What We're Reading

Presented without commentary.

And what are we doing at our computers. It's beautiful outside - go enjoy the day........and don't forget to pick up something for Mothers Day tomorrow!

This day in 1825: One of the earliest buying frenzies for an American IPO is reported, as the Bank of Southwark goes public in Philadelphia. Investors hire muscular goons to sign their names into the subscription books that confer the right to buy shares, and “noses were smashed, hats jammed in, and the police court was at work over the wounded for weeks after.”  Source: Walter Werner and Steven Smith, Wall Street (Columbia University Press, New York, 1991), p. 223; James K. Medbery, Men and Mysteries of Wall Street (Fields, Osgood & Co., Boston, 1870; reprinted, Fraser Publishing Co., Wells, VT, 1968) p. 291. 

• For you "pirates" at heart, Bloomberg says treasure hunting is the worlds worst investment.
• Massive profit taking still being seen in previous momentum names.  As Kos said previously, she didn't think the "correction" was over for small caps and tech .  If anything Kos is hoping for a move higher to add to her shorts at overhead resistance levels.
• If feels good for actual short

• Variant says UK's account deficit is unsustainable. (sure, just like the U.S.)
• And they've been trying to convince everyone it's a myth.  New Fed report says global warming is the real deal and is "expected to become increasingly disruptive across the nation throughout this century and beyond,"    "Extreme weather like droughts, storms and heat waves hit us in the pocketbooks and can be seen by our own eyes"  Doesn't make me want to become a farmer nor live near a river or ocean any time soon.
• JPM cuts GDP forecast from -0.4 to -0.8%
• Office Depot (OD) announced it will close 400 stores by 2016.
• Einhorn named ATHN a short yesterday at the Sohn conference.  Feels medical records are extremely overvalued stating $7/share is much better than $70.  Calling Athena Health a well-meaning stock caught up in a broader bubble, Einhorn says the shares "easily fall 80% or more" from their recent high.  Watch peers CERN, MDSO, etc.
• Online sales vs brick and mortar.  They really don't care.......as

These the notes from the "Next Wave" Sohn mini-conference. Stay tuned as we'll be posting notes from the main Sohn Investment Conference later on.

John Khoury. Long Pond Capital

Idea: American Homes for Rent (AMH). REIT, buys houses, fixes them up and rents them out. Debate is whether it is a good business or not. Bears say it is impossible to manage thousands of homes efficiently. Bull case: 95% occupancy, length of stay 2x that of apartments NOI margins at or higher than apartments. Doing securitization now at L+1.66 Levered up- "you want to own an asset when it begins to be securitized."

Currently 2.7% FCF yield, but with 45% net leverage get 7.0% FCF yield. "REITs do not trade at 7% FCF yields." Apartment REITS trade at 5%, if this gets there, stock has $23 PT, 40% upside. "Free call option" is consolidation, they could roll up other businesses. Still only 20% of 1% of the total market. $3T market opportunity. Founder and management own $1B of the stock. Unlevered now, so limited d

Feliz Cinco de Mayo a todos mis amigos y mi familia.  Click para jugar.  Disfrutar!

• Bond and fixed income guru Jeff Gundlach Presentation – Ira Sohn Conference 2014 Valuewalk
• Seattle Mayor announces plan for a minimum wage hike to $15/hr.  The highest in the country.
• You probably won't see much in MSM (main stream media) on it yet but quietly Michigan filed it's vote last week for a Constitutional Convention for the states, making it #34 =  or a majority which is required for such.  This has not occurred in over 200 years!  Why should you care?  Because it's at these conventions that Constitutional Amendments can be passed (and you're rights sneakily given away under the guise of being "good" for you).  I'm sure the balancing budget proposal and the 28th Amendment will be pushed up front of our faces however don't buy the hype.  Look deeper, inves

• Stocktwits: "investor say the bottom is in for gold"
• Hey, wait a minute.  Didn't StockBuz say watch for a gold (GLD) weekly right shoulder to form back in March and early April?  Even posting on the gold miners here.  We're ahead of the herd once again......maybe.   (click image to enlarge)  At least risk is minimal; stop below $120
• SINA pre-announced an earnings beat but also announced it has received two notices from Chinese regulators stating its "License for Online Transmission of Audio-Visual Programs would be revoked due to certain unhealthy and indecent content from third-parties or by users" on Sina.com and its affiliated online literature site.  Ouch!
• JPMorgan becomes the first to warn on trading revenues in Q2, expecting markets revenue to slip 20% after declining 17% in Q1.
• AAPL wins a Federal jury decision again Samsung on smart phone patients but it's a victory for Samsung with less than 10% sought, actually being awarded ($120m vs. $2bil).  The jury rejected Ap

