And the Overflowing Toilet Company Delivers Another Blow

AS predicted, CCL guides lower, in a material, and dramatic, fashion.

Carnival beats by $0.05, reports revs in-line; guides Q2 EPS below consensus; lowers FY13 EPS below consensus (35.73 )

Reports Q1 (Feb) earnings of $0.08 per share, excluding non-recurring items, $0.05 better than the Capital IQ Consensus Estimate of $0.03; revenues rose 0.3% year/year to $3.59 bln vs the $3.63 bln consensus.Key metrics for the first quarter 2013 compared to the prior year were as follows: On a constant dollar basis, net revenue yields (net revenue per available lower berth day or “ALBD”) decreased 2.3% for 1Q 2013, which was in line with the company’s December guidance, down 2 to 3%. Gross revenue yields decreased 3.4% in current dollars. Net cruise costs excluding fuel per ALBD decreased 3.1% in constant dollars, which was better than December guidance, down 1.5 to 2.5% primarily due to the timing of certain expenses. Gross cruise costs including fuel per ALBD in current dollars decreased 5.5%. Fuel prices decreased 4% to $677 per metric ton for 1Q 2013 from $707 per metric ton in 1Q 2012 and were in line with the December guidance of $674 per metric ton. Fuel consumption per ALBD decreased 5% in 1Q 2013 compared to the prior year. The company repurchased 2.3 million shares valued at $87 million during fiscal 2013.Co issues downside guidance for Q2, sees EPS of $0.04-0.08, excluding non-recurring items, vs. $0.30 Capital IQ Consensus Estimate.

Second quarter constant dollar net revenue yields are expected to be down slightly compared to the prior year. Net cruise costs excluding fuel per ALBD for the second quarter are expected to be up 9.5 to 10.5% on a constant dollar basis compared to the prior year due primarily to the timing of certain expenses and repair costs related to the ship incident.

Co issues downside guidance for FY13, lowers EPS to EPS of $1.80-2.10, excluding non-recurring items, from $2.2.-2.40 vs. $2.37 Capital IQ Consensus Estimate.

At this time, cumulative advance bookings for 2013 are behind the prior year at prices in line with the prior year levels. Since January, booking volumes for the remainder of the year, including Costa, are running significantly higher than last year at slightly higher prices.

“Booking volumes during our seasonally strong wave period have remained solid with pricing comparisons improving in recent weeks. However, economic uncertainty in Europe continues to hinder yield growth…

Despite considerable attention surrounding the Carnival Triumph, we had been encouraged to see booking volumes for Carnival Cruise Lines recover significantly in recent weeks. Attractive pricing promotions, combined with strong support from the travel agent community and consumers who recognize the company’s well-established reputation and quality product offering, were driving the strong booking volumes.”

The co now expects full year net revenue yields, on a constant dollar basis to be in line with the prior year compared to up 1 to 2% in the December guidance. The change in net yields is due to the economic uncertainty in Europe and pricing promotions for the Carnival brand combined with less than expected growth in onboard revenue across the group. The company also expects net revenue yields on a current dollar basis to be flat for the full year. The company expects net cruise costs excluding fuel per ALBD for 2013 to be up 2.5 to 3.5% on a constant dollar basis compared to up 1 to 2% in the December guidance. The change in cost guidance is due to the impact of repair costs, as previously announced, as well as, expenses related to the enhancement of vessels in the remainder of the fleet as a result of the ship incident.

Disclosure: I am short CCL.

There I was, yet again, drinking brown acid with a little milk and honey mixed into it, watching the old portfolio rise, rather appreciate, in value–disrupted! when I started to hear something odd in my dining room.

What the hell could it be, god damn it!

Remember, I just finished renovating my house, after buying it in July. I’m a big advocate of moulding, always interested in making things look better, become more attractive to any prospective buyers. After all, there’s a reason why my house sold in one week.

I called a plumber. He stepped into the guest bathroom and declared “it’s a gasket, all is well.” He fixed it, then collected his $125–like the savage that he is, then wheeled off.

At the same time VHC started to collapse, the sound in my dining room grew louder. I said to myself “Fly, what could this be? Could I be hexed again by the Gods, testing me through arduous home renovations?”

I summoned the plumber back for a second time.

I complained of the sound and he chalked it up to “it’s the wind from the attic, traveling down the pipes, into here.” Then, like a gorilla with a wrench, he said, “no, it’s the heat. The heat is making that noise.” I dismissed his excuses with as much scorn as a fanatical muslim in bible class, asking him to “please refrain from partaking in ridiculous commentary.”

I said to him “the sound, my good sir, is pervasive and means there is a leak in the ceiling, chap.”

He took out his blade and sliced through the ceiling. Like cutting through a juicy grapefruit at a wrong angle, the water squirted in his face, drenching his worker blouse with cold water. Apparently there was a pinhole leak in the ceiling, caused by acidic water (yummy), of the municipal variety.

After further inspection, we found 6 pinhole leaks, which probably means the entirety of the cold water, horizontal, copper piping in my money pit needs to be replaced.

Let me reiterate: I’ve been informed that my water is laden with acid and will eat my pipes like pacman eats ghosts.

No, I shall NOT replace it with plastic crap. I will install a higher grade copper and have the water treated at the main.

So don’t feel bad, sad faced shareholders of VHC, “The Fly” got his comeuppance today too, with a direct hit upon his treasured coffered ceilings, which will lead to a complete and utter disruption of his way of life for the foreseeable future.

Back to my cup of brown acid. It’s rather delicious, actually.

When I sold VHC I did it because I was done relying on the caprices of judge and jury. I had a moment to think about what I was doing and decided it was time to liquidate my entire position. I started to sell in late February and completed my final sale on 3/5. At its peak, VHC comprised 30% of my assets.

