Recapping Two Central Themes for 2013

The housing thesis is still on track, with new homes sales at the highest levels since 2008. Moreover, the 16% gain in January was the best in over two decades.

Japanese Prime Minister, Abe, is still fixed on “creating” inflation. While many view this as reckless economic policy, I believe it is bullish for equity valuations in Japan, as pressure mounts on the Yen, exporters benefit.

So let’s examine these two core thesis trades and see what’s working.

The PPT‘s Housing Resurgence index is chugging ahead, once again.

Within the index, over the past week, the following stocks were the best performers.

MTG +38%

PATK +15.8%

PGTI +11.5%

Z +10.6%

TPX +9.7%

My core holdings in the housing industry are USG and BZH, +1% and down 1.7% respectively.

Over the past month, the following housing related stocks performed best.

ANGI +36%

MTG +32%

Z +22%

CSTE +20%

PGTI +16%

Most of the bigger winners are speculative small cap names. Moving up the market cap ladder we can get a better feel for what’s working.

Month to date returns for housing stocks with market caps over $5 billion.

CBG +11%

MSM +6%

MHK +3.8%

FBHS +3.8%

MAS +3.5%

1 week returns

CX +6.2%

HD +5.2%

WHR +4.9%

RLGY +4.2%

SHW +3%

As you can see, the gains are still very robust. Albeit, my positions have yet to yield spectacular results, I am comforted by the fact the industry is still in a sharp upward mode. Both USG and BZH are “battle ground” stocks with huge short positions. In USG, 22% of the float is sold short and in BZH 27%. Many of the shorts are “legacy”, remnants from the 2008 housing crisis meltdown. It is my belief, as the housing market improves, these shorts will be forced to cover, allowing the shares of  both USG and BZH to run wild, like a naked man inside of a Japanese brothel.

Keep in mind, part of the driver in housing is the emergence of  private equity and REITs in the residential space. As of today, Blackstone (BX) (my top position) and Public Storage (PSA) are the number 1 and 2 owners of US households in the country, from a corporate position. I suspect these trends will continue, effectively drying up inventory and pushing home prices higher.

Japanese equities have traded sideways over the past month, after huge gains. However, last week, they surged again.

SNE +8.1%

ATE +4%

IX +4%

CAJ +2.2%

Both TM and HMC are about flat for the past month. It’s only a matter of time before the weakness in the Yen (-16% over 6 mos) allows the big auto makers to peels the skin off their idiot competitors. I am long term bullish on both.

At the moment, my only long Japanese position is MTU (+1% for the week), but have an interest in reacquiring shares of SNE and HMC for a longer term duration.

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News

Target: stealth
Galaxy: Milky’d Way
Time: 16:00

With the market at new highs, it’s important to watch the underperformers and sell them short. Bear in mind, if a stock cannot rise in this environment, something is wrong with it. This isn’t technical or fundamental analysis. Simply put, I am a servant of trends. On occasion, I become obsessed with a thesis and will fixate my energies on it. But for the most part, I am buying and selling whatever the market is rewarding and punishing.

Steel and Iron should be avoided, especially AKS, GGB, SID, MTL and CLF.

Their balanced sheets are dreadful and people are fleeing the shares.

Small cap oil drillers are death. Avoid them.

Metals and mining are heading lower. Avoid names like WLT, ACI, BTU, MCP, EC and GTI.

Once again, gold and silver miners are heading lower, on their way to fresh 52 week lows.

Stocks that look especially bad are NEM, ANV, IAG, AG, EXK, HMY, ABX and NG.

Copper and aluminum should also be avoided. There will be the temptation to buy into these sectors, hoping for a bounce. But these are bad sectors and really bad companies. The market has discarded them in the same way and fashion that the warrior spartan class tossed deformed babies off mountaintops.

Do not let these bottom feeders taint your rich portfolios with their disgrace.

Ignore them or sell them short.

Have a nice weekend and enjoy the sequestration galas being held throughout NYC this evening.
[youtube:http://www.youtube.com/watch?v=N_lVOTPRGnw 603 500]

You can try to stop the economy through silly ploys of sequestration; but nothing will ever stop this market from going higher, providing the Fed continues its path of glorious explosion.

We need men like Bernanke, scholars, to lead the path to prosperity.

I, myself, in my own scholarly way have taken the distinct honor to withdraw funds from the brokerage accounts of both Pershing Square, through my HLF long, and silver longs, through my AG short.

That being said, for the moment, I am about flat for the day. I do, however, have the taste of blood in my mouth, which is usually a precursor of great things to come. I know it to be true. It’s only a matter of time before my prophecies morph into reality.

Top picks: long HLF, short AG, long PAMT (it’s gonna go again)

I have a very high-end, powerful source in the US government who has told me the economy is about to end. I kid you not. This very distinguished woman is trying to alert everyone to something no one is aware of, not even the Prezident himself. Which is: the entire working class of the United States is employed by the government and they’re about to lose their jobs.

