Tastylunch (29.89)

Tasty Takes: Monday sell off looming?, World's worst hedge fund, Four.ob gets hit by a Citron Bomb, Icahn talks Smack, and Tasty Trash

August 18, 2008 – Comments (13) | RELATED TICKERS: FMCC , FNMA , EZPW

Hello Capsters

felt like doing some more quick takes since my date cancelled on me. Stood up for the Olympics, well I've had more more insulting rejections a least it was for a good cause . :-) Bold Emphasis where used is mine.

Monday could be Really Volatile

Once Grandpa and Grandma Investor pick up their copy of Barron's off the newstand and see this...

"IT MAY BE CURTAINS SOON FOR THE MANAGEMENTS and shareholders of beleaguered housing giants Fannie Mae and Freddie Mac. It is growing increasingly likely that the Treasury will recapitalize Fannie and Freddie in the months ahead on the taxpayer's dime, availing itself of powers granted it under the new housing bill signed into law last month. Such a move almost certainly would wipe out existing holders of the agencies' common stock, with preferred shareholders and even holders of the two entities' $19 billion of subordinated debt also suffering losses. Barron's first raised the possibility of a government takeover of Fannie ..."

http://online.barrons.com/article/SB121884860106946277.html?mod=b_hps_9_0001_b_this_weeks_magazine_home_right

I can see it now

Ethel: "Henry have you seen to day's Barron's? we don't have any of that Fannie Mae stock do we?"

Henry: "No dear just Freddie Mae, Freddie Moe, Freddie whatever its called, it's completely backed by the gov't. Our broker told me we can't lose money when we bought it last year!"

Ethel: " Honey... I think you need to read this."

Henry: "Sweet Petunias! Get me the TelePhone rightaway!"

Look out below!

 Next Time You Think you Stink at Stocks Take a Look at This Hedge Fund

 Schadenfreude senses tingling....

" LONDON -- The two-year-old hedge fund founded by Jonathan Wood, a former UBS AG trader, is down about 85% from its inception through July, according to a person familiar with the matter.

Mr. Wood, known as an outspoken investor, has seen his investments in several high-profile casualties of the global financial crisis sour, including Bear Stearns Cos., Countrywide Financial Corp., and U.K. bank Northern Rock PLC.

An added sting for investors: They haven't been able to cash out because they agreed not to withdraw money for as long as five years from when they signed up. Those are tight lockup ..."

http://online.wsj.com/article/SB121873875916841545.html

I can't believe this guy is a "pro" . 85% loss is pretty inexcusable. This is why I don't let other people manage my money.   

Micheal Goode Beat Citron again

Well this time it only took Citron about three months to catch onto Everydayinvestor's target ( Is there a reason CAPS players don't get rec his blogs more?). To be fair Citron normally doesn't dabble in OTC stocks, but it would be nice if Left gave Goode some credit publicly somewhere at some point.

http://www.citronresearch.com/index.php/2008/08/14/4c-controls-otcfour-who-is-going-to-get-them-first-irs-department-of-homeland-security-or-the-sec/

I have a feeling we are going to see something of Reaper's call possibly mentioned on Tim Sykes's site, based off comments he made in his blog an things I've seen elsewhere on the Interwebs.

I cannot tell you how mad I am, I was not able to reserve shares to short in this one. Curses!

Carl Icahn Don't Like it When You Dis Him

If owning BlockBuster and WCI stock wasn't bad enough , now Ichan has attracted haters in the media.But he ain't takin it lieing down!

 "...Ms. Stout states, "Shareholder activism can raise the stock price of a particular company, to benefit particular shareholders, in the short run. But it lowers the value of the stock market as a whole, for average investors, in the long run."

I can see no logical sense to any assertion that short-term gains in a particular stock lowers returns for the market as a whole over the long term. What research supports this claim? How can rising stock prices lower overall market returns?

