Long or Short Capital

The WSJ yesterday reported how pig farmers are using fatty non-corn based substitutes to feed their pork assets as a response to surging corn prices. Corn prices are surging because the US Government thinks what the people want more than anything is to give money to large agribusinesses, like future Satan’s Portfolio member Archer-Daniels-Midland (NYSE: ADM). The domestic production of corn is directly subsidized. Corn based ethanol production is further subsidized. Sugar faces import tariffs but sugar cane is a far cheaper and more efficient feedstock for ethanol production. Lastly, the US gov straps a tariff on imports of sugar cane based ethanol from Brazil. What does this add up to? 4 sentences and a recipe for lucre for corn producers…and pig farmers.

The staid thinking would be that pigs must be turned into delicious bacon and pulled pork products and thus the pig farmers should switch from the more expensive corn to the cheaper substitute feeds to continue to supply these vital end markets. But there is a huge opportunity for pig farmers who think out of the box, which will in turn benefit the supply and demand situation for the entire pork industry.

If people want ethanol, then give the people ethanol….made from pigs: Piganol. The technology is still under development and we are under a myriad of NDAs so we can’t speak to the science behind it but it’s a fact that piganol is on it’s way. The picture we provided in our previous article was from an actual field test and the bike not only gets great mileage, but the only thing it pollutes is bacon. The firm developing the product has achieved some important milestones indicating enhanced viability of a piganol based consumer energy source.

Recommendation: We maintain our “Delicious” position on Bacon and increase our rating on piganol from “Suspicious” to “Delicious”.

Italy has prostitutes and these prostitutes have rights. One small Italian mayor is trying to eclipse those rights. Last week he passed a law making it illegal to obstruct or slow traffic for the purpose of soliciting sex. The soliciting sex part is fine, it’s the obstructing traffic part that concerns him enough to slap the offense with a €50 fine. Well the prostitutes of Padua had enough so they decided they’re not going to take this sitting down, they are going to take this lying down, on their backs. The upset ladies are protesting by offering sex for the low low price of “on the house.” That’s right, to protest this injustice they are going to bang, constantly for zip, zilch, zero, nada, goose egg, perf – perf, 0 euros. The women participating will be wearing pink ribbons to let their customers know. Sidenote: These are just the kind of girls we need for the Save these Hot Boobs from Cancer campaign.

When unions get wronged, mad, or bored they protest by REFUSING to work and they STILL get paid. Then there’s prostitutes, when they get pissed they get even by STILL going to work and REFUSING pay. That is getting it done. There is the one small problem which is that this method of protest doesn’t really set up the right incentive structure: “So what you’re telling me is you’re going to have sex with me for free until I repeal this law? And if I repeal this law then you’ll go back to charging me? Ok, yeah let me think about what my best option is but first why don’t you get in my car so you don’t get a 50 euro ticket you pretty little thing.”

Even though sometimes they’re not the smartest I’m still long hookers and obviously short unions.

Why would the majority favor policies that hurt the majority? … The majority favors these policies because the average person underestimates the social benefits of the free market, especially for international and labor markets. In a phrase, the public suffers from anti-market bias.
Bryan Caplan GMU Economics Professor

Past Quotes Entirely Relevant to Investing

From reader “Butters” in the suicide capital of the world:

Jalen Rose of the Phoenix Suns recently commented on ESPN that without Amare Stoudemire they, “gotta find a way to get it done.” I immediately began to wonder: Is Rose a baller or a mini-baller? His command of the mini-baller language obviously indicates mini, but he does pull down 1.5MM a year and is by definition a basketBALLER.

Is there some forum where public figures can be judged on their mini-baller status? If not, albeit off-topic, I believe LoS’s market leadership in mini-baller affairs would make them a prime candidate to initiate such a forum. Make it happen.

We’ll proceed on a case by case basis. Jalen Rose is most definitely a baller, he can say “Get it done” because the man has done a lot of getting it done in his life. He probably got it done with 4 girls hotter than any you have ever seen simultaneous with his appearance on ESPN. Plus, as you point out, he is a basketBALLER on the grand stage of the NBA, so even if you stick to the epistemological roots of the term, he is a baller. This analysis cost you $4,999. Please send your check to the house to the right of http://longorshortcapitak.com, right next to http://longorshortcapitam.com.

According to this ABC News article, Time Warner had this to say at last week’s National Cable & Telecommunications Association conference:

[My] favorite quote of the week came from Richard Parsons, CEO of Time Warner Inc., speaking at the annual National Cable & Telecommunications Association conference in Las Vegas.

