Celebrating on the Graves of Others

I am +2.5% today, pushing my year to date returns to 16%. I am fueled by the losses at Pershing Square, short JCP, long BX, WNC, USG, PAMT and a big push by BZH.

My cash has been zero for weeks, as I am leveraged at 110% long, only offset by my shorts in CCL, AG and JCP.

The Fly’s swagger is back with extreme force and certitude. I am urinating on graves, drinking bottles of malted liquor, spitting fire into the sky like a dragon.

I sold out of APO, booking a 10% gain, and bulked up on BZH to reduce my basis down to $16. I have buying power set aside, from the APO sales, to initiate another short position. However, I am not going to throw it on today. I have a little more work to do on the name and rather take some time to figure out my entry point tonight.

Drink heavily plebs and gentleman alike of iBankCoin. The market’s are at new highs and the shorts are dead, save the distinguished gents who are short Tea Party investments, broken toilet boats and low end retailers trying to up-end its caste.

May the bones of the dead bears fuel the engines of the market for another 2,000 points before we are gluttonously content.

NOTE: I sold out of VHC today, raising buying power for future shorts.

All sellers in the bond market today. What’s particularly notable is the amount of sellers in the long dated 2097 bonds, which are already trading 25+ points under par. Apparently, some “smart money” doesn’t think JCP will make it until 2097.

Here are the order books for a variety of JCP bonds.

2097

2036

2018

2017

Any buyers out there? Anyone?

Disclosure: I am short JCP

I took profits on APO and added to my BZH position by 30%.

UPDATE: I sold out of VHC.

The market is about to hit new highs and Jc Penney CDS are about to blow out again. “Montauk Bill” likes JCP, so much, he might have purchased that 10 million share block from Vornado last night. Nonetheless, the smart money is taking out insurance on JCP debt, via credit default swaps.

We’re at the 5 figure mark now, +300% over the past 12 months, with no end in sight.

JCP 5yr CDS

They will need to raise money in 2013 and it is going to be punitive to shareholders.

Here are current quotes on JCP paper. As you can see,  the older the maturity, the worse the price gets.

Disclosure: I am short JCP

The main reason why I built The PPT was to automate my research. I needed a program that could automatically evaluate the balance sheets of every stock publicly traded, compared their debt vs cash, let me know when earnings estimates have been lowered, alert me to short positions, allow me to isolate companies who are trading poorly and whose earnings and revenues are decelerating.

I built PPT when the market was going down, in bear mode. This was to alert me to dangers, assist me in short sales.

Since then, I increased the power of the tool. Granted, many of you still can’t grasp how to use it, which is being addressed in the current iteration, PPT 5.0–soon to be released this century. But I know how to and will share with you a few screen results.

Most impaired balance sheets, trending lower.

Downward revisions, trending lower.

My current shorts are CCL, AG and JCP. I intend to start hedging longs until I flip the switch and go net short after tax day, 4/15. Until then, I am in a very big net long position, but will take advantageous shorts to take advantage of the slowly but surely dilapidation of this upward moving tape.

I will post my new short ideas tomorrow, after The Devil and I figure out which ones are going lower.

It’s very early in the JCP story. However, one thing is for certain, they will draw down on all of their cash by the end of 2013. This company is going to recapitalize, whether it be through private financing or a large, dilutive secondary, or bond offering.  It’s not in any danger of going bankrupt, just yet, since they have a credit facility to fall back on. But the trends in retail are the very worst ever witnessed by a big box store, including SHLD.

If forced to liquidate their real estate to raise capital, they are likely to receive “distressed bids” from prospective buyers, nowhere close to $200-250 per sq ft.

The vultures will be circling their wagons until they nail down some financing.

Ron Johnson made a huge mistake, thinking the old horse faced– sea hag crowd– at JCP was hip like the AAPL dork-a-tron line slaves. Clearly, he struck lightening in the bottle with the Apple stores and is now comically lost at JCP.

Being that Bill Ackman is getting “barbelled” on both JCP and HLF, I suspect there might be an exaggerated run on both positions, to further weaken “Montauk Bill” and his scurrilous ways.

