Bulls, bears, bunnies, & the big house

Wall Street may be filled with bulls and bears, but Rocky only recently discovered a correlation between bunnies and securities fraud.

EXHIBIT #1

The SEC just charged an Arizona investment firm, “Radical Bunny LLC” with defrauding investors and guaranteeing “double-digits” returns. The defendants include two accountants, a grade school principal and a pharmacist. (“Pass the Excedrin, please.”) See: http://www.azcentral.com/arizonarepublic/news/articles/2009/07/29/20090729secbunny0729.html2.

EXHIBIT #2

Back in 1987, Robert Freeman, chief of risk arbitrage at Goldman Sachs, was sentenced to prison for insider trading after a phone call with Martin Siegel, whose friend BunnyLasker leaked news regarding a pending merger. Siegel testified that he told Freeman, ”Your Bunny has a good nose.” See http://www.nytimes.com/1990/04/19/opinion/your-bunny-and-wall-street-justice.html

EXHIBIT  #3

And this evening Rocky discovered Whoops Bunny, an online retailer which sells “whoops” for an undisclosed amount of money. The website says, “Here at Whoops Bunny, we recycle all our plastic, paper and glass, even driving miles to the glass recycling plant. We’ll even reuse scraps of paper for our scribbles.” For a really annoying bouncing rabbit, click on: http://whoopsbunny.com/index.html

[Disclosure: Rocky already knew he should never play cards with a man named Doc, or eat at a restaurant called Mom's. Now, he knows, "never do business with a person named Bunny."]

A blizzard in July

Celebrating the 25th Anniversity of the Dairy Queen Blizzard, Rocky, Trophy Wife and the entire Humbert Clan trekked to parts unknown — and located Dairy Queen Restaurant #1. (It’s unclear why they call themselves “#1,” since the first DQ was actually in Joliet, Illinois. But DQ #1 sounds better than DQ #3904).

The evening was hot and muggy. The line was long. Men, women, children, and dogs (see top picture) waited patiently for their frozen treats.

This would be Rocky’s very first Blizzard without a down parka and snow shovel, and so he researched the history and protocol in advance. He knew that the Blizzard had originally been named “The Concrete Blizzard,” and it required the development of new high-powered mixer technology. (See: http://www.blizzardfanclub.com/behind-the-blizzard/ ) He also knew that Blizzards were traditionally served upside-down, with the counterperson using both hands.

Rocky watched with baited breath as the friendly teenage counterperson mixed the vanilla softserve with Reese’s Pieces and transferred the gelatinous creation to a bright red cup. But his anticipation turned to dismay as the counterperson handed Rocky the cup right-side- up!

“Aren’t you supposed to serve a Blizzard upside-down?” asked Rocky.

“I can do that if you’d like, Sir,” said the lad.

“Yes, please. That’s supposed to be the way it’s done,” said Rocky. “I saw it on TV.”

“Ok, then,” said the lad.

“You kids have no respect for tradition!” said Rocky gruffly.

Rocky paused — and then realized — that “times they are a-changin.” Rocky said to the lad, “”Can you please hold that Blizzard the right-way, and let me get a picture of this for my scrapbook?”

[Disclosure: Rocky owns stock in Berkshire Hathaway Corporation, the corporate parent of Dairy Queen.]

Denny’s salt lawsuit needs a “grain of salt”

A consumer activist just sued Denny’s Restaurant Corp [click here], saying the restaurant should disclose the “dangerously high” levels of sodium in its meals. The lawsuit seeks class action status (and money) for “all New Jersey residents who ate Denny’s meals … in the past six years.” Residents in other states are out of luck.

Rocky visited the Denny’s website and found ALL of the sodium content listed. Next, Rocky compared Denny’s with Panera Bread’s sodium content. (Panera is ranked as the #1 healthiest fast food restaurant at Health.Com)

Here are the stats for all entrees from both restaurant menus (as calculated by Rocky):
Denny’s: Average Sodium = 962 mg
Panera’s Average Sodium = 1439 mg
Surprisngly the “healthy,” upscale, and litigation-free Panera has more sodium than the humble Denny’s!!!

[Disclosure: Rocky has no position in DENN or PNRA. But if this silly lawsuit isn't dismissed, he'll examine the Denny's GrandSlamwich--Panera Panini Arbitrage. Perhaps cash-strapped municipalities should also consider spreading Panera leftovers on roads this winter...instead of rock salt?]