• This day in 1896: The Dow Jones Industrial Average is first published. Its 12 initial members are the great industrial giants of the time: American Cotton Oil, American Sugar, American Tobacco, Chicago Gas, Distilling & Cattle Feeding, General Electric, Laclede Gas, National Lead, North American, Tennessee Coal & Iron, U.S. Leather, and U.S. Rubber. The index’s value that day: 40.94.  Source: Phyllis S. Pierce, ed., The Dow Jones Averages 1885-1980 (DowJones Irwin, Homewood, IL, 1982), introduction, not paginated; http://averages.dowjones.com and JasonZweig

• Very odd the move in treasury yields today on the better than expected NFP number.  Maybe "smart money" is telling us the economy is not as strong as believed?  Extremely interesting to watch.  The Treasury market's reaction hasn't been more negative.  The 10-yr note, which was down 18 ticks shortly after the release, is now down just two ticks and yielding 2.62% (down roughly 40 bps since the end of 2013).  We still recommend ca

• On this day in 1965: In a boardroom on Cove St. in New Bedford, MA, a young, crew-cut Warren Buffett takes control of decrepit textile maker Berkshire Hathaway Inc., whose stock closes that day at $18 a share. Over the next thirty-three years, the stock price rises to $84,000 a share.  Source: Roger Lowenstein, Buffett: The Making of an American Capitalist (Random House, New York, 1995), p. 130. Courtesy of JasonZweig
• GS, MS and others revised their GDP # to a negative after today's poor construction spending numbers.  A negative GDP print has many wondering if we are, in fact, in a recession.  A recession as defined by the Fed is two consecutive GDP reports. 
• The weak U.S. recovery has nothing to do with inequality says CalifiaBeachPundit
• McKinsey says businesses are still extremely concerned over cyber attacks and aren't anywhere prepared as they should be (yet).  70% of the respondents said that security concerns had delayed the adoption of public cloud computing by a year or more

• ADP, GDP and FOMC all in one day.  While no one is truly expecting any change from the FOMC (taper) plan, one never knows.
• Lackluster forward guidance seems to be the recent earnings mantra (no surprise).
• Bulls need a follow through to the upside today
• TWTR beat however issued disappointing outlook.  This may be the "show me" stock for 2014 where disbelievers will have to be proven it's potential vs. $FB.  The good news:  you'll be able to buy it cheaper. The company's second quarter revenue forecast was $270M-$280M against consensus of $272.9M. Twitter's (TWTR) adjusted EBITDA guidance of $25M-$30M was lower than Q1's $37M result. In Q1, monthly active users rose 6% sequentially and 25% Y/Y to 255M, roughly inline with expectations. Timeline views rose 6% sequentially, and just 15% Y/Y to 157B. Ad sales rose 125% Y/Y to $226M amid a barrage of new ad products.

• EU added 7 rich men and 17 corporations to their list to sanction in Russia. Obama hits them with exports and the banking sector.  Market still not liking the tensions there. 

  Asked in his CNBC interview Wednesday whether Wall Street is right to remain calm over the standoff, Mr. Obama replied: “No.”“I think this time’s different,” he said. “I think they should be concerned…. When you have a situation in which a faction is willing potentially to default on U.S. government obligations then we are in trouble.  (WSJ)

• Fed whisperer Hilsenrath says it's time to worry (WSJ)

• If you're into experimental, cutting edge technologies, checkout this list of futuristic blogs by List.ly

• Kyle Bass of Hayman Capital's presentation on "Global Outlook Pitfalls and Opportunities For 2014."

• MSFT intends to this week provide hints about exclusive programming for the Xbox, with shows set to include a series from Steven Spielberg based on the video game "Halo."  See what happens when you get rid of old, outdated jumping on the stage, idiot CEO's like Ballmer?  #innovation
• Scratching your head why, if the U.S. is now the largest oil producer in the world, our gasoline costs are still 3x higher than in 2005?  Refiners exporting overseas to increase profits baby.
• Analyst thinks investors should depart the bus in Pandora ($P)  (WSJ)   Since it broke important support on Friday, I'd say they're a little late with that analysis.
• Facebooksventure with Storyful strives to bring accuracy (less rumor and fiction) to headlines
• Next of my reading list, the new best selling book by Matt Taibbi from Rolling Stone on why, when admission is made for $850M money laundering for terrorists, no one (or from the financial crisis) was prosecuted.  Eric Holder can't be too happy.  It's not a bug

