PREPARE FOR YOUR GOVERNMENT TO SHUT DOWN

I am sorry to inform you of this horrid news, but your government is going to shut down soon and there is nothing that you or your stupid friends can do about it.

As an aside, I am watching a video of Steve Ballmer go absolutely crazy on stage. This is a perfect example of money not being able to instill class into a sub-human. The man is a hairless ape, raging through the world in his private jet. Unreal.

Back to your government shut down. Yeah, they’re not interested in keeping it open any longer. The republicans feel that Obamacare is a trojan horse for the second coming of Hitler. They’re trying to save the Anne Franks of the world from Nazi extermination. The democrats feel as if the republicans are just a bunch of Steve Ballmers, loud mouth apes who do not curry the favor of anyone outside of the flyover states.

The net result is you’re screwed.

Expect markets to take a breather; but do not panic, small man on the computer. Although the market has been week, we’ve been killing it here on iBC for months now and it’s only fair that you give a little back. Don’t be so damned greedy.

In short, “The Fly” looks forward to a good old fashioned draw down, hopefully of profound proportions. I work best under grotesque conditions. See, not all of us were born into a life of privilege, always begging for the easy path, grown babies dependent upon easy wins to mask the pain of inadequacy.

BALT was designed to be a pure play, based upon the day rates of the BDI. Within the BDI, there are numerous rates, depending on the size of the ship. The biggest ships are Capesizes; BALT owns two of them.

Do you know where day rates were for Capesizes when they reported earnings?

Answer: $5,000 per day.

Do you know where they are now?

$41,000

If you combine all of their ships together and figure out what they make on a daily basis, based on today’s rates, that number is $15,000 per day. If you take that 15k times 11 ships by 90 (days in the qt.), they stand to do $13.5 million in revenue.

Do you know what they did last quarter?

Answer: $6.5 million.

Their net income break even number is $13,000 per day, meaning, at current levels, the company is operating in the black and will most likely return earnings back to shareholders, as it is company policy to do so. They currently pay a 1 cent divvy, despite operating in the red.

There isn’t a risk of dilution, because the company just raised $60 million. Instead, they will take said cash to buy more ships, investing in their business at a time when it makes sense. Not too many shippers can do this, since they are burdened with crushing debt loads.

Talking with management and people in the industry, I can tell you that demand for iron ore out of China is real. They aren’t restocking either, since inventories are low. They’re probably using it to build tanks to fight us in a world war. On the supply side, fleet growth is stymied at a paltry 3-5% this year, at least 10% off historical averages, due to scrapping and the inability for many shippers to finance new builds.

Throw all of the valuation numbers out the window. This company isn’t trading 5x sales, but 2. Analysts aren’t even updating their numbers–because they missed the move. No one is calling the company!

Like it or not, analysts will need to bring their guidance into line with reality, which will shock and surprise many, who will find out for the first time that these companies are growing at 100% clips on a quarter to quarter basis.

There isn’t a better growth story.

http://www.youtube.com/watch?v=gAjwV0ll03Y

I bulked up on MODN and added to my BALT position.

Also, I sold out of CVV.

Although I think it trades higher, I needed the money. I am out.

When I started buying GOGO at $11.5, I was researching MODN too. On paper, it’s so cheap!

The company came public and its stock ran up into the mid 20’s, amidst widespread praise and adulation from the media. However, something went awry at MODN, awfully quick, and it was reflected in their staggering earnings shortfall.

They were supposed to do 25-26 mill for the quarter, but instead did $21 mill. Analysts were pissed and threw the company under a bus. During the conference call, the CEO said it was a matter of not being able to “close deals.” He insisted that the company didn’t lose any clients and were refocused on finding a new sales manager to right the ship.

I gotta say, it sounded like a bunch of BS to me. The company guided down for the next year, not just 1 or two quarters. They went from profitability to potentially burning through $20 mill over the next 12 months.

In my estimation, the real problem is growing pains. Ironically, the company is in the business of helping life science’s companies manage their top and bottom lines more efficiently. But they managed to over-expand, and as a result, have many, many disgruntled workers leaving scathing reviews on Glassdoor.

