Friday, August 06, 2010

Dynegy Spark Spread Blues

Dynegy (DYN) issued some wording that makes an investor stop and think. Under liquidity and debt in the last earnings release they announced this snippet “During the second quarter, the company added a $150 million contingent letter of credit facility that, while currently unavailable, will provide additional liquidity for 2012 commercial activity in the event of widened spark spreads.”

OK so you look up “spark spread” you get “The spark spread is the theoretical gross margin of a gas-fired power plant from selling a unit of electricity, having bought the fuel required to produce this unit of electricity.”

So if the spreads are increasing that should be good. But Dynegy needs to post letters of credit to back itself up. Definitely needs more explaining. Was this backdoor 2012 guidance?

Disclosure: No position in any stocks mentioned in this post.

Thursday, August 05, 2010

Fortress Investment Group - Stealth Takeover Maybe?

Fortress Investment Group (FIG) announced some results and watched their stock stay below $5 @ share. They tipped toed around the redemptions issues. They cannot explain why with all their good idea’s the share price is going no where and a mere $2 billion in market cap is not attracting any interest. The company is a hodge podge of different investment deals. No focus. No management commentary worth listening to.

Makes you wonder if management group wants to talk the share price down and then buy it up?

Disclosure: No position in any stocks mentioned in this post.

Wednesday, August 04, 2010

Sirius XM Radio – No Winning Profile

Sirius XM Radio (SIRI) increased customers given better car sales. The stock stayed solidly above the $1 @ share level. The questions are on the balance sheet. In the past six months cash dropped $150 million, accounts receivables from distributors increased $35 million, prepaid jumped a whopping $93 million, something called other long term assets jumped $48 million and long term related party debt jumped $90 million.

This is not a winning profile.

Disclosure: No position in any stocks mentioned in this post.

Tuesday, August 03, 2010

MasterCard American Decline

MasterCard(MA) issued improved results but was not encouraging for the future. Offshore growth was the primary driver. Look closely at the US numbers. Volumes declined by half of one percent. The offshore volumes cannot possibly cover the half percent US decline over the long run. If the US consumer does not pick it up Mastercard has a problem. Speaking of marketing. Volumes decline in the US but the marketing costs were flat for the quarter. Is there a strategic abandonment or are they just prepared to have someone else eat their lunch?

Disclosure: No position in any stocks mentioned in this post.

Monday, August 02, 2010

Honda Short on Details

Honda Motor (HMC) issued an earnings release showing huge increases in net revenues. But for a company with $59 billion in market cap they had an underwhelming amount of financial information. No balance sheet, income statement or sources and uses of cash were included. Therefore no management commentary. Given the revolutionary nature of the global auto business why not explain yourself Honda, and let investors into the information tent.

Disclosure: No position in any stocks mentioned in this post.