Here’s to Capitulation!

SYY bought privately held US Foods this morning, sending SYY +10%. Bizarre.  Refiners were upgraded at numerous investment banks, further twisting the ALJ blade into my abdomen. I just can’t let this one go.

GMCR is edging up in pre-market and the BDI was up again this morning. I am seeing lots of reasons to be bullish today. There is a certain  smell of risk in the air, heading into the New Year, but first pagan XMAS.

MCD sucks because their food is poisonous. Once again, I am long term bearish on all poisonous food retailers, like MCD, Burger King and YUM. I am, however, constructive on CMG, SBUX and PNRA.

Speaking of coffee: coffee, the commodity, is off by 65% in recent years, obviously a giant boon for companies like SBUX, GMCR and SJM. I am bullish on GMCR because the laws of nature dictate short sellers have no choice but to capitulate.

Here’s to capitulation!

We are coming down the home stretch now and bonuses are at stake, pal. Your local hedge fund managers would prefer to make $100 mill for the year, instead of a paltry $75 million. We’ve had a great run in equities, but some have missed out. These creatures are simply hiding beneath the stairs, drinking wine until they’re too tired and stupid to figure out the market.

Well, a whole slew of them will be crawling out from the stairs this week, in the hopes of salvaging their careers. To underperform in a +30% SPY year means your career is over and you will most likely join the ranks of Obama’s unemployed.

So, as you can see, there is work to be done.

At this very moment, they are running screens, just like the one I am about to show you now. They need stocks that are trending up, since there isn’t any time for reversals. In addition, bigger funds will demand large cap names and liquidity in the form of average daily volume. These hot shots need to get in as fast as they intend to get out. They might even hold some special meeting to “unveil” said picks, in order to “Ackman” their returns.

Lastly, they want said stocks to be heavily shorted, for two reasons.

1. Additional liquidity will be added to names, as shorts cover.

2. As natural buyers pile into the stock, shorts might panic, cover, and cause the shares to explode to the upside.

Here are the stocks that fit this criteria, courtesy of The PPT.

My favorite is GMCR.

Today’s gorilla run was a mere Hors d’oeuvre of things to come. Absent from today’s rally were numerous momo names and it’s worth noting the breadth was tepid, at 74%. However, that’s what makes it so medieval. You will leave today feeling a sense of escape, almost victory, being that your shorts were barely touched.

Then you will walk into work on Monday and receive castration.

That is all.

Greetings fellow pagans from aboard the iBC pirate vessel, The SS CLAWHAMMER. I offer salutations and stock picks on this fine Friday. I sold some of my NSTG position and have reallocated the funds into GMCR.

Coffee, for the win, despite what David Einhorn thinks.

I also added to my BALT position here.

If the economy is strong enough to get off the QE tit, we’re all better for it, are we not? It’s also worth noting the difference between adding more stimulus and raising interest rates. We are nowhere close to a Fed rate hike, so chill out and go buy a house.

Speaking of which, housing related stocks are leading today’s charge. This is exactly what the market needs, real leadership in an industry that is vital to the economy. Stocks like BZH, MHO and TOL heading higher is exhilarating for stock market junkies like me. We read the headlines and know, from first hand experience, that the housing market is back. Blackstone is buying residential real estate with both hands and so is Public Storage. The best case scenario for this market, this economy, is to see the market rise, led by housing related names, which in turn will buoy materials and of course banks.

BALT trading lower sucks. I know. However, rates went up again today, spearheaded by Supramax. I cannot remember the last time Supramax rates went down. This is a rip roaring bull market and it’s all China related. Upwards of 65% of all iron ore shipments go to China. The surge in rates is due to a combination of two things: 1. lack of adequate shipping capacity. 2. The Chinese economy is strengthening.

Over the past two years, BRIC has been absent from the stock market euphoria we’ve enjoyed. What if they are finally turning the corner? What if the market’s next leg up is due to a lift in BRIC GDPs?

Something to think about. In the meantime, revenues and earnings power for the dry bulkers surge onward.

NOTE: For those of you who want to learn about options, take this opportunity to join the ranks of After Hours with Option Addict. He will be doing a very special 5 day crash course next week. Aside from that, he’s a true boss in picking stocks too, so don’t miss it.

