Things I'm Hearing...
If you listen close enough, you'll be able to hear some pretty sharp minds tell it like it is...
A large food distributor tells me:
"Dining IN just went over 50%, and dining OUT dipped under for the first time in almost 15 years."
And that's before we blow through $3 gasoline for those diners to go out. And that's before soaring input costs make their way through the food chain. And that's against the backdrop of one of the most extended groups in the market being…drumroll…restaurant stocks. Short stack anyone?
From two directors of two different mortgage operations:
"We have only seen the top of the iceberg on fraud claims against mortgage brokers. And we just saw one of our loan pools that we originated selling for 90 cents on the dollar."
"Most of my lenders have the "closed for business" signs on their (virtual) doors. My biggest lender won't even return my calls (and he was a big, big client of theirs)."
And not from a friend but it's my favorite commercial right now so he is in my mind:
"How do I do it? I'm in debt up to my eyeballs…Somebody help me."
Be glad to. Why don't more investors look at the winners and losers instead of listening to prognosticators building bunkers and stocking up on canned meat for the end of the economy? In reviewing my firm's P&L, the best holding here in the first quarter 2007 was a debt collector. Specialty finance, in many flavors, looks awfully tasty to this borrower. My firm's biggest multi-year winner? A pawnshop.
The Lone Wolf:
"Dude, the Wii is awesome."
I think he's spot on with points he made on his terrific show Fast Money about Activision (ATVI) and its margins potentially expanding as it ramps up making games for the Wii which costs much less to make than other platforms. The game-makers weren't expecting this much success for Wii while spending a lot on much more complicated games. The big boys at Electronic Arts (ERTS) might be questioning why they spent so much money to license sports franchises, while Macke and many others are suiting themselves up instead on the Wii. Paired trade?
A tremendous real estate investor in Texas:
"Among the buildings Blackstone sold from the portfolio it purchased from Equity Office were four in Austin which fetched them $340 per square foot which is unheard of in Texas. You can build a new one for $300!"
He and I agreed, especially for the Texas market and a few others, that the "Zell Top" was far too agreed upon to be such a great contrarian indicator. The deals Blackstone is cutting afterwards have been incredible for their investors. You can question the $340 (and I do) all day but it's a relative trade (I choose to live in an absolute world) and because that money is coming from California, especially with the tax loopholes on real estate, that deal makes sense to the buyers too! For now…
From my teammate in a spirited game of basketball (noting my sore back and poor play):
"Father time is undefeated."
Dammit. He's right. I've still got the first step on anybody as long as that anybody is aging, over-weight and worried about other things (the reason I joined this club). It's the second and third that are becoming a problem. This applies to economic cycles too, Minyans. Be careful out there during this "rally." Hoofy's back could flare up at any time, and just like Larry Legend himself, he may still be able to strut on The Parquet and hoist a few more into nothing but net…willing to tell any Person (Chuck) with the stakes highest exactly from where he'd do it (the 1991 Playoff series with the Pacers is easily in my top five all-time). Or walking into the locker room in 1988 before the three-point contest and asking the room, "Alright, who's playing for second?" That's how I feel about Hoofy right now, but don't forget the back.
From my son, big Jack, who turned three last week:
"We're having real dinosaurs at my party tomorrow."
Lil help please!!!
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