Long or Short Capital

A number of online photo companies have recently been threatening to delete my photos if I don’t make a purchase. For instance, I received the following in an email from Kodak Easyshare:

We’re happy to store all your memories at the Kodak EasyShare Gallery, but because you haven’t made a purchase in the last 12 months, we may begin deleting stored images from your account. Don’t risk losing your photos!

Maybe I’m the exception but deleting my photos doesn’t qualify you for my bi-annual “happy to store your memories” award. In fact, I will probably send you an email telling you that I never plan to use your service again. Here was their response:

Thank you for contacting the KODAK EASYSHARE Gallery Customer Service Team.
We wanted to let you know that we’ve just received your message. A Customer Service representative will not respond to this email. [My emphasis]

What a followup! Thanks for emailing me to tell me you won’t be responding. And what, pray tell me, is the purpose of a customer service email if no one checks it!?! I appreciate your attention to my concerns; I will never purchase another Kodak product as long as I live.

Recommendation: Short Kodak. Short bad customer service. Short automated responses.

….was that uncool?

Full disclosure to our readers; I actually owe Long or Short $430mm. In a confidence business such as the delivery of genius, our customers (you) have to be worried about whether our lack of internal controls will affect the delivery of future content, or if this will delay or otherwise hinder the release of my next set of Investing Commandments. Rest assured that this kind of thing is totally cool because we all do it. I asked our internal auditors about it and they actually used the phrase “Dude, that’s totally cool.”

According to these same auditors, the whole Refco (ticker: RFX) stock thing is totally overblown, and Tyco’s internal controls were “wicked awesome,” so our controls are probably pretty good. In light of this, we rate our own stock as market outperform. Go long the equity, but be sure to short the bonds.

Recommendation: SOX rocks!, long white collar prison sentences, short “the bonds” and private equity’s due dilligience

PS if this post was incomprehensible, start here.

Legalese always contains redundancies but the findings by IPG’s accountants in their recent restatment take this to a new level. The accountants listed 18 areas of weakness needing improvement including:

Keep in mind that these comments all appeared in the section devoted to the assessment and identification of weakness in controls.

In fairness to the flight attendants whom I maligned in my last post, accountants shouldn’t be considered professionals either. The section on controls is one big CYA move.

Kaiser inadvertently raised another point in his post (below). When did flight attendancy become a profession? Yes, the word can be used in a broad sense but doesn’t a “professional” usually hold as an occupation requiring specialized training? Lawyers, doctors, scientists; those are people you can call “professionals.” Flight attendants are (sometimes) lovely people but last time I checked they didn’t have to attend graduate school, pass any grueling exams, or even show me how to buckle my seat belt now that they have those new-fangled TV screens.

Recommendation: Short unions and pretension, in size.

From the NYPost:

September 28, 2005 — AMERICA’S first black female billionaire just got remarried. Sheila Johnson, the ex-wife of BET founder Robert Johnson, tied the knot with Judge William Newman at her Salamander Farm in Middleburg, Va., on Saturday. Newman met Johnson when he presided over her 2002 divorce case against Robert, her husband of 33 years. Newman’s decision evenly split the $3 billion Johnson netted after Viacom bought BET.

I have to give credit where it’s due. This judge ruled over a divorce case involving a billionaire, split the $3bn evenly, and then marries the now-divorced-but-also-a-billionaire woman? Wow. That’s how you use the law to your investing benefit.

People often ask me, “Mister Juggles where should I invest?” or “How should I decide whether to buy Company X’s stocks, bonds, options and exotic derivatives?” To that end, I have decided to create a list of investment rules that will allow readers to quickly qualify or rule out certain companies as potential investments. This process will continue over time as these rules come to mind.

Commandment #1: Avoid any company if the company’s CEO responds to a legitimate question with profanity and/or personal attacks. This applies double if the profanity occurs during a quarterly conference call. Consider shorting the stock or buying out-of-the-money put options.

Examples:

Patrick Byrne (Overstock) responded to certain allegations by a research firm suggesting that the authors should be “be beaten, f—ed, and driven from the land.”

Jeff Skilling (Enron) swore at an analyst who asked why Enron couldn’t produce a balance sheet and cash flow statement along with the income statement at the time of the quarterly conference call.

Commandment #2: Avoid companies that engage in transactions wildly unrelated to their core business.

Examples:

When Delta filed for bankruptcy both EDS and Disney disclosed writedowns related to aircraft leasing arrangments with Delta. EDS is a business process management company and Disney, of course, offers media and family entertainment. Neither company should, despite their disclosures of the leases, be in the business of aircraft leasing. Last time I checked the synergies between running a company that creates animated films for the pre-K set and vetting leasing arrangements with bankrupt companies were fairly low.

Expect more rules in the future to help you decide burning questions such as “Can I trust a CFO who cheats at golf?” and “What level of private jet use is abusive-but-tolerable and what level indicates a kleptocracy?”
Note: Rules are not ranked in order of importance.

From the captain on a recent flight:
“Thank you for flying United. We know you have your choice of bankrupt carriers and we appreciate your choosing United.”

Nice work United captain! Color me amused. I hereby pledge to help alleviate your company’s fiscal situation and fly United on my next journey as long as you offer me the lowest price.

I realize that, given our exploding traffic patterns, you have probably already read my colleague’s callous post. Unlike him, I think you’re cute as a button. I want to be long you, in size. Please contact me so we can make babies and live happily ever after.

Sincerely,
Mister Juggles
misterjuggles@gmail.com

P.S. I am completely serious about this.

Blogsnob sucks. Pheedo sucks.

