Month: May 2012

One more point regarding these Facebook proxy trades that are ripping yesterday and today as the $FB IPO date nears.

Today, $RENN, $YELP & $P are also all running in addition to the $ZNGA, $GSVC and $FIO that I mentioned in the earlier post (all up again today).

I view these plays as a noise trader arbitrage in that as the noise into the event (in this case the $FB IPO) increases, the related stocks also run even as the smart guys, the arbitrageurs, have already positioned themselves long in anticipation.

There is a trajectory to this phenomenon.

The smartest guys got in last Friday, the second smartest guys got in yesterday and the third smartest guys are getting in today.

You do not want to be the fifth or sixth smartest guys 🙂

There will be a sell off into these names as the smartest noise trade arbitrageurs who bought last week take profits so don’t get in late or stay too long.

Yesterday, my pal Kid Dyamite lamented that he might get the shares of Facebook that he put in for with his broker.

His worry is understandable given the tape has been dreck for six weeks, valuation in the name is nosebleed and skepticism on the issue abounds.

But I’m thinking Kid has little to worry about come Friday when $FB shares begin trading.

First, on Monday the broad market closed lower by 1+% but $FB proxies including $ZNGA $FIO & $GSVC all traded 4% or more higher. Sure, these stocks have been beaten up recently but the coordinated move on the first day of the week of $FB’s IPO is telling.

Second, skepticism is running incredibly high in the media and from those who focus on valuation – the operative long term metric that is useless in the short term.

Third, there is huge interest in the IPO.

Unless the stock begins falling soon after it begins trading, I expect those who are focused obsessively on the stock but only watching to let down their guards, buy shares and fuel momentum early on.

$YHOO has been mismanaged from the top down since Tim Koogle‘s bar mitzvah.

Despite this, it has somehow retained a huge slice of internet traffic and owns what continue to be some of the best web properties in the world.

With Loeb gaining considerable leverage, the potential exists to unlock latent value over time as difficult decisions are made smartly, as the board finally reorganizes and as this reorg trickles down.

This morning, Blodget does the best job I have seen of detailing the current situation and the future potential. He writes:

For years, many people at Yahoo, along with the Yahoo board, have gazed with envy at the success of more technology-oriented companies like Google. Yahoo’s own vision, meanwhile, has drifted all over the map. Terry Semel’s regime was an old-media regime, and it took the company too far toward the old Hollywood and TV media model. Jerry Yang’s regime wanted to turn the clock back to the “start page” model of the mid-1990s, without acknowledging that the industry had long since moved on. Carol Bartz’s regime had no vision at all for where to take the company, at least not one that was visible to anyone inside or outside the company. The appointment of the unknown Scott Thompson as CEO, meanwhile, appeared to be an attempt to steer the company back toward technology.

Yahoo’s position in the digital media business, moreover, is an extraordinarily powerful one: It is both content creator and content distributor. And, like all good digital media companies, Yahoo is both a technology and a media company: Its product is a combination of both. Without great technology, you can’t deliver great content, create communities, and build platforms. Without great content, meanwhile, you can’t get anyone to use the great technology you build.

The big opportunity here is that Loeb and company finally put an end to the systemic mismanagement of this lumbering web behemoth and begin to leverage its brand, size and traffic. It will not be an easy task but two steps are now in place.

First, the company admits that it has a problem and second, it has taken steps to rectify.

Read the rest of Henry’s piece here: This is the Best Thing to Happen at Yahoo in Years

Last week, we went up to Boston & presented to a group of

students & faculty. It was a lot of fun.

I did a talk about trading and experience.

Here's the audio:

Special thanks to investingfreak who taped this and hit me

with the embed code.

The social momentum around the JP Morgan story is unprecedented in the short time since we launched the StockTwits Social Heatmap 3 weeks ago.

Here’s a snapshot of the 12 Hour Financial Sector Heatmap. As you can see, $JPM is so thoroughly dominating interest with huge message velocity on the name. Investors, traders and the media are singularly and laser focused on the story.

As I back up the lens and eye the general heatmap which includes all sectors, it is the first time that $AAPL discussion, which usually leads, has been so dominated by another ticker and in which technology has been so dominated by another sector.

$JPM is down 7% pre market and so there is a divergence between this interest velocity and the relatively limited drop in price so far.

Over the next day to seven days I will continue to focus on these metrics in order to determine whether this story maintains such a high level of interest. Often, stories which seem like they engulf the universe one moment fade and give way to the next news cycle.

When they do not, it may be indicative of the importance of the events which occured over the 16 hours in the public eye.

I will also be watching this apparent divergence between interest and price to see if there is some regression. If there is not, it might suggest that the story is more compelling because of $JPM and Dimon’s reputation prior to the story rather than the real fundamental implications of it.

