I’m out of here. I have no desire to watch this unorganized mush of a tape today. Everybody is trying to out position/out smart one another, with vacuous bets. There is no need for me to watch the minute by minute ticks, when I know what the eventual outcome will be.
Which reminds me, I need to start shorting TheStreet.com, Inc. [[TSCM]] again. A friend of mine, who is a HUGE Cramer fan, has lost 100’s of thousands by listening to the old bald one this year, following his egregious financial advice. Don’t ask me stupid questions, like “hey, why do you let your friend do that?”
The short answer is: “The Fly” does not try to alter other peoples opinions, unless properly motivated.
Frankly, thestreet.com and realmoney.com are broken business models, that have become the laughing stock of the blogger community and a curse to their followers/subscribers. Only a handful of people, like Rev Shark, make any sense, on a day to day basis. I would expect TSCM to go substantially lower, as his (Cramer) habitual reflexive CNBC moments further tarnish his clownish reputation.
As for today’s trade:
Utter garbage. There are people out there who do not care about pending disaster at American International Group, Inc. [[AIG]] , Merrill Lynch & Co., Inc. [[MER]] , Lehman Brothers Holdings Inc. [[LEH]] or Washington Mutual, Inc. [[WM]] . All they know: U.S. Bancorp [[USB]] , Bank of America Corporation [[BAC]] and Wells Fargo & Company [[WFC]] are great buys. Boo-yah.
This is ridiculous. Go take a look at their earnings. They are not immune.
If there is one thing that I would like to see, more than anything else, I’d like the stock Gods to bestow death to the axis of evil: USB-BAC-WFC. It’s the trinity of bovine thinking.
In closing, my top picks include: [[SKF]] , Western Refining, Inc. [[WNR]] , Freeport-McMoRan Copper & Gold Inc. [[FCX]] , [[DIG]] and short Legg Mason, Inc. [[LM]] .
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RealMoney is a show that, if you strip off the clichés’, hyperbole, overblown host and ridiculous introduction, you find that it is in fact crap and sometimes succeeds in making penny stocks look like a safe alternative.
‘The Street’ – a company dedicated to bringing investment information to the public, with a number of spin-off subscriptions available, making them the No.1 company of choice for the Investor Without A Clue(tm); something very much similar to the highly successful “Teach Your Toddler To Spot Weld” series.
That was a nice call on that “Fee’poht” Gold.
In the meantime, Cramer has taken up a newer, and more socially redeeming position in his local community. That of the Village Idiot:
__
right now I am adding to WNR, I suggest you do too. I am long 3000 shares at the moment.
Also I am hedging with short MRO .5 to every 1 WNR.
wnr @ 12.23
Have a nice weekend, meddler of financial stocks.
Fly, what’s your take on infrastructure stocks? Ones like FLR and JEC that you recommended to short a while ago. They’re starting to scare me a bit with this spike.
Why’s SNV ripping higher today?
http://www.bloomberg.com/apps/news?pid=20601103&sid=aWKdjgdwQZQI&refer=us
I wonder what is going to happen to the stock market on Monday if nothing is done about Lehman, or WaMu, or soon to be AIG, Merrill, Citi, Wachovia .. Fucking GM, Ford. WTF is going on here.
I’m telling you fuckers, this thing is spinning out of control. The stock market does not have this shit priced in. Financials are roughly 40% higher now, than the July lows.
Wicked times.
Will we have 3 zeros come Monday? AIG LEH WM
Commercial RE will be next. SRS is priced for good times. Comm REITS have barely fallen. This is a layup trade.
Hank Paulson keep Hulk in cage since July. Hulk not happy with this arrangement. Hulk want SMASH cage, then SMASH stock market. Hulk wait for right moment, watch various technical indicators.
More like Negative Nancies.
Congrats on your WNR call! Nice squeeze this afternoon.
I’m in SKF and WB (as a hedge), looking forward to the carnage next week.
