blue-chihuahua

GROUPON--BofA tells you BUY it,target price $31

2012-02-09T12:04:00.000-08:00

Groupon (GRPN) today awoke to a throbbing headache: on the opening bell, stock got pounded with fisted lunchboxes--losing a whopping 11% overnight. Stock opened $21.86, and is printing a $21.17 close.

Incredible: In response to the earnings miss, Bank of America Merrill Lynch analyst Justin Post RAISED his guidance to BUY, price target $31 from $28.

On Feb8, stock closed $24.58, activity lifted on earnings anxiety. Open interest in Feb At-The-Money Puts outnumbered Calls by 2x1, and the 8.5 million shares traded was nearly 3x the daily average. The $24.58 closing price was comfortably above the IPO $20 level, but well off the $31.14 high touched on the Nov14 IPO release.

What happened: Last night after the close, Groupon announced earnings for the three months ending Dec31,2011 (Q4 2011). Analysts had estimated a first-ever profit for this starling, a cool $0.03 per share...(sigh)to many disappointed folks--Groupon admitted they lost $0.02 per share.

Some numbers were good (growing revenue,lower costs,...)--more on those points later. But the press has grabbed onto that 2 penny loss.

This earnings announcement was a critical one--it revealed Groupon activity SINCE the IPO, and a fresh look under the accounting hood. Most importantly, it was Groupon's opportunity to justify their $15 billion market valuation.

What???? $15 BILLION Market Valuation?? Yes. Can't make sense of that valuation. Nor can I.

Blame the Anlaysts. Yes--those folks that have access to the company big heads, and their very private books.

Prior to the public offering, Groupon had a number of private investment interests, and at each round the valuation number was lifted. In fact, valuations had estimated the IPO price much higher than the decided $20 issue.

okay, you know the story--Groupon goes public, starts trading, dazzling stock price. Stock trades $26..$31..and average investors scramble to buy the buzz, while investment banking clients are anxious to hedge their $20-24 purchase.

And then..stock starts melting....south below $20. Stock hit a $14.85 low in its first 30 days.

Panic.

Analysts then rushed to issue guidance, price targets. As a group, the analysts LOVED GROUPON, so should you.

On Dec14, stock was trading $23, the two underwriting banks issued a glowing BUY rating: Goldman Sachs $29, and Morgan Stanley $27. Bank of America Merrill Lynch and Wells Fargo chirped along $27-28.
Some analysts were more tepid with a range of $23-26, JP Morgan, Citi and Deutsche Bank.

Total of 22 analysts issued coverage of Groupon. Most rated it a BUY....only 2 called it SELL.

Applaud should go to the two who got it right: Ascendient Capital Markets had a $14 price target, and B. Riley with a $13 level.

Analysts will defend this enormous miss---Morgan Stanley can still believe in a $27 target....it doesnt need to say when this will happen. But for Bank of America to RAISE their target...I gotta think they are in deep doo-doo and desperately need average investors to buy into today's weakness, thereby lifting the stock...or BofA knows something no one else knows.

REMINDER: on the cusp of the WorldCom blow-up, I was standing in the Options Pits, and Bank of America was aggressively buying baby puts. At the same time--Bank of America analysts kept reiterated WCOM stock a STRONG BUY.

dont blame the option traders, blame the bank--and the their tools, the Analysts.

ZYNGA swims back to $10 IPO level (finally!!)

2012-01-27T14:38:00.000-08:00

Today Zynga (ZNGA) stock finally got its head above water, trading at a $10.25 day high, closing $10.05, a mere 0.5% over the IPO price.

Since the $10 IPO, this is the ONLY day Zynga stock has traded above IPO price.

Shareholders should dump this loser.

Zynga shares continue to struggle. Since the IPO, shares traded $7.97 low (Jan9,2012). What's to blame--Market volatility? Poor gaming sector? Investor lethargy? No. You want someone to blame? Blame the underwriters, not the market.

The stock has been public 28 trade days--and for 27 days (96% of the time)traded below the IPO level. In fact, during those 28 days the mean stock price was only $7.80, 22% below the IPO mark.

Zynga had its IPO on December 16,2011, a dizzy $10 price. With a float of 699.34 million shares, 100 million to the public, the IPO valuation made it a $7 billion company. That placed Zynga slightly more valuable than Electronic Arts(EA), maker of the fantastic Madden Football franchise.

Initially, the underwriters priced Zynga valuation at a $8.50-$10 range. Why was the final IPO price set at $10??...oh, why not squeeze every penny. Underwriters are paid a percentage of the deal, afterall--so a $10 IPO is more money for everyone involved. A high IPO price benefits insiders (who want to exit) and the underwriters...not the public.

Out the gate, Zynga stock hit a $11 high (+10% pop).....then as the day went on, stock melted to a $9.50 close,in the red 5%.

It is now 28 trade days later, and the stock has struggled to justify that $10 release. However, Underwriters have rated Zynga a BUY . The Underwriter group is the Usual Suspects--Morgan Stanley, Goldman Sachs, and JP Morgan. Their analysts have EVERY reason to rate Zynga a BUY--hopefully, this will incite the public to gobble up stock, lift the price. Hmmm....

You cannot blame the market.

From December 16 to January 28, Zynga drifted lower and lower, while the SP500 gained 7.8%, and market volatility (VIX)collapsed 23.3%. Investor confidence remains steady,showing improvement, and cannot be blamed for Zynga's lethargy.

Zynga versus other gaming stocks, Zynga has lost 8.6%, Entertainment Arts (EA) has lost 14.15%, and Activision Blizzard Inc (ATVI) has gained 2%. Mixed bag.

Here's a fun fact, from Jan-Sept 2011, Zynga had gross revenue of $829 million, though only a net income of only $31 million.

Sounds impressive? Not so much when you go look at the game companies. Activision reported it's game "Guitar Hero III:Legends of Rock" has earned $831 million. That's one game. And for Entertainment Arts, "Madden Football" has earned over $3 billion.

You're smart. How could Entertainment Arts and Zynga be so closely valued?

Ask the Underwriters. Oh, that's right--THEIR analysts told you Zynga is a "BUY"...in fact, price target is now $12. Investor beware.

Market glows 3%--close up options VIX-FXP-FAZ

2011-11-29T10:44:00.000-08:00

>>>>>This post was written Monday November 28, 2011<<<<<

Everyone here is HAPPY today....Asia markets up 2%. Americans ignoring faraway Europe. After fattening on Thanksgiving turkey, Americans make the Friday after the #1 shopping day. Markets happy to see VERY strong Black Friday sales. Craziness.

Market wise, money managers are desperate to end with a good year (or at least even).
So all major indexes up 3%, and volatility sells off. For me, the perfect time to close some option trades.

My option trades were executed on down days, when volatility and inverse ETFs had spiked--I sold calls, with the thinking that as the market flattened or improved, these ETFs would pullback and calls fade.

The Three ETFs I traded and today's activity:

VIX trades 32.29 (-6.32%)
--VIX sold Dec 37.50c 2.55--BUY to close 1.80>> profit $0.75, 29.4% in 4 days
--VIX sold Dec 37.50c 2.50--BUY to close 1.80>> profit $0.70, 28% in 2 days

FXP trades 31.91 (-8.01%)
--FXP sold Dec 35c 2.33--BUY to close 1.40>> profit $0.93, 40% in 4 days
--FXP sold Dec 38c 2.00--BUY to close 0.90>> profit $ 1.10, 55% in 2 days

FAZ trades 49.29 (-8.91%)
--FAZ sold Dec 53c 5.40--BUY to close 4.50>>profit $0.90, 16.66% in 4 days
--FAZ sold Dec 58c 5.70--BUY to close 3.20>> profit $2.50, 43.86% in 2 days

------------------------------------------------------------------

Trades that are OPEN (did not close)
--FXE sold Dec 129p 0.98 (Euro will not go below 1.29)
--FXA sold Dec 95p 0.90 (Aussie Dollar will not go below 0.95)
--RIO sold Dec 47.5c 2.20 (this is in the money...gov making mining tax changes)
--FAZ sold Dec 44/39 put spread 2.40 (volatility cooling, options will fade)

GROUPON now 51% off IPO day--next stop $11?

2011-11-28T15:25:00.000-08:00

On Nov 23, I said GRPN will be $12 soon.....

GROUPON (GRPN) took another whack whack today--trading a new $14.85 low (off 11.34%). On a happy market day wherein all major indexes made 3% gains, GRPN cannot blame market volatility for its continued slide. GRPN has only traded 16 days--closing down 12 days, up only 3 and one flat. Shares have been dragged through gravel since that sunny Nov4 IPO--a day where shares opened $28 (8 dollars above the $20 IPO level), and hit a $31.14 high.

Shares today closed $15.24 (-9.01%), and losing a whopping 51% since that Nov4 IPO high. ouch.

In a very unusual move, GRPN options were available a mere 6 days into trading, Nov14. Initially, the exchanges listed $1 strikes increments, from $15-$35, for only Dec/Jan/Apr/Jul. On that first day, option activity pointed eyes on the PUTS, a total of 7011 puts traded vs 5501 calls.

