FLASH: $HLF OPENS TO A SNOOZEFEST

The stock opened down 40 cents.

Whoever kept the stock halted for almost 3 hours should be decapitated. Seriously, how material is the news when it reopens unchanged?

Watch JCP. I suspect the higher HLF goes, the lower JCP will sink.

LIVE BY THE ACKMAN : DIE BY THE ACKMAN.

-BEAS, 2014

Several months ago, Bill’s short thesis on HLF was accepted by Wall Street and the media as “visionary”,  immediately sending the shares sharply lower. However, shortly thereafter, Dan Loeb and Carl Icahn bet against Ackman and went long HLF, which split the media and Wall Street elite between the two parties, Ackman v Everyone else.

Carl, always the skeptic, questioned the timing of Bill’s HLF bear raid and said so in a very public manner.

Carl got really mad at Bill, which was fueled by a prior engagement in which Bill sued and defeated Carl in court for monetary damages. His anger caused him to go on the television and deride Bill for his very public short position in HLF, calling it manipulative and stupid. Bill challenged Carl and told him to “make a bid for the company” if he liked it so much.

Carl was not amused.

Bill insisted HLF was going to zero and promised the FTC would act and shut them down.

Shortly after their public debate on HLF, Carl announced he was taking a very large position in HLF, as much as 25% and wanted seats on the board. Bill was chagrined by this news, as the shares skyrocketed higher.

Several months later, things at JCP went really bad to biblically wrong, led by former Apple exec, Ron Johnson. Mr. Johnson was supported by Bill Ackman and gutted the old retailer for a “new vision”, one that would make Bill “15-20 times” his investment. But that didn’t work out for Bill either, as the strategy failed. Ron Johnson was fired, leaving  the company in shambles and shareholders in ruin.

On the same day Ron left JCP, HLF announced their auditor was committing crimes, by trading on insider information. As a result, the auditor, KPMG, resigned from HLF. However, the drama thickened as the companies stock  remained halted for an undetermined amount of time, even after the KPMG news was released. Speculation ran rampant, as bull and bears debated the timing of the news.

Could Carl be making a bid for the company to destroy Bill?

Or, maybe the FTC decided to act upon Bill’s urging to finally shut HLF down?

The drama, as always, continues.

Stay tuned.

“Montauk Bill” Ackman is on record saying JCP was going to be a 15-20 bagger for his investors.  Instead, it went down more than 50%, the CEO was fired and the company is on a path towards bankruptcy. Well played, Sir.

With $10 billion under management, Bill will survive this JCP disgraceful debacle. However, he will do so losing more than $600 million for his sad faced partners.

What can go wrong for “Bicycle Bill” next? Perhaps his investment in BKW or maybe his short in HLF? Frankly, his investments aren’t that risky, with CP and PG being his largest holdings.

I don’t know why hedge fund managers think they could run retail stores (cue Eddie Lampert). Theoretically, I think I know what people want to buy and how they want to buy it. But I have no experience in the field and know enough that I know nothing.

The problem with Ackman is he doesn’t know that he knows nothing. And for that, regrettably, he’s an asshat.

NOTE: Should HLF work for Icahn and turn out to be another loser for Ackman, his fund will be Paulson’d.

This material is just the sort of thing that could separate one smartphone maker from the next. If manufacturers are worried about the expense, passing it onto the consumer, I’m afraid they don’t know their customers very well.

Sapphire, a crystalline form of aluminum oxide, probably won’t ever be as cheap as Gorilla Glass, the durable material from Corning that’s used to make screens on iPhones and other smartphones. A Gorilla Glass display costs less than $3, while a sapphire display would cost about $30. But that could fall below $20 in a couple of years thanks to increased competition and improving technology, says Eric Virey, an analyst for the market research firm Yole Développement. And since sapphire performs better than glass, that price could make it cheap enough to compete, he says.

Sapphire is harder than any other natural material except diamond; by some measures, it’s three times stronger than Gorilla Glass, and it is also about three times more scratch resistant. That’s why Apple uses it now to protect the camera on its iPhone 5. Virey says that all major mobile-phone makers are considering using sapphire to replace glass. “I’m convinced that some will start testing the water and release some high-end smartphones using sapphire in 2013,” he says.

An alternative to using pure sapphire is to laminate an ultrathin layer of sapphire with another, cheaper transparent material, maintaining much of the performance advantage of sapphire at a cost comparable to that of the glass typical in mobile-phone displays.

For this purpose, GT Advanced Technologies, based in Nashua, New Hampshire, is developing a method for making sapphire sheets thinner than a human hair—much thinner than the nearly millimeter-thick glass used now on mobile phones. (The technology, originally developed for making very thin solar cells, was acquired from Twin Creeks Technologies. See “Startup Aims to Cut the Cost of Solar Cells in Half.”)

GT is also cutting the cost of sapphire manufacturing by following the strategy that it used over the last several years to reduce the cost of making crystalline silicon for solar cells.

To make the sapphire, aluminum oxide is melted down in a specialized furnace and then allowed to slowly cool to form a large crystal. That crystal is then cut with a diamond-coated wire saw. GT designs its furnaces so that they can be cheaply upgraded to make ever larger crystals as the technology improves, allowing customers to increase production without buying new equipment.

GT is more optimistic about prices than Virey, estimating that sapphire displays might cost only three to four times as much as those made from Gorilla Glass. People at the company say prices will fall further as GT improves its furnaces, and as the manufacturers that buy those furnaces streamline their operations.

