Long or Short Capital

In case you’ve been on the moon, South Africa is out of power. One government-run monopoly produces 95% of the country’s power and they ran out. In 1998, the power company told everyone in the government that they would run out of power in 2007. The government apparently thought they were just kidding and didn’t do a damn thing. So now they’re out. In light (swish!) of this, let’s examine the key points in the investment case for going long South Africa.

1) They have a 25% unemployment rate; sounds bad but the biggest driver of the economy — the mining industry — is booming and will create jobs

2) Oh wait, you need a lot of electricity to mine and smelt metal, no one will spend the billions needed to build a new mine if they can’t get secure power to run the facility. At least there’s some positive political news….

3) The soon-to-be president, who goes by “JZ”, clearly gets it and will fix everything:

“He [Zuma] was acquitted last year of raping an AIDS activist. He testified in his trial that he had consensual sex with the activist, who is HIV-positive, without a condom, but he showered afterward to minimize his chance of contracting AIDS.”

This guy was Chairman of the National AIDS Council in the country with the biggest AIDS problem in the world and he thinks “washing it off” stops AIDS? Really? Don’t you at least have to put some ‘tussin on it?

Recommendation: Don’t analyze South Africa, it’s depressing.

“The currency is the share price of a country.”
-George Glynos, Econometric Treasury Management

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)

Past Quotes Entirely Relevant to Investing

Valentine was a saint by some accounts. By other more masculine accounts, Valentine was a cruel master, only interested in ensuring that men were immured in love. At this, Valentine was a complete success. He built his day to be the perfect prison, the Alcatraz of holidays.

Some relationship-ensnared men have tried to escape, oh yes, they have tried. Every attempt has led to either a drowning in the cool rivers of Nosex or a plunging to the steeped tips of Shivintheribwhilesleeping. As your advisor, as someone who is paid to be smarter than you, and most importantly (but least sincerely), as your friend, we implore you not to try to escape. Your best bet is to give in, to roll over and focus on surviving.

Survival requires one thing — buying your girlfriend one of the following: flowers or chocolates or shiny shit. Again, as your advisor and friend, we have helped you out and provided below a handy link to the VERY best supplier of flowers and chocolates in the whole world, FTD.com. Please, for your own sake, not for ours in any way, click the link below and buy something for your girlfriend before you find your lungs suffuse with the frigid waters of the river Nosex.

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.

So while everyone in my state was voting HRC or Huckabee or whoever, I said, why don’t I do what’s best for the country? After I laughed, I concentrated on doing what was best for me. I voted for Obama. Why would a WASP do such a thing? The answer is simple — it is a get out of racism card.

Previously, I could only use the “Hey I can say that because I have a black friend (he’s really a mulatto but that counts, look it up)” when saying something that lacked racial discretion or oppressing people on a racial basis. Now I can say “It’s cool, brother, I voted for Obama” or “How can I be racist? I voted for Obama!” or “I’m practically your [n-word], since I voted for Obama.”

From seed capital of ramen noodles and smarts, Google (NASDAQ: GOOG) now stands on the brink of world domination. How has Google done it? A lot of people think it’s because of their search engine technology, or their system for contextual advertising, or their collection of smarts, or their corporate ethos. But sometimes the answer is a pair of OO staring you right in the face. Google’s performance has been determined by the 2nd and 3rd letters in it’s name, the prominance and potency of its OO factor.

Let’s do a little history of the search engine space; first, coming out of the primordial ooze of the 80’s and 90’s there were many, mostly those who could barely walk (Altavista, AskJeeves, other crap) and amongst them, Yahoo (NASDAQ: YHOO) rose. And who could defeat the incumbent and its OO? Google, a company who knew that they couldn’t put the OO in the caboose. If they wanted to take down the champ, they had to knock him out. So they put the OO right in the middle and the rest is history.

