Long or Short Capital

The Web 2.0 Conference in San Francisco has become a hotbed for entrepreneurs eager to separate venture capitalists from their cash. With business models dependent on flashy graphics and Google Adsense revenues, these startups often appear more like interesting features for existing products than standalone companies (Click for previous research on What is Web 2.0?). Still, innovation must continue and the forward-thinking Web 2.0 Conference organizers have sent out the call to begin defining the Web 3.0.

Long or Short sees no reason to look ahead only one generation. We have instead decided to begin defining and building the Web 8.0. Our new concepts will be a full 5.0 generations ahead of current thinking. Discounting the Web 8.0 at the prevailing web generation discount rate (10%) gives us a present generational value of Web 3.39

We recommend a long position in Web 8.0 with an expected return of 13% (= 0.39/3.0).

Please note that we are simultaneously downgrading the Web 2.0 Conference to Web 1.3 after finding out that the initial roster of speakers includes Jon Miller (AOL, a Web 1.0 company) and Arthur Sulzberger (NYTimes, a Paper 3.0 company).

Note that this post is still in Beta

There is not so much difference between the ideologies of capitalism and communism, you know. The difference is simple. Capitalism is the exploitation of man by man, and Communism is the reverse.

-John Gardner, in his book The Man from Barbarossa

Past Quotes Entirely Relevant to Investing

Long or Short Capital has been conforming to Generally Accepted Accounting Principles (or GAAP) for all financial disclosures up through May 2006. However, beginning in June 2006, Long or Short Capital will be changing to Seldom Accepted Accounting Principles (or SAAP). While we acknowledge that most of our readers and subscriberholders invest most commonly in companies using GAAP, we have come to the conclusion that our unusual equity structure requires SAAP to more accurately portray our financial strength. Our previously stated financials are not to be relied upon. We will be issuing new guidance shortly which we expect will be signficantly higher than past results.

Our statements will continue to be audited by the Cambridge, MA based accountancy Dewey, Cheetham, & Howe.

There is lots of things to take into account? Do you even know what your EBITDA is? EARNINGS BEFORE INTEREST TAXES DEPRECIATION AND AMORTIZATION? Gives the true picture of a company’s profitability.

-Paulie Walnuts, Season 6 Episode 4 of the Sopranos

Past Quotes Entirely Relevant to Investing

In response to a question about having to comply with China’s censoring mandate for Internet companies:

I’ll tell you this, it’s not more hard than dealing with Sarbanes and Oxley.

-Xin Ye, a founding executive of Sohu.com (SOHU)

Past Quotes Entirely Relevant to Investing

The upshot is that the points where defensive or aggressive investment positions are most effective are also typically the points where one will, at least briefly, look like an idiot for taking them.

–Hostile Trends, John P. Hussman, Ph.D.

Past Quotes Entirely Relevant to Investing

Crack reporting from the WSJ undercovers an industry previously unknown to me: Beer Diplomacy. The increasingly multinational nature of business will only increase the demand for beer diplomats and consumer products diplomats in general. We are actively seeking ways to increase our exposure to this sector and will advise readers appropriately.

From the WSJ.
Anheuser-Busch has been a sponsor of the World Cup since 1986. And it didn’t expect to find itself in this bind when it paid an estimated $80 million in 1998 for exclusive alcohol rights to the 2002 and 2006 World Cup tournaments…German newspapers were reporting that beer fans were furious about the prospect of drinking the American brew at the tournament…If Anheuser-Busch insisted on enforcing its exclusivity, it was clear it would annoy some Germans who wanted to drink German beer and generate bad publicity for the company.
So Anheuser officials undertook an unprecedented act of beer diplomacy. Tony Ponturo, Anheuser-Busch vice president of global media and sports marketing and the executive who signed the World Cup sponsorship deal…He proposed letting Bitburger [a chief competitor] sell its beer along with Bud at the stadiums and at some promotional events. In return, the American company would gain the right to use the name Bud, instead of just Anheuser-Busch, on billboards along the fields — and visible to viewers watching on TV at home.

Movie theater chain AMC has talked a lot about the potential causes of box office decline. This slide, filed with the SEC, shows that box office receipts have decline in tandem with the number of rotten tomatoes per movie. Quite frankly, I do not understand why movie audiences enjoy watching movies in theaters with rancid fruit but it begs the question: Why haven’t the movie theaters increased their tomatoes per theater allocation?