According to Reuters — a fact that may give Parsons plausible deniability — Parsons said, incredibly, “The Googles of the world, they are the Custer of the modern world. We are the Sioux nation. They will lose this war if they go to war. The notion that the new kids on the block have taken over is a false notion.”

No one can say for sure, but the fact that the Sioux are all dead indicates that the Sioux didn’t quite win the war. I guess it really depends on what your definition of “win” is. Mine would include “not being exterminated with pox infested blankets” and “not having my land taken away and being forced into concentration camps in Oklahoma” and also “not being all dead by the hand of the white man.” I guess that makes me a purist.

Recommendation: When management doesn’t even know when they are about to be genocided, it’s probably time to short. Short Time Warner (NYSE: TWX). A catalyst for doubling down would be any raid on Google (NASDAQ:GOOG) initiated by Time Warner which results in the slaughter of 300 Googlites and one of Sergey Brin or Larry Page.

Hat tip to the value creating Newmark’s Door.

• Donating $1,000 in malt liquor money to each member of the US homeless population
• Making Spiderman 3 24.67 times
• Drowning a stripper by making it rain with $7.4 billion in singles. Sacagawea singles.
• Buying decaying shark corpse art for all your closest friends. Your 1,000 closest friends assuming you get a discount for buying decaying shark corpses in bulk (we have little information on the dynamics of the decaying shark art market).
• Purchasing Manchester United, Arsenal, AC Milan, Real Madrid, the New York Yankees, the Boston Red Sox, the LA Dodgers, the Chicago Cubs and the New York Mets with enough cash to probably buy half the NHL.
• Lifetime bottle service
• 1.75 billion golf balls to prep for that management consulting interview question
• A money bonfire

I’m back and fired up about organized labor again.  In their most recent display of genius employees at Chrysler have been attempting to secure financing in order to fund an employee sponsored bid for the automaker which is in being sold by the parent, Daimler-Chrysler (NYSE: DCX).  They claim that the interest of the employees would best be served if they themselves were the owners of the business.  I think this is the best idea I have ever heard.  I would love nothing more than the employees to buy Chrysler (Ed Note: too late, as the denizens of the 7th circle of Hell, Cerberus just acquired the Chrysler for $7.4bn), realize they are completely uncompetitive because of their own retirement benefits and wage structure and then proceed to lose billions of dollars while they sit around, point fingers and refuse to give up their ludicrous pension and healthcare benefits.

I think we should mobilize the capitalists and entrepreneurs of the world to help these employees along.  They deserve to be financially responsible for the disaster they created, they earned it, literally.  I am announcing a campaign to raise money to help these people buy their P.o.S. company.  I pledge $1,000.  Who’s with me?  Just think to yourself – how much would I pay to be part of a comedy of errors that bankrupts the UAW and embarrasses unions forever?  Then make a pledge.  Remember the money you’re pledging won’t get you a piece of Chrysler equity – it’s a pure donation.  I have however arranged for pledging members to get the rights to the reality TV mini-series “My Little Squirrely Union Boss” which will air immediately after “The Real World Detroit”.  These rights are likely to be worth division by zero percent more than the Chrysler equity anyway.

I cannot give you a sure-fire formula for success, but I can give you the formula for failure, which is: Try to please everybody.
Herbert B. Swope

Past Quotes Entirely Relevant to Investing

Long or Short Capital’s fiscal 3rd Quarter ended on 4/30/07, and the company reported its results in a press release:

Mr Juggles: “Morning all. The third quarter was a transitional one for Long or Short. We took part in initiatives which had a negative short term impact on our financials, but which will position us for a higher level of long term sustainable earnings. Additionally, we put less focus on unadulterated traffic growth and more focus on user interaction. Lastly, we worked with our customers to squeeze working capital down to more efficient levels to drive cash flow. Any quarter would have been disappointment following the milestones we were able to blow out of the water in Q2’07, but I am proud to say that I think management proved in Q3 that we will not pander to short term financial metrics, unless it will increase value to subscriberholders, in which case we will pander to short term financial metrics.

Sequential same store traffic, our measure of organic traffic, showed a 5% positive trend against Q2. Considering that last quarter was our historical peak, it means this quarter is now our historical peak, and this is, clearly, historical. Our proprietary “Eyeball Monetization Conversion” ratio, a non-pageview measure of revenue generated per customer, decreased from $18.43 to $14.49, expected due to a scale-back in static advertising and other strategic initiatives which I will address later. Our EMCr still improved 67% on a year over year basis.

