Tuesday, July 8, 2008

When Strip Clubs Are Going Out Of Business....

That's right. When Vegas strip clubs are shutting down, so is the economy. Nobody can get to Vegas due to airline costs and expensive gas. Nobody can afford a hotel room. And nobody can afford to hand out $20 every 3 minutes. Las Vegas Sands, MGM, and Wynn, all down well over 50%. Recession proof?

Now I'm beginning to sound like a broken record. But SunTrust is a loser. 50% in 5 days says we're on the right track. Even when the market was up 100 points yesterday, nobody was piling into this pile. It's not too late. I'd go further out of the money now, maybe the 1/09 $25s.

Great news about Citi in an article by John Markman yesterday. "Citigroup had to pay 8% in annual interest rates for its first round of new capital but may have to pay 12% or more for the next round, a staggering burden." Estimated writedowns are all around $8-$9 billion in the next quarter for Citi. If they have to pay 12% to stay afloat, why bother? I'll be holding on for the ride under $10.

Got greedy with GNW yesterday. I've been lowballing offers on the 12/08 $15s for a week. Kept coming up 5 cents short while the stock plummeted yesterday, costing me a 20% single day return. Will look to get in today as I think this is going under $10 as well. Might switch my tune to the $12.50s now so I can load up on contracts.

Patience with retail has paid off. My once lagging XLY puts are now up 30% with 7 months to go. Plenty of time for kablooey. Office Depot said same store sales were down 10% last month. Ouch. Reuters reported last quarter as the worst for retail in 30 years. "For the first time since 1980, more space became available to rent at strip malls than was rented out -- about 3.2 million square feet more. Part of the available space came in the form of 5.7 million square feet of new development that came on the market during the quarter." I'm still convinced commercial real estate has a lot of bottoming left. I'm looking at the best options in GGP, DDR, and maybe adding to SRS, up another $5 yesterday.

http://www.independent.co.uk/news/world/americas/down-and-out-in-las-vegas-860513.html

http://www.cnbc.com/id/25563076

http://articles.moneycentral.msn.com/Investing/SuperModels/BadTimesForGoodCompanies.aspx?page=2

2 comments:

Tiger Coach said...

Ax...
Great post... Aside from Big b's comment this morning NOTHING on Wall Street has changed. I am reminded of the boy who plugged his finger into the dike.

They actually passed a law in OH which restricts dancers from making any contact with their clients...the dancers actually went to Columbus protesting their rights...truly a pathetic site... I thought Vegas would retin the high rollers since it really seemed that somany wanted that segment...regional casinos are already DOA...I looked into those a couple of months ago. HZO might be another short play....

AX said...

Just portending future demise of all things in economy. Whole Foods is now on the list. Choice Hotels and Carmax remain high too. Missed companies like Avis, $15 in May, now $5.