be the time in which you had fully incorporating the Silver Train acquisition onto your raiding platform. But looking at your ratios for early 2009, I am having trouble seeing whether it’s flowing through or not. How should I think about that?

Captain Bigdee Mofapalous: Aye, your answer be arrivin into the pea brain on ye shoulders in the form o’ a recipe from a good friend o’ my own, one Captain Bethusela Dabringalo Scrotum. To paraphrase, in a time long ago, pirates be long lost at sea, lookin’ for wenches to commence wenchin’ with. They come across one Morgan Crumpacker and decide to be makin’ him into a wench accordin’ to the specifications o’ the sea. But after takin’ to rapin and abusin his carcass, they be hungerin’ fo’ a mighty feast! This be the recipe those sailors did employ indeed! A dead Morgan Crumpacker, a large cauldron, a casket of rum, and equal measure potato beer. Boil off Crumpackers skin, add salt to taste, and stir his carcass to keep it from stickin! Operator wench, next question.

Operator: I am showing no further questions.

Captain Bigdee Mofapalous: Aye, may ye pleasures be manifold n’ may ye enemies die in a ship fire!

Operator:With that, we conclude today’s teleconference. Thank you for joining us today.

Ahmadinejad has won the Iranian presidential election. Critics of his victory point to this piece of crockery on leaked elections results or to the mismatch between the results and the polling that had occurred prior to the voting. They may even cite the massive amounts of protests as further proof that the Ahmadinejad is not the president, as the voters do not believe the outcome reflected their votes. Proponents of Ahmandienjad as well as students of zimbabwenomics understand that Ahmandinejad is the president and will be the president. The outcome of the election and the context in which it occurred are entirely irrelevant.

In our research report entitled, Using Zimbabwenomics to Win Elections, we outlined the ways in which zimbabwenomics can be used to better understand election outcomes as follows:

Under normal political analysis, there are two result paths from an election, only one of which is victory:

1. Win the election
2. Lose the election

From a Zimbabwenomic perspective, there are also two result paths from an election, the difference being that BOTH lead to victory:

1. Win the election
2. Lose the election, but actually win the election, because your opponent pulls out

Ahmadinejad understood these basic concepts, and applied them to the Iranian election. He created an offshoot of the second zimbabwenomic path wherein he lost the election, but actually won the election, because he controlled the voting process and had the backing of the Supreme Leader.

As you may know, America had been the rising zimbabwenomic star of the last two years. But these recent events demonstrate that Iran now positions itself as a potential alternative to America as the center of zimbabwenomic thought.

Morningstar (NASDAQ: MORN) does a lot of important things, and produces services that people pay them for and other stuff. But none of that will be nearly as important to their share price as the fact that Morningstar employs this woman Catherine Odelbo:

Catherine Gillis Odelbo is president of equity research for Morningstar, responsible for Morningstar Equity Research, Financial Communications and Publications, Morningstar Real-Time Data, and Morningstar® Indexes.

Odelbo joined Morningstar in 1988 as a mutual fund analyst and from 1995 to 2000 served as senior vice president of content development, as well as publisher and editor of stock and closed-end fund research. In 2000, she was named president of retail, overseeing all print and online products for individual investors.

Sounds impressive, right? All that jazz is irrelevant too.

The key to Catherine Odelbo, and the reason you should be so long on Morningstar, all comes down to the remunerative powers of OO. Odelbo is pronounced “Oo-dle-boo”, making it the single most powerful name in the corporate world. That she has risen as high as she has is almost definitely solely due to her devastating front-back OO combo she sports, obviating the entire rest of her resume. Sets you up with an OO, slams it home with a BOO.

Recommendation: Long MORN. Our recommendation on all things Odelbo that exist to today, or will exist in the future, is long. E.g. if she ever gets securitized, or if you find some other way to invest in her, do so without hesitation.

There are some fundamental laws of advertising. One, I think is try and spend effort advertising to potential customers, rather than on people who are not potential customers. Maybe it’s the other way around, I always get it confused. I came across this while on Ars Technica’s Opposable Thumbs gaming site. Direct your attention to the right hand margin:

Ars Technica is aimed at computer enthusiasts, Apple zealots, Microsoft fans, humans interested in science, humans interested in gaming, stop me when I get to something that indicates a woman would ever visit this site, programmers, open source advocates, the list goes on. According to a survey from last year, 2% of the readership is female. So 98 cents for every dollar (whether in terms of advertiser’s actual dollars or the publisher’s pageview inventory) spent on this ad was essentially lit on fire. If it were on the main page.