Okay, we all worried about Europe and ate some turkey dinner, and now--back to GRPN.

Only two weeks into the option trading, sliding stock forced traders to list new low level strikes. How low?? Well, you can now buy Dec $5 puts for 0.10.

Worth noting: we are 3 weeks (14 days) til December expiration. Today, Dec puts traded 145% more than calls--10619 puts vs 4344 calls. Open interest, however, is fairly even, 18372 puts vs 17257 calls. Traders are tipping this over.

GRPN options have two striking things.

First the strikes are now all the way down to $5, so if you think this'll keep cratering you can buy cheap puts (hope you didnt buy $31 stock ....).

Second, there are now LEAP options for Jan 2013 and Jan 2014. Craziness. Who out there thinks GRPN will be a vibrant stock in 2014?? If you do, you can buy Jan 2014 $15 calls. Price? well the market makers are keeping it wide, the OCC says the strike closed $3.0-$6.90. sounds like an abyss.

Stock today closed $15.24. But options point stock to keep going lower. Looks like 352 Dec 11 puts were bought paid $0.35, open interest was only 81 contracts. Ok, I dont want any crying--the information was clear, $11 coming soon.

And at $11, GRPN is no deal-of-the-day.

TIFFANY sparkles $73.04 (+5%) sell put spread ahead Tuesday earnings

2011-11-28T12:24:00.000-08:00

Tiffany (TIF) sparkles, trading $73.04 (+$3.54, 5%).

After a jittery Thanksgiving week, today's market is in full holiday cheer--strong Black Friday numbers lifting the major indexes 3%. Year to date, Tiffany has certainly outperformed the SP500--while the index has slipped 5%, Tiffany has gained 19.7%. Steady in-store growth has impressed analysts, attributing this to weak dollar and foreign tourists (yeah, talking to you Russia and China). In fact, Tiffany has had extremely high demand for its diamonds--so much so, that the company has invested in Sierra Leon mines to secure supply. And success came without discounting, no sales or promotions. Tiffany has maintained its luxury status and strong sales by offering a wide product mix--such as a silver jelly bean necklace for $100 or how about a $9000 18k gold cuff bracelet, and has even inched up prices with the rising gold prices.

Tomorrow stock will be closely watched--earnings will be out before the bell Nov 29, Tuesday. Will Tiffany continue to shine?? Will the stock report dazzling numbers as it did last quarter (Aug26)--posting 0.69, up from 0.53 a year earlier. At that time, the company enthusiastically raised full-year guidance--and saw no difficulty passing along gem or metal costs to the consumer.

So, will stock get a big pop? Or will it meet the higher numbers and hold steady?
Since its Aug26 earnings, the stock has done little,simply holding in the $68-72 range.

For tomorrow, I dont see a pop--in fact, I think it Tiffany will pull back.
I sold a put spread ahead of earnings.

Stock $73.04, sell Dec70p 2.45, buy Dec60p 0.45>>>sell spread at $2.00.

If stock lifts, spread will fade. If stock is flat, spread will fade (time decay), and if stock falls spread will widen against me but I've got no worries til the $70 level.

Here's to flat stock. I've still saving for that Gold Bone Cuff.

GRPN--Susquehanna loves you (por favor)

2011-11-23T11:25:00.001-08:00

Groupon (GRPN) stock has been pulverized. No worries, Susquehanna still loves you.

Last night GRPN closed only pennies above the $20 IPO. After opening today at $19.97....shares stepped into the cuisinart,hit pulverize. Stock traded $16.84---losing a (gulp) 16.09%!!

The Nov4 IPO date is a distant mountain. Only 14 trading days ago, shares have long abandoned the $31.14 IPO high, losing a foamy -45.92%. Even if you were chummy enough to have received $20 IPO shares--you have lost -15.8%.

With the overall market down 3%, GRPN cannot blame market seas--this is their own rotten buffet.

Not to worry GRPN--Susquehanna still hearts you.

After only one day of trading, on Nov7, Susquehanna (SIG) initiated stock coverage--rating GRPN Neutral with a $26 price target. On that day, shares closed $25.97.

Today GRPN is really getting pulverized--and Susquehanna was there to show some love (pump up the stock). CNBC just gave talk time to SIG analyst Herman Leung. In short he defended the stock, said folks are just listening to bad stories (like that cupcake debacle in the UK) ..he smiled alot, and said simply: "We know for a fact, 70% of merchants repeat deals with Groupon."

Herman Leung was clearly brought on to pump the stock, plug the bleeding wall for SIG clients.

I am deeply disappointed in SIG. SIG was once the smart guys at the poker table, a maverick group who only had disdain for that frat-boy Wall Street chino crowd. Today's blah-blah-blah from Herman Leung showed me SIG has been just another investment bank.

So I learned two things: SIG is circling clients around GRPN and GRPN has a camp buddy in SIG.

I'm a seller of them both.

I see GRPN trading $12 soon.

GRPN--Susquehanna loves you (por favor)

2011-11-23T11:25:00.000-08:00

Groupon (GRPN) stock has been pulverized. No worries, Susquehanna still loves you.

Last night GRPN closed only pennies above the $20 IPO above. After opening today at $19.97....shares stepped into the cuisinart,hit pulverize. Stock traded $16.84---losing a (gulp) 16.09%!!

The Nov4 IPO date is a distant mountain. Only 14 trading days ago, shares have long abandoned the $31.14 IPO high, losing a foamy -45.92%. Even if you were chummy enough to have received $20 IPO shares--you have lost -15.8%.

With the overall market down 3%, GRPN cannot blame market seas--this is their own rotten buffet.

Not to worry GRPN--Susquehanna still hearts you.

After only one day of trading, on Nov7, Susquehanna (SIG) initiated stock coverage--rating GRPN Neutral with a $26 price target. On that day, shares closed $25.97.

Today GRPN is really getting pulverized--and Susquehanna was there to show some love (pump up the stock). CNBC just gave talk time to SIG analyst Herman Leung. In short he defended the stock, said folks are just listening to bad stories (like that cupcake debacle in the UK) ..he smiled alot, and said simply: "We know for a fact, 70% of merchants repeat deals with Groupon."

GROUPON--vendor says "Worst ever"

2011-11-22T14:28:00.000-08:00

Today, the UK Telegraph reports the details of how a Groupon "daily deal" for cupcakes went very bad --nearly destroying Need-A-Cake bakery.

Need-A-Cake Bakery's Rachel Brown is quoted saying:

"Without doubt, the worst ever business decision I have made."

Interesting words.

During the Groupon IPO roadshow (Oct21-28), the company boasted how the "Groupon" model was so unique for vendors.

CEO Andrew Mason told investors: "Merchants love Groupon because there is no other way to get thousands of new customers in one fell swoop."

Mason presented a slide (#7 of IPO Roadshow) titled WHY MERCHANTS LOVE GROUPON.
The slide shows the traditional way vendors have sought out new customers--The OLD WAY, and the new unique GROUPON WAY.

In the Old Way, vendors would use email and online marketing, broadcast, and print advertising. In all of these cases, the vendor had a fixed cost and a wait and see timeline.

In the Groupon Way, vendors design a custom discounted deal and split the revenue with Groupon. The Groupon slides says this is Risk Free for the vendors. Vendors have no up front costs....however, there is no fixed cost...or worse, no upfront loss.

For Need-A-Cake, their Groupon deal went terribly wrong.

>>a note about currency, I am using a currency exchange rate of 1 GPB=$1.56 USD, this is the time the deal was sold. My writing here has converted all British Sterling into USD amounts.

The Need-A-Cake deal was simple: for $10 you got 12 cupcakes, a $40 value (75% discount). Only 1000 deals would be sold, with Need-A-Cake Bakery taking $3.43 and GRPN pocketing $6.56. The deal boasted customers could customize their tasty treats choosing both cake and frosting flavors.

What happened: Groupon sold 8500 deals. That's 102,000 cupcakes--each one to be made by hand.

Upfront, Groupon collected $85,000. Groupon was obligated to share this with Need-A-Cake. Need-A-Cake received $29,155, with Groupon pocketing $55,760. Cha-ching. This is a sure win for Groupon, and they dont need to bake the cupcakes. sweet.

But for Need-A-Cake, the deal was NOT what the bakery expected. Although the bakery pocketed some money from the initial deal--it finally netted raw losses.

If Need-A-Cake had sold 8500 batches of cupcakes at $40 each, that would be $340,000. Working with Groupon, Need-A-Cake only got $29,155---that's 91% less than normal. Perhaps Need-A-Cake didnt run the numbers, because this deal is such a deep screaming loser.

The bakery got flooded with orders, unable to manage when customers wanted their cupcakes. Having only 8 employees, the bakery was forced to spend $19,500 on extra labor costs. Although Need-A-Cake did receive some upfront cash, the deal was still a big cost loser for the sugar and flour side, a loss of roughly $36,550 ($4.30 per batch, 8500 batches of 12 cupcakes).

Bottomline: Groupon gained $55,760 but Vendor lost (-$56,050). That sucks.

