The Black Swan that is Walter Energy $WLT

Walter Energy (NYSE:WLT) is a metallurgical coal company suffering a number of indignities. It is one of the most shorted stocks on NYSE. Some people call that bullish. The steel business has not been buying as much and Walter has been in a big cost reduction campaign. They just cut their dividend down to a penny per share. That way they keep the track record of always paying dividends.

The stock is trading around its 52 week low and several credit downgrades are starting to fly around like flies on you know what. Its pension obligations are almost equal to its market cap. the lending agreement has just been renegotiated with the decrease in dividend conserving some cash for debt repayment.

Generally the street does not like this stock. Generally the street is wrong. All you need is one strategic investor such as an end-user who may wish to buy out the company because of the reserves and watch the stock run.

This is a long position waiting to be filled. Most insider trading activity is a buy. Stock also trades on Toronto Stock Exchange which helps tax deferred investors and funds with limitations as to foreign exposure.

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

 

Top Retail Twitter Power See who is strong and weak $TWIT, $T, $JCP, $WMT, $M, $XRT

Twitter is a growing social media force. Look at the rankings of Twitter followers as of Aug 20, 2013 numbers. Target (NYSE:TGT) is way ahead and over the horizon  with 745 K compared to other big names. Everyone likes something sparkly which must explain Tiffany & Co (NYSE:TIF) very strong number two ranking at 596 K.

Best Buy (NYSE:BBY), Wal-Mart (NYSE:WMT) and Nordstrom (NYSE:JWN) round out the top five with followers well over 300K.

Macy’s (NYSE:M) seems to have some work to do. At 224 K followers and eight position how happy can they be.

JCPenney (NYSE:JCP) retails problem child comes in two spots below Macy’s at only 167K. Which may explain some of their problems. Interesting after a CEO with Apples (Nasdaq:AAPL) DNA.

Sears with an anemic 54 K of twitter followers barely registers at 17th. That’s very much worse than JCPenney. Let me express that in a different way. They both stink.

Many retailers and brands have specialized twitter feeds which focus more closely on segmented buyers. But the top to bottom comparisons are very telling for most retailers.

If social media is the marketing powerhouse than big followings are a must. some of these guys need to hire their grandchildren and get their ratings up.

Here is the list:

Company                             Thousands of Followers

K

 

Target                                                 745

Tiffany & Co                                       596

Best Buy                                             385

Wal-Mart                                            358

Nordstrom                                        300

Barney’s                                             237

Bergdorf Goodman                         231

Macy’s                                                224

Saks 5th Ave                                      201

JCPenney                                           167

Neiman Marcus                               158

TJ Maxx                                             138

Bloomingdales                                 128

Kohl’s                                                 90

Homegoods                                      85

Marshalls                                           69

Sears                                                  54

Sams Club                                         42

Lord & Taylor                                    39

Costco                                                15

Dillards                                              14

Century 21 Stores                            8

Jos A Banks                                         7

 

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

JCPenney Bankruptcy Coming Soon $JCP $XRT

JCPenney Co Inc. (NYSE:JCP) sits on the cusp tottering into the black abyss of bankruptcy. American retailers say someone has to go. JCPenney is a good candidate. Hedge fund resigns from board after its determined he has not been effective in increasing shareholder wealth. Chosen crown prince from Apple has also left the field. A huge secured term loan has been arranged to maintain liquidity. Earnings release talks about liquidity and how current management is trying to fix olde managements problems.

The only attempt at optimism is “Back to School” sales look optimistic. Everyone knows retail is all about Christmas. The buying should be substantially done about now but management is not talking yet.

The company is living on borrowed time. The retail equivalent of “Battle of the Bulge” is on. Must do desperation with an everything must work ethos is at work.

Watch for signs of bankruptcy within management comments as they extol the virtues of what may become strong points such as retail locations or logistics. They will try to enhance value to bankruptcy buyers who will be prepared to pick up pieces.

Watch for store activity, check out lines, how many parking spaces are used and how ell the rest of the mall seems to be doing when JCPenney is an anchor tenant.

There simply is no tomorrow for this one.

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

WYNN Resorts Starts to Titillate. Black Swan Fluttering $WYNN

Wynn Resorts (Nasdaq:WYNN) and gaming stocks are starting to titillate traders. Earnings news has been digested and now we look to see if all boats are rising on the tide. First you need a generally improving stock market which should be the case for the next few weeks.

Then you need the momentum boys to start chirping which is starting to happen. The charts and technicals looking good they say.

No saying WYNN isn’t gonna run some. But here is the Black Swan Event WYNN needs to think about. Macau is the only Chinese main land location to allow legal gambling. The licensing fees increase over time and the capital cost continue to rise. Beijing will want to set up a competitive apparatus somewhere to keep foreign exchange in China and tap into a huge Chinese market that cannot readily access Macau, WYNN and others.