Other positions of Bill’s to keep an eye on, in case he needs to raise money, are BEAM, CP, GGP, TGT and LOW.

Ackman owns good, liquid stocks, but these two (JCP, HLF) are going dreadfully wrong for him and I am obliged to kick him down a few flights of spiked steps–as I sashay (no homo) to my next destination.

I know you may think I am late to the party. However, it’s only getting started just now.

I started a short position in JCP.

The miners are underperforming the base metal by almost 20x today. We are getting to the pain threshold for many long term precious metal holders. These are the Tea Party people, distraught over Obama part II, now being dispatched by Bernanke part 1.

The Rick Santelli crowd has been annihilated, amidst black plumes of toxic smoke, chards of metal zipping through the air, unbelievably hot ovens melting their faces off to the bone.

I am +10% on my AG short and would short more, if I didn’t respect the specter of a mean reversion rally. On any meaningful spike, I am a net seller of AG, until it hits $12.

I also want to sell short some steel names with insurmountable debt loads, like MT. Providing I sell one of my longs to free up buying power, I will take on another short in the basic material space. The bear argument lies in China, so you might as well press the underwater longs there, in any name that is weak and dependent on the Chinese audit frauds.

CLF, MT, MTL and FCX come to mind.

I added a little bit to my DSS position. It’s very small cap and not for the faint of heart, another Devil pick–alongside PAMT.

I’d like to add to my HLF and APO positions. However, I am completely and utterly at my limit, with zero cash reserves.

In case you’re wondering if I’m worried about the market trading down: my answer is positively no.

This story always fascinated me, so I had to close it out.

SCMR announced it will be liquidating the company.

Sycamore announces intent to proceed with Dissolution; Certificate of Dissolution expected to be filed on March 7, 2013  (0.56)

Co announced today that its Board of Directors has determined that, for the reasons stated in the Definitive Proxy Statement filed with the Securities and Exchange Commission in connection with the Special Meeting of Stockholders of the Company held on January 29, 2013, and after reviewing strategic alternatives for all of the Company’s assets and available options for providing value to the Company’s stockholders, it is advisable and in the best interest of the stockholders for the Company to proceed with its previously announced liquidation and dissolution in accordance with the plan of complete liquidation and dissolution that the stockholders approved at the Special Meeting, effective as of the close of business on March 7, 2013.

After paying more than $14.00 in special dividends, the last remnant from the dot come bubble is calling it quits. If you are not aware of the story, in a nut shell, this is what happened.

Just before the dot com bubble bursted in 2000, SCMR was a high flying stock. They did a secondary offering when the stock was around $1,400 (split adjusted), netting them more than a billion dollars. Hell, the market cap of SCMR, at its peak, was $44 billion.

When the bubble popped, the stock plummeted so hard and fast, due to their business falling to drill bits. However, because they had a billion dollars sitting in US treasuries (they never had a chance to spend it), the interest alone on the bonds kept them alive. It offset the losses from the operating business, after they slimmed down to survive the new, new economy. One could argue that management milked SCMR just to draw 13 years of salary. They tried to reinvigorate the business several years ago, through an acquisition–but it fell flat.

Today marks the end of the dot com bubble, the very last remnant of an era of excitement, excess and legendary stock runs.

60 minutes did a hit piece on China last night. They’ve must’ve collaborated with Muddy Waters for the material.

Futures are lower and the American economy is on the cusp of ending, or suffering from a 0.5% annual drawdown thanks to sequestration.

Do we really care?

Come on. You people make me sick already, timing tops and running away from bottoms.

Retail and restaurants, R n R you pikers–remember that.

I am sure all of the experts will be “cashing out” tomorrow, following an early morning gap lower. I flick my cigar ashes in your general direction and hold the course.

We’re buyers of stocks in March. I don’t see the global push for higher stock prices ending because the librarians from 60 minutes said so.

To hedge, I am keeping my CCL and AG shorts and may initiate new ones in the basic material space.