Recommendation: Domestic theater attendance may be trending 3-4% positive YTD, but until we see evidence that this is due to higher rotten tomato/screen ratios, we cannot recommend a long position in any of the publically traded theater companies such as Regal Entertainment (RGC) or Carmike Cinemas (CKEC).

My position is so short, it may actually go negative short, which would be a long and would be terrible for all. Just like this horrendous disgusting concoction from Hades. Coke with double the caffeine, half the carbs and infinitely more “rich coffee essence.”

Just as a service to the Coca-Cola Company (KO) here are some other combinations which, if you care about your shareholders even a little, we recommend you should never combine.

• Mayonnaise, beer and walnuts.
• Corriander and Bette Middler.
• Chocolate and plutonium.
• Bubble gum, strawberry and post-modern feudalism.
• The phrase “lack of internal controls” and my money.

Recommendation: Short Coca-Cola for producing the first product that could be accurately described as “swill.” Long red wine & coke and a double huzzah for green tea & whiskey.

Returning from a recent trip to Tokyo and enamored with Japanese technology in general — and bathroom-related technology in particular — I recommended that an acquaintaince of mine pick up a few shares of Toto. Two weeks later, I find out that he has invested in a comeback attempt by Toto, the multi-platinum, Grammy-winning band responsible for the hit, Africa.

I suppose I should have been more specific, especially since US investors are typically skeptical that a toilet maker can sustain a $3.6bn market cap and a 37x P/E. To clarify and rectify my mistake, I hereby formally recommend a long position in Japanese toilet technology plays. Our extensive field testing indicates that the new features such as the Cyclone Flushing System and the integrated rear warm water washing in products like the Neorest 600 will allow Toto to increase market share and deliver solid returns, as well as encourage me to stay regular.

Everyone post your insider information in the comments section of this post. There is no way the SEC will find out about us this time! Make sure your comments follow our specific Direktanlage Trader checklist as outlined below.

Comments must:

• Contain insider information that will let us reap fraudulent (and likely abstract) profits.
• Be highly illegal.
• Be sourced from a Croatian, German, Russian or someone of evil descent.
• Give guidance on alleged inside-trader Monika Vujovic, who we have conveniently marked with our insider trading lasso: I would share way more than 50% of the “fraudulent proceeds” with her; further analysis is pending.

Readers are always emailing me, asking me to explain exactly how I maintain such an enviable track record. So here’s a step-by-step case example of how to make money on a startup.

Step 1: Find a hot sector
Investors often talk about the “rising tide” law of investing: better to own a mediocre company in a great sector than a great company in a terrible industry. When a sector gets hot, the crap often rises as fast (or faster) than the cream.
No sector is hotter right now than “CleanTech.” How hot? Big name venture capitalists are now raising cleantech-only funds. Bush discusses clean energy in every address he makes. And solar power — solar! have I gone back to the future? — stocks like Evergreen Solar (ESLR) and SunPower (SPWR) are doubles coming out of their IPOs.

Step 2: Create a pure play
Investors love pure plays. When a sector is hot, they want as much exposure as possible. Take online advertising. Sure, News Corp (NWS-A) owns MySpace — the fastest growing web site and community — but you have to buy a whole bunch of newspaper, cable, and satellite TV assets too. The performance of those assets will drown out any positive developments at MySpace. Instead, investors clamor for stocks like Yahoo (YHOO) and Google (GOOG) …they’re pure plays.

So for cleantech, I will start a company from scratch to ensure it’s a pure play.

Step 3: Find a great name
Now that we’ve found a hot sector and, we need to find a name that will inspire the masses. SunPower works well, conveying a sense of action and virility. Fortunately, the stars have truly aligned in this case as Pure Play connotes both a provider of cleanliness as well as a streamlined stock. Perfect!
A star is born: CleanTechPurePlay.com

Step 4: Find a strong management team
I, Mr Juggles will run this company. Done and done.

Step 5: Profit

The job of a Russian man is to plant:
His house in the ground (sic).
His seed in a woman.
His neighbour in jail.

-From Ruminations on Russia

From a very earnest, deep-voiced P&G (PG) advertising executive on a recent conference call:

“When a girl starts menstruating, we want to be there…on the radio, in print, and on the web sites with relevant advertising.”

From a very earnest, eager McKinsey consultant:

“Now we’re focused on figuring out what it is about Metamucil that makes it so attractive.”