But only probably 2% of that 2% would be likely to click on this article in the gaming section (called Opposable Thumbs), a review of a game called Prototype which features a paragraph describing it thusly:

Battles between your character and the military feature bodies and cars flying this way and that as civilians are treated as little more than shrapnel. To fill your energy you can grab anyone in the world and “consume” them, first killing their body and then absorbing their body into yours. The game gleefully counts up the number of military and random passers-by you kill in each mission.

Sounds like Gossip Girl mixed with the Bachelor dressed up in a pink bow!

Recommendation: Now, this comes down to Google (NASDAQ: GOOG), not Brooks Brothers or Ars, since it’s Adsense and that ad is pay-per-click. How can Adsense still target so poorly so often? Short Adsense.

In TV Ads, Chrysler, GM Diverge on Image Repair:

General Motors — once so mighty, it made half of all new cars in the United States — has humbled itself before the American consumer. Its new television ad begins with a man’s voice intoning: “Let’s be completely honest. No company wants to go through this. . . . General Motors needs to start over to get stronger.” The ad, a montage of images seemingly meant to show everyday American life, is part of a multimedia campaign called “re: invention” that includes a corporate Web site, where consumers can track the company’s progress through Chapter 11 bankruptcy.

“Because the only chapter we’re interested in,” the GM ad concludes, “is Chapter One.”

And that’s the problem. The Chapter you need to be writing is the chapter titled “Cars People in America Want to Buy, Made At Prices at Which We Will Be Sustainably Free Cash Flow Positive”. That chapter still doesn’t seem to be in your book.

More simply, the OLD GM, y’know the one that filed for bankruptcy protection a few weeks ago and the one that since 1980 has hemorrhaged cash like it was Prince Alexei after a Rasputin beatdown, looked like this:

While the new GM looks like this:

Spot the problem yet, Private Motors?

The campaign is the result of consumer research beginning last December, when the company’s executives were pilloried for haughtily coming to Washington — on a private jet — to ask for aid. After that fiasco, GM asked consumers: What do we need to do to regain your trust?

“They just kept giving us the same feedback — that we need to be brutally honest,” said Jay Spenchian, GM’s executive director of North American marketing strategy. “We need to ‘man up,’ was one of the terms that came out of the focus groups.”

I repeat, you’re a company not a lover. GM, I know that this it is difficult to even conceive a reality where this would be the case, but ideally people want to buy your cars, not get into bed with them. You don’t need to man up, or regain trust to make us open our wallets. You need to cut costs and make things people want. They just don’t understand that their goal is to make money. Nothing else.

Recommendation: Short GM. But give them credit where credit is due. They will probably bang a couple insecure freshman chicks with their sensitive-guy “trust” shtick. These girls will be drunk, and later full of regret. They’ll move GM into the friend zone during their Psych 101 Lab section a few days later. But good for GM, another notch on their belt and maybe the best they can hope for.

I was getting into a cab and I may (or may not) have cut in front of a man who hitching for a ride. He said, and I quote, “You penis.” I was taken aback. I know myself. I am self-aware and I, anonymous other man in the city, I am no penis. I am a dick. So I said, without missing a beat, “I’m not a penis, I’m a dick. Get it straight.” Now put aside questions about how likely it is that my wit is that quick, sharp and nuanced. Focus on my package. Dick vs penis.

To be a “dick” is not always bad. Certain situations call for it. Waiting in lines requires it, whether those lines be traffic, or for takeout or taxis. Getting your best possible deal on a car? Dickhood is a must for the circumspect auto-shopper. Attractive female assets? The dick status is practically a down payment on fantastic strange. Sure, you don’t want your friends or loved one to think you are always a dick, but at the end of the day, a dick is more likely to have a great res at fantastic restaurant with a sexy broad on his arm than a Schmoe.

On the other (left) hand, a “penis” is irredeemably lame, a flaccid creature that brings none of the good qualities of a dick to the table while retaining most of the bad. A penis is immature and ineffectual but nonetheless a douchebag. A dick is aware of what it is, a penis thinks it is a dick and thus is an erroneous prick. “That guy over there with the double popped collars, he is such a penis.”

Recommendation: Long dick, short penis. From an insulting investment perspective, we’d be long “penis” as it should generate higher insult effectiveness returns. As an example, insulting someone with a “penis” can prompt them to onanistically wax for almost 300 words on the internet.