They paint a picture of middle management anarchy run amok, something reminiscent of the movie Office Space. Upper management seems to be unable to motivate people, and as a result, performance and productivity have suffered.

None of what I said sounds good and certainly not a reason to buy the stock. However, the company has over $100 million in cash, equating to 50% of its market cap. The p/s ratio is in the league of ZNGA and is 60% cheap, when compared to other companies in the SAAS space. Providing management can right this ship, this stock will make a bee-line for $20.

If management continues to fail, I am almost certain this stock will be a feasting ground for activist shareholders, demanding change, clamoring over the strong cash backstop.

In summary, MODN sucks, but I took a position nonetheless.

Dry Bulk day rates are racing higher, most likely due to a robust Brazilian grain harvest, and of course the much lauded iron ore demand from china, which is now being sent seaworthy. It was only a matter of time before shipping rates exploded to the upside. After all, end user demand is still strong. The problem was over-capacity; but that’s been getting rectified by massive insolvency striking the shippers, forcing banks to seize assets (ships) and scrap them for their metal.

Economics 101 dictates that whoever is left standing will benefit from a new supply/demand paradigm. Also, since 2007, major innovations in fuel consumption have been made, giving the companies who own new ships a distinct advantage over those with old gas guzzlers. On average, fuel is 60% of a shippers expense.

To that end, enter BALT. They just did a capital raise and do not have any debt maturities due until 2015. They have a fleet of 9 ships, 2 of which are Capesizes. The Capes are the biggest ships and their rates are +300% over the past few months. Since BALT’s fleet is so young (3.5 years), they are fuel efficient and able to make money at a much lower rate than its peers. In other words, this is a company that will benefit from its peers going by the wayside, profiting best from a rising day rate environment most because of their capital structure and superior fleet.

If rates continue to break necks to the upside, look for material upside guidance and profits to be reported at some of your favorite dry bulkers, something that hasn’t been reported in years.

Classic Krull. Very funny.

For those of you who haven’t seen the movie Glenn Gary Glenn Ross, go youtube the Alec Baldwin speech and this will make sense to you.

Someone told me the market is on its biggest losing streak of the year. By the looks of my accounts at all time highs, I wouldn’t know it.

I am out of POWI, IMMR, EGLE and ANGI, with timing no less than you’d expect from a seasoned space alien magician.

I’m in at 110% long again. I don’t care about the risk, sitting on a +59% gain for the year. Although my gains were higher earlier, I still managed a 1% showing.

It’s all about the boats, friendo. The Dry Bulk Index is inflating and “The Fly” is sailing the seven seas like a pirate, ransacking merchants, long an egregious amount of BALT.

Top holdings MHO, BALT, NSTG, FSLR, FLTX, FFIV, CVV

Yeah, I’m up another 2% aka +60% for the year.

http://www.youtube.com/watch?v=JQYTVg2dE2o

Via Briefing:

Drybulk shipping rates rise again. Panamax pops 8.9%, capesize rises 5.2% overnight. Since Aug 12 capesize rates are up 300%
Overnight, capesize rates rose 5.2% (or $2,206/day) to $42,211/day, panamax rates rose 8.9% (or $1,144) to $13,989/day, while supramax rates rose 2.6% to $10,579/day. The overall BDI rose 5.2% (or 106 pts) to 2,127 overnight.

The Baltic Dry Index (BDI) is now up 17 out of the last 18 sessions (up 27 out of last 31 sessions).

Since August 12 (a recent low), the BDI is up 114% to 2,127 (from 996), led by capesize rates. Meanwhile, capesize drybulk ship rates are up 300% (or $31,661/day) to $42,211/day, also since Aug 12, largely driven by higher iron ore shipments to China out of Brazil and Australia. Panamax rates are up 87%, largely driven by coal activity and anticipation of a good amount of shipments from a bountiful U.S. harvest.

I sold out of hundreds of thousands of shares of EGLE for a 40% profit. I sold another 20 blocks yesterday at $7.1. The reason why I swapped EGLE for BALT is balance sheet, mate. In my opinion, thanks to the debt/eq ratio at EGLE, there is a distinct possibility that a secondary offering is just around the corner. That risk is significantly less with BALT. BALT also has exposure to Capesize rates.

Full retard to the upside.