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3 O'Clock High: Vic Trades NetFlix



To: The investors of Centurion Responsible Allocation Potency LLC (CRAP)

From: Victor "Senor Juan Doe" Bligh, Managing Partner, CRAP LLC

Re: Reckless Media Sensationalism

Buenos Dias de Argentina, invesores!

You guys have probably been reading a lot of disturbing and misleading things about the fund lately, after the leaking of our last quarterly report.

I can't help but feel partially responsible for the misinformation, having pulled a Sorkin then been "unavailable" for comment. Still, I have to re-stress the import of confidentiality in our communications. To uninformed Nosey Nellies, who haven't been privy to our visual aids or seen me use words like "Vega" in person, my actions may seem unnecessarily risky.

I know a few things after 10 challenging months in the hedge fund business. One of the things I know is that I wouldn't be where I am today (meaning "rich", not "in Argentina" which, to be honest, isn't nearly as cool as it looked in that Madonna movie) if I had listened to all the Nervous Nellies. The Nay-Sayers use ugly, hostile words like "Ponzi" and "Flight Risk". What they are really saying is "Wow... the LPs in CRAP are making a bundle! I wish my meager wages allowed me get in on the big gains!"

But that's why we have our mandatory lock-up period; to protect those of you who are allowed to live freely in America from her scurrilous media. As you can see from the detailed view of our projected return graphic (below), we anticipated some slight draw-downs but those are behind us ("Past"):

You could cash out (and accept the 95% early withdrawal penalty) but if you do you'll be selling out at the bottom and missing the rocketship to our pot o' gold! What those fancy pants lawyers and Wall St. types don't want you to know is that looking in the "past" is no way to run a portfolio. Instead you want to look "forward"... and get those sunglasses ready because the future is looking pretty darn bright indeed!

A Peek Under the Filth Covered Poncho: Net-Flix (NFLX)

Just to put your minds at ease I'll let you all know how I'm playing tonight's earnings release by NetFlix (a stock traded in the States!).

The suckers playing the "fundamentals" know that Company preannounced on 9/29 and guided revenue $173.5-$175.5M, with net income of $6.5-$8.3M and ending subscribers 3.59-3.61M.

First Call estimates are at EPS of $0.15 on $175.0M. According to StreetAccount "consensus (4-7 firms) is: gross margin 41.6%, SAC $36.72, and monthly churn 4.4%. Focus continues to be on margin and subscriber trends as the company ramps marketing to gain market share. Q4 First Call is $0.12/$195.5M; SA consensus for ending subscribers is 4.125M. Company has guided Q4 revenue $187-$193M, with GAAP net income $1-$6M and ending subs 3.85-4.05M.

Conference call at 18 ET: 913.981.5559 pw 4417528"

Ignore all that. What "Senor Juan Doe" comprendos is this: Options expiration week is when good fund managers load up on cheap paper in a desperate attempt to recover money lost when the corrupt bastards at the NFL and the television networks openly rigged the outcome of the Lions- Bucs game to hose you out of your monster bet.

I feel big things on this one, gang. We've got the October 30 calls trading at a mere 55-cents on the ask. According to the financial models all those propeller-head quant guys use, these things have a theoretical value of 5-cents. I figure those guys are just irrationally bitter because going to Blockbuster (BBI) is their only social outlet.

I can't buy these calls fast enough today. Don't believe the published volume of 1,160 contracts on those. That only counts the non-Black Market volume. I know for a fact it's undercounted because I used the identity I stole from a kid on Spring Break to lever up on those email offers for cash-advances on credit cards and used the money to buy 10x that many contracts on the Argentinean version of E-trade (EGRP... pronounced "Eh-Group" here).

As you can see, we are one huge guide up from NetFlix (and a quick fund wire to Antigua) from being right back in this game! In terms of "hedging" our only risk is that some teenaged missionary has to explain how he came to owe a few banks $700,000. He probably won't even get grounded!

It's a trade they don't teach you in business school but my ability to "think outside the box" was one of the reasons you trusted me with your money. I have to run ("el flee-o") now as it sounds like the people who own my "trading turret" are waking-up. Rest assured that your money is hard at work and consider renting a couple 100,000 DVD's and staying home for a few months while this bird thing calms down!

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No positions in stocks mentioned.

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