Long or Short Capital

Held a meeting with the CFO of one of the largest construction equipment manufacturers in China. Their main business is wheel loaders.

Me: You and your competitors have very high margins, some are even higher than Catepillar (NYSE: CAT) which is the global leader. Is there any risk that as you all add capacity those margins decline?

Chinese CFO (through tanslator): Uh so he says that there is no risk of a pricing war.

Me: Ok can you tell me why that is?

Chinese CFO: Uh so he says China has 5 main wheel loader companies. And all are good companies and will not start a price war. Also he says the 5 CEOs of the companies meet every month for a dinner and they all agree not to make a price war against each other.

Me (to the translator): Did he really say that?

Translator: Yes.

Me: OK, moving right along.

Let’s talk about all the good things and the bad things that may be. Recently, everytime I’m at Blockbuster video (NYSE: BBI) or waiting in line for a payphone or getting my chest hair lasered (ask your depillitator for “the Kaiser”, your lady will be grateful) I’ve been getting dragged into the healthcare debate. Usually I just pretend I’m on Total Request Live:

Carson! I think Obamacare {QUICK DEEP BREATH} by Barrack Obama {QUICK DEEP BREATH}) should be the number 1 video because Barrack is soooooo hotttt and everyone should have should have rad healthcare and it should cost way less and Obama rocks my world!!!! WOOOOO!!!!!

If however you actually want to waste your time arguing about healthcare we thought we’d take a few things we commonly hear and give you some IN YOUR FACE FACTS to drop on your friends and make them hate you more than if you just make outrageous claims that you can’t back-up. Mostly what’s below is true, mostly, and if that standard is good enough for science and math, it’s good enough for us.

People say: For-profit health insurance companies are the devil and the reason we spend so much more on healthcare than other countries (Note: this is a recurring theme of the hot selling book “Healing of Amercia” by T.R. Reid, now available at your local grocery store).

IN YOUR FACE FACT: Healthcare insurance companies make between 5 and 10% profit margins (p.5). So even if you usurped all these profits (assuming you could run the companies just as efficiently) the most you could save is 5-10% of the cost. And by the way many states already have not-for-profit Blue Cross Blue Shield plans. If not making profits made insurance companies give you the same care at lower costs then these BCBS plans would be blowing up like a totally sweet Jenna Haze automatic blow-up doll. But they’re not, they’re slowly deflating like blow-up dolls tend to when you make them wear a spiked choker against their will. Mostly.

Reader The Paleofish sent in a link to Hugo Chavez in action, sticking it to uppity hotels.

Venezuelan President Hugo Chavez has said he seized the landmark Hilton hotel on Margarita Island because its owners dared to impose conditions on its use by his government to host a summit there last month.

“To hold the conference we had to ask for permission… and the owners tried to impose conditions on the revolutionary government. No way,” said Chavez.

“So I said, ‘Let’s expropriate it.’ And now it’s been expropriate

The hotel was a Hilton, the second Hilton to be seized by Hugo Chavez. How does this affect your portfolio? Quoting myself, something I love to do, this was our first piece on Piratery:

But setting up a lair in a place like Isla Margarita, located off the northern coast of Venenzuela, would be an environment with relatively low piratery penetration but proximity to major cruiseline and OPEC oil routes. An added bonus, Isla Margarita is where non-pirate berserker Lope de Aguirre reached his crescendo.

Revisiting this recommendation, we would downgrade Isla Margarita to “Not a good place to set up a pirate lair” due to the Venezuelan government’s growing presence in the quasi-legal seizure business.

Have you heard the news? Garmin’s (NASDAQ: GRMN) new nuvifone is new?

Recommendation: Short Garmin. It may be my irrational fear of oomlats, my hate of redundancy in advertising or my rational fear of combo devices, but any company that is working all three of these angles, isn’t a company worth a damn. If they had changed the name to “noovifone” they may have had a hit.

I’ve spent a lot of time recently on a boat. Later on, I was on a dolphin doing flips and shit, but mostly I’ve been on a boat. And all I could think as I idly sailed about was:

“People call this a sport? Raping mother nature’s winds for your own pleasure? Hundreds of feet from your competitors, who like you, are wearing dock shoes, and Nantucket reds and have the complexion of snow. Where is the sport in that? And what is that Somali looking man doing with that RPG?”