PS: Then Hulk SMASH Paulson, put slow-motion video on YouTube.
Great Depression – The Stock Market crashed when traders were unable to complete their business without weeping. The midwest turned into a giant Dust Bowl, as people neglected to water their lawns. Group therapy sessions occurred, involving hundreds of people sitting in a circle and talking about their feelings, thereby creating crop circles. Jobs became scarce as entire companies shut down when the management wouldn’t leave their houses.
The PPT wins again.
Nice fucking call on WNR!!!!
Wow! AIG really shit itself.
Wow, AIG is picking up steam on its downward spiral heading into the close. Why would anyone buy that stock heading into the weekend except to cover a short?
Yet, everyone is buying banks into the AIG-MER-LEH death knell.
You only get one chance in a lifetime to buy them down here…
Hey all you chart guys, how’s F looking to you closing avove the 50 on big vol? Double bottom 4.24 and 4.26?
Thanks for any input. Have a good weekend.
Kevin Depew
03:41:28 PM
No positions in stocks mentioned.
Pep Step!
A few quick points into the close:
1) Crashes occur from oversold (not overbought) conditons.
2) Because the credit situation is so dire and not easily followable for equity traders and investors, they may be operating under illusion that things arent as bad as they are based on indices
3) Be careful following tried and true stock market indicators when the real issue is credit. Stock market indicators–by definition–fail during crashes.
Food for thought into the weekend.
Donny, you consistently get high karma. I humbly propose you join the PG, bc trust me, you will be king.
Gramps … F looks just like FNM did a month ago when I was about to pull the trigger on a Costanza trade. Fortunately I didn’t. The rest is history.
Not saying history is gonna repeat here, just saying.
Juice,
with you on commmercial REITs. I am heavily short SPG and it is just sitting there. I wrote some research for it posted below:
The New England Patriots were unstoppable last year. They were crushing teams by an average of twenty points with Tom Brady throwing bombs to Randy Moss while also scoring a new girlfriend, Supermodel Giselle Bunchen. Man, it must have been easy to be Tom Brady last year. Well, as the season went on, many people kept asking the question, “Can the Patriots have the perfect season?” As the playoffs approached, the margin of victory kept getting slimmer and slimmer. Could there be a chink in this unstoppable team? Long story short, the Patriots lost a historic upset in the Super Bowl as it turned out there was a chink in their armor: their offensive line couldn’t stop the Giants front four. The Giants sacked Tom Brady over six times and knocked him down 10 more times. The result: a Patriots loss in the Super Bowl.
Well, I am about to point out a few kinks in the armor of a viewed best of breed in the REIT space. Analysts LOVE this stock with it being recommended by over 15 analysts on the street. The stock is SPG. Not only do I not like the stock, but I will go even further to call it one of my top five favorite short positions for the next 18 months on a risk/reward basis.
There are four huge areas where I see Simon Property Group at Risk:
1) Continuing weak retail sales resulting in closing of stores and slower expansion by its tenants
– Put simply, retailers commonly chase growth in boom times opening store after store, while in tougher times, they tend to close non performing stores and try to lower costs. SPG is starting to see cancellations from some of its major tenants. The reason SPG stock hasn’t gotten hit compared to these battered retail stocks is partly due to the lag effect of a bad retail environment trickling down to cancellations and less expansion. Here is a breakdown of some major tenant cancellations and leases up for renewal shortly ( data courtesy of Raymond James):
The Gap, Inc. – Opening 100 stores, closing 115 (upped store closings by 15 and decreased store openings by 15 versus prior forecasts). Plans to cut 10-15% of total square footage over the next 3-5 years.
Limited Brands, Inc.- Scaled back store openings by 35% since last fall.
Foot Locker, Inc.- Expanding footprint by 9-10% (down from previous forecast of 15%), 99 store openings.
Abercrombie & Fitch Co.- Opening 60 stores, remodeling/relocating 200, closing 170-180 (30-40 more store closures than previously forecast).