Look at the social networking space. Friendster gave way to MySpace, a beast many thought to be unstoppable –> until Facebook rose to power. There have been hundreds of videosites, none that crushed the others, until a double dose of phonic OO from Youtube. Similar thing occurred with Bluetooth and wireless standards. And HD-DVD? Didn’t have a chance against Blu-Ray.

Why did Microsoft (NASDAQ: MSFT) pay so much for Yahoo in their contemplated acquisition? Clearly, the OO premium. There isn’t much of it out there, so when OO assets are available, they get bid up.

Recommendation: We chastise people who try and make things too simple, but in this case, it IS that simple. OO assets outperform OOless assets. Expect Web 2.0 to be surpassed by the Web 2.OO.

We pride ourselves on not just predicting the market, but shaping it. From underseas futures, to piratery, to sexual harassment, we have taken backwater markets and squeezed the profit out of them for our readers. So if I say I’m a market shaper you will agree. What brings this up? I’ll boil it down for you.

1. I’m amazing
2. I made an amazing James Joyce joke while editing Mr. Juggles’ Overstock research.
3. Subsequently, likely from having read our site, Long or Short Capital, widely known as the no.1 site for satirical financial research on the internet, a separate site, McSweeneys, widely known as not the no.1 site for satirical financial research on the internet but capable of producing material which is still pretty awesome, published an article (FAMOUS AUTHORS PREDICT THE WINNER OF SUPER BOWL XLII) which also featured an amazing James Joyce joke.
4. Comparing the facts in 3. to the facts as laid out in 2. only strengthens the factiness of 1., namely, my amazingness and its existence.

Recommendation: When I say that James Joyce jokes are an appropriate long, you know this not to be false; you know this to be true. Long James Joyce jokes.

All men’s miseries derive from not being able to sit in a quiet room alone.
-Blaise Pascal

Past Quotes Entirely Relevant to Investing

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.

The most frequently asked question by our readers is the likelihood of Bernanke finishing the job that Greenspan started: inflating the US economy back into the 70’s. But the second most frequently asked question is whether walruses are more efficient than human beings. To date, my only response has been: I really don’t know…maybe? I mean they have those giant husking tusks, yet they don’t seem to have ever attained any professional employment, or attended college, or, as far as I know, even learned how to speak English. Surely there must be menial labor jobs that Guatemalans do and that walruses could do better, like opening cans or whatever. So why doesn’t the walrus work?

Because the walrus doesn’t have to.

They free ride on mother nature, ignoring the property rights of humans, fishing at their leisure, and destroying the ozone with their flatulence. They create nothing in their life and the only viable industries they contribute to are ones which revolve around their death. Countless non-profits and government agencies assist them and monitor them, likely devoting more money to the average walrus than to the average Namibian. This points to their efficient use of their own walrus capital, carving out a life of luxury wherein they get to eat sashimi every day without ever having to punch a clock.

It’s even less fair when you look at the upper class male segment of the walrus population.

Wikipedia on the Walrus:

The males show off in the water for the females who view them from pack ice. Males compete with each other aggressively for this display-space; the winners in these fights breed with large numbers of females.

Seaworld.org on the Walrus’s mating

Each herd of estrous females is attended by one or more large adult males. According to one study, the ratio of males to females averaged 1 to 23
…
After the mating season, mature bulls return to all-male herds.

Well, I’m not surprised. Not only does a certain privileged subset of the male population dominate walrus society, but when they are done with their walrus orgy, they discard the females and join their buddies in a male-only club, likely to smoke cigars, hunt fish and watch walrus sports.

Recommendation: I am not the walrus, but I want to be.

Cheeseburger in a can

Recommendation: Fundamentally, technically, there is nothing about the Cheeseburger in a Can that does not make me want to back up the truck and load it with cans of Cheeseburger in a Can. People doubted us when we went long Two Girls One Cup (we didn’t release it to the public, but we are assure you that our private funds got in way before the mania), and we see this as a trend towards putting amazing things in cups or cans in order to make things which are even more amazing than the sum of their amazing parts. Long Cheeseburger in a Can.

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)

Past Quotes Entirely Relevant to Investing