Oil Barrels and King Dollars Will Be Your Demise

Who would’ve guessed that King Dollars would rise 30% vs the euro in just one year? Who would’ve guessed that oil would keep going lower, after a 60% decline? Gentlemen, we are in a different market now, one that is adjusting to a new paradigm of cheap oil and strong King Dollars.

On the surface, this spells doom for oil and gas companies, as well as all of those bozo companies who prided themselves on international growth. To be domestic, depending on fuel to run your business, is now a net positive.

Fuck The Habit; but this is very boolish for any restaurant play, or companies who deliver things. FDX, UPS, DPZ, PZZA and GRUB come to mind. Small companies, like air freight plays, rails who do not deliver crude, airlines who aren’t hedged, automobile companies with favorable forex dynamics (FCAU!) and rubber for the win too.

Nevertheless, a fresh move lower in crude, coupled with a continued move higher in the dollar, will eventually jar markets and result in lower prices. At 15% cash, long quality free cash flow generating machines, I am in a good spot to defend my 13% year to date returns. If you aren’t cash heavy, still long oil and other high beta names, I strongly advise you to play a little defense until the oil barrels and king dollars stabilize.

This could’ve been a great movie, had it not been for the studio taking over and chopping it up to pieces. After Citizen Kane, Orson was in hot water, due to the lack of commercial success of the film, considering its sky-hot budget, and also for going after William Randolph Hearst, whom the movie was based on. When given the green light to do The Magnificent Amberson’s, a movie Orson did not star in other than some eloquent narration, he was also commissioned to do some bullshit movie down in the jungles of Brazil, called It’s All True.

The Magnificent Amberson’s is a movie about change, a change that happened at the end of the Victorian era. It’s about a family who had it all and then lost it. They were unable to change with the times.That sense of entitlement, infamous traits of fuckheads who come into large inheritances, was their ultimate downfall.

It’s a movie about comeuppance.

Truth is, Orson got distracted, left before final edit was done, and the studio fucked him by nearly ruining the film–removing 45 minutes from the film because ‘it was too downbeat.’ Nevertheless, it has a lot of the magic that made Kane such a good movie and is worth a view.

Here’s a little background on the movie, from the man himself

I am boolish on financials here, long LAZ, SBNY, BX and BCS. I added a little something to that cocktail, getting long JNS. In this environment of bond market fuckery, I cannot think of a better play than JNS, with William H. “SHUT THE FUCK UP WHEN YOU’RE IN MY BOARDROOM” Gross at the helm. If you were a helpless institution and needed bond management, who would you trust, some punk left over at Pimco or Bill?

Exactly.

For the day, I sold 75% of my HABT position, because insiders are fucking greedy bastard motherfuckers. I have no patience for this sort of trickery. I also sold WYN. With some of the proceeds, I bought JNS and GRUB (twice). Yesterday I added LVLT and SKX to the mix. I intend on adding to both stocks next week.

I had a nice winner in TA today, who crushed numbers by 88 cents thanks to higher gross margins for their gasoline sales. I love that stock, and MUSA, into weaker gasoline. Bear in mind, gas is only up due to exogenous factors in the northeast, due to snow. Crack spreads blew out to new highs in recent weeks; but that is dissipating now that the snow is melting.

Hands down, my favorite stock here is GRUB, the perfect play off cheaper gasoline/restaurants seeking ways to increase sales.

All in all, it was a good week; but the past few days were fucked up thanks to HABT. But that is almost behind me now and I am super-focused on maintaining a winning strategy, which entails cutting out losers quick before they metastasize into something deadly.

My cash position is 15%.

NOTE: Be sure to visit tomorrow, as I am on my Orsen Welles kick.

This has to be the nerdiest profession of all time. Here I am laughing out loud at prospective Federal monetary policy, purely from an unqualified layman’s point of view. I don’t understand this sense of urgency to raise rates. What will higher rates do for the economy? Pray tell me? With zirp rates, the economy is barely kicking ass. The housing market is mediocre, retail sales are meh, and just about everything but Apple is milquetoast. And here we are, with the biggest fucking dollar rally in centuries, post commodity industry collapse, and you’re all talking about rate hikes!?

When I say “you’re” I mean the financial media. What in the fuck are you smoking, son? Aren’t you supposed to use your brain before talking? Enlighten me, the layman, and tell me why we need higher rates?

I suppose Grandma needs higher yields on her CDs.

Interesting side note on banking: I have accounts at several large banks, one of which is Chase. I just got notice the other day that one of my accounts, mid-5 figure account that has been idle since 2009, was going to be handed over to the state of NJ, unless I signed a document claiming it and visited a branch. Upon visiting those fuckheads, they informed me that the account needed to be active or else it’d be deemed an orphan account and its contents shipped over to Trenton for expeditious disposal.

Markets suck giant moose-cock today, so you might as well laugh a little.

I reduced my HABT position and will keep limit orders in place to make it a small part of my future. Fuck being emotionally attached to a company that spits in the face of its after-market shareholders. There are too many great companies out there to get hung up on a concept or a single name. Regrettably, I’d love to have sold at $36; but it wasn’t in the cards for me. I had no way of knowing they’d pull this shit, so I am dealing with the situation with fresh facts on the ground.

With some of my cash, I started a position in GRUB. With GRUB, you have several things working in your favor.

1. They are the Uber of food delivery.

GRUB doesn’t just add restaurants to their app. They employ a fleet of drivers and physically deliver the food to your fat, fucking, mouths. They take 10% of sales from participating customers.