Hang on a second, as I explain.

Do you know that hedge fund that you run, the money you manage for others?

That’s gone. Don’t bother showing up for work. Your offices will be shuttered.

Do you work on the television, telling great pornographic tales to the blue collared folk?

Work for free, else don’t work at all.

A mind numbing 170 million people will become unemployed at midnight, tonight. How’s that for starting the weekend on a good note?

On this mind boggling display of government malfeasance, expect the ratings agencies to smirk and tell you “I told you the government was retarded.”

Back to the 170 million, soon-to-be-unemployed: may God grant you the courage to carry on. Use the barter system to acquired canned goods and hope that your leaders, the men on drugs who vote on things in DC, will put you out of your misery and detonate nuclear devices over your respective cities.

Here is my source.

Time’s up. After the elections for interim tabbed blogger were held, back in December, I said “you have three months to keep your position.”

One of you have moved onto the next phase of “Tabbed Bloggerdom” and the others are fired. My advice to those who were fired is simple: don’t give up. Use the blogger network to build a loyal reader base. Should you decide to degrade yourself by leaving iBC for your own hovel, you will be making an extraordinary mistake.

Nevertheless, mistakes are owned by their idiot masters.

My mandate was for the interim blogger to seize 3% traffic from the other bloggers on the site, making it their own. None of you were able to accomplish this task. However, one of you came close and I’ve decided to grant leniency, giving that person another chance (the generosity of The Fly has no bounds).

Content wise, you were all superb. Everyone wore their hearts on their dirty sleeves and gave it 110%. I know, being the Blogfather and all, that none of you mailed it in–unlike some of my former tabbed blogger bastards.

Here are the stats for February, compared to January.

Rhino wins.

Both Elizamae and Raul3 have until Saturday to pack up their things and get the hell out of here. Please don’t make a mess on your way out. You will be prosecuted.

New elections will be held next Friday. Depending on the amount of interest, elections may last for two weeks. If you want to write for iBankCoin and compete to become an interim tabbed blogger, announce your candidacy in the Blogger Network. If you do not have a blog in the blogger network and would like an invite, email Vincenzo Illuminati at [email protected].

As for Rhino: you have 3 months to get 3% of the site’s traffic, else you will join your filthy sleeved brothers back in the Blogger Network ghetto.

Congratulations, goodbye and good luck.

Fly
Manager

ISRG plunged into the bell because of this headline:

Intuitive Surgical: Shares drop 40 points as headlines that co’s robots being probed for safety by U.S. regulators cross wires

I’ve always said robot arms performing surgery is a horrific idea. I wouldn’t want some cow-grabber in Mumbai performing open heart surgery on me through some stupid arm robot and internet connection. I’m not sure how the stupid thing works– but I don’t care. I’d punch any doctor in the face for asking me to have that done to me.

I’ve seen terminator. No thanks pal.

Secondly, DECK’s numbers beat estimates, further solidifying Sam Poser, from Stern Agee, as a legendary market timer for the name. He was bullish at the bottom, bearish as hell at the top, then switched to bullish again. He’s the only one you should pay attention to with DECK.

Lastly, let’s talk about the giant elephant in the room. Carl Icahn is pressing needles into the skull of Bill Ackman. This happens all the time in the hedge fund world, but never this public. Going after someone’s short position is standard procedure, when it comes to ‘revenge trading.’ In this case, Carl is just an aggressor, multi-billionaire, who wants to teach Ackman a lesson. It never made any sense for Bill to disclose the size of his position.

Icahn is so boss– it’s not a contest. By timing the HLF board news, with comments from the CEO saying he’d go private, on the same day that one of Bill’s largest position– JCP– cratered, it speaks to masterful class embodied by the old war horse– and violence– that nerds like Ackman can only dream of pulling off.

As you know, Bill is a pervert and displays childlike traits when around grown men.

Old school Icahn is going to teach him a lesson and I am going along for the ride in his T-model Ford, top hat and cane (I will beat Bill with my cane) to match.

For the day, I was +0.5%–with terrific gains out of PAMT.

I’m piling on here, supporting the living legend, Carl ‘screw you, give me three seats on your board‘ Icahn– buying HLF just under $40.

Am I late?

Yes.

Do I care?

No.

Why not?

Because I am going to help kill Bill, that’s why.

Off to ride my bike to Montauk.

http://www.youtube.com/watch?v=zaBOlv4zcx8

Only one silver miner has strayed away from the pack, still up nicely while silver is lower. Unless they’re mining sheet rock and NFLX DVD’s, I do not see anything special about AG to give it this sort of premium, trading more than 8x sales–sporting negative revenue and earnings growth rates.

Get back in line, AG. See you at $12.