Hamptons ATM Receipt – Bogus Maybe? Delinquent Children Perhaps? Rich People Check Your Records

Very well protected ATM (but I think the bars ...

Image via Wikipedia

Dealbreaker yesterday posted an image of a Capital One ATM receipt with a remaining balance of around $99 million and change. The withdrawal is reputed at $400. Everyone wants to know who it is. The service fee is supposedly $2.75.

Is the ATM receipt a bogus plant designed to entice financial media? Would a mega rich guy need a $400 cash withdrawal? The charge cards should have pretty good limits.

Would a mega rich guy be paying $2.75 for transaction fees? Just having around $100 million in deposits gets you a lot of freebies from most banks.

Would a mega rich guy even bother to print a receipt or did it just come out accidentally? Maybe the mega rich guy is not used to using ATM’s?

Will Capital One review their security camera footage and find who this person is? To protect the client they should change the card.

Maybe there was a security breach and the thieves were just going for $400 and had no need for the receipt. Too bad they probably could have skimmed more.

Maybe the mega rich guy has teenage children who just wanted to get their hands on some cash for who know’s what and now the mega rich guy is embarrassed with a family problem. Maybe the teen ager was using their own card responsibly, took out $400 for an OK reason and like most teenagers of rich people not too good with the paper work.

Maybe rich people will stop using the ATM in question because they are annoyed with the media stake outs. Pretty soon the bank will wonder why they installed at that site as no one important is using it.

Disclosure: George Gutowski writes from a caveat emptor perspective. I do not have $100 million in any bank account. I do not know of any circumstance where this may change within the next 72 hours.

$KBH Changes Mortgage Providers! Who Cares? #homebuilders maybe #LBO

KB Homes (NYSE:KBH) met expectations and reported really terrible numbers. They are a home builder in a lousy market.

Jeffrey Mezger, president and chief executive officer has been reduced to simplistic comments as this quote illustrates: “We believe the current housing market conditions will likely continue until there are meaningful and sustained improvements in job growth and consumer confidence.”

Brilliant analysis. The signal to investors is “We are lost deep in the woods and cannot find our way out” Why would the CEO put out a comment like that? After all the negative housing news investors are painfully aware that the economy stinks. But the stock tanks another 13%.

The market cap is below $1 billion.  You have to believe Americans will fall back in love with house ownership some day. KB Homes is not generating wealth as it lists in windless markets. Investors would only be too happy to be bought out by a deep value investor with a long-term view.

So Jeffrey Mezger keep bad mouthing the stock so everyone becomes disheartened and the take over price is more attractive. Home builders may need to become self eviscerating to restructure for the future. Capitalism is a tough blood sport too bad for current investors. A solvent new mortgage provider is just pretty window dressing for the new team.

Hey isn’t this the spot when some Asian guy walks in and writes a cheque, scoops up the marbles and laughs on his way to his bank. Probably.

Disclosure: George Gutowski writes from a caveat emptor perspective. I hold no positions in stocks mentioned in this post. I have no plans to initiate new positions within the next 72 hours.

$ITW Sells Off Assets, Buys Back Shares, Why is This Good? #sharebuyback

Illinois Tool Works (NYSE:ITW) to use the famous investment euphemism “as previously announced” reported they sold off some assets and therefore restated earnings and EPS. OK fair enough. The press release begs more questions than it solves.

ITW, who BTW does not quote any executives, could have confirmed how much capital was being redeployed and what was ITW going to do. Silence usually means embarrassment. Debts are over $2 Billion and interest rates will start popping soon. Why not cut debt and get the monkey off your back? Or at least get a smaller monkey. Don’t give me this locked in fixed rate stuff. Companies with little or no debt are more valuable. $2 billion is a lot and will remain a lot.

The EPS hit seems substantial for the quarters restated but they cover that up with re-affirmed guidance to pacify the gullible and easily distracted. They then follow-up proudly with how many shares they have re-purchased and what the supposed positive impact will be.

The stock yields about 2.5% and the company offers nothing about fundamentals. What about a dividend increase?

This is drip drip disclosure designed to allow executives in the future to say “as we previously announced”

Disclosure: George Gutowski writes from a caveat emptor perspective. I hold no positions in stocks mentioned in this post. I have no plans to initiate new positions within the next 72 hours.

Fuller Brush $FUL Margins Tipping Point Risks #fullerbrush

Fuller Brush (NYSE:FUL) announced results and improved guidance. Jim Owens, H. B. Fuller president and chief executive officer patted himself on the back by saying “Our performance this quarter demonstrates our ability to execute with rigor and speed” and then he added “In the face of continued raw material inflation, we performed well ….”