Benjamin Bernanke is engineering one final stock market rout before the year ends, before he retires to the beaches of South Beach Miami, where he will continue the good work as a cocaine vendor.

Rickard Santelli, from the CNBC, is so mad that the futures are ripping higher on news that more jobs were created for the month of November. He is simply besides himself with venomous rage. He even said “stocks would eventually go down” once all of the realities were understood. Gorilla of a man.

Mr. Bernanke begs to differ.

From the darkest corner of his parlour, he sits, quietly, laughing at the rats scurry atop the ship, trying to discern “what is all means.” He smokes from his pipe, filled with marijuana leaves, mumbling to himself “got you bitches real good this time, ho, ho,ho. I’m Santa Claus, motherfuckers.”

Fin.

I have to be brutally honest with you. This industry is simply the best place to put funds. The only impediment, which happens to be a big one, is that for many bulkers, it’s too little too late. They’ve amassed too much debt and will either go bankrupt or dilute. That’s why you own the stocks with good balance sheets, like BALT and DSX.

Let’s do some back of the envelope math for BALT, using current day rates. Remember, unlike other bulkers who opted for charter rates during a depressed market, BALT chose to stick with spot. They did this because their balance sheet was good and could afford to ride out the storm.

4 Capesize $33,475= $133,900
2 Ultramax $18,000= $36,000
4 Supramax $15,222= $60,888
5 Handysize $7,820= $39,100

Total= $269,888 per day.

Let’s extrapolate the $269,888 per day by the number of days in a quarter, shall we?

SURVEY SAYS: $24,289,920.

The company did $9 million in revenues last quarter. That’s 166% revenue growth, quarter over quarter.

What’s changed?

Aside from rates spiking, they bought two Ultramax and two Capesize vessels, adding another $9+ million in quarterly revenues in the process. Understand something, what’s transpiring right now is a best case scenario for the company, providing rates remain elevated. They are going to make a mint at current levels and their share price, without a doubt, is going to skyrocket.

Take the last sentence with some salt, as I am archly biased, talking my own book.

Nevertheless, just because I am talking my own book doesn’t mean it ain’t true.

With today’s buys and market appreciation, BALT is now a 30% holding of mine. I am fully leveraged, extra tilt, at 140%. Other large positions include RBCN, NSTG, GIMO and YELP– with YELP being the smallest. SOL was a minor position and has been eliminated due to classic chinese burrito dealings.

As we speak, the market is weak, The PPT is not oversold yet, and I am up almost 3%.

I am still 15% off my annual highs and believe I can attain that feat before the end of the year. It’s a lofty goal that seems incredulous. However, if I am correct about my oversized positions, I will make it look rather easy.

The month of November was an abysmal one for me. Even more so than the losses was the stifling of activity, due to being hamstrung in flat to down positions that engendered an emotional response from me. I’ve resigned myself to seeing them through, at least for another month or so, in order to stay true to my convictions.

The overall market is in a bad spot, due to earnings misses in retail. For the most part, the consumer is on strike, shopping away at AMZN, but nowhere else. Buying retail stocks has never been more treacherous than now.

Yes it’s true, I am swinging for the fences, betting a lot on a few ideas, even though I am way ahead. Consider it my vice.

I sold SOL for a horrendous percentage loss. I don’t have time to mess around with chinese solar burritos who manage to miss estimate by 89 cents.

With the proceeds, I added to an already massive BALT position. The size of my BALT is now equal, on a percentage basis, to FTK, YELP and other thesis plays of mine.

The good news is Capesize rates are up more than 10% this morning, lighting a hot fire under the shares of dry bulkers. I expect to make a King’s ransom in BALT today. The bad news is SOL. These crazy people are having issues collecting money from China (shocker!). They managed to beat on the top line by $50 million, but took a major charge and missed the bottom line by 0.89!

I’d like to have the patience to understand what is going on there. I’d also like to know if I should be bailing on the stock here, down huge on a percentage basis, or double down. I don’t have a large position in SOL; but -15% hurts no matter how small it is.

For now, let’s celebrate the hedonism to come in the bulkers. Companies with most exposure to Capes are DRYS, GNK and DSX. However, BALT, thanks to their recent purchases, now have 4. More importantly, they just bought 2 Capes when rates were down to $17,000 per day. Now that day rates are above $33k per day, they look like the smartest men in the room.