“The Fly” Having a Chat During Dinner

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I am about to go out for a little trick or treating with the kids, so pardon the brevity of this post.

The end of day sell off is indicative of hedge funds teetering on the brink of liquidation. There will be a tug and pull between underperforming mutual fund managers and hedge fund managers vying to stay in business via locking in profits.

I got suckered out of my TLT position at the range lows. I’ve said it numerous times, 2011 has been a very tricky tape for me and my paltry 16% gains reflect that. Nevertheless, the year is not over and there is plenty of coin to be made.

At the close of trade, I was heavily weighted in EXK, RENN, NFLX on the long side and short EXH and VXX on the short side for a grand total loss of about 0.7%.

Bank stocks are dropping again, as the ghosts of Jimmy Cayne and Dick Fuld haunt the minds of perverted speculators. Just a short while ago, banks were deemed to be “uninvestable.” Now they are all the rage at metrosexual NYC house parties.

When it comes to the banks, all you need to monitor are the shares of MS. They are at the epicenter of all that is wrong with society. When it comes to white shoe firms on Wall Street, no one holds a candle to Goldman. In the event something BIG occurs on Wall Street, you will see it first in the retarded second fiddle shares of MS.

Ahead of the GRPN ipo, shares of GSVC are holding firm. Look at the volume of GSVC and ask yourself, “do the unwashed know about this company?” Without a doubt, the answer is no.

With the dollar and treasuries spiking and commodities getting plugged, I am holding off on any new buys, aside from degenerate Chinese accounting dice-rolls.

Additionally, I still have about 10% downside exposure via VXX and short EXH. I will close out these positions if The PPT flags OVERSOLD.

Parting advice: stay the fuck out of those zombie banks. They’ll eat your brains out and send you packing to Zucotti park.

I don’t give a fuck and I’m not scared of ghosts.

I bought more RENN.

A great degenerate man once said “the fucking charts are lying to me.”

The market is knifing lower and MF Global is “Corzine’d.” Is that a reason to panic? No. However, the market is up about 15% over the past month. Based upon the laws of reason, we should pullback 3-5%. But I am not counting on that shit to happen. Just like the ruins at Puma Punku, logic does not exist on Wall Street.

For the day, I am down 0.25%, thanks to gains in my VXX, short EXH, long RENN, long BORN etc. My silver stocks are getting hammered. But all of that is likely a temporary phenomenon. Remember, I fucking hate stocks and would love to see them dismembered.

At any rate, I would not buy stocks here. Italian yields are north of 6.1%. I cannot justify buying stocks with meatballs under pressure.

I refrained from opining on the EFSF because I know how to comport myself when in defeat. Unlike many of you, “The Fly” knows how to behave graciously when things do not go his way. Whether it be in a game of chess or the acknowledgment of egregious grammatical and/or syntax errors in a self penned manifesto, “The Fly” tips his hat and continues to fight the good fight, as any gentleman of stature would behave.

Having said that, it’s true this stock market is the biggest piece of offal to ever exist amongst mankind. The EFSF bailout is a complete fraud and you will understand this lesson soon, as Italian 10 year yields scream higher. The reason why Europe cannot bail itself out is because there is a nuclear bomb in a box, atop the altar of the Eurozone, and it has Italian words scribbled on it. Some dumbass German guy is gonna open it and the entirety of Germany will be distinguished. It will be quite the spectacle. Moreover, the idea to leverage 440 billion of imaginary money by 500% to purchase Greek bonds is insane. I hope you realize this main hypothesis of mine.

Aside from Greece, Portugal, Belgium, Ireland and Spain need help too. This is a little early, but Turkey is a highly levered economy and will die, soon enough. China is not Santa Claus and Brazil couldn’t care less.

Eventually, these chickens will come home to roost and my original thesis will be proven correct. In the interim, I will play the rape-tape and assume all is well, even though it’s not. It’s clear to me, the “powers that be” have a firm grip in the price action and it would beguile my good name to incessantly call for sheer panic. As a point in fact, I am not expecting a panic. Instead, I am anticipating a total snap and break of the equity arm of this tree of bullshit, all in due time.

Until that happens, stay flexible and as always, avoid those murdeholes.

Not the psychopath political one, but the stock.

I’ve been recommending purchase of it since $20, yet haven’t bought a share for myself. I was going through personal strife, whereby Italian bonds yields infected my brain with visions of dust.

Buying a high end, mall based, retail chain is risky, especially in its infancy. Without a doubt, the high end retailers, COH, WSM, AAPL etc, is where the money is flowing these days, as the 1% continues to denigrate the pathetic, hapless, lives of the 99%. In all seriousness, buying TEA here may lead to a swift decapitation because the stock is gaudily valued.

At 43x 2012 EPS, the stock could easily lose 50%, similar to the pinless hand grenade action in Herb Greenberg’s taste test fav SODA. Nevertheless, all early stage growth companies trade in this manner (rich premium) until they lose credibility. Right now, TEA is being given the benefit of the doubt, despite trading below its IPO price.

Here are the hard facts.

The company opened 18 new stores in the second quarter and intend to open a total of 50 in 2011. By the end of 2011, the company should have about 200 stores, a very small footprint by any standard.

They’ve partnered with Alshaya to open retail stores throughout the middle east.

To date, they have zero stores in China. It is estimated that more than 70% of Chinese favor tea over coffee, making it a prime expansion target for TEA.

Approximately 55% of their revenue derives from the sale of loose tea, while 35% comes from merchandise.

Their same store sales are increasing at a 9% clip, buoyed by a robust e-commerce platform.