We generated earnings per subscriberholder of $0.91 compared to $2.12 in the second quarter and $0.60 in Q1. We generated $947 in revenue for the quarter, a 685% increase year over year, and slightly down sequentially. Our dosey-doe with Google Adsense and Yahoo Publisher resulted in yet another switch, this time from Yahoo to Adsense at the beginning of April. We made the switch due to our dissatisfaction with the relevance of Yahoo’s ads, as well as cost-per-click levels which were sub-twenty cents. We will continue to dynamically adjust to changes in the contextual ad market.

Text link advertising remains the stalwart of our topline, but it experienced a diminution. We sold a full load of Text Link Ads inventory in the second quarter. Subsequently, management determined that a substantial portion of that ad inventory was being delivered at sub-market rates with unreasonable contractual terms. We elected to reduce the ad inventory sold through that channel from 10 links to 1 link. This had a negative $350 impact on our topline. Management believes it is in Long or Short’s long term best interest to hold back supply while pushing for Google Page Rank 6, and then seek out premium pricing selectively. If you have the ability to link to us or coerce high page rank friends to link to us, this will help greatly in our efforts to achieve Page Rank 6, and only further the growth the amount of money we dividend to our readers and get us a step closer to feeling ok buying iPhones for our children’s stuffed animals.

We had one successful CPA campaign which we launched late in Q2 with Everybody’s Gonna Get Laid Except You and followed with “Buy Your GF Flowers Now. Get It Done“.

Our subscribership increased from 508 to 1012. Approximately half that is organic growth and half that resulted from a change in the way Google Reader shows up in susbscriber stats, namely that it does show up now.

Our free cash flow is something I am really proud of and thanks to the good work our finance department did in reaching out and shaking changes out of our customers (laughs), those slow paying mother (expletive), (laughs) (inaudible), we generated free cash flow of $1,417, an increase of 200% sequentially, and higher than our cumulative free cash flow up until the beginning of this quarter. We set a target on last quarter’s call for working capital to run in the 30-35% range and we like the progress we were able to achieve in just one quarter. We are exploring uses for our cash which include but are not limited to investments in regional financial humor producers, acquisition of competitors, complicated structures involving SPEs that would allow us to mislead potential investors, or one really nice corporate pen.

Transition doesn’t sound sexy, but let me tell you, it will be. By way of example, we are like that 7 coming out of college, you know the one, brunette with an ok body ok face and has never really put it altogether. Two years out of college, she is exercising twice a day, not-eating three healthy meals a day, she blondes her hair and learns how to get it done with makeup, and now she is a 9 plus and everyone is bidding up her assets. And how does she get that done? She transitions. And that is what Long or Short is doing, transitioning. Thanks for your time, and have a great night.”

Top Articles from the Third Quarter

1. Four Simple Steps to Becoming a Thousandaire
2. Jacob, Son of Isaac, the First Value Investor
3. Adjusted GPA on a Pro Forma Basis
4. Pomegranate Capital Thinks Women Can Run Money Better Than Men, Is Wrong
5. Crazy Person or Bluetooth Headset?: The Home Game
6. The Market, She’s a Bitch
7. Dogs Can Smell Fake DVDs and Other Malaysian Lies

Top Articles from the Second Quarter

1. Vertizontal Consolidation
2. Stop Global Warming, Make Emissions More Delicious
3. 2×2 Matrix: Less is More
4. Accounting in My Refrigerator
5. Joe Theismann Presents Monday Morning Investing
6. Critical Mass Supplier
7. Kaiser Falcon Eyes

Note that the financials below are unaudited and may contain non-GAAP measures. All numbers comply with Seldom Accepted Accounting Principles (SAAP).

Unaudited Financial Results for Q3’07
Income Statement

Contextual CPC Revenue $229
CPA Revenue $109
Static Ad Revenue $594
Other Revenue $15
Total Revenue $947

Cost of Sales $19.55
SAAP Income $926.9

Balance Sheet

Cash $1962
Accounts Receivable $302
Inventory $0.00
Prepaid Marketing/Hosting/Reg $146
Accounts Payable $0

Cash Flow Statement

Operating Cash Flow $1417
Capex $0.00
Dividends $X.00

Performance Metrics

Visits 65,290
Pageviews 133,960
Clicks on ads 282
Subscribers by Email 159
Subscribers by XML 853
Inbound Links per Technorati 394 from 148 Sites
Technorati Rank 27,274
Inbound Links per Google ~399 sites
Google PageRank 5

Past Results (due to our reliance on SAAP, previous unaudited financial results are not reliable)
Long or Short Capital Q1’06 Results
Long or Short Capital Q2’06 Results
Long or Short Capital Q3’06 Results
Long or Short Capital Q4’06 Results
Long or Short Capital Q1’07 Results
Long or Short Capital Q2’07 Results

Also here is a look at our Google Spreadsheet Financials spread out quarterly. As you can see, we strictly adhere to SAAP.