Zale Corporation- Has opened 35 new stores (including 4 kiosks) and closed 100 stores (including 49 kiosks) year-to-date in fiscal 2008. Luxottica Group S.P.A 342 0.9% N/A
Express LLC- Has been closing stores amid declining sales.
Square footage up for renewal:
Year # leases expiring Square Feet
2009 369 1,444,026
2010 502 2,180,143
2011 475 2,056,631
2012 477 1,991,725
As you can see, if the retail environment continues to get worse, there is a lot of revenue at risk. Although I have to mention that leases up in these periods above are about 15% below current going market rates for leases, bankruptcies and a weak retail environment give the tenants a lot of negotiation ammo.
2) Large exposure to weak housing markets
The breakdown of Simon Property Group’s net operating income from these top three states:
Florida: 13.2%
California: 10.5%
Texas: 10.3%
If you have a tv, newspaper, or the internet, I don’t have to explain this one too much. As much as everyone wants to call a bottom on housing, I look at one thing: inventories. Until these numbers come down significantly, the real estate market will continue to struggle. SPG has seen weak spending patterns out of Florida and California as inventory levels are still at record levels. Almost 25% of their net operating income is tied to the two worst housing markets in the nation! Ouch!
3) Declining rents per square foot and rising interest rates
Rents per square foot have been increased every year since 1998 all the way from $25 a square foot to $38 a square foot now! In our current economic climate, I find they will have a tough time continuing to pass on their pricing power when these companies renegotiate their leases. In addition, I view SPG’s future expansion in which they have over $2 blllion of projects gravely at risk for a plethora of reasons including: rising interest rates which increases their cost of capital and lowers the spread they receive between asset yield and cost of capital, construction cost risk, and lastly financing risk as banks are getting stingier with their money.
4) Valuation
In case you didn’t know, REIT’s are not valued on a Price to Earnings typical ratio because it subtracts depreciation from Net income which doesn’t apply with real estate. Instead, REITs are typically valued on a funds from operation basis (FFO). Using estimated FFOs from the most responsible and reliable Lehman Brothers (chuckle, chuckle), you can see the estimates below:
Simon Property Group: 13.5 x FFO per share of $6.85 for 2009
Industry average: 7.9 x FFO for 2009
If you just assume SPG comes remotely back to the pack at 10 x FFO in a tough economic climate, you have a stock price of $68.50. Any of the above risks I mentioned above could contribute to this decline. In order to keep the current valuation, SPG has to dodge all these bullets and operate perfectly. Further, if mother market feels like pricing SPG close to the industry average, look out below with a stock price of 55 bucks. Ouch.
“Buy! Buy! Buy!” says Jim Cramer recently on Mad Money recently of SPG. Well Mr. Cramer, perfection didn’t work out very good for the Patriots last season. In fact, in the first eight minutes of this NFL season, Tom Brady is now out the season. I see a similar disastrous fate for Simon Property Group.
Timeframe: 2 years. I have already been building up a short position in SPG for awhile now, and I plan on adding on strength. I have 75% of my desired position.
Dear fellow Comrades of Mother America,
No need to worry about silly things like stock market. By Monday stock market will all be under State control by order of new directive issued by Politburo and Commissar Paulson. This is part of transition to Communistic Proletariat State.
Be so kind for your patience
Your Comrade
Vladimir W. Bush
Secretary General USSA
All My Exes Live In Texas
You F*ckers know nothing! Nothing! (I got that one from Cramer, heh-heh).
Fly,
banked another nice gain in WNR donka.
Thanks Juice,
funny you said it, I was thinking Costanza while I was making the post, I’m thinking couple of day trade with targets of 5.14, then 5.48. Appreciate your response as well as all of your posts.
The heroes and celebrities of the bull markets become the bad guys and criminals in the bear markets. Cramer will be hated by all his former fans before this thing bottoms. Cramer cut his teeth in a great bull market and has no clue about what is happening, nor about to happen in this greatest of all bear markets. And, as if y’all didn’t know already, the average retail investor knows less than Cramer. You can’t tell these people anything. 1 in 100 might listen, the rest just go with the herd and do what their neighbor Jim Bob is doing.