Groupon said “Need a Cake did not make us aware of any problems with capacity, however our customer service team received complaints about the non-delivery of orders and poor quality."

With these numbers, why would any vendor call on Groupon for their "Risk Free" unique strategy??

Asking Rachel Brown about her Groupon experience:

"It's been an absolute nightmare."

Groupon should hope potential vendors don't read this story.

GRPOUN jitters--sell dec 26c (to close)

2011-11-22T13:52:00.000-08:00

Groupon had a tangled day. New all time low of $20.03.

First a quick recap of today's trading activity. Stock opened up slightly, at $24.55 (+4.1%) from its $23.58 close. Quickly dashed. Shares immediately got slammed--in 3 hrs hammered down to the day's low $20.03. There was a brief pick-up, shares treaded in the $20.50-$21 range most of the second half. But in the end, exhausted and bloody, stock finished $20.07.

If you own GRPN shares, you're gut must be grinding. Shares have lost 100% of their IPO gains, and is struggling to stay above its $20 IPO level....all this only 13 days as a public company. augh. If you bought the stock--at any level--you're a loser.

Me, I bought options yesterday--and I got out today with only a small loss.

Yesterday, on $23.74 stock, I bought the Dec 26c 0.70.

Right on today's open, on $24.55 stock, I sold out my option at 0.65. So a nickel loss. I had a GTC order in place. Good thing. Open interest is still a small 583 contracts, and with 283 trading today--if I did not have my GTC limit in place, I would easily have been chasing down a price. In the end, the Dec 26c closed 0.20. whew.

Things look bleak for GRPN.

GROUPON skids -14.89%---gasping pennies above $20 IPO level

2011-11-22T13:00:00.000-08:00

OOOOOuch.

Groupon (GRPN) got pushed off a fast moving skate board today--scrapping knees, elbows and skin off its high nose. There's blood everywhere. And no band-aids in sight.

GRPN today continued its skid down, losing 14.89%....currently trading $20.07...gasping to hang above its $20 IPO level. Ah, that IPO was such a warm fuzzy memory--a golden event only 13 trade days ago (Nov4). With 5.2 million shares trading today, that's nearly 2x the daily average.

What's the catalyst for this crushing sell-off??

Can GRPN blame general market anxiety, investor European concerns, need for Black Friday cash??

GRPN cannot blame market malaise on its beatdown.

Here's the snapshot, since GRPN's Nov4 IPO date, the overall market has lost about 5%--SP500 (-4.76%), DOW (-4.56%), and Nasdaq (-5.85%). However, GRPN has lost a full 36% from its $31.14 IPO trading high. And, at a pithy $20.07--GRPN has lost 100% of its IPO gains.

So, GRPN now has a $13 billion valuation.

Time to buy-in?? Are you now thinking its a scoop and you're feeling excited to get this Thanksgiving bargain??

Not me. The company fundamentals have not changed, and the more I know--the more GRPN smells like a scam.

Groupon falls 10%--buy Dec 26c

2011-11-21T15:53:00.000-08:00

After scant 12 trading days, it seems folks are asking: Is GROUPON (GRPN) valuation reasonable?? too funny.

GRPN today closed $23.58--shedding $2.61 (-9.97%). Trading only 17% above the $20 IPO price--was this your opportunity to buy GRPN?? Lets consider that with options.

Although stock opened $26.75,slightly above Friday's $26.19 close, it immediately fell off. In the opening hours,stock collapsed from $26.75 to a day low of $23.28. Shares finally found some air, holding a range of $23.40-$24.10.

For GRPN this was a big dent on the new shiny IPO star. Maybe this star is tin, and not gold.

With a $23.58 price tag, GRPN is a company valued at $15 billion. It has no net revenue, and has admitted to "unique" accounting practices (repeatedly questioned by the SEC). Do you think $15 BILLION sounds about right??

For now, I'm not getting caught in a "Valuation" game. Instead, I am looking at the Options. GRPN stock has no traded 12 days--8 days closing lower than the day before, 1 day flat, and only 3 days closing higher than the day before.

umpf.

Although the IPO price was $20, shares opened day one at $28....and have since treaded in the $24-26 range.

Considering this, some may think today was a day to buy stock then sell out at $26. Rather than layout the $23.75 cash, I instead traded options at a fractional sum. I bought the Dec 26c 0.70. With stock down 10%, the option was down 65%---revealing high vol. Big downside, also will mean big upside.

The option expires Dec 16. So this trade will either decay to zero or reap big.

Here's to Grouponomics.

"Super Committee" squashes market--sell calls VIX,FXP,FAZ

2011-11-21T14:36:00.000-08:00

Today's headlines of Europe and "Super Committee" activity squashed markets lower. This snag ignited volatility--pushing major indexes further away from safe shorelines, and raising market woefulness.

On light volume, all three major indexes slipped downwards: SP500 1192.98 (-1.86%), Dow 11547.31 (-2.11%), Nasdaq 2523.14 (-1.92%).

While this may be yet another down day, it is significant--because there are only 27 trading days left in 2011. For investors, each day becomes more precious---the scent of a market recovery, and the hope the year will end in positive territory..or at least flat.

I have instead placed my faith in inverse-leveraged ETFs, those that move up as the market slips away. In general, these ETFs float on a quiet bay, and surf on market tsunami.

These are market tsunami days. Perfect time for temperature ETFs.

I watch three "temperature ETFs" --VIX, FXP, FAZ. Today, I sold calls intending to capture gains as the market levels off, and the options deflate.

My trades:
--VIX trading 33.71 (+5.34%) sold DEC 37.50c 2.55 (expiry dec21)
--FXP trading 33.09 (+6.50%) sold DEC 35c 2.33 (expiry dec16)
--FAZ trading 49.60 (+7.06%) sold DEC 53c 5.40 (expiry dec16)

This is a short trading week for us--Thanksgiving we are closed, and Friday is a half day. This is disadvantage to our recovery metrics--especially because Europe will be open every day...and our Super Committee will be snoozin from turkey dinner.

Let's see how my options roll.

GROUPON and Rentech Nitrogen: a tale of two IPOs

2011-11-11T15:26:00.000-08:00

What does GROUPON (GRPN) and Rentech Nitrogen Partners (RNF) have in common? For starters-both had IPO Nov4. What happened in these 6 days?

This is the tale of two IPOs. Here's a quick overview,chart above-RNF is the blue line.

For GRPN and RNF, Morgan Stanley was the lead underwriter. The IPO price was set at $20. First day of trading was Nov4. The commonalities end there.

GRPN had initially filed with the SEC on June1, leaving many to speculate the IPO would out by September. As summer days cooled, and no IPO date announcement, many speculated GRPN was postponing the IPO due to market volatility--possible weakened IPO interest.

GRPN released a mere 5.6% of shares...which only ignited demand, even more.

The truth was ugly: GRPN needed to satisfy the SEC's multiple requests for accounting clarification, a matter that finally revealed GRPN had deliberately claimed the entire value of a deal as revenue--rather than the actual dollars a customer paid. This revision of revenue materialized as 54.8% less than GRPN had been pounding their chest over($688 million from $1.52 billion).

RNF had initially filed with the SEC on August 8. This filing received little press, little interest--even though the fertilizer space has been red-hot (and takeover prone), think Potash's scuffle to remain Canadian. RNF had no SEC snafus-and announced the IPO date as anticipated.

Six days can feel like a lifetime. Especially if you bought GRPN.

ON Nov4, GRPN opened $8 above the $20 IPO price, traded up to $31.14, closing at $26.11, a comfortable 30.55% gain. RNF opened $20-right on the button, pcked up $0.20, then closed slightly lower at $19.85.

The next few days saw struggles for GRPN--closing lower 5 out of 6 days. The shares hit a $22.76 low on Nov9, and continued to garner mixed press. Over at camp RNF, shares treaded trading in a $0.75 range, hitting a $20.65 high on Nov8.

So from the close of Nov4, GRPN lost 7.12% ($24.25 down from $26.11), while RNF gained 1.01% ($20.05 up from $19.85).

And to continue the GRPN circus, confirmed by Blue-Chihuahua today: GRPN options have been rushed--trading starts Monday Nov14. That's only 6 days after the IPO. wow.

And the Primary Specialist (the one who will make the options markets, set the spreads and control order flow)??? That will be Morgan Stanley on the PCoast-Arca.

RNF options?? maybe months away--if at all.

Volatility sell off-buy back calls VIX-FAZ-FXP

2011-11-11T13:47:00.000-08:00

Volatility sell off –buy back open calls VIX-FAZ-FXP.

Seems like Christmas has come early for Europe--they are getting what they wished. There is a fresh happy glow in the air, with Berlusconi writing his resume and Greece welcoming new leadership. Swift decisive action has also calmed market jitters, raising hope for year-end gains.

Since Wednesday, two full trading days, major US indexes closed on strength:
DOW 12153.68 (+3.16%) Nasdaq 2678.75 (+2.18%) SP500 1263.84 (+2.82%)

This sunny mood, also deflated volatility. The "temperature ETF's" also faded.
I watch three ETF's--VIX, FAZ,FXP, which move directional opposite to the market, making wilder swings. So with the US indexes gaining 3%, these ETF's sharply fell-off.