Professor Gates, Pretty Woman and a mattress

Harvard Professor Henry Gates’ arrest by the Cambridge Police Department reminds Rocky of the best technique for buying a new mattress.

In an interview with Bloomberg News regarding the Gates situation, Duke University Professor Kerry Haynie, who is black, said he consciously changes out of old clothes before shopping to minimize suspicion that he may be shoplifting.

When Rocky shops on Rodeo Drive (remember Miss Vivian in Pretty Woman), he doesn’t care whether store detectives falsely accuse him of shoplifting. (“Officer, that’s not a laptop under my sweater, I just need to lose a few pounds.”)

In fact, when shopping at a store where prices are negotiable (such as auto dealers and matress retailers), he consciously puts on OLD clothes to look less wealthy. He’s discovered firsthand that wearing a Casio watch, jeans and worn-out sneakers often results in a better price than when he dons a Rolex watch and Gucci loafers. He understands that the salesman may treat him with less respect, but Rocky is more interested in paying less than getting respect.

People (and the police) certainly respond to verbal and non-verbal cues. A challenge for the intelligent consumer is to use these sterotypes to one’s advantage. (By the way, Rocky loves his new car, which he bought well below dealer invoice.)

Universal health care and complex financial derivatives

The following flow-chart (which outlines the House Democrats’ Health Plan) reminds Rocky of Offering Memoranda that he read for CMO and CDO-squared structures in 2006 and 2007. This chart was provided by the Joint Economic Committee, Republican staff.

Rocky’s rule of thumb in investing: If he doesn’t understand it, he doesn’t invest in it. Rocky doesn’t understand this chart.

One can only hope that this “structure” has a happier-ending than the structured finance market.

For a larger image, click here:healthcare_PDF
For the “simple” financial derivatives chart, click [here.]

Marijuana research and the CEO

Rocky recently stumbled upon an implausible public company, “Cannabis Science Inc,” whose stated mission is “marijuana research and development.” The company’s website [click here] says that it employs scientific methodologies to “develop, produce, and commercialize phytocannabinoid based … products.”

Not surprisingly, the company’s headquarters are located on Market Street in San Francisco.

Even more interesting was an SEC Form 8-K that the company filed this morning:

“[At the] Special Board Meeting held July 10, 2009, the Board accepted the resignation of CEO Steven W. Kubby, Ray Carr, Mary Ruwart and Lee Wrights.

“The Board hereby authorizes an internal investigation and review of Mr. Kubby’s apparently fraudulent activities using the position he held as President & CEO, including but not limited to Mr. Kubby’s apparent inappropriate and unauthorized distribution of Company funds for his personal gain, while leaving essential obligations of the Company unmet.”

Rocky has only one question: “What was he smoking???”

[Disclosure: Rocky would not invest in this company, nor does he (in the words of President Clinton) "inhale."]

TARP & canned beverage consumption

Local charities in Moline, Illinois (population 43,000) want every man, woman and child to quickly drink 93 cans of soda.

After Rep. Barney Frank criticized Northern Trust (a TARP recipient) for sponsoring their annual charity golf tournament, Wells Fargo and US Bancorp slashed their charity contributions to the Moline-based John Deere Classic.

Local charities said that they were relying on this $200,000. To fill the budget gap, they instructed their volunteers to collect empty beverage cans and claim the 5-cent deposit.

Rocky did the math in his head, and that’s 4,000,000 empty cans!

The charity’s can-collecting seems especially odd since Wells Fargo and US Bancorp both said that they will donate the same amount of money directly to local charities.

Rocky’s three theories:
1. The local charities saw local homeless people living high on the hog (collecting empty soda cans,) and they wanted a piece of the action.
2. A weak economy and high unemployment rate correlates with increased beer consumption — and those empty cans are strewn in the streets and parks.
3. It is a publicity stunt on the part of the charities.

Click [here] for the full story.

It’s good to be the King

July 6 (Bloomberg) — The U.S. Treasury has raised $896.054 billion in new cash this year selling Treasury securities. The Federal Reserve has purchased $197.723 billion in Treasury securities, or
22.1 percent of the new cash raised in 2009 by the Treasury.

Rocky notes that this is the classical definition of a “monetization of debt.” A less generous term is “printing money.” If Rocky pursued this strategy, it would be called “counterfeiting.”

As Mel Brooks would say, “It’s Good to be the King.”