They may even be nice about it and offer the operators in Macau first opportunity. But it will happen sooner than later. The bastards in Beijing are not beholden to the SEC or any other western imperialist tools. They may even short WYNN and others before their announcement and start being profitable right from the get go.

WYNN’s Macau occupancy is now around 95% so even the simplest economic analysis points to expansion profits.  The current forward PE is around 19. How much bigger can the multiple grow?

The Chinese Black Swan will come out of nowhere. So if your trading, protect your self in all the usual ways. Stop loss, puts yadda yadda yadda.

WYNN is particularly vulnerable because it grew up in the Nevada fish bowl. they even have a Governor on the board. they are used to being part of the house that controls the house. Macau and China are not the same. In the mean time can it pop? You bet. and that’s what you are gonna do. Bet! good luck.

George Gutowski writes from a caveat emptor perspective. Follow him on Twitter @financialskepti   And now I’m off to check out this Chinese translation tool. Hmm

 

What are Six Dangerous Emotions of Behavioural Finance? $SPX

Investors are lectured be careful of your emotions; they will contribute to your losses. Well just what are the emotions that we should be watching out for? Answer

  1. Anger
  2. Disgust
  3. Fear
  4. Happiness
  5. Sadness
  6. Surprise

Problem solution starts with problem identification.

Investor know thyself.

George Gutowski writes from a caveat emptor perspective. He has experienced all of the above; often in cocktail combinations. Have you ever been happy and sad at the same time?

 

Egypt is So Screwed Riots Don’t Matter Any More. Muslim Brotherhood is having a Moralistic Temper Tantrum. No effect to risk or volatility. $VXX $VIX

Egypt is manufacturing lots of violent TV for action influenced investors. The military élite is not about to give up power to the Muslim Brotherhood. That’s just the way power is. The Muslim Brotherhood is having a moralistic temper tantrum. Democratically elected just as Adolf Hitler was, they proceeded to not improve the economy after major promises to do so. The unrest reignited. The military saw their chance to become the eradicateur.

So while we have useless and tragic bloodshed, no one is able to paint a vision for the future. Egypt’s economy with almost 90 million is tragically non-existent. Tourism an important employer and source of foreign exchange has all but dried up. Both sides will keep the Suez Canal open because it’s a source of revenue.  Just like violence rife Iraq keeps oil flowing. No one takes out the pipelines because both sides will need the money.

The military have the guns and enjoy being a popular organization with the Egyptian population. They also have the support of the Saudi’s with near limitless wealth. The Muslim brotherhood if it were to prevail would need the support of other radical regimes which would demand confrontation with Israel.

Both sides may find nearby Libyan Oil to be highly attractive as a military/financial target.

The Muslim brotherhood riots in the street because they do not recognize the economic incompetence of their leadership. If the violence were to stop right now tourism would return very slowly. If the Muslim Brotherhood prevails tourism will be a distant memory. They cannot abide tourists coming from afar attracted by culture and history which pre-dates and out shines Islam.

Egypt has cheap labour close to Europe. If the military prevails and understand how to work globalism they will attract manufacturing and compete with Asia. If they allow modernity to prevail then they can allow an educated population to grow economically by taking risks and offering something of value. Not sure if the current zeitgeist from either side understands how to leverage this.

The west despite their anti violence rhetoric will do what they can to favour the Egyptian Military. Do not be fooled by cancelled military exercises with US Forces. The Egyptians are busy doing things the US military seeks to avoid. best leave they alone.

I’m not sure if the average man in the street understand how far into the toilet they really are. Which is probably why they are fighting in such irrational manners. In the end they will not effect risk premiums or volatility. Another crazy guy shaking his gun at the West will not change anything.

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

Strange Logic behind Regulators Lawsuits on London Whale $JPM, $XLF It’s all about the Kill Shot.

JPMorgan (NYSE:JPM) is in the news again. Finally some charges or something or other are about to be laid. But the regulators are going after some small fish. The Board of Directors untouched. Jamie Dimon the CEO has all his Teflon intact. Bruno Iksil the London Whale has slithered out. Neither Ina Drew, the bank’s former chief investment officer, nor Achilles Macris, a former top Chief Investment Office executive have been charged.

The regulators want to lower level operatives. Two former JPMorgan traders – Javier Martin-Artajo and Julien Grout are the targets “du jour”  Minnows not whales.

Pour Quoi?

By charging the most senior members of JPMorgan the regulator would face blow back over their ineffectual role. Everyone is innocent until proven guilty. Defense lawyers say what they need to say to get their clients off. The regulator cannot get a clean “Kill Shot” so its taken an Uzi and is spraying a few small fish to make it look good.

Regulators are political animals and savvy as to the way of bureaucracy. They have no interest in suicidal confrontation where they end up wearing it.

Obama for all his chagrin with Wall Street may end up giving Jamie Dimon an ambassadorship just to neutralize him and his cohorts.

George Gutowski writes from a caveat emptor perspective. Follow him on Twitter @financialskepti . One piece of advice to one and all. Never walk in front of the snipers rifle.