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Commentary on The Capital Markets

Some of you remember my articles a while back on Sprint; I was convinced the company was a good buy and stuck my neck out when everyone else thought they were swirling the bowl.

I proved to be right, but then a disrupting force came in through M&A -- and I got out.  I was asked at the time what I thought about the combination and my answer was simple: I lack enough information to analyze the situation post-merger, and I have no reasonable expectation of being able to regain that analytical capacity -- therefore, I'm out.

The stock continued to rise for a bit, but now it is in an all-on collapse, hitting $3.11 today down from over $8 a year ago.

So what do you do now?

You stay away for the same reason I argue you wanted out before.

I don't like the internals, I don't like the technicals, I really don't like the firm's debt position against it's free cash or its debt:equity ratio (which is in the stratosphere) and I question the book value.  Oh, and that negative levered free cash flow bothers me too.

It would have been an interesting short if you could get visibility into the combination at the time of the acquisition but there was no good way to do that, and at this price shorting it is folly.  But buying it here is basically buying a long-dated option on the company being taken out, and that's already happened -- which means that it's more-likely to find itself as a written-off piece of the acquirer, much like Nokia's spin-and-sell to Microsoft was.  If you're tempted then buy some cheap CALLs instead, but do it with money you'd otherwise spend on booze and call it a purchase intended to be "for your health" (because it kept you out of the bar.)

Short form: Stay away.

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Now this is rich...

Citing “security reasons,” the Pakistani government plans to prevent its citizens from accessing BlackBerry’s suite of secure messaging services by December 1, according to a report fromReuters.

“[The Pakistan Telecommunication Authority] has issued directions to local mobile phone operators to close BlackBerry Enterprise Services from Nov. 30 on security reasons,” said an unnamed Pakistani official to the publication.

Uh huh.

The truth is, as BlackBerry explains, that Pakistan demanded a back door into the firm's BES services -- and BlackBerry refused.

Pakistan wouldn't have asked if they could have broken in without BlackBerry's help, by the way.

In light of this admission and public position, backed up by acts instead of rhetoric, which company would you like to buy your phone and mobile management service from?  Psst... don't read this article... smiley

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President Obama on Saturday made an personal plea for gay rights during his visit to Kenya, warning that “bad things happen” when countries discriminate against certain groups of people.

“As an African-American in the United States, I am painfully aware of the history of what happens when people are treated differently under the law,” Obama added during a joint press conference with Kenyan President Uhuru Kenyatta. “I’m unequivocal on this.”

But Obama’s call for universal gay rights was quickly dismissed by Kenyatta, who described the issue as something “our culture, our society does not accept.”“For Kenyans today, the issue of gay rights is really a non-issue. We want to focus on other areas that are day-to-day living for our people,” he said, citing heath concerns and women’s rights.

It's always amusing to see our nation try to shove its views down someone else's throat.  The pushback on this one, however, was foretold as it was expected the Kenyan government wasn't going to just roll over and take the lashing from Obama, even though I suspect he thought he could get away with it unchallenged.

Uh, nope.  

Maybe -- just maybe, the Kenyans are on to something...

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2015-07-27 10:12 by Karl Denninger
in Social Issues , 277 references

I cannot vouch for this.

The site on which it appeared (it has been picked up a few other places) has a definite slant.  Then again, we all have slants.  The question isn't whether there's editorial slant, it's whether there is truth presented on the page.  Those of you inclined to discount this due to the source are welcome to do so but this is a first-party account of alleged facts backed up by actual criminal convictions, not an anecdote.

I was born into a family of famous gay pagan authors in the late Sixties. My mother was Marion Zimmer Bradley, and my father was Walter Breen. Between them, they wrote over 100 books: my mother wrote science fiction and fantasy (Mists of Avalon), and my father wrote books on numismatics: he was a coin expert.

What they did to me is a matter of unfortunate public record: suffice to say that both parents wanted me to be gay and were horrifed at my being female. My mother molested me from ages 3-12. The first time I remember my father doing anything especially violent to me I was five. Yes he raped me. I don’t like to think about it. If you want to know about his shenanigans with little girls, and you have a very strong stomach, you can google the Breendoggle, which was the scandal which ALMOST drummed him out of science fiction fandom.

Read the entire article.

Have a full glass of whatever adult beverage you prefer in-hand first.

Another article, which the US Press appears to have ignored (gee, I wonder why, other than an apologist-style article in WaPo that is not worth my citation) is found here.

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2015-07-27 08:31 by Karl Denninger
in Macro Factors , 145 references

From the Census Bureau....

New orders for manufactured durable goods in June increased $7.7 billion or 3.4 percent to $235.3 billion, the U.S. Census Bureau announced today. This increase, up following two consecutive monthly decreases, followed a 2.1 percent May decrease. Excluding transportation, new orders increased 0.8 percent. Excluding defense, new orders increased 3.8 percent.

Transportation equipment, also up following two consecutive monthly decreases, led the increase, $6.4 billion or 8.9 percent to $78.4 billion.

The internals are about as expected; whether this is a relief snapback for a month after the two months of bad numbers is an unknown; the "all other" category, which is very broad was up 0.4% as well.

There's not much to say on this one other than let's see what next month looks like.

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