Ms. Stout also suggests that activist investors are only interested in pushing for short-term stock gains after which they "dump" their stock. This is a common charge against activists leveled by faltering corporations and their enablers.

If Ms. Stout had bothered to take even a few minutes of her "busy" day to call me, I would have been happy to explain to her that I have many long term holdings, a fact that any competent first year law student could easily ascertain by a simple review of the public record. In fact my long term holdings have been responsible for the greater part of my net worth...."

http://www.icahnreport.com/report/2008/08/response-to-wsj.html

Burn! You just got served Wall Street Journal!

I can only imagine what he'd say if you talked about his mother.

Can You Answer the Floyd Norris Challenge?

The previous post, on stealing a company, brought a claim that is common, but incorrect: that a major company used to be a penny stock. In this case, the claim was made for Intel.

Intel went public in 1971 at $23.50 per share. I don’t have complete records before late 1973, but I think the lowest per share price — based on the shares then trading — was $14.88 in 2003.

If you look at a long-term stock chart, you can get the impression Intel was a penny stock, because the chart is adjusted for splits. If you bought one Intel share at any time in the 1970’s, and put it away, you now have 96 shares thanks to splits.

The lowest split-adjusted price I could find was 16.1 cents on Sept. 17, 1974. But the actual price someone paid that day was $15.50. Someone who specialized in penny stocks, sometimes said to be shares under $5, although now they are usually under $1, would not have bought Intel at any time in its history.

Here is the challenge: Can anyone name a company that became a successful important company that was ever really a penny stock?

Addendum: I should have specified U.S. company. In some countries, such as Britain, there is no tradition that good stocks do not sell for pennies."

 http://norris.blogs.nytimes.com/2008/08/16/has-any-penny-stock-become-a-big-company/

  Well some people already have but the overall point shouldn't be lost Penny Stocks are horrible long term investments. Trades ...well that's a different story.

Yes Tasty Still Buys Longs On Occasion

I know I come across as a pretty negative guy sometimes, but those who know me perosnally probably wouldn't characterize me as such. I just find Bear Markets and associated topics really intellectually exciting actually, they are typically volatile and I firmly believe doing well in Bear markets is when you really make your money. This is when you find out just how good you really are.

If you want to see what sort of long plays I'm interested in lately (assuming that even matters to you)  you can swing by The Stinky Feet discussion board (Small Caps longs only)  at Motley Fool run by good CAPS buddy Madcowmonkey here

 We got some good guys (StockSpreadsheet aka HighHopesInSD , Madcowmonkey, Schuured, the ever lovable Binv and of course myself) and good content in there already.  If you like small caps and affable and honest debates are your sort of thing, you might wish to check it out.

FWIW my latest stock I'm interested is EZCorp , you can see my rationale here.

All skill levels are welcome, no time committement required.

I'll post again about this later.

Tasty Trash - Cardima (CADM.OB)

I have a suspicion this section is the real  many reason people rec Tasty Takes when I do them .

Eh Whatever it's fun to find these POS companies.

from my pitch

 " These guys use PIPES
http://www.sec.gov/Archives/edgar/data/1022570/000101376208001295/form8k.htm

They have 8 million in total assets and a market cap of 185 million

they have had 200%+ run up in stock price.

Sales for 07 were down over 20% over 2006. Leaving the price to sales  at roughly 160.

and then there's this from the 10K

'Going Concern

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. As reflected in the accompanying financial statements, as of December 31, 2007, we had cash on hand of $4,811,000, short term investments of $2,008,000, positive working capital of $6,018,000, and an accumulated deficit of approximately $176,559,000. We had a net loss of $42,646,000 and $12,151,000 for the years ended December 31, 2007 and 2006, respectively. In October 2007, we reached an agreement with our major creditor, APIX International, Ltd., (“APIX”), to convert all of our outstanding debt, $17,661,000 into equity, which resulted in APIX becoming the majority stockholder of the company. '.... "

Sounds like Cardima might be ready to go into Cardiac Arrest.