Since Wednesday's close:
VIX (volatility index on the SP500) fades -16.92%, closing price 30.04.
FAZ (Direxion Financial Bear 3x) fades -7.8%, closing price 39.99.
FXP (ultrashort FTSE China) fades -5.3%, closing price 27.44.

Fortunately, the ETF slide also meant volatility got sucked out of the options. On Wednesday, I opened three trades. I closed them today,taking my profits off the table.

My positions: (sold to open on Nov9-buy to close Nov11)
---VIX sold Nov 40c 2.00 (expiry 11162011)—BUY to close 0.20>> profit $1.80, 90%
---FAZ sold Nov 50c 1.60 (expiry 11192011)—BUY to close 0.50>> profit $1.10, 69%
---FXP sold Nov 36c 0.40 (expiry 11192011)—BUY to close 0.05>>profit $0.35, 87.5%

Options can be risky business. The Europe situation is changing every single day. With these nice profits, the right move was to close them up going into the weekend....who knows what Monday will bring.

GROUPON options start trading Monday Nov14

2011-11-11T12:57:00.000-08:00

GROUPON (GRPN) has been called the most exciting "tech" stock IPO in years. Debatable. However, I am certain GRPN will be the most exciting option trading in years!!

Confirmed: GRPN options will start trading Monday Nov14. Highly unusual--since the stock has only been public one week.

The Options Clearing Corp (OCC) confirms GRPN options will trade on all exchanges, with the PCoast-Arca as the primary.

In obvious fashion, those that played key roles in the underwriting--will have a hand as Option Specialists, thus influencing spreads and activity. Morgan Stanley (chief underwriter) will be the Primary Specialist on the PCoast-Arca, and Bank of America-Merrill Lynch (lesser underwriter) will be the Specialist on the AMEX. For a fresh choice, the CBOE has designated Citadel (not an underwriter).

The Options will be on a Jan cycle, so there will trading months DEC-JAN-APR-JUL.
The strikes are $15-$35 in one dollar increments. Incredible.

You can throw your darts at this.

GRPN stock has just finished 6 full days of trading,having started Nov4. The IPO price had been set at $20--but shares burst open at $28 and flapped up to $31.14. Shares have not held those lofty levels--falling to a low of $22.76 (Nov9), quietly tucking into today's close at $24.25. So despite rainbow-unicorn excitement--GRPN has already given away 22.12% from the highs..and struggles to maintain its 21.25% over IPO.

How will GRPN stock respond to Option trading?? Hard to say. I see continued sell-off. The normal Call-Put relationship will be totally out-of-whack: PUTS will be very expensive because stock is scarce.

The company very smartly released a pitiful 35.75 million shares (only 5.6%). So if you want to short stock--its nearly impossible, as stock is hard to borrow; buying PUTS maybe you're only way to play GRPN fadeout.

Important fact: 94.4% GRPN shares remain tightly held, and restricted from being sold for 90-180 days (lock-up period). These holders are likely to buy PUT PROTECTION. And they will pay big bucks to have it.

In the old days, rich PUTS normally signaled general disgust in a stock,and strong protection demand. So option traders would jack these up. GRPN feels like the old days....party like 1999?

LASHOU (LASO) and GRPN are alike--SEC questions accounting practice

2011-11-10T14:36:00.000-08:00

LASHOU (LASO) will postpone its Nov14 IPO release, reports REUTERS.

The reason?? An Underwriter has only said "Corporate developments." Reuters reported the SEC has requested accounting clarification.

Accounting Clarification?? That could mean anything. Just ask the folks at Groupon (GRPN).

On the road to their IPO, GRPN was required to satisfy three SEC accounting clarification requests. And for GRPN it finally meant a big overhaul of their "Revenue" numbers. In their Aug10 filing, GRPN stated for the first 6 months of 2011 (Jan-Jun30)Revenue of $1,522,746,000 Billion. The investment community was abuzz.

However, just weeks later--GRPN filed revised numbers. On Sep23, GRPN filing reads for the first 6 months of 2011 Revenue of $688,105,00. My crunching calculates that as 54.8% less than what GRPN peddled to investors. wowee.

How did this happen??

Well, it seems the GRPN folks think if you bought a deal worth $100, they reported $100 as revenue--even if you only paid $25.

Shouldnt revenue ONLY be money that actually comes in??

For Lashou, this SEC inquiry maybe the first of many setbacks.oh boy.

VOLATILITY spark-sell NOV calls VIX-FAZ-FXP

2011-11-09T14:39:00.000-08:00

VOLATILITY sparked anew-tilting US markets into chopping waters.

For the last few weeks, US markets have been treading...adrift, against the winds of a European debt storm. Shrouded in a wet blanket. As days pass, US markets are growing increasingly uneasy--anxious for a command decision. Its gonna happen-- Shareholders will crack, there will be a runaway liquidation sell-off. It happened today.

US investors hit the panic button, chipping off all major indexes to close down more than 3%:
DOW 11,780.98 (-3.20%) Nasdaq 2621.65 (-3.88%) SP500 1229.09 (-3.67%)

To consider real market temperature, I watch reverse ETFs. These rise in jerks, rather than pops or simple point bounces--they rise when volatility spikes, and flatten out when the market is swimming calm lakes.

On a day when the major indexes shed about 3.5%, these ETFs had wilder moves:

VIX (volatility index on the SP500) jumped +31.59%, closing price 36.16, +8.68.
FAZ (Direxion Financial Bear 3x) jumped +14.97%, closing price 43.40, +5.65.
FXP (ultrashort FTSE China) jumped +11.16%, closing price 28.98,+2.91.

For me, this market storm (vol pop)opens a new trade window.

I did three trades today, all short to open on the front month:

---VIX sell Nov 40c 2.00 (expiry 11162011)
---FAZ sell Nov 50c 1.60 (expiry 11192011)
---FXP sell Nov 36c 0.40 (expiry 11192011)

As things develop in Europe, this storm should break--and the volatility will flatten out. These ETF's will pullback, and the calls will shrink--at which time I will buy them to close. Since all trades are NOV expiry--that only gives Europe two weeks to sort out this out. I trust Germany to make the command decision.

GRPN coverage initiated BUY and HOLD?? or SIDELINE

2011-11-07T13:21:00.000-08:00

GROUPON (GRPN) receives analyst coverage after only one day of public trading.

Benchmark initiates coverage at BUY (price target $32).

At the heart of things, Benchmark believes GRPN is the leader in daily-deals, which should propel the company into a profit making position (scabbing over their recent loss reporting of -$1.66 per share). GRPN should be able to achieve this by exponential growth and high profit creation in local commerce.

The tone was cooler at Susquehanna (SIG). In a letter to investors, the research/trading group initiated coverage at NEUTRAL (price target $26).

So, what's this all mean?? Today is day2 (Monday Nov7) of GRPN trading. Shares closed at $25.97, on a scant 9.9 million shares. Thats markedly softer than day1 blockbuster 49.7 million shares.

From here, will shares slowly melt away? Drip down to the $20 IPO price...or swim upstream to that shiny $32 Benchmark target??

GRPN looks too rich to me. I will stay sidelined til earnings give me a better look under the bed.

BlueChihuahua initiates coverage at SIDELINE.

GROUPON opening day gains 30.55%-more coming?

2011-11-07T12:32:00.000-08:00

GROUPON (GRPN) started public trading Friday Nov4. Closing at $26.11, shares salsa danced forward,a one day gain of 30.55%--making valuation a hot $16.6 billion.

The IPO was set at $20, with a release of 35.75 million shares (5.6% of total shares).
Initially, GRPN had talked IPO at a range of $16-18, with only 30 million shares. Reuters and Bloomberg had long speculated there would be a share increase to satisfy tremendous investor interest.

Opening day action: GRPN had selected the NASADAQ as its primary exchange. Normal opening hour is 9:30am EST. Due to strategic log-jam, the NASDAQ reported GRPN's first print at 10:45am, priced at $28. That's +40% gain over IPO price.

Volume exploded out the gate, leveling off throughout the day.

After the open, shares cooled a bit, pulling back to the day's low of $25.90. Midday action reignited activity, peaking shares at $31.14 (+55.7% over IPO). Trading leveled out, retreating shares to a close of $26.11.

For investors--was this the perfect wave? If you got in early,it was a good ride...like surfing, don't bet on steady swells. If you're still in---you maybe drifting for awhile.

GRPN has many bumps ahead, that may be a serious drag on stock valuation.
Some considerations:

1) Company needs to clarify accounting practice. The SEC has asked GRPN to explain, restate, reevaluate, or completely reinvent their accounting numbers. After 3 SEC re-filings, shareholders should keep ears-eyes open to anything the company releases. Numbers being stated one way today, but another tomorrow is not comforting--thats often just a style convenience (which looks better).

2) Are subscribers equal to a customer? The SEC and other business experts have criticized this blended number. If GRPN says the business model hinges on selling deals, then are emails (members) who have never bought a deal--can you call that person a customer?