But keep in mind, I’m not a guru, just a space alien magician (SAM) trying to make his way–here on Earth. The gurus are guys like Bill Ackman, long JCP into the teeth of catastrophe. Bill’s other “big bets” include risky stocks like PG and TGT, a real genius that guy is.

I don’t know what will happen to VHC tomorrow or the next day. For those of you who are still long, I am pouring out some of my 40 ounce of malted liquor onto my persian rug, right now, in your honor.

This too shall pass and you will learn from this experience to never trust a sure thing ever again. I am guilty of being swayed into the trap of euphoria too. At one point I felt this stock was on a bee line to $100. But the way the stock traded, spoke volumes, much more than the news itself. It was frustrating to own it and most of the time it traded by appointment.

Perhaps this is a blessing in disguise. Maybe this is a buying opportunity of a lifetime. I am sure James Cramer will give it another “boo-ya” on CNBC this evening.

The important takeaway from all this is asset allocation. If this was just a 5 or 10% position, it would hurt, but not be catastrophic.

Regards,

Lord Fly, Commander of the Stock Exchange, King of Kings, President of Atlantis.

Via BBG:

*VIRNETX JURY CANNOT REACH UNANIMOUS VERDICT IN CISCO CASE

*VIRNETX JUDGE TELLS JURY TO CONTINUE DELIBERATIONS

Stock is getting hammered on the news.

With natural gas spiking, coal becomes more attractive to utilities.

For a trade, I went long $ANR.

I just heard Rick Santelli whine about our government not using natural gas to fuel our cars. Let’s not be naive, ok? The government is owned by large corporations. Companies like XOM, CVX and COP want to own the natural gas space, but were caught off guard by a slew of start up companies. Over the past 5 years, partly due to inaction by our government to use natural gas for cars, partly due to the advancement of horizontal drilling, the price of natural gas has plummeted, bankrupting hundreds of companies, as a result.

As we speak, there are many over-leveraged natural gas companies with the very best properties in America. Because they are now being controlled by debt holders, those assets will be sold or they will go bankrupt. When liquidated, the big oil companies will buy up the property.

Only after this process is complete will the quintessential American politician take action, promoting natural gas as a primary fuel for the US automobile market. Within 10 years, the price of natural gas will be north of $10 and the natural gas companies who survived this transfer of wealth would’ve enjoyed parabolic moves to the upside.

I started a position in BV.

This is a real bottom, not one of the head fake’s we’ve witnessed over the past 5 years.

We are seeing significant drawdowns in supply (the most in 20 years) and more importantly, the rig count is down 58% from 2010. In other words, supply is being dried out at a time when wells are shut in. Should we get a few supply disruptions this summer, the price of natty can spike higher.

The direct beneficiaries are companies who desperately need higher prices, like CHK, GMXR, KWK, UPL, ECA, SFY and CWEI. There are others and the sector is ripe for speculation.

In other news, Blackstone borrowed another $2.1 billion to buy more residential real estate. I’m telling you now, as I’ve told you for months, housing has bottomed and prices are going up–big time.

Human waste everywhere. This company is full of feces.

“We are not allowed off of the boat despite the fact that we have no way to use the restrooms on board,” Jonathan Evans of Reidsville, North Carolina, said in an e-mail early Thursday. “The cruise director is giving passengers very limited information and tons of empty promises. What was supposed to take a hour has turned into 7-plus hours.”
Carnival, in a statement, said the ship never lost power, “but there were periodic interruptions to elevators and toilets for a few hours last night. However, at this time all hotel systems are functioning normally and have been functional since approximately 12:30 a.m.”

Gregg Stark, who is traveling with his wife and two young children, told CNN, “There’s human waste all over the floor in some of the bathrooms and they’re overflowing — and in the state rooms. The elevators have not been working. They’ve been turning them on and off, on and off.”

Source

I am short CCL.

After selling BX and HLF, I need to plug a hole or two with larger cap names. Right now I am invested in an array of smaller caps, which is perfectly fine in an upswinging, penis chopping market. But if the blade swings the other way, I’m gonna get hurt.

I’ve spent all day and night looking for names, searching the darkest corners of the world for something of value. I’ve come up with a handful of names, none of which inspire boldness.

Here they are

CRUS (small cap at 1.5b)
GS
RF
RLGY
SWKS
SWK
WDAY
WFM
LM

On the other hand, I’ve got small cap ideas coming out of my nose (not really, because that would be gross). But there are chockfull of micros spinning higher. A new trend that I noticed today was to buy up beaten down names, just because they are more than 15% off their 52 week highs. You have no idea how hard it is to find stocks more than 5% of their 52 week highs. If that’s the case, SWKS, FIO and WFM are poised to rip tits, breasts and ball sacks to the upside.

There is one little internet name that is interesting, ticker DMD. They own Livestrong.com, Ehow.com, Cracked.com and are the #2 registra of websites in America, second to Godaddy, which is owned by none other– KKR.

Speaking of which, asset managers look great. I can assure you that my business is thriving now. I am in a growth industry, the very best industry in America, bar none. So, there isn’t any doubt in my mind that EVR, BX, APO, FIG and KKR aren’t knocking the cover off the ball too. One name worth noting is LM, old school asset management firm with big exposure to banks.

I like LM here, very much so.

Finally, there has been a secret society out there who’ve been buying up regional bank stocks like Ronald Reagan’s jelly bean budget. The trick to finding the winners is to look for banks with price to book ratios under 1.25 and debt/equity ratios under 3, with decent growth. The lower the debt/equity ratio, the higher the stock. Add in a little dividend and you have a winner.

I would reveal this list to you, but it’s for closers only. Plus you have plenty to chew on now, so hop to it.