Fly Buy: MER, LEH

I covered my MER short, buying 14,000 @ $43.25. I covered some of my LEH short, buying 5,000 @ $36.

I sold 50,000 FNSR @ $1.81.

Look very closely at the shares of CHL and LFC, for they are about to die a terrible death. Seriously, CHL is fucked, due to new government regulations forcing them into the slow growing land line business.

With regards to LFC, it is a ticking hydrogen bomb. They have way too much exposure to the Chinese stock market, which has been blown out—over the last quarter. With that being said, FXP is poised to run. Run like the Hamburglar escaping the grips of McDonald’s security apparatus.

Aside from sinking countries, “The Fly” is enjoying large percentage gains in QTWW and LEI. Quite honestly, I have zero edge on these stocks. They’re just running.

The funny shit is, my “edge” on FTK was an ax to my head, while my lack of insight into both QTWW and LEI led to bountiful gains. Sometimes the market makes no sense. If it did, all of you E-Trade morons, executing trades in Hong Kong, would be rich. But you’re not. You’re just reading the coherent rantings of a maniacal genius.

After looking at UBS and the general tone of things, I’ve decided to hold back on any buying, with the exception of obligatory averaging down in FTK. Instead, I will look to borrow more shares of FED and sell more POT.

Finally, on this dip, PCZ is good for a bounce.

NOTE: With ag getting killed, ethanol stocks may bounce too, providing corn trades lower.

I bought 10,000 FTK @ $16.25.

Disclaimer: If you buy FTK because of this post, you will never learn lessons. And, you may lose money.

I was going to rant about my Memorial Day experiences with asshole picture taking tourists. However, as you already know, I am the recipient of a “homo-hammer of death” this morning, thanks to the inadequacy of FTK.

Nothing in the world beats coming to work, hung over, seeing a top 10 position blown the fuck up.

Needless to say, I have not made a decision, whether to cut my losses, or average down. My knee-jerk reaction would be to sell it and get done with it. However, it is probably good for a moderate bounce here.

Early this morning, I covered my LEH short, on the BAC downgrade. Killing LEH is too mainstream now. I’ll revisit the name at higher prices.

Also, due to the bastards at FTK, I took profits in a variety of stocks/etf’s, such as SKF, NOV, short MER, short DSL, short FHN and short WM. I will keep my FED short, due to its egregiously high valuation.

With oil coming down, I suspect the bulls will attempt to hold these levels and kill a few bears.

For now, I will reduce my short exposure, raise cash, and figure out where to go long.

Developing…

NOTE: One of my lotto tickets (LEI) hit pay dirt.

Ongoing…

1. FXP

2. SRS

3. SKF

4. AAPL

5. FTK

6. Short MER

7. Short LEH

8. Short FED

9. GD

10. RIG

Notable mentions: VSE, PCZ, REW, NOV, Short POT, Short DSL, Short FHN, BAP, AIZ and GILD.

Motherfuckers.

God Bless our Troops.

[youtube:http://www.youtube.com/watch?v=TKGzU8C4zOg&feature=related 450 300]

I’m out of here.

No need to wrap up the week. I made Godly trades, putting my year to date gains above 30%.

Do not wonder how I manage to win, with great accuracy.

Just remember, “The Fly” wins all the time, even when he loses.

Top picks: FTK, VSE, short FED, short LEH, short MER.

UPDATE: Merrill on FED

April results feed rally in FED shares as smaller balance of 30-89 day delinquent loans and deceleration in NPA growth likely drives some shorts to cover.
However, weakness in CA housing market and expectations of climbing credit
losses continue to warrant further discounting of valuations. Risk of increased
regulatory scrutiny remains our largest near-term concern as higher NPA levels
(now at an estimated 67% of core capital) along with the lack of significant
franchise value could prompt a highly dilutive capital raise.

Maintain Sell rating
NPAs rise at a slower pace while delinquencies fall
The balance of non-performing loans increased an estimated 11% from Q1 levels.
NPAs now equate to 6.85% of assets vs. 6.20% in Q1 and above our 6.75% Q2
estimate. 30-89 day delinquencies fell 9% to $248M. While the deceleration in
NPA growth and the smaller delinquency levels are positive notes, we caution
investors from viewing this as a turning point for credit as the bulk of recasts are
still well in front of FED. Notably, FED anticipates recasts of $606M in ’08, $685M
in ’09 and $1,690M thereafter. We anticipate that the later recasts will largely be
comprised of the higher risk ’05 and ’06 vintage loans recasting in ’10 and ’11.
Margin compression continues
FED reported an effective net spread for April of 2.80%, 21 bps below March
levels and 5 bps below our Q2 NIM estimate. The decline was driven by a 20 bps
reduction in average loan yields. FED’s average funding cost fell 16 bps as the
balance of higher cost wholesale deposits declined, replaced with more favorably
priced FHLB advances. We are maintaining our NIM expectations for Q2 of 2.85%
as we anticipate FED to gain further funding benefits from lower short-term rates