Long or Short has served roughly 4,000 impressions for Blogsnob/Pheedo. It’s supposed to be such that for each impression we serve we get a credit for 2/3 of an ad of ours to be served on another part of the Blogsnob network. This is the idea of traffic sharing. Our ads have been served at a rate below 20% of the amount we have served. This is the idea of traffic thieving. We have 2 clickthroughs to our site. What is the point? Pheedo is a bad service. When we short you, we crush you. Pheedo, you are crushed.

Recommendation: Short Pheedo.

Self-analysis of Long or Short. Judged and ranked for the strongest combination of humor and truth.

1. Perf: The Next Big thing. Abstract, yet tangible. And clearly, very true.
2. Supreme Court Dance Parties: Long. Truth was strong in this analysis, as this has been upgraded to Chief Justice Dance Parties, within only a month of our post.
3. Visteon: Analysis of New Ideas. A graph and fraternal due dilligience. This is why we’re the best there are at what we do.
4. Racialistness: Markets in Soul and Respect. An overview of the impact of the inputs of “soul” and “respect” on the music markets.
5. Proposed Changes to Koran Pt 1: Mortgage Friendly. Everyone wants an ARM these days, let’s not let religion prejudice a group of potential homeowners against “freedom” financing.
6. Mudpies, Creampies: Short, Long. Prefaced the whole OSTK hubbub. THAT is how you analyze.
7. The Number Z: Preempting the trend. Like Perf, but with numbers. When is the last time a truly new whole number came along?

Recommendation: Give us your money. Riches will follow. We’re long Long or Short Capital LLC. Feel free to advocate for your favorite.

Full disclosure: We are Long or Short Capital LLC, which may or may not bias our opinions of ourselves. All external advocacy will be ignored.

Justifying our cephalopod recommendation from July, witness this video in which a giant pacific octopus dominates a shark in acquatic combat. Here is the footage. We reiterate our long position. Keep in mind that if the stock begins to tick up, there is a lot of tentacle pressure that could push it through the roof.

Background via Collision Detection:

Okay, so — the Seattle aquarium had a couple of Giant Pacific Octopi, and for logistical reasons they had to temporarily put one of them in a tank holding several sharks. They figured the octopus would be okay because it can change color to conceal itself from predators. But over the next week, the marine scientists came into work to find sharks are lying dead on the floor of the aquarium. Whatever was going on? They stayed around one evening and trained a camera on the water to see.

The diamond industry has tailored over 70 years of marketing around the idea that a marriage is NOT a marriage without the BLING. Their recent campaign underscores their updated message in a world where the role and composition of marriage is changing.

This anniversary, show her your love is everlasting by saying “I Forever Do.”

Say “I Forever Do” as opposed to the first time you made that promise….but didn’t really mean it. Well now you mean it forever, you do.

Another gem:

Only the gift of a diamond, as timeless and unique as your love, shows her you would marry her all over again.

In the past, many men have tried to show their devotion by treating their wives with respect, providing for them, and accompanying them to watch romantic comedies involving a woman and her bookstore (or a woman, her dog and a bookstore. Or a woman, her dog, and her 3 best friends, one of whom owns a bookstore and meets guys on IM). And they were all wrong. Thanks to the diamond industry and their products backed with extensive empirical romantical experimentation, we now know that only the gift of a diamond will suffice to show your wife that you will love her for foreverido.

In May on their 1st quarter conference call, auto retail chain CSK Auto announced that they would be launching a secondary store initiative called Pay’N’Save. In the words of CEO Maynard Jenkins (via Streetevents):

Second, the Company has recently launched a new retail concept store named Pay N Save. Pay N Save, which targets a broader demographic than our CSK stores, represents one potential component of an important long-term growth strategy for CSK and is allowing us to develop new sourcing, particularly import sourcing for our merchandise.

Well, Maynard, that doesn’t sound so bad. What kind of goods will you sell at these Pay N Save stores?

Pay N Save stores plan to offer a consistent core of value merchandise, and I want to stress value, consisting primarily of tools, hardware, housewares and other household goods, seasonal goods such as tents, outdoor furniture, water toys, and a constantly changing array of unusual merchandise, such as industrial popcorn machines, garden windmills, full-size leather barber chairs, all at incredibly low prices.

Ahh the “Selling-Shit-from-China” business model. But, lest investors be concerned:

I want to assure everyone we understand what our main focus is and [we]will remain [focused on] automotive parts at CSK.

Because for an auto-retailer, nothing says focus like starting a whole new concept store to sell “an eclectic mix of items such as windmills, fishing gear, water fountains and bar stools.” CSK Auto, you win the Patrick Byrne Award for Operational Focus and Excellence. Congratulations, young padowan.

My knowledge of Islamic doctrine is admittedly limited — I’m the same guy who thought that “Mecca” was a low-carb energy drink until early last week. Apparently, the Koran prohibits the paying or receiving of interest. It’s high time for Muslim leaders to update that belief because they’re missing out on the American dream and the greatest invention of the modern age: sophisticated financial products. Why should I be able to own 6 condos in Miami (and a duplex in the Valley) while Muslims everywhere are forced to barter for housing?

It just seems like the type of situation where Muslim leaders should get together and say “Ok, from now on, this rule only applies to excessive interest. No loan sharking but that mortgage from Countrywide is A-OK.”

I bet Mohammed would have been all about 4.4% fixed rate mortgages. He was only pissed because he had bad credit and the best he could do at the local medieval mortgage broker was a 7.8% 5/1 ARM. No way you want to put that kind of financing on a herd of mangy goats; you can’t get gap insurance on them! I’d be pissed too.