OK so some of the optics look good until you cast an eye over the international margins. North America clocks in at 12%. Every other region comes in under 6%. North America is growing at 6%. Other regions are growing well above that in some cases over 30%.

This is business 101. Low margins overwhelming high margins. Jim Owens says they are doing well. Needs some serious explanations.

Disclosure: George Gutowski writes from a caveat emptor perspective. I hold no positions in stocks mentioned in this post. I have no plans to initiate new positions within the next 72 hours.

Goldman Sachs $GS Director Strategy Why Debora Spar?

Logo of The Goldman Sachs Group, Inc. Category...

Image via Wikipedia

The Board of Directors of The Goldman Sachs Group, Inc. (NYSE: GS) today announced the election of Debora L. Spar as an independent director of the firm effective immediately. Dr. Spar’s election expands the Board to 11 directors, nine of whom are independent directors. Dr. Spar will be a member of each of the firm’s Audit, Risk, Compensation and Corporate Governance and Nominating committees.

Debora’s valuable and independent perspective on finance and business, emerging markets and recruitment, particularly of women, will be a tremendous asset for Goldman Sachs in the years ahead,” said Lloyd C. Blankfein, Chairman and CEO of The Goldman Sachs Group, Inc

So goes the press release issued on June 16, 2011 at 11:59 am. We can safely assume that no one thought this would affect the price of Goldman Sachs because they issued the announcements right at mid day. Probably between a board meeting and a fancy lunch. It’s always interesting to see how they justify a new board member. Gutsy move on Debora Spar’s part. Goldman Sachs is one of the most controversial boards. She may have a lot of emergency meetings coming up.

Goldman Sachs wants to be seen as feminine friendly. Well OK. How many women have become rich in say the past five or ten years compared to men. Men and women would have the same reason for joining. Make a lot of money very quickly. Will women figure prominently in the next Wall Street Scandal? Is that the progress they are looking for?

Debora Spar has done work in how emerging markets develop regulation. So to maintain Goldman Sachs reputation for the smartest guy in the room they are recruiting the intellectual headwaters into emerging market regulation. Hope the other side is matching the hires.  

Will the USA offer foreign aid to under-developed countries, contract Goldman Sachs to develop regulatory models for big fees and then drop in a few trading desks to take advantage of the nuances they built in months perhaps years in advance.

disclosure: George Gutowski writes from a caveat emptor perspective. I hold no positions in stocks mentioned in this post. I have no plans to initiate new positions within the next 72 hours.

 

Jarislowsky vs $RIMM Brilliance or Senility #Blackberry #Smartphone

Image representing Research In Motion as depic...

Image via CrunchBase

Stephen Jarislowsky was recently quoted by Bloomberg saying he was selling off Research In Motion ( Nasdaq:RIMM) . Jarislowsky is one of the deans of the investment management world felt the smart phone was becoming a commodity and margins were compressing quickly.

Think what you may about Research In Motion; also think about why this supposedly brilliant guru has chosen to make such a public statement. According to the recent Bloomberg article at the end of Q1 Jarislowsky on behalf of investor funds held some 10.2 million shares valued at USD361 million. The article also contains a snippet saying the old guy is no longer involved in the research or active management of the funds.

Stephen Jarislowky is synonymous with the firm that bears his name. When the old guy speaks everyone assumes it is on behalf of the company. The market will not comprehend some nuanced corporate governance structure that looks like he is removed from day-to-day operations.

The article comes out as the media piles onto Research In Motion with negative stories during the mid June 2011 time frame. The last reported data for holdings is about ten weeks old. Conceivably the Jarislowsky machine has totalling exited their long position and may have some short positions which only profit from continued declines of RIM share prices.

Or Team Jarislowsky is looking to re-enter and establish a long position and would like the price to drop some more. Classic value investor methodology. I do not believe the old guy is senile so it must be brilliance in motion.

Disclosure: George Gutowski writes from a caveat emptor perspective. I hold no positions in stocks mentioned in this post. I have no plans to initiate new positions within the next 72 hours.

Kroger Trojan Horse – Debt – Interest Rate Risk – Think About It

Kroger logo

Image via Wikipedia

Kroger (NYSE:KR) reported better results and all grocery store stories sound better for now. People need to eat and not everyone will stop shopping. Some of the operating fundamentals are better.