2. The price of gasoline is going lower. I hate oil stocks here and feel the price of crude is about to take another leg lower. Being in the business of driving cars about town, cheaper gasoline is a direct benefit to GRUB, just like it is for PZZA and DPZ.

When I was a kid, I was a huge baseball fan. I played the sport every day and made sure to watch every Mets baseball game on teevee, a ritual shared with Grandpa Fly. If you’re a National League fan like me, you know that Tony Gwynn was the best player in the 1980’s to the 1990’s. He was the Ty Cobb of our generation, putting up amazing stats, such as striking out less than 20 times per season ten out of the 19 years he played and NEVER striking out more than 40 times in a season.

Think about that.

In 1995, Gwynn hit .368 with 577 at bats, striking out just 15 times. The fuck?!

The year prior, during the god forsaken strike year, he hit .394.

In our business, it’s so tempting to want to be Babe Ruth. Truth be told, most of the homerun hitters are Barry Bonds, using nefarious methods to achieve greatness.

Single after single, Gwynn built a legacy of greatness that solidified his place in the annals of baseball history.

This is more for me than it is for you. I want to remind myself that controlling the beta, being consistent over outsized, is supremely more desirable in this business. The enemy of wealth is high beta and draw-downs. If I limit my world of stocks to companies that are performing now, over stocks that might perform in the future, I will greatly reduce my strike out ratio; and that’s what it’s all about.

Early going the futures are flat–but there is a positive tone to this tape, so I will not be surprised to see bears getting their arms snapped in half by 11am.

Shake Shack reversed a 4 point deficit and roared higher today. You’d think HABT would follow suit, after yesterday’s drubbing, right? Under normal conditions, there isn’t a chance in red hell HABT wouldn’t run today too. But then again, that all depends on how nefarious the company and its insiders are.

See, as the market climbed today and SHAK did a miracle run higher, some fucking scumbag investment bank was passing around a secondary offering prospectus, leading to a leak of information (Piper Jaffray, Baird, Wells Fargo) that caused weakness in HABT’s shares today. I know how this shit works, having worked at bullshit firms like this in the past. The real question that I have for management is WHY THE FUCK ARE YOU DOING THIS NOW AFTER THE STOCK DROPPED 15%?!

Much more than that, the gall of these bastards to permit sales during a lock up period, which expires May 19th. Seriously, this is some fucked up shit. This isn’t a company that needs the money, after just bragging in a conference call that they had enough cash to fund  two years of expansion. So this is obviously insiders, motivated by greed and avarice, taking advantage of their dominant position over the layman shareholder.

The sellers will be private equity firm, Karp Reilley, and whoever else owns the stock, pro-rata. I am sure their “advisors” believe there is demand for the shares, especially since the share price is up from its IPO price of $18. Essentially, this is a punch in the nose to anyone who bought stock in the after-market. I understand that private equity needs to sell in order to lock in gains. However, they should abide by the fucking lock-up expiration, or don’t have one at all.

It’s deplorable and makes me reconsider my whole position on being an investor in this company, who clearly places their shareholders into the bottom of their greasy, crooked and greedy little barrel.

NOTE: Karp Reilley owns more than 55% of HABT, so this is going to be an issue going froward.

Armed with algorithms that literally predict the future, and now the most comprehensive equity analytic software the world has ever seen (Exodus, coming soon, I promise), “The Fly” has turned over a new leaf, one of extreme winship–based upon certain truths that cannot be debated. Gone are the days of wanton speculation and outsized drawdowns. Believe it or not, I’ve learned a great deal about the market in recent months and I am not ashamed to say I continue to learn from the great humbling mechanism that is equity trading.

Like in all aspects of life, if one doesn’t adapt to a changing environment, one will become extinct (extra dinosaur). There isn’t any denying certain truths that I am about to reveal to you.

Your gains will always be higher if you exclude Chinese burritos from the menu of stocks that you choose from.

Your gains will always be higher if you’re buying companies with a specific amount of free cash flow. The number cannot be too low or too high. It must be just right (don’t ask).

Your gains will always be higher if you accept the fact that trading quickly is a poor man’s game. Buying over periods of time, in increments, is a preferable method of investing for a wide array of reasons.

This isn’t 2013 anymore. The market is asking for certain requirements before sending your stocks higher. As for me, I am making headway in MS, MD, JAZZ, MUSA, N, SGEN, HAR, SBNY, just to name a few. Being that I have a very large cash position and lots of ideas of how to reinvest the money, I began buying today, starting with SKX and LVLT.

In light of the HABT decline, I added to my position. I have 7 months left of dollar cost averaging into the stock.

The PPT Wins again– to the exact day.

This is getting tiring. The Federal Reserve isn’t going to jack up rates, jackass, because they cannot. Listen to me for the 10,000th time: if the Fed raises rates, it will be responsible for completely destroying a wide basket of foreign currencies, and by extension, hurting US multi-national firms. Are you even monitoring the rout in the euro vs the dollar?

It’s like the media is filled with catamite idiots, the dumbest varietal of human being. There isn’t a basis to raise rates, not now, not ever!

Pray tell me, why should the Fed raise rates, aside from the moronic idea that we need “bullets” for the next crisis?

All European yields are at RECORD LOWS. Negative yields persists and King Dollar reigns supreme. WE DO NOT NEED TO FUCKING TIGHTEN WHEN INSIDE A DEFLATIONARY VORTEX!!!

As an aside, INTC just warned thanks to currency fuckery. Banks look good and the market is set to bounce, as predicted, yet again, by The PPT.

SHOMP.