Utah: Its a Dump
Although we have witnessed many weird things in NYC over the years, the Big Apple is rather staid compared to Utah...the landlocked state that proudly claims the California Seagull as its state bird.
Things in the “State of Industry” mutated into a turn for the worse with a recent deal to name the home of the Utah Jazz after a nuclear waste dump.
But Utes of all ages are chiming in. They love the deal and have already submitted nicknames for the home of the Jazz…
The Glow Bowl and the Isotope. The Dump and ChernoBowl. JazzMat (short for Jazzardous Materials), the Big Bang and the Tox Box. The Power House and the Hot Spot. The Fallout Shelter. And the Melta Center.
A letter writer to The Salt Lake Tribune suggested the jaunty Radium Stadium. NY Times
We wanted to analyze the investment merits of Energy Solutions for our loyal readers. Unfortunately, the company is not publicly traded...yet. But with several private equity firms involved it is probably only a matter of time.
Although Energy Solutions has all the trappings of a hot IPO, investors might want to kick the tires of USEC Inc. (USU-NYSE) or Cameco Corporation (CCJ-NYSE) too, as the closest toxic proxies to Energy Solutions. These Uranium plays might not outperform the S&P...but investors would probably prefer them to a lump of coal.
Love Your Mamma
Shares of internet search engine Mamma.com (MAMA-NASDAQ) rose 80.6% today after the company announced the beta launch of its new video search engine.
Mamma users are now able to find, explore, and view millions of broadband videos from a wide range of topics including TV shows, movies, music, and news events. The Pixsy Media Search Platform provides Mamma.com with technology that gives users the ability to search for videos from their favorite providers across the web including YouTube, Revver, StupidVideos.com, AddictingClips.com, Blastro, BusinessWeek, Grouper, MetaCafe, Reuters, Sharkle, Roo Media, USA Today, and many more. Market Wire
Mamma.com shares rallied sharply in 2004 after Billionaire Mark Cuban disclosed a stake in the Montreal-based company. Cuban dumped the shares abruptly after the company completed a PIPE transaction that did not sit well with the mercurial owner of the Dallas Mavericks. The stock has been largely shunned since Cuban threw MAMA under the bus.
Mamma.com recently settled a class action lawsuit stemming from manipulation by Canadian stock promoters. Investors chasing the stock today were also apparently willing to look past the company’s recent earnings shortfall that depressed the shares last month.
Citadel Investment Group LLC, the largest institutional shareholder, was the real winner today. The gains in their 282,161 share position might ensure a last minute upgrade at the holiday party.
Chump change.
Fridays Breakfast Menu: Pork Sausage
Anything is possible on the Street of Dreams.
Here is our take on the HEELYS (HLYS-NASDAQ) deal…
Pros
-CNBC will christen it the new, new thing on a slow news day, resulting in a buying panic
-Neanderthals invented the wheel but did not patent it
-Bulls will buy shoes and wipe out, removing selling overhang
-Holiday sell-through doesn’t matter if you are flipping the stock
-Wealthy bankers and models will support aftermarket trading big-time after confusing it with this pig
-CROCS are so November 2006
-Blessed with a Booyah
Cons
-Limited barriers to entry
-Goldman Sachs passed on lucrative underwriting fees...hello B-Team!
-HEELYS handle poorly in ice and snow
-Skating from lawsuits works well until you hit a speedbump
-Blessed with a Booyah
Although groveling like a pig for an allocation is undignified..we are in.
See you at the shareholders meeting.
Go here if you need a little meat on the bone…
Lock and Load
*UTC Breaking News*
Heelys Inc.’s 6.43 million-share initial public offering. lead by Bear Stearns, priced Thursday evening at $21 a share, well ahead of the expected price range of $16 to $18 a share.
Sign(s) of The Times
Homebuilding stocks caught a bid earlier this week due to comments made by Robert Toll of Toll Brothers (TOL-NYSE).
The colorful CEO of luxury homebuilder Toll Brothers, Robert Toll, stepped forward on Dec. 5 with the claim that some housing markets might be stabilizing. His comments came as a slight disconnect from the company's quarterly news: Profits plunged, customers canceled more orders, and the company took a deep hit on its property holdings... Business Week
Are the comments wishful thinking?
The change in tone struck several analysts in the Dec. 5 conference call, which came less than a month after the company’s last briefing. “You seemed like a very…I guess broken man last time. And here you are a new man,” Ivy Zelman, an analyst at Credit Suisse First Boston, told Toll Tuesday. “I’m wondering which Kool-Aid you’re drinking because I want some. No one else in the industry is willing to stick their neck out.” Business Week
Never underestimate the ability of corporate insiders to multi-task. Filling out sell tickets while simultaneously boasting about business prospects is considered best practices in many corner offices. Homebuilding executives reaped huge windfalls from insider sales over the past two years.
Watch what they do not what they say.
As promised, we recently spoke with Wayne Nef of Sniper Research. Wayne has published equity research on the homebuilders longer than nearly all of the talking heads regularly trotted out on CNBC, and we hope his comments help you make sense of the endless spin.
UTC: Tell Me about your background. And how is business?
I have covered homebuilders for about ten years and building materials stocks for about 16 years. I started my career at Value Line in 1991, and I worked as a buyside analyst for Merrill Lynch and Circle T Partners before starting my hedge fund consulting business in 2003. Don’t believe what you read about independent research dying out, our business continues to grow sequentially, primarily from hedge funds. They are good clients to have!
UTC: Fair enough. Do you talk to management teams or prefer to focus on insights drawn from independent sources?
Generally, when I begin to drill down into a sector I like to talk to my contacts within the industry. For the homebuilders this would include some of the management teams, realtors, contractors and contacts at buildng material suppliers. I also find a lot of pertinent data in the 10-Qs and conference call transcripts.
UTC: Where do you stand on Industry Fundamentals?
I believe the bulls are buying the stocks on the hopes that they will see a turn in the fundamentals this spring, and not on the fundamentals. Fundamentals are weak currently and all of the homebuilders have been cutting their guidance. Many of the homebuilders were presenting at the NYSSA 10th Annual Homebuilding Confererence (12/6/06) today, and while all were bullish about their long-term prospects, none were bullish about their prospects for 2007. Many spoke about further charges for writing off optioned land and for writing down the value of land already on the books.
Two of the companies that presented, TOL and HOV said that they may be nearing bottom in some selected markets, but that they expected things to just bump along the bottom and not be moving up anytime soon. The recent rally has brought many of these stocks back up above book value. Due to the number of charges being taken within the industry, book value is a bit of a moving target right now, thus for me to turn more bullish on this group I would need the stocks to trade at a discount to book value rather than at a premium.
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