Sailing needs something. It needs conflict. It needs physicality. It needs to be more impactful. It needs to feature boarding and grappling hooks.

When Black Beard did the first America’s Cup race back in 17whateverthehell, they didn’t race each other in boats that cost tens of millions dollars, helmed and manned by sons of privilege. They fought each other to death in pilfered pinnaces, helmed and manned solely by maroons and sons of bitches. Race? The only race was to see how long you could survive, and how much whoring and pillaging you’d take down before death.

So obviously things are different. And that’s why sailing needs a sea change, three of them actually.

First things first, the aforementioned grappling and boarding is allowed in all sailing races. Let’s see how many Ted Turners are “courageous” when they face the chance of being gutted from groin to gill by an Australian ex-con named Roggie. As a bonus, this return to its classical roots would make sailing the world’s most popular spectator sport.

Second. All yacht clubs ban popped collars, people with names like Preston, and people rich enough to own a boat. Yacht club membership will remain an exclusive status, but the criteria for admittance will change. Instead of a blue blood test, there will be a red blood test. You have to have killed a man on the sea, justly, to become a full member. Junior membership will be bestowed upon anyone who has won a knife fight or bedded a mermaid.*

Third. Grappling and boarding is also legal at any point on the sea. If you are a “boater” and you love being on the ocean, then you better be able to handle your business with a cutlass. Any boat seized after being boarded would then be lawful property of the seizers, the male crew would be subject to death or impressment, the female crew would be subject to slavery.

*Manatees do not count, regardless of how hot they look. I’ve heard all the hot manatee claims before, and that crap won’t fly with me.

Meeting rescheduled for 90min later on 10min notice.

IR contact: “Our leader needs to have a nap.”
MrJuggles: “Ummm…”
IR contact: “He usually naps until 3pm but since you have traveled so far he will meet you at 2pm.”
MrJuggles: “Thank you.”

America will blow up the moon, we have the technology, the time is now, science can wait no longer, children are our future, America can, should, must, and WILL blow up the moon…And we’ll be doing it during a full moon so we make sure we get it all.

Quote from Mr. Show in 1996

I don’t mean to be that monkey, but why are we blowing up the moon? Has it come to this? I understand that this is a search for water but at $79 million, aren’t their cheaper local sources? Isn’t this the kind of thing that leads to more global warming? E.g. sourcing water from the moon and then shipping it here burns more fossil fuels than even bottled water, according to my model at least.

Recommendation: Short moon real estate. While it’s likely to benefit from increased scarcity, it’s also likely to be negatively impacted by being exploded.

A number of our investors have contacted us, asking us questions like:

• are you still alive?
• where are our dividends?
• have you stopped posting due to being brutally murdered?

The answer to all these questions is yes, yes and yes.

Or it’s that the stimulus is working but we have to respect our arrangement with the Blog Czar. If you missed the Abstract Investment Idea Investment and Recovery Act of 2009 (you did), you also missed that President Obama appointed a Blog Czar to oversee the compensation levels for authors of arcane and imaginary investment ideas. It’s only fair that compensation is regulated for these blogs given the staggering amounts of taxpayer money they have received from the federal government. Obviously, we at Long or Short have received far more than our share of the pseudo-real investment blog bailout. Again, it’s only fair.

We were also able to negotiate an agreement whereby we submit our commentary for regulation rather than our compensation. You see, if our compensation is regulated, we will no longer have incentive to research new, cutting edge fabrications for publication*. However, if our commentary is regulated, but we are still well-compensated, we will continue to be productive as ever, dreaming up incredible and illusory investment opportunities which we can then publish to the public. Unless, of course, the Blog Czar regulates our speech. Which he normally does, because if he didn’t, what would he really have to do? It’s only fair.

So, in summary, we are alive. We are still as inventive and imaginative and profitable as ever (moreso!). And we are excited to bring you all the commentary that isn’t regulated by the Czar (probably not much, to be honest) and to reap massive profits on that which is censored.

As you can see, it’s all quite fair.

* We will also be unable to contribute to the ruling party at the levels we would like to (if we are overly compensated).

What motivates me? In a rare interview/sale, I give readers a glimpse into my soul in this Mr. Juggles public listing:

My name is Juggles, I belive it´s like so solely cause, ever since I was aware of my paws, I had all kinds of balls in my hands, spining them, throwing them in the air and doing all sorts of tricks with them! 🙂
At the moment I´m practising a special trick by balancing them stacked towerly like on top of my head … do you think I´ll be able to pull it off?!

