When it comes, it comes, so you have to seize it, tame or trick it, beat it into submission, break its neck, take it, hang it upside down, gut it, remove its hide, tan its hide, carve out the post from the tanned hide, submit the carved-out post to the WordPress, hope people like it, and then, if they don’t, well fuck’em.
Me in correspondence with the Epicurean Dealmaker.
Over the weekend, the WSJ had this article on earnings calls being crashed by faux-analyst Joe Herrick.
At least seven times just the past three weeks, a mystery caller has cleverly insinuated himself into the normally well-manicured ritual of the quarterly calls. As top executives of publicly traded companies respond to securities analysts’ questions about their balance sheets, he impersonates a well-known analyst to get called upon. Then, usually declaring himself to be “Joe Herrick of Gutterman Research,” he launches into his own version of analyst-speak.
“Congratulations on the solid numbers — you always seem to come through in challenging times,” he said to Leo Kiely, president and chief executive officer of Molson Coors Brewing Co., on Feb. 12, convincingly parroting the obsequious banter common to the calls. “Can you provide some more color as to what you are doing for your supply chain initiatives to reduce manufacturing costs per hectoliter, as you originally promised $150 million in synergy or savings to decrease working capital?”
Analysts say the caller’s questions, though credibly phrased, are too off-target for a real analyst. It’s more like “consultant-speak,” says a disdainful Bryan Spillane, a Banc of America Securities analyst, a victim of one of Mr. Herrick’s impersonations. Analysts deal with often-wonky financial details, but “savings per hectoliter” rarely comes up.
…
Mr. Schmitz[, a sell-side analyst,] speculates that Mr. Herrick is “some minion” at a consulting firm trying to do clandestine research on companies’ use of Six Sigma techniques.
…
Coke’s caution was evident when Banc of America’s Mr. Spillane, the earlier impersonation victim, posed a detailed question about how much of the company’s currency-neutral operating profit growth was organic rather than coming from acquisitions or cost savings. “We hesitated on you for a minute because as we take these questions we are just trying to make sure that in fact you are who you say you are,” Coke’s chief financial officer, Gary Fayard, said before launching into an answer. “I am the real deal,” Mr. Spillane replied.
Recommendation: Beside multiple digs at consultants by sell-side analysts (Spanish Editor’s Note: che absurdo¿!), the best part is that Joe Herrick asked questions that many companies tried to answer because, well, they were the same kind of inane crap questions that they EXPECT from your typical sell-side analyst. Short the sell-side. Additionally, we are initiating coverage on Gutterman Research at a solid “Do Not Buy“.
HT to Terry
Everything in the universe relates to the number 5, one way or another, given enough ingenuity on the part of the interpreter.
-Principia Discordia (ht: Chris)
Long or Short frequently critiques management teams who lie, obfuscate, and otherwise fail to tell investors the full story. So it’s only right that we point out management teams who have tickets on the Straight Talk Express. During yesterday’s earnings call, Steve Wynn of Wynn Resorts told it like it is.
[Responding to a question as to why Wynn issued equity at $154 at the end of September and then paid a dividend of $6/share on December 10th. Note that Wynn shares had traded in the $80s in June of last year and at $120 yesterday.]
It is the job, and you can take this as a final statement on the subject going forward. It is the job of board of directors and especially of the CEO to take advantage of the market when that market movement is extreme. When a company increases its value by 100% in 60 days, that’s an unnatural movement of value and the market also goes the other way sometimes. These unnatural movements in value, no company gets to be worth twice as much in 60 days as it was before to any intelligent person, so when that happens, we take advantage of it. If everybody is so hungry for shares, we let them have some. If the shares go down, we buy them. And that, that is a statement of policy in this company, period.
Translation: Y’all are fools and so we took advantage of you.
[It] would be nice…we always seem to get questions every quarter from the same five or six people, and you mention there were 200 people on the call, and I was hopeful that somebody new might have a more– a question that attacked our business from a different angle, for example, and if that’s not the case, we’ll say thank you and good-bye to everybody, but we’re always anxious to hear from new people if they are on the call…besides our competitors.
Translation: Why do I keep getting the same 5 stupid questions from the same 5 stupid people every quarter. Someone save me! (But not you, Sheldon.)
Economics…has not truly come to grips with the main difficulty, which is the inordinate importance of a few extreme events.
-Benoit Mandelbrot (ht: Jeremy Grantham)
Translating a Yahoo (NASDAQ: YHOO) CEO e-missive may be a fool’s errand for the average person, but our friends at Yahoo have asked for help and we will oblige them with the application of our propietary translation algorithm to the letter of Jerry Yang.
