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DAILY DIARY

Doug Kass

Williams-Sonoma Gets Schmeissed

  • A big and surprising 3Q guide down.

"One last thing." --Lt. Columbo

Williams-Sonoma (WSM) just had a big and surprising third-quarter guide down and shares are getting schmeissed after hours.

Is this further evidence that the aspirational middle class is getting squeezed, contracting in size and reducing purchases?

What does this mean for U.S. retail sales and forward aggregate economic growth?

Position: None

Happy Trails

  • Thanks for reading.

Thanks for reading my Diary today and enjoy your evening.

And God Bless Uncle Vinnie.

Position: None

On the Close

  • $1.1 billion to buy market on close.
Position: None

Repudiation?

  • Repudiation at 2000?
Position: Short SPY

Check Your Monitise Position

  • I worry this stock is too important to the portfolios of many readers.

The lesson I learned with Monitise (MONIF) is that too many (on this site) embrace an inexpensive stock with the hope of outsized gains.

Too often this appears to have been done blindly/recklessly, without consideration of the likely share price volatility and business challenges that are associated with am emerging and potentially disruptive company (in an enormous industry like mobile payments/banking) that is, at the current time, small as measured by revenues and even smaller into terms of profitability .

From inception I have described Monitise as a speculative stock and that it should be weighted according to your risk profile and timeframes.

I am fearful that some have not taken that advice.

Speculative stocks, like Monitise, have a tendency to be very volatile and 30% to 50% moves (in either direction) are frequent. The shares climbed by more than 125% in the first 12 months that I mentioned the company, only to halve in the last few months in reaction to two guide-downs by Monitise's management.  

Today the shares are up 15% on the news of a heightened alliance with IBM (IBM) and there is a large buyer in the market.

Based on my analysis and deep dives into the company, I have expressed my view of the shares' attractive reward vs. risk in my Diary since last year. Much of my optimism is based on channel and customer checks, the quality of the company's alliances and venture partners and a view of Monitise's competitive position (both in terms of technology and marketing). I have even been attracted to the quality of the company's stakeholder base.

Monitise's management -- after two bumps in the road recently -- now has a lot to prove.  But today's IBM announcement suggests the company is moving in the right direction and is confirmation of input I've had from my recent meetings. 

As such, many who (understandably) expressed concerns in the comments section over the last few weeks should reconsider the size of their Monitise holdings, as it is clear, for some, it plays a too-important role in portfolios.

If this is the case, get down to sleeping levels, a position where you can deal with the rocky (execution and share price) road of a potentially disruptive company in a rapidly-changing market. 

Position: Long MONIF

Answering Email

  • In response to a number of emails, I am a buyer of iShares China Large-Cap (FXI) under the market ($39-$40).
Position: Long FXI

Big Buyer

  • A large buyer just came into Monitise (MONIF).
Position: Long MONIF

Cashin's Midday Musings

  • Midday musings from Sir Arthur Cashin.

Europe goes out mixed to little changed as some confusion pops up on when and what Draghi will do.

Geo-political rumors should subside as our friends across the pond head for dinner or crib.

Run rate slowing post-Europe and at 12:15 projects an NYSE final volume of 515/595 million shares.

Position: None

Recommended Reading Part Deux

Position: None

Recommended Reading

  • How did ice buckets take off?

knowledge@wharton asks, why did the ALS challenge go viral?

Position: None

That Was Quick!

  • I was stopped out for a $0.50 loss on my Apple (AAPL) short.

Quickest loss on record.

Position: None

Shorting Apple

  • I just put on a small trading short rental in Apple (AAPL) at $101.10.

The proximate reason, as I previously mentioned in Market Setup, is technical and the weakening relative performance both relative to the market and its peer group.

Position: Short AAPL

Remarks From Cashin

  • Mid-morning observations from Sir Arthur Cashin.

Here they are.

Some aspects reminiscent of Tuesday morning -- geo-political rumors in Europe put risk assets on roller-coaster. The U.S. ten year [Treasury] yield dropped 24 ticks then came back to unchanged -- now back to -13. Thankfully run rate better than Tuesday.

Position: None

Recommended Reading

  • On Monitise and IBM.

Value Walk asks: Will IBM (IBM) Take Over Monitise (MONIF)?

Position: Long MONIF

Tweet of the Day

  • From Carl Icahn.
Position: None

Don't Trade for the Sake of It

  • Volume is low and ranges narrow.

With volumes so meager and price ranges reasonably narrow, this week is not a good time to aggressively trade, IMHO.

Forcing or manufacturing trades -- just to trade something -- is usually a recipe for investment failure.

Position: None

I Spy a Buy

  • I am seeing a buyer in Bon-Ton Stores (BONT).
Position: Long BONT

ECB's QE Barrier

  • Break in!

According to Zero Hedge:

ECB SOURCE: THE BARRIER TO QE IS STILL VERY HIGH

Position: None

More on Bunds

  • Closed-end muni funds get more attractive.

As I mentioned the 10-year German bund is at a record low 0.90%. In fact, the yields on all German bonds out to three years are now negative!

The spread between the German and U.S. 10-year yields is at a record as well.

Closed-end municipal bond funds are getting more and more attractive and I have nearly ten of them on my Best Ideas list.  

Position: None

Kudos to Kollins!

  • Tim "Not Judy or Phil" Collins was superb in his columns yesterday on my Diary.

He was great!

Position: None

Do You Read Me, HAL?

  • Deal speculation hits shares.

Halliburton's (HAL) shares are weaker, seemingly in response to Mario Gabelli's statement on Bloomberg that he sees Halliburton buying Weatherford (WFT).

