Friday, July 29, 2011

Chatting Messenger

It's the last Friday of the month, so Frank (author of value site frankvoisin.com) and I are chatting messenger, where we discuss stories from the web that caught our interest:

Saj: Are gas prices maybe a little too high? Some beneficiaries have run out of things to do with their money.
"Nothing quite says MINE like carving your name in your private island...The whole thing is so large that it's actually visible from space..."
Frank: Good thing his name is Hamad and not Ahmadinejad, or he'd run out of space.
Saj: Or, he could just buy a bigger island.
Frank: Much bigger islands aren't cheap! To scrape together that kind of cash, he'd need at least a few hundred thousand Hummers to fill up in the next year - oh wait, that's how many Hummers fill up every week in the USA alone!
Saj: Well, maybe people are adjusting. According to this guy, "[Hummer] values are dwindling which will hopefully make their demand go down."
Frank: Doesn't he have the direction of causation completely bass ackwards?
Saj: Yes

Frank: Check this story out. Even though the wife wanted no part of the Madoff funds in the divorce settlement, the husband is coming after her for half of the money that was scammed!
Saj: That seems fair. He chose to invest all of his financial assets post-divorce with Madoff, and now she should have to pay for it.
Frank: This serves as a good lesson in diversification.
Saj: Yes, diversification of spouses, or risk your only spouse being a total jerk!

Frank: So Travelzoo fell 35% in one day this week, despite announcing revenue and income growth of 34% and 51%!
Saj: I guess it's not a good idea to buy a stock at a P/B of 50?
Frank: Only if its price to operating cash flow is less than 60...and Travelzoo's wasn't.
Saj: But hey, it is now!
Frank: What a steal...everyone who bought at a P/B of 50 must now love it at a P/B of 30!

Saj: It's rare to see a value stock have such a ridiculous short interest, but check out hhgregg's short interest as a percentage of float: 67% !!
Frank: Seriously, what gives? Is it some sort of Chinese fraud?
Saj: "Muddy Waters reports hhgregg's supposed flagship store in Avon, Indiana is just an empty building."
Frank: "The security guard spoke only broken English, but told us the store is simply closed for renovations in preparation for a massive back-to-school sale."

Frank: Yet another city feels the need to subsidize a private business with taxpayer funds.
"At least half the funding for the building will come from the public purse..."
Saj: Why only half? Billionaire sports team owners and their millionaire employees need our help!
Frank: Incredibly, not only does the owner of the team want a new arena funded by the public, but he wants the city's existing arena shut down!
"Katz [the owner] says the city has to exert some kind of influence on Northlands so they will agree not to compete with a new arena."
Saj: Sounds like a great plan. Let's give him a publicly funded, private monopoly on all large city events. Surely reducing competition is great for the citizens!
Frank: Socializing losses while privatizing gains...when has THAT ever been a problem?

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