Facebook avoids death of thousand cuts. Still needs one big bandage. $FB

Image representing Facebook as depicted in Cru...

Image via CrunchBase

Facebook (Nasdaq:FB) has drawn criticism by allowing insiders who control some one billion shares to sell now instead of later. Facebook valuation is controversial no lets say dubious. The overhang would always be a negative black cloud. Delaying the inevitable sell action would just perpetuate the death of a thousand cuts.

Open up the doors. Let the blood flow and get it over with. Investors knew this was coming so it should have been baked into the valuations. Or maybe it wasn’t and investors who got it wrong are just engaging in scream therapy and dealing with their angst.

George Gutowski writes from a caveat emptor perspective. Follow him on twitter@financialskepti

Wal-Mart Upsets Communists $WMT Is Wal-Mart A CIA Front?

English: Walmart Home Office, the headquarters...

English: Walmart Home Office, the headquarters of Wal-Mart – Bentonville, Arkansas Español: Walmart Home Office, la sede de Wal-Mart – Bentonville, Arkansas (Photo credit: Wikipedia)

Wal-Mart (NYSE:WMT) is upsetting the communist party in India. While I’m not normally a fan of Wal-Mart I do like upsetting the communists. Wal-Mart has vigorously denied wrongdoing and said it had acted in compliance with all Indian laws.

M.P. Achuthan, a Kerala member of the upper house of parliament for the Communist Party of India,  wrote to India’s prime minister Manmohan Singh that Wal-Mart had “clandestinely and illegally invested”.

Most Wal-Marts are big ugly boxes so I’m not sure how the clandestine part works. Illegal well maybe you got something there. India has so many regulations you are bound to have run afoul of something.

Wal-Mart has recently run afoul in Mexico with bribes and skullduggery. Legal fight under way. Wal-Mart has bloodied its nose in Germany and Japan where they have lost money because their model did not work.

Now the communists in India are complaining. Wal-Mart is culturally tone-deaf. If I were a communist I would let them in and let them roll the dice in the huge Indian market. Wal-Mart is leveraging up with billions of dollars of cheap debt. They are investing in Indian rupees. The entire expansion is one big unhedged foreign exchange exposure. But then again the communists don’t see it that way.

If I was an investor I would be concerned about Wal-Mart getting in and then blowing their brains out all the while borrowing huge gobs of US dollar capital.


#sandy covers up bad news $QQQ #governance

Companies desperate to release bad news often report just before statutory holidays or late Friday night. Watch the newswires carefully. Markets will be distracted with all the sandy and storm surge news. Just the right time to release tough news under a business as usual guise.

George Gutowski writes from a caveat emptor perspective. Follow him on twitter@financialskepti

Black Swans Float During Storm Surges #sandy $QQQ

For those of you in a caveat emptor perspective remember that Black Swans can float quite easily. Lots to think about during tomorrows trading.

George Gutowski writes from a caveat emptor perspective. Follow him on twitter@financialskepti

Mobile App Storm Surge #sandy Drives Facebook $FB #twitter

Image representing Facebook as depicted in Cru...

Image via CrunchBase

NYC, NYSE and Nasdaq all prepare for hurricane Sandy. Wall St to stay home and trade electronically. Watch for a surge in users of Facebook (NASDAQ:FB) and twitter as more investors are forced to use mobile.

So far apps have been sold on efficiency. Will Mark Zuckerberg figure out the plan B dynamic.

George Gutowski writes from a caveat emptor perspective. Follow him on twitter@financialskepti

Loblaws Still Looking for Joe Fresh Value. No Arithmetic on Fifth Ave. $L-CA

Loblaw Great Food Logo.

Loblaw Great Food Logo. (Photo credit: Wikipedia)

Loblaws (TSX-L) is still looking for ways to score on Joe Fresh. Days before a hurricane was to shut down NYC the Fifth Ave store is selling decent rain jackets at $19. No sense of supply and demand. Rain jackets are now very important in NYC. Not to mention you will never cover Fifth Ave rents by selling $19.00 items.

Arithmetic not there. Wall of worry seems very high on this one.

George Gutowski writes from a caveat emptor perspective. Join him on twitter@financialskepti

Best Buy Best Suited to Best Takeover $BBY $GOOG $MSFT $AAPL

Image representing Best Buy as depicted in Cru...

Image via CrunchBase

Best Buy (NYSE:BBY) continues to lurch forward and attempt to revitalize itself. New C level officers are in place. They have decided to ramp up on-line activities. (Hey that sounds fresh) They have dwindling cash resources which is disturbing.

Do we smell a take-over. Because we do smell something.

Best Buy leading retail problem is consumers doing physical browsing and then placing on-line orders somewhere else. OK so they have a tremendous strength that they cannot leverage. In the mean time Google, Apple, Samsung and Microsoft (think games and maybe phones) all have a vested interest in selling hardware and devices. Best Buy still generates huge foot traffic and satisfies any tactile pre-purchase needs.

As a mass market retailer Best Buy has its faults which are well documented in the market place. But to someone wishing to dominate distribution channels Best Buy offers some near monopolistic advantages.

So like someone should buy them, feature their own products and kick competitors in the groin area.

Market cap of around $5 Billion and dropping. An expensive dividend yield of 4.45% and an approximately short interest position of around 10% of public float, the under 5 trailing PE ratio has got to make an acquisition look good.

Maybe go the private equity route and disguise any anti-trust issues through the chop-house process but the bits and pieces will give strategic advantage to key players. Given the huge cash balances of some tech players this is entirely doable.

Remember its a double play gambit. Enhance your own product line and torpedo some or all your competitors.

Count down?

George Gutowski writes from a caveat emptor perspective. Follow him on twitter@financialskepti

Netflix gets a fuzzy picture $NFLX Big Dogs have no skin in the game.

Image representing Netflix as depicted in Crun...

Image via CrunchBase

Netflix (Nasdaq:NFLX) has a leadership team with very little skin in the game. CEO Reed Hastings salary doesn’t depend on Netflix’s business performance.  Netflix has taken the unusual move of granting its named executive officers only fully vested stock options. Who runs the compensation committee?

Reed Hastings makes $500K per annum. His stock options were cut back in 2011 but he made $43 million that year by exercising 190,500 of stock options earned in times past. He and his henchmen probably do not have fire in the belly.

The stock is around a 34 trailing PE and has a short interest of 28.87% of the public float. Money flow is an anemic 1.04.

It looks like the boys do not have their eye on the ball.

George Gutowski writes from a caveat emptor perspective. Follow him on twitter@financialskepti