Recommendation: No man and no woman can ever own me…unless they have $19 at their disposal.

Analyst Q: The commission cap agreement among the various operators. Sheldon, is there a method set up for enforcing that? And how do you expect it’ll affect your bottom line?

Sheldon Adelson, Las Vegas Sands (NYSE: LVS) Chairman: Well that’s a good question. There has been no when I was there, I committed to do it on the honor system. The breach of which will be reason to beat people up with a wet spaghetti noodle.

Translation: There is no way to enforce this collusive agreement among the local operators because this is China.

Analyst Q: Can I ask about the Sands on the peninsula? All of the revenue components are down, and yet your EBITDAR margin is up an impressive six points, and your EBITDAR is up 13%. How do you do that?
Sheldon Adelson, LVS Chairman:By cooking the books! Just kidding, just kidding. Mike, do you want to answer that?

Translation: I am the Chairman of a public company and I’m joking on a public conference call about cooking the books of a company that is probably cooking the books*. Draw your own conclusions.

*Our lawyers have advised us to note that, when saying that LVS is cooking the books, we don’t mean that in any kind of legal sense. We may mean that in a culinary sense and look forward to a 4th Quarter quiche.

Submitted by user KB

Baker Hughes to Acquire BJ Services in $6.9 Billion Transaction

• Share price premium of 26.9% over the frothy closing price of BJs stock on August 28, 2009
• Pressure pumping cost synergies of $75 Million in 2010 and $150 Million in 2011
• Combination to be immediately accretive to EPS and other easily manipulated metrics

HOUSTON, Aug 31, 2009 — Baker Hughes (NYSE: BHI) and BJ Services (NYSE: BJs) today announced that their respective Boards of Directors have approved a definitive merger agreement, which represents a transaction value of $6.9 billion for BJs based on the closing stock prices on August 28, 2009. This agreement represents a share price premium of 26.9% over the frothy closing price of BJs’ stock on August 28, 2009. Under the agreement, Baker Hughes will be coming to BJs’ stockholders with 0.6969 shares of stock and cash of $0.69 in exchange for each share of BJs common stock. Upon the happy ending of this merger agreement, current Baker Hughes shareholders will own approximately 69% of the blissfully coupled company.

“This transaction further clarifies Baker Hughes’ top-tier position preference for the global exploitation of unconventional and deepwater reservoirs,” said Chad C. Deaton, Baker Hughes Chairman, President and Chief Executive Officer. “BJs’ broads are an excellent addition to our portfolio by adding the services, technologies and talented people that are key to helping releasing the value in our reservoirs. It will better position us to thrust forward for international growth and compete in the cut-throat pressure pumping market. Although in the past I have said I would never pay for BJs, this one was too good to pass up.”

Baker Hughes expects to realize annual pressure pumping cost savings of approximately $75 million in 2010 and $150 million in 2011 as it eliminates dry-hole blind date costs, consolidates booty-call marketing efforts, and further rationalizes playing-the-field costs. Baker Hughes expects the combination to be immediately accretive to earnings per share and other easily manipulated metrics.

BJs Chairman, President and CEO Jill Stewart said: “We are very pleased to be offering our services to Baker Hughes and negotiated hard to maximize the consideration paid for our platform [stripper heels]. Their offer blows all the other offers…out of the water.”

Shareholders of Baker Hughes should note Barclays Capital or J.P. Morgan Securities did NOT act as financial advisor or render a fairness opinion in connection with this transaction, so the risk of overpaying for BJs has been significantly mitigated. In addition, the definitive merger agreement does not appear to contain any major gaping holes because Vinson & Elkins LLP were NOT retained to provide legal counsel or investigate management-controlled limited partnerships.

Conference Call

Baker Hughes and BJs have scheduled a joint conference call. To access the call, please contact the conference call operator at 1.866.637.7128, enter your corporate credit card information, and indicate you are interested in connecting to the BJs discussion. You must be 18 years or older to make this call. Management will provide a brief introduction of the transaction, explain what they are or are not wearing, and then begin the Q&A portion of the call. Please download some materials from the web (Is She Filthy) prior to the call to increase the efficiency of the discussion and ensure your phone on is on mute prior to any heavy breathing.