Source: NY Post

More evidence, this time from the NYPost, that Vice funds are better than Green or Socially Responsible funds. When you’re goal is to make money, give your money to the guys without scruples.

Here are three sectors with terrible fundamentals:

1. Autos — No demand. Terrible labor relations. Rising gas prices. EPA is about to crack down.
2. Paper — China is killing paper pricing.
3. Housing — As mortgage financing falls apart, so does the housing sector.

The most surefire way to make money shorting a stock would to be to find a company that somehow participated in all three of these known negative trends. Therefore, I appeal to you, the crowd to help me find a manfacturer of RVs made out of paper. Or an operator of garages for paper automobiles. Or a home builder who designs and sells houses made out of paper made out of automobiles.

I am desperate. If these companies don’t exist, perhaps we should start one so we can then short it?

Their new president plans to implement controversial legislation by waiting until all his citizens leave for their (long) vacation. Brilliant and yet pathetic, a la meme fois.

Parliament usually is away from mid-July to October, but Mr. Sarkozy has suggested he would call a special session to push through legislation while most of the French are vacationing — and when it would be hard for unions to mobilize them.

The unions warned against it. “Whoever is elected president, if he or she thinks there are things that must be decided very fast, in a flash, and pass them in July, watch out,” said Mr. Mailly of the Force Ouvrière federation. “There’ll eventually be a boomerang effect.”

Absurd. The US equivalent to this would be traders running up the price of thinly-traded and heavily-shorted stocks during August when the entire financial community is out in the Hamptons. Oh wait…

Recommendation: Long summer vacations, short France and the Hamptons.

As you may or may not know, the esteemed Dealbreaker released a blind item hinting at the identity of the anonymous author of Going Private. That hint pointed to Kimberly Kravis, daughted of KKR founder, Henry Kravis. Having developed a website relationship with Going Private which includes internet tea parties, anonymous post swapping, and a friendly give and take, we too have come to know the true identity of the industrious and using-word-a-lotty Equity Private. It is this knowledge that allows us to strike down the Dealbreaker’s false claim of her identity and instead let the world know who Equity Private is through pictures.

Here is shot of Equity Privateer with Armin, her boss.

She goes by the nickname “Birdie”.

A candid shot of Equity Private engaging in one of her most favorite hobbies that don’t include anonymous blogging or being “very wordy”.

Here Equity Private is in the Hamptons after one too many. Never trust a man who wears a mask and steals hamburgers, ladies. If he has no problem stealing a burger, he has no problem stealing your heart.

And here she is at one of her private equity firms soirees discussing deals and getting sauced on expensive drinks. The Debt Bitch is the pink one with the siren-song eyes.

As you can see Birdie comes with a certain amount of pedigree. She has always been an “early bird” doing well enough to get accepted to Hamburger University and later getting her MBA from HBS, in this case the tastily named Hamburger Business School. As we have exchanged emails with Birdie, and gotten to know her, we have found her to be one of the good ones not like that horrible Hamburglar or that Grimace looking purple bastard, so we hope that despite our outing of her real real identity she will continue her noble goal of bettering the world one 5000 word sardonic memoir post at a time.

I have a wedding to attend and need to know the correct amount to spend on a wedding gift. They are registered in places online such that I can buy gifts ranging from $10-200 and more than one gift, to achieve the exact basket of flatware, plates, toaster ovens and bedding I desire to give as a gift.

What is the market price to balance the rational desire not to spend money and the rational desire not to insult a friend and his whore of a wife. I’m setting the price at $150 (too much, too little?) for what I should spend and will adjust it for whatever amount the comments indicate, ignoring extreme outliers. I will spend whatever the adjusted amount is as of market close May 9th 2006. Help me find my optimal level of wedding gift expenditure.

Price as of May 9th, 4:00PM: $140, down 15 points since market close yesterday, down 10 pts from its opening level at May 8th 1:45PM, down 5 pts since May 8th 3:45PM, up 5pts from the opening bell of May 9th on light volume