Several other companies with proprietary technologies are also lowering the cost of sapphire, including Rubicon Technologies in the United States, Monocrystal in Russia, and Sapphire Technology in South Korea. If costs can get low enough, these manufacturers may have a large market waiting for them. But they’ll have to continue to contend with the incumbent technologies—Gorilla Glass and similar materials offered by other manufacturers. This year Corning introduced a new version of the material that it says is about twice as resistant to scratches. It could be in products later this year.

Source

The reason why the stock spiked after the news hit that Ron Johnson had been ousted as CEO is because the immediate perception was that Johnson’s policies were so detrimental to JCP, anyone but him would be an upgrade. However, as the news was digested, the shares slid and are now down 7%.

Why?

Firstly, it means that the largest holder of the stock, Bill Ackman, should divest from the company, since his entire thesis was “revolution by Johnson”, turning JCP into a frappacino, ipad loving, place of chic high end retail–a gathering corridor for gay males to converse about fashion and technology. The only problem with that idea is the fact that JCP has been the home base for old ladies with coupons in their purses for the past 50 years.

Johnson’s retail strategy was a good one, just not for JCP.

Secondly, now that Johnson is out, does that mean Joe Fresh is out? JCP has already converted more than 10% of its stores and has spent billions on revamping their strategy. Surely the new CEO will have to revert to the JCP of old, which might lead to a massive write down.

Thirdly, their debt covenants will be called into question soon. The company doesn’t have enough cash to survive until 2014. Therefore, they need to raise capital. A new CEO isn’t going to travel the ruinous path of Johnson. Therefore, he is likely to raise capital immediately.

This needed to be done now, so that the company could be on firm footing for the holiday shopping season. There was a chance that suppliers would withhold merchandise–fearing a JCP bankruptcy.

My best guess, this is going to be a make or break X-mas for JCP. However, the stock is going to be a buy AFTER they raise capital.

Fly 1 – Ackman 1

I covered all of my shorts for gains today because I’m optimistic on thermal-nuclear war, bullish with my balls swinging, hoping it will create more jobs in America. Factories will buzz again, like the 1950’s, producing drones with nuclear tipped missiles, on an industrial scale.

America’s largest export will be weapons of mass destruction, which will create MOAR jobs abroad too–thanks to “rebuilding efforts.”

I kept HDGE, as my largest position, because this is it–the grande finale– the moment we’ve all been waiting for. This is the final melt up, Godfather of speculative perversion. Let’s play the game and win.

I made GTAT a meaningful position, buying it all day long. Long term, I am bullish on sapphire. RBCN is another play in the space.

What are we doing here? What are the goals?

Yesterday the goal was to punish Bill Ackman for trying to be a retailer. Today we’re just trying to pay our 2012 taxes with gains to be realized this week.

I will not reinvest my assets in a broad array of stocks. For now, I am content with insane beta stocks, FRO and GTAT. I kicked out GNK today for a loss, because it’s not FRO.

Due to my belief that the market cannot trade lower, even in the face of ‘merciless’ nuclear war, I covered my shorts in AG, CCL, JCP and PBR.

I did, however, keep my position in HDGE, due to the diversified nature of the vehicle.

There was a bullish report issued this morning by Sterne Agee, upgrading RBCN based upon channel checks showing Sapphire capacity utilization is ramping. So you know, Sapphire is a manufactured material that is stronger and better than Gorilla Glass and has been rumored to be in the final stages of testing for certain smartphone manufacturers.

GTAT is such a company. Therefore, I bought it.

The Devil did it again, nailing the UNXL trade with Space Alien Magician precision. I didn’t have the stones to buy it; therefore my salutations are somewhat hedged with disdain for not making money on it.

Markets look safe for today, possibly setting up a niche trade for me. I have two ideas, spearheaded by a research report out this morning from an analyst who I respect. I’m sure you’d like to know the names; but you’re gonna have to wait until I am good and ready.

The Japanese carry trade is the driving force of the world now. Borrow Yen and buy Italian or Spanish debt. Why the hell not? The Yen goes lower every-single-day, making the money free!

Now the other side of that trade can disrupt things, no? Say, for example, there is a sudden spike in the Yen, to the tune of 10-15%. Should that happen, whatever these carry-trade bozos are buying will need to be liquidated ASAP. However, things are going swimmingly for now. My reservations on the markets are fueled by my desire for moderation, because I’m already +21% for the year. Plus, I’ve always said, from the 2nd week of January: “we’re going up until tax day.”

If that’s the case, this could be the last up week in the markets for a while–the grande finale. Finis.

Just about once per annum the market enters the Twilight Zone, as the disbelievers snatch the purses of the anointed and send markets lower. Over the years, we’ve witnessed a steady, almost methodical, walk down of volatility, partly due to the manipulative measures being practiced at the Federal Reserve. As such, we’ve enjoyed pornographic stock returns and the elimination of the “bear class.”

However, almost like groundhog’s day, the bears make an appearance once or twice per year to remind everyone that markets do in fact go down–on occasion.

I believe we are entering such a period, albeit a brief one. During the month’s of May and June, the lot of you will die in despair, tortured by mountainous market calamities. If my losses in VIX/VXX weren’t upwards of $5 million since 2010, I’d try my hand at it right now. However, due to the exogenous circumstances of my pervious VXX endeavors, I’ve reserved it for my annual Halloween costume only, mainly to scare the adults–sending them indoors.

In short, prepare for a miniature meltdown, which will correct (extra Mr. Grady) the lowest of the low among us and turn them into honest men again.

Volatility is cheap and it’s only going to get more expensive from here.