Corporate Speak
Subject: Building on our strengths
yahoos —
first off, I want to thank you for the great job you’re doing staying focused on executing our priorities. there’s obviously been a lot of talk about yahoo! in recent days and we won’t let it distract us from pursuing our transformation strategy.
roy and I have communicated about the thorough review process our board is going through right now. the board is focused on maximizing the value of yahoo!’s tremendous assets for our shareholders. and it is going to take the time it needs to do it right.
as we’ve said, no decisions have been made about microsoft’s proposal. our board is thoughtfully evaluating a wide range of potential strategic alternatives in what is a complex and evolving landscape. and we’ve hired top advisors to assist through the process.
what’s become clear in the past few days is how much people care about this company. we’ve seen a strong show of support from our users, advertisers, and publishers, reminding us how much they love our products and services. and i’ve heard from many of you — and from other friends and colleagues from around silicon valley and across the globe — that we need to do what’s best for yahoo! and our shareholders. i promise you that the board is going to do that.
the microsoft interest highlights the tremendous strength of the yahoo! brand and assets: our half billion users around the world, our leading products and services, our open ad network, our technology, and most of all, our amazingly talented people.
we have a lot to be excited about and there’s more good news to come. yesterday we announced a digital music partnership with rhapsody and our acquisition of foxytunes, maker of the popular music toolbar plugin. today we launched zimbra 5.0, a next generation e-mail and collaboration suite that’s a great milestone in our open platform and starting point strategies. and stay tuned for exciting announcements next week at the mobile world congress.
as we look to build on the progress we’ve been making, i want to make sure you all realize how essential you are to yahoo!’s success. as this process moves forward, we’re going to keep you informed. your hard work and strong commitment are more important now than ever before.
jerry
Translation
Subject: Building on my fortune
Employees of Yahoo,
Thanks for pretending to focus on work in between sending out your resumes and returning headhunter calls. We know the fax machines are out of toner and are looking into the matter.
As you may know, Microsoft has offered to acquire the entire company for $31. That’s significantly more than our shareholders think we’re worth because, at this point, those guys hate us. We will consider Microsoft’s offer in the context of our many terrible strategic options and our fruitless restructuring plan (note: I may have called this a growth plan last time we spoke).
As mentioned, our strategic options are manifold and we have made some really tough decisions recently, coming to the conclusion that we need to focus on our home page, our search engine, as well as our communication products like email and IM. This represents a new direction for a company that has historically been characterized by its home page, search engine, email, and IM products. So it will take some time for investors to recognize the transformation of the company.
Please know that I value all of you to the tune of almost $2bn (my current holdings). You, our (remaining and less talented) employees are our greatest and (only remaining) asset. So keep up the mediocre work! I promise to update you when my rich friends and I have decided your fate.
The Yang
ps just for disambiguation sake, I do not have a gambling problem. It’s only a problem if you lose.
Editor’s note: This was written early Wednesday before we had seen the daringfireball version. Also, unlike that version, ours isn’t terrible.
All men’s miseries derive from not being able to sit in a quiet room alone.
-Blaise Pascal
I get it. China is big. There are a lot of people there and they are increasingly buying stuff. So when you present an investment to me, it’s not useful to tell me how many people there are in China. You see, I know that already. That’s why I own some Chinese companies already, before you came in here. So when I ask you why I should pay 50x earnings for this company, it’s singularly unhelpful to start off by saying: “Did you know there are A BILLION PEOPLE IN CHINA?” It doesn’t make me want to buy the stock, it makes me want to punch you in the mouth or “decouple” your head from your torso.
I’ll tell you what China also has. A BILLION POOR PEOPLE. A whole billion of them (heck there may even be a TRILLION, why not give them credit and round up) all looking to buy no things with their no money. Stick that in your model and regress it.
Long or Short Capital released this press release this morning:
Long or Short Capital Management intends to stop messing around and realign our fiscal year end with the calendar year end. The confusion the previous misalignment created allowed management to manipulate the firm’s financials and allowed us to report our earnings in such a way as to maximize our compensation. Despite these obvious positive aspects of the previous year end policy, we have also found that maintaining mildy accurate records that correspond to these dates to be slightly hard. This is, as far as we and our consultants can tell, “slighty hard” too hard given our endowments of work ethic and of managerial competence. Thus our new fiscal year end will be December 31st, and we will restate all of our numbers correspondingly in conjunction with the release of our fiscal year 2007 numbers. This does not and will not affect the level of dividends we have granted in the past and no refunds will be given; any such requests for refunds or compensations will be handed off to our counsel, Google Trash and Can. Subscribers will be able to collect their new dividends when we announce them and their onerous conditions. We have checked with our accountants and advisors, and they have informed us that everything we intend to effect is fully compliant with SAAP standards. The management of Long or Short want to thanks our subscriberholders for their continued support in this non-difficult time for the company and also for allowing us to pad our pockets and line the hull of our mega-yachts with carbon fiber. Good day, sir.
It’s a zero-sum game. If you put trades on that worked so well that you bankrupt your counterparty, you will not collect on those trades.
-Jim Keegan, a senior vice president and portfolio manager at American Century Investments (from Calculated Risk)
Investors think Overstock (NASDAQ: OSTK) CEO Patrick Byrne is crazy. That’s why his ecommerce company trades at a 0.3x price to sales ratio while Amazon (NASDAQ: AMZN) sits at 2.3x.
Well, here was an email from the IR from last week: Overstock Appoints James Joyce to the Board of Directors
I am flabbergasted. I mean, when people are questioning your sanity, the ideal response is not to appoint a poet and author from the EARLY 20th century. Is this the man to turn around a troubled internet retailer?
Recommendation: Short OSTK; with James Joyce behind them, it will be almost impossible to invest in OSTK without an accompanying guide to help you understand. This will severely and negatively impact demand from institutional and retail investors alike, who may claim “We love OSTK! We think it’s one of the greatest stocks ever!” but actually do not hold any OSTK in their portfolios.
Host: why does Ambac still have AAA rating?
Cramer: BECAUSE THE TRUTH IS TOO PAINFUL.
-Jim Cramer in this CNBC video
…when you can’t remember what your base salary is but know that it’s just enough to cover your expenses.