Position: None

Basement Bund Yields

  • The German 10-year bund yield drops below 0.90% for the first time.

It's taking U.S. bond yields ever lower.

Position: None

Short Position Update

  • I am now at my highest net short position of the last two months.
Position: None

Altisource Gets Buyback OK

  • I could see a short squeeze.

Yesterday Altisource (ASPS) announced that it received (on Aug. 19) a confirmation letter from the Luxembourg tax authorities that will allow the company to repurchase stock (in Luxembourg this is necessary).

The buyback is limited by its recently amended term loan, limited to the lesser of $288 million or 2.9 million shares. (The company at quarter end had $160 million available for buybacks under Luxembourg law).

Remember the company recently finalized a debt deal that is geared towards a buyback. The $200 million debt deal, coupled with June 30 cash of $125 million, gives ASPS a large cash hoard (which is supplemented by strong free-cash-flow generation).

Given the several-million short position in ASPS and the fact that insiders and Omega have tied up a lot of stock, I could see a short squeeze in this name.

I am a buyer at around $90-$92 for a trade, though I might be too cute on this one.

Position: None

Something D-O-O (Anyone?)

  • Here is some technical voodoo from UBS this morning.

S&P-500: With many of our sentiment indicators and virtually all market breadth indicators in contrarian territory, we said that we are still waiting for momentum divergences on the minor time frame (daily and hourly chart basis) to get a tactical reversal signal. On a daily chart basis, yesterday has generated a momentum sell signal, which means that the ideal set-up could be completed this week by another marginal advance in the S&P-500 to complete the momentum non-confirmation. We furthermore expect the first serious down-test/reversal for next week, when the trading volume is expected to come back after Labor Day. On the future side, the situation has not changed in terms of price with the September contract going sideways within a tiny range. For today, minor resistance is at 2002, whereas a price projection is unchanged at 2008. First important intraday support is at 1992, whereas the intraday key support is unchanged at 1981.

Position: Short SPY

Raising Some Buy Limits

  • I am now a buyer of Monitise (MONIF) at $0.75 and Citigroup (C) at $51.
Position: Long MONIF and C

This Morning's Market Setup

  • Where it began.

Jack Nicklaus was once asked to rate several famous courses on a scale of difficulty from 1 to 10. He rated Augusta National, St. Andrews, Oak Hill and Seminole all 8s, and Pebble Beach and Baltusrol each got a 10. How about Winged Foot? "11," said Nicklaus. "Maybe 12."

The rundown:

  • U.S. futures continue to build off last week's gains. (S&P futures are up by 1 handleand Nasdaq futures are 2 handles higher.)
  • European stocks are mixed to lower.
  • Nikkei and China are unchanged. 
  • Little foreign-exchange volatility this morning.
  • Gold is down $2 an ounce and crude is up $0.35 a barrel.
  • The yield on the 10-year U.S. note is unchanged to 2.375%. EU (large countries') yields at yearly lows. Sovereign debt yields flatlined.  

I was out most of yesterday. It seemed like a quiet day. Scaled into a SPY short (averaging $200.40) to expand my short book modestly.

Financials continue to be the world's fair. Citigroup (C) and Northwest Bancshares (NWBI) are on my Best Ideas List. Energy shares made the second day of strong outperformance. Reversion from recent underperformance, stabilization of commodity and short covering are likely reasons. This morning both crude and natural gas have a higher start in pricing. (API stats last night showed a large draw. DOE inventories at 10:30 a.m.). By contrast, Apple (AAPL) is underperforming and seems to be stalling.

I recently mentioned that Twitter's (TWTR) shares might be technically right to buy for a trade as the shares were green in the early August swoon. I didn't buy the shares, but the stock has traded well in the last week or so. 

With many on vacation I continue to expect a low-volume week with little price movement over the remainder of the week.

As mentioned in prior post, Monitise (MONIF) trading +15% on IBM (IBM) alliance being strengthened.

I shot a 89 on Winged Foot West Course. (42/47) Could have been worse -- greens are like putting on a table.

Short Market Setup column this morning as I am heading out to a quick MD appointment.  

Position: Long FXI, QID, C, NWBI, MONIF and short RT, QQQ, SPY

More on Monitise

  • From BTIG on Monitise (MONIF).

Five weeks after Buy-rated Monitise (AIM: MONI; OTC: MONIF)announced an expa nded, multi-year global alliance with IBM (IBM -- Not Rated) to deliver cloud-based mobile commerce solutions to banks, the companies this morning announced a reinforcement of their relationship with an announcement of an enhanced sales, marketing and technology arrangement in which IBM's sales and specialist resources will be used in a joint effort to pitch MONI's Mobile Money products.

Position: Long MONIF

Moni, Moni!

  • Big news at Monitise.

Monitise (MONIF) has announced a much-expanded relationship with IBM (IBM) this morning.

Here are the details.

The shares are now 15% above where they were at Tuesday's close. The stock was as much as 20% higher in London trading.

I will have more on this after I speak to the company.

Position: Long MONIF
Doug Kass - Watchlist (Longs)
ContributorSymbolInitial DateReturn
Doug KassVKTX4/2/24-32.96%
Doug KassOXY12/6/23-16.60%
Doug KassCVX12/6/23+9.52%
Doug KassXOM12/6/23+13.70%
Doug KassMSOS11/1/23-22.80%
Doug KassJOE9/19/23-15.13%
Doug KassOXY9/19/23-27.76%
Doug KassELAN3/22/23+32.98%
Doug KassVTV10/20/20+65.61%
Doug KassVBR10/20/20+77.63%