 

This is just awesome and my favorite Youtube video of the year so far.

The presence to make this play by a 6yo. Ridiculous!

 

I’m loving where the social web is and headed in the finance vertical.

Last weekend, I was in New Orleans at the Options Industry Conference and had a chance to talk to a number of pr and marketing execs from the banks.

When we discussed the real time web, user generated content, StockTwits and the finance blogosphere there was this split into two groups.

A minority group gets it and participates to varying degrees dependent upon corporate limitations while the second group, the majority, worries about market manipulation and fake negative stories and rumors about the companies they represent.

I loved hearing this because I understand that these worries are false truths.

If you have not heard the term false truth this is how the Urban Dictionary defines it:

A false truth is something believed by many people to be true but is not. It is usually something that cannot be backed up with hard evidence.

So those with something to lose and fearing the current tidal wave of faster and more direct information flow have precisely the wrong impression.

False Truth: Social media will be used to manipulate markets and spread false stories about public companies.

When I take take a look at what might manipulate markets today I think of how the well heeled and powerful utilize the mainstream media to trumpet well timed opinions to their benefit.

Its quid pro quo.

You think the Fed doesnt use their pulpit to manipulate the media’s reporting? Wait a bit and let this market continue to sink and you will see how quickly reports start leaking in about QE3.

Think about the HFT which cancels more bids in a second then you or most real people will ever cancel in a lifetime.

Meanwhile, social media does just the opposite by spreading the flow so quickly it allows others who might know the real story and who have earned authority in public through the quality of their ideas over time to dispute and question.

So from the social media flow, you can no longer bullshit anything without millions of eyes from all over the globe questioning it with the ability to then broadcast.

If someone, one person in Des Moines perhaps or wherever, can prove a story false or questionable, that message will get trumpeted and rebroadcasted globally almost instantaneaously.

Social media flow actually deters people with nefarious intent from manipulating markets.

If a source tries to spread false rumors, the finance socialmediasphere will parse it in about two seconds. The collective, made up of an endless array of vantages from around the globe, will analyze the authority of the source and the veracity of the claims.

If there is a hint of bullshit, the hint will spread just as quickly.

The social finance web is a global crowdsourced vetting mechanism the likes of which we have never seen.

It is more traditional sources of information and activity that we ought to be concerned about when it comes to manipulation, rumors and the like…

 

I’m heading down to New Orleans to speak at the 30th Annual Options Industry Conference.

I will be on a panel Saturday morning at 10AM entitled The Future of Social Communications in Financial Services.

I’ll be joined by a distinguished group including:

Moderator: Jim Binder, Director of Public Relations, The Options Industry Council
Scott Peterson, Co-Founder, Relay Station Social Media
Steven Sears, Columnist & Senior Editor, Barron’s
Jill Dodge, Managing Director, Global Marketing, NASDAQ OMX

If you are at the conference, please come by and say hi.

Earlier in the week, I spent some time over at the Microsoft offices in NYC.

They had a $SBUX coffee machine over there easier to operate than a Keurig that made freshly ground coffee. It was awesome.

Here’s the photo I snapped of it:

It made a good cup of coffee and I want something like it.

The problem with the Keurig is that it makes a mediocre cup of coffee from beans that have been ground and vacuum packed for God knows how long and, in light of $GMCR blowing up last night, it appears the scales have finally shifted from convenience to quality.

The next monster hit will sacrifice neither.

The $SBUX machine is called The Starbucks Interactive Brewer and it is a part of their Office Coffee Solutions. You pay a monthly fee and they provide the machine and service it. Its great for large companies such as $MSFT that can afford it but way too large and expensive for the home. Here’s the video promo for it:

Wow!

The next great machine will deliver both convenience and quality and I will be first in line. You will press a button and it will grind the beans for you and make you the killer cup.

$SBUX or another company such as $GMCR or Braun or Cuisinart or whoever will make this machine and sell it for less than 500$ and it will be the next big thing…

What’s likely holding $SBUX or $GMCR back now is that it does not make economic sense for them to mass produce such a machine unless they can also lock you into buying their coffee.

The solution there will be to sell the beans in special 5lb containers that are home delievered and fit right into the machine the same way the top load home water coolers do.

They gotta be working on this.

 

Frontline’s four part series on the financial crisis entitled Money, Power and Wall Street is thorough, smart and riveting and all of the episodes are available here.  It is the very best television has to offer.

PBS does an amazing job on their website too and includes a special section with full length interviews of such key figures as Austan Goolsbee, Richard Kovacevich, Robert Wolf and others.

I’ve embedded Part 4 below and it is an amazing watch.  It will bump you over to pbsdotorg around the 13 minute mark to watch the rest of the episode.

$WFC $JPM $XLF