Doug Kass fills his blog on RealMoney every day with his up-to-the-minute reactions to what's happening in the market and his legendary ahead-of-the-crowd ideas. This week he blogged on:
- How the rest of the story goes.
- How to play Sears.
Click here for information on RealMoney, where you can see all the blogs, including Doug Kass'--and reader comments--in real time.
Now You Know the Rest of the Story
Originally published May 3 at 5:29 p.m. EST
In the interest of transparency, I am at my largest net short exposure in months.
As it relates to my Trade of the Week (long SQQQ)--particularly after having had the opportunity of seeing and analyzing the Facebook (FB) - Get Report and Tesla (TSLA) - Get Report results--I feel strongly about the merits of the trade.
Speaking of Tesla, here are some back-of-the-envelope observations:
* Customer deposits down from $664 million to $616 million. Clearly not a good sign for second quarter demand.
* Loss per car sold: $13,184. Exclude the phony gain on SCTY accounting, and it's $15,855 per car.
* Negative free cash flow per car: $24,847.
* Liabilities swelled from $16.8 billion to $18.9 billion.
* Long-term debt increased from $6.0 billion to $7.2 billion.
* Forget Model 3, but for how many Model S+X cars do they guide, full-year? There is no guidance for that. Is a shortfall coming in the back half of the year?
The Nasdaq, from my perch, is generally overbought, has discounted many of the well-known favorable sector trends and may be exposed to profit-taking after a lengthy run higher.
That said, the virtuous cycle of money flowing into ETFs and followed by the price momentum based risk parity and volatility trending strategies may continue, but I remain doubtful as the heavy weight of elevated valuations may overcome the near-term voting by investors and trading over the last few months.
Looking more broadly, I continue to see a market topping out, supported by both eroding fundamentals (relative to consensus expectations) and a growing list of technical weakness.
Now you know the rest of the story!
How Do You Play Sears?
Originally published May 3 at 12:08 p.m. EST
I believe Sears Holdings' (SHLD) financial and operating condition has deteriorated to the point that bankruptcy may be near.
According to my contacts, suppliers are tightening up on the retailer.
If anyone has an idea how to position this heavily shorted stock on the short side--that provides defined risk--please let me know.
So far I can't find any suitable vehicles.
Action Alerts PLUS, which Cramer manages as a charitable trust, is long FB.