Mr. Sensitive

August 17, 2012

FSX Friday Update

Filed under: Uncategorized — lbej @ 17:09

When I worked for the bank, I would try to avoid scheduling vacation for times I knew a lot of folks would be out of the office.  I found I could get a lot more done while the executives were at the beach instead of dreaming of new windmills for middle-managers (like me) to tilt at.  I had plenty of tilting to do as it was, and I could do more of it while everyone else was on vacation.  It’s different for traders.  A trader needs other traders, and lots of them, to take the other side of the hedges or prop positions he wants to open.  When everyone’s at the beach, there’s no liquidity—a trader can’t do his job (trading) because he’s got no one to trade with.  That’s why Wall Street goes on vacation en masse at certain times of the year.  This week was one of those times.  Earnings season is over, the market doesn’t care about politics nearly as much as the financial news pundits wish it did, and Europe—the #1 macro driver of the last two years—has vanished from the news cycle.  If Marcus and Jodi Ann weren’t taking pictures on their Italian honeymoon and posting them to Facebook, I might think the entire continent of Europe sank into the Atlantic last weekend.

Speaking of Facebook…the stock fell to $19 this week as the first lockup period (during which insiders were barred from selling their stock) expired, freeing more than 200 million more shares to potentially swamp the market.  Why is $19 significant?  Well, the IPO priced at $38, so FB at $19 means investors who bought at the price underwriters and FB executives set have now lost half their money in three months.  And there are compelling reasons to think the stock should keep dropping: it’s still expensive (P/E multiple is 66 versus 15 for the S&P 500); the company has no idea how to monetize its user base; there’s no strategy for mobile; the CEO has that wonderful combination of inexperience and arrogance you want at the helm of a high-profile, multi-billion-dollar public company.  If Zucky admits he needs to bring in an experienced manager to, um, manage (what the Google guys did by hiring Eric Schmidt), FB is worth a look at these levels.  If it trades in single digits, the stock is worth a look no matter what.  I wouldn’t short it here, but I’d definitely go short before I’d go long.

What I love is the breathless reporting on how much money Zuckerberg has lost since the IPO.  When Facebook went public, his shares were worth more than $19 billion; now they’re worth less than $10 billion.  So how that gets reported is that Mark Zuckerberg lost more than nine billion dollars.  Um, no he didn’t.  He didn’t have $19 billion three months ago and he doesn’t have $10 billion now.  He has a ton of Facebook stock, stock he didn’t buy and can’t sell.  He couldn’t have sold his stock three months ago, and he can’t sell it today.  He can start selling in a few months, but he won’t.  Apart from the standpoint of prestige, Zucky has no reason to care that he ‘lost’ $9 billion.  If you’re a retail investor and you spent $38,000 cash to buy 1,000 shares of FB in the IPO, if you decide or are forced to sell now, you will indeed lose half your money, and that’s a pinch a regular person’s liable to feel.  Do you think the Zuckerbergs are pinching pennies because he ‘lost’ $9 billion?  Of course not.  He even took out a mortgage to buy his $7 million house; does it sound like he has a $9 billion bank balance?

The Family Stock Index marched slowly higher this week, finish up 1.4% to 12,612.  Here’s how much trading has slowed over the last eight trading sessions:

  •  +0.6% cumulative, 60-point average daily move, one triple-digit move (today +109)

By way of comparison, over the prior eight sessions we traded thusly:

  • +2.2% cumulative, 154-point average daily move, triple-digit moves 6 out of 8 sessions

Come on back, volatility; I miss you.

Advancers

  • Jenny (JNY) +8.1%. The pop this week brings Jenny’s six-week gain to 27%. Rallying into the beginning of the middle school years?  It’s unheard of.  And it makes me a little jealous.  I wore a bolo tie with a pineapple on it through all of sixth grade; do you think my stock was up 27% during summer 1988 in anticipation?
  • Lulu (LULU +7.6%) and Marisa (MOLX +4.3%).  Their cat brains got a little overcooked this summer, but they’re inching back away from feral derangement.  Probably that’s for the best, especially since Lulu’s started sleeping right by Katie’s face at night.
  • Icarus (ICS +3.9%).  Speaking of unheard of, a one-week move of this magnitude in a muni bond fund isn’t what I expected to see—ever.  Perhaps Icarus was able to spread his wings somewhat when Justin was in D.C.  I definitely get a vibe from Icarus like he wants to be free to do his own thing sometimes.  His own thing being eating cat poop.
  • Mario the Elder (MGEE) +2.9%.  Sold a house.  We’ve got another two coming up for sale in the cul-de-sac; will Grandpa be able to pass on both?
  • Brinkley (BCO) +2.3%.  He’ll be talking anytime now, right?  That’s what his mother thinks.  I think that two-out-of-three academically gifted kids isn’t exactly tragic, especially if he’s a big guy.  Brinky thinks jumping up and down is the coolest.
  • Marcus (MCS) +3.1%.  Jodi Ann got him into a pink shirt, evidently a significant milestone in the journey to relaxed goofiness.

Decliners

  • Jodi Ann (JOY) -2.3%.  But what if he really likes the pink shirt?  What if he likes it too much?  What if he decides he wants to be That Guy Who Wears Pink Too Often?  What if he starts telling everyone to call him Mr. Pink?  I’ve seen that movie, and it doesn’t end well for poor Bob Geldof.  A two-percent haircut for JOY this week isn’t unreasonable if there’s even a slightly increased risk of Bob Geldof.

  • Winston (ED) -3.1%.  I think Ed dropped a dividend this week.  He does that from time to time, and you don’t even need a scooper to take care of it.
  • Nicole M. (COLM) -5.0%.  This analysis is all Katie; I can’t take any credit.  Nicole will be competing for the Brinky Cup for the first time this year, and in fact I already have her picks in hand.  At first, Katie thought the drop in COLM this week was a harbinger of picks failure.  Almost immediately, though, she realized the much greater risk lies in picks success.  If Nicole were to finish ahead of Mario in the Brinky Cup standings, how would it go?  I’ve seen that movie, too.

Name Ticker 8/17/2012 Change
Brinkley BCO $23.36 +0.53
Charlotte ICE $135.34 +2.08
Dustin DST $51.24 +0.08
Icarus ICS $16.33 +0.61
Jenny JNY $12.15 +0.91
Jodi Ann JOY $55.90 -1.34
Justin SCI $13.00 unch
Katie CATY $16.67 +0.22
Lee MSTR $126.81 -0.83
Lisa LNCE $23.04 +0.17
Lucas LEI $1.86 +0.08
Lulu LULU $63.19 +4.47
Marcus MCS $13.44 +0.41
Mario T.E. MGEE $50.82 +1.45
Mario T.Y. WMAR $10.15 +0.02
Marisa MOLX $27.39 +1.13
Namilita NL $12.45 +0.56
Nicole E. NICE $31.53 -0.28
Nicole M. COLM $50.68 -2.22
Reagan REGN $138.06 +1.22
Ruby RJET $4.98 -0.14
Wilson WILC $4.18 +0.07
Winston ED $61.68 -2.19
Zero ZIP $8.00 -0.08
Zondro ZQK $2.92 +0.12
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2 Comments »

  1. I’ve got to ask… What up with the Michael Bolton pic?? Seems strangely out of place on your blog.

    Comment by Lisa — August 19, 2012 @ 08:25 | Reply

    • In our Biebery world, it’s easy to forget what raw, untamed masculinity looks like. You’re welcome.

      Comment by lbej — August 19, 2012 @ 08:36 | Reply


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