3) At $16 billion, is the price too rich?? For 2011 (Jan-June30), the company reported a NET Loss $253.886 million. That was a net loss to shareholders of (-$1.67) per share.

Going forward, GRPN stock will be carefully watched. After the IPO swell, will interest continue to lift shares..or will this wave mush-out??

I'm awaiting two events: Options trading and earnings.

GROUPON: moneyball or fireball?

2011-11-04T01:49:00.000-07:00

GROUPON: moneyball or fireball?

GROUPON finally announced the IPO price:$20, trading starts Friday Nov4.

GROUPON touts humor as an attractive point,disputable. An agreeable point--GROUPON is sly. The public offering is limited to a mere 4.7%,30 million shares. Trickle equals robust demand,meaning shares sure to pop.

In 3 months time (hello earnings): Will GROUPON surprise as a moneyball?? or further kindle its fireball reputation??

Quick review:
According to (often revised,updated Sep23) SEC filing, GROUPON admitted some pathetic numbers. Click headline title to view the complete SEC filing.

The GROUPON numbers say simply in 2011 (January 1-June 30,2011,total 181 days), the company had GROSS Revenue $688.105 million, and a NET Loss $253.886 million. They also had 115,717,299 worldwide subscribers.

The Bottomline: FIREBALL
GROUPON burned $1.66 NET LOSS PER SHARE
GROUPON burned $1,402,685 NET LOSS PER DAY.
GROUPON burned $2.19 PER SUBSCRIBER

In the original June 1,2011 SEC filing, CEO Andrew Mason writes (page 5):
"We believe that when once-great companies fall, they don't lose to competitors, they lose to themselves."

Words to consider,dear investor.

GROUPON why SEVICHE loves Groupon???

2011-11-03T13:59:00.000-07:00

GROUPON (GRPN)company heads are peddling snake oil. Last week (Oct21-28), Groupon did a chatty IPO ROADSHOW presentation. Normally this is an opportunity for the (anxious) IPO team to smooth down hairy matters, and pepto uneasy guts. Did they succeed?? I dont think so. Looking at the GROUPON slides--raises more concern.

You can view the complete slideshow here at the BusinessInsider:http://www.businessinsider.com/groupon-ipo-roadshow-slides-2011-10#

GROUPON brags how the Groupon business model is a WIN-WIN for any vendor.
Let's take slide #6 BASIC MODEL:(above) WHY SEVICHE LOVES GROUPON

There are many problems, that to me--do not translate into a WIN_WIN scenario.
I dont understand why "Seviche loves Groupon". This is what I read:

The SEVICHE deal costs $25, which buys $60 of restaurant eats.
For the customer who buys the deal--you get 58% off your $60 Seviche table bill.
BUT for the Vendor???....things are much worse than a 58% haircut.

The GROUPON #6 slide states of the $25 purchase price---GROUPON keeps $19.50 (78%) and the Vendor gets $5.50 (22%). GROUPON touts this as about $15,000 in gross profit.

The Vendor bottomline is: GROUPON sold a $60 deal and gave you only $5.50. What's the math on that??
Simple: Hey SEVICHE you just lost 90.83% on a $60 table bill. GROUPON just pillowed you--and now GROUPON says "WIN-WIN!!"

If all those SEVCHE $60 Groupon holders show-up for food: SEVICHE will make a REAL LOSS of $43,218.50.

SEVICHE--is this the romance you were promised??
SEVICHE--you gonna come back for more??
(gonna tell your friends??)

GROUPON:company thinks 93% non-purchase is a vendor win

2011-11-03T13:32:00.000-07:00

GROUPON (GRPN)company heads have been peddling snake oil. Last week (Oct21-28), Groupon did a chatty IPO ROADSHOW presentation. Normally this is an opportunity for the (anxious) IPO team to smooth down hairy matters, and pepto uneasy guts. Did they succeed?? I dont think so. Looking at the GROUPON slides--raises more concern.

You can view the complete slideshow here at the BusinessInsider:http://www.businessinsider.com/groupon-ipo-roadshow-slides-2011-10#

GROUPON brags how the Groupon business model is a WIN-WIN for any vendor.
Let's take slide #6 BASIC MODEL:(above) WHY SEVICHE LOVES GROUPON

There are many problems, that to me--do not translate into a WIN_WIN scenario.
I dont understand why "Seviche loves Groupon". This is what I read:

Groupon emailed this to 12,916 Groupon SUBSCRIBERS (not customers),and then 793 subscribers decided to purchase the Seviche deal.
>>>>that means only 1 in 16 (6.13%) subscribers actually opened their wallets and bought the deal. That means 15 people looked at it and said No Thanks, or 93.87% passed.

In retail sales world, the average storefront has a turnaround (conversion) of 1-5, and the better stores (like Coach) have a conversion of 1-3. With a low $25 price point...how is a 1-16 conversion a WIN???

GROUPON (GRPN) or Greece? where to spend $11 billion USD

2011-11-03T12:01:00.000-07:00

If you have $11 billion USD to spend--you got choices these days: you can buy GROUPON (the Icarus of daily deals)or bailout Greece (European bigwigs suspend emergency aid). Hmmmm-choices, choices. The breakdown, or best bang for your buck:

Groupon will officially go public Friday November 4--tonight the stock will be priced, in the range of $16-18 per share. Company has not specifically disclosed exact shares, but Reuters reports a mere 4.7% will be released, some 30 million shares..My math calculates that to be 638.29 million shares, valuing the company then at $10.2-11.48 BILLION USD dollars. Call that $11b.ok. What does that mean?? Since the release is a trickle--demand will probably be robust (like Missoni for Target)...and shares will most likely get a decent pop..say 10% in under 30 days...and then...well, you know the Icarus story,right???

Greece?? That azul water, that salty charcoal roasted fish, that jolty clear booze--and that serene sunshine....I love Greece,and it never disappoints my getaway cravings. So in the interest of preserving future holidays: Dear EU leaders, please give Greece that $11b. Do not force Greece to become Germany (no one dreams of a Dusseldorf sunset). Consider making Greece a permanent tax-free holiday park--give up this notion Greece will pay you back, and forget the notion that the Greek people will dig up their hidden cash.

So where would I spend my $11 billion--Greece....sail on.

Ernst & Young: if that rock is $17 million, can you tell my bank this rubber flip flop is $2 million?

2009-10-02T13:26:00.000-07:00

Ernst & Young: do you actually value assets?

Dear Ernst & Young, I openly challenge you to respond and explain how you determine/value/price the inventory of a company--known as the stuff YOUR client owns, the stuff banks consider as collateral.

My simple understanding: You "value" items based on WHATEVER your client tells you.

If I hire you guys, will you please tell my bank that my rubber flip-flop sandal is worth $2 million? Thanks. Afterall, you told banks that a red rock was worth $17 million..

Yep--CNBC reports a bankrupt British firm is now auctioning its assets; Ernst & Young listed the items for sale--the most valuable item is the "GEM OF TANZANIA". Ernst & Young listed it for $17 million...but experts determine the red shiny rock to be worth $160. Ummmm, thats a math accounting error of six zeros.

Geezz, makes me wonder how anyone loses money under your watch.

Currently, the Ernst & Young company motto is:
"We provide global services to help you retain confidence of investors, manage your risk, strengthen your controls and achieve your potential." The bread-butter money end of things is their Auditing/Accounting services.

I suggest Ernst & Young adopt this simpler motto: "We do whatever you want. That's why we have big fees, and you get rich."

This $17 million red rock makes me laugh and laugh....
Someday, these Auditing/Accounting firms will be held legally responsible for deliberate book-cooking and "asset pricing." Until then, I'm just sad Ernst & Young is not a publicly traded company (options anyone?).

Hank Paulson: I bullied Bank of America (BAC)

2009-07-16T10:35:00.000-07:00

Bank of America: are you the sucker who STILL owns this stock?
If you burned your cash, it'd at least keep you warm.

The ugly truth: Today on Capital Hill, Paulson admits three important things:
--Yep, I bullied Lewis to buy Merrill. (he was waffling)
--Yep, I told him if he didn't swallow it--then I was gonna get him fired. (how? i don't need to explain--I'm with the Fed's, c'mon)
--Yep, I guessed Merrill was rotten (it wasn't my idea to hide this from shareholders. suckers.)

BAC stock currently trading $13.25.
In 52 weeks, stock has melted -42.19% (leaking away from $22.92).
Company paid a dividend on March 4, 2009--$0.01. Stock price on that day was $3.38.
Compared to the year before, the dividend was -98.45% lower, and the stock was off -90.38% . OOOUCH.

Puzzled??? How is this possible--America's biggest bank, and plenty of fresh cheap cash from the Federal "Money Press" Treasury. Thanks Paulson. Lewis will pay you tomorrow, he promises. What’s money between friends?

On September 15, 2008--Ken Lewis (BAC CEO) announced BAC would buy Merrill Lynch, the whole thing--rotten fruit, exotic structures, and leaky accounts to boot. Lewis chatted about synergies, and efficiencies for the two companies, and called the deal a triumphant success. Paulson was “instrumental” in getting the deal done, promising to throw TAX-PAYER at this stink hole.

