Wednesday, August 30, 2006

TRLG Update: Strong Buy

Jeff Lubell States the Obvious and Buckley outlines growth strategy.

This article is fairly on-point. A couple points I disagree with, however:
1. UARM is doing better because it is a brand that most traders know and nobody has doubts about people buying sweat-wicking sportswear, whereas they always do about any premium fashion. I don't think going public through a reverse merger, as the Routers article stated, has an impact on TRLG's current valuation, especially since it became NASDAQ listed over a year ago. They need to face the facts - right now the market doesn't get you, it hasn't got you since you've been public so go and get bought with a strict agreement allowing you to continue operations with the same management team, get a nice capital infusion from the buyer and exit with a true IPO in a couple years if you feel the time is right.

2. Surfwear - This market is cornered right now, and there are actually plenty of high-end $60 -100 boardshorts out there. TRLG shouldn't expand that far, rather they should become the new, more premium, Deisel.

All that being said - these guys are going to have more good news. Hold them tight, and buy at anything below 20.

You know you’re a middle market ibanker when…

…you go to the bathroom to sleep
…you steal utensils and condiments from fast food joints
…you ask your bulge bracket buddies for their excel models and training manuals
…you pretend that working one-on-one with mediocre MDs makes up for having billion-dollar deals
…you have to resort to cigarettes because cocaine is too expensive
…you only tip a buck for lap dances, and get your money’s worth
…you have no league tables in your books, because no amount of spin could make this shack look good
…the only girls impressed by your job are of the holla-back sort

Friday, August 25, 2006

Rejected Follow-on

Observe the white gloved line
Too clean to cut
The undervalued vagabond
Even as he begs to bleed

Thursday, August 24, 2006

StockTips: TRLG

Those who know me also know about how fervent of a True Religion supporter I've been. The company has been good to me, with over 85% in realied returns. Here is why TRLG is especially sexy: the market doesn't get it. Look at all the street articles - most question why people would buy a pair of $200+ jeans. Fortunately, I've had enough experience in fashion to know that you can't put a price on sexy, and TRLG, like Justin Timberlake, is bringing SexyBack. True Religion is premium denim's golden calf and isn't going away anytime soon based on that alone.

Still critics chirp - but aren't premium jeans just a fad? Aren't all denim firms doomed to the fate of Jordache? Certainly kids will be rocking jeans for all time, but say that all of a sudden distressed denim goes the way of the dodo. Is TRLG doomed? Not at all.

Enter the firm's new President: Mike Buckley, the man who took Diesel and transformed it from a mediocre denim designer into a full-service "lifestyle brand" with stores all over the world. He's doing the exact same thing to True Religion with the introduction of a more diversified product range and retail stores in all the trendiest spots, with more to come. The brand now has ever increasing exposure and market share.

This isn’t being reflected in the stock price, however, so TRLG has finally publicly announced that they are looking for a buyer, and when the almighty Goldman is willing to represent them you better believe the deal will go through with a good premium.

So what should you do to take advantage of TRLG? Here are two simple strategies:

  1. Buy and hold – enter anywhere below 19 and you will see positive returns. The firm won’t sell for anything below 24, and my guess is closer to 28 – the only question is when and to whom. Obviously a strategic buyer will bring the premium up even higher. Otherwise, a financial buyer is a likely candidate. I pitched the idea to Mr. Kravis in January, and I sincerely hope he takes it to heart (and if he does I hope there’s a commission for me in the form of a job offer from KKR). Bear Stearns’ merchant banking group owns Seven Jeans and a few other smaller apparel firms, so there could certainly be consolidation if they were to add TRLG into the mix.
  2. Long + SAR – notice that the stock tends to go up, then back down. This is because of all the shorts on TRLG that always bite whenever it goes past 20. Use this to your advantage. Enter gradually from 18 down then ride it up to 20. Now stop and reverse into a short and ride the stock back down to about 17 before covering and going to long. TRLG tends to float between 16 and 21, so don’t get too greedy and you will see excellent returns. This is the strategy I’ve been using and it has worked wonderfully. You just need confidence in you strategy and patience.
Update: TRLG just announced they appointment of Zihaad Wells as the new Design Director. This guy created Levi's Red and Vintage brands. He is perfect for TRLG in terms of aesthetic direction: clean and sexy with a hint of flair and tasteful accents. Note that this happened just as the stock was about to start heading down. My guess is that the shorts will be weary, but not too much. In any case since banking means I can't day-trade I am backing out of my short before market open tomorrow and will re-purchase the stock when I see it has leveled/reversed.

Wednesday, August 23, 2006

Poetry in Money

One of my all-time-favorite idiot savants (a literature professor at my alma mater) once said, mockingly, that there is “no money in poetry, no poetry in money.” I contested then, and will prove through my writings in this blog, that the latter point especially is false. My style tends to be fairly laconic so don’t expect (or fear) having to sift through Evgeni Onegin. For future reference I’ll label all of my poetry of money posts as pomo.

Sacked Religious

Under the shadow
Of the Silver Seraph's wings
I walk on water
That turns to pinot noir

Jesus was overrated
Said St. Peter
When I bought out Heaven

Monday, August 21, 2006

Poker Playing Computers & Free Energy

AI that plays Poker
Now I understand why this poses a great challenge from the sense that it's modeling a game of imperfect information, but what I really want to see is portable, concealable, AI I can take to Vegas. Maybe they could have a camera and HUD embedded in sunglasses that transmit wirelessly to a CPU box that's hidden under a shirt/blazer. Baby needs a new pair of Ferragamos!

Free Energy
An Irish company claims to have made free, clean energy. No, it doesn't run on Guiness - it supposedly uses magnets. Simple stuff, right? Except how do you fit a magnet strong enough to power a cell phone into a cell phone? What about for a car? And how would having extrmely strong magnets affect other (metal) cars on the freeway? The company has issued a public challenge in the Economist for any scientist to test their product/theory, but I'm not going to be short crude anytime soon.

Arbitrageur says Quack. (the first post)

After a somewhat extended sabbatical from keeping any sort of "blog" (back when I still kept one the term wasn't even common) I have decided to make a quiet, yet triumphant return. This is the first time that I’m using a full-service as opposed DIY content delivery mechanism, but Google has lured me with their promises of being able to post anywhere at any time while still allowing me to create my own layout and designs. Semantics aside, let’s elaborate on the content.

This is going to be a cross between the diary of a banker (it’s 5AM and I’m trying to slit my wrists with pitchbook paper), the ramblings of a wannabe BSD (hedge Tatneft with a written Lukoil collar), and the general banter of a formerly artistic 22 year old in a city full of clean vehicles and dirty hippies (I hate both).

I may have a few guest contributors and will spice up the text with audiovisuals every now and then. One thing I can promise with complete confidence: this blog will be way more exciting than anything else an analyst sees on his computer (unless he’s figured out a way to circumvent the firewall to look at porn).