• No shocker here as the FTC issues a blistering rebuke of states limiting sales of TSLA direct consumer sales.
• So much for the peace accord with Russia as they begin military exercises (WSJ)  Markets will not like this continued uncertainty.  Watch crude oil, gold, silver and copper.  You will note that bonds $BND (flight to safe haven) have been holding up.  Not everyone is pouring money into equities.
• The first regulation proposals are coming out on e-cigarettes  $LO currently holds a 42% market share..
• Talk about putting cash to work.  AAPL has bought 24 companies in the last 18 months.  Searching for innovation allthewhile announcing an increase to their stock buyback, stock split and quarterly dividend to keep value investors in the name.  Oh, and an earnings beat once again to a low bar set.  Way to go Tim Cook.
• The FCC said it will propose rules today that could give high-speed Internet providers more power on what content moves the fastest on the Web based on which firms pay th

• New homes sales down -14.5% and if it were the weather, why were they up in the Northeast?  Looking at reality. Mish
• Einhorn warns of a second tech bubble in 15 years.  It's all about overvaluation in certain names and momentum stocks folks.  Oh, for the days of fundamentals. 
• Test your knowledge, take the quiz.  Who's the worst of developed countries?  The U.S.?
• Slap in face to NFLX as AMZN signs a deal with HBO.  Amazon prime lovers, don't get too excited.  The deal does not include shows newer than three years old so you'll still have to tune into HBO to view Game of Thrones.  Still, this move has generated more talk about NFLX and how it's ability to offer new streaming is limited in contrast to what's available due to licensing agreements.
• More talk today about "fringe" energy other than solar.  We've already witnessed Elon Musk (TSLA) transforming the electric car market.  What about the artificial leaf based on photosynthesis and others?  Check out this very interesti

• Saving down, lending up and tapering combine in a perfect storm.  One of our favorite bloggers CalifiaBeachPundit
• More tech companies are experiencing DDoS cyber attacks including SAY Media (Typepad), Meetup, Basecamp, Vimeo, Bit.ly and others.
• 51% of Americans are unsure of the validity of the Big Bang theory.  For many it's because it can't be seen or seems too far away  A look at the iron triangle of science, religion and politics,
• For the first time in history, the rich find themselves working longer than the poor.
• The Fed must choose:  more jobs or lower inflation.
• Shipments through the port of Los Angeles jumped 34% spurring a bit of (recovery) conversation today on Wall Street
• Google follows Facebook and Twitter with app-installed advertising.

• London market closed today in observance of Easter
• (Part of me is chuckling at this one)  A federal judge will allow Wells Fargo's (WFC +0.7%) dreaded foreclosure manual into evidence in the bankruptcy case of a former homeowner. The homeowner's lawyer alleges the manual is "a blueprint for fraud," and contains step-by-step instructions for - among other things - processing notes without endorsements.
• The disruptive potential of solar power McKinsey
• General Mills (GIS) apologizes (more like oops we got caught) and pulls it's sneaky forced arbitration wording on its' Facebook page fine print.

• Energy is better than technology Stocktwits
• State Department indefinitely postpones the Keystone pipeline (obviously waiting for November mid-terms or if all else fails, a new, hopefully more persuasive President in 2016) Ecowatch
• General Mills pulls a fast one (I'm sure more will follow) using the fine print when you "like" a page on Facebook ($FB) thereby agreeing to forced arbitration.  In simple terms, you won't sue them for product recalls, mis-labeling, you name it.  Pretty slick, I must say. Rawstory 
• Money rotation into late cycle names continues Stocktwits

• "We're obviously in the throes of what feels like a correction for the small-cap and growth-equity companies," said David Golden.  (ya think?! LOL)  Not good news for start ups such as BOX who has filed for IPO and will begin their road show shortly seeking (they hope) high end of the range valuation.  Good news for the investor however as we'll be able to scoop up names at lower (not peak) levels.  Full story at  WSJ
• Due to tighter regulation, banks have reverted back to the use of block trades.  There were 48 such deals in the U.S. ust in the first three months of this year, more than in any first quarter since 1998, according to Dealogic.   Full story at WSJ
• Markets are instrumental, not intrinsic, for human flourishing. As with any tool, wielding capitalism for good requires deep moral awareness. Only activities motivated by a concern for others’ well-being, he declared, could be truly “constructive.”"Washington needs to be more like the Dalai Lama. Without abandoning princi