For anyone who wishes for the old days, oh—BAC was a decent stock.
In 2001, Wall Street imploded from a Tech stock firebomb. Investors came back to hard-rock companies, steady "we have a real business model", and pay fat dividends. Bank of America was a STAR.

Historical stock price (split adjusted) and dividend details say it all. Below, is the dividend paid for MARCH delivery:
2001--$17.74--$0.28
2002--$23.09--$0.30
2003--$25.73--$0.32
2004--$32.34--$0.40
2005--$37.91--$0.45
2006--$38.76--$0.50
2007--$44.56--$0.56
2008--$35.17--$0.64
2009--$3.59---$0.01

GPS (The Gap,Inc) $17.36: Three ways to piss off a customer.

2009-05-27T12:40:00.000-07:00

GPS (The Gap,Inc) $17.36: Three ways to piss off a customer.

Richard Jaffe, analyst at Stifel Nicolaus, has got it wrong about Gap Stores.
TheStreet.com (May 27, 2009) reports Memorial Day Sales were measly, however analysts anticipate the May Same-Store-Sales numbers (release date June1) will be brighter than the April numbers. TheStreet mentions Richard Jaffe's outlook:

"Richard Jaffe, analyst at Stifel Nicolaus, expects Gap(GPS Quote) TJX(TJX Quote), Ross Stores(ROST Quote) and Kohl's(KSS Quote) to deliver the biggest gains during the month, with their value-oriented merchandise."

http://www.thestreet.com/_yahoo/story/10505969/1/measly-memorial-day-sales-better-than-awful.html?cm_ven=YAHOO&cm_cat=FREE&cm_ite=NA

Let me ask: When was the last time you Richard Jaffe shopped at the Gap?

Over Memorial Day weekend, I visited all three flagship stores in San Francisco: Banana Republic, The Gap, and Old Navy, and my experience can be summed up as: F for Frustrating.

Gap does not value customers. Proof: Gap does not care if they piss off customers. I am a customer, and I was pissed at the price problems I experienced.

Here's the story of three items from Banana Republic:
Style#648404 Petite Solid Pintucked Faux-Wrap Dress, silk-cotton blend, original price $130.00.
The Store experience--In the Petite area,dress was hanging in a niche area, crowded and crushed on a bar with dozens of the same dress. The rack was not sized, so I tore three fingernails fishing my hand-in to locate a size tag. Almost the last dress was my size, Petite XS. The price tag said: $74.99. Odd.
The Online price--$59.99. (customer cheated of $15.00)
I asked the cashier to honor the online price. Her response: "You need to bring us proof of this different price, and a manager will review the situation." The Cashier only has a number,1947167.

Style#633751 Petite Shiny Pleated Sweater Dress, viscose, original price $150.00.
The Store experience--In the Petite area, I looked and looked over every rack,nothing. I asked 3 salespeople (none who wearing BR clothes, just a tag to identify them as staff), and they insisted it was NOT a BR item: "Maybe you saw that at Bebe." What?? I had originally fallen in love with the item online, and wanted to try it on. I went downstairs to the Women area. I discovered 6 rooms (more than 2700 sq. feet of retail space) of ONLY SALE merchandise. After 20 minutes, two attempted phone calls to GAP.com, I found the dress. No line for the dressing room, because no one was shopping, so I tried on the XS. Not bad, I need the Petite XS.
The price tag said: $30.00. Odd.

I carried the dress upstairs, and asked a salesperson to help me locate/buy the Petite Dress--I got passed onto the Concierge, Shannon. Shannon was helpful, and told me that the dress was only online and I had to buy it there. What about the price--online the item is $99.00. (customer cheated of $69.00)? She told I must buy-it online, then bring the item and receipt back to the store, and a manager will review the situation. I bought it online, and hopefully the manager will give me the price adjustment.

Style#606551 BR Monogram Cashmere Long Cardigan, cashmere, original price $275.00.
In Store experience--BR Monogram is the new premium line. On a table next to a busy door, there was a big messy pile of sweaters--like at Filene's Basement--in the heart of this disarray I found this lovely sweater. The size S fits beautifully as a dress, really--it hits me at the knees. If this is supposed to be a "cardigan" I guess BR designs for NCAAA volleyball players and not everyday women (the average American women is only 5ft4in)--no wonder earnings are so limp. The price tag: $41.99. Odd.
The Online price--$129.99. (customer cheated of $88.00). I bought the sweater in-store, and asked the cashier about the price difference. The Cashier simply said: "Well, why are you asking? you got the good price, the online people are too lazy to come into the store, so why care if they need to pay more." What???

Richard Jaffe, I invite you to openly share your Gap shopping experience. I’m sure your clients would like to read all about it.

Madoff Madness?--no, you're the lazy idiot!

2009-01-01T19:10:00.000-08:00

Madoff Madness? more evidence of stupidity and nonsense. this is worse than that Mint-Water garbage drink.

If you want a MADOFF FED band-aid, then go to your kitchen-get a knife-and kill yourself so we tax-payers won't be bleed to death for your stupidity!

CNBC (common nobs bobbleheads & complainers) is giving face time to the mob-o-whiners. The boring suits are saying the government MUST absolutely MUST honor all the money given to Bernie--and make them whole!
WHAT???? The investors (namely your money manager who was too lazy to actually invest your hard-earned money BUT still charged you a fee) is pestering the FED vehicle to scrape back the cash they gave (open wallet on golf course) smiley Bernie.

BOTTOMLINE: Madoff was no SCAM. He identified suckers, and took all the money left on the table. He laughed all the way to Bermuda.

MESSAGE: Hey, FEDs (whatever body of frat-boy-cheap-suits that's assigned to this mission), I say NO MADOFF SETTLEMENT!!!

CNBC says large funds lost money to Madoff: lazy bastards. never asked what the F he did with the cash. That's not my problem! I am a tax-payer and I think this Madoff complaining is a waste. I said NO to all these corporate bailouts..and I say to this Madoff bs.

Big Brother Bailout nixd=Gold gains $30 (options gain 88%)

2008-09-30T08:22:00.000-07:00

You know the news by now: On Monday morning (Sept 29) Government Bailout was nixed. Bickering amongst senators sidelined the hope of market salvation. The result marks history: DOW lost 777 points (nearly 7%); the other indexes struggled for air --the SP500 lost 8.79% and the Nasdaq lost 9.14%. The VIX screamed over 46. And GOLD? Gold glittered. Grabbing a $30 gain, globally gold was the go-to-answer.

This happened just like I wrote on September 25 (last Thursday).

A recap of the 3 day move:
Sept 25 Gold spot closed $875.90.
I said buy the Call Options: the GLD Oct 92c 1.70, and GLD Nov 100c 1.70.
Sept 29 Gold spot traded as high as $920, finally closing at $903.50.
I sold the Call Options: GLD Oct 92c 3.20 (gain of 88.23%), and GLD Nov 100c 3.70 (gain of 117.64%).
Nice gain. Pocketed quickly.

Big Brother Bailout? Buy Gold

2008-09-25T14:11:00.001-07:00

Congress is mumbling. Senators are swarming. Big Brother will soon announce the BILLION-BILLION dollar bailout. Don't bet on whether the deal will get done. Worlwide market shakeup means increased volatility, and market liquidation panic sell-off.

Market tsunami means GOLD will float upriver to new highs.

The Idea: Glittery Gold

Gold spot closed $875.90 (-$6.00). Like 18k diamond-cut bangles clanking on a banquet table--September 17, was a glittery Gold celebration. Gold rocketed $90 (up to $860 from $780). Why? More war and chaos in Angola? nope. Peasant miners demanding healthcare?nope. Russian "peacekeepers" monitoring mine conditions? nope.

One simple answer: Gold (like the crude sticky stuff) continues to be priced in USD.

Anyone remember WorldWar I? Germany was defeated, and its neighbors demanded money be paid. Germany agreed to pay its mistakes, millions and millions in german currency. The French were fools. Germany turned on the printing press--effectively paying their debt, and in the same breath making the currency worthless. A wheel-barrel of german dollars wasn't enough to buy a loaf of bread.
So--the itchy Washington wool suits are giving the sloppy banks $700 Billion (or as one friend said--"its 700,000 million"). At Forbes, Matt Woolsey, says this is almost double the money spent on Iraq. No comfort to me. The bottomline is: the USD will continue to erode, and anything priced in dollars will cost more.

The TRADE: buy Gold --Buy the spot. One way to access the long-side, is to buy the out-of-the-money GLD options.
--buy GLD Oct 92c 1.70
--buy GLD Nov 100c 1.70

JCREW (JCG): earnings miss by 12.5% (cashmere on sale)

2008-08-27T20:28:00.000-07:00

JCREW(JCG): earnings miss, options unravel.

Trade:
Everything happened just like I said.

August 26, stock closed $26.64. The company released the slippy numbers, and the conference call laid out the gravel. Afterhours stock got hammered, 30 min into the confcall--stock was off -12.55% (-$3.43, trading $23.21).