But investors need to look down the road. Many will prepare for a rising interest rate environment. Kroger is leveraged to the eye balls. Sure some of the obligations are leases. Sure some leases will be discontinued if the locations do not work out.

But leases are financial instruments. They are financed on the basis of Kroger’s credit worthiness. There is an imputed interest rate. As rates rise so will Kroger’s costs. This will be particularly true for top locations that Kroger wants to keep.  

Think about it. This will be the ugly trojan horse.

Disclosure: George Gutowski writes from a caveat emptor perspective. I have no positions in stocks mentioned in this post. I have no plans to initiate new positions within the next 72 hours.

MKS Teaser Press Release Hoopla, Hype, Oh Oh Lower Earnings

MKS Instruments ( Nasdaq:MKSI) headline announcement focuses on

  1. Update to revenue
  2. Investor and analyst meeting
  3. 50th anniversary
  4. Ringing Nasdaq Opening Bell

Then they slip in that they may be coming in at the lower range of their earnings and would be discussing the pertinent facts at the investor and analyst meeting, which is available through webcast while  the market is open for trading. That be after the bell has been rung.

Not the clearest or most intellectually honest form of communication. If something is wrong with the business you need to disclose. Disclosure rules are biased toward sooner than later. Investors do not want to know about bell ringing before substantive news is presented. Investors do not want to wait for an all day investor conference wondering when the critical nuggets will be disclosed. Hope the powerful analysts did not get key advance copies.

Not impressed with this one.

Disclosure: George Gutowski writes from a caveat emptor perspective. I hold no positions in stocks mentioned in this post. I have no plans to initiate new positions within the next 72 hours.

 

Toys R Us Sham Investor Relations Motions

Toys 'R' Us

Image by Jeffery Simpson via Flickr

Toys R Us which used to be publicly traded and was gobbled up by private equity in 2005 is still issuing earnings releases and going through the motions of an investor relations exercise. I guess the game is to eventually go to IPO and get investors back into this stock. The problem lies with the poor expalinations. The company is losing money and is having problems. This after six years of being in the repair shop of private equity. Management has not taken any time to talk about why they are losing money and what they are doing about it. The main points dealt with the new refinancings and how much interest they think they will be saving themselves. By the way when you pay LIBOR plus 3% and more you are in deep dodo. So I guess there is you management discussion and analysis.

Disclosure: George Gutowski writes from a caveat emptor perspective. I hold no positions in stocks mentioned in this post. I have no plans to initiate new positions within the next 72 hours.

Brown Foreman Can Jack Daniels Still Pour? #jackdanielshoney $BFB

Jack Daniels

Image by Naveen Roy via Flickr

Brown Foreman (NYSE:BFB) announced results for 2011 and immediately started selling the story that 2012 will continue to be a success. How can a Booze company go wrong? These guys have Jack Daniels after all! That’s right Jack Daniels!

Listen to the tone of the executive commentary and you might pick up a nuance or two. They are spending heavily on marketing costs for Jack Daniels Honey. Have not had any yet so I have no personal opinions about the product. I guess that makes me neutral but curious and open-minded. Here are the snips about how the marketing costs are rising faster than the revenues which  as every marketing 101 student will assure you is the proverbial kiss of death.

Fourth Quarter

During the fourth quarter of fiscal 2011, reported net sales grew 8% and underlying net sales gained 3%. The company remained resourceful in its approach to investing behind its brands, effectively and efficiently reaching and responding to our consumers in the challenging environment. Reported advertising expenses increased 11% and underlying advertising expenses grew 7% in the quarter. The advertising expenses outpaced the net sales growth largely as a result of the company providing strong support for its launch of Jack Daniel’s Tennessee Honey through a campaign that combined both traditional and new media. The company intends to continue to support its brands by remaining agile and adaptive to the world’s changing environment and optimizing the mix of its total brand investments.

The above comments are not attributable to Paul Varga, the company’s chief executive officer.

Agile, adaptive and opportunistic are wobble words when a marketing campaign does not go as well as expected. They clearly cannot increase spending faster than revenue growth. Watch carefully in future quarters as they continue to comment. If you are into insider trading watch the advertising spend. If they cut back suddenly you know they hit the wall and the VP Finance read out the riot act. If they continue to spend without improving results they are between a rock and a hard place. Seems to me the consumer will know soon if they like the new Jack Daniels Honey.

Disclosure: George Gutowski writes from a caveat emptor perspective. I have no positions in stocks mentioned in this post. I have no plans to initiate new positions within the next 72 hours. I normally drink single malt scotch.