On another note, gas is up 20 to 50 cents a gallon today in my neck of the woods. I’ve verified $3.99 per, and I’ve heard a report of $5 from further south.
Palin-
SRS is your boy then, I’m waiting to pounce as well.
http://www.proshares.com/funds/srs.html?Index
Our good (commie) gubner just put out an Executive Order against “price gouging” as well.
Is your Ozarkian gubner a Dem as well?
___
Yes he is. The Wal-Mart gas station across the road from my office is a madhouse.
Somebody tell Jamie Dimon, I don’t care. I-do-not-care. No more calls!
I’m off to enjoy cocktails with friends.
Let’s see. Dow was net UP this week. Yes, UP.
That’s because as fuckwhacked as we are here in the USA, we are still only about as half as fucked as the rest of the world. Yes, Europe would give up tea if they could wave a magic wand and only be in the trouble we are in.
USA, baby. Love it. Invest in it. Watch it crush the rest of the world.
wonder why the markets held up so well last few days despite all the bad news like Leh, AIG, F&F getting bailed out, CMG GE Mer taking hits, etc.
Danny … I will never be King of the so-called “Peanut Gallery”. There is one King, and we all know who that is.
I am not a stock picker. I don’t even own a securities license (anymore). I am simply a guy with excellent clarity, living in the midst of very confusing times. I manage risk, not money.
Have a great weekend.
“I am simply a guy with excellent clarity, living in the midst of very confusing times. I manage risk, not money.”—Donny
Ha! Welcome to my nightmare, Don Juan.
That’s what I keep trying to tell people. I’m the right man for the times. “Mr. Fixit”. I can do anything. The sun is shining and the oceans are parting. They don’t pay me enough for what I do!
Buy the banks! Now! (or we’ll pull your chest hairs off, one-by-one)
Hurricane up date from kingwood Tx,
Lots of wind but no rain.
If humming birds are any indication of pending disaster you would never know it from my feeder.
it storming here as I catch an outer band, good luck Chuck.
Update: Tornadoes are torching down in my neck of the woods. time to run for cover.
Trinity of Bove-Ayn thinking? Never was into objective reality myself, but I like the sound of it. PS: LEH is a generational buy here, don’t pass it up.
Strange events in Nashville. We are out of gasoline. Almost every station is shut down.
I managed to get fuel near my home and asked the attendant about it. He said they got a fax from corporate to raise the price to $5.85/gallon overnight.
Very strange indeed!
BOOMER
How many teeth did the attendant have. HAHA
Boomer, here just outside of Richmond Va., my buddy in the local sheriff’s dept. called me and said gas was going to over 5 a gallon by tonight or tomorrow morning.
By 2 o’clock, gas was up to 3.90s, from 3.40s in the morning.
Nice smile, actually. Looked like this guy:
Too bad none of you guys worked for GS. I could get you a discount on your gas! hahahahahahaha!
Woodshedder, greetings from the Shenandoah Valley! Harrisonburg here.
WSJ.com reported the PPT met tonight at 6pm at the NY FED … stand by and grab your wallets (again)
Palin – any relation to whats her name?
Thanks for the great analysis . I’m short a little SPG. Probably will add shortly (no pun). Fucker just won’t roll over & die yet, as well as the rest of the Comm(ie) REITs. I think they are fat shorts up here. No way they come out unscathed before this bear is done. Not a chance.
————————————-
A little political humor. If you’re a die-hard, dyed in the wool Republican, don’t watch.
http://www.funnyordie.com/videos/ea0b05d406
Cramer is calling for a 1 point rate cut on Tuesday, when the fed meets. The guy is a fly in the ointment of my numerous bank shorts.
I hope there is no cut at all on Tuesday, otherwise its back to minting coin with the shorts.