August 27, stock opened $24.36, off 8.55%. Heavy volume, 4x normal activity (5.8 million shares in the first 2 hours). Call option contracts unraveled. I said sell calls ahead of earnings. Good job.
Here's the info on the Call options--Close (before earnings) vs. Opening (after earnings)--
--Sept 30c $0.60 // $0.05 (-91.67%)
--Sept 27.5c $1.50 // $0.35 (-76.66%)
--Sept 25c $2.75 // $1.10 (-60.00%)

Numbers:
Company missed earnings by 12.55%, reporting $0.28 share vs. the anticipated $0.32. Looking foward? Well, no shiney pennies. Forward guidance lowered 15.29%!! Outlook will (hopefully) be $1.44-$1.54, a stepdown from the previous chants of $1.70-$1.75. And what is Drexler doing? NOT managing the company. He continues to spend money, and cross his fingers on a revenue stream. He chatted optimistically about opening more stores, selling pricey jeans, and inventing new ways for us say "gray". He likes "graphite" and "gravel".

JCREW (JCG): $25.61, sell ahead of earnings--cashmere on sale

2008-08-25T13:53:00.000-07:00

JCREW (JCG): closes $25.61. average volume, 2 million shares.

Sellshort the stock ahead of earnings, tomorrow after the close (4:30pm eastern).
Earnings estimate is $0.32/share. The company will probably meet the number, and may suggest increasing costs--casting shadows on the bright retail star.

Increasing costs? don't blame credit crunch--blame Mickey "I was fired from GAP" Drexler.

Play: sell SEPT call options. Expiration is 14 trade days out. Pocket the cash, and wait for cashmere to go on sale.
JCG stock $25.61
--Sept 30c $0.65
--Sept 27.5c $1.30
--Sept 25c $2.35

NUMBERS:
Year-over-year (52 week) stock change--loss of 50.83% (closed Aug 24, 2007 $51.97)
Year-to-date stock change--loss of 45.25% (closed Jan 2, 2008 $46.67)

Q2 (Sept 5-07)--Earnings Estimates had a $0.29 target, and Drexler's higher-price points cha-chinged a surprise $0.32 (a whopping 9.07% better than estimates). Drexler was downright gushing about a premium collection, and launch of new product markets. Translation--Drexler was giddy to spend money, betting high-end product mix would fill up your closet (and his wallet). Two days later, stock sold off more than 10%--losing $5.92, closing below $44.

COLOR:
--Earnings have steadily drifted lower--and will continue to weaken. Drexler's "growth"strategy is simple--spend more money to attract more money. Look to the fall of the Roman Empire--if the spending outlays the revenue received, just assume the stock will SUCK. And SUCK does not accessorize well with cashmere, luxury or fabulous portfolio returns.

Drexler has a two pronged growth plan: increase price points, and increase mix of high-end goods. This has worked, sorta.
Drexler has certainly delivered some nice numbers: dollars-per-square foot has steadily increased 8-12% year-over-year, but that's largely driven by regular price increases on bread-butter items (think cashmere and chinos, catalog staples). If you sell the same number of the same basic items, and continue to raise the price-tag, then even a Presidential candidate can do the math--revenue will increase. Launching new collections, like Wedding, has ensured the Jcrew gal will make Jcrew the First-Look Location for all her outfitting needs.
BUT Drexler wants to be the First-Look Location for lifestyle needs. Drexler is talking Jcrew pet, and home. Money out, money out--river of money flowing south. So far--the stock has lot 50% on this plan. Hey Mickey--don't worry, you still have another 50% to lose.

CNBC-FastMoney roundtable: DOWNTICK! to the boys for inviting Stacey Briere

2007-10-08T20:04:00.000-07:00

MAJOR DOWNTICK on FastMoney!

CNBC tv normally has nice suited bobby heads, pastey penguins and the usual school-house economist. The intelligence denominator has increasingly ticked into the USATODAY readership level. ugh. Under all that fluorescent glow, a GENUINE spark of friction and imagination is seen on the show FastMoney. The roundtable is packed with trader guys that have tasted their own grit, greased their own trades, and taken a few in the gut. I cheer for these guys.

BUT the guys get a BIG DOWNTICK today: what the hell was Stacey Briere doing there?
Who told you she's a trader? Her name tag? Her business card? Her driver's license? Hell, her driver license probably says she's 118 lbs.

Her title at SIG is Options-Strategist. Her yabber on CNBC sounds like a summation of some junior research report.

What qualifies her opinion as newsworthy? noteworthy? or even noisey?

I CHALLENGE not so young Ms. Briere: Put your own money where your mouth is.

I'll take you head to head--any pick of stocks against mine. You in?

EBAY-23.70, not this low since May 12-2003

2006-07-27T13:18:00.000-07:00

EBAY--23.70 close

split adjusted, the stock hasn't closed this low since May 12-2003.
that's a new 1140 day low.
continued selling of at-the-money September calls.

grumblings over China consumer consumptions should be increasing headache for eBAY interests.

EBAY-24.05, save your pennies

2006-07-24T22:16:00.000-07:00

EBAY-trades 24.05 new 52 week low.

eBAY anounces plans to discontinue store fees in CHINA--BUT increases fees in USA.
get the details from gigaom:
http://gigaom.com/2006/07/24/ebays-china-syndrome/#more-6545

Ugh. I read this story and think--- those OCT 20p look pretty good.
or sep 20/ 25 strangle.
by day end stock trades 25.14 now. volume was pretty average, about 20million

stock broke a new 2 yr low--trading 24.05 in morning buzz.
short interest on the stock was over 2.3% (that's roughly 46,420,330, nothing to sneeze at)
the short interest has been increasing in the last few quarters, widening by 0.3% last in the last 30 days.

On the Option side:
oct 20p offered at 0.50
sep 20/ 25 strangle offered at 1.95 screen mkt.

open interest on the oct 20p--1374, small buy activity.
there's zero historical activity for SEP, its the new month coming off the JULY expiration cycle. however, there has been sellers all day on the SEP 25 line (at-at-at) 851 at 1.65.

most active line BY FAR is the AUG 25c kind--avalanche of sellers 25,108 (interesting cuz there was an open interest of 15,330) blocks trade 1.10, mostly on the ISE.
25,108 may read as 2,510,800--worth noting, think short sellers.

Meg Whitman's cautious statements about foward numbers needs to be viewed in consideration of all the bruising the stock has been suffering. her comments were an attempt to bolster the stock, ignite "value" activity and remind shareholders: eBAY has a long term profit plan, don't look for ka-ching sale dollars to be rolling in anytime soon.

on the year--stock is down 38%, and frankly it will get worse.
put your money in your penny jar, rainy days ahead.

(i can only think ebay's "penalty" fees make Yahoo Stores and those Google guys smile)

ICE and NYX excitement: +15% gains in 5 days

2006-03-14T06:32:00.000-08:00

ICE--stock closed $71.28 yesterday, gaining $3.03 on 1.8 mil.
NYX--stock closed $81.30 yesterday, running up $5.19 on average of 7 millions shares. This was the 4th day of public trading in NYX. look for continued gains and interest in this group.

NYX went public on March 8--gaining $14.00 or 20% in the first 4 days of trading.
On March 8 it opened $67.00 and traded heavily, closing down slightly. In the next few days the volume activity tapered off despite continued buying strength.

On March 7 (one week ago), ICE stock opened $61.31, closing slightly down on average volume of 638,000. March 8--NYX went public. Since, there's been increased interest and activity in similar products, like ICE.

Today ICE opened $71.50--that's a $10.19 surge, +16.7% gain in 5 days of trading.

What's the significance in ICE activity? this is a big upward move on almost triple volume.
Consider putting this stock on for a 3-5 month play with big upward momentum. would be good to have in your pocket along with NYX.

--UNUSUAL activity: options trade scanty in this product, strikes up to the 70 level.
BUT yesterday, a customer asked to list the MARCH 100 line--with only 4 days to expiration and 30 dollars away. what's this guy know? maybe nothing.

Effective this morning--there are new ICE strikes from 70-100 in the April/June/September months.
Watch these stocks for continued strength and some options interest.

SIRI: (worthless) lottery ticket?

2006-02-21T21:51:00.000-08:00

SIRI: (worthless) lottery ticket?
today this is $5 stock--it could be zero or much more.
think of buying SIRI as a $5 call, not a great place to invest money.

definition: SIRIUS, n., brightest star in the constellation

new definition: SIRIUS, n., hottest stock on NASDAQ. satellite radio generating revenue from a subscriber user base, and a multi-facted network of strategic alliances (namely automakers and media houses).