Dear Ben,

Congratulations! I have heard the good news that you will be reappointed as Fed Chairman and I have to say that you’ve earned it! It’s been a long fourish years, but in that period of time there isn’t likely a single soul who wouldn’t agree that Fed’s commentary and actions have reeked of unequivocal success. When you make a call, Ben, you nail a call. I remember back to November 2007 when you said:

Our forecast is for moderate but positive growth going into next year. We think that by the spring, early next year, that as these credit problems resolve and, as we hope, the housing market begins to find a bottom, that the broader resiliency of the economy, which we are seeing in other areas outside of housing, will take control and will help the economy recover to a more reasonable growth pace.

Paulson may have been the hammer, but you provided all the nails when it came to nailing that economic forecast for 2012. People may quibble about timing, especially since your policy for the dollar and your far-reaching Fed actions of questionable legality were predicated on the timing and accuracy of your forecasts, but those people are the vocal minority; those fools probably hope to have grandchildren whose government won’t be crippled by an untenable debt load. Selfish morons!

Now, I can’t say I always envisioned you in your current role. As a child, when you weren’t eating dirt or inflating sandbox economies, you spent most of your time forming your arms into rotor blades and making yourself into a helicopter, or a Bernankptor as you liked to call it. PHWIT PHWIT PHWIT PHWIT would be the accompaniment your mouth provided before you’d set down the Bernankptor with a THWOMP. You were so happy then as a boy, it brings a smile to my soul to know that boy is still spinning his rotor blade arms inside the Federal Reserve walls. I can picture you now, alone in your office, behind your mahogany desk, arms out, PHWIT PHWIT PHWIT PHWITting about.

But this is neither here nor there. I’m writing because I’m just so proud of you. It was always clear that you were around 70% tardass and we thought you’d never even become a helicopter pilot of any kind. Today, The Obama is reappointing you as Dollar Force Pilot 1. It fills my heart with pride.

Love,
Mom

Last week I wrote this quite racistly:

And as we all know Crabs:Cephalopods as WWII Italians: WWII Germans — fun-loving incompetent bottom-feeders who love spaghetti and wouldn’t mind being along for the world domination ride.

Well I can only blame that I grew up with The Untouchables, and, in that movie, the character of Malone colored my view on the whole country when he described a would-be assailant with a series of slurs which made impaled the assailant’s Italian descent. But, much to my racist chagrin, only days after feeling a smidgen of guilt for comparing Italians to bottom-feeding crabs, I read something like this, headline: In Italy Parmesan Is As Good As Money. Seriously.

The vaults of Credito Emiliano SpA hold the pungent gold prized by gourmands around the world – 17,000 tons of parmesan cheese.

The regional bank accepts parmesan as collateral for loans[.]

…

The bank offers loans for as long as 24 months, equal to the time it takes the parmesan to age, at the euro interbank offered rate, plus 0.75 percent to 2 percent, Bizzarri said. The bank gives producers as much as 80 percent of the value of the product, based on current market prices.

The bank considered taking prosciutto ham, another of the region’s specialties, and olive oil as collateral, but such products are harder to store and brand, Bizzarri said.

I bolded the AYFKM parts.

Recommendation: Let me just reiterate that I can’t take any country or group of people seriously if they keep up with this kind of stuff. This cheese shit doesn’t cut the mustard of taking a country seriously.

HT to MO

Running this company has failed and the company has filed for bankruptcy protection. It’s time for management to roll the dice. Literally. They need to take their entire capex budget to the craps table and bet it on the Six to Win. Or better yet the No Pass Line. I don’t get why they haven’t thought of this. It’s called Gambling Expenditures or Gamblex. It can be a positive amount, but generally it’s a negative number on the cash flow statement. The owners’ equity checks are already toast, so what do they have to lose?

Worst case they go bust and they screw their debtholders, but who cares about those morons who signed up for a convoluted structured deal for a company run by certifiable madmen? And shouldn’t they expect the Fertitas to do something like gamble all the capex money in a dice game? That is why you do due diligence — to avoid providing debt financing to people who are certifiable madmen.

Best case, they win and get the opportunity to double down, which of course they’d need to do again 2 or 3 times. Station should act like responsible irresponsible managers they are and pour all the cash they can into gamblex.