Annual sales will be in the ballpark of $160 mill, a 38% increase over last year. Net income will be around $16 mill or 0.43, an increase of 78% over last year.

Here’s the kicker.

Shorts are all over this stock, just like a variety of high growth retail. People simply do not believe in the model, considering the economic vitality of America. Where I believe they are wrong, and will get bludgeoned, is the wide array of expansion possibilities for TEA. This country is ripe for TEA to expand. For more than two decades, SBUX and copy cats have flooded every city with their asshole cafes. The time has come for a change of flavour, if I might be so bold.

Aside from the international possibilities, TEA could easily KCUP their product or even develop their own machine. That’s not the reason why you buy the stock, however. Right now, just 7 million shares lie in the float. On any upside news, this stock will flame higher, fueled by the tinder that is represented in the 40% short position.

The company has $5 million in debt and total liquidity of $35 million.

It’s hard to assign a price target to TEA because it’s so young. Clearly, they can expand in the US by at least another 500 stores and start to rollout TEA cafes, similar to SBUX–if they so choose. In my opinion, the big opportunity is in China. Like GMCR three years ago, there is tremendous upside to a story like this; but you have to be patient when buying the stock. Dollar cost averaging every quarter makes sense, unless the company is proven to be incompetent.

At a minimum, I think the stock can hit $50 by the end of 2012, based on the current trends.

I just got back from the mall at Short Hills, where ChessnWine, Mrs. Fly and I did some channel checks. Needless to say, TEA was the big winner. Additionally, we floated the idea of a special iBC seminar, hosted by Chess and RC. Obviously, such an event would be held in the financial capital of the world, NYC, in favor of a place where vagrants travel to lose money on spinning wheels.

As you can see by my positions today, Im on fucking fire. From RENN to GSVC to CIEN= pure, hot, fire. Things over at GSVC are only going to heat up, as their holdings in Twitter, Zynga, Groupon, Gilt, Chegg, Sharespost and Facebook mature. One of you idiots emailed me last week to “rescind” my recommendation on GSVC based upon their cost basis on GRPN. Let me remind you, your short positions in my stocks are not safe havens. You stand to lose a great deal of money and I will see to your head getting devoured by naked animals, in due course.

Do not be rude when visiting iBC. “The Fly” has the temper of a lit stick of dynamite. I’m liable to cut your collected heads off at a drop of a hat.

I hope you enjoy your weekends, for it might be your last. As for me, I will be dining at Michelin ranked restaurants, laughing it up with the 1%ers.

Top picks: GSVC, CIEN, RENN, NFLX, EXK.

UPDATE: I bought BORN.
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After yesterday’s orgy of degeneracy, I’ve decided to, respectfully, bow out of the stock market for the day. I have a bunch of fucking positions that I didn’t want in the first place. It’s as if some pervert with a knife forced me to buy all of this shit, as I panicked the fuck out of VXX and into a goulash of gambling stocks.

I still have about 10% total short exposure, which will be dealt with at my earliest convenience. Although I didn’t take a big hit yesterday, I am now positioned to get punched in the liver, providing we trade down from here. But that’s not gonna happen is it?

The Fed has the longest line of cocaine, stretched from Maine to San Diego and Wall Street has the straw. QE3 is Bernanke’s gift to Wall Street, as no one else benefits from such a punitive act of injustice. The average Jack ends up paying more in gasoline, heating oil and groceries. And we get to live high off the hog, long millions of dollars in commodity stocks.

I don’t give a fuck.

I’m gonna do some “channel checks” today because I’m a fucking psychopath. I am going to take ridiculous anecdotal evidence and apply it empirically, ’cause that’s how I roll.

NOTE: GRPN is coming public today. It is going to ROAR. GSVC is the only publicly traded company that owns a piece, albeit it is small. Nevertheless, a successful GRPN offering opens the door to other companies on the fence to iPO. Either way, a net positive for GSVC, one of my long term positions.

Before I get into it, let me just say I am thoroughly impressed by participation in the iBC Blogger Network. In just one day, we have over 130 new bloggers signed up providing content. If you want to be heard, sign up and compete. Eventually, I will be rewarding A list bloggers. Also, if you link up your Twitter account to the blog, you stand to gain many new followers, as we auto tweet your blogs on our corporate account (18,700+ followers) with your twitter name.

iBC is a force not to be fucked with.

For the sake of fantasy, let’s assume the crisis we just endured, the China scares, the Euro gayness, were nothing more than bullshit. Again, imagine yourself in 2006 and the global growth story is in hyper speed, flattening bears along the way. After this gicockulous run, what stocks are still cheap?

For the most part you want to be long companies with high ROE ratios, one of my favorite gauges to determine if a company is well run. Then you want to compare FPE’s and PEG ratios of companies in the same industry. Lastly, go listen to the fucking conference calls or read some research to get a feel.

Here is my “best case scenario” “Fly in wonderland” list of stocks that will rip chest hairs off the bears.

AGU, NOR, KRA, HUN, FCX, DE, CNH, CPE, WLT, BTU, SWC, X, WLL, HFC, OMN, SOA, SID, MTL, TS.

Lastly, I am thoroughly impressed with TEA. Think of TEA as GMCR without the accounting scandals, selling the shit Asia likes to drink via retail stores. I will do a complete post on TEA this weekend. If they execute, the stock trades to $100 within 2 years.

A great man once said “Gentlemen: you have undertaken to cheat me. I won’t sue you, for the law is too slow. I’ll ruin you.”

Yours Truly