Here's the skinny: SIRI is burning a ton of money. literally. this company makes okay trading, horrible investment. market activity, general optimism from critics/analsysts and chatter from the industry make SIRI seem like a small BIOTEH-PHARM (remember how so many almost cured aids/cancer?) --it surges on excitable upcoming events like Howard Stern or a new CEO, it trades sideways in a treading hold-your-breath-or-get-out pattern for months, then it either scrambles up the mountain face or cliff dives.
This company has never made positive made earnings, doesn't pay a dividend, and Short Interest is almost 10% of the floating shares. Ugh.
SIRI will either burn out (and scramble to resolve those 5 yr deals), or build a strategic alliance of gigantic Life Changing proportions (akin to way Napster forced a change in online music).
Companies in prime position: a firm that would vantage from portable users accessing new media content.
(Watch those large Media houses, MP3 dominators,and multi-task phone guys).

OVERVIEW:
SIRI--$5.18 (-0.08) on 59,678,380 slightly larger than last 30 day volume activity
100 day average volume-60,349,250

February 17(friday morning before the bell)--SIRI announced 2005 Q4 earnings.
Noteworthy:
--2005 Revenue grew 262% to over $242 million
--2005 Subscribers increased 190% to over 3.3 million
Sounds good? sounds too good.

On the opening bell SIRI shares were off (-0.18) from the close--
trading a $5.47 open , leading up small interday--but unable to gain traction on "good earnings".
SIRI closed for the long weekend--$5.26 (-0.39) on a whopping 123,349,696 shares.
exhaustive.
The company was careful with its earnings language--and the timing of an early dawn Expirtaion Friday announcement was carefully laid into their plan. From a quick look, everything in the SIRI earnings release sounded really good.

However, careful reading outlines: "don't put your retirement money here. "

SIRI Satellite is an incredible company--the technology, the strategic alliances and the variety of programming cannot be ignored. It was just a few years ago MP3 devices were cutting edge; today, they are ubiquitous and one smartapple dominates the marketshare.

SIRI could dominate the market in the near future, less than 2 years. Its only rival is XMSR.

Or SIRI could go the way of some other incredible companies: spend crazy cash, pay executives crazy money, keep spinning upbeat investor releases--stock trickles away, or vaporizes in an angry sell-off. Money stream being a noxious matter.

Here's some bad news buried deep in the earnings summary is:
--the $311 m quarterly loss (that's a burn of $34.6m a day)
--2005 4Q loss was $226.3m,
--2005 total year loss was $863 million (or $2.36 million a day)

SIRI subscribers pay $12.95/month to get Howard Stern talk sweetly in their ears.
Anxious to get commercial free radio--1,142,640 new subscribers plunked down their money in 2005 Q4.

Okay, using basic 2nd grade math--no funny accounting--that's an expense of $198.05 per customer acquisition, or a total loss per new customer (revenue vs. total quarter expenses) of $272.53. Expense per customer includs all strategic alliances (deals with media houses or auto companies) or signing agreements with franchises/programmers, like the $650 million cupcake SIRI gave to the Major League Baseball franchise.

In defense of these numbers Karmazin said ,on CNBC, expenses per customer are spent with the consideration that the customer will subscribe for 5 years. (what? 5 years--the target audience is young men--why would they agree to a 5 year anything?)
okay, given that: if the monthly cost to subscribe is $12.95, at 12 months, x5 yearsx 1,142,640 new customers= $887,831,280.00

big IF--if 100% of the new customers agree to a 5 year deal, SIRI would make a total profit of $576.8m.
big IF--50% of the new customers agree to a 5 year deal, SIRI would make a total profit of $132.9m.
big IF again--if 25% of the new cutomers agree to a 5 year deal, SIRI would LOSE ($89.1m).

think to yourself, how many things have you committed 5 years to? and put your money on it.

China-Latin America: first 5 days 2006

2006-01-09T23:50:00.000-08:00

2006—first 5 days show upbeat determination for Latin America and China products, namely the ETF’s. ETF’s gained equal good fortune from east to west, however fund activity continues to demonstrate—Latin America is a stronger hand right now.

The press continues to watch China—inventory numbers, telephone subscriber estimates, slower than anticipated Wal-Mart expansion, general growth and more growth.

Where’s the chatter about Latin America? Don’t hold your breath—too many suits are still distracted, crossing their fingers that BAIDU will surprise anxious eyes and empty wallets.

Here’s a quick peek at the first 5 days of 2006.
Tomorrow look for concerns and comments on Fund Distribution Holdings and Sector Weighting: I guarantee you will see some surprises.
(do not ever forget that CHINA is the largest owner/holder/dealer of everything—what makes you think those guys are telling you everything…)

ticker fund name close 01/09/05 last price (12/30/05) change 5 day % change 52 week 2005 YTD
PRLAX T Rowe Price Latin America $27.66 $25.32 $2.34 8.46% 60.05%
MALTX Merrill Lynch Latin America $40.35 $37.17 $3.18 7.88% 55.40%
FLATX Fidelity Latin America $34.55 $31.98 $2.57 7.44% 55.17%

TCWAX Templeton China World, A $23.98 $22.90 $1.08 4.50% 17.63%
FHKCX Fidelity China Region $20.30 $19.30 $1.00 4.93% 14.46%
LNGZX Columbia Greater China Z $27.62 $25.83 $1.79 6.48% 9.30%

ticker fund name last price (12/30/05) change 5 day % change
EWZ iShares BRAZIL $37.40 $33.37 4.03 10.78%
EWW iShares MEXICO $38.48 $35.71 2.77 7.20%
ILF iShares S&P Latin America 40 $134.17 $122.85 11.32 8.44%
FXI iShares FTSE/Xinhua $66.79 $61.92 4.87 7.29%
EWH iShares Hong Kong $13.28 $12.62 0.66 4.97%
PGJ PowerShares Golden Dragon Halter USX China $15.13 $13.87 1.26 8.33%

OHB, TOA, BMHC--3 hot builder stocks

2005-07-20T12:29:00.000-07:00

OHB,TOA , BMHC--three housing stocks that are booming

OHB--Orlean Homebuilders $26.32 +0.22, on average volume 31,200
TOA--Technical Olymipic $27.70 +0.39, on slightly better volume 108,300
BMHC--Building Material Holding $80.43 +1.00, slightly better volume 152,420

Incredible--none of these have OPTIONS.
if you are looking to list one--BMHC would be the best for trading.

These three stocks are relative small fry compared to RYL or LEN. They have small floats and almost no fund activity. ripe for emerging growth. currently being monitored by larger Home builders and the fund folks. All three have double digit quarterly growth and scant debt to hold them down. Even if there's a near-term pullback in real estate, these three developers have unique edge over the BIG builders, namely regional low-key approachability.

Think Florida. Think the Southeast, like the Carolina's and Virginia.
Think more than low tide water, flat land and filled in swampy sand pits.
Start thinking cheap land, great weather, and the low cost of living.
And--dare to even think hurricanes. Hurricanes? yes hurricanes.
Put this all together, and you've got a power group of builder stocks.
All three had steady gains and an accelerated volume-stock breakout in May, 2005.

The Details: 1 yr.total return P/E 52 week high/low Float/Short interest
OHB-- 67.9% 11.6 27.67/15.25 4.7 M/ 429,548 (9%)
TOA-- 64.49% 11.8 28.34/16.12 14.0M/1M (7%)
BMHC-- 352.45% 15.8 80.50/16.99 13.48M/656,473 (4.8%)

OHB--Orelans Homebuilders
sells land and develops homesites in North Carolina (Charlotte, Raleigh, and Greensboro), Richmond Virginia tidewater area, Florida (pan-handle, Orlando and the Palm Coast). Some pre-fab home building.
Earnings last reported for period ending March 31, 2005-
-revenue up 73%
-orders increased 44%
Greensboro, North Carolina was named the best place in the USA for Latino's to live! Traditionally it was rural farmland (cotton, tobacco) but the way farming has subsided--this cheap land has opened up to new cheap housing communities.The Carolina Charlotte/Raleigh is trying to build to meet demand, they can't build fast enough. the whole region is growing rapidly--from Virginia to Florida.

TOA-Technical Olympic
this Hollywood, Florida builder is closely being watched by the fund guys. regular new highs and increasing volume is making this stock more and more attractive. recently the firm reported quarterly earnings--up 14%, volume surged 80%.These folks are building communities (designs/builds and markets)-single family homes, townhouses and duplexes in Southern Florida, the Carolinas and eastern Texas. Putting them in the same market place as OHB.

BMHC--Building Material Holiding
located in the Southern territory again...
using its subsidiary BMC West Corporation, distributes building materials to professional contractors and project-oriented consumers. The Company also conducts value-added conversion activities which include fabricating pre-hung doors, roof trusses, pre-assembled windows, and pre-cutting lumber to meet consumer specifications.
Basically if you want to build anything in this Florida-Carolinas-Virginia area you're probably talking to these folks.
Hurricane season has come 6 weeks early this year--for BMHC this means stronger growth going into the next quarter, as demand for NEW buildings and supplies increases ahead of schedule.

And how does hurricanes tie in?
This geographic area is little impacted by Hurricane season.
The Carolina coastline and parts of Florida have their hurricane days--but builders have taken little concern to this cutting into their profits.
The truth--the new communities are all being built in areas traditionally known for great protected farm land.
And--if a hurricane cuts through--these three companies are in the best position to be the New builder or the building supplier.